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Bengal Jute Mills Vs. Jewraj Heeralal - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata
Decided On
Reported inAIR1943Cal13
AppellantBengal Jute Mills
RespondentJewraj Heeralal
Excerpt:
- .....of jute known as t.s.g. mark. disputes arose, the buyers contending that the goods were not of the contract quality and they claimed an allowance in respect of the defective jute. the disputes under the two contracts were stated by the buyers in their letters of 10th and 18th february 1942. on 12th march following the arbitrators, through the registrar of the chambers tribunal of arbitration, published their award. i will deal later with the merits and substance of the application itself.2. learned counsel on behalf of the respondents took a preliminary objection against the maintainability of the present application upon the following grounds. the applicants are a firm comprising three partners. the petition is signed and verified by one, sukhdeo singh who describes himself as the munib.....
Judgment:
ORDER

Gentle, J.

1. This is an application to set aside an award made by the Bengal Chamber of Commerce in an arbitration upon the question referred to the arbitrators. The present applicants were the sellers and the present respondents were the buyers in two sale of goods contracts in respect of a total of 257 bales of jute known as T.S.G. Mark. Disputes arose, the buyers contending that the goods were not of the contract quality and they claimed an allowance in respect of the defective jute. The disputes under the two contracts were stated by the buyers in their letters of 10th and 18th February 1942. On 12th March following the arbitrators, through the Registrar of the Chambers Tribunal of Arbitration, published their award. I will deal later with the merits and substance of the application itself.

2. Learned Counsel on behalf of the respondents took a preliminary objection against the maintainability of the present application upon the following grounds. The applicants are a firm comprising three partners. The petition is signed and verified by one, Sukhdeo Singh who describes himself as the Munib gomasta of the firm, and in his affidavit at the foot of the petition he states that none of the partners were at Calcutta, and there was no likelihood of any of them going to Calcutta in the near future : that he was looking after the business of the firm and was fully acquainted with the facts and circumstances : he had verbal authority from the partners to appoint an attorney and to sign and verify the petition on their behalf. The objection raised is that the petition has not been signed nor verified as required by the Code inasmuch as the acts of signing and verification should be effected by a recognized agent of the parties, and Sukhdeo Singh is not such a person as indicated in Order 8, Rule 2, Civil P.C. Since there has been non-compliance in this respect the present application must be dismissed, it was contended, without consideration of its merits. The relevant provisions of Order 3 of the Code are as follows:

Rule 1. - Any application to any Court required to be made by a party may, except where otherwise expressly provided by any law for the time being in force, be made by the party in person or by his recognized agent.

Rule 2 defines 'recognized agent' as (a) persons holding powers of attorney, (b) persons carrying on trade or business for and in the name of parties not resident within the local limits of the jurisdiction of the Court.

3. It was conceded that Sukhdeo Singh does not hold a power-of-attorney, and it was contended on behalf of the respondent that he does not come under 'recognized agent' as indicated in Rule 2(b). As he was in Court and at the request of counsel for the applicants I allowed him to be examined and cross-examined. In substance his testimony was to this effect: his employers lived in Calcutta above or adjacent to the office of the firm : in March or April, or it may be a little later in the present year, the three partners of the firm left Calcutta for Rajputana on account of the panic arising out of their conception of the present emergency, and Sukhdeo Singh was left by them in charge of the whole business, being given authority to do everything which, was required, including any matters which the partners would themselves have to do in connexion with the arbitration before the Bengal Chamber of Commerce. He said that the three partners will return to Calcutta when the present panic or emergency comes to an end. It follows that they are not permanent residents outside Calcutta, and live in Kajputana, but are staying there temporarily although it may be for an extended period. The witness was asked whether he had been given oral authority to sign and verify the present petition, and his answer was that he had such authority inasmuch as he had authority to 'do everything necessary' and which was required. I see no reason not to accept his evidence.

4. If the matter rested there I should have but little doubt that Sukhdeo Singh is not included in the persons who are indicated in Order 3, Rule 2(b) of the Code. I do not think he is carrying on a trade or business for and in the names of his employers, the three partners of the firm, which persons are not resident within the jurisdiction of this Court. Other considerations, however, arise. By chap. 7, Rule 8 of the rules of the original side of this Court, it is provided that where any person other than a party verified a pleading under Order 6, Rule 15 of the Code, his fitness to do so shall be proved by his affidavit at the time the pleading is presented, and that a pleading shall include a petition. Order 6, Rule 14 of the Code provides that:

Every pleading shall be signed by the party and his pleader : Provided that where a party pleading is, by reason of absence or other good cause, unable to sign the pleading, it may be signed by any person duly authorized by him to sign the name or to issue or defend on his behalf.

