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Shree Bhowani Cotton Mills Vs. Union Textile Traders - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberMatter No. 213 of 1964
Judge
Reported inAIR1966Cal588
ActsArbitration Act, 1940 - Sections 2, 5, 11 and 30; ;Constitution of India - Article 14; ;Indian Chamber of Commerce, Tribunal of Arbitration Calcutta Rules - Rules 5, 6, 7 and 8
AppellantShree Bhowani Cotton Mills
RespondentUnion Textile Traders
DispositionApplication dismissed
Cases ReferredLee v. Showmen
Excerpt:
- .....the notice of motion. first, that thearbitration agreement is vague. secondly, that the rules of indian chamber of commerce are illegal. thirdly, that the registrar, tribunal of arbitration, indian chamber of commerce failed to exercise his discretion. fourthly, that the arbitrators are guilty of misconduct. 2. the petitioner and the respondent had dealings and transactions whereby the respondent sold and the petitioner bought certain quantities of cone yarn. the contract contained inter alia the following provisions: (a) in case of any dispute arising out of this contract the matter in dispute shall be referred to the arbitration of the indian chamber of commerce whose decision shall be binding on both the parties. (b) the courts at calcutta alone and no other courts whatsoever shall.....
Judgment:
ORDER

A.N. Ray, J.

1. Four questions have been canvassed on the notice of motion. First, that thearbitration agreement is vague. Secondly, that the rules of Indian Chamber of Commerce are illegal. Thirdly, that the Registrar, Tribunal of Arbitration, Indian Chamber of Commerce failed to exercise his discretion. Fourthly, that the arbitrators are guilty of misconduct.

2. The petitioner and the respondent had dealings and transactions whereby the respondent sold and the petitioner bought certain quantities of Cone yarn. The contract contained inter alia the following provisions:

(a) In case of any dispute arising out of this contract the matter in dispute shall be referred to the arbitration of the Indian Chamber of Commerce whose decision shall be binding on both the parties.

(b) The Courts at Calcutta alone and no other Courts whatsoever shall have jurisdiction to entertain and try suits in respect of any claim or disputes arising out of or under this contract or in any way relating to the same.

3. Counsel on behalf of the petitioner contended that the arbitration agreement is vague because there are various Indian Chambers of Commerce and secondly Indian Chamber of Commerce, Calcutta, is not the agreed arbitrator. In aid of these contentions allegations in sub-paragraph (b) of paragraph 46 of the petition were relied upon. It appears from the petition that it is not the petitioner's case that Indian Chamber of Commerce, Calcutta, is not the Indian Chamber of Commerce referred to in the agreement. Further, the correspondence indicates that the parties had no difficulty in identifying the Indian Chamber of Commerce as the agreed arbitral authority. The petitioner wrote to Indian Chamber of Commerce and the petitioner received replies and the petitioner appeared before the Indian Chamber of Commerce. Counsel on behalf of petitioner relied on the decision in C.M. Karanji and Co. v. Indo China Trading Co. Ltd. reported in (1952) 56 Cal WN 763 where a provision to the effect that the parties would have the right to call for arbitration on the matter in dispute under the rules of local Chamber of Commerce was held to be vague. That decision to my mind is of no assistance to the petitioner, because of the wide difference in the language of the agreement. It is obvious that the phrase 'local Chamber of Commerce' might refer to any of several Chambers of Commerce whereas the language in the present case that the arbitral authority is the Indian Chamber of Commerce does not suffer from any indefiniteness or vagueness. The Indian Chamber of Commerce is the agreed arbitral authority and its situation is at Calcutta is amply proved by the unequivocal appearance of the parties before the authority.

4. The other contention on behalf of the petitioner was that it appeared from a Clause of the agreement that the Courts at Calcutta would have jurisdiction, that it was open to the parties to come to a Court of law and therefore the agreement as to arbitration was vague. Settlement of dispute through the medium of arbitration and through recourse to Court of law are two different aspects. It may be that the parties envisaged disputes which are not covered by the arbitration Clause and in such a case the partiesmight have recourse to a Court of law. That is why the parties stipulated that the Courts at Calcutta would have jurisdiction. I am unable to find any inconsistency between the provisions or to hold that there is any vagueness or uncertainty or that the Clause providing for resort to Courts of law in Calcutta nullifies the arbitration agreement. Further, counsel for the respondent rightly contended that in a document of this nature if there was any inconsistency the earlier Clause would prevail unlike in a Will where the later Clause would prevail. I make it quite clear that I do not hold that there is any inconsistency.

