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Chandrabhan Bilotia and anr. Vs. Ganpatrai and Sons - Court Judgment

LegalCrystal Citation
Decided On
Reported inAIR1944Cal127
AppellantChandrabhan Bilotia and anr.
RespondentGanpatrai and Sons
Cases ReferredBoard of Education v. Rice
- .....denied the jurisdiction of the bengal chamber of commerce to determine any question between the present parties in the events that had happened. as a matter of fact the arbitration between the present respondents and their purchasers went on, and by a letter of 4th march 1942 the present respondents opened arbitration proceedings against the present applicants in purported pursuance of the arbitration agreement contained in the sold note. a copy of their letter was promptly forwarded by the registrar of the bengal chamber of commerce tribunal of arbitration to the present petitioners on 5th march 1942, and on the 6th messrs. ganpatrai and sons ltd., lodged with him certain statements as exhibits in support of their claim including their difference bill no. 143 in which they claimed.....

Blagden, J.

1. On 24th September 1941, the Champdany Jute Co. Ltd., made out a delivery Order for 50,000 yds. hessian cloth in favour of Messrs Adamjee Hajee Daud & Co. Ltd., or order. Various dealings with this document took place, it being endorsed gen-erally by those in whose favour it was drawn and endorsed again by six persons or com-panies before finally this document came into the hands of the present applicants. Where a document of this kind is negotiated in this manner and treated as though it were the goods that it represents, that which takes place is sometimes called 'symbolic delivery' of the goods. It is also, I think, quite accurate to say that it is a conditional delivery of the goods, much in the same way as the handing over of a cheque is a conditional payment of money, the condition being that when the holder of the Order wants his goods he should be able to get them by presenting it. On 1st October 1941, the present applicants sold the goods represented by this order, which had by then come to their hands, to the present respondents on the terms of a sold note in the Indian Jute Mills Association printed form which embodied certain printed terms and conditions. Payment and delivery were to take place ready cash against mills p. d. (standing for 'pueca delivery') orders, and in fact on that date the present respondents paid for the goods and the present applicants endorsed and handed to them the delivery order. The 13th of the Terms and Conditions read as follows:

All matters questions disputes difference and/or claims arising out of and/or concerning and/or in connexion with and/or in consequence of or relating to this contract whether or not the obligations of either or both parties under this contract be subsisting at the time, of such dispute and whether or not this contract has been terminated or purported to be terminated or completed shall be referred to the arbitration of the Bengal Chamber of Commerce under the rules of its Tribunal of Arbitration for the time being in force and according to such rules the arbitration shall be conducted.

2. The rules of the Tribunal of Arbitration of the Bengal Chamber of Commerce were, I understand, in the same form at all material times as far as this case is concerned and included the following provisions. By Rules 11 to 13 inclusive, documents corresponding to pleadings in litigation are to be delivered by the disputing parties and by Rule. 15 and 16 the following provisions were made:

15. A dispute will normally be decided by the Court on the written statements of the parties and oral evidence will not be taken nor will the parties be entitled to appear or any formal hearing be held. The Court shall have power however if it thinks fit to appoint a time and place for the hearing of the reference and to hear oral evidence.

16. In any case of a formal hearing no party shall without the permission of the Court be entitled to appear by counsel, attorney, pleader, advocate or adviser but the Court in its discretion may require the parties with or without witness to attend before it or before any Sub-Committee or Sub-Committee of the Chamber to be examined.

3. 'Court,' I should say, means by Rule 1 the arbitrator or arbitrators appointed for deter-mining a particular dispute or the umpire where an umpire has been appointed. Rule 20 provides as follows:

The Court may proceed with the reference notwithstanding any failure to file a written statement within due time and may also proceed with the reference in the absence or any or both of the parties who being entitled to appear before the Court after due notice refuse or neglect to attend.

4. Rule 37 provides:

All notices required by these rules to be given shall be in writing and shall be sufficiently given if left at the last known place of abode or business of the party to whom the notice is addressed or if sent by registered post addressed to him by name at such last place of abode or business.

