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TMI Blog1953 (2) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... a vires. During the pendency of the suit negotiations started between the company and the State for a settlement of the dispute and ultimately on 28th October, 1949, a deed of agreement was arrived at between them. The effect of the agreement and the correspondence referred to there in was substantially as follows :- (a) That the company would withdraw the suit No. 58 of 1949 unconditionally on 25th October, 1949. (b) That with in three days of the withdrawal of the suit the State of Bihar would make an advance payment of rupees five lacks to the company, and simultaneously the company would formally hand over the possession of the undertaking to an authorized officer of the Government. (c) That both parties will make their respective valuations within three months of taking over the undertaking and any balance of money found due to the company as per Government valuation will be the paid to the company and in case of over-payment, the excess paid to the company on account of the on account payment of rupees five lacks will be refunded to the Government. (d) That in the case of any difference or dispute between the parties over the payment of the balance which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this breach the company had rescinded the agreement and had for forfeited the sum of five lacks paid as advance by the State. The company prayed inter alia for the reliefs of declaration that the electrical undertaking belonged to them, for damages, for appointment of receiver and for injunction. On the 9th October, 1950, the State Government filed the Present application under section 34 of the Indian Arbitration Act. It was stated there in that the company had with a dishonest and mala fide motive and with a view to avoid the decision of the matter in dispute in arbitration instituted the suit on incorrect and false allegations, that the arbitration agreement was still subsisting and valid and binding on the parties and could not be taken as having been rescinded as alleged by the company, that the cause of action as alleged in the plaint being non-compliance with the agreement the suit arose out of and related to the agreement and was covered by the arbitration clause and that the State Government was ready and willing to have the dispute settled by arbitration. The company denied the allegations of mala fides and pleaded that the arbitration clause was no longer in existence a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties seeks to avoid the contract, the dispute is referable to arbitration if the avoidance of the contract arises out of the terms of the contract itself. Where, however, the party seeks to avoid the contract for reasons decors it, the arbitration clause cannot be restored to as it goes along with other terms of the contract. In other words, a party cannot rely on a term of the contract to repudiate it and still say the arbitration clause should not apply. If he relies upon a contract, he must rely on it for all purposes. Where, however, an arbitration clause is not so comprehensive and is not drafted in the broad language which was used in the House of Lords case, namely, in respect of any agreement, or in respect of something arising out of it , that proposition does not hold good. The arbitration clause is a written submission agreed to by the parties in a contract and like every written submission to arbitration must be considered according to its language and in the light of the circumstances in which it is made. 10. Now as regards the first question, viz., what is the present dispute about, the answer is to be gathered from paragraphs 14 to 17 of the plaint. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the agreement or in respect of it will be decided by arbitration. Questions relating to the breach of contract or its rescission are outside the reach of this clause. The arbitrator has not been conferred the power by this clause to pronounce on this issue whether the plaintiff was justified in claiming that time was of the essence of the contract and whether the State Government committed a breach of the contract by not making a valuation within the time specified. This clause is therefore no answer to the company's query Show me that I have agreed to refer the subject-matter of the suit to an arbitrator. Besides this clause in the agreement there is nothing else which can deprive the court of its jurisdiction to decide the plaintiff's suit as brought. 12. Ramaswami J., with whom Rai J. concurred, held that upon a perusal of the terms of the contract and of the correspondence it was obvious that no stipulation was made that the compensation money should be paid within the period of three months, and that on the contrary, the intention of the parties was that the Government would pay compensation money only after the award had been made by the arbitrator. Now th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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