The ratio of the decision discussed above is that if the terms and conditions printed overleaf the consignment note are to be binding on the parties they must be brought to the notice of the consignor (customer) before the contract of carriage is completed. In other words, these terms and conditions must be specifically and categorically brought to the notice of the consignor before he agrees to book the consignment. Since it is not practical or feasible that such terms and conditions could be read out to the individual consignors it is expected that such steps be taken by the transporter to exhibit those terms and conditions outside or inside their office premises insufficiently legible and bold letters so as to attract the attention of the incoming customer and afford him sufficient warning beforehand that the transaction of booking the consignment will be subject to the said terms and conditions. If the transport company has acted in that way or in any other mode sufficient to bring to the notice of customer those terms and conditions then of course, the customer would be deemed to have known those terms and conditions and the contract of carriage entered into would be integral part of the contract.
In the present case there is no material on the record to suggest that the terms and conditions overleaf the G.Rs./consignment notes were exhibited by way of notice outside or inside the working premises of the defendant Transport company or in any way brought to the notice or knowledge of plaintiff 2 before the goods were booked for carriage by the defendant transport company.
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In these circumstances it cannot be said that the parties to the contract of carriage were ad idem or intended to make submission to any arbitration. It was, therefore, open to the plaintiff to file the suits ignoring the arbitration clause. Section 34, Arbitration Act, 1940, therefore, is not applicable and the suits are not liable to be stayed."
HIGH COURT OF JUDICATURE AT ALLAHABAD
Civil Misc. Writ Petition No. 56545 of 2007
M/s New Highway Forwarding Agency Vs. The United India Insurance Company Ltd. And another
Hon. Dilip Gupta, J.
Dt/-27.11.2007
The petitioner is defendant No.1 in Original Suit No. 280 of 1995 that had been filed by the United India Insurance Company Ltd. with a prayer that a decree for Rs. 65,400/- with costs of suit and interest at the bank rate of 18% be passed in favour of the plaintiff and against the defendant No.1. It was stated that defendant No.1 is a common carrier and it had entered into a contract with defendant No.2 M/s Mudit Rice Mills, Pilibhit to transport certain goods. The goods were, however, not made available for delivery in sound condition and the consignor (defendant No.2) suffered a loss of Rs. 65,400/-. The consignment was insured with the plaintiff Insurance Company which settled and paid the claim of the consignor.
On 25.1.1998 the petitioner (defendant No.1) moved an application under Section 34 of the Arbitration Act, 1940 (hereinafter referred to as the 'Act') with a prayer that the proceedings in the suit may be stayed as there was an arbitration agreement between the parties. It was stated that the consignment in question was booked vide Goods Receipts (G.R.) No. 9549 dated 25.5.1989 on the terms and conditions printed on the reverse side of the G.R. and clause 14 of the terms and conditions constitutes an agreement between the consignor and the defendant No.1. Clause 14 of the terms and conditions is given below:-
"That if there is any dispute or claim arising from the goods consigned between Biopary and common carrier, the same shall be referred to the Manager of the Agency for Arbitration who shall always be deemed to have been appointed with the consent of the parties and whose decision shall be final and binding on the parties and L. Res."
The learned Additional Civil Judge (Senior Division), Court No. 4 Bareilly rejected the same by the order dated 3.3.2005 and the Appeal filed by the petitioner was also dismissed by the learned Additional District Judge, Court No.11, Bareilly by the judgment and order dated 21.7.2007. This petition has been filed for setting aside the aforesaid orders.
I have heard Sri A.C. Pandey, learned counsel appearing for the petitioner and Sri Saral Srivastava, learned counsel appearing for the Insurance Company.
Learned counsel for the petitioner submitted that in view of the provisions of clause 14 printed on the reverse side of G.R. No. 9549 there is an arbitration agreement between the parties and as such the Courts below committed an illegality in coming to the conclusion that there was no arbitration agreement between the parties and in support of his contention he has placed reliance upon the decisions of the Supreme Court in Owners and Parties Interested in the Vessel M.V. "Baltic Confidence" and another Vs. State Trading Corporation of India Ltd. And another (2001) SCC 473, Punjab State and others Vs. Dina Nath (2007) 5 SCC, 28 and Jagdish Chander Vs. Ramesh Chander and others (2007) 5 SCC 719.
Learned counsel appearing for the respondent Insurance Company, however, submitted that neither was there any arbitration agreement between the Insurance Company and the petitioner and nor can it be said that the condition contained in clause 14 printed on the reverse side of G.R. No. 9549 constitutes an arbitration agreement. In support of his contention, he has placed reliance upon the decision of the Supreme Court in Anderson Wright Ltd. Vs. Moran and Company 1955 SCJ 198 and the decision of this Court in M/s Oriental Fire and General Insurance Company and others Vs. M/s New Suraj Transport Company, Pvt. Ltd., AIR 1985, Alld. 136.
In order to appreciate the controversy involved in this petition, it would be useful to reproduce the provisions of Section 34 of the Act:-
"Power to stay legal proceedings where there is an arbitration agreement.- Where any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may at any time before filing a written statement or taking any other steps in the proceedings, apply to the judicial authority before which the proceedings are pending to stay the proceedings; and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, such authority may make an order staying the proceedings."
