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Soorajmull Nagarmal Vs. Golden Fibre and Products - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberMatter No. 1 of 1969
Judge
Reported inAIR1969Cal381
ActsCode of Civil Procedure (CPC) , 1908 - Section 151 - Order 9, Rule 13 - Order 21; ;Arbitration Act, 1940 - Sections 14(2), 17 and 30; ;Limitation Act, 1963 - Section 5 - Schedule - Articles 119 and 158
AppellantSoorajmull Nagarmal
RespondentGolden Fibre and Products
Advocates:B.M. Bagaria, Adv.
DispositionApplication dismissed
Cases Referred and Bijoy Singh v. Bilashroy and Co.
Excerpt:
- .....the said award until december 28. 1968-hence, the petitioner has applied for setting aside of that decree passed on november 25, 1968 and thereupon for setting aside of the said award.7. although the petitioner alleged in the petition that the said decree was an ex parte decree and there was sufficient cause for non-appearance of the petitioner, it appears to me that the judgment and decree passed on the said award on november 25, 1968 was or was not an ex parte decree.8. order 9, rule 13 of the civil p. c. enables the court to set aside an ex parte decree, in the circumstances mentioned in the said rule. it is apparent that the said rule is not applicable to the instant case. order 9, rule 13 applies only to the application made for setting aside of an ex parte decree passed in a.....
Judgment:

S.C. Ghose, J.

1. This is an application by the petitioner, inter alia, for setting aside or revocation of the decree dated November 25, 1968; upon the said decree being set aside, for setting aside of the Award dated June 4, 1968 passed by the Bengal Chamber of Commerce and Industry in case No. 210 of 1967. The petitioner is partnership firm and carries on business under the name and style of Shree Hanuman Jute Mills. The petitioner in the name of the said jute mills agreed to purchase from the respondent and the respondent agreed to sell to the petitioner on March 5, 1965 Siam Mesta Habijabi (1964-65 crop) of 100 tons (1016 Kg) at Rs. 156 per bale of 400 Ibs, gross delivery Mill jetty. A letter dated March 5, 1965 written by the respondent confirming the sale of the said goods and recording the terms and conditions of such sale has been annexed as Annexure 'A' to the petition. The said contract between the parties contains an arbitration clause which is set out hereunder:

'Arbitration -- Bengal Chamber of Commerce and Industry, Claims, if any, are to be lodged within 3 days of the arrival of the parcel at the mills'.

2. The respondents delivered the contracted goods to the petitioners' said Shree Hanuman Jute Mills. Thereafter disputes and differences arose between the parties. The said disputes were referred to the arbitration of Bengal Chamber of Commerce and Industry. The said Arbitrator having heard the parties and considered the evidence led by the parties before it, made and published an award on June 4, 1968. A copy of the said award has been annexed to the petition and is Annexure 'D'. Notice under Section 14(2) of the Arbitration Act 1940 was served upon the parties. The petitioner was served with the said notice on September 21, 1968.

3. Disputes and differences cropped up between the petitioner and its employees since about April, 1967. The employees of the petitioner according to the petitioner, grew violent and disobedient and started violent activities even inside the petitioner's office at No. 8, Dalhousie Square East. The petitioner terminated the services of all employees and closed down the office by a notice dated November 3, 1968. The dismissed employees of the petitioner stayed on in the office premises at No. 8, Dalhousie Square East at No. 1/1, R. N. Mukherjee Road, Calcutta. According to the petitioner on and from November 3, 1968, some of the employees of the petitioner were obstructing egress and ingress of the partners and office bearers of petitioner from or to the said office premises. As a result, necessary papers, documents including those of the arbitration proceedings in respect of the instant award case could not be taken out of the office of the petitioner.

4. On November 12, 1968, Mr. B. M. Bagaria, on behalf of the petitioner, wrote to Messrs. M. L. Khemka and Co., Solicitors of the respondent, asking as to whether notice under Section 14(2) of the Arbitration Act in the instant case was served upon the petitioners. in the said letter, it was alleged that, '............ all their documents are lying in their office and it is not possible for them to remove any document from their said office'. Mr. Bagaria requested the Solicitors of the respondents to send a copy of the said notice under Section 14(2) to him as his clients wanted to make an application for setting aside the said award. In the said letter Mr. Bagaria gave the name of the clients of Messrs. M. L. Khemka and Co. as Golden Film and Products. On November 16, 1968, M. L Khemka and Co. informed Mr. Bagaria that they had no client by the name of Golden Film and Products. On November 19, 1968, Mr. Bagaria corrected the error and informed that the name of M. L. Khemka's client was Golden Fibre and Products. By letter dated November 22, 1968, Messrs. M. L. Khemka and Co. informed Mr. Bagaria that the matter would appear for judgment upon award on the 25th instant in the list of Sabyasachi Mukharji J. On that date that is 25th November, 1968, the matter appeared on the list of Mukharji, J. The petitioner's lawyer attended the Court of Mukharji J. and prayed for adjournment of the matter, which prayer was refused by his Lordship. Thereafter judgment upon the said award was passed and a decree followed.

