1. This is an appeal from a judgment and order of P. B. Mukharji J. passed in a proceeding to enforce certain Foreign Awards under the provisions of the Arbitration (Protocol and Convention) Act, 1937.
2. The appellant firm which carries on business at Calcutta, sold to the respondent company having its registered office and principal place of business at Plantation House, Mincing Lane, in the city of London, various quantities of reptile skins under eight several contracts entered into between June 1951 and February 1952 and bearing Nos. 789, 884, 909, 920, 921, 926, 938 and 947. Disputes and differences having arisen between the parties in July 1952 as to the quantity and quality of the goods supplied, the differences were referred to arbitration in terms of the arbitration clause contained in the contracts. The arbitration clause was as follows:
'Failing amicable settlement any dispute arising out of this contract to be settled by arbitration in London in the usual manner. Arbitrators and Umpires to be persons engaged in the trade and their decision to be final and binding on all concerned.'
3. The case of the appellant however is that the arbitration clauses in the contracts Nos. 938 and 947 had been deleted from the original contracts before the same were signed and so there was no arbitration agreement governing these two contracts. The respondent's case on the other hand is that no such deletion ever took place and these two contracts like the other contracts contained the usual arbitration clause. The fact however remains that arbitration was held in London with regard to the disputes which had arisen, in the presence of two arbitrators, one nominated by each side. The Arbitrators differed, and as they could - not also agree as to the appointment of an Umpire, the respondent had to institute proceeding in the Court in London for the appointment of an Umpire, and the learned Master appointed one Mr. Croft as such Umpire. On 6th November, 1953 the Umpire made nine awards in favour of the respondent for the aggregate sum of 12725-9-8d being the equivalent of Rs. 169968/3/- in Indian currency. Thereafter on 3rd September 1954 the respondent company's solicitors took out a Notice of motion from this Court for an application for filing the said Awards in this Court and for judgment in terms of the said Awards. On 28th June 1956 P. B. Mukh-arji'J. made an order for filing of the said Awards in Court, and the learned judge also pronounced judgment in terms of the said Awards. It is against this order and judgment of the learned judge that the present appeal has been preferred.
4. As the contentions raised in this appeal, are based principally on sec. 7 of the Arbitration (Pro-tocol and Convention) Act 1937 it will be convenient to set out the relevant portions of sec. 7 hereunder: 'Section 7(1)--In order that a foreign award may be enforceable under this Act it must have-
(a) been made in pursuance of an agreement for arbitration which was valid under the law by which it was governed,
(b) been made by a tribunal provided for in the agreement or constituted in manner agreed upon by the parties,
(c) been made in conformity with the law governing the arbitration procedure,
(d) become final in the country in which it was made,
(e) been in respect of a matter which may lawfully be referred to aribtration under the law of India,
and the enforcement thereof must not be contrary to the public policy or the law of India.'
5. The first contention raised by Mr. Submial Roy, the learned counsel for the appellant is that the contracts Nos. 938 and 947 did not contain any arbitration clause and so the arbitration in respect of these two contracts was without jurisdiction and the awards made by the Umpire in relation to these two contracts are invalid,
6. Now it appears from paragraph 5 of the petition filed in this Court for enforcement of the Awards and sworn on the 16th August 1954, that the course of dealings between the parties was normally that the contracts were negotiated by telegram and that a written contract note setting out the contract and giving it a number, was then prepared by the plaintiff (petitioner) in triplicate--one note being retained by the plaintiff and two being sent to the defendant (appellant) with a request that one be returned countersigned. It also appears from the letter of the defendant firm to the plaintiff company dated the 24th January 1950 that the defendant firm in making proposals for entering into business relations with the plaintiff company, had themselves suggested that the contracts would contain an arbitration clause for settlement of disputes. The said letter inter alia stated that one of the terms of the business would be:
'Arbitration, should any dispute arise under any contract with respect to quality or any other difference to be settled in accordance with the terms of the C.I.F. contract of the London Reptile Skins Brokers.'