In Anderson Wright Ltd. (supra) the Supreme Court observed that unless the applicant, who has filed an application under Section 34 of the Act succeeds in establishing that the respondent is a party to an arbitration agreement, the applicant cannot possibly ask the Court to order stay of the proceedings under Section 34 of the Act. The relevant observations are as follows:-
"We are in entire agreement with the view enunciated above. As we have said already, it is incumbent upon the Court when invited to stay a suit under section 34 of the Indian Arbitration Act to decide first of all whether there is a binding agreement for arbitration between the parties to the suit. So far as the present case is concerned if it is held that the arbitration agreement and the contract containing it were between the parties to the suit, the dispute in the present suit would be one relating to the rights and liabilities of the parties on the basis of the contract itself and would come within the purview of the arbitration clause worded as it is in the widest of terms, in accordance with the principle enunciated by this Court in A.M. Mair and Company v. Gordhandass (1951) SCJ 1. If on the other hand it is held that the plaintiff was not a party to the agreement the application for stay must necessarily be dismissed."
In the present case, it is not in dispute that the suit had been filed by the Insurance Company for recovering the amount on the basis of the terms and conditions enumerated in the Insurance Policy entered into between the petitioner and the Insurance Company. The Insurance Company is not a party to the alleged terms and conditions printed on the reverse side of the G.R. and, therefore, there is no arbitration agreement between the petitioner and the Insurance Company. In view of the aforesaid decision of the Supreme Court in Anderson Wright Ltd. (supra), the petitioner cannot ask for stay of the proceedings under Section 34 of the Act.
This apart, unless the terms and conditions printed on the reverse side of the G.R. were brought to the notice or knowledge of the consignor, they would not constitute an arbitration agreement. In this connection, reference may be made to the Division Bench decision of this Court in M/s New Suraj (supra) wherein, while considering a similar clause printed on the reverse side of the G.R., the Court observed:-
" A plain reading of the above definition makes it clear that before an agreement can amount to an arbitration agreement it has to be in writing. The requirement of the said written agreement to be signed by the parties to the agreement is not there. The signing of the written agreement is not the necessary ingredient to make the written agreement an arbitration agreement. In our view, whereas an arbitration agreement must be in writing it need not be signed.
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We, therefore, hold that the mere fact that the said G.Rs./consignment notes were not signed by the plaintiffs or their agents would not take out the said documents out of the arbitration agreement if otherwise they operated as arbitration agreement between the parties.
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The ratio of the decision discussed above is that if the terms and conditions printed overleaf the consignment note are to be binding on the parties they must be brought to the notice of the consignor (customer) before the contract of carriage is completed. In other words, these terms and conditions must be specifically and categorically brought to the notice of the consignor before he agrees to book the consignment. Since it is not practical or feasible that such terms and conditions could be read out to the individual consignors it is expected that such steps be taken by the transporter to exhibit those terms and conditions outside or inside their office premises insufficiently legible and bold letters so as to attract the attention of the incoming customer and afford him sufficient warning beforehand that the transaction of booking the consignment will be subject to the said terms and conditions. If the transport company has acted in that way or in any other mode sufficient to bring to the notice of customer those terms and conditions then of course, the customer would be deemed to have known those terms and conditions and the contract of carriage entered into would be integral part of the contract.
In the present case there is no material on the record to suggest that the terms and conditions overleaf the G.Rs./consignment notes were exhibited by way of notice outside or inside the working premises of the defendant Transport company or in any way brought to the notice or knowledge of plaintiff 2 before the goods were booked for carriage by the defendant transport company.
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In these circumstances it cannot be said that the parties to the contract of carriage were ad idem or intended to make submission to any arbitration. It was, therefore, open to the plaintiff to file the suits ignoring the arbitration clause. Section 34, Arbitration Act, 1940, therefore, is not applicable and the suits are not liable to be stayed."
The Court below, in the present case, have recorded a categorical finding of fact that the terms and conditions printed on the reverse side of the G.R. were neither exhibited by way of notice inside or outside the working premises of defendant No.1 and nor had they been brought to the notice or knowledge of the consignor. In such circumstances, in view of the decision of this Court in M/s New Suraj (supra), the suit was not liable to be stayed under section 34 of the Act.
The decisions relied upon by the learned counsel for the petitioner do not help him. In the case of State Trading Corporation of India Ltd. (supra) the Supreme Court found that if the parties to the Bill of Leading being aware of the arbitration clause in the Charter Party Agreement have specifically interpreted the same in the conditions of the Bill of Leading, then the intention of the parties to abide by the arbitration clause is clear. In Dina Nath (supra) the Supreme Court observed that an arbitration agreement is not required to be in a particular form and what is required to be ascertained is whether the parties have agreed that if any dispute arises between them in respect of the subject matter of the contract, such dispute shall be referred to arbitration. The interpretation was with regard to clause (4) of Work Order dated 16.5.1985 which was in respect of a contract entered into by the parties. In Jagdish Chander (supra) the Supreme Court decided as to whether clause (16) of the Deed of Partnership constituted an arbitration agreement. It is, therefore, clear that in the aforesaid decisions of the Supreme Court relied upon by the learned counsel for the petitioner, the dispute was not with regard to the terms and conditions printed on the reverse side of the G.R. These decisions are, therefore, of no benefit to the petitioner.
Thus, for all the reasons stated above, there is no infirmity in the orders passed by the Courts below.
The writ petition is, accordingly, dismissed.
Dt/-27.11.2007
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