{"id":162182,"date":"1969-10-28T00:00:00","date_gmt":"1969-10-27T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/vo-tractor-export-moscow-vs-ms-tarapore-company-anr-on-28-october-1969"},"modified":"2019-02-17T16:20:51","modified_gmt":"2019-02-17T10:50:51","slug":"vo-tractor-export-moscow-vs-ms-tarapore-company-anr-on-28-october-1969","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/vo-tractor-export-moscow-vs-ms-tarapore-company-anr-on-28-october-1969","title":{"rendered":"V\/O Tractor Export, Moscow vs M\/S. Tarapore & Company & Anr on 28 October, 1969"},"content":{"rendered":"
Supreme Court of India<\/div>\n
V\/O Tractor Export, Moscow vs M\/S. Tarapore & Company & Anr on 28 October, 1969<\/div>\n
Equivalent citations: 1971 AIR, 1\t\t 1970 SCR (3)\t 53<\/div>\n
Author: A Grover<\/div>\n
Bench: Grover, A.N.<\/div>\n
           PETITIONER:\nV\/O TRACTOR EXPORT, MOSCOW\n\n\tVs.\n\nRESPONDENT:\nM\/S.  TARAPORE & COMPANY & ANR.\n\nDATE OF JUDGMENT:\n28\/10\/1969\n\nBENCH:\nGROVER, A.N.\nBENCH:\nGROVER, A.N.\nSHAH, J.C.\nRAMASWAMI, V.\n\nCITATION:\n 1971 AIR    1\t\t  1970 SCR  (3)\t 53\n 1969 SCC  (3) 562\n CITATOR INFO :\n R\t    1981 SC2085\t (25,32,33)\n R\t    1984 SC 667\t (7)\n E&D\t    1985 SC1156\t (51)\n F\t    1987 SC 674\t (18)\n RF\t    1989 SC 818\t (9)\n\n\nACT:\nForeign\t Awards\t (Recognition and Enforcement)\tAct  XLV  of\n1961, s. 3--\"Submission made in pursuance of an\t agreement\",\nmeaning of Act passed to implement international convention-\nInterpretation of Stalutes--Where language is clear Act must\nbe  construed  according to their meaning  even\t if  against\nobject\t of  convention-lnjunction-Jurisdiction\t of   Indian\nCourts\tto  grant injunction restraining a party  in  Moscow\nfrom Proceeding with arbitration in Moscow-Arbitration\tAct,\n1940, s. 35, applicability of.\n\n\n\nHEADNOTE:\nBy  article 2 of the New York Convention on the\t Recognition\nand  Enforcement of Foreign Arbitral Awards, 1958, to  which\nIndia  was  a  party,  each  contracting  State,  agreed  to\nrecognise  an agreement in writing under which\tthe  parties\nthereto\t undertook to submit to arbitration dispute  between\nthem and the Court of a contracting State when seized of  an\naction in a matter in respect of which parties have made  an\nagreement \"shall at the request of one of the parties  refer\nthe  parties to arbitration\".  To implement this  Convention\nParliament  enacted  the  Foreign  Awards  (Recognition\t and\nEnforcement) Act XLV of 1961 Section 3 of the Act  provides,\ninter  alia,  that \"if any party to a  submission  made,  in\npursuance  of an agreement\" commences any legal\t proceedings\nin  any Court any other party to the submission may  at\t any\ntime after appearance and before filing a written  statement\nor  taking  any other step in the proceedings apply  to\t the\nCourt  to  stay\t the  proceedings  and\tthe  Court,   unless\nsatisfied  that the agreement is null and void,\t inoperative\nor incapable of being performed. shall make an order staying\nthe proceedings.\nIn respect of a contract entered into by the respondent,  an\nIndian\tFirm,  with  the  appellant,  a\t Russian  firm,\t the\nrespondent  instituted\ta  suit in  the\t Madras\t High  Court\nalleging  breach of contract.  Thereafter the  Russian\tfirm\ninstituted  proceedings in terms of the arbitral  clause  in\nthe contract before the Foreign Trade Arbitration Commission\nof  the\t U.S.S.R Chamber of Commerce, Moscow.\tThe  Russian\nfirm  also  entered appearance, under  protest,\t before\t the\nMadras High Court and on the same date filed an\t application\nunder section 3 of the Act for stay of the suit.  The Indian\nfirm   filed  an  application  for  an\tinterim\t  injunction\nrestraining  the Russian firm from taking -any further\tpart\nin  the arbitration proceedings at Moscow.  The\t High  Court\ndismissed the application filed by the Russian firm for stay\nof the suit and granted the interim injunction sought by the\nIndian\tfirm.\tIn  appeal to this Court,  the\tIndian\tfirm\ncontended  that\t s. 3 of the: Act could be  invoked  by\t the\nRussian\t firm  only if it had  implemented  the\t arbitration\nagreement   by\t actually  submitting\tthe,   dispute\t for\narbitration  prior to the institution of the suit.   On\t the\nquestions  (i)\twhether\t the words  \"a\tsubmission  made  in\npursuance of an agreement\" ill section 3 of the Act meant an\nactual\t or   completed\t reference  made  pursuant   to\t  an\narbitration agreement or they meant an arbitration agreement\nthat  has  come\t into existence as a  result  of  commercial\ncontract and (ii) whether the courts in India could grant an\ninjunction  restraining\t a party in Moscow  from  proceeding\nwith the conduct of arbitration before a tribunal there,\n54\nHELD : (Per Shah and Grover, JJ.)\nThe   word  \"submission\"  in  section  3  means\t an   actual\nsubmission made in pursuance of an arbitration agreement  or\narbitral  clause  to which the Convention  setforth  in\t the\nSchedule to the Act applies.  If submission means \"agreement\nto refer\" or an arbitral clause in a commercial contract  it\nmakes the entire set of words unintelligible and  completely\nambiguous.  It is difficult to comprehend in that case,\t why\nthe legislature should have used the words which follow\t the\nterm   \"submission\",  namely  \"made  in\t pursuance   of\t  an\nagreement\".   If  by  \"agreement\"  is  meant  a\t  commercial\ncontract  the words \"made in pursuance of\" convey no  sense.\nThe difficulties disappear if the word submission, is  given\nthe meaning of an actual submission of a particular  dispute\nto  the\t authority of an arbitrator.  There is no  rule.  of\ninterpretation\t by  which  rank  ambiguity  can  be   first\nintroduced  by\tgiving\tcertain\t expressions  a\t  particular\nmeaning\t and  then an attempt can be made to emerge  out  of\nsemantic  confusion  and obscurity by having resort  to\t the\npresumed  intention  of the legislature to  give  effect  to\ninternational obligations.  In this country, as is the\tcase\nin England, a treaty or international protocol or convention\ndoes  not become operative by its own force unless  domestic\nlegislation has been introduced to attain a specific result.\nOnce Parliament has legislated the court must first look  at\nthe  legislation and construe the language employed  in\t it.\nIf  statutory enactments are clear in meaning they  must  be\nconstrued  according.to their meaning even though  they\t are\ncontrary  to the comity of nations or international law.   A\nclear  deviation  from the rigid and strict  rule  that\t the\ncourts must stay a suit whenever an international commercial\narbitration,  as  contemplated\tby  the\t protocol  and\t the\nConventions, was to take place, is to be found in Section 3.\nIt  is\tof  a  nature which is\tcommon,\t to  all  provisions\nrelating to stay in English and Indian arbitration laws, the\nprovision  being that the application to the Court for\tstay\nof the suit must be made by a party before tiling a  written\nstatement  or taking any other step in the proceedings.\t  If\nthe  condition is not fulfilled no stay can be granted.\t [65\nG-66 H; 68 D]\nOwners\tof Cargo on Board the Merak v. The  Merak  (Owners),\n(1965)\t2 W.L.R. 250, Unipat A.G. v. Dowty Hydraulic  Units,\n(1967)\tR.P.C.\t401,  Barras v. Aberdeen  Steam\t Trawling  &\nFishing Co., L.t.d., [1933] A.C. 402 and W. Wood & Son\tLtd.\nv., Bengal Corporation, A.I.R. 1959 Cal. 8, referred to.\n(Per  Ramaswami, J. dissenting.) The expression\t \"submission\nmade  in pursuance of an agreement\" in section 3 has  to  be\nconstrued in its historical setting.  The word\t\"submission\"\nmust be interpreted to mean tile arbitral clause itself\t and\nthe  word  \"agreement\"\tas the commercial  or  the  business\nagreement which includes or embodies that clause.  In  other\nwords  the  word \"submission\" in the opening  words  of\t the\nsection\t means an agreement to refer to arbitration and\t the\nwords \"the agreement to which the convention setforth in the\nschedule  applies\" means the business agreement or  contract\ncontaining  the arbitral clause.  It follows therefore\tthat\nif  there is an arbitral clause whether this is followed  by\nactual\treference to arbitration or not, the very  existence\nof this clause in the commercial agreement would render\t the\nstay  of  the suit mandatory under section 3. This  view  is\nconsidered  with  the rule of construction that\t as  far  as\npracticable municipal law must be interpreted by the  courts\nin  conformity with international obligations which the\t law\nmay  seek  to effectuate., It is well settled  that  if\t the\nlanguage  of  a section is ambiguous or is capable  of\tmore\nthan one meaning the protocol itself becomes relevant,\tfor,\nthere is a prima facie presumption that Parliament does\t not\nintend to act in breach of international law including\n\t\t\t     55\nspecific  treaty obligations.  Article, 2 of the  convention\nimposes\t a  duty on the court of a  contracting\t state\twhen\nseized\t of  such  an  action  to  refer  the\tparties\t  to\narbitration.  Section 3 must therefore be read in consonance\nwith this international obligation.  The doctrine of literal\nintepretation is not always the best method for ascertaining\nthe   intention\t  of  Parliament.   The\t  better   rule\t  of\ninterpretation\tis that a statute should be so construed  as\nto prevent the mischief and advance the remedy according  to\nthe true intent of the makers of the statute. [79 C-G; 85 C]\nOwners of Cargo on Board of the Merak v. The Merak (Owners),\n(1965)\t2 W.K.R. 250, Unipat A.G. v. Dowty Hydraulic  Units,\n(1967)\tR.P.C.\t401,  Barras v. Aberdeen  Steam\t Trawling  &\nFishing Co. Ltd., [1933].  A.C. 402, W. Wood & Son Ltd.,  v.\nBengal\tCorporation, A.I.R. 1959 Cal. 8, Shiva Jute  Balling\nLimited\t v. Hindley & Company Limited,<\/a> [1960] 1 S.C.R.\t569,\nSalomon\t v. Commissioners of Customs and Excise,.  [1966]  3\nA.E.R.\t871, Ellerman Lines Ltd. v. Murray [1930]  All\tE.R.\n503, Owners of Cargo on Board The Mark v. The Merak,  (1965)\n2  W.L.R.  250,\t Radio Publicity  Ltd.\tv.  Compagine  Luxem\nbourgeoise de Radiodifusion, [1936] 2 All E.R. 721, In Ex P.\nCampbell,  1870 L.R. 5 Ch. 706, Webb v. Outrim, [1907]\tA.C.\n81,  P\tEmden  v.  Pedder, [1904] 1  C.L.R.  91,  Barras  v.\nAberdeen  Steam\t Trawling  Co.,\t [1933]\t A.C.  402,  Bajrang\nElectric  Steel Co. v. Commissioners for Port  of  Calcutta,\nA.I.R.\t1957  Cal.  240,  W. Wood  &  Sons  Ltd.  v.  Bengal\nCorporation,  A.I.R.  1959 Cal. 8, K. E. Corporation  v.  De\nTraction,  A.I.R.  1965 Bom. 114, R. v. Blape,\t[1849]\tQ.B.\n769,  Eastman Photographic Co. v. Comptroller ('if  Patents,\n[1898] A.C. 571 and Hawkine v. Cathercole, (1856) 6 D.M. & G\n1.\n(ii) (Per  Shah\t and  Grover,  JJ.)  The  point\t about\tthe.\nRussian\t firm  having  no representative in  India  was\t not\nagitated before the High Court and the position taken up  in\nthe  plaint  was  that\tthe-Russian  firm  was\tcarrying  on\nbusiness in the U.S.S.R. and at Madras.\t The principle;\t em-\nbodied\tin  s.\t35  the\t Arbitration  Act,  1940  cannot  be\ncompletely   ignored  while  considering  the  question\t  of\ninjunction.  In the present case when the suit is not  being\nstayed\tunder section 3 of the Act it would be\tcontrary  to\nthe  principle underlying s. 35 not to grant an,  injunction\nrestraining  the  Russian  firm\t from  proceeding  with\t the\nArbitration  at Moscow.\t The principle essentially  is\tthat\nthe arbitrator should not proceed with the arbitration\tside\nby  side in rivalry or in competition as if it were a  civil\ncourt. [69 H, 70 H]\n (Per  Ramaswami J dissenting.) Even assuming that 3 of\t the\nAct is not applicable this is not a proper case in which the\nHigh Court should have issued an injunction restraining\t the\nappellant  from proceeding with the arbitration.  As a\trule\nthe  Court  has\t to  exercise  its  discretion\twith   great\ncircumspection\tfor  it\t is imperative\tthat  the  right  of\naccess; to the tribunals of a country should not be  lightly\ninterfered with,.  It is not sufficient merely to show\tthat\ntwo  actions  have been started for it is  not\tprima  facie\nvexatious  to  commence two actions about the  same  subject\nmatter,\t one  here  and\t one  abroad.  The  reason  of\tthis\nreluctance  to exercise the jurisdiction is that owing to  a\npossible  difference between the laws of the two  countries,\nthe stay of one of the actions may deprive 'the plaintiff of\nsome  advantage which he is justified in pursuing.  Thus  he\nmay have a personal remedy in one country and a remedy\tonly\nagainst\t the goods in another; or a remedy against  land  in\none  State  but\t no  such  remedy  in  another.,  The  rule,\ntherefore  is  that  a plea of lis alibi  pendens  will\t not\nsucceed\t and the court will not order a stay of\t proceedings\nunless\tthe defendant proves vexation in point of fact.\t  He\nmust show that the continued prosecution of both actions  is\noppressive  or embarrassing, an onus which he will :find  it\ndifficult to discharge if the\n56\nplaintiff  can\tindicate  some material\t advantage  that  is\nlikely\tto  result from each separate  action.\t Each  case,\ntherefore  depends  upon the setting of its  own  facts\t and\ncircumstances. [86 H]\nMettenry v, Lewis, 22 Ch.D. 401, referred to.\n\n\n\nJUDGMENT:\n<\/pre>\n
CIVIL  APPELLATE  JURISDICTION : Civil Appeal No.  1208\t and
\n1209 of 1969.\n<\/p>\n
Appeals\t by special leave from the judgment and order  dated
\nDecember 16, 1968 of the Madras High Court in O.S. Appeals
\nNos. 25 and 28 of 1968 and Appeals by special leave from the
\njudgment  and order dated April 12, 1968 of the Madras\tHigh
\nCourt  in Applications Nos. 105 and 106 of 1968 in C.S.\t No.