The rest of the rules appear immaterial. All would have been well if it had not been for the fact that subsequently, in the course of dealing with the goods represented by the delivery order, a purchaser had chosen to pay for the goods by means of a cheque which was dishonoured on presentation; the result of this naturally was that the vendor took steps to see that the purchaser should not be able to get the goods, and he gave notice to the drawers (if that is the correct expression) of the delivery Order not to part with them; meanwhile, the gentleman into whose hands the delivery Order had by this time come and who was unable to get the goods, found before long that he had lost his delivery Order too, because the police obtained a search warrant and seized this piece of paper. The result was that as regards each dealing in the goods the purchaser made a claim on his vendor who in turn made a claim on his vendor etc., until eventually these backward claims reached the present respondents Ganpatrai and Sons Ltd. When this happened they gave notice that a claim had been made against them to the present petitioners, who by letter of 11th December 1941 professed complete lack of interest in the arbitration that was about to take place between the respondents and their purchasers, and denied the jurisdiction of the Bengal Chamber of Commerce to determine any question between the present parties in the events that had happened. As a matter of fact the arbitration between the present respondents and their purchasers went on, and by a letter of 4th March 1942 the present respondents opened arbitration proceedings against the present applicants in purported pursuance of the arbitration agreement contained in the sold note. A copy of their letter was promptly forwarded by the Registrar of the Bengal Chamber of Commerce Tribunal of Arbitration to the present petitioners on 5th March 1942, and on the 6th Messrs. Ganpatrai and Sons Ltd., lodged with him certain statements as exhibits in support of their claim including their difference bill NO. 143 in which they claimed the sum altogether of rupees 15,766-10-0. Notice of the constitution of a Court to decide the matter was given on 9th March and a copy of Messrs. Ganpatrai's last communication was forwarded to petitioners on 10th March.

5. The present petitioners by their solicitors on 16th March lodged a lengthy written statement, into the details of which I need not go which again was passed on Messrs. Ganpatrai and Sons Ltd., by the Chamber of Commerce. On 2lst March Messrs. Ganpatrai Sons Ltd., sent to the Tribunal another very lengthy statement, which consisted, in substance, of underlining the points they had already sought to make in their previous statement. This again was handed on to the present petitioners on the 23rd and they were told that they must make such comments as they desired by the 26th. On the 26th they did make another quite long statement in reply, and on the 28th Messrs. Ganpatrai and Sons Ltd., were invited to formulate whatever claim they might have against the present petitioners. They delivered what might (comparatively speaking) be called a 'concise statement' on 8th April and this again was passed on to the present applicants; the time for replying to it having been extended they finally did reply to it on 22nd April in which they stated that they referred to their previous statement and 'had nothing further to add thereto.' I may say that during this month of April the present applicants were moved by considerations for their own personal safety to leave Calcutta, but they left behind them to manage their business affairs others for whose personal safety they had less consideration and I am quite satisfied that there was always some responsible person at all reasonable times to be found at their gadi who could deal with business matters, in addition to which of course, their solicitors had not left Calcutta and were available to look after their worldly interests.

6. By two letters of the 7th, amended on 8th May 1942 which were left at the present applicant's gadi, the Registrar of the Tribunal of the Bengal Chamber of Commerce purported to give the present applicants notice 'that the above arbitration' (meaning the arbitration now in question) 'would take place at the Bengal Chamber of Commerce at 4 P. M. on Tuesday 12th May 1942.' I had better read the body of the second letter because a good deal turns on it but would remark both of them are headed 'General Arbitration' and the parties to the arbitration and the number of the case is set out; the body of the notice simply reads:

I beg to give notice that the above arbitration will take place here at 4 p. m. on Tuesday the 12th instant.