5. On or about December 9, 1968, the petitioner applied in the Court of the Chief Presidency Magistrate, Calcutta, inter alia, for a direction on the Officer-in-charge. Hare Street Police Station to see that the employees of the petitioner were restrained from preventing or obstructing egress from and ingress to the office rooms of the petitioner. Thereupon, pursuant to the direction of the learned Chief Presidency Magistrate, the police made a report. Upon perusing the said report, the learned Magistrate made an order under Section 144 of the Indian Penal Code on December 13. 1968 upon the employees of the petitioner. Notwithstanding the said order, the petitioner alleges that its partners or employees could not go in or come out of the office premises of the petitioner. Thereupon, the petitioner made an application on 'December 20. 1968 before the learned Chief Presidency Magistrate for a direction upon the Officer-in-Charge. Section 'G' Town to assist and help the petitioner and his men to take out books of account, documents and other papers from the office premises of the petitioner.

Pursuant to the order made in the said application, the petitioner under the protection of the police brought out certain books of account and records from its office on December 22, 1968. Even then the petitioner could not bring out all the books and documents. Thereafter, another application was made by the petitioner on December 28, 1968. Pursuant to the order made in the said application with the assistance of the police, the petitioner on or about December 28, 1968, got hold of the relevant papers and documents in respect of the instant award case.

6. For the aforesaid reasons, according to the petitioner, the petitioner could not take any effective step to set aside the said award until December 28. 1968-Hence, the petitioner has applied for setting aside of that decree passed on November 25, 1968 and thereupon for setting aside of the said award.

7. Although the petitioner alleged in the petition that the said decree was an ex parte decree and there was sufficient cause for non-appearance of the petitioner, it appears to me that the judgment and decree passed on the said award on November 25, 1968 was or was not an ex parte decree.

8. Order 9, Rule 13 of the Civil P. C. enables the Court to set aside an ex parte decree, in the circumstances mentioned in the said rule. It is apparent that the said rule is not applicable to the instant case. Order 9, Rule 13 applies only to the application made for setting aside of an ex parte decree passed in a suit.

9. The Court in its inherent jurisdiction has power to recall order or decree passed under Section 17 of the Arbitration Act if it was passed irregularly i.e., if it was passed without complying with the requirements of Section 17 of the Arbitration Act, as for example, without serving notice under Section 14(2) of the Arbitration Act or before the time to make an application for setting aside the award had expired or before an application made for setting aside the award had been dismissed. (See Ganeshmal v. Keshoram Cotton Mills Ltd., : AIR1952Cal10 ; Eusuf v. David, AIR 1951 Mad 658 (1) ).

10. It has been held in : AIR1952Cal10 that the provision of Order 9. Rule 13 of the Civil P. C. does not apply to a proceeding for setting aside an ex parte decree passed under Section 17 of the Arbitration Act. Order 9 deals with suits and Rule 13 deals with setting aside of ex parte decree passed in a suit. In an award case like the present, both the plaintiff and the defendant are entitled to ask the Court to pronounce judgment in terms of the award. Section 17 makes it mandatory on the part of the Court to pass a judgment and decree in terms of the award in the circumstances specified in the said section. Such a decree may be pronounced in the absence of parties; even then it cannot be said that the decree has been passed ex parte (see Subramanian v. Vasudevan, : AIR1950Mad488 ; Prafulla v. Panchanan, 50 Cal WN 287 = (AIR 1946 Cal 427). Motandas Torumal v. Wadhumal, AIR 1948 Sind 74).

11. In the instant case notice under Section 14(2) was duly served. No application for setting aside the award was made or pending when the judgment and decree was passed. As a matter of fact, time to make such application expired. Therefore, there was no irregularity in passing the said judgment and decree nor can it be said that the said judgment and decree was passed without jurisdiction.

12. In Ganeshmal's case, : AIR1952Cal10 the ex parte decree was set aside only because the decree was passed irregularly. Notice under Section 14(2) was not served upon Ganeshmal. The Court in the said case set aside such a decree in its inherent jurisdiction to set right an injustice done by the Court on a party. Such is not the case here.

