1978 (8) TMI 242 - HC - VAT and Sales Tax

Summary

Issues:
1. Application for stay under S. 34 of the Arbitration Act in a suit for recovery of amount due from a contract for the supply of goods.
2. Interpretation of arbitration clause and whether all claims must be referred to an arbitrator.
3. Definition of "dispute" and "difference" in the context of arbitration.
4. Requirement to specify the exact dispute or difference in the application for stay.
5. Consideration of whether non-payment of price of goods constitutes a referable dispute.

Analysis:
1. The judgment deals with an application for stay under S. 34 of the Arbitration Act concerning a suit for the recovery of an amount due from a contract for the supply of goods. The plaintiff claimed non-payment of the price of goods supplied and interest under the Sale of Goods Act, seeking recovery through the suit. The defendant argued that the matter should be referred to arbitration based on an arbitration clause in the contract.

2. The court addressed the interpretation of the arbitration clause and the misconception that all claims must be referred to an arbitrator if an arbitration clause exists. The judge highlighted that not all disputes necessarily fall under the scope of arbitration, emphasizing that a mere failure to pay the price is not a dispute but a non-performance of a contract term. The court stressed the need for a genuine dispute where one party makes a claim and the other party denies it for a matter to be referred to arbitration.

3. The judgment discussed the definitions of "dispute" and "difference" in the context of arbitration, clarifying that a dispute arises when there is a specific claim and a denial or refutation by the other party. The court differentiated between a dispute and a mere non-payment situation, outlining that a dispute requires a statement of proposition and a counter-position by the other party.

4. The court emphasized the necessity to specify the exact dispute or difference in the application for stay under S. 34. It was noted that without clear particulars of the disputes to be referred to arbitration, the court cannot determine if the matter falls within the scope of the arbitration clause, leading to the rejection of the application for stay in this case.

5. The judgment also addressed whether the non-payment of the price of goods constitutes a referable dispute. Referring to previous judgments, the court concluded that the non-payment of price alone does not qualify as a dispute under or arising out of a contract unless there is a specific disagreement or reason for non-payment that is referable to arbitration. As such, the court rejected the application for stay, stating that the suit cannot be stayed solely based on non-payment without a genuine dispute being established.

Overall, the judgment provides a detailed analysis of the misconceptions surrounding arbitration clauses, the requirements for a matter to be referred to arbitration, and the necessity to specify the exact dispute or difference in applications for stay under the Arbitration Act.