Nobody on the present petitioner's behalf in fact attended at the time and place in question, nor does it appear that anybody did so on behalf of the respondents. The arbitration took place at that time and place and the arbitrators made their award, which was communicated to the parties by a letter of the following day the 13th. The award so far as is now material reads as follows:

We the undersigned, having been duly constituted by the Registrar, Tribunal of Arbitration, Bengal Chamber of Commerce, as the Court to adjudicate on a dispute between Messrs. Ganpatrai and Sons Ltd., buyers, and Messrs. Chandrabhan Surajbhan, sellers, regarding a claim made by the former on the latter in respect of 50,000 yds. hessian cloth under Messrs. Chandrabhan Surajbhan's contract No. 2-3824 dated 1st October 1941, have taken upon ourselves the duties of arbitrators, read and carefully considered the papers in the case, and hereby decide and award as follows:

(1) That Messrs. Chandrabhan Surajbhan shall pay to Messrs. Ganpatrai and Sons Ltd., in full settlement of their claim herein the sum of Rs. 15,765-13-0 together with interest thereon at the rate of 5 per cent, per annum from 24th October 1941 until the date of this award.

In clue course the award was filed in this Court, and on 4th June notice that it had been filed was served on the present applicants as a firm but the notice was less than a thirty days notice. A fresh notice was served on each of them as individuals on the 17th of that month, and on the 16th of last month the present proceedings were commenced by the applicants to set the award aside.

7. A preliminary point has been taken (though it was not dealt with as a preliminary point it really in effect is one), viz., that the pre-sent application is time-barred as being made outside the thirty days from the service of notice of the filing of the award. The answer taken to it by Mr. P.C. Ghose is that the notice served on his clients outside the thirty days, though it was a perfectly good notice of the fact that the award had been filed was a perfectly bad notice of the day on which the Court would proceed to give judgment on the award because it was too short, and he says, a notice of this kind is like a boiled-egg- it cannot be-partly good and partly bad, but if it is bad at all it is bad altogether. That is certainly so for example in the ease of a notice by a landlord to his tenant to quit the tenant can disregard a notice if it is too short and if the landlord tries to amend it by a subsequent notice purporting during its currency to add a further period to the former notice the tenant can ignore that too, because he is enti-tled to a single and proper notice. So I think this point is well founded and is an answer to the preliminary objection but the other, more interesting, questions remain.

8. The applicants take what really amount to three points first, that the arbitrators (in a purely technical sense, not one which involves the slightest stigma on their characters in any way) 'misconducted themselves' by proceeding ex parte on inadequate grounds, thus de-priving his clients of an opportunity of arguing their case and/or adducing evidence. Secondly, he says that there were questions in dispute which could only have been decided by taking oral evidence, and that they must have acted on no admissible evidence. Thirdly, he contends, that, read with the documents corresponding to pleadings, the award is bad on the face of it as not dealing with all matters in dispute.

9. I think it will be convenient to deal with these points in the reverse order. As to the last point, the applicants before me had set up a set-off or counter claim which I think must have been intended only to go in reduction of the amount claimed by a sum of Rs. 1068 odd, and they definitely claimed that if any sum were awarded against them they were entitled to have back their delivery order. It does not appear on the face of the award that the arbitrators had considered these contentions, and it is noticeable that the difference between what they awarded and the amount claimed by the present respondents is exactly thirteen annas, for which difference no explanation has been offered to me at all. But the award does recite that they had carefully considered all the documents submitted to them and in the absence of any evidence to suggest in the least that that is not true, I must assume and I do, that they had carefully considered all the documents submitted to them. They therefore considered these points raised by the present applicants and, tightly or wrongly, thought that there was no substance in them. I have no doubt that they did think all. I am not for a moment Baying whether their decision is right or wrong. I should not express any opinion on the merits of the question, because they were parties' selected tribunal. Beading the recitals in the award with the body of the award itself and the parties' written contentions it must be taken that they had considered this matter suggested by the present applicants and thought, as I say, there was nothing in it. My attention has been called to a case cited in Russell at p. 203 (Edn. 13) in Maloney v. Stockley (1842) 2 Dowl. (N.S.) 122, which on the face of it is strong in the applicants' favour. The note in Russell reads as follows:

When all matters in difference, as well as the causo, are referred and the arbitrator find for the defendant on the general issue in debt, the award may be set aside for failing further to ascertain the amount of the defendant's set off.

