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Tons Jute Co. Ltd. Vs. Kissenlal Bangur - Court Judgment

LegalCrystal Citation
CourtKolkata High Court
Decided On
Case NumberAppeal No. 130 of 1960
Reported inAIR1963Cal322
ActsArbitration Act, 1940 - Section 30; ;Bengal Chamber of Commerce Tribunal of Arbitration Rules, 1956 - Rule 5
AppellantTons Jute Co. Ltd.
RespondentKissenlal Bangur
Appellant AdvocateS.S. Ray and ;S.K. Gupta, Advs.
Respondent AdvocateA.C. Bhabra and ;S. Tibriwal, Advs.
DispositionAppeal dismissed
Cases ReferredRamnath Narendranath v. Nanjee Shamjee and Co.
- .....on or about the 28th june, 1952 the appellant tendered the pucca delivery order in respect of the june portion, with the bill, but the respondent failed to accept or pay for the same, whereupon, it is claimed that, on the 1st june 1952, the appellant resold the same by public auction, resulting in a short-fall of rs. 8835/2/0 for the june portion of the goods.4. thereupon, the appellant wrote to the registrar of the tribunal of arbitration of the bengal chamber of commerce on the 20th april, 1955 claiming arbitration. in this letter, the may portion of 50,000 yards and the june portion of another 50,008 yards, have been dealt with and described separately. they are set out under different headings, and all the particulars of each portion have been set, out under that heading separately......

Sinha, J.

1. This is an appeal from an order of Ray, I. dated the 24th March 1960, by which the learned Judge has set aside an award of the Bengal Chamber of Commerce dated the 15th September, 1955 and has declared the same to be null and void The facts are as follows:

2. By contract No. 203, dated the 30th January 1952, the appellant sold and the respondent bought, 150,000 yards of Hessian cloth, delivery April/May/June 1952, at the rate of 50,000 yards monthly. There was the usual arbitration clause for reference to the Tribunal of Arbitration of the Bengal Chamber of Commerce.

3. The appellant's case is that it tendered the pucca delivery order to the respondent, in respect of the May portion, together with the bill, but the respondent failed to accept or pay for the same. Thereupon, on the 6th June, 1952 the appellant resold the same at a public auction, with a shortfall of Rs. 9525/7/6. Similarly, on or about the 28th June, 1952 the appellant tendered the pucca delivery order in respect of the June portion, with the bill, but the respondent failed to accept or pay for the same, whereupon, it is claimed that, on the 1st June 1952, the appellant resold the same by public auction, resulting in a short-fall of Rs. 8835/2/0 for the June portion of the goods.

4. Thereupon, the appellant wrote to the Registrar of the Tribunal of Arbitration of the Bengal Chamber of Commerce on the 20th April, 1955 claiming arbitration. In this letter, the May portion of 50,000 yards and the June portion of another 50,008 yards, have been dealt with and described separately. They are set out under different headings, and all the particulars of each portion have been set, out under that heading separately. However, the total claim that was made was for Rs. 18,360-9-6, being the claims for May and June portions added together. It is not disputed that this letter was forwarded and one set of fees was sent, namely, for Rs. 400/-, as the cost of the arbitration.

5. On the 17th May, 1955 a Court was constituted by the Registrar, in accordance with the rules framed by the Bengal Chamber of Commerce. On the 20th May, 1955 the Registrar forwarded a copy of the appellant's statement of claim to the respondent, asking it to file its counter-statement. On or about the 13th June 1955, the respondent wrote to the Registrar stating that under the contract, each month's delivery was to be considered as a separate contract. Therefore, there should have been separate applications for arbitration in respect of the May and June deliveries. On the 21st June, 1955 the Registrar informed the appellant of this objection and returned the statement and papers, to enable the appellant to submit the applications separately in respect of the May and June deliveries, with a further deposit of Rs. 400/-. On the 28th June, 1955 Messrs. Leslie and Khettry, solicitors for the appellant, wrote as follows to the Registrar:

'As desired by you, we return you, herewith, two statements of our claim filed in the above case, after deleting therefrom certain portion in respect of our client's claim for the June, J952 portion of the contract. In the circumstances, the present case relates only to the May, 1952 portion of the contract.'

On the 1st July, 1955 the Registrar wrote to the respondent intimating to them about the letter from Messrs. Leslie and Khettry, and asking that their counter-statement should now be filed. In answer to this, technical objections were taken on the ground that there was a fresh reference, which was incompetent, or, alternatively, the old reference should not be continued. It was stated that, without prejudice to these contentions, the counter-statement would be filed within a fortnight. The Registrar thereupon asked the appellant's solicitors for comments, which were forwarded. It was stated in the comments, a copy of which is at page 37 of the Paper Book, that the statement of claim that was filed on the 20th April 1955, was of two distinct deliveries, namely, May and June. As soon as objection was taken to this claim, on the ground that the two claims should have been made separately, the appellant deleted its claim in respect of the June portion, for which it has subsequently made a claim. A Court was constituted for this subsequent claim and an award was made, which has now been satisfied. It was submitted that the objection was a very technical one and not valid.

