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LachminaraIn Kanoria and Co. Vs. Victory Jute Mills - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberAward Case No. 209 of 1964
Judge
Reported in[1966]36CompCas53(Cal),70CWN110
ActsArbitration Act, - Section 14(2); ;Companies Act, 1862 - Sections 41 and 42; ;Registration of Business Names Act, 1916
AppellantLachminaraIn Kanoria and Co.
RespondentVictory Jute Mills
DispositionApplication dismissed
Cases ReferredKhardah Co. v. Raymon
Excerpt:
- .....october 1, 1962. the award is as follows :' that lachminarain kanoria & co. shall pay to victory jute mills in full settlement of their claim herein, the sum of rs. 32,875 (rupees thirty-two thousand eight hundred and seventy-five) together with interest, thereon at the rate of 6 per cent. per annum from ist august, 1961, to the date of this award.that lachminarain kanoria & co. shall pay to victory jute mills the costs of this arbitration which we fix at rs. 304.50 np. and which are to be recovered by the tribunal from the deposit made by the latter.'3. lachminarain kanoria & co. is the petitioner and victory jute mills, the respondent, is alleged to be a sole proprietary concern of tolaram india ltd. carrying on business at no. 68, nalini sett road, calcutta.4. there was a contract.....
Judgment:

A.N. Ray, J.

1. This is an application for an order that the notice dated April 2, 1965, issued under Section 14(2) of the Arbitration Act, 1940, be set aside and also for an order that the service of the notice under Section 14(2) of the Arbitration Act be declared to be bad and ineffective. The other reliefs askedfor are that the arbitration agreement dated February 1, 1961, be declared to be void and of no effect and that it be declared that the award purported to be dated October 1, 1962, was not made or signed on October 1, 1962, and did not exist on October 1, 1962, and that the award be set aside.

2. The award is made by the Bengal Chamber of Commerce and Industry and bears the date October 1, 1962. The award is as follows :

' That Lachminarain Kanoria & Co. shall pay to Victory Jute Mills in full settlement of their claim herein, the sum of Rs. 32,875 (Rupees thirty-two thousand eight hundred and seventy-five) together with interest, thereon at the rate of 6 per cent. per annum from Ist August, 1961, to the date of this award.

That Lachminarain Kanoria & Co. shall pay to Victory Jute Mills the costs of this arbitration which we fix at Rs. 304.50 nP. and which are to be recovered by the Tribunal from the deposit made by the latter.'

3. Lachminarain Kanoria & Co. is the petitioner and Victory Jute Mills, the respondent, is alleged to be a sole proprietary concern of Tolaram India Ltd. carrying on business at No. 68, Nalini Sett Road, Calcutta.

4. There was a contract as will appear in annexure 'A' to the petition. Under that contract Victory Jute Mills agreed to sell and deliver to the petitioner certain quantities of hessian cloth. There was an arbitration clause.

5. Counsel for the petitioner impeached the award on two grounds. First, that Victory Jute Mills is not a legal entity and therefore there cannot be a contract between Victory Jute Mills and the petitioner and consequently there cannot be any award pursuant to such agreement. Secondly, it is contended that the award is perverse inasmuch as the arbitrator did not have any evidence as to delivery orders and delivery orders were not produced.

6. The first contention is amplified to mean that Victory Jute Mills not being a legal entity any contract made in the name of Victory Jute Mills is void and therefore the award pursuant to such void contract is invalid. It is said on behalf of the petitioner that under the memorandum of association of Tolaram (India) Ltd., and in particular Clause 99(17) the directors shall have power to enter into all such negotiations and contracts and rescind and vary all such contracts and execute and do all such acts, deeds and things in the name and on behalf of the company as they may consider expedient for or in relation to any of the matters aforesaid or otherwise for the purpose of the company. Extracting this clause from the memorandum counsel on behalf of the petitioner contends that the company can enter into contract only in the name of the company and in no other name, Reference is made to Sections 13 and 14 of the Companies Act in support of the contention that the memorandum of every company shall state the name of the company and a company can carry on business only in accordance with the provisions of the memorandum and as long as the memorandum is not changed the company must carry on business in its registered name. Counsel for the petitioner relied on the decision in King v. The Inhabitants of Haughley, 1 Neville and Manning 525 in support of the contention that a company cannot enter into a contract in any name other than its' registered name. In that case a special authority was delegated by a local Act to the directors and guardians of the poor of a district incorporated for the government of the poor. The name of the corporation was 'Guardians of the poor within the hundred of Stow in the county of Suffolk ' but in the deed the words ' Directors and acting guardians of the poor' were introduced. This was held to be invalid. It was said that the name of the corporation in grants or conveyance must be the same in substance with the proper name of the corporation, although it would not be the same in syllables and words; Applying that test it was held that the name used ' Directors and acting guardians of the poor ' was not substantially the right name. The name of the corporate body was in that case ' Guardians of the poor within the hundred of Stow in the county of Suffolk '. This decision in my opinion does not help the petitioner.