\nII 8 of 1967.\n<\/p>\n
S.   Mohan  Kumaramangalam,  M.\t K. Ramamurthi,\t S.  M.\t Ali
\nMohd.,\tMrs. Shamala Pappu, J. Ramamurthv, Vineet Kumar\t and
\nC.   R. Somasekharan, for the appellant.\n<\/p>\n
V.   P. Raman, S. N. Srivastava, B. Datta, D. N. Mishra and
\nJ.   B. Dadachanji, for respondent No. 1.\n<\/p>\n
Rameshwar Nath and Mahinder Narain, for respondent No. 2.
\nThe  Judgment  of  J. C. SHAH and A.  N.  GROVER,  JJ.,\t was
\ndelivered  by  GROVER, J. RAMASWAMI, J., gave  a  dissenting
\nOpinion,.\n<\/p>\n
Grover,\t J. These connected appeals which involve points  of
\nimportance   and   interest  in\t  international\t  commercial
\narbitration  arise out of a suit instituted on the  original
\nside  of  the  High Court of Judicature at  Madras  by\tM\/s.
\nTarapore & Co. against.\t M\/s.  V. O. Tractoroexport, Moscow.
\nInitially   the\t claim\twas  for  a   permanent\t  injunction
\nrestraining the Russian firm from realizing the proceeds  of
\na  Letter of Credit opened on June 9, 1965 with the Bank  of
\nIndia  Ltd.,  Madras,  which had also been  impleaded  as  a
\ndefendant.   Subsequently by an amendment of the plaint\t the
\nplaintiff has confined relief to recovery of damages.
\nThe  facts chronologically are as follows : A  contract\t was
\nentered into on February 2, 1965, between the Indian and the
\nRussian firms for the supply of earth-moving machinery for a
\nvalue of Rs. 66,09,372.00. The machinery was required by the
\nIndian\tfirm  for  executing the work  of  excavation  of  a
\nfeeder-\t canal as part of the Farakka Barrage  Project.\t  On
\nJune 9, 1965. the Indian firm opened a Letter of Credit with
\nthe  Bank  of  India  Ltd., for\t the  entire  value  of\t the
\nmachinery  in favour of the Russian firm.  The\tconsignments
\nstarted\t arriving at Calcutta in October 1965.\tOn  February
\n22,  1966, the Indian firm wrote to the Russian firm  saying
\nthat there was something wrong with the design and work-\n<\/p>\n
\t\t\t     57<\/span><\/p>\n
ing of motorised scrapers which had been supplied and  which
\nformed\tone  of\t the  items  of\t machinery  covered  by\t the
\ncontract.   One\t June 6, 1966 came the\tdevaluation  of\t the
\nIndian rupee by 57.48% as a result of -which the amount that
\nbecame payable by the Indian firm to the Russian firm  under
\nthe  contract increased by Rs. 25 lakhs or so.\tOn June\t 20,
\n1966, the Russian firm demanded an increase in the Letter of
\nCredit\towing  to the devaluation.  On August 1,  1966,\t the
\nIndian\tfirm served a notice on the Russian firm  containing
\nthe  main allegations relating to breech of contract on\t the
\npart  of  the Russian firm.  The letter was called  upon  to
\nremedy the breaches and pay compensation.  It was made clear
\nthat  until  this  was done the Russian firm  would  not  be
\nentitled  to  encash the Letter of Credit  for\tthe  balance
\namount.\t On August 4, 1966, the Indian firm filed a suit  on
\nthe  original side of the Madras High Court and obtained  an
\nex parte order of injunction in respect of the operation  of
\nthe  Letter  of\t Credit.  On August 14,\t 1966,\tthe  parties
\narrived at a settlement at Delhi after mutual discussion.
\nPursuant  to  the agreement the suit was  withdrawn  by\t the
\nIndian\tfirm  but no amicable settlement,  as  contemplated,
\ntook  place.  The Indian firm instituted a suit\t (No.\tC.S.
\n118  of 1967) on the original side of the Madras High  Court
\non  August  14, 1967.  It also filed an application  for  an
\ninterim\t injunction  in the matter of the operation  of\t the
\nLetter of Credit.  On October 26, 1967, another\t application
\nwas  filed for an interim injunction against the  encashment
\nof the devaluation drafts.  On November 4, 1967, the Russian
\nfirm instituted proceedings in terms of the arbitral  clause
\nin  the\t contract  before  the\tForeign\t Trade\t Arbitration
\nCommission  of the U.S.S.R. Chamber of.\t Commerce,,  Moscow.
\nOn  November 14, 1967, the Russian firm\t entered  appearance
\nunder  protest\t_ before the Madras High Court in  the\tsuit
\nfiled  by  the Indian firm.  On the same date  the,  Russian
\nfirm  filed an application under s. 3 of the-Foreign  Awards
\n(Recognition  and Enforcement) Act XLV of 1961,\t hereinafter\n<\/p>\n
-called\t the Act.  A prayer was made for stay of  the  suit.
\nOn  January 15, 1968, the Indian firm filed  an\t application
\nfor an interim injunction restraining the Russian  firm-from
\ntaking any further part in the arbit proceedings at  Moscow.
\nWe are not concerned with the branch of the litigation which
\ncame  up  to this Court at a prior stage in respect  of\t the
\ninterim injunctions granted by the single judge with  regard
\nto the operation of the Letter of Credit, and the subsequent
\narrangement made for payment as a result of devaluation.  It
\nis  sufficient to mention that the appeals brought  to\tthis
\nCourt  were allowed on November 26, 1968, and the  temporary
\ninjunction  granted by the learned single judge relating  to
\nthe operation of the Letter of Credit was vacated.
\nSup.  CI\/70-5
\n58<\/span>
\nThe application which had been filed by the Russian firm for
\nstay  of  the suit under S. 3 of the Act  was  dismissed  by
\nRamamurthi  J., on April 12, 1968.  The application  of\t the
\nIndian\tfirm  for  an  interim\tinjunction  restraining\t the
\nRussian firm from taking any further part in the arbitration
\nproceedings  at Moscow was, however, granted.\tThe  Russian
\nfirm  preferred\t appeals against the orders of\tthe  learned
\nsingle judge before a division bench.  The bench  maintained
\nthe  orders of Ramamurthi, J. The present appeals have\tbeen
\nbrought\t by the Russian firm by special leave  both  against
\nthe order of the division bench and against the judgment  of
\nthe learned single judge.  This was presumably done  because
\nthere was some controversy about -the finality of the orders
\nwhich had been made by the single judge of the High Court.
\nThe  questions which have to be determined in these  appeals
\nare  quite narrow.  The first question is whether the  words
\n“a  submission\tmade in pursuance of an agreement”  mean  an
\nactual\t or   completed\t reference  made  pursuant   to\t  an
\narbitration agreement or they mean an arbitration  agreement
\nthat  has  come into existence as a result of  a  commercial
\ncontract.  According to the appellant firm whenever there is
\nan  arbitration\t agreement  or\tan  arbitral  clause  in   a
\ncommercial   contract  of  the\tnature\tmentioned   in\t the
\nConvention the court is bound to stay the suit provided\t the
\nother  conditions laid down in s. 3 are satisfied.  On\tthis
\napproach  the  word “submission” is to be understood  as  an
\narbitration   agreement\t or  arbitral  clause  relating\t  to
\nexisting  or  future differences and  the  word\t “agreement”
\nmeans an agreement of a commercial or business character  to
\nwhich the Convention applies.  The respondent firm maintains
\nthat the critical words submission?’ and “agreement” must be
\ngiven  their  natural and grammatical meaning and  the\tword
\n“submission” made in pursuance of an agreement can only mean
\nan  actual  submission\tof  the\t disputes  to  the  arbitral
\ntribunal.   The word “agreement” can have reference  to\t and
\ncan  be\t construed  ,only in the  sense\t of  an\t arbitration
\nagreement  or an arbitral clause in a  commercial  contract.
\nIt cannot mean a commercial contract because an\t arbitration\n<\/p>\n
– agreement cannot be stated to have been made pursuant to a
\ncommercial ,contract.  In other words, if submission has  to
\nbe  taken in the sense of an arbitration agreement it  would
\nrender the words ”  submission\tmade  in  -pursuance  of  an
\nagreement” meaningless and unintellip.\tThe second  question
\nrelates to the jurisdiction of the courts in this country to
\ngrant an injunction restrationing a party which is in Moscow
\nfrom  proceeding  with the conduct of arbitration  before  a
\ntribunal  there.   Even if the courts have  jurisdiction  to
\ngrant  an injunction, it is said, it would not be  a  proper
\nexercise of that jurisdiction in the circumstances of the
\n 59<\/span>
\npresent\t case  to give an injunctory  relief.\tThe  learned
\nsingle judge has decided certain other controversial  issues
\nbut  the  division  bench did not go into  them\t nor  do  we
\npropose\t to deal with them unless the decision on  the\ttrue
\nand correct interpretation of S. 3 of the Act goes in favour
\nof the appellant firm.\n<\/p>\n
The Act has been enacted to enable effect to be given to the
\nConvention  on\tthe recognition and enforcement\t of  foreign
\narbitral awards done at New York on June 10, 1558, to  which
\nIndia  is a party.  In the statement of objects and  reasons
\nit  has been pointed out that the procedure  for  settlement
\nthrough\t arbiration  of disputes  arising  from\t internation
\ntrade  was  first  regulated  by  the  Geneva  Protocol\t  On
\nArbitration  Clauses 1923 and the Geneva Convention  On\t the
\nExecution of Foreign.  Arbitral Awards to which India was: a
\nparty  and  which  was\tgiven effect  to  in  India  by\t the
\nArbitration (Protocol and Convention) Act, 1937.
\nThe provisions of the Act may be noticed.  Sections 2 and  3
\nare in these terms :\n<\/p>\n
\t      S.2   “In\t ,  this  Act  unless  the   context
\n\t      otherwise requires, “foreign awards” means  an
\n\t      award oil differences between persons  arising
\n\t      out    of\t  legal\t   relationships,    whether
\n\t      contractual  or not, considered as  commercial
\n\t      under  the  law in force in India made  on  or
\n\t      after the 11th day of October 1960\n<\/p><\/blockquote>\n
\t      (a)   In pursuance of an agreement in  writing
\n\t      for   arbitration\t to  which  the\t  Convention
\n\t      setforth in the Schedule applies and\n<\/p><\/blockquote>\n
\t      (b)   in\tone  of\t such  territories  as\t the
\n\t      Central\tGovernment  being   satisfied\tthat
\n\t      reciprocal  provisions have been made may,  by
\n\t      notification in the Official Gazette,  declare
\n\t      to be territories to which the said Convention
\n\t      applies.”\n<\/p><\/blockquote>\n
\t      S.3 “Notwithstanding anything contained in the
\n\t      Arbitration Act, 1940, or in the Code of Civil
\n\t      Procedure, 1908, if any party to a  submission
\n\t      made in pursuance of an agreement to which the
\n\t      Convention set forth in the Schedule  applies,
\n\t      or  any person claiming through or  under\t him
\n\t      commences\t any legal proceedings in any  Court
\n\t      against  any other party to the submission  or
\n\t      any  person claiming through or under  him  in
\n\t      respect  of any matter agreed to\tbe  referred
\n\t      any  party to such legal proceedings  may,  at
\n\t      any time after appearance and before filing  a
\n\t      written statement or taking any other step  in
\n\t      the proceeding apply to the Court to stay\t the
\n\t      proceedings  and\tthe Court  unless  satisfied
\n\t      that the
\n\t      60<\/span>
\n\t      agreement\t is  null and void,  inoperative  or
\n\t      incapable of being performed or that there  is
\n\t      not  in fact any dispute between\tthe  parties
\n\t      with  regard  to\tthe  matter  agreed  to\t  be
\n\t      referred\tshall  make  an\t order\tstaying\t the
\n\t      proceedings.”\n<\/p><\/blockquote>\n
\t      The  Schedule contains the Convention  on\t the
\n\t      recognition   and\t  enforcement\tof   foreign
\n\t      arbitral awards.\tArticle II may be reproduced
\n\t      with advantage :\n<\/p><\/blockquote>\n
\t\t\t\tArticle II
\n\t      “1. Each Contracting -State shall recognise an
\n\t      agreement\t in writing under which the  parties
\n\t      undertake to submit to arbitration all or\t any
\n\t      differences  which  have arisen or  which\t may
\n\t      arise between them in respect of defined legal
\n\t      relationship,  whether  contractual  or\tnot,
\n\t      concerning   a   subject-matter\tcapable\t  of
\n\t      settlement by arbitration.\n<\/p><\/blockquote>\n
\t      2.    The\t term “agreement in  writing”  shall
\n\t      include an arbitral clause in a contract or an
\n\t      arbitration  agreement, signed by the  parties
\n\t      or  contained  in an exchange  of\t letters  or
\n\t      telegram.\n<\/p><\/blockquote>\n
\t      3.    The\t Court of a Contracting State,\twhen
\n\t      seized of an action in a matter in respect  of
\n\t      which  the  parties  have\t made  an  agreement
\n\t      within the meaning of this article, shall,  at
\n\t      the  request of one of the parties. refer\t the
\n\t      parties  to arbitration, unless it finds\tthat
\n\t      the   said   agreement  is  null\t and   void,
\n\t      inoperative or incapable of being performed.”\n<\/p><\/blockquote>\n
In  order to resolve the controversy on the  first  question
\nthe  history of the International Protocols and\t Conventions
\nas  a  result  of which legislation had\t to  be\t enacted  in
\nEngland\t and  India as also the relevant provisions  of\t the
\nArbitration  law  may be set out.  The\tGeneva\tProtocol  On
\nArbitration  Clauses,  1923 recognised the  validity  of  an
\nagreement  between  each of the Contracting  States  whether
\nrelating  to existing or future differences between  parties
\nsubject\t respectively to the jurisdiction of different\tCon-
\ntracting States by which the parties to a contract agreed to
\nsubmit\tto  arbitration all or any  differences\t that  might
\narise\tin  connection\twith  such  contract   relating\t  to
\ncommercial  matters  or\t to  any  other\t mater\tcapable\t  of
\nsubmission by arbitration whether or not the arbitration was
\nto take place in a country to whose jurisdiction none of the
\nparties\t was  subject.\t Article 4 of the  Protocol  was  as
\nfollows,
\n\t\t\t     61<\/span>
\n\t      “The tribunals of the Coiitracting Parties, on
\n\t      being seized of a dispute regarding a contract
\n\t      made  between persons to whom Article  applies
\n\t      and including an arbitration agreement whether
\n\t      referring\t to  present or\t future\t differences
\n\t      which  is valid in virtue of the said  Article
\n\t      and  capable  of being  carried  into  effect,
\n\t      shall refer the parties on the application  of
\n\t      either   of  them\t to  the  decision  of\t the
\n\t      arbitrators………..”\n<\/p>\n
In  order  to give effect to this Protocol  the\t Arbitration
\nClauses\t (Protocol)  Act,  1924\t was  enacted  in   England.