13. In the case of : AIR1951Mad658 judgment and decree was passed on an award under Section 17 of the Arbitration Act before the time to make an application for setting aside the award expired. It was held that it was the duty of the Court to see that the requirements of Section 17 were complied with. The judgment and the decree passed, without complying with the requirements of Section 17, i.e. before expiry of the period to make application by any party to the award for setting aside the award, was without jurisdiction and ought to be set aside.

14. In my opinion, even in a case where judgment upon award has been passed under Section 17 of the Indian Arbitration Act, if the judgment-debtor can satisfy the Court that such decree should be set aside on grounds appearing sufficient to the Court, the Court has jurisdiction to set aside such a decree in its inherent jurisdiction for ends of justice. But whether the Court would set aside such decree would depend on the question as to whether the Court could extend the time for making an application under Section 30 of the Indian Arbitration Act for setting aside the award; and even if the Court could extend such time, whether the Court would extend the time in the particular case.

15. Prior to the coming into operation of 196 3 Limitation Act. Section 5 applied only to appeals, applications for review of judgment, applications for leave to appeal and other applications to which the section was made applicable under any Statute by States or High Courts. Formerly an application for setting aside an award could not be admitted after the prescribed period of thirty days (Article 158 of the Limitation Act, 1908). Now, under the 1963, Limitation Act, it appears that Section 5 applies to all applications except those under Order 21 of the Civil P. C. The period within which an application has to be made for setting aside an Award under Section 30 of the Arbitration Act 1940 has been prescribed by Article 119 (b) of the Limitation Act, 1963. The period is 30 days from the date of service of the notice under Section 14(2) of the Arbitration Act. This period of 30 days is the 'prescribed period' to make an application for setting aside the Award under the Limitation Act 1963. Now, on sufficient cause an application for setting aside an Award may be admitted by Court even after the said prescribed period of 30 days. But sufficient cause within the contemplation of Section 5 must be a cause which is beyond the control of the party invoking the aid of the section (See Ashutosh Bhadra v. Jatindra Mohan, : AIR1954Cal238 . The cause for delay in making the application which by due care and attention could have been avoided cannot be a sufficient cause within the meaning of Section 5 of the Limitation Act. (See Ramlal v. Rewa Coalfields Ltd., : [1962]2SCR762 . Where no negligence nor inaction nor want of bona fides can be imputed to the applicant, a liberal construction of the section has to be made in order to _advance substantial justice. The applicant has to show sufficient cause for not filing the application on the last day of limitation and must explain the delay made thereafter day by day till the actual date of filing of the application: See : [1962]2SCR762 , and in particular the following observations made by their Lordships of the Supreme Court:

'...............In our opinion it would be immaterial and even irrelevant to invoke general considerations and diligence in construing the words of Section 5. The context seems to suggest that 'within such period' means within the period which ends with the last day of the limitation prescribed. In other words in all cases in filing appeal under Section 5 the party has to show as to why he did not file an appeal on the last day of the limitation prescribed. That may inevitably mean that the Party will have to show sufficient cause not only for not filing the appeal on the last day but to explain the delay made thereafter day by day. In other words in showing sufficient cause for condoning the delay the party may be called upon to explain for the whole of the delay covered by the period between the last day prescribed for filing the appeal and the day on which the appeal is filed'.

16. In the facts and circumstances of the instant case it appears to me that the applicant has to explain the delay in not making this application from 6th November, 1968 till the 2nd January, 1969.

17. The applicant knew that the Notice under Section 14(2) of the Arbitration Act had been served upon it. Judgment and decree was passed on the said Award on November 25, 1968. Even then the applicant did not take any steps until 9th December 1968 when it made an application before the Chief Presidency Magistrate to enable it to enter its office. According to the applicant, only alter such application was made on the 28th December, 1968, that the applicant was able to take out relevant papers and documents from its office on the 28th December, 1968. The applicant has not stated why it could not or did not apply before the learned Chief Presidency Magistrate earlier in order to take possession of the relevant documents from its office prior to the 25th November, 1968.

18. In any event the records of the proceedings together with all relevant documents including the Award and statements filed by the parties before the Arbitrators, were filed by the Arbitrators in Court together with the Award. The applicant could search the records of the Court and take inspection of the relevant documents from the records in the Award case. The applicant filed requisition for search only on the 23rd December, 1968. From the facts stated above it seems to me that the applicant has not been diligent in making the instant application for setting aside the Award.