5. It is to be noticed that the rule does not provide that, in the events indicated in it, the person to sign for the party shall be a 'recognized agent' as contemplated by Order 3, Rule 2. It is to be done by a person duly authorized, but it would seem that this rule is to be utilized only when an absence is temporary or for some good cause and not when the circumstances arise which are indicated in Order 3, Rule 2 (b), namely, that the person by whom a suit is brought is resident permanently outside the jurisdiction of the Court. Order 6, Rule 15 of the Code provides that every pleading shall be verified at the foot by the party or by one of the parties or by some other person proved to the satisfaction of the Court to be acquainted with the facts of the case. So far therefore as verification is concerned the Court must be satisfied that if it is not by a party, it is by a person proved to its satisfaction to be acquainted with the facts. Sukhdeo Singh has so sworn in his affidavit, and his statement has not been challenged in cross-examination. I accept therefore that he has knowledge of the facts, to which he testifies in the affidavit and which are set out in the petition. The absence of the principals of the firm is temporary, and I accept from Sukhdeo Singh that he was orally instructed and authorized during the absence of the partners to do everything which would be required to be done in connexion with the business, in charge of which he was left, and that he was expressly authorized to take all necessary steps in regard to the arbitration then pending and which is the subject-matter of the application before me. He was, in my view, duly authorized as contemplated by Order 6, Rule 14 of the Code.

6. Order 3, Rule 1 requires an application to be made by a party or by his 'recognized agent' except where otherwise expressly, provided by, any law for the time being in force. This exception, in my view, includes the provisions in Order 6, Rules 14 and 15. Those rules expressly provide the ways and means by which pleadings (which by chap. 7, Rule 8 of the Rules of this Court include the petition) shall be signed and verified when the circumstances exist which are indicated in those rules. In my view, the preliminary objection fails and the present petition is not one which should be dismissed by reason of non-compliance with the rules and orders of the Code and of this Court. The contracts between the parties are dated 2nd December 1941. Clause 7 provides that all matters, questions, disputes, differences and/or claims arising out of and/or concerning and/or in connexion with and/or in consequence of or relating to the contract whether or not the obligations of either or both parties under the contract be subsisting, at the time of such dispute and whether or not the 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. Clause 10 provides that many case where the buyers purport to reject the tender of jute for any reason and the dispute is referred to arbitration as provided for in Clause 7 the parties specifically agree that any award made may inter alia provide for the replacement of the tender whether or not the due date or any extended date has expired. Another provision in the contract is that if the jute be not sound, the buyer has the option to cancel the parcel and to ask for a fresh tender.

7. Although there were two contracts and two complaints regarding the quality of the jute the wording of the contracts and the complaints are identically same in regard to the quantities. There were two deliveries under the contracts and the complaint in regard to each delivery are also identical although of different dates. It is convenient to refer to the earlier complaint and communication in regard to it with the Chamber's Tribunal of Arbitration. On 10th February 1942 the respondents, as buyers, wrote to the Registrar of the Tribunal of Arbitration that they begged to submit the dispute mentioned in the letter arising out of inferior quality of jute supplied by the sellers for decision by the Tribunal of Arbitration. The letter proceeds as follows:

We found on inspection that the jute was very inferior in quality. We therefore claim for an adequate allowance thereon for the defects. In these circumstances we pray that the learned arbitrators may be pleased to award that the sellers do pay us an adequate allowance for quality and condition in respect of the goods.

8. A similar letter was written on 18th February. The award of the arbitrators was published on nth March 1942 and its terms are set out in a letter written by the Registrar of the Tribunal of Arbitration addressed to the applicants dated 12th March 1942. The relevant portions are as follows : (1) That the jute is not a fair tender under the contract; (2) That the buyers shall have the following options to be declared within five days from the date of the award; (a) That the buyers may accept the 257 bales of jute in dispute at the contract rate subject to an allowance of Rs. 4-8-0 per maund on account of quality; or (b) That (subject to all bales opened for inspection and arbitration purposes being retained and paid for at the contract rate subject to the aforesaid allowance the buyers may reject the parcel and treat that portion of the contract as cancelled; or (c) That (subject to as in (b)) the buyers may reject the parcel and claim a fresh tender within so days from the date of the award.