10. It will be seen that this was decided before even the Common Law Procedure Act, in 1842, in the days of strict pleading and on a reference in a suit and not merely of matters that had arisen in a dispute between the parties outside the Court. It is evident that the decision proceeded largely on the then technicalities of pleading and I do not feel bound to import into this country a decision founded on technicalities outgrown even in England at the present day. I think the reasonable construction of the award here is that the arbitrators did take these matters into account and thought nothing of them.

11. The second point raises the interesting question whether the arbitrators were bound to act on what is strictly admissible evidence. It is quite evident that they did not do so, because, for example, their knowledge of the matters in dispute in so far as they were left in controversy by the written submissions of the parties could have been derived, in substance, only from their knowledge of arbitrations between other people, and Mr. Ghose presses upon me a number of English decisions in which it has been clearly laid down that arbitrators must at least try to apply the laws of evidence properly. I do not know that if an arbitrator makes an honest mistake as to what the law of evidence is that, in itself, is necessarily a ground for setting aside his award, because any tribunal may make a mistake as to law and the arbitrator (like the civil Court whose decision it is sought to get revised) has jurisdiction to decide wrong as well as to decide right. But if it is shown that the arbitrator knowing, for example, that 'what the soldier said is not evidence' were to say 'I am not going to be bothered with technicalities of that sort and I am going to decide on what the soldier said' then no doubt, in England, he would be misconducting himself, and the award would be voidable. But the position here (as I think Mr. Banerjee is right in saying) is different because of Section 1, Evidence Act. This Act purports to be a complete codification of the law of evidence' and by Section. 1 it is expressly said not to apply to arbitrations. This can only mean, to my mind that the arbitrators are not bound by those strict rules which are applicable to Courts of law. Indeed, Mr. Ghose agrees that it is so; but he says, they must observe the principle, if not the letter, of those rules, and not decide on questions of fact by the spin of a coin unless the parties agree that they should be decided in that manner. I think the real question here as in the case of the first point, is whether they have adopted any means of deciding the ease, which is contrary to natural justice. The question of what is 'contrary to natural justice' has arisen very often, not only in connexion with arbitrations, but also in connexion, for example, with cases in which the committee of a club seeks to expel a member for misconduct, or an executive body has been given, as by statute now-a-days it frequently has, power to act as judge in its own cause. It is certainly not contrary to natural justice to act on materials on which ordinary and reasonable people would naturally act. And ordinary and sensible people do constantly act and decide important matters in their own lives on materials hopelessly inadmissible in a Court of law. For example, I imagine, that most people, if such a question should arise in their private lives, would regard it as some evidence that a testator was mad if he was proved to have been habitually followed about the place by small boys throwing stones and shouting 'Silly Jack;' and would regard it as some evidence that a ship was seaworthy, if it was proved that her experienced captain made a thorough examination of her from truck to keel soon before putting to sea in her, even if he and the ship subsequently perished. Baron Parke himself however pointed out that neither of these things is any evidence at all as proving the fact of insanity or that of seaworthiness. In this case the arbitration proceedings between other parties were not strictly evidence, or indeed at all evidence, as between the disputants. But I think the tribunal was not strictly bound by the law of evidence, and was not acting unreasonably in regarding them as some indication of what in fact had taken place.

12. The next point raises a wide question to which I have already alluded, that of acting 'in accordance with natural justice.' I think I am right in saying that old cases in regard to club committees went so far as to decide that the committee could not expel a member for alleged misconduct without giving him an opportunity of appearing before them physically, either in person or if he desired by legal advisers but the House of Lords once before the last war and once during the war had to consider what was in substance the same question in two cases, Board of Education v. Rice (1911) A. C. 179 and (1915) A. C. 120.

13. In the first case the Lord Chancellor stated his view of the propriety of the procedure adopted by the board of education and said that in such a case the board of education would have to ascertain the law and also to ascertain the facts that in doing so either they must act in good faith and listen fairly to both sides, for that is a duty laid upon any one who desires anything but he said:

I do not think they are bound to treat such a question as though it were a trial. They had no power to administer on oath and need not examine witnesses. They can obtain information in any way they think best, always giving a fair opportunity to those who were parties to the controversy to correct or contradict any relevant statement prejudicial to their view.