5. It should be stated that counsel for the petitioner abandoned allegations contained in sub-paragraph (c) of paragraph 46.

6. The second contention on behalf of the petitioner is based on allegations contained in sub-paragraphs (d), (e) (f), (g) and (h) of paragraph 46. Reference was made to Rules 3, 5, 6 and 7 of the Rules of Indian Chamber of Commerce, Tribunal of Arbitration, in support of the contention that Rule No. 3 showed that the Registrar had the discretion to give the names of the members of the Tribunal of Arbitration to persons other than members, whereas the names of arbitrators should be open for inspection by members and therefore, there was discretion between members and non-members. It was also contended that under Rule 5 the selection made by the Registrar was to be final and could not be questioned and therefore if any person appointed as an Arbitrator had any bias or any influence the parties could not question such appointment and therefore, such a provision violated the provisions of the Arbitration Act.

7. The other contention on the rules was that the names would not be disclosed and such non-disclosure would affect the validity of arbitration proceedings and therefore, such a rule also infringed the provisions of the Arbitration Act. Reliance was placed by Counsel for the petitioner on the unreported decision D/-10th April 1964 in Matter No. 95 of 1963, Suraj Ratan Benani v. Hindusthan Motors Ltd. In that case one of the contentions was that the applicant requested the Registrar of the Indian Chamber of Commerce to give the names of arbitrators constituting the Court and the names were not given on the ground that under the rules the applicant was not entitled to the same. It was held in that case that Sections 5, 11 and 30 of the Arbitration Act referred to arbitrators and if the names of arbitrators were not known to the parties until the award was filed the parties would not be in a position to know whether the arbitrators had misconducted themselves within the mischief of purview of Section 5 or Section 11 or Section 30 of Arbitration Act. The agreement in the present case does not take away the right of any of the contracting parties to resort to a Court of law for redress of grievances under Sections 5, 11 and 30 the Arbitration Act. These sections do not indicate that the name of the arbitrator has to be disclosed. Bias is a disqualification and it is different from misconduct of arbitrators in arbitration proceedings. Misconduct is an objective fact and the Court has power to removearbitrators who are guilty of misconduct. Misconduct is in relation to proceedings. Names of arbitrators have no nexus with misconduct in proceedings. It is said that unless names of arbitrators are known it may not be possible to find out whether they are guilty of bias. Bias will arise from facts or conduct and they can be proved irrespective of names. Parties nave the freedom to enter into a contract and as long as the contract is not opposed to any statutory provisions such a contract is enforceable. The contract in the present case does not infringe any provisions of the Arbitration Act,

8. Counsel for the petitioner relied on the aforementioned unreported decision dated 10 April, 1964 in Matter No. 95 of 1963 (Cal) where it has been held that Rules 3 (3), 5 and 7 of the Arbitration Rules of the Indian Chamber of Commerce are in violation of the provisions contained in Sections 5, 11 and 30 of the Arbitration Act because the name of the arbitrator cannot be kept secret. It has been said in the judgment that it is an essential rule of arbitration that names of arbitrators are known to the parties and even to the public at any rate before reference proceeds. Counsel for the respondent submits that that proposition is not supported by any authority nor do the provisions of the Arbitration Act justify such a proposition. Sections 5, 11 and 30 of the Arbitration Act contemplate that the authority of the appointed arbitrator may be revoked and that Court may remove any arbitrator, and that Court may set aside an award on the ground that an arbitrator misconducted himself in the proceedings. Arbitration Rules of the Indian Chamber of Commerce in the present case do not offend any of the sections of the Arbitration Act inasmuch as the power of the Court to revoke the arbitration or to remove an arbitrator or to set aside an award remains.

9. Further, in the present case it appears from the correspondence that the Registrar of the Arbitration Department by the letter dated 27 July 1964 informed that the names of arbitrators could not be disclosed to the parties and further stated that the case was proceeding. The Registrar by the letter dated 30 July 1964 informed the petitioner's solicitor that the Tribunal of Arbitration acted independently of the Indian Chamber of Commerce and the information sought for by the petitioner's solicitor in regard to the names of arbitrators concerned the Indian Chamber of Commerce to whom the petitioner's attorney could refer. The correspondence thereafter shows that the petitioner's solicitor asked for the information as to whether the claimant was a member of the Indian Chamber of Commerce. It does not appear from the correspondence that the petitioner's Attorney took further steps as far as the Indian Chamber of Commerce was concerned in getting the names of arbitrators. On these facts it does not appear that the Indian Chamber of Commerce refused to give the names of arbitrators. As far as the Registrar is concerned he exercised his discretion and I am unable to accept the contention on behalf of the petitioner that the Registrar failed to exercise his discretion. In my opinion his discretion was justified in the facts and circumstances ofthis case, and particularly, when the case waspending and the names of arbitrators were asked for the Registrar was justified in refusing to comply with the request.

