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Batokristo Roy Co. (Pvt.) Ltd. Vs. H. Polesy and Co. (importers) Pvt. Ltd. and ors. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberAward Case No. 57 of 1970
Judge
Reported inAIR1975Cal467
ActsArbitration Act, 1940 - Section 30
AppellantBatokristo Roy Co. (Pvt.) Ltd.
RespondentH. Polesy and Co. (importers) Pvt. Ltd. and ors.
Appellant AdvocateA.C. Bhabra and ;Ahim Chowdhury, Advs.
Respondent AdvocateBhaskar Gupta, Adv.
DispositionPetition dismissed
Cases ReferredRamgopal Lath v. Commonwealth Assurance Co. Ltd.
Excerpt:
- .....co.'s claim with regard to may consignments as to short weight and difference in quality to the mills. australian co. preferred that their claims against roy co. and the matters in dispute between them may be decided by bengal chamber of commerce and industry. on december 26, 1968 roy co. addressed a letter to the registrar, tribunal of arbitration making a claim of rs. 26,246.69 p. against the mills and referred the dispute raised by australian co. to the arbitration of bengal chamber of commerce and industry stating that the said amount claimed by australian co. should be paid by the mills. it may be noted here that the contract dated may 10. 1969 between roy co. and the mills contained a clause for arbitration of the dispute between the parties by bengal chamber of commerce and.....
Judgment:
ORDER

Salil Kumar Hazra, J.

1. Two petitions filed by Batokristo Roy Company (Private) Limited for setting aside two awards dated May 9, 1969 and July 19, 1969 by the Tribunal of Arbitration of Bengal Chamber of Commerce and Industry were assigned to me by the learned Chief Justice. The first petition was filed on July 30. 1970 for setting aside the award dated July 19, 1969. I shall deal with this petition first. The facts are shortly as follows : Batokristo Roy Company (Private) Ltd. (I shall shortly call Roy Co.) carries on business as importers, exporters and commission agents in jute and jute goods H. Polesy and Co. (Importers) Private Ltd., a Company incorporated in Australia (I shall shortly call Australian Co.) carries on business as importers and dealers in jute and jute goods.

2. On or about March 21, 1968 Roy Co. and Australian Co. entered into a contract whereby Australian Co agreed to buy from Roy Co. and Roy Co. agreed to sell to Australian Co. 200 bales of light wool packs of jute goods of certain specification and description. Under the contract the said goods were to be shipped in 4 monthly instalments of 50 bales each commencing from April 1968 i. e.. 50 bales were to he shipped in each of the months of April, May, June and July, 1968. Pursuant to the said contract in April 1968 50 bales of jute goods were supplied by Roy Co. to Australian Co. There was no dispute between the parties with regard to this supply. On May 10, 1968 Roy Co. entered into another contract with Ambica Jute Mills Limited (I shall shortly call the Mills) whereby the Mills agreed to sell to Roy Co. 750 bags, i. e. 150 bales of light wool packs of identical specification and description as mentioned in the contract between the Roy Co. and Australian Co. deliverable by Roy Co. to Australian Co. in the months of May. June and July. 1968. On May 19, 1968 the goods supplied by the Mills were despatched by Roy Co. to Australian Co, Similarly, in June 1968 the goods supplied by the Mills were despatched by Roy Co. to Australian Co. In July 1968 the goods supplied by the Mills were despatched to Australian Co There was no dispute between Aus ralian Co. and Roy Co. with regard to the goods despatched in July 1968. But in October 1968 Australian Co. complained about the weight and quality of the goods shipped in the month of June. 1968. On November 22, 1968 Australian Co. made similar complaint in respect of the goods supplied in the month of May 1968. On December 17, 1968 Roy Co. forwarded Australian Co.'s claim with regard to May consignments as to short weight and difference in quality to the Mills. Australian Co. preferred that their claims against Roy Co. and the matters in dispute between them may be decided by Bengal Chamber of Commerce and Industry. On December 26, 1968 Roy Co. addressed a letter to the Registrar, Tribunal of Arbitration making a claim of Rs. 26,246.69 p. against the Mills and referred the dispute raised by Australian Co. to the arbitration of Bengal Chamber of Commerce and Industry stating that the said amount claimed by Australian Co. should be paid by the Mills. It may be noted here that the contract dated May 10. 1969 between Roy Co. and the Mills contained a clause for arbitration of the dispute between the parties by Bengal Chamber of Commerce and Industry Calcutta, whereas the contract between Roy Co. and Australian Co.. dated May 21, 1968 did not contain any arbitration clause. Bengal Chamber of Commerce and Industry declined to take up the matter in dispute between Roy Co. and Australian Co. unless Roy Co. and Australian Co. consented in writing to such arbitration by Bengal Chamber of Commerce and Industry. On December 31, 1968 Australian Co. agreed to accept the award of arbitration by Bengal Chamber of Commerce and Industry andstated :

