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Issues: Validity of the arbitration agreement based on the wording of the clause and the use of the word "can" instead of "shall."
Analysis: 1. The judgment deals with an application for stay of a suit under Section 34 of the Arbitration Act, focusing on the validity of the arbitration clause in the contract. The clause states that disputes can be settled by arbitration held by a Chamber of Commerce at Madras. The plaintiff filed a suit for damages due to breach of contract for non-delivery of goods, where the arbitration clause is a crucial element. 2. The judge examines the validity of the arbitration agreement, emphasizing that the clause's wording is essential. Referring to previous cases, the judge notes that an arbitration agreement must be clear and definite, specifying the arbitrator or the process. The judge questions the validity of the agreement due to the vague use of the word "can" instead of "shall," which implies a mere possibility of arbitration, not a binding obligation. 3. The judge discusses the interpretation of the word "can" in the arbitration clause, highlighting that a valid arbitration agreement must be a present and concluded agreement to submit disputes to arbitration. The judge emphasizes that the clause in question does not create a binding contract for arbitration but rather a contract to potentially enter into a contract for arbitration in the future, which is not legally enforceable. 4. The judge rejects the argument that the word "can" could be construed as providing an option to either party to choose arbitration. Citing previous cases where the word "shall" was used to signify a clear obligation to arbitrate, the judge concludes that the present arbitration clause lacks the necessary clarity and definiteness to constitute a valid arbitration agreement. The absence of clear language specifying whose option it is to call for arbitration further undermines the validity of the clause. 5. Ultimately, the judge dismisses the application for stay of the suit, ruling that the arbitration clause in question does not amount to a valid submission to arbitration due to its ambiguous and uncertain language. The judge emphasizes the importance of clear and unambiguous terms in an arbitration agreement to ensure enforceability and concludes that the clause in the contract fails to meet this standard. 6. The judgment highlights the significance of precise language in arbitration clauses to establish a binding agreement and emphasizes that a mere possibility of arbitration without a definite commitment does not constitute a valid arbitration agreement under the law.
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