Appeal No 205 of 1953
Appeal from the Judgment and Order dated the 24th February 1953 of the High Court of Judicature at Calcutta in Appeal from Original Order No 19 of 1952 arising out of the Order dated the 23rd day of August 1951 of the High Court of Calcutta in its Ordinary Original Civil Jurisdiction Matter No 157 of 1951
K P Khaitan section N Mukherjea and Rajinder Narain with him for the appellant
M C Setalvad Attorney General for India A N Sen V section Sawhney and section P Varma with him for the respondents
November 1
The Judgment of the Court was delivered by MUKHERJEA J
This appeal is directed against a judgment of an appellate bench of the Calcutta High Court dated the 24th February 1953 reversing on appeal the judgment and order of a single Judge sitting on the Original Side of that Court passed on an application under section 34 of the 
The material facts are not in controversy and may be shortly stated as follows On the 7th of July 1950 the respondent Moran and Company Limited passed two Bought Notes to the appellant company couched in identical terms under which the appellant purchased 1200000 yards of hessian cloth 600000 yards under each contract on certain terms and conditions stated therein
The delivery was to be made every month from January 1951 at the rate of 100000 yards per month under 864 each of these notes and payments were to be made in cash on delivery each delivery being treated as a separate and distinct contract
The Bought Notes commenced thus Dear Sirs We have this day Bought by your order and on your account from our Principals
 The particulars of the goods the price the time of delivery and other terms of the contract are then set out and amongst the terms is an arbitration clause worded as follows  All matters questions disputes differences and or claims arising out of andor concerning andor in connection with andor in consequence of or relating to this contract whether or not the obligations of either or both parties under this contract be subsisting at the time of such dispute and whether or not this contract has been terminated or purported to be terminated or completed shall be referred to the arbitration of the Bengal Chamber of Commerce under the rules of its Tribunal of Arbitration for the time being in force and according to such rules the arbitration shall be conducted
 The notes were signed by the respondent Moran and Company describing themselves as brokers
It is admitted that the goods covered by the Bought Notes were delivered to the appellant in all the months from January to June 1951 with the exception of the goods due to be delivered for the month of March 1951
The appellant required from the respondent delivery of goods in respect of the month of March but the latter informed the appellant by a letter dated the 27th March 1951 that its principals disowned a liability in this respect as there was default on the part of the appellant in not giving shipping instructions for the said goods within the time mentioned in the contracts
The appellant denied any default on its part and did not also accept the position that the respondent had any principal and on the 27th of April 1951 it sent its bills to the respondent claiming Rs 113042 3 0 as damages for non delivery of the 865 goods
As the respondent did not comply with this demand the appellant contemplated referring the matter in dispute to the arbitration of the Bengal Chamber of Commerce as provided in the contracts and while it was preparing to take steps in that direction the respondent on the 11th of June 1951 filed a suit against the appellant in the Original Side of the Calcutta High Court being Suit No 2516 of 1951 and it is in respect of this suit that the application under section 34 of the has been made
It was alleged in the plaint that the plaintiff acted merely as broker and in that capacity brought about the two contracts of sale and purchase evidenced by the two Bought Notes mentioned above that the real seller was a firm known as Gowarchand Danchand and that the plaintiff not being a party to the contract could not incur any liability under its terms
There were prayers in the plaint for a declaration that the plaint
off was not a party to the said contracts and that it had no liability under the same
There was a further prayer for an injunction restraining the respondent from claiming any damages in respect of the said contracts The writ of summons was served on the appellant on the 23rd of June 1951
On the 19th July 1951 it filed an application under section 34 of the praying that the proceedings in the suit may be stayed in order that the matter in dispute between the parties may be dealt with under the arbitration clause contained in the contracts
The application was heard by Das Gupta J who allowed the prayer of the applicant and stayed further proceedings in the suit
In the opinion of the learned Judge the dispute in this case was not whether there was any contract entered into by and between the appellant and the respondent but whether the respondent who admittedly passed the two Bought Notes to the appellant could be made liable under the contract by reason of the fact that it described itself as broker
The answer to this question depended according to the learned Judge upon the interpretation of the contract itself and the dispute arising as
it did out of or concerning or relating to the 866 contracts would come within the purview of the arbitration clause
Against this judgment the respondent took an appeal to the Appellate Division of the High Court and the appeal was heard by a bench consisting of Chakravartti CJ and Sarkar J
By two separate judgments which concurred in the result the Chief Justice and the other learned Judge allowed the appeal and vacated the order for stay
It is against this judgment that the appellant has come to this Court on the strength of a certificate under article 1331a of the Constitution
The short point for our consideration is whether on the facts of this case the appellant is entitled to an order under section 34 of the  staying the proceedings of the suit commenced by the respondent
Section 34 of the is in these terms  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