14. In the latter case, in which the respondent, Mr. Arlidge objected to a proposal by a local authority to demolish a considerable number of hia houses, it was held that an appellant against the decision to demolish his house to the Local Government Board was not entitled as of right, as a condition precedent to the dismissal of his appeal, either (a) to be heard orally before the deciding officer, or (b) to see the report made by the Board's Inspector upon the public local enquiry. They had to have a local enquiry before they would pull down other people's houses, but having done that no one had a right to appear before them either in person or by an advocate or otherwise, but only a right to make written representations. Lord Shaw at page 138 said this:

The words 'natural justice' occur in arguments and sometimes in judicial pronouncements in such cases. My Lords, when a Central Administrative Board deals with an appeal from a local authority it must do its best to act justly, and to reach just ends by just means. If a statute prescribes the means it must employ them. If it is left without express guidance it must still act honestly and by honest means. In regard to these certain ways and methods of judicial procedure may very likely be imitated; and lawyerlike methods may find especial favour from lawyers. But that the judiciary should presume to impose its own methods on administrative or executive officers is usurpation. And the assumption that the methods of natural justice are ex necessitate those of Courts of justice is wholly unfounded. This is expressly applicable to steps of procedure or forms of pleading. In so far as the term 'natural justice' means that a result or process should be just, it is a harmless though it may be a high-sounding expression; in so far as it attempts to reflect the old jus naturale it is a confused and unwarranted transfer into the ethical sphere of a term employed for other distinctions; and, in so far as it is resorted to for other purposes, it is vacuous.

15. Just as a statutory tribunal must follow its statutory procedure (if any) right or wrong, so all decisions as to the course to be adopted in general by a contractual tribunal must be read as subject to that course if any which the parties to the dispute in a particular case have agreed that their tribunal shall adopt. Subject to this, according to the high authority of Lord Shaw, the Rule about 'natural justice' only really, means that a tribunal, which is to apply 'natural justice', must act honestly and impartially.

16. In this case the parties, it seems to me, have contracted away any right to appear by advocate under the rules, and any right to appear in person unless the tribunal says 'you appear in person and we will make a formal hearing of it,' and it is rightly said by Mr. Banerjee that it is incorrect to say that the arbitrators proceeded ex parte at all. They did not. They proceeded according to the normal procedure that the rules, incorporated by the parties into their contract, contemplated, unless it is to be held that the notice of 8th May must be read as a notice of a formal hearing. I do not think that is its true construction. It headed ' General Arbitration.' It merely informs them that the arbitration will take place at a particular place and at a particular time. It does not say 'you are required to attend, you must bring your witnesses' or anything of that sort. I quite agree with Mr. Ghose that, if it is correct that it is not an intimation of a formal information, it becomes, very nearly, a useless document. But though it may serve no useful purpose I think it was reasonable and an act of courtesy to the disputing parties to tell them what was happening that a decision was going to be made on their dispute at a particular place and particular time, and, at any rate, that the Bengal Chamber of Commerce were not sleeping over the matter but were doing something about it. If that is so, the applicants had no right to be present and were not deprived of anything to which they were entitled.

17. A minor point has been taken about it namely that they were away at the time, and consequently could not have attended. But nothing turns on that, if it is once decided that this was not a notice of a formal hearing, and moreover, Rule 20 covers it. If this notice was given 3 or 4 days before the time the arbitration was to take place at a particular place, namely their place of business in Calcutta, and the arbitration also was to take place in Calcutta, it was in fact a perfectly sufficient notice which distinguishes at least one case cited to me in which the notice in fact reached the person concerned about an hour before the time that the arbitration took place. That, being the position though I am indebted to learned counsel for drawing my attention to a number of cases bearing on the question, I do not think it necessary to go through them all but I am obliged for their interesting and helpful arguments. The petition in my opinion fails and must be dismissed with costs.

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