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Nandram Hanutram Vs. Raghunath and Sons Ltd. - Court Judgment

LegalCrystal Citation
SubjectContract;Arbitration
CourtKolkata High Court
Decided On
Case NumberSuit No. 331 of 1952
Judge
Reported inAIR1954Cal245,58CWN510
ActsArbitration Act, 1940 - Section 2
AppellantNandram Hanutram
RespondentRaghunath and Sons Ltd.
Appellant AdvocateD.E. Sethia, Adv.
Respondent AdvocateA.C. Bhabra, Adv.
Cases ReferredChandanmull v. Donald Campbell
Excerpt:
- .....demands made by the petitioner.4. the respondent referred its claim to the arbitration of the bengal chamber of commerce on 7-7-1952. the petitioner did not file any statement before the bengal chamber of commerce. the bengal chamber thereupon made its award on 24-9-1952.5. it is contended on behalf of the petitioner that there was no dispute between the parties prior to arbitration and that therefore the bengal chamber had no jurisdiction to make the award. this contention is raised in paras 9 and 17(c) of the petition.6. the arbitration clause is as follows : '13. all matters, questions, disputes, differences and/or claims arising out of and/or concerning and/or in connection with and/or in consequence of or relating to this contract whether or not the obligations of either or.....
Judgment:
ORDER

Bachawat, J.

1. This is an application to declare an award to be null and void.

2. The arbitration clause is contained in a contract dated 2-1-1952, for sale by the respondent to the petitioner of hessian cloth delivery April to June in equal monthly instalments.

3. The respondent tendered the goods to the petitioner on the due dates. The petitioner failed to take delivery and thereupon on due notice to the petitioner the respondent re-sold the goods for and on account of the petitioner. Bills of difference in price were duly submitted but the petitioner did not pay those bills. The petitioner maintained an unusual silence throughout and did not send any letters to the respondent in answer to the several demands made by the petitioner.

4. The respondent referred its claim to the arbitration of the Bengal Chamber of Commerce on 7-7-1952. The petitioner did not file any statement before the Bengal Chamber of Commerce. The Bengal Chamber thereupon made its award on 24-9-1952.

5. It is contended on behalf of the petitioner that there was no dispute between the parties prior to arbitration and that therefore the Bengal Chamber had no jurisdiction to make the award. This contention is raised in paras 9 and 17(c) of the petition.

6. The arbitration clause is as follows : '13. All matters, questions, disputes, differences and/or claims arising out of and/or concerning and/or in connection with and/or in consequence of or relating to this contract whether or not the obligations of either or both parties under this contract be subsisting at the time of such dispute and whether or not this 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 of arbitration shall be conducted.'

7. There is no doubt that the existence of disputes or differences contemplated by the arbitration clause is an essential condition of and prerequisite to the exercise of the jurisdiction by the Arbitrator.

A dispute implies an assertion of a right by one party and a repudiation thereof by another --'Chandmull Ganeshmull v. Nippon Munkwa Kabushiki Kaisha', AIR 1921 Cal 342 (A). The repudiation by the other party may be either express or implied and may be by words or by conduct.

8. Failure to perform the contract and to pay the amount claimed may take place under such circumstances as may justly lead to the inference of repudiation and denial of the right of the other party. Such conduct and stoic silence may be more eloquent than words and may show that the party is disputing his liability. Coupled with other circumstances a failure to pay a claim may constitute a difference between the parties. See -- 'James Finlay & Co. v. Jeshanmal', 12 Ind Gas 188 (Sind) (B); -- 'Donald Graham & Co. v. Asumal', 12 Ind Gas 187 (Sind) (C); -- 'Berth, Stevenson & Co. Ltd. v. Firm of Naroomal Khem-chand', AIR 1924 Sind 117 (D) at pp. 118-119; --'Tyebally Abdul Hussain v. James Finlay & Co.', AIR 1924 Sind 105 (2) (E) at p. 110.

Failure to pay under a claim of right is certainly a dispute. -- 'Uttamchand Saligram v. Mahmood Jewa Mamooji AIR 1920 Cal 143 (F). The claim of right need not necessarily be express. It may and should justly be inferred against the defendant from his sphinx-like silence in an appropriate case. It is not the law that a person who desires to evade arbitration may not write letters in answer to a claim explaining and justifying his conduct and then turn round and say there is no dispute.

I can well imagine that in certain circumstances the Court will not infer the existence of a dispute from a mere failure to pay (Russell on Arbitration, 14th Edn. 252). -- 'Mathuradas Goverdhonedas v. Khusiram Benarshilal', 53 Cal WN 873 (G) at p. 875.

9. If the defendant maintains complete silence in answer to demands made against him until a suit is instituted against him (he?) may have a very heavy burden of proving that there was a dispute prior to the institution of the suit necessitating a reference to arbitration when he subsequently applies for stay of the suit -- 'Dawoodbhai Abdulkader v. Abdulkader Ismailji : AIR1931Bom164 , or when he subsequently contends that the suit is barred by a special statute requiring previous recourse to arbitration. -- 'London and Northwestern Railway Co. v. Jones', (1915) 2 KB 35 (1). The circumstances however are quite different.