 Thus in order that a stay may be granted under this section it is necessary that the following conditions should be fulfilled 1The proceeding must have been commenced by a party to an arbitration agreement against any other party to the agreement 2the legal proceeding which is sought to be
stayed must be in respect of a matter agreed to be referred 867 3the applicant for stay must be a party to the legal proceeding and he must have taken no step in the proceeding after appearance
It is also necessary that he should satisfy the Court not only that he is but also was at the commencement of the proceedings ready and willing to do everything necessary for the proper conduct of the arbitration and 4the Court must be satisfied that there is no sufficient reason why the matter should not be referred to an arbitration in accordance with the arbitration agreement
The third condition can be taken to have been fulfilled on the facts of the present case and the fourth is one which is exclusively for the determination of the Court
The controversy between the parties centres round the other two conditions namely conditions 1 and 2  and unless the applicant for stay succeeds in establishing that the respondent is a party to an arbitration agreement and that the subject matter of dispute in the suit is a matter coming within the scope of such agreement it cannot possibly ask the Court to order a stay of the proceedings under section 34 of the 
The learned Judges of the appellate bench of the High Court have taken the view that the only matter in dispute between the parties to the suit is whether the plaintiff was a party to the contract
It was definitely alleged by the plaintiff that the contract was not between it and the appellant but was one between the appellant and a third party and since the arbitration agreement is contained in the contract it is an agreement between those parties only which could not bind or affect the plaintiff in any way
The dispute it is said which is the subject matter of the suit does not arise under the contract and does not relate to it it is outside the contract altogether and does not come within the scope of the arbitration agreement
The decision in the appeal therefore rests entirely on the finding of the learned Judges that the matter in dispute between the parties to the suit does not come within the ambit of the arbitration clause
In view of this decision the learned Judges did not consider it necessary to go into the first point as to whether in fact 868 there was a binding arbitration agreement between the parties to the suit
The learned Chief Justice no doubt did in a manner consider that point also but he refrained from pronouncing any decision upon it being of opinion that a decision on this question which was the only issue in the suit itself might prejudice the parties and create a bar of res judicata against one or the other
We think that on the facts of this case it was necessary for the learned Judges of the appellate bench to decide the question as to whether or not the plaintiff in the suit which the applicant wants to stay was a party to the arbitration agreement
This would have a material bearing on the decision of the other question upon which the learned Judges rested their judgments
The first and essential pre requisite to making an order of stay under section 34 of the is that there is a binding arbitration agreement between the parties to the suit which is sought to be stayed
The question whether the dispute in the suit falls within the arbitration clause really pre supposes that there is such agreement and involves consideration of two matters viz 1 what is the dispute in the suit and 2 what disputes the arbitration clause covers1
The contention raised by the plaintiff in the present suit is that the contract was really between the appellant and another party and not between it and the appellant and consequently it was not bound by the contract and could not be made liable for any damages in terms thereof
In substance therefore the controversy between the parties in the suit is whether the plaintiff did incur any liability in terms of the contracts evidenced by the two Bought Notes to which it was a signatory no matter in whatever capacity
The question whether the plaintiff was a party to the agreement at all is undoubtedly one which cannot go before the arbitrators and with that question they cannot possibly deal
But as Lord Porter pointed out in Heyman vs Darwins 2 this does not mean that in every instance 1 Vide per Viscount Simon in Heyman vs Darwins at 360
2  393
869 in which it is claimed that the arbitrator has no juris diction the Court will refuse to stay an action
If this were the case such a claim would always defeat an agreement to submit disputes to arbitration at any rate until the question of jurisdiction had been decided
The Court to which an application for stay is made is put in possession of the facts and arguments and must in such a case make up its mind whether the arbitrator has jurisdiction or not as best it can on the evidence before it
Indeed the application for stay gives an opportunity for putting these and other considerations before the court that it may determine whether the action shall be stayed or not
 Section 34 of the as is well known is a virtual reproduction of section 4 of the English of 1889
The observations quoted above were approved of by Mr Justice section R Das in the case of Khusiram V Hanutmal 1 and it was held by the learned Judge that where on an application made under section 34 of the for stay of a suit an issue is raised as to the formation existence or validity of the con
tract containing the arbitration clause the Court is not bound to refuse a stay but may in its discretion on the application for stay decide the issue as to the existence or validity of the arbitration agreement even though it may involve incidentally a decision as to the validity or existence of the parent contract
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 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 Nair and 1 at 518
870 Company vs Gordhandass 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
The appellate Judges of the High Court in our opinion held rightly that the decision in A M Mair and Company vs Gordhandass 1 was not in any sense conclusive in the present case on the question of the dispute in the suit being included in the arbitration agreement
