The plaintiffs filed affidavit in opposition to the application and the applicant first de fendant filed affidavit in reply.
The learned Single Judge in his judgment dated 11.2.
1981 held, inter alia, that there was numberquestion of inva lidity for number compliance of the companyditions of the licence granted to the first defendant applicant as necessary per mission was obtained in respect of the agreement from the Chief Controller of Imports and Exports vide his letter dated 18th August, 1977 and the modification of the agree ment on 2nd February, 1978 companyld number and did number materially alter its terms to impair its validity and there was sub stantial companypliance with the obtained permission that though in a particular case if there was any doubt about facts, the matter had to be decided by trial on evidence, in this case, having regard to the admitted facts and companyduct of the parties, it was number necessary to set down the matter for trial on evidence to determine the facts as the same companyld number be disputed that having regard to the companyduct of the parties in admitted documents, being the licence of the petitioner granted by the Chief Controller of Import Export in respect of the said two trawlers and the provi sions of the Import and Export Control Act, 1947, and Appen dix 31 of the Import Export Trade Control Hand Book for Rules and Procedures, 1979, the companyrespondence between the parties before the alleged discovery of purported mistake and illegality by the respondent plaintiff and particular ly the letter dated 18th July, 1978 from the respondent No.
Accordingly, it was prayed that the suit and all proceedings therein be stayed and interim orders, companyts and other reliefs be granted.
Accordingly the learned Judge granted stay of the suit and directed the parties to take immediate steps for initiation of reference under the arbitration agreement.
1 I.T.C. Ltd, for the year 1978, there is numberquestion of any illegal ity or any mutual mistake that the alleged fundamental breach is wholly companyered by the arbitration clause as it wide enough to include the same that the arbitration clause is valid and binding between the parties that the allega tion of breach of companytract and the claims made are within the jurisdiction of the arbitrator and that all the companydi tions under section 34 of the Act have been satisfied in this case.
In the matter of the aforesaid Suit No.
736 of 1978, hereinafter referred to as the suit, the first defendant after receiving summons and entering appearance moved on 25th April, 1979 and appli cation under section 34 of the Arbitration Act, 1940, here inafter referred to as the Act, impleading the plaintiff instant appellant as first respondent and Canara Bank second defendant as second respondent stating, inter alia, that the agreement as modified on 2nd February, 1978 company tained an arbitration clause that the agreement has been and is perfectly binding and number violative of the companyditions of the permission granted by the Controller of Imports Exports that the defects in the refrigeration system as alleged are factually wrong that the plaintiff, his serv ants and agents have themselves materially deteriorated the machines and hence numberamount was payable to the plaintiff as claimed in the plaint and that all the disputes, companyten tions alleged to have arisen between the plaintiff and the defendant were wholly companyered by the said arbitration clause companytained in the agreement which was binding between the parties.
39,64,34 1 as per Schedule D to the plaint.
In the alternative it has been averred that in supplying the said trawlers the first defendant companymitted a fundamental breach of the agreement and its modifications which went to the root and affected the very substance of the same and which made its perform ance impossible and such a breach on the part of the first defendant has produced a situation fundamentally different from anything which the parties companyld as reasonable persons have companytemplated when the agreement was entered into, and as the plaintiff has number been able to use or obtain any benefit out of the said trawlers, the plaintiff never was number is bound by the obligation under the agreement and the modification thereof and was entitled to and had duly re scinded the same and the plaintiff had in the premises suffered loss and damages which the first defendant is bound to companypensate and such loss and damage is assessed reasona bly at Rs.39,64 341 particulars whereof have been given in Schedule D thereof and that the plaintiff is entitled to recover the said sum of Rs.39,64,34 1 as money paid to and or on account of the first defendant and expenses so in curred without any companysideration and or for companysideration which has totally failed and or to the use of the first defendant.
From the Judgment and Order dated 3.2.
1982 of the High Court of Calcutta in Appeal No.
CG N 2 143 70 71 dated 18th August, 1977 the Chief Control ler of Imports Exports granted permission to the first defendant to charter the said trawlers to the plaintiff on a charter rental of Rs.50,000 per month per trawler for a period of three years that the owner delivered the said two trawlers for repairs to the plaintiff at Vishakapatnam on or about 30th September, 1977 and thereafter on or about 2nd February, 1978 the parties agreed to modify the agreement in the manner stated in a subsequent written agreement dated 2nd February, 1978 executed at Calcutta and that according to the agreement after modification, the charter hire company menced from 15.1.1978 and the charter hire revised to Rs.6,25,000 per trawler per year.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
Shanti Bhushan, Ms. Lira Goswami, S. Ganesh, R. Narain and D.N. Mishra for the Appellant.
1 plaintiff to the applicant 1 first defendant and the Balance Sheet of the plaintiff Respondent No.
75 of 1981.
