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Katihar Jute Mills Ltd. Vs. Shri Lachminarayan Jute Manufacturing Co. Ltd. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberA.F.O.O. No. 9 of 1956
Judge
Reported inAIR1958Cal501
ActsArbitration Act, 1940 - Sections 19 and 30; ;Arbitration of the Bengal Chamber of Commerce and Industry Rules - Rule 21
AppellantKatihar Jute Mills Ltd.
RespondentShri Lachminarayan Jute Manufacturing Co. Ltd.
Appellant AdvocateR. Choudhary, ;Bimal C. Mitter and ;H.N. Ghosh, Advs.
Respondent AdvocateI.P. Mookherjee and ;A.C. Bhabra, Advs.
DispositionAppeal allowed
Cases ReferredThe Baranagore Jute Factory Co. Ltd. v. Hulaschand Rupchand
Excerpt:
- p. chakravartti, c.j.1. this is an appeal from an order of s. r. das gupta j., dated 2-8-1955, whereby the learned judge set aside an award made by the bengal chamber of commerce and industry in the appellant's favour, superseded the reference to the chamber and directed the arbitration agreement to cease to have effect with respect to the difference referred. the award was set aside on two grounds, first, that it was made on a second reference which was not maintainable in law and, secondly, that the arbitrators who made it had misconducted themselves by shutting out the respondent from adducing material evidence. the first ground did not reflect the learned judge's own opinion which he expressly declared to be different but since there was a previous decision of bachawat j., according.....
Judgment:

P. Chakravartti, C.J.

1. This is an appeal from an order of S. R. DAS Gupta J., dated 2-8-1955, whereby the learned Judge set aside an award made by the Bengal Chamber of Commerce and Industry in the appellant's favour, superseded the reference to the Chamber and directed the arbitration agreement to cease to have effect with respect to the difference referred. The award was set aside on two grounds, first, that it was made on a second reference which was not maintainable in law and, secondly, that the arbitrators who made it had misconducted themselves by shutting out the respondent from adducing material evidence. The first ground did not reflect the learned Judge's own opinion which he expressly declared to be different but since there was a previous decision of Bachawat J., according to which a second reference was not competent and since the practice of the court required a Judge, sitting singly on the Original Side, to follow an earlier decision of a Judge of co-ordinate jurisdiction, if any such decision on the same subject existed, he set aside the award on the first ground as well. The appellant questions that order and contends that neither of the grounds given in its support is sustainable.

2. The decision of Bachawat J., which the learned Judge purported to follow in setting aside the award on the first ground was that in the case of Hulaschand Bupchand v. The Baranagore Jute Factory Co., Ltd. (A). That case was itself brought up on appeal, and judgment in the appeal has Just been delivered by us. (Baranagore Jute Factory Co, Ltd. v. Hulaschand Rupchand, : AIR1958Cal490 ) (B). We have not been able to agree with Bachawat J., In all the views expressed by him; but in his views as to cases of the present type, we have agreed. On the principles enunciated by Bachawat J., and upheld by us, the award in the present case cannot be impugned as invalid on the ground of its having been made on a second reference. With great respect to S. R. Das Gupta J., he seems to have been under some misapprehension as to what had been actually held by Bachawat J., as I shall presently explain, but before I do so, I must state the relevant facts. They are as follows.