19. In my view sufficient cause had not been shown by the applicant which prevented the applicant from making this application prior to 2nd January, 1969. The applicant has stated as grounds for setting aside of the award that the arbitrators misconducted themselves in refusing to allow the applicant his counterclaim for the sum of Rs. 8301.61. The applicant's case for this counter-claim is that the import duty in respect of the goods was withdrawn at the time when the contracted goods were imported into India. The price in the contract included the import duty and thus the import duty in respect of the said goods for the said sum of Rs. 8301.61 was repayable to the applicant by the respondent. According to the applicant, the respondent pleaded an agreement before the arbitrators, namely, that the respondent was not liable to refund this import duty although it was refundable under the terms of the contract in view of an agreement between A.K. Sarkar of the respondent and M. P. Jalan of the applicant. The said agreement according to the petitioner will also appear from a letter written by the respondent to the applicant, copy whereof has been annexed to the petition and a copy of which letter appears at page 25 of the Annexure. The relevant portion of the said letter appears at page 26 of the Annexure and reads as follows:--

'Regarding your Bill No. 37/1957, D/-30-4-65 for Rs. 8,301,61 P., we are very much surprised about the remarks that the above bill was sent by you about a year back on the assumption that you were entitled to deduct the value of the import duty from the price of the goods for the reason that the existing import duty at the time of entering into the contract was subsequently abolished. In fact, the Regulatory Import duty temporarily applicable on the import of raw jute was subsequently exempted by the Government of India but under the terms of contract you were not at all entitled to receive any deduction or refund out of the contracted value on the goods to be supplied by us. The matter was fully discussed with your Sri M. P. Jalan by our Mr. A. K. Sarkar and your Shri Jalan completely agreed that no such claim could be made by you. In view of the same, your above bill was returned to him personally after such discussion'.

20. It appears from a perusal of the aforesaid passage, that the respondents were not pleading any agreement apart from the contract between the parties. In the aforesaid portion of the said letter, the respondents merely asserted as to the purport of the relevant portion of the contract and that the applicant's M. P. Jalan accepted such purport and effect of the said contract between the parties.

21. The said relevant parts of the contract which is Annexure 'A' to the petition are as follows:--

'Prices:

@Rs. 156 per bale of 400 Ibs. gross, payments: ..............................

By unrestricted irrevocable sight letter of credit in the name of the seller's nominee or nominees at Bangkok. Thailand and at the seller's contracted price and the balance amount on presentation of seller's sight bill. Import duty if any is to be paid in advance by the buyer and to be deducted from the seller's bill.'

The said contract also provided as follows:--

'Buyers will provide the Import Licence and will open letter of credit at their cost in favour of seller's nominee or nominees immediately. Any increase or decrease of the Import duty will be on the buyers 'account.' '

22. It is admitted that the buyer did not pay Import duty in the instant case. It is true that at the relevant time Import duty was withdrawn from the contracted goods but that does not, in my opinion, entitle the buyer, that is, the applicant to the refund of any part of the price of the goods as stipulated under the contract. There was no such term in the said contract. The contract stipulated that increase or decrease of Import duty would be on buyer's account. That merely states, in my opinion, that if the Import duty was paid by the buyer, the buyer would be entitled to the refund if the Import duty was decreased; if the Import duty was increased, the buyer would be liable to pay the Increased part of the Import duty also. The arbitrators merely construed the contract, especially in view of the admitted case that the buyers in the instant case did not pay any part of the Import duty. In my opinion, no agreement, as alleged by the applicant was pleaded either in the statement of claim or urged before the arbitrators by the respondents. In my opinion, in the Instant case, the arbitrators were not called upon to take evidence as to the entering into any agreement in order to enable them to come to the finding arrived at by them. The cases of Khusiram Benarasilal v. Mathuradas Goverdhandass reported in 52 Cal WN 826 and Bijoy Singh v. Bilashroy and Co. reported in : AIR1952Cal440 are not applicable to the facts of the instant case. In those two cases, arbitrators could not come to the finding arrived at by them without taking evidence and thus were held to have misconducted themselves, inasmuch as they did not hear evidence in arriving at the finding. Such is not the case here.

23. For the reasons stated above, I do not think that this is a fit case where I should exercise my inherent jurisdiction and set aside the decree passed on the award on November 25, 1068 for ends of justice. I am also of the view that the applicant has not been able to show sufficient cause to enable me to condone the delay in making the application and extend the time for making the application for setting aside of the award as prayed.

24. For the reasons aforesaid, this application must fail and is dismissed withcosts.


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