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Firstly, it has been argued that there are no averments in the plaint which, if true, would render the contract either void or voidable. According to the defendant petitioners, the misrepresentations alleged are against the respondent No. 5 who is not a party to the agreement. Therefore, it was argued that there might be a claim for damages in tort for the wrongful conduct of the respondent No. 5, It was, then, urged that even if the averments rendered the contract, in question voidable, the dispute whether the circumstances existed to make the said contract voidable was itself arbitrable under thg arbitration clause, referred to hereinbefore. Lastly, it was contended that whether there was fraud or fraudulent misrepresentation which rendered the contract void or voidable, should, if the Court think that there are allegations of facta which rendered the contract in question either void or voidable be decided on evidence, then such evidence may be considered in this application under Section 34 of the Arbitration Act. According to the learned advocate for the petitioners, the averments made in the instant case only make the contract voidable and the plaintiff has alleged that the plaintiff had avoided the contract. It did not, according to the learned advocate for the petitioners, make the contract non est in law and it ceases only from the point of avoidance. In this connection reliance was placed on several material sections of the Contract Act as well as the Specific Relief Act. I would refer to the said sections presently. But reliance mainly had been placed on certain observations of Lord Denning in the case of Mackender v. Feldia A. G. (1966) 3 All ER 847: (1967) 2 QB 596. There a jewellers' block policy insurance was negotiated, signed and issued in England by underwriters. The policy covered stock-in-trade of diamond merchants, who were three foreign companies incorporated severally in Belgium, Switzerland and Italy, against loss of their stock of jewels and precious stones. The policy contained a foreign jurisdiction clause, which provided that the policy should be governed by Belgium Law and that any dispute arising thereunder should be subject exclusively to Belgium jurisdiction. A representative of the diamond merchants had a stock of diamonds and pearls stolen from him in Naples. The underwriters discovered, so they alleged, that the diamond merchants had made a practice of smuggling diamonds into Italy. The underwriters rejected a claim by the diamond merchants for the loss, alleging, among other matters, non disclosure by the diamond merchants of their smuggling activities. The underwriters sought a declaration that the policy was void and applied for leave to serve notice of their writ out of jurisdiction. It was held by the Court that although the terms of the rules of the Supreme Court Order 11, Rule l(f) of England were wide enough to cover the case, as the policy was a contract made within the jurisdiction, and although, if the issueg were whether there had been a contract at all, viz., on a plea of non est factum, the foreign jurisdiction clause might not apply, yet non disclosure would merely make the policy voidable from the time of election to avoid it, not void ab initio, and similarly illegality under the proper law of the contract would merely make the policy unenforceable; accordingly the dispute ag to non disclosure or illegality was a dispute arising under the policy and was within the foreign jurisdiction clause, with the consequence that the leave to serve notice of the writ out of jurisdiction should be refused. Reliance was placed on this decision on the basis that on the analogy of the foreign jurisdiction clause in this case the arbitration clause survived until the contract was avoided and therefore the disputes between the parties in this case would be referable under the arbitration clause. In this connection learned advocate strongly relied on the observations of Lord Denning, M. R. at page 849 of the report to the following effect:

"(1) An arbitration clause Is a collateral term of a contract as distinguished from its substantive terms: but none the less it is an integral part of it; (2) however comprehensive the terms of an arbitration clause may be, the existence of the contract is a necessary condition for its operation, it perishes with the contract; (3) the contract may be non est in the sense that it never came legally into existence or it was void ab initio; (4) though the contract was validly executed, the parties may put an end to it as if it had never existed and substitute a new contract for it solely governing their rights and liabilities thereunder; (5) in the former case, if the original contract has no legal existence, the arbitration clause also cannot operate, for along with the original contract, it is also void; in the latter case, as the original contract is extinguished by the substituted one, the arbitration clause of the original contract perishes with it; and (6) between the two fall many categories of disputes in connection with a contract, such as the question of repudiation, frustration, breach etc. In those cases it is the performance of the contract that has come to an end, but the contract is still in existence for certain purposes in respect of disputes arising under it or in connection with it. aS the contract subsists for certain purposes, the arbitration clause operates in respect of these purposes."

14. In the case of Bilasrai and Co. v.

Tularam Nathmall (1948) 52 Cal WN 858 Sinha, J. observed that for the purpose of an application for stay of suit under Section 34 of the Arbitration Act, the Court could only consider the case as pleaded and framed. If the pleas taken in the suit make the contract containing the arbitration clause void ab initio, the arbitration clause could not operate. If, however, the pleas raise grounds for avoiding a contract validly entered into, the arbitration clause survived the avoidance or termination of the agreement. The jurisdiction of the arbitrators would depend on the existence of the contract and the submission. Where the formation of the contract was challenged, the arbitrators, in the absence of an agreement between the parties had no jurisdiction to decide the issue. Sinha, J. after analysis of the seve-

ral cases put the proposition    of  law as
follows: 

"The essential question seems to be (a) whether the plea taken, whether it is mistake, fraud, misrepresentation or coercion, makes the contract containing the arbitration clause void ab initio so that the challenge is as to the formation of the contract or (b) whether the plea relates to grounds for avoiding a contract validly entered into. If the latter, arbitration clause survives the avoidance or termination of agreement. If the former, the arbitration clause cannot operate."