1970 (10) TMI 82

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....whether that application should be allowed? 2. It will be sufficient to state, for purposes of the present controversy, that the petition for winding up has been made with the allegation that the respondent Company is unable to pay its debts within the meaning of Clause (e) of Section 433 of the Companies Act and that it is just and equitable that it should be wound up under Clause (f) of that section. In substance, the petitioners have alleged that the Company should be deemed to be unable to pay its debts within the meaning of Section 434(1)(a) of the Companies Act. The respondent Company has, in its turn, made the aforesaid application under Section 34 of the Arbitration Act on March 25, 1968 and the question whether it should be allo....

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....neering Co. Ltd. 1963-2 SCJ 509 = (AIR 1964 SC 558). 4. Having put aside this argument of Mr. Lodha, I shall proceed to examine whether there was an arbitration agreement in the present case? Mr. Garg, learned counsel for the respondent Company, has in this connection, relied on paragraph 10 of the respondent Company's letter Ex. 2 dated January 16, 1964. That paragraph, it is admitted, is similar in the case of all the petitioners, and reads as follows:-- "(10). That in case of any dispute arising between us, the matter may be referred to arbitration mutually agreed upon and acceptable by you and us." 5. The question is whether this paragraph is an "arbitration agreement" within the meaning of Clause (a) of Section 2 of ....

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.... has been given to any one of the parties in that respect. It will therefore appear that if the option is of both the parties, then both of them will have to agree to refer their differences to arbitration in pursuance of another agreement between them, so that the paragraph amounts to no more than an agreement to enter into an agreement and is quite ineffective. It may be mentioned that such a mutuality for a future agreement is reflected in the subsequent portion of paragraph (10) which provides for an agreement between the parties for purposes of arbitration. At any rate it cannot be said that the parties were ad idem on the question of referring their disputes to arbitration within the meaning of Clause (a) of Section 2 of the Arbitrati....

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.... contention. I do not, however, think it necessary to express any opinion on the question whether an arbitration agreement is of such a special nature as to require a stricter construction of its terms than any other contract for, as has been stated, the relevant clause of the agreement relied upon by the respondent Company does not amount to an arbitration agreement on any construction thereof. 9. Mr. Garg has cited Chhabildas Nandlal and Co. v. Damodar Khetsey & Co., AIR 1943 Bom 199 in which the word "may" has been used in the relevant clause, and has argued that a similar construction should be placed on the aforesaid paragraph (10) of the respondent Company's letter Ex. 2. A reading of the judgment shows that the material portio....