THE CALCUTTA TRAMWAYS CO. LTD. versus THE CORPORATION OF CALCUTTA

Citation: [1965] 3 S.C.R. 354 · Decided: 12-03-1965 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Dismissed

Judgment (excerpt)

354 
THE CALCUTTA TRAMWAYS CO. LTD. 
v. 
THE CORPORATION OF CALCUTTA 
March 12, 1965 
A 
[K. SUBBA RAO, J.C. SHAH AND R. S. BACHAWAT, JJ.J 
B 
Cakutta Tnnrvways Act (W.B. Act 25 of 1951), s. 5-·.4.greements 
with .4.rbitration clause-Whether saved. 
By the enactment of Calcutta Tramways Act, 1951, the Govern-
ment of west Bengal was substituted tor the Corporation of Calcutta 
(HesponJent) ln ;·arious agreements entered into between· the pre-
deccssors-m-interest of the appellant and the predecessors-in-interest 
of the rtopondcnt, subject to a reservation that any sum payable under 
the agreements shall be payable by the appellant to the respondent. 
All the agreements contamed an arb.traLon ckuse which provided 
for refcr.1:1ng aHy u1sputes arising under the agreements to arbitration 
a1 the prescribed .manner. Disputes arose as regard the track rent. 
payable by the appeUant· to the responuent and the dispute was 
referr.;d to arb.trat1on in accordance with the terms of the arbitration 
clause. 'lhe appellant nominated its arbitrator without pcejuciice to 
its right;, and tiled an application in the High Court, for the determi-
nat.on oi lne que.stion whether there was a valid 
agree-
ment netween the appellant and respondent. The High Court held 
that there was an agreement. In appeal by special leave: 
HELD: Both the r'ght to the sums payable to· the respondent and 
the proced'1re of arbitration were saved under the Act. 
The proviso to s. · 5 of the Act, in terms as well as hy necessary 
implication brings the subject-matter of the sums payable under the 
agreements both under the substantive and procedural aspects within 
the scope of the exception. The substantive right to the payment of 
rent and the procedural one to have any dispute arising in respect of 
that rigllt relerred to arb'tration embodied in the agreements are 
interconnected and are not severable. To preserve the substantive 
right and to withhold the procedural right to enforce it is to save the 
right and deny the remedy, (357. C-D, F-G] 
C1viL APPELLATE JurusmcnoN: Civil Appeal No. 245 of 
1964. 
. 
Appeal by special leave from the judgment and order dated 
February 13, 1963, of the Calcutta High Court in Award Case No. 
8 of 1963. 
A. V. Viswanatha Sastri and D. N. Gupta, for the appellant. 
S. T. Desai and P. K. Mukherjee, for the respondent. 
The· Judgment of the Court was de!ivered by 
Sobba Rao, J. On or about October 2, 1879, the Corporation of 
the town of Calcutta incorporated under Bengal Act IV of 1876 
into an ag!eement in writing with Dillwyn Parrish, A!freoh 
Parrish and Robmson Souttar, hereinafter called the grantees. 
c 
D 
E 
F 
G 
H 
A 
B 
0 
D 
E 
F 
G 
H 
CAL. TRAMWAYS v. CORPORATION OF CALCUTTA (8ubba Rao, J.) 
355 
whereunder the Corporation granted to the said grantees the right 
to construct, maintain and use certain tramways in Calcutta on 
payment of certain rents as provided in the said agreement. The 
aoreement contained an arbitration clause which provided for 
r;ferring any disputes arising under the said agreeme_nt to arbitra-
tion in the manner prescribed thereunder. The said agreement 
further provided in cl. 28 that the words "the said Corporation" 
would include the Corporation and its successors. Different agree-
ments were entered into between the successors of the Corporation 
of Calcutta and the grantees from time to time, namely, on Novem-
ber 22, 1879, September 2, 1893 and December 9, 1899, and were 
confirmed by appropriate Acts. In all these agreements the appel-
lant's predecessor-in-interest agreed to pay the rents to the respon-
dent's predecessors-in-interest in respect of the tramways construct-
ed, maintained and used by them. All the said agreements contain-
ed an arbitration clause similar to that contained in the first agree-
ment. The Corporation. of Calcutta is now the successor of the 
properties of the Corporation of the town of Calcutta constituted 
under the Bengal Act IV of 1876. It was constituted by Bengal Act 
II of 1888. The appellant, i.e., the Calcutta Tramways Co. Ltd., is 
the successor or the assignee of the said grantees. On August 30, 
1951, the State of West Bengal entered into an agreement with the 
appellant whereby the Government agreed to purchase the under-
taking of the appellant as provided in the said agreement. The said 
agreement was subject to an Act being passed by the appropriate 
Legislature ratifying the agreement and giving effect to it. The Cal-
cutta Tr

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