MICHAEL GOLODETZ AND OTHERS versus SERAJUDDIN & COMPANY

Citation: [1964] 1 S.C.R. 19 · Decided: 12-12-1962 · Supreme Court of India · Bench: P.B. GAJENDRAGADKAR · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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-t 
j 
1 S.C.R. 
SUPREME COURT REPORTS 
MICHAEL GOLODETZ AND OTHERS 
v. 
SERAJUDDIN & COMPANY 
(P. B. GAJENDRAGADKAR, K. N. WANCHOO, 
K. C. DAS GUPTA and J. C. SHAH, JJ.) 
19 
Arbitration-Contract to supply goods between an Indian 
Firm and a Foreign Firm-Arbitration clause to refer disputes to 
a foreign Tribunal-The foreign Firm refers the dispu.te to a 
foreign Tribunal-The Indian Firm files a suit in the High 
Court-Cancellati·m of the Contract-Injunction to restrain the 
other party from proceeding with arbitration-Petition in the 
High Court to stay suit-power of court to entertain the Suit-
Exercist of discretion-Arbitration Act, 1940 (X of 1940) s. 34. 
The appellants are a firm carrying on business in the 
United States of America. 
The respondents are an Indian 
Firm. These two firms entered into a contract in writing by 
which t.1e appellant agreed to buy certain goods from the 
respondents. 
An arbitration 
clause 
in 
the 
contract 
provided that disputes arising out of the contract are to be 
settled by arbitration in New York according to the rules of the 
American Arbitration ~.<\.ssociation. 
Disputes having arisen the 
appellants referred them to arbitr4tion. The respondents there· 
upon filed a suit on the Original side of the Calcutta High Court 
for the cancellation of the contract and for the issue of a per· 
petual injunction restraining the appellants from taking steps in 
purported enforcement of the contract. 
The appellants then 
filed a petition before the same High Court for the stay of that 
suit under s. 34 of the Arbitration Act, 1940. This petition was 
heard by a Single Judge who held that the remedy of the party 
aggrieved by the manner in which the proceedings are conducted 
by foreign Tribunal was to c mtest the proceedings according to 
the law applica~>le to the tribunal and that the respondents have 
not shown sufficient reasons for not granting stay. 
In appeal 
under the Leite'• Patent the order was set aside and the appell-
ants appealed with special leave. 
The main question before this Court was whether the 
Court of first instance has or has not exercised its discretion 
properly in granting stay. 
Held, that a clause 
in~ a commercial contract between 
merchants residing in different countries to go to arbitration is 
1962 
Decer:1her, 1~. 
196t 
Mi<llMI Gol°'61< 
v. 
S1rojulkfi11 ~ Co. 
SINh, J. 
20 
SUPREME COURT REPORTS [1964] VOL. 
an integral part of the contract on the faith of which the cont; 
ract is entered into, hut that docs not preclude the court having 
territorial jurisdiction from entertaining a suit at the instance 
of one of the parties to the contract even in breach of the cove• 
nant. The court ordinarily requires the parties to resort for 
resolving disputes arising under a contract to the tribunal 
contemplated by them at the time of the cnntract. 
The court 
may in such cases refuse its assistance in a proper crue when the 
party seeking it i• without sufficient reason resiling from the 
bargain. It is for the court having regard to all the circum· 
stances to arrive at a conclusion whether sufficient reasons are 
made out for refusing to grant stay. Whether the circumstan· 
ces in a !{iven case make out sufficient reasr,ns for 
refu~ing to 
~tay a suit is es:.tntially a qu~tion of fa-:.t. 
In the present ca.<e all the evidence of the parties was in 
India, and the current restrictions imposed by the Government 
of India on the availability of foreign exchange, made it 
impos~ible for the respondents to carry their witnesses to New 
York for examination before the arbitrator. 
The proceeding 
before the arbitratot would in eff•ct be ex parft. 
The High 
Court was thcrcfl>rc right in its conclusion, on a review of the 
b~lance of convenience, that stay should not be granted. 
Cn·1L APPELI.An: jURI8IJICTION : Civil Appeal 
No. 493 of l!l60. 
Appeal by special leave from the judgment and 
order dated April 29, 1959, of the Calcutta High 
Court in 
Appeal from Original Order No. 177 
of 1958. 
S. T. Desai, D. N. :llnH1erjee and B. N. Ghosh. 
for the appellants. 
C. K. D1iphtary, Solicitor Grnernl 
8. K. 
Kapur 
and P. C. 
Ch«tte1jee, 
respondent. 
of lndicl, 
for 
the 
1962. December 12. 
The Judgment of the 
Court was delivered by 
SnAH,J .-The appellants are a firm carrying on 
business as importers in the name and style of ".M. 
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1 S.C.R. 
SUPREME COURT REPORTS 
21 
Golodetz & Company" at 120, Wall Street, New 
York in the United Stat

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