Court rejects stay application based on arbitration clause; clause in original agreement doesn't cover subsequent disputes.

The court dismissed the application for a stay of the suit based on an arbitration clause, as it found that the arbitration clause in the original agreement did not extend to disputes arising from a subsequent agreement. Additionally, the involvement of third-party mortgagees in the dispute made it impractical to proceed with arbitration. Consequently, the application for a stay was rejected, with costs fixed at Rs. 250.

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Issues Involved:
1. Application for stay of the suit based on an arbitration clause.
2. Validity and applicability of the arbitration clause.
3. Impact of a subsequent agreement on the original arbitration clause.
4. Dispute over the plaintiff's lien or charge on the film negatives and prints.
5. Inclusion of third parties (mortgagees) in the dispute.

Detailed Analysis:

1. Application for Stay of the Suit Based on an Arbitration Clause:
The defendants sought a stay of the suit on the grounds that the agreement dated May 12, 1941, which is the basis of the suit, contains an arbitration clause. Clause 9 of the agreement states: "If any dispute arises between the parties in respect of this agreement, the same shall be referred to arbitration, each arbitrator to be appointed by both the parties whose award will be final and binding upon both the parties."

2. Validity and Applicability of the Arbitration Clause:
The plaintiff opposed the stay, arguing that the disputes arose not only from the agreement dated May 12, 1941, but also from a subsequent agreement evidenced by letters (exhibit B). The plaintiff contended that the arbitration clause in the original agreement does not cover disputes arising from the subsequent agreement.

3. Impact of a Subsequent Agreement on the Original Arbitration Clause:
The court examined the subsequent agreement, which was a tripartite arrangement involving the plaintiff, the defendants, and Bombay Film Laboratories. This arrangement conferred new rights and imposed new liabilities not present in the original agreement, such as the retention of positive prints by a third party on behalf of the plaintiff. The court found that the arbitration clause in the original agreement did not apply to these new rights and liabilities.

4. Dispute Over the Plaintiff's Lien or Charge on the Film Negatives and Prints:
The defendants argued that the plaintiff had released his lien or charge by handing over the negatives and prints to the defendants, who then handed them to Bombay Film Laboratories. The plaintiff denied this, asserting that the negatives were handed over to Bombay Film Laboratories with the defendants' consent and that his lien or charge was still valid.

5. Inclusion of Third Parties (Mortgagees) in the Dispute:
The plaintiff discovered that the defendants had mortgaged the films to third parties (Messrs. Sewaram Tricumdas). The court noted that these third parties were not part of the arbitration agreement and that it would be inconvenient to stay the suit and proceed with arbitration without including them.

Conclusion:
The court concluded that the arbitration clause in the original agreement did not cover the disputes arising from the subsequent agreement. Additionally, the involvement of third-party mortgagees made it impractical to stay the suit and proceed with arbitration. Therefore, the application for stay was dismissed with costs fixed at Rs. 250.

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