3. On 26-3-1951, the appellant entered into a contract with the respondent for sale of 4,02,000 yards of Hessian cloth, manufactured in its own mills, of which 3,00,000 yards were to he delivered in July, August and September, 1951 at the rate of 1,00,000 yards per month and the remaining 1,02,000 yards were to be delivered in October next. The contract provided that each month's delivery was to be treated as a separate contract and it contained an arbitration Clause in the standard form prescribed by the Indian Jute Mills Association. The goods due to be delivered in the first three months were duly delivered and accepted, but when the last instalment, deliverable in October, was despatched, the respondent refused to accept the goods on the ground that they were not of the appellant's manufacture. The appellant repudiated the allegation and after selling the goods, claimed damages from the respondent for loss suffered. The respondent refused to pay and dispute having thus arisen between the parties, the appellant referred it to the arbitration of the Bengal Chamber of Commerce and Industry. Thereupon, a Court was constituted to hear the reference, which was numbered 16G of 1952, but as the court failed to make an award within the time allowed, the Registrar of the Chamber constituted a second court under Rule VII of the Rules of Arbitration. That court made an award in the appellant's favour. The respondent, however, made an application to this court for setting aside the award on several grounds and the court set it aside on the ground that the second court, which had made the award, had been constituted of the same persons as had constituted the first court. Thereafter, on 22-4-1953, the appellant addressed a further communication to the Registrar of the Chamber which has been taken by the learned Judge as a second reference. By it, the appellant submitted a fresh statement of claim, but explained its reason for doing so by pointing out that though the previous award had been set aside, the arbitration had not been superseded and that the statement of claim, originally filed, had been forwarded by the Chamber to this Court along with the previous award and was lying here, as were the statements of the respondent and further statements of the parties. On receipt of the appellant's letter, the Registrar started a proceeding which he numbered as 162-G of 1953 and called upon the respondent to file its statement in reply. The respondent took up the position that there could be no further arbitration by the Chamber, since, with the making of the previous award, the arbitration agreement had been exhausted, but as that contention did not find favour with the Chamber, it asked for time to apply to the court for leave to revoke the authority of the arbitrators. An application was made, but it did not succeed. The respondent then filed its statement under protest and thereafter participated in the proceedings. As on the previous occasion, the court, first constituted, was unable to make an award within the time allowed, whereupon a second court was constituted and that court eventually made an award which was again in the appellant's favour. It is that award which the learned Judge has held to be bad on the ground that it was made on a second reference and therefore the decision of Bachawat J., applied.

4. On the above facts, the decision of Bachawat J., undoubtedly applied, but in holding that that decision compelled him to condemn the award as invalid, the learned Judge waS, with respect to him, in error. It has been seen that when the award was set aside, the reference was not superseded. The reference was therefore subsisting even after the award had gone. The award was set aside on the ground that the Court which made it had been illegally constituted and had therefore no jurisdiction to make the award. That finding meant that all the proceedings held by the court were void and not merely illegal and the resultant position arising out of the court's decision was that while a valid reference had been made to the arbitration of the Chamber, the Chamber, as the arbitrator, had taken no effective steps by way of holding an arbitration under the reference. Bachawat, J. held that, in such a case, the proceedings held by the arbitral court and the award made by them were nullities and with that view, S. R. Das Gupta J., has expressed his agreement. Bachawat J., held further that after the award had been set aside in such a case, the parties would be restored to the position in which they were before the abortive proceedings began and they would be entitled to a revival of the proceedings and a valid and effective determination of their dispute. S. R. Das Gupta J., has noted that proposition as well, though he has added that his own view is different. Then he has quoted from the early part of the judgment of Bachawat J., a general proposition and a partial exception thereto, viz., that a second reference of the same dispute under the same arbitration agreement is not competent, but in proper circumstances, a second reference may be treated as a revival and continuation of the first reference, and he has again observed that his own view is different. After referring to those propositions of Bachawat J., the learned Judge has observed that they compel him to hold that the award in the present case is invalid.

'If', he has said, 'I follow the view taken by Bachawat J., on this point, then I have to hold in favour of the petitioner because, in this case, there has been a fresh reference and not a revival of the old reference.'

It appears to have been overlooked by him that Bachawat J., treated a case of the present type as coming not under his general proposition but under the exception. After pointing out that when the award was set aside in such a case, the parties were relegated, as they were in all cases where the award was set aside as a nullity, to the position in which they were before the abortive proceedings began, Bachawat J., held that the position to which the parties were so relegated was that a valid reference had been made but no valid arbitration, and therefore no arbitration, had taken place thereon. He proceeded to say that, in that position, the parties would clearly be entitled to have further arbitration for a determination of their dispute and they would be able to have such arbitration, unless it was impossible to provide the necessary machinery for it. According to him, in the case of an arbitration by the Bengal Chamber of Commerce and Industry, it was possible to have the necessary machinery for further arbitration when an award was set aside as a nullity, because in such a case it might well be said that the arbitral court had allowed the time for making an award to expire 'without making an award' within the meaning of Rule VII of the Rules of Arbitration and therefore the Registrar might, under that Rule, constitute 'another Court' to proceed with the arbitration. The conclusion of the learned Judge was that, in such a case, a reference, which was purportedly a second reference, might properly be treated as a revival and continuation of the original reference, because not having been superseded and not having been worked out upto an effective award, that reference was still pending and further proceedings therein were possible. 'While S. R. Das Gupta J., has noticed the view of Bachawat J., that in proper circumstances a second reference may properly be treated as a revival and continuation of the first reference, he has overlooked the further opinion of the learned Judge that one case where a second reference may be so treated is where an award made by an arbitral court of the Bengal Chamber of Commerce and Industry is set aside as a nullity on the ground that the constitution of the Court was illegal and thereupon a fresh statement of case is filed before the Chamber. In our judgment in the appeal from the decision of Bachawat, J., we have upheld this view of the learned Judge for the reasons given there. We must accordingly hold that in taking the view that the decision of Bachawat J., required him to declare the award in the present case to be invalid, as an award made on a second reference, S. R. Das Gupta J., misdirected himself and also that the declaration is, on the merits, wrong.