7. The question in the present case is whether a company can be a proprietor of a business and can enter into a contract in that business name. The contract in the present case was made between Lachminarain Kanoria & Co. on the one hand and Victory Jute Mills on the other. The reference to arbitration was made by Tolaram (India) Ltd. as proprietor of Victory Jute Mills. In the case of H. E. Randall Ltd. v. British & American Shoe Co., [1902] 2 Ch. 354 it was held that a limited company might acquire a right to protection to trade name used separately from its corporate name, although such user was in contravention of Sections 41 and 42 of the Companies Act, 1862. Under ihose two provisions in the Companies Act, 1862, a limited company, was required to paint or affix its name on the outside of every office or place in which the business was carried on and if any limited company did not paint or affix its name on the outside of every office or place in which the business was carried on and if any limited company did not paint or affix its name in the manner directed by the Act it was liable to a penalty. In that case a shop was opened under the name of American Shoe Company and that name was adopted to distinguish it from the shops of English goods which were carried on under the corporate name H. E. Randall Ltd. In all shops of American Shoe Co., the words H. E. Randall Ltd. appeared conspicuously over the door for a considerable time past. It was held that the plaintiffs in that case established their rights to an injunction for the purpose of protection of their business and their reputation. It was said by Swinfen Eady J. that no distinction could be established between a business bought and a business created and established. This decision shows that a company may acquire a business, may carry on business in that name, and is in proper cases entitled to protection of its reputation in that business.

8. In the case of Pearks, Gunston and Tee Ltd. v. Thompson Talmey & Co., (1901) 18 R.P.C. 185 a person named A. Talmey, having carried on business as Talmey & Co., assigned the premises and goodwill to ' G', who assigned them to a limited company of whose registered name ' Talmey ' formed no part. The company continued to carry on the business as Talmey & Co. although their own name was placed over the door of the premises. The defendants having commenced to trade as Thomson, Talmey & Co., the company commenced proceedings against them to restrain them from using the name Talmey without clearly distinguishing their business from the plaintiff's business and for other reliefs. The defendant's allegation that the plaintiff having used the name Talmey & Co., without their registered name on their bills and customers' weekly books precluded from suing, contravened Section 41 of the Companies Act, 1862, constituted no defence. An injunction was granted.

9. In the case of Employers' Liability Assurance Corporation v. Sedgwick, Collins & Co. Ltd., [1927] A.C. 95. there is an observation of Lord Blanesburgh at page 119 that a limited company may acquire a right to protection of a trade name used separately from its corporate name although such user is in contravention of Section 63, which requires every such company to paint or affix its name on the outside of every office or place. In Palmer's Company Precedents, I7th edition, Part I, it is stated at page 262 that where a company purchases a goodwill of an existing business, it has, in the absence of agreement to the contrary, a right to carry on business under the trade name previously used in connection with such business ; for the goodwill includes the right to use the name. A company carrying on business under a name other than its registered name has to register under the Registration of Business Names Act, 1916, in England. There is no comparable statutory provision in our country.

10. In the light of the decisions and principles stated above the rival contentions appear to resolve into the question as to whether a company is prohibited from carrying on any business in a name other than its registered name though the company is itself the proprietor of such business. In law there is no statutory bar. In England the position under the Registration of Business Names Act makes it compulsorily registrable as far as name is concerned. The decisions to my mind show that it is legally permissible for a company to own a business in a name different to the name of the business of the limited company. The provisions of the Companies Act on which counsel for the petitioner relied do not in my opinion provide any fetter ona company owning a business in a name apart from the name of the company itself. As long as a company discloses itself to be the proprietor and the concern is shown to be a proprietary concern of the company the veil of the business when pierced will reveal that it is the company which is the proprietor of the business. In the present case, as I have already indicated, the respondent company preferred a claim before the arbitrator as proprietor of Victory Jute Mills. I am, therefore, of opinion, that the contention of the petitioner fails.

11. Counsel for the respondent contended that it was not open to the petitioner to raise the question that the company could not own and carry on the business of Victory Jute Mills. Reliance was placed on the decision of Arbn. Jupiter General Insurance Co. v. Corporation of Calcutta, (1956) 60 C.W.N. 721. A contention was advanced in that case that the Corporation had no power to refer any matter to arbitration in the absence of statutory provision. No such point had been taken before the arbitrator. It was said that such a point could not be taken not on the ground of estoppel but that such a contention was not open to the petitioner. Reliance was placed on the decision in Ex parte Wyld, (1860) 45 E.R. 770 where a question arose as to whether a bankrupt could refer to arbitration without leave of court. I am unable to accept the contention on behalf of the respondent that any such consideration can apply to the facts and circumstances of the present case. It is in my opinion open to a petitioner to contend that a contract is void. Such a contention if denied will deprive a person of his legal right to challenge a contract or its validity. There cannot be any estoppel against the statute. Further, counsel for the petitioner in my view rightly relied on the decision of the Supreme Court in Khardah Co. v. Raymon & Co. (India) Private Ltd., (1963) 1 S.C.A. 314. where it was said that the principle in the decision of Ex parte Wyld would not preclude a party from impeaching the legal ineffectiveness or validity of a contract.

12. The other contention on behalf of the petitioner is in my opinion unacceptable. Parties adduced evidence. The assessment of evidence is a matter within the province of arbitrators. Whether the arbitrators preferred one form of evidence to the other is a matter which cannot be agitated by the petitioner in an application for determining the validity of an agreement or an award. Further, counsel for the respondent contended that the grounds urged by the petitioner that delivery order was not produced were gone into by the arbitrators and parties led evidence as to why delivery orders were or were not produced. In my opinion these questions do not fall to be considered in an application for setting aside an award. For these reasons I am unable to accept either of the two contentions advanced on behalf of the petitioner. This application is, therefore, dismissed with costs. I hold the arbitration agreement and the award to be valid and binding.


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