The report shows that the dispute in that case was whether the appellants had made the contract in their own right as principals or on behalf of the Bengal Jute Mill Company as agents of the latter
The decision of this question was held to turn upon a true construction of the contract and consequently it was a dispute under or arising out of or concerning the contract
The judgment proceeds on the footing that there was in fact a contract between the parties and the only dispute was in which character they were parties to it the respondents contending that the appellants were not bound as principals while the latter said that they were
Mr Justice Fazl Ali in delivering the judgment pointed out that the error into which the learned Judges of the appellate bench of the High Court appeared to have fallen was their regarding the dispute raised by the respondent in respect of the position of the appellants under the contract as having the same consequence as a dispute as to the contract never having been entered into
In this case it is certainly not admitted that the respondent was a party to the contract
In fact that is the subject matter of controversy in the suit itself
But as has been said already the question having been raised  in this application under section 34 of the  the Court has undoubted jurisdiction to decide it for the purpose of finding as to whether or not there is a binding arbitration agreement between the parties to the suit
It has been said by Chakravartti CJ and in our opinion rightly that if the person whose concern with the agreement is in question is a signatory tothe contract and formally a 1  871 contracting party that will be sufficient to enable the Court to hold for purposes of section 34 that he is a party to the agreement
It was the contention of the respondent in the Court below that this test was not fulfilled in the present case
The point has been canvassed before us also by Mr Sen and it has been argued on the authority of several decided cases that in cases of this description the Bought Note is a mere intimation to the buyer that the orders of the latter have been carried out and purchases have been made from other persons and not from them
The writer does not thereby become a party to the contract of purchase and sale even as an agent
He remains a mere broker or intermediary and the provision of section 2302 of the Contract Act Cannot be invoked against him
Mr Khaitan on the other hand argues that the English law being quite different from the Indian law regarding the liability of an agent contracting on behalf of an undisclosed principal the English authorities are no guide to a solution of the problem
It is said that the case of Patiram Banerjee vs Kanknarrah Co Ltd1 upon which the respondent relies was wrongly decided being based upon English authorities which have no application to India
The respondent here it is pointed out signed an elaborate document setting out in full every particular of the contract entered into and it is impossible to say that he was not an agent executing a contract on behalf of another whose identity he did not disclose but was a mere intermediary conveying an information to the buyer
In our opinion the point is not free from doubt and requires careful consideration and as it was not decided by the learned Judges of the High Court and we have not the advantage of having their views upon it the proper course for us to follow would be to send the case back for a hearing of and decision on this point
We therefore allow the appeal and set aside the judgments of both the Courts below
The matter will go back to the appellate bench of the Calcutta High Court which will decide as an issue in the proceeding under section 34 of the the question whether the respondent was or was not a party 1 Cal
I050 872 to the arbitration agreement
If the Court is of opinion that the respondent was in fact a party the suit shall be stayed and the appellant would be allowed to proceed by way of arbitration in accordance with the arbitration clause
If on the other hand the finding is adverse to the appellant the application will be dismissed
The appellant will have its costs of this appeal
Further costs between the parties will abide the result
Appeal allowed


Summary:
A device parcel containing camouflaged live hand grenade exploded in the hands of the addressee resulting in his instantaneous death
The police collected from the scene of incident the typewritten pieces of the paper in which the grenade had been wrapped and sent them to the Central Foren sic Science Laboratory where they succeeded in partially reconstructing the name and address of the deceased
These were then examined by the Head of the Document Division in the said Laboratory with reference to the specimen of typing prints taken from the commercial college where they were alleged to have been got typed
He opined that on balance of similarities and dissimilarities it was reasonable to con clude that the type scripts found on the slip pasted on the wrapper of the parcel had been typed from one of the ma chines of the college as both the impressions were identi cal
At the trial the prosecution wanted to examine the said expert to prove the fact
This was resisted by the defence on the ground that the evidence of such typewriting expert was inadmissible under section 45 of the Indian Evidence Act as it did not fall within its ambit
The trial court relying on the observations to that effect in Hanumant  Anr
vs State of Madhya Pradesh 1952 SCR 1091 dismissed the prayer
The High Court dismissed the State s revision petition in limine
In the appeal by the State it was submitted that the word science  occurring in section 45 of the Evidence Act should be held comprehensive enough to include the opinion of an expert in regard to transcript as well in view of the march of science
Referring the matter to the larger Bench the Court HELD By the march of time there is rapid development in the 125 field of forensic science and it has become imperative to match the said march of modern vistas of scientific knowl edge
The question in the instant case whether the opinion of an expert in regard to type script would fall within the ambit of section 45 of the Evidence Act should therefore be examined in detail and decided by a Large Bench as the judgment in Hanumant s case was rendered by a Bench of three Judges
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