5. Indeed, with great respect to S. R. Das Gupta, J., it would appear that he overlooked not only the application by Bachawat J., of the exception to his general rule to cases of the present type, but also the exception itself. The whole basis of his decision on this part of the case is that the appellant purported to make a fresh reference. But if he was following Bachawat J., the fact that there was a fresh reference, assuming it was such a reference that had been made, could by no means be decisive, because only when there is a fresh or second reference can any question arise as to whether it may be treated as a revival and continuance of the original reference. The decision of the learned Judge which rests on the single finding that there was a fresh reference in form and which presupposes that where there is such a reference, proceedings therein must be held to be invalid, was not in accordance with the view of Bachawat J., whom he purported to follow.

6. Nor, I think, was there a fresh reference in this case, even in form. The appellant's letter of 22-4-1953, addressed to the Registrar, began with setting out the whole history of the previous proceedings, upto the setting aside of the award, and then stated in paragraph 5 that as the arbitration had not been superseded, it had been advised to submit a fresh case to the Chamber. The next paragraph explained why it had become necessary to submit a fresh statement and the reason pointed out was that the original statement of claim, the counter-statement of the respondent, the further statements of the parties and other papers including the original sold Note, had all been submitted to this court along with the award and would not therefore be available to the arbitrators. It was only thereafter that the letter proceeded to state the appellant's casein detail and ask for the constitution of a court, to adjudicate on its claim and make an award in its favour. In my view, by writing that letter, the appellant was not purporting to make a fresh reference even in form and the letter does no even require to be liberally or indulgently construed in order to be taken as an application for a resumption of the reference and further arbitration thereon by another court. It, was clearly such an application and, accordingly, no question of a second reference arises in the present case.

7. A word is necessary as to the personal opinion of S. R. Das Gupta J., as to the validity of a second reference. His view is that what is to be seen after an award is set aside is whether the arbitration agreement still subsists. If it does, the parties can again refer the same dispute to the arbitrators and where the award is set aside more than once, they will be entitled to make a fresh reference every time it is set aside. Indeed, to make a fresh reference is, according to the learned Judge, the only course to be followed by the parties. His reason is that where the arbitration agreement provides in general terms, as the standard form prescribed by the Indian Jute Mills Association does, that all disputes between the parties shall be referred to arbitration and it does not limit them to a single reference, the agreement subsists even after an award is set aside, so long as it is not superseded under Section 19 of the Act and, therefore, since the dispute remains undecided, the parties can, under the very words of the. agreement, make another and a, fresh reference and go on doing so, where award after award is set aside. The subsistence of the dispute and the survival of the agreement providing for its reference to arbitration give the parties a right to make a fresh reference.