7. So it is clear that the intention of the defendant was to have the disputes settled by arbitration.
8. As copies of some of the outstanding contracts including contracts Nos. 938 and 947 had not been returned by the appellant till then the plaintiff company on 13th February 1952 wrote to the appellant intimating that they were awaiting return or the countersigned copies of the said contracts. On 19th February 1952 the appellant by their letter of that date acknowledged that they had received the contracts and would send them the next day after countersigning the same. On the 20th February 1952 the appellant wrote to the plaintiff company the following letter:
We beg to confirm our yesterday's letter and as promised therein we are pleased to enclose herewith your six contracts Nos. 920, 921, 926, 928, 938 andt 947 duly countersigned by us which please acknowledge. With kindest regards, We are,
Yours very truly,
S. Mohd. Naim Mohd. Alam
S. Mohd Naim'
9. Although the appellant had forwarded six contracts including contracts Nos. 938 and 947 along with this letter there is no mention in this letter that the appellant had made a material alteration in the two contracts by deleting the arbitration clause therefrom. If the deletion had been actually made, one would naturally expect that such an important fact would be specifically mentioned in this letter. (10) On the 23rd February 1952 the appellant wrote another letter to the plaintiff company in which they reiterated the fact that they had sent the six contracts. On 26th February 1952 the plaintiff company replied stating that they had not till then received the letter of the 20th February 1952 or the countersigned copies of the six contracts. But after this no other letter appears to have been written by the plaintiff company complaining that they had not received the countersigned copies of the six contracts. It however appears that when on 22nd July 1952 Mr. Knight who had been appoint-ed Arbitrator on behalf of the plaintiff company wrote to the appellant that he had been appointed Arbitrator in respect of the seven contracts including Contracts Nos. 938 and 947 no objection or point was raised to the effect that the arbitration clause in the two contracts Nos. 938 and 947 had been deleted. Thereafter on 12th August, 1952 the plaintiff company sent to the appellant a detailed statement of their claim. On 6th September 1952 the appellant wrote to the plaintiff company asking for photostatic copies of the contracts. On 16th September 1952 the plaintiff company wrote to the appellant stating that the request for photostatic copies was incomprehensible as the originals were in the possession of the appellant. On 26-9-1952, the appellant pointed out that the countersigned contracts had been returned to the plaintiff company and they repeated their request for photostatic copies, and forwarded a copy of the letter of the 26th September to Mr. Knight for his information. On 2nd October 1952 Mr. Knight replied to the letter of the appellant dated the 26th September 1952 stating that at the time the plaintiff company had nominated him as the arbitrator they had pro-vided him with original contract invoice and correspondence etc. So this letter of Mr. Knight indicates that the original contracts were in possession of the plaintiff company and had been made over to the Arbitrator. On 25th November 1952 Messrs. Dutt and Sen on behalf of the appellant wrote to the plaintiff company asking for appointment of some other person as Arbitrator in place of Mr. Knight and informing that the appellant had nominated one Mr. Mohd. Shaft as their Arbitrator, This letter was written with reference to nine contracts including contracts Nos. 938 and 947 but in the concluding paragraph of the letter the appellant's solicitors repeated their request for ptiotostatic copies, On the 28th November 1952 Messrs. Dutt and Sea wrote to Mr. Knight asking for photostatic copies of the original contracts which according to Mr. Knight were in his possession. Thereafter there was further correspondence between the ap-pellant's solicitors Messrs. Dutt and Sen and the plaintiff company in which the appellant went on asking for photostatic copies and the plaintiff com-pany alleged that the originals were in the possession of the appellant.
