Document Fragment View

Matching Fragments

23. POINT NO. 3 :- The iearned counsel for the defendants has strenuously argued that there was no privity of contract between the plaintiff and the defendants, as such, the arbitration clause cannot be enforced. Further, he argued that assignment of lands by M/s. Imperial Enclave in favour of M/s. R. K. Associates does not bind the defendants. The learned counsel appearing for the plaintiff has submitted that the contention of the defendants counsel is a gallant attempt to get the case out of the purview of arbitration clause. He has pointed out that the agreement, dated 4-2-1990, to which the defendants are parties; and the contract is assignable as per the terms contained in the agreement. The purchaser of the land as per Partnership Deed, dated 5-2-1990 was M/s. Imperial Enclave which later constituted as M/s. R. K. Associates by deed dated 2-5-1990, as the Registering Authorities refused to register since the name was not acceptable and renamed as M/s. R. K. Associates. Several receipts issued by the defendants for having received the consideration amount of the sale of land under the agreement, viz., the Annexures D-7 to D-11 which go to show that the defendants have acted upon the contract and on change of the name of the firm as R. K. Associates, the defendants have issued receipts in favour of plaintiff viz., Anne-xuresD-14, D-15, D-16 and D-17 in which it is stated that the defendants have received the respective part consideration amount from M/s. R. K, Associates formerly Imperial Enclave. The payments to the tune of Rupees 13,47,000/- was received by the defendants from the plaintiff M/s. R. K. Associates (formerly Imperial Enclave) without any demour and the receipts have been passed evidencing the receipt of the amount by the defendants from the plaintiff M/s. R. K. Associates. The contention of the defendants' counsel that there was no privity of contract is a feeble attempt to riggle out of the binding effect of the agreement of sale.

24. Mr. S. G. Sundaraswamy, learned senior counsel appearing for the plaintiff, has pointed out that as per the true construction of the contract, it was the intention of the parties that it should be assignable. The clause in the agreement of sale specifically mention the assignabllity of the contract and as such, when the contract is assignable, an arbitration clause is also equally assignable for the assignment is the entire subject-matter of contract. In support of this submission, he has relied on the decision reported in 1946 54 All ER Shyler v. Woolf. In the said decision, it is observed as follows:--

"on the true construction of the contract, it was the intention of the parties that it should be assignable. Moreover, since the contract did not relate to personal services and there would be no increase in the burden of the contract if it was assigned, no objection to assignability arose."
"If a contract were otherwise assignable, an arbitration clause did not prevent it from being assignable, the clause followed the assignment of the subject-matter of contract."

The agreement in this case, in my opinion, is quite clearly assignable. The surrounding circumstances and on true construction of the agreement and intention of the parties gathered from the documents when read in the light of its subject-matter, it is an assignable contract. The clause in the agreement is so worded which binds the original parties. In fact, the assignees of the main contract can enforce it only by arbitration. It is well laid principle of law that an arbitration clause is assignable, if the main contract is assignable. Russel on Arbitration Nineteenth Edition, at page 69 has stated that "an arbitration agreement will bind not only the actual parties to it, but also an assignee of the contract containing it."