\nSection 1 (1) of that Act contained provisions similar to s.
\n3  of the Act with certain differences.\t When the  aforesaid
\nAct  of\t 1924  was enacted the meaning\tof  “submission”  as
\ncontained in s. 27 of the English Arbitration Act, 1889\t was
\na written agreement to submit present or future\t differences
\nto  arbitration whether an arbitrator was named\t therein  or
\nnot.”\n<\/p>\n
The  Arbitration (Foreign Awards) Act, 1930 was\t enacted  to
\ngive  effect  “to a certain convention on the  execution  of
\narbitral  awards  and  to amend sub-s. (1) of s.  1  of\t the
\nArbitration Clauses (Protocol) Act, 1924 which provision was
\ndescribed  in s. 8 as one “for staying of legal\t proceedings
\nin  a  court  in  respect  of  matters\tto  be\treferred  to
\narbitration under agreements to which the Protocol applies”.
\nThe Arbitration Act, 1889 was amended by the Arbitration Act
\nof  1934 which also provided for other matters\trelating  to
\narbitration  law  in England.  In sub-s. (2) of\t s.  21\t the
\nexpression  “arbitration agreement” was defined to  mean”  a
\nwritten agreement to submit present or future differences to
\narbitration whether an arbitrator was named therein or not”.
\nAlthough  the  definition of the  expression  ”\t arbitration
\nagreement”  was\t introduced  by the amendment  made  by\t the
\nArbitration   Act  of  1934  the  definition  of  the\tword
\n“submission”  contained in s. 27 of the Arbitration  Act  of
\n1889  remained\tunaffected and unchanged.  To  complete\t the
\nhistory of legislation in England mention may be made of the
\nArbitration Act, 1950 which repealed the earlier enactments.
\nSection\t 4(2)  of  this Act provided for,  stay\t when  legal
\nproceedings  were  commenced  in court by any  party  “to  a
\nsubmission to arbitration made in pursuance, of an agreement
\nto which the protocol set out in the First Schedule to\tthis
\nAct applies”.  The Schedule to this Act contained the Geneva
\nProtocol on Arbitration Clauses of 1923 and the Geneva\tCon-
\nvention on the execution of foreign arbitral awards of 1927.
\nIn this Act the definition of “submission” contained in\t the
\nAct  of 1889 was omitted.  By s. 32 “arbitration  agreement”
\nwas  defined to mean “a written agreement to submit  present
\nor future differ-\n<\/p>\n
62<\/span><\/p>\n
ences to arbitration, whether an arbitrator is named therein
\nor not”.\n<\/p>\n
In India the Arbitration (Protocol and Convention) Act, 1937
\nwas  enacted  for  the\tfirst time to  give  effect  to\t the
\nProtocol  and the Convention of 1923 and 1927  respectively.
\nThis  was  done as the Government wanted to meet  he  widely
\nexpressed  desire of the commercial world  that\t arbitration
\nagreements  should  be\tensured\t effective  recognition\t and
\nprotection.   Section  3 of the 1937 Act employed  the\tsame
\nlanguage as is contained in s. 3 of the Act except with some
\nminor differences.  Both the Geneva Protocol of 1923 and the
\nConvention  of 1927 were appended as Schedules to this\tAct.
\nSo far as the ordinary arbitration law was concerned,  prior
\nto  the enactment of the Indian Arbitration Act, 1940  there
\nwere  two  sets\t of  laws applicable  to  what\twere  called
\nPresidency  towns and areas which did not fall within  those
\ntowns:\tThe  Indian Arbitration Act, 1899 applied  to  cases
\nwhere  the subject matter submitted to arbitration was of  a
\nnature\tthat  if a suit were to be instituted  it  could  be
\ninstituted in a Presidency town.  Section 4(b) contained the
\ndefinition  of the word ” submission” which was\t similar  to
\nthe  definition\t in the English Act of 1889.  In  the  Civil
\nProcedure Code of 1882 Part V dealt with arbitration.  These
\nprovisions were applicable to such areas which were  outside
\nthe  Presidency towns.\tWhen the Civil Procedure Code,\t1908
\nwas  enacted  it  contained in\tthe  IInd  Schedule  similar
\nprovisions   for  arbitration.\t There\twas,   however,\t  no
\ndefinition of “submission” or “arbitration agreement”.\t The
\nArbitration Act, 1940 was meant to consolidate and amend the
\nlaw relating to arbitration in India.’ The word “submission”
\nwas  not defined but the word “arbitration agreement” in  s.
\n2(a)  was  stated  to mean a  written  agreement  to  submit
\npresent\t or  future differences to arbitration\twhether\t the
\narbitrator was named therein or not.\n<\/p>\n
The  phraseology  which\t has been employed  in\tthe  English
\nstatute\t and the Indian enactment for giving effect  to\t the
\nProtocol  and  the Conventions relating\t to  arbitration  is
\npractically the same.  In the English Act of 1924 the  words
\nused  were identical with the words to be found in S.  3  of
\nthe  Act,  namely,  “a submission made in  pursuance  of  an
\nagreement”.  The only change which has been effected in\t the
\nEnglish\t Arbitration  Act of 1950 in s. 4(2)  is’  that\t the
\nwords “to arbitration” have been inserted, within the  words
\n“submission” and “made”.  Among the authoritative text\tbook
\nwriters there has been a good deal of divergence of  opinion
\non the meaning of the above phraseology.  In the 8th Edn. of
\nthe Conflict of Laws by Dicey and Morris, Rule 182 has\tbeen
\nformulated  which is based on S. 4(2) of the  English  Arbi-
\ntration\t Act 1950.  Referring to s. 4(2) and the meaning  of
\nthe
\n63<\/span>
\nwords  “a submission to arbitration made in pursuance of  an
\nagreement to which the protocol applies” the, authors are of
\nthe  view  that this condition is satisfied if\tthe  parties
\nhave  agreed  to  submit  present  or  future  disputes\t  to
\narbitration.  The Court is, according to them, under a\tduty
\nto  stay  proceedings  although\t no  arbitrators  have\tbeen
\nappointed.   The  word\t“submission”  must  be\tregarded  as
\nsynonymous with the term “arbitration agreement” in the Pro-
\ntocol and the term “agreement to which the Protocol applies”
\nis  used  “to identify the commercial or  business  contract
\nbetween\t the  parties”.\t  This statement  is  based  on\t the
\njudgment  of  Scarman, J., in Owners of Cargo on  Board\t the
\nMerak\tv.  The\t Merak\t(Owners)  (1).\t Even\tbefore\t the
\npronouncement of this judgment preference for the view which
\nlater  on  came\t to be expressed by  Scarman  J.,  had\tbeen
\nindicated in the 7th Edn. of the same book. (See pages\t1075
\nto  1076).  According to the well known work of\t Russell  on
\nArbitration,  17th  Edn.,  the English\ttranslation  of\t the
\nProtocol  is most obscure.  This is what has been stated  at
\npage 79
\n\t      “The words of the section, however, would seem
\n\t      to  limit\t its operation to cases\t where\tsome
\n\t      sort  of “agreement to submit” is followed  by
\n\t      an actual “submission” made “pursuant to”\t it.
\n\t      (Presumably, the word ” submission” here bears
\n\t      its natural meaning, of “a submission  written
\n\t      or  not)\tof  an\t–  actual  dispute  to\t the
\n\t      authority\t of  an arbitral  tribunal,  “rather
\n\t      than the statutory meaning which it bore
\n\t      under  the 1889 Act and which is now borne  by
\n\t      the phrase “arbitration agreement)”.  Thus the
\n\t      common  case, of an agreement -to refer  which
\n\t      is never followed by a submission because\t the
\n\t      claimant prefers to sue instead, is apparently
\n\t      outside  the  section, although  the  Protocol
\n\t      clearly meant it to be covered; see the French
\n\t      text of Article 4″.\n<\/p>\n
The  English translation of the French text in the 1950\t Act
\nhas  been  stated  to  be a  mistranslating.   It  has\tbeen
\nsuggested that the Parliament may have enacted not the\ttrue
\ntext  of the Protocol but a very limited  interpretation  of
\nthe false translation.\tIn Halsbury’s Laws of England, Third
\nEdn.,  Cumulative Supplement 1968, Vol. 11, Arbitration,  p.\n<\/p>\n
2. reference has been made to the decision of Scarman I., in
\nThe  Merak(1),\twhich was affirmed on appeal and  which\t has
\nbeen followed in Unipat A.G. v. Dowty Hydraulic Units(1) the
\nstatement  in  the  text being that this  provision  of\t law
\napplies\t although  no actual submission to  arbitration\t has
\nbeen made.\n<\/p>\n
(1)  (1965) 2 W.L.R 250.\n<\/p>\n
(2) [1967] R.P.C. 401.\n<\/p>\n
64<\/span><\/p>\n
In  the\t Merak(1), Scarman J., react s. 4(2) of the  Act  of
\n1950  with  the\t translation of the Protocol  in  the  First
\nSchedule  to  the Act.\tAccording to him  the  Protocol\t was
\nconcerned with two agreements–One, a contract commercial in
\ncharacter or giving rise to a difference relating to matters
\nthat  were  either  commercial\tor  otherwise  ‘capable\t  of
\nsettlement  by\tarbitration between parties subject  to\t the
\njurisdiction  of different contracting States; the other  an
\narbitration agreement whereby the parties to such a contract
\nagreed\tto  submit their differences  to  arbitration.\t(The
\narbitration   agreement\t  might\t itself\t included   in\t and
\nsimultaneous  with  the commercial  or\tbusiness  contract).
\nSection\t 4(2)  of  the Act was intended\t to  make  the\tsame\n<\/p>\n
-distinction  between  the parties’  business  contract\t and
\ntheir arbitration agreement.  He proceeded to say:\n<\/p>\n
\t      ” It uses the term “submission to arbitration”
\n\t      to identify the protocol’s agreement to submit
\n\t      their differences to arbitration and the\tterm
\n\t      “agreement  to which the protocol applies”  to
\n\t      identify\tthe commercial or business  contract
\n\t      between  the  parties.  Section  4(2),  in  my
\n\t      opinion,\tapplies to agreements to  submit  to
\n\t      arbitration made in pursuance of a contract to
\n\t      which,  because  of  its\tcharacter  and\t the
\n\t      character\t  of  its  parties,   the   protocol
\n\t      applies.\tThe words “in pursuance of”,  merely
\n\t      establish the link that there must be
\n\t      between  the  agreement to submit\t present  or
\n\t      future  differences  to  arbitration  and\t the
\n\t      agreement\t  of   a  commercial   or   business
\n\t      character\t between parties of a certain  class
\n\t      to  which the protocol applies.  They have  in
\n\t      this context no temporal significance”.\n<\/p><\/blockquote>\n
One of the main reasons which prevailed in The Merak(1)\t was
\nthat by construing “submission to arbitration” as an  actual
\nsubmission   of\t  an  existing\tdispute\t to   a\t  particular
\narbitrator, it would make “non-sense of the Protocol”.
\nNow, as stated in Halsbury’s Laws of England, Vol.  36,-page
\n414, there is a presumption that Parliament does not  assert
\nor   assume  jurisdiction  which  goes\tbeyond\tthe   limits
\nestablished  by the common consent of nations  and  statutes
\nare to be interpreted provided that their language  permits,
\nso as not to be inconsistent with the comity -of nations  or
\nwith  the established principles of International Law.\t But
\nthis principle applies only where there is an ambiguity\t and
\nmust  give  way before a clearly  expressed  intention.\t  If
\nstatutory  enactments  are clear in meaning,  they  must  be
\nconstrued  according to their meaning even though  they\t are
\ncontrary to the comity of nations or International Law.
\n(1)  (1965) 2 W.L.R. 250.\n<\/p>\n
65<\/span><\/p>\n
We  may look at another well recognised principle.  In\tthis
\ncountry,   as  is  the\tcase  in  England,  the\t treaty\t  or
\nInternational\tProtocol  or  convention  does\tnot   become
\neffective  or operative of its own force as in some  of\t the
\ncontinental  countries unless domestic legislation has\tbeen
\nintroduced   to\t attain\t a  specified  result.\t Once,\t the
\nParliament has legislated, the, Court must first look at the
\nlegislation  and construe the language employed in  it.\t  If
\nthe  terms of the legislative enactment do not\tsuffer\tfrom
\nany  ambiguity or lack of clarity they must be given  effect
\nto  even if -they do not carry out the\ttreaty\tobligations.