11. On 12th March 1953 Messrs. Dutt and Sea wrote to the plaintiff company that Mr. Shafi had expressed inability to act as Arbitrator on Medical grounds and so the appellant had nominated Mr. Sheikh Enayatullah as their Arbitrator in respect of disputes in which there was an arbitration clause. In this letter therefore the solicitors used a guarded language as they had reason to think that all the contracts did not contain arbitration clause, and on 27th June 1953 Mr. Agnihotri the representative of the appellant wrote to the plaintiff company's solicitors in London definitely that the two contracts Nos. 938 and 947 did not contain any arbitration clause. Why did the appellants or their legal advisers take so much time to set up this positive case is not at all clear. No reason is forthcoming as to why, if at all, the arbitration clauses in contracts Nos. 938 and 947 were deleted or struck out by the appellant, but the clause was allowed to remain in the other contracts. It remains also inexplicable why Messrs. Dutt and Sen would write in their letter dated 31st January 1953 that 'In view of the wrongful attitude adopted by you we have to advise our clients in future not to accept the Arbitration clause in any contract,' if, as a matter of fact the arbitration clause had already been scored out in the two contracts, long before this date. However, it appears, that this question of whether the contracts Nos. 938 and 947 had any arbitration clause or not, was put in issue before the learned Master in the Court in London, and he was apparently satisfied that all the contracts did contain the arbitration clause and on that basis he proceeded to appoint the Umpire by his order dated 9th July 1953. The parties having agitated this question in a previous judicial proceeding and the issue having been decided, whether rightly or wrongly, by the learned Master, the appellant is in my view precluded from reagitating the issue before this Court, on principles analogous to res judicata. No appeal was preferred from the decision of the learned Master although an appeal lay to the Divisional Court (See Russel-page 208-209 under Heading Practice--16th Edition). Apart from this, even if it was open to us to decide this issue in a proceeding for enforcement of the Award, we would have resolved the doubt in favour of the plaintiff company and would have held that all the contracts contained the Arbitration clause and the parties intended that their disputes in relation to all the contracts would be settled by arbitration.
12. The learned counsel for the plaintiff company has argued that even if the arbitration clause was really deleted from contracts Nos. 938 and 947 the parties by filing their respective statementsbefore the Arbitrators had submitted the differences to arbitration and these statements constituted the arbitration agreement between the parties. Reliance was placed on the case reported in Khusiram Banarshilal v. Kian Gwan and Co. (Cal.) Ltd., 88 Cal. LJ 165 at p. 171 and on the case of Frank Fehr and Co.v. Kassam Jivraj and Co., (1949) 82 LL.L. Rep 673 referred to in Russel on Arbitration 16th Ed. page 25. But in view of our previous findings it is not necessary to express any opinion on this point.
13. The next contention of Mr. Subimal Roy is that as Mr. Enayatulla, the Arbitrator, nominated by the appellant, did not receive any notice of appointment of an Umpire in terms of sec. 10 of the English Arbitration Act, 1950 calling upon Mr. Enayatulla to appoint an Umpire or to concur in the appointment, within seven days from the date of service of the Written Notice, the entire proceeding before the learned Master in the Court in London was without jurisdiction and the appointment of Mr. Croft as Umpire was invalid.
14. It is alleged that on 18th June 1953 Easton and Sons, the solicitor for the plaintiff company, wrote a letter to Mr. Enayatulla enclosing a notice given pursuant to Section 10 of the English Arbitration Act 1950. This letter was addressed to Mr. Enayatulla at his Kensington Hotel address at 118 Queensgate S. W. 17. Mr. Enayatulla in his affidavit affirmed on 23rd February 1955, has stated that he left Kensington Hotel on 5th June 1953 and shifted to Claremont House Hotel at 95, Queensgate, London S. W. 7 and there he stayed up to 17 June 1953 and on 18th June 1953 he shifted to Hotel Regina, London, Certain correspondence dated 3rd June 1953, 5th June 1953, 8th Tune 1953, 10th June 1953 and 11th June 1953 which passed between W. P. James, the Arbitrator nominated by the plaintiff company, and Mr. Enayatulla, have been produced to show that Mr. James knew the correct address of Mr. Enayatulla.
15. Mr. Enayatulla has further stated in his affidavit that he did not receive any notice calling upon him to appoint an Umpire. It appears however that on that very day when Notice is alleged to have been sent by Easton and Sons to Mr. Enayatulla, Easton and Sons wrote letters to Mr. W. P. James, to Mr. Agnihotri and Messrs. Dutt and Sen, and a copy of the Notice given under sec. 10 of the English Arbitration Act 1950 was also sent to Mr, Agnihotri, and Mr. Agnihotri replied to this letter on 24th June 1953. Furthermore from the affidavit of S. R. Vincent, (the London Solicitor of the appellant; sworn on the 7th July 1953 and filed before the Queen's Bench Division in London, it appears that before filing this affidavit he made enquiries from Mr. Enayatulla and received certain information from him which he recorded in paragraphs 9 and 10 of his affidavit. If Enayatulla did not actually receive any notice under sec. 10 of the Act he would certainly have mentioned this to Mr. Vincent, and this fact would have found place in the affidavit of Mr. Vincent.