6. Thereafter, the respondent was told that the arbitration would proceed, and time was extended for filing the counter-statement, until, finally, notice was given that the hearing would take place on a particular date. The respondent did not either appear or contest the case. On the 15th September 1955, an award was made in favour of the appellant for Rs. 9525/7/6 with interest and costs. On the 17th September 1955, notice was given about the making of the award, and on the 17th February 1960, an application was taken out for setting aside the award.

7. In his judgment, the learned judge referred to Rule V of the rules for arbitration. Actually, the reference is to the proviso to Rule V, which runs as follows:

'Provided that where disputes or differences arising out of more than one contract between the same parties are intended to be referred to the Chamber, a separate application accompanied by the requisite deposit against fees as provided in these Rules shall be made in respect of the disputes or differences arising out of each of such contracts.'

According to the learned Judge, these two portions, namely, the May and June portions, were separate contracts, and there should have been two applications. He then proceeded to hold that in allowing the 'amendment' as he calls it, the principles of natural justice were violated, because no opportunity was given to the petitioner to contest the same. The learned Judge then proceeds to find that the tribunal as originally constituted on the 17th May, 1955 had no jurisdiction to adjudicate on the dispute -- 'referred to in the letter dated June 18th'. It is explained that the tribunal that was constituted on the 17th May was in respect of the May and June portions, and, according to the learned judge, was incompetent to adjudicate on the dispute with regard to the May portion only.

8. The other ground on which the learned Judge proceeded was on the question of limitation. I regret to say that it is not very clear from the Judgment how this question of limitation arises. I shall presently deal with the limitation point, as propounded before us. On these grounds the learned Judge set aside the award and declared the same to be null and void. In our opinion, the learned judge was in error in doing so. There can be no dispute that the contract stipulated that the delivery for each month should be considered as a separate contract. Whether a separate reference to arbitration arises under each such contract is a matter which is not free from difficulty. But I do not think it is necessary to deal with that aspect of the matter. Assuming that the delivery of each of the 3 months was to be considered as a separate contract with a separate arbitration clause, we have to see now the reference to arbitration should have been made, and whether the procedure adopted was in accordance with law.

9. Firstly, we come to the definition of the word 'Reference', as defined in the rules:

''Reference' means any agreement or application to refer a difference or dispute (present or future) to the Tribunal. In case of more than one difference or dispute between the same parties which arise under separate contracts, there shall be a separate reference in respect of each contract.'

10. I have already referred to the proviso to Rule V. I might mention here that the rules in their present form were promulgated in 1956, previous to which there was a slight difference in the wording. There can be no doubt now that it has been emphasised that disputes and differences arising out of separate contracts call for separate applications to be made. No form of application however has been prescribed.

11. Coming now to the facts of this case, we find that the appellants made an application in which they dealt with the deliveries of May and June separately, but it was included in one letter or application, and the total claim was the figurefor the two months added together. Upon this, a Court was constituted. The respondent objected that the two claims were to be treated as under two separate contracts, and could not be mixed up together. Thereupon, what the appellants did was to delete the June portion so that the application remained an application relating to the May portion only. The objection that is now taken is that the original application being not in accordance with the rules, the appointment of the Arbitrators was invalid and therefore they could not proceed to deal with the matter as if only one claim was preferred originally. As will appear from the observations made above, the matter was contested from two points of view. It was contended that the whole proceedings were void because there was not a proper application for reference, and alternatively that there was a fresh reference and it was not a reference which could be ante-dated to May 17, 1955. Why this second objection has been put forward is clear. It is urged that if the reference is to be considered as a fresh reference on or about June 28, 1955 then the claim is barred by limitation, whereas if the reference is on May 17, 1955, then the bar of limitation does not apply. In my opinion, neither of these contentions is of substance. It is true that under the amended rules, separate applications have to be made in respect of separate contracts. But the form of the application has not been prescribed. The applicant here, made an application in which the claims were dealt with separately. There was no insurmountable difficulty in treating them as separate claims. However, the Registrar sent them back to the applicant, to split them into two separate applications. The applicant thereupon chose to delete the claim for one of the two periods. In other words, if the original application was to be considered as a consolidated application for arbitration with regard to two claims, one was deleted. This was done because of the objection taken by the respondents, and I do not see how, by allowing this deletion, there was any violation of the rules of natural justice. It is the option of the claimant to claim for either one portion or two portions. They had originally put forward a claim for May and June portions, now they abandoned the claim for the June portion. Therefore, the claim remained a claim for the May portion only. To state otherwise, would be to introduce into arbitration proceedings the rigours of technicality, which should at all times be avoided. It will be observed that at no point of time did the respondents contest the matter on merits, and they should not be allowed to succeed on this technical point which, according to us, has no substance.