10. In 'Chandanmull v. Donald Campbell', 23 Cal WN 707 (FN) (PC) (J), A drew bills on B on the basis of certain award made previously and binding upon A & B. B dishonoured the bills on presentation. A then made a further reference to arbitration: B did not appear before the arbitrators and an award was made against him. B then contended that the award was invalid. The House of Lords negatived the suggestion of his counsel that there was no dispute prior to reference. Lord Sumner observed thus -

'It is true that Mr. Chandanmull when required to pay in accordance with the first award, preserved a sphinx-like silence. It is true also that it takes two to make a quarrel. But a dispute may perfectly well arise when only one disputant is articulate and the other stands mute when called upon to plead. What is required is that one party should affirm and the other deny and conduct will do this as well as words. The respondents said in effect 'You owe the money and have no excuse for not paying it.' The appellants to my mind in effect retorted nonetheless eloquently though he held his tongue. 'I owe you nothing, I have a defence under the contract.'

x x x

It is suggested that the appellant really disputed nothing but simply could not, or would not pay; in other words he lacked either money or honesty. My Lords, I cannot assume in Mr. Chandanmull'a favour that he was wanting in either. If it be the case that no further dispute arises out of the contract when nothing capable of being disputed is to be found and nothing is alleged to be disputable. I think still that if the appellant's attitude can be explained consistently with any recognition of his business application this should be done.'

11. In the present case repeated demands for performance of contract were made upon the petitioner. He did not perform the contract and gave no explanation for his non-performance. Repeated demands for payment of the difference was made upon the petitioner. He did not pay the amount claimed and gave no answer why he was not making the payment. The petitioner is a firm apparently of good credit. In fairness to the petitioner it is to be assumed that he was disputing his liability on some ground. I cannot assume in his favour that he was dishonestly avoiding liability or that he was insolvent. In fact even now in the petition he maintains that the admission for performance was wrongful. The exact disputes need not be specified. If the dispute is a vague one the arbitrator has jurisdiction to call upon the parties to specify the disputes. The arbitrator can order points of claim and points of defence as also particulars. The arbitration clause is very wide and confers jurisdiction upon the Bengal Chamber of Commerce to decide all matters, questions, disputes, differences and/or claims arising out of the contract. In my judgment there was a sufficient dispute or difference prior to the reference attracting the jurisdiction of the Bengal Chamber of Commerce to arbitrate upon these disputes.

12. It is contended that the arbitrator was not selected, or appointed by the Registrar by his own hand. Reliance is placed upon Rule 6 of the rules of the arbitration of the Bengal Chamber of Commerce. Rule 6 is as follows :

'6. Unless the agreement to refer the dispute or difference to the Chamber or Tribunal otherwise expressly provides the Court shall consist of two arbitrators, who shall be selected by the Registrar from the Tribunal and appointed in writing under his hand.'

13. The argument here has proceeded upon the footing that the selection and appointment in writing was made under the hand of one Mr. S. J. Philips. Mr. Sethia on behalf of the petitioner has conceded and formally admitted that Mr. Philips was at the relevant time a member of the secretarial staff of the Chamber and acting for him at the relevant time.

14. Rule 1(6) of the Rules of Arbitration of the Bengal Chamber of Commerce is as follows :

'1. (6) 'Registrar' -- The Registrar of the Tribunal shall be the Secretary for the time being of the Chamber or such other member of the Secretarial staff of the Chamber as shall be acting for him from time to time.'

15. On the admission made by Mr. Sethia it must be held that Mr. Philips was at the relevant point of time for the purpose of appointment and selection of arbitrators the Registrar and as such the appointment and selection of the arbitrators were duly made in accordance with Rule 6.

16. It is next contended that the arbitrators were guilty of misconduct because they refused to give an opportunity to the petitioner to submit its statement. This contention is raised in para 17 (e) and para 10 of the petition. I am satisfied that the petitioner had ample opportunity to place its case before the Bengal Chamber and there is no substance in the present contention.

17. The contention raised in para 17(d) is not pressed and expressly abandoned by Mr. Sethia.

18. The only dispute, therefore, now outstanding for adjudication is that raised in para 17 (a) and paras 3, 4, 5 and 6 of the petition.

I adjudge and declare :

(a) That the award is not bad on the ground that there was no dispute between the parties prior to the reference.

(b) That the award is not bad on the ground that the arbitrators were not duly selected and appointed in accordance with the rules of the Bengal Chamber of Commerce.

19. The petitioner must pay the costs of hearing of yesterday which I assess at 5 G. ms.

20. The disputes raised in para 17A and paras 4, 5 and 6 remain outstanding. I make cross order for discovery against both parties. Affidavit of documents shall be filed within one month from today disclosing all documents and books of account, bill books and contract register, if any, material to the case and in particular all entries in books of account, bill books and contract registers for three years preceding 2-1-1952, (a) relating to the sale and purchase and delivery of jute goods and (b) relating to the godown and other means and equipments necessary for the storage and supply of jute goods, if any, in possession and control of the parties. There will be an inspection forthwith thereafter. Within two months thereafter the respondent shall file a further affidavit annexing thereto copies of all documents and all the entries in books of account relied upon by the respondent, and stating further facts, if any relied on by him. Where the entry is in vernacular language a translation either official or non-official thereof shall be annexed to the affidavit.

If the respondent desires to call any further witness, the respondent shall as far as possible procure an affidavit from such witness and fite such affidavit. Within a fortnight thereafter the petitioner shall file a further affidavit annexing to such affidavit copies of all documents and entries in the books of account relied on by him and further facts if any relied on by him. Where the document is in vernacular language a translation either official or non-official thereof shall be annexed to the affidavit. If the petitioner desires to call any other witness, the petitioner shall as far as possible procure an affidavit from such witness and file the same. The matter will appear in the list for hearing on 3-4-1954. I leave it open whether the Court will decide the disputes then on affidavits or whether the Court will then take oral evidence. The parties must however be ready with all oral evidence on that date. The matter is adjourned until 3-4-1954 for adjudication of the outstanding disputes.

21. I direct that the matter be not treated as part heard before me. Liberty to apply.


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