16. It appears to me that this case of Mr. Enayatulla not receiving the notice under Section 10, is the result of an after thought and is not true.
17. In view of this finding it is not necessary to go into the further question raised by Mr. Roy whether the absence of notice vitiated the entire proceeding for appointment of the Umpire which took place in the Court in London, and rendered the order for appointment of the Umpire invalid.
18. The next point of Mr. Subimal Roy is that the Awards were not made in conformity with the law governing the arbitration procedure and so they are not enforceable. In other words the contentionis that Section 7(1)(c) of the Arbitration (Protocol and Convention) Act has not been satisfied.
19. It is submitted by Mr. Roy that the Umpire in the present case violated the fundamental principles of law and justice, in interviewing and receiving information from the parties separately and in the absence of each other, and in acting upon such information or evidence, in making the Awards. The attention of this Court has been drawn to paragraphs 8 and 9 of the affidavit of Mr. Agnihotri affirmed on 1st February 1955 and to the affidavit of Mr, Croft, the Umpire, sworn on 12th May 1955. It appears from the affidavit of Mr. Agnihotri that Mr. Croft held a separate conference or meeting with Mr, Enayatulla and Mr. Agnihotri, at Mr. Enayatulla's place in London, and there received the seller's documents, written statement and the seller's written submissions and asked Mr. Agnihotri to say what he wanted to say in support of the seller's written statement and the seller's written submissions. After this Mr. Croft informed them that he would give time to the plaintiff company (the buyers) and would hear them. All this took place on the 26th July 1953. On 29th July 1953 Mr. Agnihotri met Mr. Croft at the latter's office & explained to him further the seller's contention. He was told by Mr, Croft that Mr. Croft was likely to meet the buyers and Mr. James, in a day or two, when he would hear them regarding the various disputes. Mr. Agnihotri informed Mr. Croft that he was going to leave England for India on 31st July 1953 to which Mr. Croft replied that Mr. Angnihotri could most certainly leave for India. In the afternoon of 29th July 1953 Mr. Croft also asked Mr. Agnihotri over the phone, to send a statement of all expenses incurred by the sellers in connection with the arbitration ana Mr. Agnihotri wrote a letter to Mr. Croft on the 29th July 1953, that is, the same day.
20. Mr. Croft in his affidavit states that he gave both parties the opportunity of making further submissions or representations. But it is only the sellers who availed themselves of this opportunity but the buyers did not and the latter were content to rely on the documentary evidence already produced and the submissions already made. It is further stated in the affidavit of Mr. Croft as follows:
When acting as Umpire I gave the parties every opportunity whenever they wanted to, to make any further submissions they may wish to make to me and I understand that unless they both ask to be present together there is nothing improper in any receiving such submissions separately. If any new evidence or material is produced by one party in the absence of the other my practice is to notify that other party but nothing of that sort occurred in the present case.
I personally inspected the merchandise as to which the dispute had arisen and had no difficulty whatever in identifying the same in accordance with the documentary evidence submitted to me by the parties.'
21. It is not clear from the affidavit of Mr. Croft that he had any expert knowledge of reptile skins. All that is stated in the affidavit is that he has been for years engaged in the leather and skin trade and he was the Manager of the Reptile Department in C. B. Denials Ltd.
22. It may be noted in this connection that Mr. Agnihotri in paragraph 10 of his affidavit has raised a complaint about the unsatisfactory nature of the inspection made by the Umpire. The said paragraph runs as follows:
''I further say that the Umpire did not (sic) the parties in the presence of each other. The Umpire did not take any oral evidence nor did he inspect the skins in my presence which were the subjectmatter of arbitration.