'We will accept the award of arbitration pursuant to the claim which you are filing against the supplying mill provided the Chamber will accept the date 22nd November, 1968 i.e. the date of our letter to it when we submitted our claim in respect of 50 bales of wool packs shipped per s. s. State of Travancore-Cochin' as if on that date you had applied for arbitration and provided also that you pass to us for reply all questions which may arise during the arbitration.'

On February 27, 1969, an agreement in writing was entered into between Australian Co. and Roy Co. for reference of their dispute to the arbitration of Bengal Chamber of Commerce and Industry. In March, 1969 Roy Co. claimed Rs. 25,796.69 p. against the Mills in Reference Case No. 312 of 1968 and Bengal Chamber of Commerce and Industry accepted November 22. 1968 as the date. The claim of Roy Co. against the Mills was made on the basis of the claim of Australian Co. against Roy Co. up to that date. In March, 1969 Australian Co, referred a statement of case for arbitration of Bengal Chamber of Commerce and Industry claiming Rupees 3,316.32 dollars, against Roy Co. The case was registered as case No. 81 of 1969. Thereafter on May 9, 1969 Award No. 78 of 1969 was passed in Roy Co.'s reference against the Mills whereby Rs. 1333.31 was awarded to Roy Co. against the Mills. On July 29 1969 an award was made in Case No. 81 of 1969 whereby Roy Co. was directed to pay Rs. 18,862.88 p. to the Australian Co.

3. The first petition of Roy Co. is directed against the award of the Tribunal of Arbitration of Bengal Chamber of Commerce and Industry in favour of Australian Co. The respondent No. 1 to this petition is Australian Co. The respondents Nos. 2 and 3 are two arbitrators who constituted the Tribunal of Arbitration. The difference in amount of damages awarded against Roy Co. by the Tribunal of Arbitration in the matter of their dispute with Australian Co. and the amount which was awarded in favour of Roy Co. in the matter of their dispute with the Mills have given rise to the two petitions for setting aside the two awards.

4. The case of Roy Co is that the goods which the Mills supplied to Roy Co. were despatched by Roy Co. to the Australian Co. The subject-matter of arbitration case between Roy Co. and the Mills namely. Case No. 312 of 1968 and the subject-matter of the arbitration case between Roy Co. and Australian Co. being case No. 81 of 1969 are in respect of the same goods but the Arbitrators awardedRs. 18,862.88 p. against Roy Co in Case No. 81 of 1969 being Award No. 104 of 1969, while the arbitrators awarded Rs. 1.333.31 to Roy Co. against the Mills. The grievance of Roy Co. is why should it be so? Why should Roy Co. get only Rs. 1,333.31 from the Mills while Roy Co. will have to pay Rs. 18.862.88 p. to Australian Co.? The main grounds for setting aside the award for Rs. 18,862.88 p. in favour of Australian Co. are contained in paragraphs 22, 23 and 27 of the petition. I shall shortly indicate the grounds here.

5. Roy Co. states that the basis of the assessment of damages in the two cases could not be different. The arbitrators namely, the respondents Nos. 2 and 3 made the award of Rs. 18,862.88 p in favour of Australian Co. which no reasonable man could make in the facts and circumstances of the case. The award is arbitrary, capricious and perverse. Although the award dated May 9, 1968 for Rupees 1.333.31 p. against the Mills and the records and proceedings of the Arbitration Case No. 312 of 1968 were placed before the arbitrators namely, respondents 2 and 3, but the arbitrators made an award on a completely different and whimsical basis. Roy Co. states that the arbitrators failed to appreciate and ignored the fact that Australian Co. was estopped and precluded from claiming any higher sum than what was awarded to Roy Co. in the Arbitration Case No. 312 of 1968.

