ANDERSON WRIGHT LTD versus MORAN AND COMPANY

Citation: [1955] 1 S.C.R. 862 · Decided: 01-11-1954 · Supreme Court of India · Bench: BIJAN KUMAR MUKHERJEA, VIVIAN BOSE, B. JAGANNADHADAS · Disposal: Appeal(s) allowed

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Judgment (excerpt)

1954 
,!{oJ;embtr I 
862 
SUPREME COURT REPORTS 
[19551 
ANDERSON WRIGHT LTD. 
v. 
MORAN AND COMPANY. 
[MuKHERJEA, VIVIAN BosE and JAGANNADHADAS JJ. J 
Arbitration Act, 1940 (X of 1940), s. 34-Application under the 
section for stay of 
legal proceedings-Necessary conditions-Fulfil-
ment of-First essential pre-requisite for an order of stay-Binding 
arbitration 
agreement between 
the parties-Incumbent upon the-
Court to decide this point. 
Held, that in order that a stay inay be granted under s. 34 of 
the Indian Arbitration Act, 
1940, it is necessary that the follow-
ing conditions should be fulfilled :-
(I) The proceeding must have been commenced by a party to 
an arbitration agreement against any other party to the agree-
ment; 
(2) the legal proceeding which is sought to be stayed must be 
in respect of a matter agreed to be referred ; 
(3) the applicant for stay must be a party to the legal pro-
ceeding and he must have taken no step in the proceeding after 
appearance. 
It is also necessary that he should satisfy the court 
not only that he 
is, but also was at the commencement of 
the 
proceedings, ready and willing to do everything necessary for the 
proper conduct of the arbitration ; and 
( 4) the Court must be 
satisfied 
that there 
reason why the matter should not be referred to 
accordance with the arbitration agreement. 
1s no 
sufficient 
an arbitration in 
The first and essential pre-requisite to making an order of stay 
under s. 34 of the Arbitration Act is that there is a binding arbi-
tration agreement between the parties to the suit which is sought 
to be stayed. 
The question \.vhether the dispute in the suit falls 
within the arbitration clause really pre-supposes that there is such 
agreement and in\'olves 
consideration of two matters, viz., 
(1) 
what is the dispute in the suit and (2) what disputes the arbitra-
tion clause covers. 
It is incuxnbent upon the Court, when invited 
to stay a suit 
under s. 34 of the Indian 
Arbitration Act, to decide first of all 
whether there is a binding agreen1ent for arbitration between the 
parties. 
If, in the present case, it is held 
that the arbitration agree-
ment and the contr_act containing it were between the parties 
to 
the suit, the dispute in the pre_sent suit would be 
one relating to 
..,t 
the rights and liabilities of the parties on the basis of the contract 
itself and would come within the purview of the arbitration clause 
• 
S.C.R1 
SUPREME COURT REPORTS 
863 
'I-' worded as it is in the widest of terms. 
If, on the other hand, it is 
held that the plaintiff was not a party 
to the 
agreement, 
the 
application for stay must necessarily be dismissed. 
;. 
'1 
Case 
sent back for the decision of the question whether the 
respondent was or was not a party to the arbitration agreement. 
Heyman v. Darr1Jins ([1942] A.C. 356), Khusiram v. Hanutmal 
( (1948) 53 C.W.N. 505), A. M. Mair and Company v. Gordhandas 
((1950] S.C.R. 792) and Pat1ram v. 
Kankarah 
Company ((1915) 
I.L.R. 42 Cal. 1050) referred to. 
CIVIL 
APPELLATE 
JURISDICTION : 
Civil 
Appeal 
No. 205 of 1953. 
Appeal from the Judgment and 
Order dated the 
24th February, 1953, of the High Court of Judicature 
at Calcutta in Appeal from 
Original Order No. 19 of 
1952, arising out of the 
Order dated the 23rd day of 
August, 1951, of the High Court of 
Calcutta in its 
Ordinary Original Civil Jurisdiction Matter No. 157 of 
1951. 
K. P. Khaitan, 
(S. N. Mul(herjea 
and Rajinder 
Narain, with hiin) for the appellant. 
M. C. Setalvad, Attorney-General for India, (,.-!.. N. 
Sen, V. S. Sawhney and S. P. Varma, with him) for 
the respondents. 
1954. 
November 1. The Judgment of the 
Court 
was delivered by 
MuKHERJEA J.-This appeal is 
directed 
against a 
judgment of an appellate bench of the 
Calcutta 
High 
Court, ·dated the 24th 
February, 1953, reversing, on 
appeal, the judgment 
and 
order 
of a single 
Judge 
sitting on the 
Original Side of that 
Court, passed on 
an application under section 34 of the Arbitration Act. 
The material facts are not in controversy and may be 
shortly stated as follows : 
On the 7th of 
July, 1950, the 
respondent, Moran 
and Company Limited, passed two Bought 
Notes tu 
the appellant company, 
couched in 
identical terms, 
under which the appellant purchased 12,00,000 yards 
of hessian cloth, 6,00,0JO yards 
under 
each contract, 
on certain terms and conditions stated therein. The 
delivery was to be made every month from January, 
1951, at 

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