23. It is thus clear from these affidavits that the Umpire did hear some submissions separately and it does not appear that any hearing or proceeding took place in the presence of both parties, the Umpire dealt with the parties separately. He inspected the goods in dispute all by himself and the parties were not present at the time of such inspection.
24. Now it is true that Courts must not insist upon a too minute observance of the regularity of forms among persons who naturally by their educa-tion or by their opportunities cannot be supposed to be very familiar with legal procedure, and so some latitude may be permitted to them when they make slips in what is mere matter of form, but the rule is now well settled that the arbitrators must observe the first principle of justice, be the arbitration commercial or of any other kind. Though intending no injustice they must observe the funda-mental rules which govern judicial proceedings.
25. In the case of Harvey v. Shelton, (1844) 7 Beav 455 at p. 462 which was decided abount 20 years after the case of Maston v. Trower (1824) Ry and M 17, on which reliance is placed by the plaintiff company, Lord Langdale M.R. observed as follows:
'It is so ordinary a principle in the administration of justice, that no party to a cause can be allowed to use any means whatsoever to influence the mind of the judge which means are not known to and capable of being met and resisted by the other party, that it is impossible for a moment, not to see that this was an extremely indiscreet mode of proceeding, to say the very least of it. It is contrary to every principle to allow at such a thing and I wholly deny the difference which is alleged to exist between mercantile arbitrations and legal arbitrations. The first principles of justice must be equally applied in every case. Except in the few cases where exceptions are unavoidable, both sides must be heard, and each in the presence of the other. In every case in which matters are litigated you must attend to the representations made on both sides, and you must not in the administration of justice, in whatever form, whether in the regularly constituted courts or in arbitrations, whether before lawyers or merchants permit one side to use means of influencing the conduct and the decisions of the Judge, which means are not known to the other side.'
26. This passage has been quoted with approval by the Supreme Court of India in the case of P. Vengamma v. P. Kesanna, : 4SCR119 . In this case of (1844) 7 Beav 455 interviews between the arbitrator and one party rendered the award invalid.
27. In the case of Inland Revenue COMMIS-sioners v. Hunter, (1914) 3 K.B. 423 at p. 428 where solicitors with no improper motive gave some information to the arbitrators it was said:
'I think it right to say that the well-known rule, that no communication shall be made by one party to a judicial tribunal without the knowledge of the other is of the greatest importance.'
28. In the case of In Re Gregson and Armstrong, (1894) 70 L.T. 106 where after the close of evidence the Arbitrator held a meeting and received some information in the absence of one of the parties, the award was set aside.
29. How rigidly the Courts have insisted upon observance of this rule is illustrated by the case of Ramsden and Co. Ltd. v. Jacobs, (1922) 1 KB 640. (sic) this case the arbitrator had heard the evidence of each of the parties in the absence of the other. No objection was made by the parties at the time to this procedure adopted and it was not shown that any injustice had resulted from the improper procedure. The case of 1824-Ry and M 17 was cited before the court and it was argued that in arbitrations it is the common practice where, the dispute is as to quality, for the parties not to appear at all. Bray J. held that whatever might be the practice, the procedure of hearing evidence of one party in the absence of the other was absolutely wrong and the award was set aside.
30. It is of course to be noted that this case of 1922-1 KB 640 was one where evidence was taken in the absence of the other party and this was, without question, grossly improper.
31. In the case of Fuerst Bros. and Co. v. Stephenson, (1951) 1 Lloyd's Rep. 429 the Umpire in a commercial arbitration, (after he had finished hearing the arbitrators) approached one of them and asked him for further information, which was given, it being left to that arbitrator to tell the other what was going on. On a motion by the other party to set aside the award, it was argued that it was the practice in the course of such an arbitration for the Umpire to leave it to one arbitrator to keep the other informed. The court set aside the award holding that the alleged practice would not justify what was done but remarking also as to the alleged practice 'I doubt the validity of it as a matter of procedure'. (See Russell--16th Ed. page 119).