6. Mr. A. C. Bhabra, learned counsel appearing for Roy Co. submitted that this was a chain contract and the award in favour of Australian Co. was perverse and should be set aside.

7. The question shortly before me is whether the petitioner has been able to make out a case for setting aside the award under Section 30 of the Arbitration Act. Have the arbitrators misconducted themselves or the proceeding in making the award dated July 19, 1969?

8. Mr. Bhaskar Gupta appearing for Australian Co. submitted that the award cannot be challenged on the ground of perversity. He said that perverse award is an award which is not supported by any evidence at all. But in this case it cannot be said that the arbitrators gave the award without any evidence. It is not disputed that Australian Co. is entitled to some damages for defective supply of jute goods. What is in dispute is the quantum of damages. The case of Roy Co. is that the quantum of damages payable by it under the award is perverse because there is complete disparity between the amount of damages awarded in favour of Australian Co and the amount of damages awarded in favour of Roy Co. against the Mills Mr. Gupta .submitted that this presupposes- that the award dated May 9. 1969 by the arbitrators against the Mills for Rs. 1,333.31 is a correct award. But the petitioner Company in this application has also challenged the award in favour of the petitioner against the Mills in the next petition. Therefore, the petitioner has not accepted the correctness of the award given in favour of the petitioner against the Mills.

9. The argument of Mr. Gupta is interesting. The case of Roy Co. as stated in paragraphs 22 and 23 of the petition is on the basis that the award against the Mills is correct award and, therefore, there should not be disparity between the two awards. But Roy Co. is not accepting the correctness of the award against the Mills and has challenged the same in the next petition. Thus the test of disparity between the two awards cannot be based on the correctness of the award against the Mills as the petitioner has challenged the award in favour of the petitioner against the Mills in the next petition. It seems to me that the submission made by Mr. Gupta has great force in the facts and under the circumstances of the case. Having challenged the correctness of the award against the Mills in the next petition the petitioner cannot in this application contend that the award in favour of Australian Co. is perverse or has been made on a wrong basis.

10. There is another aspect of the matter which may be considered here. This relates to the question whether this Court can go into the merits of the mat-ter or the reason of the arbitrators as to why they awarded Rs. 18,862.88 p. to Australian Co. as damages whereas the arbitrators in case No. 312 of 1968 awarded Rs. 1,333.31 p. against the Mills.

11. It is the case of the petitioner that the award against the Mills and the records and proceedings of the Arbitration Case No. 312 of 1968 were placed be-fore the arbitrators. It cannot be said that the arbitrators had no evidence at all before them. The award on the face of it shows that the arbitrators read and considered the papers of the case and heard the respondents and then decided the matter. The correctness of the decision of the arbitrators or any question as to merit of the award cannot be gone into by this Court in an application for setting aside the award under Section 30 of the Arbitration Act. It is not open to the Court to speculate as to what impelled the arbitrators to arrive at their conclusion.

12. In the case of Jivarajbhai Ujamshi Sheth v. Chintamanrao Balaji. : [1964]5SCR480 of the report the Supreme Court observed :

'It is not open to the Court to attempt to probe the mental process by which the arbitrator has reached his con-elusion where it is not disclosed by the terms of the award.'

13. In an application under Section 30 of the Arbitration Act for setting aside the award the court cannot go into the question whether the view taken by the arbitrator on evidence is justified. In a proceeding to set aside the award the court does not sit in appeal or make any re-assessment of the evidence. See in this connection the case Union of India v. Kalinga Construction Co. (P.) Ltd.. : [1971]2SCR184 .