\nBut  the  treaty or the Protocol or the\t convention  becomes
\nimportant  if  the meaning of the expressions  used  by\t the
\nParliament  is riot clear and can be construed in more\tthan
\none  way.  The reason is that if one of the  meanings  which
\ncan  be properly ascribed is in consonance with\t the  treaty
\nobligations and the other meaning is not, so consonant,\t the
\nmeaning\t which is consonant is to be preferred.\t Even  where
\nan  Act\t had been passed to give. effect to  the  convention
\nwhich was scheduled to it, the words employed in the Act had
\nto  be interpreted in the well established sense which\tthey
\nhad in municipal law (See Barras v. Aberdeen Steam  Trawling
\n& Fishing Co. Ltd.(1).\n<\/p>\n
The  approach in “The Merak” appears to have been  dominated
\nby  the Protocol of 1923 and the question to be examined  is
\nwhether\t the language of s. 4(2) of the English Act of\t1950
\nand  s. 3 of the Act contains any such ambiguity or  suffers
\nfrom  any such lack of clarity as would justify the  use  of
\nthe  Protocol to the extent made in the English\t case.\t The
\nterm ‘submission’ as defined in the English Act of 1889\t and
\nthe  Indian  Act  of  1899,  was  meant\t to  cover  both  an
\narbitration  clause  by\t which the parties  agreed  that  if
\ndisputes  arose\t they would be referred to  arbitration\t and
\nalso  an  actual  submission  of  a  particular\t dispute  or
\ndisputes  to the authority of a particular arbitrator.\t For
\nthe sake of convenience, a distinction could be made calling
\nthe  first  “an\t agreement  to refer”  and  the\t second,  “a
\nsubmission”.  The term-“arbitration agreement” as defined by
\nthe  English  Act of 1950 and the Indian Act  of  1940\talso
\ncovers\t both  “an  agreement  to  refer”  and\t“an   actual
\nsubmission”.   Turning to the words used in s. 3 of the\t Act
\n“submission  made in pursuance of an agreement to which\t the
\nconvention  setforth  in the schedule  applies”,  the  first
\ncritical expression “submission” can have both the  meanings
\nin  view  of the historical background\tof  the\t legislation
\nwhich  was  enacted to give effect to the Protocol  and\t the
\nConventions.  If this term is to be given the larger meaning
\nof  including of “an agreement to refer” as also “an  actual
\nsubmission” of a particular dispute, it has to be determined
\nwhich meaning would be appro-\n<\/p>\n
(1)  [1933] A.C. 402.\n<\/p>\n
66<\/span><\/p>\n
priate\tin  the context in which the term  “submission”\t has
\nbeen  used  in\ts.  3 of the  Act.   If\t “submission”  means
\n“agreement to refer” or an “arbitral clause” in a commercial
\ncontract,  it makes the entire set of  words  unintelligible
\nand completely ambiguous.  It is difficult to comprehend  in
\nthat  case  why the Legislature should have used  the  words
\nwhich  follow  the  term  “submission”,\t namely,  “made\t  in
\npursuance  of  an agreement”.  This brings us  to  the\ttrue
\nimport\tof the expression “agreement”.\tIf by\t” agreement”
\nis  meant a commercial contract of the nature  mentioned  in
\nthe,  “Merak”,\tthe words “made in pursuance of”  convey  no
\nsense.\t Another anomaly which militates against the  estab-
\nlished\trule  of interpretation would arise if by  the\tword
\n“agreement” is meant a commercial contract.  It cannot, even
\nby  stretching the language bear that meaning in the  second
\npart of s. 3 which reads
\n\t      “……….  The court unless  satisfied\tthat
\n\t      the agreement is null and void, inoperative or
\n\t      incapable of being performed or that there  is
\n\t      not  in fact any dispute between\tthe  parties
\n\t      with  regard  to\tthe  matter  agreed  to\t  be
\n\t      referred\tshall  make  an\t order\tstaying\t the
\n\t      proceedings.”\n<\/p>\n
Here “agreement” can have reference to and mean not the com-
\nmercial\t contract  to which the convention setforth  in\t the
\nSchedule  applies  but only the agreement to  refer  or\t the
\narbitral clause.  Unless the context so compels or requires,
\nthe same meaning must ordinarily be ,attributed or given  to
\nthe  same words used in the section. The above\tdifficulties
\ncompletely  disappear  if “submission”\tisgiven\t the  second
\nmeaning\t of an actual submission of a particular dispute  or
\ndisputes  to the authority of a particular arbitrator.\t The
\nwords which we are construing then have a clear,  consistent
\nand intelligible meaning,, namely, an actual submission made
\nin pursuance of an arbitration agreement or arbitral  clause
\nto  which the convention setforth in the  Schedule  applies.
\nThe  words  “in pursuance of” are also thus  saved  and\t not
\nrendered otiose.  The courts have to be guided by the  words
\nof  the statute in which the legislature of the country\t has
\nexpressed  its intention.  If s. 3 cannot be so read  as  to
\npermit\tthe meaning of the word “submission” to be taken  as
\nan  arbitral  clause or an agreement to\t refer,\t the  courts
\nwould  not be justified in so straining the language of\t the
\nsection as to ascribe the meaning which cannot be  warranted
\nby  the words employed by the legislature.  We are aware  of
\nno  rule  of interpretation by which rank ambiguity  can  be
\nfirst introduced by giving certain expressions a  particular
\nmeaning\t and  then an attempt can be made to emerge  out  of
\nsemantic confusion and obscurity by having resort to the
\n 67<\/span>
\npresumed  intention  of the legislature to  give  effect  to
\ninternational obligations.\n<\/p>\n
It  is\ttrue that by taking the above view the\tpurpose\t and
\nobject\tbehind the Protocol and the conventions may  not  be
\nfully  carried out.  The intention underlying Art. 4 of\t the
\nProtocol  of  1923  and Art. 2 of  the\tConvention  of\t1958
\nundoubtedly  appears  to be that whenever the  parties\thave
\nagreed\t-that their differences arising out of a  commercial
\ncontract  be  referred to an arbitration,, the\tcourt  of  a
\ncontracting  State when seized of an action in\tthe  matter,
\nshall  refer the parties to an arbitration unless  it  finds
\nthat  the  agreement is null and void or is  inoperative  or
\nincapable of being performed.  We apprehend it would  hardly
\nbe conducive to international commercial arbitration not  to
\nhave legislation giving full and complete effect to what  is
\nprovided by the Protocol and the Conventions.  He also share
\nin  full  measure the anxiety and the effort  of  those\t who
\ndesire\tto respect the terms of international Protocols\t and
\nConventions  in letter and spirit.  But we are bound by\t the
\nmandate\t of  the  legislature.\tOnce it\t has  expressed\t its
\nintention  in  words which have a  clear  signification\t and
\nmeaning, the courts are precluded from speculating about the
\nreasons\t for  not effectuating the  purpose  underlying\t the
\nProtocol  and the conventions.\tThe consistent view  of\t the
\nIndian courts on the interpretation of the critical words in
\ns.  3  of  the Act of 1937 has not been in  favour  of\twhat
\nprevailed in the “Merak”.  In the leading case in W. Wood  &
\nSon  Ltd. v. Bengal Corporation(1), Chakravarti\t C.J.  while
\ndelivering  the judgment of the court, examined the  various
\naspects of the question including the terms of the  Protocol
\nof 1923 and the Convention of 1927 and said :\n<\/p>\n
\t      “If  the\tagreement  to  which  the   Protocol
\n\t      applies is an agreement for arbitration, there
\n\t      cannot  possibly be an agreement in  pursuance
\n\t      of that agreement.  Section 3 must, therefore,
\n\t      be construed as contemplating a case where not
\n\t      only  is\tthere an  arbitration  agreement  in
\n\t      force  between the parties but there has\talso
\n\t      been an actual reference to arbitration.”\n<\/p><\/blockquote>\n
The  learned  Single  Judge has given some  reasons  why  in
\nEngland as also in India the Statutes insist upon an  actual
\nsubmission  before  a stay of the suit can be  granted.\t  It
\nhas,  been pointed out that in different countries  the\t law
\nrelating  to  arbitration is  naturally\t different.   Actual
\nsubmission has been made a condition precedent for  granting
\nstay  but  the\tcourt has been left with  no  discretion  in
\nEngland\t and in India.\tIn some of the other  countries\t the
\norder for stay of a suit contrary to the arbitral
\n(1)  A.I.R. 1959 Cal. 8.\n<\/p>\n
68<\/span><\/p>\n
clause\tis discretionary, there being no difference  between
\nthe   municipal\t arbitration  and  arbitration\t under\t the
\nProtocol.   It\twas  presumably for  this  reason  that\t the
\nParliament insisted upon a real dispute between the  parties
\nand  an actual reference or submission to an arbitration  to
\nresolve\t the  particular  point or points in  dispute  as  a
\ncondition  for\tstay.  We do not consider that it  would  be
\nright  to speculate about the reasons which  prevailed\twith
\nthe  Parliament in enacting s. 3 of the Act in the  language
\nin which it has been done.  It is abundantly clear that\t the
\nParliament  did not employ language which would indicate  an
\nunequivocal  intention that in the presence of an  agreement
\nto refer to an arbitral clause in a commercial contract, the
\nprovisions  for\t granting  stay\t under\tthe  section   would
\nimmediately  become  applicable irrespective  of  an  actual
\nsubmission  or a complete reference.  As it was open to\t the
\nlegislature  to deviate from the terms -of the Protocol\t and
\nthe  Convention\t it appears to have given  only\t -a  limited
\neffect\tto the provisions of the 1958 Convention.   A  clear
\ndeviation  from\t the rigid and strict rule that\t the  courts
\nmust  stay  a  suit  whenever  an  international  commercial
\narbitration   as  contemplated\tby  the\t Protocol  and\t the
\nConventions, was to take place, is to be found in s.3. It is
\nof  a nature which is common to all provisions\trelating  to
\nstay in English and Indian arbitration laws, the  provisions
\nbeing that the application to the court for stay of the suit
\nmust be made by a party before filing a written statement or
\ntaking any other step in the, proceedings.  If the condition
\nis not fulfilled, no stay can be granted.  It cannot thus be
\nsaid that s. 3 of the Act or similar provisions in the prior
\nAct  of\t 1937 or the English Statutes were enacted  to\tgive
\neffect\tin its entirety to the strict rule contained in\t the
\nProtocol and the Conventions.\n<\/p>\n
Another\t significant feature which cannot escape  notice  is
\nthat the Parliament in England and India must be presumed to
\nhave  been  aware when the English Act of 1950 and  the\t Act
\nwere  enacted  that  the expression  ‘submission’  had\tbeen
\nabandoned  in  the Arbitration Acts and, instead,  the\tterm
\n‘arbitration  agreement’ had come to be defined\t as  meaning
\nwhat  submission meant :according to the definitions in\t the
\nEnglish\t Act  of 1889 and Indian Arbitration  Act  of  1899.
\nNotwithstanding\t  this,\t the  expression  ‘submission’\t was
\nemployed in Sec. 4(2) of the English Act of 1950 and Sec.  3
\nof the Act.  If the intention was to have the wider  meaning
\nthe  proper  and  correct  term\t to  use  was\t“arbitration
\nagreement”  and\t logically  those  words  would\t have\tbeen
\nemployed.   It\tis  more plausible that\t the  Parliament  by
\nretaining the expression ‘submission’ wanted to give it\t the
\nmeaning\t of an actual submission, as by then there had\tbeen
\nfirm expression of opinion in the well-known work of Russell
\non Arbitration and by jurists like Prof.  Arthur Nassbaum in
\nan article “Treaties on Commercial
\n 69<\/span>
\nArbitration” in Vol. 56 of the Harvard Law Review,  pointing
\nto that meaning being given to ‘submission’. -In India,\t the
\nHigh  Courts had uniformally and in unequivocal terms  taken
\nthat view. (See W. Wood & Son Ltd.Supra).
\nThe  language in the relevant article of the  Convention  of
\n1958  had also undergone a change.  According to  Art.\t II,
\nthe  term “agreement in writing’ was to include an  arbitral
\nclause\tin a contract or an arbitration agreement  and\tthat
\nterm  was  stated  to mean something by\t which\tthe  parties
\nundertook  to submit to arbitration all or  any\t differences
\nwhich  had  arisen  or which might  arise  between  them  in
\nrespect\t  of   any  defined   legal   relationship   whether
\ncontractual  or not concerning a subject matter\t capable  of
\nsettlement  by\tarbitration.  Thus, the term  “agreement  in
\nwriting”  embraced  an\tarbitral  clause  or  an   agreement
\nsimpliciter  to\t refer\tto arbitration\tas  also  an  actual
\nsubmission  of\tthe  disputes to  the  arbitrator.   It\t was
\nequivalent to “Arbitration Agreement’ as defined in the Act.
\nBy  not\t using\tthat term and by  employing  the  expression
\n‘submission’  in  Sec.\t3 the  Parliament  appears  to\thave
\nindicated  an  intention  to restrict the  meaning  of\tthat
\nexpression to an actual submission or a complete reference.
\nWhatever way Sec. 3 of the Act is looked at, it is difficult
\nto reach the conclusion that ‘submission’ means an agreement
\nto  refer or an arbitral clause and does not mean an  actual
\nsubmission  or\tcompleted  reference,  and  that  the  word’
\n“agreement” means a commercial contract and not an agreement
\nto refer or an arbitral clause.\n<\/p>\n
The next question is whether the High Court was justified in
\ngranting an interim injunction restraining the Russian\tFirm
\nfrom proceeding with arbitration at Moscow.  The position of
\nthe  Russian firm is that neither it nor the  Foreign  Trade
\nArbitration  Commission of the U.S.S.R. Chamber of  Commerce
\nwhich  is seized of the arbitration proceedings is  amenable
\nto the jurisdiction of the courts in India.  The presence in
\nIndia  of  the party sought to be injuncted is\ta  condition
\npre-requisite for the grant of an injunction.  Altematively,
\nthe  Indian Firm has been guilty of breach of the  agreement
\nto  refer the matter to arbitration at Moscow and  therefore
\nit  has\t disentitled itself to the exercise of\tthe  Court’s
\ndiscretion  in\tits  favour in the  matter  of\tgranting  an
\ninjunction.\n<\/p>\n
Now,  it is common ground that the point  about-the  Russian
\nFirm  having  no representative in India  was  not  agitated
\nbefore\tthe High Court.\t The position taken up in the  plant
\nwas  that the Russian Firm was carrying on business  in\t the
\nU.S.S.R.  and  at Madras.  The controversy before  the\tHigh
\nCourt- appears to have
\n70<\/span>
\nbeen  confined\tonly  to what is stated in  Para  5  of\t the
\ncounteraffidavit  of the Russian Firm, namely, that  in\t the
\npresence  of  the  Arbitration\tagreement  in  the  contract
\nentered into between the parties, the only proper remedy for
\nthe   Indian  Firm  was\t to  submit  the  disputes  to\t the
\narbitration tribunal at Moscow.\n<\/p>\n
The  rule as stated in Halsbury’s Laws of England, Vol.\t 21,
\nat page 407, is that with regard to foreign proceedings, the
\ncourt  will restrain a person within its  jurisdiction\tfrom
\ninstituting or prosecuting suits in a foreign court whenever
\nthe  circumstances  of the case make such  an  interposition
\nnecessary  or, proper.\tThis jurisdiction will be  exercised
\nwhenever  there\t is  vexation or  oppression.\tIn  England,
\nCourts\thave been very cautious and have  largely  refrained
\nfrom   granting\t stay  of  proceedings\tin  foreign   Courts
\n(Cheshire’s Private Industrial Law, 7th Ed. pages  108-110).