9. The objection which is made by the applicants to the award is that the arbitrators have exceeded their jurisdiction, inasmuch as the questions which required their decision were only two, firstly, the quality of the jute, whether it was defective or not, and secondly if defective the amount of the allowance which the buyers were entitled to receive against the purchase price. That in addition to dealing with the matters which they were required to decide the arbitrators have given to the buyers two further alternatives, namely, either to reject a part of the goods and treat that portion of the contract as cancelled or that they can reject the goods and claim a fresh tender within 30 days. It is common ground that arbitrators can publish an award in an alternative form and complaint is not made on that account. The letters of 10th and 18th February, it is argued on behalf of the applicants, make it quite clear that the only two matters which required the decision of the arbitrators are those which I have previously indicated. The arbitrators, therefore, having given the buyers two alternatives in addition to affording them the relief which they sought, it is contended they have exceeded their powers or jurisdiction. Reference has been made to some extracts from Russell on Arbitration. The accuracy of the passages has not been challenged. In Edn. 11 at p. 376 the following appears:

Another and important rule is that the arbitrator must decide neither more nor less than the disputes submitted to him, otherwise the award may be set aside.

10. And on the same page:

Where the submission under the statute under which be is acting prescribes his powers or duties, he must strictly observe and comply with the same.

11. At page 79:

The question over what subject-matters the arbitrator is to exercise his powers, must be answered by a reference to the particular words of the submission enumerating the subject-matters. If the arbitrator adjudicates upon matters beyond the limits of the submission the award will be bad in toto.

12. And lastly at page 82:

Where on disputes as to the quality of goods delivered in one case the question only of the buyer's right to reject the goods in consequence of alleged inferiority, and in another case the question only whether the goods were deficient in quality, was referred, it was held that the arbitrator was not entitled to make his award that the purchaser should take them at a reduced price.

13. Several authorities are cited in support of the passages which I have quoted but as the principles are not disputed, reference to these authorities is not necessary. Learned Counsel on behalf of the respondent buyers in his argument contended that the submission to arbitration was not under the letters of 10th and 18th February. Under the Arbitration Act, 1940 the question of a submission no longer arises and the right and authority of the arbitrator rests upon the arbitration agreement made between the parties. This agreement is contained in Clause (7) of the eon-tracts, the terms of which I have earlier quoted. Learned Counsel pointed out that under this clause the arbitrators had authority and jurisdiction to deal with all questions, disputes and differences arising out of and/or concerning and/or in connexion with and/or in consequence of or relating to the contract, and that this clause gives full authority to the arbitrators to make an 1 award in the form in which they published it. He pointed out that if the jute was not' sound, that is, was not of the contract quality, the respondent buyers had the option to cancel the parcel and to ask for a fresh tender, and also by el. 10 of the contract in case the buyers purported to reject the tender for any reason and the dispute was referred to arbitration as provided in the contract the parties had specifically agreed that any award might inter alia provide for the replacement of the tender.

14. The two letters of 10th and 18th February 1942 in which the respondents informed the Registrar of the Tribunal of Arbitration of the disputes are contained upon a printed form provided for that purpose. A portion of this form has been deleted by the respondents. One deleted portion is to the effect that the goods were poor in quality and had therefore been rejected. There is nothing before me which justifies any suggestion that the goods were rejected. The two letters make it quite clear that the respondents sought only for reductions in price on account of the defective quality. Clause 10 of the contract can be brought into operation only when the buyers have purported to reject the tender for any reason. From the two letters it would seem that no rejection had taken place, that the buyers were prepared to accept the goods but that they wished for the price to be reduced. Similarly, the other provision in the contract, that if the jute was not sound the buyers could reject and call for a fresh tender does not arise. It is in respect of the buyers' right to reject and also to claim a fresh tender that the alternative reliefs have been granted. Whilst it is correct that since the recent Arbitration Act there need be no form of submission, and the authority and jurisdiction of the arbitrator is to be ascertained from the agreement for arbitration, which in this case is contained in the contract, nevertheless when the parties set out specifically what disputes have arisen and what relief is sought in consequence of the alleged default by one party, it seems to me that those are the only matters upon which the arbitrators are required to inquire and to adjudicate. The only relief claimed in the present case was confined to an allowance being made in the price on account of the defective quality. The buyers never sought to have other awards given dealing with rejection and fresh tender of the goods. By adding to their award Para. 2 (b) and (c), above, it seems to me that the arbitrators have gone beyond what was required for their consideration and have decided questions beyond which they were required to adjudicate. This being the case it must follow that the award is void in toto and must be set aside and there will be an order accordingly as sought in the petition. The respondents must pay the costs of the application.


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