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Ganges Manufacturing Company, Limited Vs. Indra Chand and anr. - Court Judgment

LegalCrystal Citation
SubjectArbitration;Contract
CourtKolkata
Decided On
Judge
Reported in(1906)ILR33Cal1169
AppellantGanges Manufacturing Company, Limited
Respondentindra Chand and anr.
Excerpt:
arbitration - indian arbitration act (ix of 1899) sections 4 and 20--contract act (ix of 1872), section 28--arbitration clause in a contract, whether valid--reference to an association--power to delegate. - .....contracts, were referred by the plaintiffs under the arbitration clause in the contract, to the bengal chamber of commerce. the arbitration was conducted by that body. the defendants declined to appear on the arbitration and awards were made in favour of the plaintiffs and it is those awards that the plaintiffs now ask to have filed.4. the defendants contend that the awards ought not to be filed.5. first they allege that the arbitration clause in the contracts is bad as being in contravention of section 28 of the indian contract act.6. with that contention i do not agree. firstly, i think that the first exception to section 28 covers the arbitration clause in the contract. secondly, the arbitration clause in the contracts comes within the definition of a submission to arbitration.....
Judgment:

Harington, J.

1. Those are two applications to file awards in accordance with the Rules made under Section 20 of the Indian Arbitration Act.

2. The cases arose out of certain contracts, which were entered into by the defendants, to sell to the plaintiffs certain lots of jute. The plaintiff complained that the jute in question in some cases was of inferior quality to that contracted to be sold and in others they complained of short delivery.

3. The defendants did not admit that the plaintiff's complaints were well founded, and consequently the disputes, which arose between the parties in respect of these jute contracts, were referred by the plaintiffs under the arbitration clause in the contract, to the Bengal Chamber of Commerce. The arbitration was conducted by that body. The defendants declined to appear on the arbitration and awards were made in favour of the plaintiffs and it is those awards that the plaintiffs now ask to have filed.

4. The defendants contend that the awards ought not to be filed.

5. First they allege that the arbitration clause in the contracts is bad as being in contravention of Section 28 of the Indian Contract Act.

6. With that contention I do not agree. Firstly, I think that the first exception to Section 28 covers the arbitration clause in the contract. Secondly, the arbitration clause in the contracts comes within the definition of a submission to arbitration under Section 4, Clause 4 of the Indian Arbitration Act, and therefore the clause is a perfectly lawful one.

7. In the next place the defendants object that the reference was to the Bengal Chamber of Commerce and that that body had no power to delegate the functions of an arbitrator to the particular individuals, who made the awards in the present case, and thirdly, that assuming these persons were selected under the Rules of the Bengal Chamber of Commerce, the defendants were not bound by those Rules, it not having been shown that they had express notice thereof.

8. Now the Bengal Chamber of Commerce is an association, of which merchants, bankers, ship-owners, representatives of Commercial Railway or Insurance Companies, brokers and persons and firms engaged in commerce, agriculture, mining or manufacture and Joint Stock Companies and other Corporations, are entitled to become members, and one of the objects, for which this association was established, is to be found in the 7th Clause of paragraph 3 of their memorandum of association, and it is to arbitrate in the settlement of disputes arising out of commercial transactions between parties willing or agreeing to abide by the judgment and decision of the association.

9. Now that object can only be carried out by an association of the nature of the Bengal Chamber of Commerce, if certain individuals are selected to carry it out. If the defendant's contention is well founded, a reference to the arbitration of the Bengal Chamber of Commerce would be a perfectly futile and idle provision, because a body so constituted could never get every single person, who belonged to the Chamber, to assemble together to hear and dispose of a trade dispute; and the argument of the defendants must go to this length that, if one single member was absent and was to fail to act as an arbitrator, the whole proceeding would be infructuous.

10. I agree with the argument of the defendants that, where a dispute is referred to the award of a body of persons, who can sit as a tribunal, then the arbitrators are not entitled to delegate their power to individuals, But in my opinion where a dispute is referred to an association consisting of a large and fluctuating body of persons, who cannot sit as a tribunal, it must be taken that the parties intend that that body shall carry out the arbitration in the only way in which it is possible to do so, viz. by individuals selected for that purpose.

11. It appears to me to involve an absurdity to say that, when the parties have made an agreement to refer their disputes to the arbitration of the Bengal Chamber of Commerce, they expect that body to dispose of the dispute by the whole of their members, instead of by persons chosen to that end. In my opinion, it was within the power of the Bengal Chamber of Commerce to appoint persons to act as arbitrators, because the object for which, amongst others, the association was established, viz. the settlement of disputes by arbitration, can only be carried out by the association acting through individuals chosen to conduct the arbitration.

12. It has not been contended that the disputes were not disposed of in accordance with the Rules of the Bengal Chamber of Commerce, but the defendants say they had no notice of these Rules. In my opinion that argument is not open to the defendants. They chese to propose that their disputes should be disposed of by the Bengal Chamber of Commerce. They chose this association. It is one of the duties of this association to dispose of such disputes by arbitration according to its Rules. Having offered to be bound by the decision of this association they cannot now be heard to say that they are not bound by the Rules of the tribunal of their choice.

13. Both the applications will be granted and the awards will be filed with costs against the defendants.


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