10. When the parties appear before the arbitrator they know how the proceedings are being conducted. As far as misconduct is concerned, it will appear from the proceedings and nothing attaches to the name. Therefore, I am unable to accept the contention on behalf of the petitioner that a party's ignorance of the name of the arbitrator by itself will deprive a party of making an application for setting aside the award on the ground of misconduct. As far as revocation of authority of the arbitrator is concerned, it is a question of fact and if parties come to know that the arbitrator is disqualified by reason of certain facts and circumstances the rules do not prevent any party from bringing to the notice of the Court such features.

11. Counsel for the petitioner contended on the authority of the unreported decision referred above that the rules were bad. Counsel for the respondent on the other hand contended relying on the authority of the decision in D.L. Miller and Co. Ltd. v. Daluran Goganmull, : AIR1956Cal361 that where parties enter into a contract providing for arbitration according to certain rules, the same would be the basis of contractual justice and to that extent the principles of natural justice in the abstract or in vague form would not apply. The contention on behalf of the petitioner that there is discrimination in not supplying the name to non-members is, in my opinion, unacceptable. Counsel for the respondent in my view rightly contended that the provisions contained in Article 14 of the Constitution of India would apply in relation to State and other statutory bothes, and as far as individuals were concerned, they were left free to enter into a contract on such terms as they thought fit and proper. Further, there is a good deal of reason in making certain things available to a member and not making the same available to a non-member.

12. On a consideration of the unreported decision in Matter No. 95 of 1963 dated 10-4-1964 (Cal) and the decision in : AIR1956Cal361 I am of opinion that in the facts and circumstances of the present case the rules do not offend any provision of the Arbitration Act and there is no discrimination on the basis of Article 14 of the Constitution of India and the parties are at liberty to enter into such a contract and bargain for contractual justice. The decision in Maclean v. The Workers' Union, 1929 (1) Ch. 602 held that a person who joins an association governed by rules under which he may be expelled, has no legal right of redress if he be expelled according to the rules provided that there is good faith and there is an inquiry and the fundamental principles of fairplay are observed. The same view is taken in Lee v. Showmen's Guild of Great Britain reported in 1952(2) Q.B. 329. Counsel for the petitioner contended that the decision in Maclean's case 1929-1 Ch. 602 was doubted in Lee's case, 1952-2 QB 329 but I am unable to find that there was any doubt as to the broad principles enunciated in Maclean'scase 1929-1 Ch. 602. As long as there was good faith and an inquiry, and the principles of fair-play were observed there could be (sic) any occasion to take the view that natural justice was not observed or denied. In Lee's case, 1952-2 QB 329 it was said that the Court could always examine if the rules were lawful. In the present case parties bargained to go to arbitration in accordance with the rules of the Indian Chamber of Commerce. The rules envisage that the names of arbitrators may not be furnished. On facts it appears that the petitioner was referred to the Indian Chamber of Commerce to ascertain the name of the arbitrator. The petitioner did not pursue the matter. There is an abstract contention that the rules offend the principles of natural justice. I am unable to hold that the rules, violate provisions of the Arbitration Act. There is no violation of principles of natural justice in the facts and circumstances of the case. The rules are a bargain between the parties. As far as discrimination is concerned I have already expressed my opinion against the contention of the petitioner.

13. The last contention on behalf of thepetitioner was that the arbitrator is guilty ofmisconduct, and in support of that contentionreliance was placed on allegations contained insub-paragraph (i) of paragraph 46 of the petition.It is alleged that one of the arbitrators wasfound to be holding discussion. It is not statedwhat the discussions were. I am unable to holdthat such allegations amount to any avermentof misconduct. They are too general and vagueto merit any foundation of fact to be gone into.Further, I am of opinion that the petitioner hasgiven no evidence of misconduct of arbitrators.For these reasons I am of opinion that the application should fail. The application is dismissedwith costs.


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