\nThe injunction is, however, issued against a party and not a
\nforeign court.\n<\/p>\n
Although it is a moot point whether Section 35 of the  Arbi-
\ntration\t Act, 1940, will be applicable to the present  case,
\n(Shiva\tJute Baling Limited v. Hindley & Company  Limited<\/a>(1)
\nit  was\t assumed  that’\t section  35  applied  to   protocol
\narbitration.) The principle embodied in that section  cannot
\nbe  completely\tignored while considering  the\tquestion  of
\ninjunction.   According\t to that Section  no  reference\t nor
\naward  can  be\trendered  invalid  by  reason  only  of\t the
\ncommencement  of legal proceedings upon the subject  of\t the
\nreference, but when legal proceedings upon the whole of\t the
\nsubject matter of the reference have been commenced  between
\nall  the parties to the reference and a notice\tthereof\t has
\nbeen  given  to\t the  arbitrators  or  umpire,\tall  further
\nproceedings  in a pending reference shall, unless a stay  of
\nproceedings is granted under section 34, be invalid.
\nIf  the\t venue of the arbitration proceedings  had  been  in
\nIndia and if the provisions of the Arbitration Act of  1940,
\nhad.   been  applicable,  the  suit  and   the\t arbitration
\nproceedings   could   not  have\t been  allowed\tto   go\t  on
\nsimultaneously\tand either the suit would have\tbeen  stayed
\nunder section 34 or it was, not stayed, and the\t arbitrators
\nwere  notified\tabout the pendency of the suit,\t they  would
\nhave  had to stay the arbitration proceedings because  under
\nsection\t 35 such proceedings would become invalid  if  there
\nwas identity between the subject-matter of the reference and
\nthe  suit.  In the present case, when the suit is not  being
\nstayed\tunder section 3 of the Act it would be\tcontrary  to
\nthe principle underlying Set. 35 not to grant an  injunction
\nrestraining  the  Russian  Finn\t from  proceeding  with\t the
\narbitration  at Moscow.\t The principle essentially  is\tthat
\nthe arbitrators should not proceed wit
\n(1)  [1960] 1 S.C.R.1569.\n<\/p>\n
7 1
\nthe arbitration side by side in rivalry or in competition as
\nif it were a Civil Court.\n<\/p>\n
Ordinarily,  a\tparty which has entered into a\tcontract  of
\nwhich  an arbitral clause forms an integral part should\t not
\nreceive the assistance of the court when it seeks to  resile
\nfrom  it.  But in the present case a suit is being tried  in
\nthe  courts of this country which, for the  reasons  already
\nstated,\t cannot be stayed under section 3 of the Act in\t the
\nabsence\t of  an\t actual submission of the  disputes  to\t the
\narbitral tribunal at Moscow prior to the institution of\t the
\nsuit.\tThe only proper course to follow is to restrain\t the
\nRussian\t Firm  which  has gone to the  Moscow  Tribunal\t for
\nadjudication of the disputes from getting the matter decided
\nby the tribunal so long as the suit here is pending and\t has
\nnot been disposed of.\n<\/p>\n
In this context, we cannot also ignore what has been  repre-
\nsented\tduring\tthe  arguments.\t  The  current\trestrictions
\nimposed by the Govt. of India on the availability of foreign
\nexchange  of which judicial notice can be taker,, will\tmake
\nit  virtually  impossible for the Indian Firm  to  take\t its
\nwitnesses  to  Moscow for examination  before  the  Arbitral
\ntribunal  and to otherwise properly conduct the\t proceedings
\nthere.\t Thus,\tthe  proceedings before\t that  tribunal\t are
\nlikely\tto  be\tin effect ex parte.   The  High\t Court\twas,
\ntherefore,  right in exercising discretion in the matter  of
\ngranting an interim injunction in favour of the Indian Firm.
\nThe  appeals  fail  and are dismissed but  in  view  of\t the
\npeculiar  nature  of the points involved, there will  be  no
\norder as to costs.\n<\/p>\n
Ramaswami,  J.\tI  regret  I am unable\tto  agree  with\t the
\njudgment pronounced by Grover, J.\n<\/p>\n
The  first respondent had entered into a contract  with\t the
\nGovernment  of India for the excavation work in\t the  feeder
\ncanal  of  the\tFarakka Barrage\t project.   To\tfulfil\tthis
\ncontract with the Government of India and for the excavation
\nwork  the  first respondent  required  certain\tconstruction
\nmachinery  such\t as  scrapers,\tboth  towed  and  motorised,
\ncrawlers,  tractors  and bulldozers.  The respondent  No.  1
\nagreed\tto purchase them from the appellant and\t the  latter
\nagreed to supply and deliver and the terms and conditions of
\nthe  contract were embodied in a document dated February  2,
\n1965  signed  by  both the parties.   In  pursuance  of\t the
\ncontract the first respondent opened a confirmed irrevocable
\nand  divisible letter of credit with the  second  respondent
\nfor  the  entire  value\t of  the  equipment,  that  is,\t Rs.
\n66,09,372\/-  in favour of the appellant\t negotiable  through
\nthe  Bank of Foreign Trade of the U.S.S.R.,  Moscow.   Under
\nthe said letter of credit the second respondent was required
\nto pay to the appellant on production of the
\n72<\/span>
\ndocuments particularised in the letter of credit along\twith
\nthe drafts. – One of the conditions of the letter of  credit
\nwas  that  25  %  of  ‘the amount  should  be  paid  on\t the
\npresentation  of the specified documents and the balance  of
\n75% within one year from the date of the first payment.\t  On
\nthe strength of the contract the -appellant supplied all the
\nmachinery  which it undertook to supply by about the end  of
\nDecember, 1965.\t After the machinery was used for some\ttime
\nthe  first respondent complained that the machinery did\t not
\nconform\t to  the terms and conditions of  the  contract\t and
\nconsequently   it  had\tincurred  and  continued  to   incur
\nconsiderable loss.  Meanwhile the Indian rupee was  devalued
\non  June  6,  1966  and in  consequence\t the  price  of\t the
\nmachinery  went\t up by about 57.48 %. The  increase  in\t the
\nprice  of  the\tmachinery was in accordance  with  the\tgold
\nclause\tof  the contract entered into between  the  parties.
\nClause 13 of the Contract read as follows :\n<\/p>\n
\t      “The  sellers  and the buyers shall  take\t all
\n\t      measures\tto settle amicably any disputes\t and
\n\t      differences  which  may  arise out  of  or  in
\n\t      connection with this contract.  In case of the
\n\t      parties being unable to arrive at an  amicable
\n\t      settlement,  all disputes are to be  submitted
\n\t      without application to the ordinary courts for
\n\t      the  settlement by Foreign  Trade\t Arbitration
\n\t      Commission at the U.S.S.R. Chamber of Commerce
\n\t      in  Moscow  in accordance with  the  Rules  of
\n\t      Procedure\t  of  the  said\t  Commission.\t The
\n\t      Arbitration  award will be final\tand  binding
\n\t      upon both parties.”\n<\/p><\/blockquote>\n
Ignoring this clause the first respondent instituted a\tsuit
\nC.S.  134 of 1966 in the Madras High Court  and obtained  an
\nex  parte  injunction against the appellant and\t the  second
\nrespondent  restraining them from negotiating the letter  of
\ncredit.\t The ‘appellant protested that the first  respondent
\nshould\tnot  have  instituted a suit  in  violation  of\t the
\narbitration  clause  in\t the  contract.\t  By  a\t  subsequent
\nagreement dated August, 14, 1966 the appellant and the first
\nrespondent   agreed  to\t settle\t the  matter   amicably\t  in
\naccordance  with the contract.\tThe appellant  consented  to
\nextend\tthe payment of letter of credit by one year and\t the
\nfirst respondent thereupon withdrew the suit in C.S. 134  of
\n1966.\tThe  respondent No. 1 is said to have  accepted\t the
\ndevaluation drafts representing increase in the price of the
\nmachinery consequent on the devaluation of the Indian  rupee
\nin  accordance\twith  the clause in  the  contract.   Though
\ncorrespondence\t was  going  on\t between  the  parties,\t  no
\nsettlement could be arrived -at.  When the time came for the
\npayment\t of the balance of 75% of the letter of\t credit\t the
\nfirst  respondent instituted a suit C.S. 118 of 1967 in\t the
\nMadras\tHigh Court in violation of the arbitral\t clause\t and
\nobtained  an ex parte injunction against the appellant\tfrom
\noperating  the\tletter of credit.  On November 5,  1967\t the
\nappellant instituted- arbitral proceedings
\n\t\t\t     73<\/span>
\nbefore the Foreign Trade Arbitration Commission of  U.S.S.R.
\nChamber of Commerce, Moscow in accordance with cl. 13 of the
\ncontract for payment of the price of the machinery.   Notice
\nwas issued to the first respondent to choose its nominee  to
\nrepresent  it in the Arbitration Commission and the date  of
\nhearing was also notified by the first respondent.  But\t the
\nfirst  respondent failed to appear before the Foreign  Trade
\nArbitration  Commission.  Thereafter the  appellant  entered
\nappearance  in C.S. 118 of 1967 under protest and  filed  an
\napplication No. 2604 of 1967 before the High Court under  s.
\n3 of the Foreign Awards (Recognition -and Enforcement)\tAct,
\n1961  (45  of  1961) for the stay of the  suit.\t  The  first
\nrespondent also filed an application No. 106 of 1968  before
\nthe  High  Court  praying  that\t the  appellant\t should\t  be
\nrestrained  from taking part in the arbitration\t proceedings
\nat  Moscow.   After  hearing  the  parties  Ramamurthi\t J.,
\ndismissed the application of the appellant No. 2604 of 1967.
\nThe  learned  Judge  allowed the application  of  the  first
\nrespondent   and  granted  an  injunction  restraining\t the
\nappellant  from taking part in the arbitral  proceedings  at
\nMoscow.\t  The appellant preferred, appeals O.S.A. 25 and  26
\nof  1968  against the orders of Ramamurthi, J.\tThe  appeals
\nwere  dismissed\t by a Division Bench of the  High  Court  on
\nDecember 16, 1968.\n<\/p>\n
The  question  involved in this case is : What is  the\ttrue
\ninterpretation\tand  effect of s. 3 of\tthe  Foreign  Awards
\n(Recognition  and  Enforcement)\t Act-  1961  (45  of   1961)
\n(hereinafter referred to as the Act).  Section 3 of the\t Act
\nstates
\n\t      “Notwithstanding\tanything  contained  in\t the
\n\t      Arbitration Act, 1940 or in the Code of  Civil
\n\t      Procedure, 1908, if any party to a  submission
\n\t      made in pursuance of an agreement to which the
\n\t      Convention set forth in the Schedule  applies,
\n\t      or  any person claiming through or  under\t him
\n\t      commences\t any legal proceedings in any  Court
\n\t      against  any other party to the submission  or
\n\t      any  person claiming through or under  him  in
\n\t      respect  of any matter agreed to\tbe  referred
\n\t      any  party to such legal proceedings  may,  at
\n\t      any time after appearance and before filing  a
\n\t      written statement or taking any other step  in
\n\t      the  proceedings, apply to the Court  to\tstay
\n\t      the proceedings and the Court unless satisfied
\n\t      that   the   agreement  is  null\t and   void,
\n\t      inoperative or incapable of being performed or
\n\t      that there is not in fact any dispute  between
\n\t      the parties with regard to the matter,  agreed
\n\t      to be referred shall make an order staying the
\n\t      proceedings.”\n<\/p>\n
Section 3 refers to the Convention which is set forth in the
\nschedule.   It\tis an international protocol to\t which\tthis
\ncountry\t was a signatory and which was effected at New\tYork
\non June 10,
\n1\/70-6
\n74<\/span>
\n1968.\tArticle 2 of this Convention has three\tclauses\t and
\nreads as follows :\n<\/p>\n
\t      I\t Each Contracting State shall  recognise  an
\n\t      agreement\t in writing under which the  parties
\n\t      undertake\t to submit to arbitration at or\t any
\n\t      differences  which  have arisen or  which\t may
\n\t      arise between them in respect of defined legal
\n\t      relationship,  ‘whether  contractual  or\tnot,
\n\t      concerning   a   subject-matter\tcapable\t  of
\n\t      settlement by arbitration.\n<\/p><\/blockquote>\n
\t      2.    The\t term “agreement in  writing”  shall
\n\t      include  an arbitral clause in a contract,  or
\n\t      an   arbitration\tagreement,  signed  by\t the
\n\t      parties or contained in an exchange of letters
\n\t      or telegrams.\n<\/p><\/blockquote>\n
\t      3.    The\t Court of a Contracting State,\twhen
\n\t      seized of an action in a matter in respect  of
\n\t      which  the  parties  have\t made  an  agreement
\n\t      within the meaning of this article, shall,  at
\n\t      the  request of one of the parties, refer\t the
\n\t      parties  to arbitration, unless it finds\tthat
\n\t      the   said   agreement  is  null\t and   void,
\n\t      inoperative or incapable of being performed.”\n<\/p><\/blockquote>\n
The argument of the first respondent is that s. 3 of the Act
\ncan  be invoked by the appellant only if it had\t implemented
\nthe  arbitration  agreement  by\t actually  submitting,\t the
\ndispute\t to  the  arbitrator or\t arbitrators  prior  to\t the
\ninstitution  of the suit.  In the present case if there\t was
\nany such reference to arbitration it was only on November 4,
\n1967,  that  is, about three weeks after the suit  bad\tbeen
\nfiled  in the High Court.  The contrary view point  was\t put
\nforward by Mr. Mohan Kumaramangalam on behalf of the  appel-
\nlant.\tIt  was\t said  that  s. 3  of,\tthe  Act  should  be
\ninterpreted in the context of the articles of the Convention
\nset out in the schedule and it was not necessary that  there
\nshould\tbe an actual submission to, arbitration\t before\t the
\ninstitution  of the suit.  If there was an  arbitral  clause\n<\/p>\n
-whether  this was followed by reference to  arbitration  by
\nany of the parties or not the very existence of this  clause
\nin  the commercial agreement would render stay of  the\tsuit
\nmandatory under s. 3 of the Act.  The argument was that art.
