LAW OF CONTRACT - II

Topic - Jagdish Chandra Gupta v. Kajaria Traders (India) Ltd. AIR 1964 SC 1882
Submitted to - Prof. Rahul Arora
Submitted by - Rudranshi Agnihotri
Batch - BA LLB (2nd Semester)
Enrollment no. - 05225503822
Jagdish Chandra Gupta v. Kajaria Traders (India)
Ltd. AIR 1964 SC1882
Hon'ble Judges: HIDAYATULLAH, M. WANCHOO, K.N.GUPTA, K.C. DAS
AYYANGNAR, N. RAJAGOPALA
Decided on :
29 APRIL, 1964

Relevant S. 69 OF INDIAN PARTNERSHIP ACT, 1932 (9 OF 1932)

sections : S. 8(2) OF ARBITRATION ACT, 1940 (ACT 10 OF 1940)

Court : Supreme Court of India

Citation : 1964 AIR 1882, 1964 SCR (8) 50

 On 30 July 1955, the respondent Messrs. Kajaria Traders (India)
Ltd. and Messrs. Foreign Import and Export Association
(exclusively owned by the appellant Jagdish C. Gupta) entered
into a partnership to export between January and June 1956,
10,000 plenty of manganese ore to Phillips Brothers (India) Ltd.,
New York. Each partner was to provide a particular quantity of
manganese ore. The agreement has arbitration clauses. The
corporation claimed that Jagdish Chander Gupta did not carry out

FACTS his part of the partnership agreement. The corporation wrote to

Jagdish Chander Gupta on February 28, 1959, that they had
appointed an arbitrator and asked Jagdish Chander Gupta either
to confirm Mr. Kolah’s appointment as the only arbitrator or to
appoint his arbitrator. Jagdish Chander Gupta postpones
consideration and on St Patrick’s Day, 1959, the corporate
informed Jagdish Chander Gupta that as he had not assigned an
arbitrator within 15 days, they were appointing Mr. Kolah as the
only arbitrator. Jagdish Chander Gupta discovered this. And on
March 28, 1959, the company filed a plea under s. 8 (2) of the
Indian Arbitration Act, 1940 for the nomination of Mr. Kolah or any
other person as arbitrator. Jagdish Chander Gupta appeared and
demurred the petition.
Whether S. 8(2) of the
Indian Arbitration Act Whether S. 69(3) of
was applicable in this the Indian
agreement because it
Partnership Act,
was not expressly
ISSUES 1932 petition can
provided in the Letter
of Intent that the
RAISED be filed because

arbitrators were to be the partnership was

appointed by consent not registered?
of the parties?
 ARGUMENTS
Mr. Jagdish Gupta firstly argued that if the appointment is not made
within 15 days of notice, on the application of the party who has given
the notice, and following the principle of Audi Alteram Partem, the court
may appoint an arbitrator.
The company alleged that Jagdish Chander Gupta failed to carry out his
part of the partnership agreement. After some correspondence, the
company wrote to Jagdish Chander Gupta on February 28, 1959 that
they had appointed Mr. R. J. Kolah (Advocate O.S.) as their arbitrator
and asked Jagdish Chander Gupta either to agree to Mr. Kolah's
appointment as sole arbitrator or to appoint his own arbitrator. Jagdish
Chander Gupta put off consideration and on March 17, 1959 the
company informed Jagdish Chander Gupta that as he had failed to
appoint an arbitrator within 15 clear days they were appointing Mr.
Kolah as sole arbitrator.
 Mr. Jagdish Gupta firstly argued
that if the appointment is not made
within 15 days of notice, on the
application of the party who has
given the notice, and following the
JUDGMENT
principle of Audi Alteram Partem,
(High Court)
the court may appoint an arbitrator.
The Bombay High Court bench
consists of Justice Mudholkar and
Justice Naik, who agreed on the
first contention constructed by Mr.
Jagdish.
But the division bench
contradicts the 2nd point.
Justice Mudholkar believed
that the application cannot be
filed under s. 69(3) of the Indian
Partnership Act, 1932, while
Justice Naik has a different
opinion. Then the case went to
Justice KT Desai who agreed
with Justice Naik’s view. And
the court held that the
application was held to be
 JUDGMENT (SUPREME COURT)
After the Bombay High Court Judgement, the appeal was filed in which it
was contended that the High Court wrongly interpreted the grounds under S.
69(3) of the Indian Partnership Act, 1932.

The Supreme Court held that the words ‘other proceeding’ in S. 69(3) of the
partnership act must receive their meaning and must be unaffected by words’
claim of set-off. Therefore, the appeal is allowed to rescind the decision of
the Bombay High Court.
 CONCLUSION

The appeal was allowed.The decision of the High Court was set aside
and the application under s. 8(2) of the Arbitration Act were stand
dismissed with costs throughout on the applicant in the High Court.

APPEAL ALLOWED
 The judgment answers the
question of whether an
unregistered firm can initiate
LEARNING arbitration proceedings
negatively. Despite the
2020

OUTCOMES
arbitration clause, the
arbitration proceedings were
barred in this case. Hence, to
function like a well-oiled
machine, the firm must get
THANKS