32. It has been held in numerous cases that it is immaterial if the arbitrator or Umpire swears an affidavit that information obtained by him ex parte has not influenced his mind one way or the other or has not resulted in any prejudice. It is sufficient to refer to the Supreme Court case of Vengamma v. Kesanna mentioned in an earlier part of this judgment in support of this proposition. Some of the English cases having a bearing on this point are dealt with in the judgment of the Supreme Court. (See 1952-15 S.C.J 630 at pages 632-633: : 4SCR119 ).
33. It appears to me notwithstanding what he has stated in his affidavit, that Mr. Croft had received information from both parties separately and he had heard them separately and in doing so he did not act in conformity with the arbitration procedure.
34. It has been argued on behalf of the plaintiff company that the appellant by not objecting to this improper procedure at the time, had waived the irregularity, and their conduct also shows that they impliedly agreed to such procedure being adopted. This case of waiver and implied agreement involves questions of law and fact and in the absence of specific pleading and specific issue, such pleas cannot be allowed to be raised (see Florrie Edridge v. Rustomji Danjibhoy and the Supreme Court case already referred to at page 633 : 4SCR119 .
35. The fact that inspection of the goods was made by the Umpire in the absence of the parties is a further ground for holding that the first principles of justice were not observed by the Umpire in conducting the arbitration. It is possible that he did not inspect the goods in dispute but saw some other goods, and it is also possible that the extent of his inspection was not thorough and adequate and he did not see all the goods which should have been seen by him.
36. In Russell on Arbitration (16th Ed. page 173) the following passage occurs:
'An arbitrator must not, unless so authorised by the parties, decide upon a view or inspection ofpremises or goods at which they have had no opportunity to be present. But it would seem that in the case of arbitrators authorised to decide upon their own expert knowledge, such further authority might be presumed by a Court.'
37. There are two cases cited after this passage in Russell's book at page 173 (bottom) which may also be referred to.
38. Reference may also be made to the case of In Re, Brook, Delcomyn and Badart (1864) 16 C.B. CN.S.) 403. In this case an Umpire who had been called upon to decide on the condition of rape-seed, inspected samples shown to him by One party in the absence of the other. The award was set aside on the ground that the Umpire's conduct in receiving one-sided evidence was a violation of the principles of justice.
39. It has no doubt been held that it is in the discretion ot the Arbitrator to inspect or not, the premises or the goods in dispute, (See Russell 16th Ed. page 128-129) but it is clear that if he decides to inspect, he must do so in the presence of both parties.
40. As I have pointed out already the affidavit of Mr. Croft does not give any clear indication about his expert knowledge of skins or about the extent of his experience in this particular trade. But even assuming that he is an expert in this trade it is only fair and proper that he should carry out the work of inspection, in the presence of the parties, especially when the quality of the goods is in dispute and the identity of the goods and the extent if any of supply of goods of inferior quality are prime factors for consideration.
41. It has been argued before us that the expression 'arbitration procedure' in Clause (c) of Sub-section (1) of Section 7 of the Arbitration (Protocol and Convention) Act, 1937 should be limited only to the procedure prescribed by statutory enactment and it has no reference to procedure which has its basis on principles of natural justice. I am unable to accede to this contention. Apart from the law which is codified in Statutes principles of equity and justice have always guided the Courts in the matter of administration of justice, in all civilised countries of the world. That the law laid down by judicial decisions is as much a part of the law of the land as the law embodied in Statutes, is a fact recognised in all authoritative works of Jurisprudence and the argument that an Award made in violation of the first principles of justice or in disregard of the fundamentals of fairplay is a good enforceable Award, does not merit any serious consideration at all.
42. In my view the Awards made by the Umpire are not in conformity with the law governing the arbitration procedure and are not therefore enforceable in this Country under the provisions of the Arbitration (Protocol and Convention) Act, 1937.
43. The learned Counsel for the respondent company suggested very faintly that no appeal lies from the order of the learned trial judge. In view of the Bench decision of this Court which is reported in Shiva Jute Baling Ltd. v. Hindley and Co. Ltd., 57 Cal. W.N. 573, from which at present we see no reason to differ, this point need not be pursued any further.
44. In the result the appeal is allowed and the order of the learned trial judge is set aside. The respondent will pay to the appellant the costs of the appeal.
45. Certified for two Counsel.
Das Gupta, C.J.
46. I agree.