\n2 of the Convention makes it clear that under the Convention
\nthe court of contracting State must, when seized of such  an
\naction\trefer the parties to arbitration.  Section 3 of\t the
\nAct  must be read in consonance with this  obligation.\t Any
\ninterpretation\tof  that section which\twill  restrict\tthis
\nobligation  could  be  justified only  if  the\tplain  words
\nnecessitate  such a reading.  The argument of the  appellant
\nis  that  the words “if any party to a\tsubmission  made  in
\npursuance of an agreement to which the convention set  forth
\nin the schedule applies” really mean that the submission  is
\nthe arbitral clause itself
\n\t\t\t     75<\/span>
\nand  the agreement is a commercial agreement which  includes
\nor embodies that clause.\n<\/p>\n
It  is\tnecessary  in  this  connection\t to  refer  to\t the
\nlegislative history of the section.  The reason is that both
\nthe  expressions submission” and “agreement of\tarbitration”
\nhave  got a special meaning because of the evolution of\t the
\nstatute\t law.\tThe English Arbitration Act of\t1889  (52-53
\nVic.c.49)  is the first amending and  consolidating  statute
\nrelating  to  arbitration.  Section 27 of  the\tAct  defined
\nsubmission as follows :\n<\/p>\n
\t      “Submission  means  a  written  agreement\t  to
\n\t      submit   present\tor  future   difference\t  to
\n\t      arbitration  whether  an arbitrator  is  named
\n\t      therein or not.”\n<\/p><\/blockquote>\n
There  is  no  definition  of “agreement”  as  such  and  no
\ndifference  is made between a mere arbitral clause, that  is
\nan  agreement  to  refer to an\tarbitration  and  an  actual
\nsubmission to arbitration after the disputes have arisen.  A
\nsubmission  defined  by\t s. 27\tcomprehends  both  meanings.
\nSection\t 4 of the 1889 Act provided that if any party  to  a
\nsubmission commenced any legal proceedings against any other
\nparty  to  a settlement the latter may apply  to  the  court
\nconcerned  to  stay the proceedings and the court if  it  is
\nsatisfied that there is no reason why the matter should\t not
\nbe  referred in accordance with the submission may  make  an
\norder  staying the proceedings.\t In the\t Indian\t Arbitration
\nAct of 1889 s. 4(b) defines “submission” in exactly the same
\nterms  as  s.  27 of the English Act of 1.889,\tthat  is,  a
\nsubmission  means a written agreement to submit\t present  or
\nfuture\tdifferences to arbitration whether an arbitrator  is
\nnamed or not.  In the Arbitration Clauses (Protocol) Act  of
\n1924 (14 & 15 Geo.  V c. 39) we have the phrase\t “submission
\nmade   in  pursuance  of  an  agreement”  and\tthe   phrase
\n“submission” appears to be employed in the special statutory
\nsense.\tSection 1 of this Act states
\n\t      “Staying\tof Court proceedings in\t respect  of
\n\t      matters  to be referred to  arbitration  under
\n\t      commercial  agreements.–(1)   Notwithstanding
\n\t      anything in the Arbitration Act, 1889, if\t any
\n\t      party to a submission made in pursuance of  an
\n\t      agreement\t to which the said protocol  applies
\n\t      or  any person claiming through or under\thim,
\n\t      commences\t any legal proceedings in any  Court
\n\t      against any other party to the submission,  or
\n\t      any  person claiming through or under him,  in
\n\t      respect  of any matter agreed to be  referred,
\n\t      any party to such legal proceedings may at any
\n\t      time  after appearance, and before  delivering
\n\t      any  pleadings  or taking other steps  in\t the
\n\t      proceedings,  apply to that Court to stay\t the
\n\t      proceedings,   and  that\tCourt  or  a   Judge
\n\t      thereof,\tunless satisfied that the  agreement
\n\t      or
\n\t      76<\/span>
\n\t      arbitration  has become inoperative or  cannot
\n\t      proceed,\tshall  make  an\t order\tstaying\t the
\n\t      proceedings.\n<\/p>\n
\t      Clause 1 of the Schedule states
\n\t      “Each of the contracting States recognises the
\n\t      validity\tof an agreement whether relating  to
\n\t      existing\t or   future   differences   between
\n\t      parties,\t  subject   respectively   to\t the
\n\t      jurisdiction  of different Contracting  States
\n\t      by  which the parties to a contract  agree  to
\n\t      submit to -arbitration all or any\t differences
\n\t      that   may  arise\t in  connection\t with\tsuch
\n\t      contract relating to commercial matters or  to
\n\t      any  other  matter capable  of  settlement  by
\n\t      arbitration, whether or not the arbitration is
\n\t      to   take\t  place\t in  a\tcountry\t  to   whose
\n\t      jurisdiction none of the parties is subject.
\n\t      Each  contracting State reserves the right  to
\n\t      limit   the  obligation  mentioned  above\t  to
\n\t      contracts\t as  commercial under  its  national
\n\t      law.   Any  Contracting  State  which   avails
\n\t      itself   of   this  right\t will\tnotify\t the
\n\t      Secretary-General of the League of Nations  in
\n\t      order that the other contracting States may be
\n\t      so informed.”\n<\/p>\n
In 1930 the Arbitration (Foreign Awards) Act, 1930 (20\tGeo.
\n5,  c. 15) was enacted in order to give effect to  the\t1927
\nGeneva\tConvention  on\tthe execution  of  arbitral  awards.
\nSection\t 8  of\tthis Act explains  the\tphrase\t“arbitration
\nagreement” by reference to the 1924 Act.
\nThe  next  statute in England is the Arbitration  Act,\t1934
\n(2425  Geo.  V c. 14).\tSection 8 read along with the  First
\nSchedule  dealt\t with the powers of the court,\tamong  other
\nmatters, to pass various orders such as interim\t injunction.
\nappointment   of  receiver,  orders  for   preservation\t  of
\nproperties or for protecting rights of parties etc.  Section
\n21   of\t this  Act  defines  the   expression\t“arbitration
\nagreement” to mean a written agreement to submit present  or
\nfuture\tdifferences to arbitration whether an arbitrator  is
\nnamed or  not.\t Nothing  was said about the  definition  of
\n“submission” in S.  27\tof the Act of 1889.   Virtually\t the
\neffect is that in the place of\t   the word “submission” the
\nphrase\t“arbitration  agreement” is substituted\t and  has  a
\nsynonymous meaning.\n<\/p>\n
In India the Arbitration Act, 1889 was repealed and replaced
\nby  the\t Arbitration Act of 1940.  The Act dealt  with\tonly
\nmunicipal  or  local  arbitrations and\tso  far\t as  foreign
\narbitration  was concerned, the Indian Protocol Act of\t1937
\n(Act 6 of 1937) was enacted.  Section 3 of this Act states :\n<\/p>\n
\t      “Notwithstanding\tanything  contained  in\t the
\n\t      Arbitration Act, 1899, or in the Code of Civil
\n\t      Procedure, 1908, if any party to a  submission
\n\t      made in pursuance of an agreement to which the
\n\t      Protocol set forth in the First
\n\t      77<\/span>
\n\t      Schedule\t as  modified  by  the\t reservation
\n\t      subject  to  which  it  was  signed  by  India
\n\t      applies,\tor  any person claiming\t through  or
\n\t      under  him, commences any legal proceeding  in
\n\t      any  Court  -against any other  party  to\t the
\n\t      submission  or any person claiming through  or
\n\t      under  him in respect of any matter agreed  to
\n\t      be   referred,   any  party  to\tsuch   legal
\n\t      proceedings may, at any time after  appearance
\n\t      and,  before  filling a written  statement  or
\n\t      taking  any  other steps in  the\tproceedings,
\n\t      apply  to the Court to stay the proceedings  :
\n\t      and  the\tCourt  unless  satisfied  that\t the
\n\t      agreement\t   or\tarbitration    has    become
\n\t      inoperative  or cannot proceed, or that  there
\n\t      is  not  in  fact\t any  dispute  ‘between\t the
\n\t      parties with regard to the matter agreed to be
\n\t      referred,\t shall\tmake an\t order\tstaying\t the
\n\t      proceedings.\n<\/p><\/blockquote>\n
\t      The  First  Schedule  of\tthis  Act   contains
\n\t      articles of the 1923 Convention of which\tArt.
\n\t      1 reads as follows
\n\t      “Each  of\t the contracting  States  recognises\n<\/p><\/blockquote>\n
\t      -the validity of an agreement whether relating
\n\t      to  existing  or\tfuture\tdifferences  between
\n\t      parties\t subject   respectively\t  to\tthe’
\n\t      jurisdiction  of different Contracting  States
\n\t      by  which the parties to a contract  agree  to
\n\t      submit  to arbitration all or any\t differences
\n\t      that  may arise in connection,  with  contract
\n\t      relating to commercial matters or to any other
\n\t      matter  capable of settlement by\tarbitration,
\n\t      whether  or  not the arbitration\tis  to\ttake
\n\t      place in a country to whose jurisdiction\tnone
\n\t      of the parties is subject.”\n<\/p><\/blockquote>\n
\t      The   Second  Schedule  contains’\t  the\t1927
\n\t      Convention and Art. 1 reads as follows :
\n\t      “In  the territories of any  High\t Contracting
\n\t      Party to which the present Convention applies,
\n\t      an  arbitral  award made in  pursuance  of  an
\n\t      agreement,  whether  relating to\texisting  or
\n\t      future  differences  (hereinafter\t called\t  ‘a
\n\t      submission  to  arbitration’) covered  by\t the
\n\t      Protocol\ton  Arbitration\t Clauses  opened  at
\n\t      Geneva   on  September  24,  1923,  shall\t  be
\n\t      recognised as binding and shall be enforced in
\n\t      accordance with the rules of the procedure  of
\n\t      the territory where the award is relied  upon,
\n\t      provided that the said award has been made  in
\n\t      a\t territory  of one of the  High\t Contracting
\n\t      parties\tto  which  the\tpresent\t  Convention
\n\t      applies and between persons who are subject to
\n\t      the   jurisdiction   of  one   of\t  the\tHigh
\n\t      Contracting parties.\n<\/p><\/blockquote>\n
\t      To obtain such recognition or enforcement,  it
\n\t      shall further be necessary
\n\t      78<\/span>\n<\/p><\/blockquote>\n
\t      (a)   That   the\taward  has  been   made\t  in
\n\t      pursuance of a submission to arbitration which
\n\t      is valid under the law applicable thereto;\n<\/p><\/blockquote>\n
\t      (b)   That the subject-matter of the award  is
\n\t      capable of settlement by arbitration under the
\n\t      law  of  the  country in which  the  award  is
\n\t      sought to be relied upon;\n<\/p><\/blockquote>\n
\t      (c)   That  the  award has been  made  by\t the
\n\t      Arbitral\t Tribunal   provided  for   in\t the
\n\t      submission  to arbitration or  constituted  in
\n\t      the manner agreed upon by the, parties and  in
\n\t      conformity   with\t  the  law   governing\t the
\n\t      arbitration procedure;\n<\/p><\/blockquote>\n
\t      (d)   That  the award has become final in\t the
\n\t      country  in  which it has been  made,  in\t the
\n\t      sense  that it will not be considered as\tsuch
\n\t      if it is open to opposition, appeal or pourvoi
\n\t      en  cassation  (in the  countries\t where\tsuch
\n\t      forms  of procedure exist) or if it is  proved
\n\t      that  any\t proceedings  for  the\tpurpose\t  of
\n\t      contesting  the  validity\t of  the  award\t are
\n\t      pending;\n<\/p><\/blockquote>\n
\t      (e)   That  the recognition or enforcement  of
\n\t      the  awards not contrary to the public icy  or
\n\t      to the principles of the law of the country in
\n\t      which it is sought to be relied upon.”
\n\t      It  should be noticed that Art. 1 of the\t1927
\n\t      Convention  defines an arbitration  agreement”
\n\t      as “a submisison to arbitration”.<\/p><\/blockquote>\n
\t      The  next event in the legislative history  is
\n\t      the New York Convention adopted at the  United
\n\t      Nations\tConference   in\t  June,\t  1958\t  on
\n\t\t\t    International and Commercial Arbitrati
\nons.   It
\n\t      was  felt that the  international\t conventions
\n\t      uptil then reached did not effectuate a speedy
\n\t      settlement  of disputes and did not  meet\t the
\n\t      requirements   of\t international\t trade\t and
\n\t      commerce\tand disputes arising  therefrom\t and
\n\t      that there should be some modification and the
\n\t      Convention  was  agreed to by almost  all\t the
\n\t      countries.    India  accepted  the  same\t and
\n\t      enacted  the Foreign Awards  (Recognition\t and
\n\t      Enforcement)   Act,  1961\t to  implement\t the
\n\t      conventions  so  far as India  was  concerned.
\n\t      This Act of 1961 repealed the Protocol Act  of
\n\t      1937.   With  regard to S.  3,  the  provision
\n\t      concerning  stay\tof proceedings\tin  a  civil
\n\t      court in violation of the arbitral clause. the
\n\t      language is the same as in the Protocol Act of
\n\t      1937.\n<\/p>\n
\t      The  question presented for  determination  is
\n\t      what  is the true meaning -and effect  of\t the
\n\t      words  “it any party to a submission  made  in
\n\t      pusuance\tof the agreement to which  the\tsaid
\n\t      protocol\tapplies”? in s. 3 of the Act.\tEven
\n\t      at  the  time  of the Act\t of  1889  the\tword
\n\t      “submission” had received a special meaning as
\n\t      including a mere
\n\t\t\t\t    79<\/span>
\n\t      agreement\t to refer to arbitration as well  as
\n\t      an   actual   reference\tor   submission\t  to
\n\t      arbitration and this special meaning was given
\n\t      statutory\t recognition in the Act of  1889  by
\n\t      defining\tsubmission’ in this special  manner.
\n\t      In  the  Arbitration Clauses  (Protocol)\tAct,
\n\t      1924 the phrase “submission made in  pursuance
\n\t      of  the  agreement”  is  used  and  the\tword
\n\t      “submission”  is\temployed  in  the  statutory
\n\t      sense.  In the Indian Arbitration Act, 1889 s.