14. It is well-settled that 'a court cannot review an award of the arbitrator and correct a mistake in his adjudication, unless an objection to the legality of the award is apparent on the face of it.' An award of arbitrator can be set aside on the ground of error of law on the face of the award only when in the award or in the document incorporated with it there is found some legal proposition which is the basis of the award and which is erroneous (See the decision of the Supreme Court in Firm Madanlal Roshanlal Maha-jan v Hukumchand Mills Ltd., Indore, : [1967]1SCR105 and the decision of the Privy Council in Champsey Bhara and Co. v. Jivrai Balloo Spinning and Weaving Co. Ltd. 50 Ind App 324 = (AIR 1923 PC 66} relied on by the Supreme Court.) It may be that the subject-matters of the dispute in the two awards are the same. But I cannot say that the award in favour of Australian Co. is such that no reasonable man could have made the same. This proposition of the petitioner cannot be accepted by me as it cannot be disputed that at least there was some evidence before the arbitrators to come to a conclusion. There cannot be a case of estoppel against Australian Co. from making a claim before the arbitrators higher than the amount of damages awarded to the petitioner against the Mills. In any event these matters relate to the merit of the dispute which cannot be gone into in an application for setting aside the award. The arbitrators had exclusive jurisdiction to decide the question and the arbitrators had decided it. As no mistake appears on the face of the award, it will not be set aside even assuming that the arbitrators made mistake.

15. Mr. Bhaskar Gupta invited my attention to the two recent decisions of this Court by Ramendra Mohan Datta, J., : AIR1972Cal295 , Life Insurance Corporation of India v. M. L. Dalmia and Co. Ltd. The learned Judge in that case observed :

'To my mind, the weight or the appreciation of the evidence by the arbitrator should not be considered by the Court in coming to the finding as to whether there was misconduct or not.'

I agree with the observation of the learned Judge. In that case, the arbitrators did not give any reason in making the award and the learned Judge observed :

'There is no reason why the arbitrator could not 'be in a 'position to make his award in the manner he has done.'

I think that the same observation is applicable in the instant case also.

16. The other decision of Ramendra Mohan Datta, J., referred to toy Mr. Bhaskar Gupta is the case of Ramgopal Lath v. Commonwealth Assurance Co. Ltd., : AIR1973Cal504 of the report, the learned Judge observed :

'All that the court can consider under such circumstances is whether there were materials before the arbitrator to make such an award and once that has been done, the Court should no longer guess in what manner and how such evidence was appraised or weighed by the arbitrator in coming to the decision in a case where no reason has been given in making the award.'

17. I agree with the principle of law laid down by the learned Judge and I am also satisfied that, in the instant case, there is no error of law on the face of the award and the arbitrators are not guilty of any legal misconduct.

18. Mr. Bhaskar Gupta in this connection, submitted that prima facie the two awards need not be identical because the terms of the two contracts are different. The terms and conditions of the contract between Roy Co. and the Mills include : 'subject to the bye-laws for trading in Transferable Specific Delivery Contracts of the East India Jute & 'Exchange Ltd., Calcutta, in jute goods for the time being in force'. But there is no such term in the contract between Roy Co. and Australian Co.

19. I do not think that I shall go into the question how the arbitrators in the two awards assessed the damages. As the contracts are different, the parties are different; the terms and conditions of the two contracts are also different, the arbitrators had different considerations before them for assessment of the damages. So the amount of damages may not toe the same. However, the question of appreciation of evidence or the weight of evidence given 'before the arbitrators cannot be gone into in this application and I cannot go into the merits of the matter. It is enough to say that the petitioner has failed to make out a case before me under Section 30 of the Arbitration Act. 1940 and the award is not a perverse award as stated by the petitioner. In my view, the contract is not a chain contract as submitted on behalf of the petitioner. In any event, assuming it is a chain contract, thepetitioner has failed to make out a case for setting aside the award.

20. Mr. Bhaibra in reply submitted that there is great injustice done to the petitioner. The award is not a just award. There are allegations against the arbitrators, but the arbitrators did not make any affidavit or deny the charges against them. I do not think that the arbitrators are bound to deny the allegations against them. It is for the petitioner to make out the grounds for setting aside the award and if the petitioner fails to make out any ground for setting aside the award the petition must be dismissed. The difference in the amount of damages in the two awards may cause injustice to the petitioner, but that is not a ground for setting aside the award.

21. In view of the matter which I have taken the petition should be dismissed with costs.


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