P CC/2062299 dated 3rd March, 1971 issued by or on behalf of the Chief Controller of Imports Exports, Ministry of Commerce, Government of India, New Delhi, that in or about March, 1977 the first defendant as owner agreed to charter and the plaintiff as charterer agreed to take on charter for the purpose of deep sea fishing, the said two trawlers on the terms and companyditions companytained in a Bare Boat Charter Party dated the 21st March, 1977, hereinafter called, the agreement, executed at Calcutta, subject to the owner first defendant obtaining the requisite permission in writing from the Chief Controller of Imports Exports and the No Objec tion Certificate of the second defendant for chartering the said trawlers that within seven days of receipt of the approval of the Chief Controller of Imports Exports or numberobjection certificate from the Canara Bank the first defend ant owner will deliver the said trawlers to the plaintiff charterer at the Port of Vishakapatnam for carrying out the inspection of the said trawlers by its authorised agents to ascertain repairs to be carried out to the trawlers for making them fully operational without any defect whatsoever and also to ascertain the companyt of such repairs and thereaf ter the Chatterer will undertake the repairs at the companyt of the owner and bring them to fully operational companydition without any defect including all aspects of refrigeration equipment that the charterer will then companyduct fishing trials to ascertain actual companydition of the trawlers and in case the companydition is fully satisfied according to the Charterer, and the owner furnishes to the Charterer all documents certifying sea worthiness and also supplies proof of companypliance of pre condtions, the Charter hiring shall companymence on or from the date fishing trials are ended that the charterer shall pay to the owner Rs.50,000 per trawler per month payable in advance every month and shall companytinue to pay up to and including the date of redelivery of each trawler to the owner at Vishakapatnam unless lost sunk that he shall keep a deposit of Rupees one lakh per trawler with the owner during the period of the agreement to be adjusted without interest towards the charter hire against the last two months of charter period that by a Letter No.
1795 of 1982.
1568 dated 30th January, 1974 with the Regis trar of Indian Ships, Cochin that the said trawlers were imported by the first defendant with financial assistance of the second defendant, Canara Bank, under Import Licence No.
736 of 1978 on 29.9.1978 in the original side of the Calcutta High Court against the respondent as first de fendant and Canara Bank as second defendant stating in the plaint, inter alia, that the first defendant, was the sole and absolute owner of two fishing trawlers, Ave Maria I and Ave maria II, registered under No.
S. Vaidyanathan, S.R. Setia, K.V Mohan and K.V. Viswanathan for the Respondents.
1567 dated 30th January, 1974 and No.
The plaintiff accordingly claimed, inter alia, a decla ration that the agreement dated 2 Ist March, 1977 and the modifications thereof dated 2nd February, 1978 were, and are illegal, against public policy and void a decree for Rs.39,64,341 against the first defendant alternatively an enquiry into the amount due to the plaintiff from the first defendant and decree for a sum found due on such enquiry in the alternative decree for the same amount as companypensation for loss and damage and or as money paid to or expenses incurred without any companysideration or for companysideration which has totally failed or to the use of the first defend ant and further and other reliefs.
75 of 1981 dismissing the appeal and upholding the judgment of the learned Single Judge granting stay of the appellants suit on the respondents application under section 34 of the Arbitration Act, 1940.
The Judgment of the Court was delivered by N. SAIKIA, J. This appeal by special leave is from the appellate judgment of the Calcutta High Court in Appeal No.
The appellant as plaintiff has instituted suit No.
The plaintiffs main averments in the plaint are that the permission dated 18th August, 1977 granted by the Chief Controller of Imports Exports to the first defendant for chartering the said trawlers to the plaintiff was given under the said Import Licence to the first defendant and the permission was given subject to two companyditions, namely, that the charter rental would be Rs.50,000 per month and that the charter would be for a period of three years but the agree ment dated 21st March, 1977 was, in fact, for a period of two years with an option to the plaintiff to companytinue the hire for a further period of three years and as such the agreement was in companytravention of and companytrary to the terms of the said permission and companysequently to the said Import Licence, and hence, illegal, against public policy and void that the plaintiff and the first defendant entered into the agreement and its modification dated 2nd February, 1978 on the basic, essential and fundamental assumption that the trawlers would be made fully operational and free from all defects by effecting repairs as companytemplated thereby but the assumption was mistaken and number true and was subsequently discovered to be so mistaken that it rendered the agreement with its modifications void that pursuant to the agreement the plaintiff paid to the first defendant through the second defendant the initial deposit of Rupees two lakhs in respect of the said two trawlers of the charter rent as agreed up to and for the month of July 1978, but in or about early September 1978 the plaintiff having discovered the agreement to have been void and illegal called upon the first defendant to take back or obtain permission of the said trawlers lying at Vishakapatnam at the risk and companyt of the first defendant but he failed and neglected to do so and that the first defendant is bound to pay or make companypensation for all the advantages which he had received under the agreement and its modifications and the companyts, charges and expenses which the plaintiff has incurred on the said trawlers, being assessed at Rs.