12. Certain authorities have been cited before us. The first authority is a decision of Bachawat J. -- J. Agarwalla and Sons Ltd. v. Kanoria General Dealers Ltd.. 59 CWN 715. I must point out here that this judgment, as also the appellate judgment which followed, deal with the rules as they were before the amendment, and as I pointed out above, were slightly different in wording. However, the learned Judge has discussed certain principles which should be applied to arbitrations and awards. It was held that where there were twocontracts between the same parties, the subject-matter of which were identical, and they were referred to the same arbitrator he was entitled to make one award in respect of them. This decision, however, is not in conformity with another single decision of this Court made by S. R. Das Gupta, J. -- Re Arbn. Askaram Kissenlal v. Kanyalal Dugar (unreported judgment dated August 18, 1953). Both these judgments came to be considered by the Appeal Court in Appeal No. 36 of 1955 --J. Agarwalla and Sons v. Kanoria General Dealers Ltd. (unreported judgment of Chakravartti, C.J. dated April 26, 1956). In this judgment, the learned Chief Justice has dealt with both the cases and has considered the rules, and come to the conclusion that such defects were one of mere irregularity and not want of jurisdiction. Mr. Bhabra, appearing on behalf of the respondents has said that this matter is now before the Supreme Court and that the learned Chief Justice was not right in holding that it was a matter of mere irregularity and not want of jurisdiction. Mr. Bhabra has argued that he is questioning the appointment itself of the arbitrators, and this is always a question of jurisdiction. He cited a number of cases, namely, Ramnath Narendranath v. Nanjee Shamjee and Co., : AIR1953Cal787 and two other decisions of this Court. They all proceed to decide the effects of Rule 7 of the old Arbitration Rules of the Bengal Chamber of Commerce. Under the said rule, the arbitrator had to make his award within a specified date. If he did not do so, then he became functus-officio and the Registrar had to appoint another Court. The point dealt with in all these cases was as to what happened if the fresh Court was not constituted after the expiry of the term, and the same Court made the award, it was held that this was a matter of jurisdiction. I do not think that this proposition can be disputed. I do not think, however, that the facts in the present case bear any analogy. Where under the rules, certain arbitrators had become functus officio, naturally they cannot act any further, and if they do act, it is obviously a question of jurisdiction. Here the arbitrators were appointed by the Registrar upon an application by the party affected. The application was made, but instead of two applications being made separately, two claims were set out in one application. As soon as it was pointed out that the application was not strictly in terms of the rules, the applicant abandoned the claim with regard to one contract. Thereupon, the application upon which the Arbitration Court proceeded to adjudicate, related to one period only and was in accordance with the rules. There is no other sense in deleting the claim for the other period or allowing the applicant to do so. The same parties have subsequently been allowed to make a reference with regard to the other portion and it has been adjudicated upon in the presence of the respondents and an award made.

13. Coming now to the point of limitation, it is said that if the reference was a reference on the 28th June, then the claim is barred by limitation. That does not follow automatically. The question of limitation is one which depends on facts. Limitation may be saved by a number ofthings, for example, acknowledgment, part payment and so forth. Therefore, if the respondent wished to take the point of limitation, they should have agitated it before the arbitrators. Assuming that the reference was to be taken as a reference on the 28th June 1955, the question of limitation was never taken by the respondents in such a reference, and not having been taken before the arbitrators, I do not see how it can be agitated at the present moment. As I said, the question of limitation may involve questions of fact. It will appear from the judgment of the Court below that mention was made of Section 14 of the Limitation Act. The learned Judge held that the pleadings were not sufficient to dispose of that point. If that is so, I do not see why the appellants should suffer. They had made a claim before the arbitrators. Under the Arbitration Act, as now amended, the law of limitation applies. Therefore, if it was the case of the respondents that the claim was barred by limitation, they should have taken it before the arbitrators. They did not do so, and the arbitrators have awarded a certain sum against the respondents. The plea of limitation cannot surely be agitated at the present stage.

14. For these reasons, I think the judgment of the Court below was erroneous and that this appeal should be allowed and the judgment setaside.

15. The result is that the application for setting aside the award is dismissed. The matter for Judgment upon Award is now restored and sent back for the passing of a Judgment upon award. The appellant is entitled to costs here and in the Court below. Certified for two counsel.

Mitter, J.

16. I agree.

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