\n\t      4(b)  defines submission in exactly  the\tsame
\n\t      terms  as s. 27 of the English Act of  In\t the
\n\t      English  Arbitration  Act\t of  1934  the\tword
\n\t      agreement’  is  defined  in  s.  21(2)  as   a
\n\t      “written agreement to submit present or future
\n\t      differences   to\t arbitration   whether\t the
\n\t      arbitrator  is named therein or not”.   It  is
\n\t      clear,   therefore,   that   the\t  expression
\n\t      “arbitration    agreement”   and\t the\tword
\n\t      “submission”  are synonymous and\tconnote\t the
\n\t      same  idea.   In\tmy  opinion  the  expression
\n\t      “submission made in pursuance of an agreement”
\n\t      in  s. 3 of the Act must be construed  in\t its
\n\t      historical setting.  The word
\n\t       ”    submission”\t   must,    therefore,\t  be
\n\t      interpreted to mean the arbitral clause itself
\n\t      and the word “agreement” as the commercial  or
\n\t      the  business  agreement\twhich  includes\t  or
\n\t      embodies that clause.  In other words the word
\n\t      “submission”  in\tthe  opening  words  of\t the
\n\t      section\tmeans  an  agreement  to  refer\t  to
\n\t      arbitration  and the words “the  agreement  to
\n\t      which the Convention set forth in the schedule\n<\/p>\n
\t      -applies”\t mean  the  business  ‘agreement  or
\n\t      contract\tcontaining the arbitral clause.\t  It
\n\t      follows,\ttherefore,  that  if  there  is\t  an
\n\t      arbitral\tclause whether this is\tfollowed  by
\n\t      actual  reference to arbitration or  not,\t the
\n\t      very   existence\t of  this  clause   in\t the
\n\t      commercial agreement would render the stay  of
\n\t      the. suit mandatory under s. 3 of the Act.
\n\t      The  view\t that  I  have,\t expressed  is\talso
\n\t      consistent with the rule of construction\tthat
\n\t      as  far as practicable the municipal law\tmust
\n\t      be  interpreted  by the courts  in  conformity
\n\t      with  international obligations which the\t law
\n\t      may  seek\t to effectuate’ It is  well  settled
\n\t      that   if\t the  language\tof  a  section,\t  is
\n\t      ambiguous\t or  is capable’ of  more  than\t one
\n\t      meaning  the protocol itself becomes  relevant
\n\t      for  there is a prima facie  presumption\tthat
\n\t      parliament does not intend to act in breach of
\n\t      international  law, including specific  treaty
\n\t      obligations.  – In the words of Diplock,\tL.J.\n<\/p>\n
\t      in  Salomon\t      v.  Commisisoners\t  of\n\t      Customs and Excise(1).\n<\/pre>\n
\t      “If the terms of the legislation are clear and
\n\t      unambiguous  they\t must ‘be given\t effect’  to
\n\t      whether  or not they carry out  Her  Majesty’s
\n\t      treaty  obligations, for the  sovereign  power\n<\/p>\n
\t      -of.  the\t Queen\tin  Parliament\textends\t  to
\n\t      breaking treaties lsee Ellerman Lines Ltd.  v.
\n\t      Murrey(2)1  and any remedy for, such a  breach
\n\t      of  an  international obligations\t lies  in  a
\n\t      forum other than Her Majesty’s own
\n\t      (1) [1966] 3 All E.R. 871 at 875 -876.\n<\/p>\n
\t      (2) [1930] All F.R, 503.\n<\/p>\n
\t      80<\/span><\/p>\n
\t      courts.\tIf the terms of the legislation\t are
\n\t      not clear, however, but are reasonably capable
\n\t      of  more than one meaning, the  treaty  itself
\n\t      becomes  relevant, for there is a prima  facie
\n\t      presumption that parliament does not intend to
\n\t      act in breach of international law,  including
\n\t      therein  specific treaty obligations;  and  if
\n\t      one  of the meanings which can  reasonably  be
\n\t      ascribed to the legislation is consonant\twith
\n\t      the  treaty obligations and another or  others
\n\t      are not, the meaning which is consonant is  to
\n\t      ‘be  preferred.\tThus,  in case\tof  lack  of
\n\t      clarity in the words used in the\tlegislation,
\n\t      the  terms  of  the treaty  -are\trelevant  to
\n\t      enable  the court to make its  choice  between
\n\t      the  possible  meanings  of  these  words\t  by
\n\t      applying this presumption.”\n<\/p>\n
Applying  this principle to the present case it is  manifest
\nthat  art.  2 of the Convention which is  contained  in\t the
\nSchedule  to  the  Act\timposes a duty on  the\tCourt  of  a
\ncontracting  State when seized of such an -action  to  refer
\nthe  parties  to arbitration.  Section 3 of  the  Act  must,
\ntherefore,  be\tread in consonance with\t this  international
\nobligation  and\t any  interpretation of\t S.  3\twhich  would
\nrestrict the obligation or impose a refinement not warranted
\nby the Convention itself will not be justified.
\nThis view is also borne out by the reasoning of Scarman\t J.,
\nin  Owner of Cargo on Board The Merak v. The  Merak(1).\t  In
\nthat  case  the plaintiffs’ timber was\tshipped\t abroad\t the
\nMerak under bills of lading which stated that the voyage was
\n“as per charter dated April 21, 1961” and contained a clause
\nincorporating  “all  the  terms,  conditions,  clauses\t….
\nincluding  clause 30 contained in the said  charter  party”.
\nClause,\t 30  mas  irrelevant to a bill\tof  lading  and\t was
\ninserted  in  mistake for the arbitration clause  32.\t‘The
\nincorporation  clause was followed by a clause giving  para-
\nmount  effect  to  the Hague Rules.  In the  course  of\t the
\nvoyage\tthe cargo was damaged and just -within 12 months  of
\nthe  final  discharge  of  the\tcargo  the  plaintiffs,\t  as
\nindorsees  of  the bills of lading, issued a  writ  claiming
\ndamages\t from  the  Merak’s  owners,  who  relying  on\t the
\narbitration  clause,  moved for a stay (if  the\t proceedings
\nunder\tsection\t 4  of\tthe  Arbitration  Act,\t1950.\t The
\nplaintiffs  opposed  the  motion on  the  grounds  that\t the
\narbitration  clause  was not incorporated in  the  bills  of
\nlading;\t that  the dispute did not arise out  of  the  April
\ncharter party or any bills of lading issued thereunder;\t and
\nthat  the arbitration clause must in any event\tbe  rejected
\nbecause\t it  was repugnant to the  paramount  clause  giving
\neffect\tto  the Hague Rules, which by article  III,  rule  6
\nprovided  for  bringing\t ‘suit’\t and  not  for\tarbitration.
\nScarman J. holding that section 4(2) of the Arbitration Act,
\n1950 gave effect to the inten-\n<\/p>\n
(1)  [1965] 2 W.L R 250 at 262-263.\n<\/p>\n
\t\t\t     81<\/span><\/p>\n
tion  of  the protocol on arbitration clauses to  which\t the
\nsub-section  related, rejected the  plaintiffs’\t contentions
\nand  stayed the proceedings.  In the course of his  judgment
\nScarman J., observed as follows :\n<\/p>\n
\t      “In  my opinion, the sub-section must be\tread
\n\t      together\twith  the  protocol  as\t it   stands
\n\t      translated  into\tthe  English  of  the  First
\n\t      Schedule\tto the Act.  Article 1 of the  tran-
\n\t      slated  protocol provides for the\t recognition
\n\t      of  the  validity\t of  an\t agreement   whether
\n\t      relating\tto existing or\t,future\t differences
\n\t      whereby  the  parties to a contract  agree  to
\n\t      submit  to arbitration differences arising  in
\n\t      connection  with that contract, and  expressly
\n\t      reserved\tto contracting states the  right  to
\n\t      limit   the  obligation  of   recognition\t  to
\n\t      contracts\t which\tare  considered\t commercial.
\n\t      Article  4 provides that the tribunals of\t the
\n\t      contracting  states,  on\tbeing  seised  of  a
\n\t      dispute  regarding  a contract which  includes
\n\t      an arbitration agreement whether referring  to
\n\t      present  ‘or future differences,\tshall  refer
\n\t      the dispute to arbitration.  Thus the protocol
\n\t      is  concerned  with  two\tagreements–One,   a
\n\t      contract\tcommercial  in character  or  giving
\n\t      rise to a difference relating to matters\tthat
\n\t      are either commercial or otherwise capable  of
\n\t      settlement  by  arbitration,  between  parties
\n\t      subject  to  the\tjurisdiction  of   different
\n\t      contracting states; the other, an\t arbitration
\n\t      agreement\t whereby  the  parties\tto  such   a
\n\t      contract agree to submit their differences  to
\n\t      arbitration.   It is clear from  the  protocol
\n\t      that  the arbitration agreement may itself  be
\n\t      included in and simultaneous with the  commer-<\/p><\/blockquote>\n
\t\t\t    cial or business contract between the
\n parties.\n<\/p>\n
\t      In  my  opinion section 4(2) -of\tthe  Act  is
\n\t      intended to make the same distinction  between
\n\t      the  parties’  business  contract\t and   their
\n\t      arbitration    agreement,\t  and\t no    other
\n\t      distinction.  It uses the term “submission  to
\n\t      arbitration   to\t identify   the\t  protocol’s
\n\t      agreement\t to  submit,  their  differences  to
\n\t      arbitration  and the term “agreement to  Which
\n\t      the   protocol   applies’\t to   identify\t the
\n\t      commercial  or business contract\tbetween\t the
\n\t      parties.\tSection 4(2) in my opinion,  applies
\n\t      to agreements to submit to arbitration made in
\n\t      pursuance\t of a contract to which, because  of
\n\t      its   character  and  the\t character  of\t its
\n\t      parties, the protocol applies.  The words\t “in
\n\t      pursuance\t of” merely establish the link\tthat
\n\t      there must be between the agreement to  submit
\n\t      present  or future differences to\t arbitration
\n\t      and the agreement of a commercial or  business
\n\t      character between parties of a certain  -class
\n\t      to  which the protocol applies.  They have  in
\n\t      this context no temporal significance.\n<\/p>\n
\t      82<\/span><\/p>\n
\t      see   no\t reason\t for  having   to   construe
\n\t      ‘submission  to  arbitration’  as\t an   actual
\n\t      submission   of  an  existing  dispute  to   a
\n\t      particular  arbitrator.  The Act of 1950\tdoes
\n\t      not say that I must.  It makes nonsense of the
\n\t      protocol\tso  to do.  The Act  of\t 1924  which
\n\t      first  introduced the sub-section, was an\t Act
\n\t      to give effect to the protocol ,arid there  is
\n\t      respectable, though now antiquated,
\n\t      authority, namely, the repealed section 27  of
\n\t      the Act of 1889, for giving a wider meaning to
\n\t      ‘submission’ if the context so requires.\t The
\n\t      term  ‘submission to arbitration’ is  not\t now
\n\t      defined by statute, and must, -in my  opinion,
\n\t      be given a meaning appropriate to its context.
\n\t      While, no doubt, it is often convenient to use
\n\t      the term to distinguish an actual reference of
\n\t      a\t particular dispute to arbitration  from  an
\n\t      ‘arbitration  agreement’ it would be wrong  so
\n\t      to   do\tin   construing\t  this\t  particular
\n\t      subsection.   Accordingly, I find myself\table
\n\t      to say that the subsection gives effect to the
\n\t      intention\t of  the  protocol,  the   intention
\n\t      clearly  being that when there is\t a  business
\n\t      contract between parties subject to  different
\n\t      contracting  states those parties ‘are  to  be
\n\t      referred\tto  arbitration\t if  they  have\t  so
\n\t      agreed,  whether\ttheir agreement\t relates  to
\n\t      present or future differences.”\n<\/p>\n
\t      The same view is expressed in Dicey &  Morris,
\n\t      The Conflict of Laws, 8th edn. p. 1075 :\n<\/p>\n
\t      Section 4(2) of the Act imposes upon the court
\n\t      a\t duty  to stay the proceedings\tif  a  party
\n\t      relies on ‘a submission to arbitration made in
\n\t      pursuance\t of  ‘an  agreement  to\t which\t the
\n\t      Protocol\t applies’.    This   condition\t  is
\n\t      satisfied if the parties have agreed to submit
\n\t      present  or  future disputes  to\tarbitration.
\n\t      The term ‘submission’ includes an agreement to
\n\t      refer.  The court is therefore under a duty to
\n\t      stay  the proceedings although no\t arbitrators
\n\t      have  been  appointed, Find the fact  that  an
\n\t      arbitration   clause  is,\t included   in\t the
\n\t      contract between the parties suffices for\t the
\n\t      application of section 4(2).  There is thus no
\n\t      discrepancy between the section and Article  4
\n\t      of  the Protocol to which it purports to\tgive
\n\t      effect.  According to Article 4 the court must
\n\t      “refer  the  Parties to the  decision  of\t the
\n\t      arbitrators”  if\tthe  contract  between\t the
\n\t      parties  includes\t “an  arbitration  agreement
\n\t      whether  referring  to present  or  to  future
\n\t      differences.”  The word “submission”  used  in
\n\t      section  4(2) must be regarded  as  synonymous
\n\t      with  the term ‘arbitration agreement’ in\t the
\n\t      Protocol and the term ‘agreement to which\t the
\n\t      protocol\tapplies’ is used in the section\t ‘to
\n\t      identify the commercial
\n\t\t\t\t    83<\/span>
\n\t      or  business  contract between  the  parties’.
\n\t      The controversy surrounding the interpretation
\n\t      of section 4(2) (to which reference, was\tmade
\n\t      in the previous edition of this book) was left
\n\t      undecided in Radio Publicity Ltd. v. Compagnie
\n\t      Luxembourgecise de Radiodifusion(1).  It\twas,
\n\t      however, settled by the decision of Scarman J.
