Summary
A money suit founded substantially on non-performance of a compromise arrangement and resulting losses could not be referred under an arbitration clause in the superseded clearing-and-forwarding agreement. The compromise created a different stockist arrangement without an arbitration clause. Admission that the earlier agreement once contained arbitration did not establish consent covering the later dispute. The suit was restored, with the challenge alleging fraud in obtaining the compromise also left for the civil court.
Issues
- Whether the prior agency agreement’s arbitration clause extended to disputes under the later compromise stockist arrangement.
- Whether the High Court could leave that threshold question entirely to an arbitrator.
Held
- The compromise substituted a new arrangement: stockist status in two cities replaced the earlier regional clearing-and-forwarding agency, with stocks and documents handed over. The earlier arbitration clause could not simply be incorporated into the compromise. (¶¶ 11–13, 20)
- Referral required an arbitration agreement applicable to the transaction and subject matter of the suit. A clause concerning another contract did not suffice, and the High Court erred in treating admission of the old clause as enough to send the matter to arbitration. (¶¶ 13–16, 22)
- Although some loss claims referred to the earlier termination, substantial claims arose from the later stockist arrangement, loss of goodwill and legal proceedings. Those were not covered merely by the old clause’s words concerning disputes touching the agency agreement. (¶ 16–20)
- The respondent’s pending allegation that the judicial compromise was procured by inducement and fraud also required determination by the civil court on evidence in this case. The Court did not adjudicate whether that allegation was proved. (¶ 21)
Result
Appeal allowed and High Court referral order set aside. Money Suit No.73 of 2003 restored before the Civil Judge, Senior Division, Kamrup, Guwahati, to proceed according to law.