\n\t      in The Merak(2) and the point was not disputed
\n\t      in ‘the Court of Appeal.”\n<\/p>\n
If the opposite view for which respondent No. I contends  is
\nadopted\t and if it is held that the section only applies  if
\nthe parties have submitted an actual dispute to\t arbitration
\nthe  purpose of s. 3 of the Act and of the  ratification  of
\nthe  New  York\tProtocol of 1958 by India  would  have\tbeen
\nlargely\t  frustrated.\tSuch  an  interpretation  would\t  be
\ncontrary to the avowed object and intention of the Act which
\nis “to give effect to the Convention -on the recognition and
\nenforcement of foreign arbitral awards” done at New York  on
\nJune  10, 1958.\t When there is ambiguity in the language  of
\nthe  section  it  is the duty of the  court  to\t adopt\tthat
\nconstruction which will effectuate the object of the Act and
\nnot  nullify  the  intention  of  Parliament  and  make\t the
\nprovision devoid of all meaning.\n<\/p>\n
On behalf of the first respondent it was said that there was
\na  presumption that the legislature in reenacting a  section
\nof  the\t law  must be presumed to have\tbeen  aware  of\t the
\nintervening  judicial interpretation and to have  given\t its
\napproval  to it.  The classic statement of the rule is\tthat
\nJames L.J. in Ex. p. Campbell(1)
\n\t      “Where  once  certain  words  in\tan  Act\t  of
\n\t      Parliament    have   received    a    judicial
\n\t      construction  in one of the  Superior  Courts,
\n\t      and the Legislature has repeated them  without
\n\t      any  alteration  in a  subsequent\t statute,  I
\n\t      conceive that the legislature must be taken to
\n\t      have used them according to the meaning  which
\n\t      a\t Court of competent jurisdiction  has  given
\n\t      them.”\n<\/p>\n
But  the  rule is better and more moderately stated  by\t the
\njudicial  Committee in Webb v. Outrim(4) where the words  of
\nGriffith  C.J. in the Australian case D’Emdon  v.  Pedder(5)
\nare   adopted:\t“When  a  particular  form  of\t legislative
\nenactment, which has received authoritative  interpretation,
\nwhether by judicial decision or by a long course of practice
\nis adopted in the framing of a later statute, it is a  sound
\nrule of construction to hold that the words so adopted\twere
\nintended  by the Legislature to bear the meaning  which\t has
\nbeen  so  put  upon them”.  Even  in  this  qualified  form,
\nhowever.\n<\/p>\n
(1)[1936] 2All E.R. 721 at p. 726.\n<\/p>\n
(2) [1965] 2 W.L.R. 250.\n<\/p>\n
(3) [1870] L. R. 5 Ch. 706.\n<\/p>\n
(4) [1907] A.C. 81. 89.\n<\/p>\n
(5)  [1904] 1 C.L.R. 91.\n<\/p>\n
84<\/span><\/p>\n
the rule has not been acknowledged without protest (see\t the
\nspeech\tof  Lord  Blanesburgh in Barras\t v.  Aberdeen  Steam
\nTrawling Co.(1) The presumption\t is weak and is passed on an
\noptimistic fiction.  The rule has been criticised by Dr.  C.
\nK. Allen:\n<\/p>\n
\t      “The second petrifying f`actor is the real  or
\n\t      supposed rule (now, however, questioned)\tthat
\n\t      once a word or phrase has been given a certain
\n\t      judicial\tmeaning, it is deemed to  bear\tthat
\n\t      meaning not only in all subsequent cases,\t but
\n\t      in  all  subsequent  statutes.   This  is\t  an
\n\t      offshoot of the somewhat optimistic assumption
\n\t      that the legislature must be presumed to\tknow
\n\t      the actual state of the law.  Consequently, if
\n\t      a\t word  has  once  been\tgiven  a  particular
\n\t      meaning  in  any case of\tauthority,  however,
\n\t      obscure,\tin  connection\twith  any   statute,
\n\t      however recondite, the draftsman who uses that
\n\t      word  in\ta later enactment is, so  to  speak,
\n\t      ‘affected\t  with\tnotice’\t of   the   judicial
\n\t      interpretation, however remote it may be\tfrom
\n\t      the  matter in hand.  It need hardly  be\tsaid
\n\t      that  in\tthe huge mass of our case  law\tthis
\n\t      assumption is a transparent fiction.” (Law  in
\n\t      the Making pp. 508-9).\n<\/p><\/blockquote>\n
Mr.  Raman  referred to the decisions of the  Calcutta\tHigh
\nCourt and of the Bombay High Court in Bajrang Electric Steel
\nCo. v.\t  Commissioners\t for Port of Calcutta(1), W. Wood  &
\nSons Ltd. v.   Bengal  Corporation(3) and K. E.\t Corporation
\nv.  S. De Traction  (4 ).  It was held in these\t cases\tthat
\nbefore\tthe  court stays proceedings under s. 3 of  the\t Act
\nthere  must be an actual submission by both the\t parties  to
\narbitrators  of\t the particular point in  dispute.   It\t was
\nargued that in enacting s. 3 Parliament was not content with
\na mere readiness of the parties to go to arbitration but  it
\ninsisted on something mote, that is, the actual\t implementa-
\ntion  of the arbitration agreement by the parties  concerned
\nby setting up the machinery of arbitration in motion.  I  am
\nunable\tto  accept this line of reasoning.  It is  not\tsaid
\nthat  there  is\t a long course of practice or  a  series  of
\ndecisions of various High Courts taking a particular view of
\ns.  3  of  the\tAct.   The  decisions  referred\t to  by\t the
\nrespondent  are\t not  numerous -and, it is  unsafe  and\t un-
\nrealistic  to  draw the presumption that Parliament  in\t re-
\nenacting  s.  3\t of the Act was\t aware\tof  the\t intervening
\njudicial  interpretation and set its seal of  approval\tupon
\nit.   In R. v. Bow Road Domestic Proceedings  Court(5)\tLord
\nDenning\t pointed  out  that though the\tdecision  in  R.  v.
\nBlane(6)  stood\t for  over 100 years, if  it  was  quite  au
\nerroneous precedent, the fact that Parliament had  reenacted
\nthe  provisions\t of  the  statute,  did\t not  authorise\t the
\nerroneous interpretation.\n<\/p>\n
(1)  [19331 A.C. 402.\n<\/p>\n
(3)  A.I.R. 1959 cal. 8.\n<\/p>\n
(5)  [1968] 2 All, E. R. 89 at 911.\n<\/p>\n
(2)  A.I.R. 1957 cal. 402.\n<\/p>\n
(4)  A.I.R. 1965 Bom. 114.\n<\/p>\n
(6)  [1849] Q. B. 769.\n<\/p>\n
85<\/span><\/p>\n
It is, however, maintained by the respondent that the  words
\n”  submission” and “agreement” must be given  their  natural
\nand  grammatical meaning and the word “submission”  made  in
\npursuance   of\tan  agreement”\tcan  only  mean\t an   actual
\nsubmission of the disputes to the arbitral tribunal.  So the
\nword “agreement” can have reference to and can be  construed
\nonly  in the sense of an arbitration agreement\tor  arbitral
\nclause\tin  a  commercial  contract.   It  can-not  mean   a
\ncommercial contract because an arbitration agreement  cannot
\nbe  stated  to\thave  been made\t pursuant  to  a  commercial
\ncontract.   The contention is that if submission has  to  be
\ntaken  in  the sense of an arbitration -agreement  it  would
\nrender\tthe  words  “submisison\t made  in  pursuance  of  an
\nagreement”  meaningless and unintelligible.  In\t my  opinion
\nthe argument proceeds on a fallacy.  A statute should not be
\nconstrued  as  a theorem of Euclid but the statute  must  be
\nconstrued  with some imagination of the purpose\t which\tlies
\nbehind the statute.  The doctrine of literal  interpretation
\nis not always the best method for ascertaining the intention
\nof Parliament.\tThe better rule of interpretation is that  a
\nstatute\t should be so construed as to prevent  the  mischief
\nand -advance the remedy according to the true intent of\t the
\nmakers\tof  the\t statute.  The principle  was  for  example,
\napplied\t by  Lord Halsbury in Eastman  Photographic  Co.  v.
\nComptroller of Patents(1) where the question was whether the
\nword  ‘solio’  used  as a trademark was\t an  invented  or  a
\ndescriptive word.  In examining this question Lord  Halsbury
\nsaid:  “Among  the things which have passed into  canons  of
\nconstruction  recorded in Heydon’s case we are to  see\twhat
\nwas  the  law before the Act was passed, and  what  was\t the
\nmischief or defect for which the law had not provided,\twhat
\nremedy\tParliament appointed and the reason of the  remedy”.
\nAt p. 575 Lord Halsbury proceeded to state
\n\t      Turner, L.J. in Hawkins v. Cathercole(2),\t and
\n\t      adding  his own high authority to that of\t the
\n\t      judges   in  Stredling  v.  Morgan(3)   -after
\n\t      enforcing\t the proposition that the  intention
\n\t      of the Legislature must be regarded, at length
\n\t      the  judgment  in that case :  that  the\thave
\n\t      collected\t the intention ‘sometimes by  consi-
\n\t      dering  the cause and necessity of making\t the
\n\t      Act….\tsometimes   foreign   circumstances’
\n\t      (thereby meaning extraneous circumstances), so
\n\t      that they have ever been guided by the  intent
\n\t      of  the  Legislature, which they\thave  always
\n\t      taken  according\tto  the\t necessity  of\t the
\n\t      matter,\tand  according\tto  that  which\t  is
\n\t      consonant to reason and good discretion’.\t And
\n\t      he adds : “We have, therefore, to consider not
\n\t      merely the words of this Act of Parlia-\n<\/p>\n
\t      (1)  [1898]  A.C.\t 571.\n<\/p>\n
\t      (2) [1855] 6 D. M, & C. 1.\n<\/p>\n
\t      (3)   [1584] 1 Plowd 204.\n<\/p>\n
\t      86<\/span><\/p>\n
\t      meat  but the intent of the Legislature to  be
\n\t      collected from the cause and necessity of\t the
\n\t      Act  being  made,\t from a\t comparison  of\t its
\n\t      several  parts,  and  from  foreign   (meaning
\n\t      extraneous)  circumstances so far as they\t can
\n\t      justly  be considered to throw light upon\t the
\n\t      subject.”\n<\/p>\n
For  the  reasons  expressed I hold that  the  appellant  is
\nentitled under S. 3 of- the Act for an order of stay of\t the
\nproceedings  in C.S. 118 of 1967 pending in the Madras\tHigh
\nCourt  on  the ground that in terms of\tthe  Contract  dated
\nFebruary  2,  1965  the parties expressly  agreed  that\t all
\ndisputes  arising out of the contract should be\t settled  by
\narbitration  by the Foreign Trade Arbitration Commission  of
\nthe U.S.S.R. Chamber of Commerce at Moscow.
\nIt is not, however, possible to decide these appeals finally
\nbecause the respondent has opposed the application for\tstay
\non  other  grounds  also.  Ramamurti,  J.,  found  that\t the
\narbitral  clause  in the contract of February  2,  1965\t had
\nteased to be effective as between the parties as a result of
\nthe  agreement dated August 14, 1966 Ex.  P-32 “and that  it
\nwill  be wholly unrealistic. . . to hold that the moment  an
\namicable settlement as provided in Ex.\tP-32 proved  futile,
\nthe  entire  contract,\tEx.  P-4 revived. . .  .  ”  On\t the
\nfurther\t aspect\t that  admittedly s. 3\titself\tcontains  an
\nexception  that\t the  mandatory obligation to  stay  is\t not
\nincumbent  on the court if the court is satisfied that\t“the
\nagreement  is  null and void, inoperative  or  incapable  of
\nbeing  performed” Ramamurti, J. was apparently of  the\tview
\nthat  the  alleged nullity of the contract on the  basis  of
\nmutual\tmistake was, a matter that the court has to  examine
\nfurther\t after recording evidence and that was a  ground  on
\nwhich proceedings cannot be stayed under s. 3.
\nI  consider,  therefore,  that C.A. 1209 and  1834  of\t1969
\nshould be set down for further hearing on these points.
\nCivil  Appeals Nos. 1208 and 1833 of 1969 arise out  of\t the
\napplication  No. 106 of 1968 filed by the  first  respondent
\nfor  injunction to restrain the first respondent for  taking
\nfurther\t part  in  the arbitration  proceedings\t in  Moscow.
\nRamamurti  J., took the view that since the application\t no.
\n2604 of 1967 for stay of the proceedings in the pending suit
\nC.S. II 8 of 1967 bad been dismissed the first\trespondent’s
\ninjunction petition should be allowed on the ground that the
\ntwo  forums  were  mutually  exclusive.\t  In  the  connected
\nappeals\t I have taken the view that the appellant  would  be
\nentitled to an order of stay of the proceedings in C.S.\t 118
\nof 1967 under s. 3 of Act 45 of 1961.  Even assuming that S.
\n3 of the Act is not applicable this is not a proper case  in
\nwhich  the  High  Court should\thave  issued  an  injunction
\nrestraining   the   appellant  from  proceeding\t  with\t the
\narbitration.   As  a  rule the Court  has  to  exercise\t its
\ndiscretion  with great circumspection for it  is  imperative
\nthat the
\n\t\t\t     87<\/span>
\nright of access to the tribunals of a country should not  be
\nlightly\t interfered  with.  It is not sufficient  merely  to
\nshow that two actions have been started for it is not  prima
\nfacie  vexations  to  commence two actions  about  the\tsame
\nsubject\t matter, one here and one abroad. (See\tMcttenry  v.
\nLewis(1).   The\t reason of this reluctance to  exercise\t the
\njurisdiction is that owing to a possible difference  between
\nthe  laws  of  the two countries, the stay  of\tone  of\t the
\nactions may deprive the plaintiff of some advantage which he
\nis  justified  in  pursuing.  Thus he may  have\t a  personal
\nremedy in one country and a remedy only against the goods in
\nanother;  or a remedy against land in one State but no\tsuch
\nremedy in another.  The rule ‘ therefore, is that a plea  of
\nlis  alibi pendens will not succeed and the court  will\t not
\norder  a  stay of proceedings unless  the  defendant  proves
\nvexation in point of fact.  He must show that the  continued
\nprosecution  of both actions is oppressive or  embarrassing,
\nan onus which he will find it difficult to discharge if\t the
\nplaintiff  can\tindicate  some material\t advantage  that  is
\nlikely\tto  result from each separate  action.\t Each  case,
\ntherefore,  depends  upon the setting of its own  facts\t and
\ncircumstances.\t In  the facts of the present case I  am  of
\nopinion\t that no case for injunction has been made  out\t and
\nthe  order of Ramamurti, J., dated April 12.  1968  allowing
\nthe  application of respondent in no. 106 of 1968 should  be
\nset -aside.  I would accordingly allow the appeals nos. 1208
\nof 1969 and 1833 of 1969 with costs.\n<\/p>\n
\t\t\t   ORDER
\nIn  accordance with the opinion of the majority the  appeals
\nare dismissed.\tThere will be no order as to costs.
\nY.P.\n<\/p>\n
(1) 22 Ch.  D. 401.\n<\/p>\n
88<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India V\/O Tractor Export, Moscow vs M\/S. Tarapore & Company & Anr on 28 October, 1969 Equivalent citations: 1971 AIR, 1 1970 SCR (3) 53 Author: A Grover Bench: Grover, A.N. PETITIONER: V\/O TRACTOR EXPORT, MOSCOW Vs. RESPONDENT: M\/S. TARAPORE & COMPANY & ANR. DATE OF JUDGMENT: 28\/10\/1969 BENCH: GROVER, A.N. BENCH: […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-162182","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nV\/O Tractor Export, Moscow vs M\/S. Tarapore & Company & Anr on 28 October, 1969 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/vo-tractor-export-moscow-vs-ms-tarapore-company-anr-on-28-october-1969\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"V\/O Tractor Export, Moscow vs M\/S. 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