8. In my opinion, this view cannot be fitted in with the Act and is not correct. I agree with the learned Judge that when only the award is set aside, the arbitration agreement subsists except perhaps in the unusual but possible case where the award itself provides that there shall be only one adjudication. The observation made in passing the judgment in A. O D. No. 93 of 1953, decided on 20-7-1954 (C), to which I was a party, that where there is a named arbitrator and the award is set aside for his misconduct, the arbitration agreement ceases to have effect cannot be, it appears to me on further consideration correct, as applied to all cases. But it is not only the arbitration agreement which survives. The learned Judge seems to think that Section 19 provides for supersession of only the arbitration agreement. In fact, the Section provides for supersession of the reference and carries the clear implication that unless the reference is superseded when an award is set aside, it continues to subsist. It is, however, true that when the court supersedes the reference, it must also declare that the arbitration agreement shall cease to have effect, so that the two stand or fall together, except where the award is set aside on the ground that the reference itself was invalid, in which case no order superseding the reference is required. But except in that one case, it is not possible, after an award is set aside, that the reference shall no longer subsist, but the arbitration agreement shall. I agree with Das Gupta J., that whether an award is set aside as a nullity or on the ground of misconduct can make no difference -- except, however, where the nullity of the award is due to the invalidity of the reference -- but in all other cases where the award is set aside but the reference is not superseded, not merely the arbitration agreement, but the reference also would continue to subsist, which the learned Judge appears to have overlooked. It follows that In all such cases, there being a reference already made and still pending, a fresh reference is unnecessary and indeed cannot lie and further arbitration can be had only in the original reference, upon its being resumed and continued. I am therefore unable to agree with S. R. Das Gupta, J., that after an award is set aside, not only are the parties entitled to make a fresh reference, but a fresh reference is the only means by which they can have further arbitration and that they may make a fresh reference as many times as the award is set aside. In the case of an arbitration by the Bengal Chamber of Commerce and Industry, the reference is to the Chamber and not to the arbitral court constituted to deal with it. Consequently, even when an award is set aside on the ground that the court which made it was illegally constituted and the award is a nullity, the reference is not affected and further arbitration can be had, and had only, by way of a continuation of that reference. If the arbitration proceedings held in the present case after the 22nd April, 1953 are to he treated as valid, they can be so treated only on the basis of the view of Bachawat. J. and not on the basis of the view of S. R. Das Gupta. J.

9. There had been an argument before S. R. Das Gupta, J. which was not repeated before us, but as it had some ingenuity in it and has been noticed in the Judgment, I consider it advisable to deal with it. It was contended that where the Bengal Chamber of Commerce and Industry set up a court of illegal constitution and such court made an award, the award was not a nullity, because it was an award of the Chamber which, and not the arbitral court, was the arbitrator and therefore it could not be said that the award was made by a body which had no jurisdiction to make it. In such a case, it was said, the award was only illegal but not void and it was illegal because the arbitrator, viz., the Chamber, had misconducted itself in setting up a court of illegal constitution. The next step in the argument was that such a case came under the principle laid down by Bachawat, J. that where an award, though illegal, had been made with jurisdiction. there could be no second reference after the award had been set aside and a purported second reference could not also be treated as a continuation of the original reference. In my view, this argument cannot be accepted and, as I have already stated, the learned counsel for the respondent did not try to advance it before us. The argument is untenable for several reasons. It is true that in the case of an arbitration by the Bengal Chamber of Commerce and Industry, the award made is an award of the Chamber itself and not of the arbitral court, but as S. R. Das Gupta, J. has pointed out, the Chamber, being a corporated body, can function only in accordance with its rules and therefore when the court constituted is one which cannot be constituted under the rules, the award made by the Chamberthrough such a court is an award made without jurisdiction and as such a nullity. In the second place, as regards the question whether after an award has been set aside, a purported second reference can be treated as a continuation of the original relerence the distinction made by Bachawat, J. between void and illegal awards is not, in my view, correct and the learned Judge, with respect, was also not right in holding that although the original reference might be subsisting, there could be no further arbitration in continuation of it, because no machinery for such arbitration could be provided under the rules of the Chamber. I need not repeat here my reasons for differing, with the learned Judge, because I have given them in full in my judgment in the appeal from him in The Baranagore Jute Factory Co. Ltd. v. Hulaschand Rupchand : AIR1958Cal490 (B).

10. The second ground on which the award in the present case has been set aside is that it is vitiated by misconduct of the arbitrators who shut out the respondent from adducing material evidence. In my view, that ground also cannot be sustained.

11. The respondent's case which found favour with the learned trial Judge is that from the very beginning, it had been asking for the production of the Monthly Returns of production and stock which the appellant had submitted to the Indian Jute Mills Association during the relevant, period, but the arbitrators had not taken any steps under Rule XXI or the Rules of Arbitration to cause their production and had also refused to grant an adjournment for the purpose for which the respondent had prayed on the last date of hearing. Those returns, it is said, would prove that the goods tendered by the appellant could not be of its own manufacture and therefore by the refusal of facilities for bringing in those very material papers before the Court, the arbitrators had misconducted the proceedings and caused serious prejudice to the respondent, if the course of the proceedings be examined with care, this complaint will be found to be wholly unmeritorious.

12. The arbitrators held their first meeting on the 24th February, 1954. Before that date, the respondent had filed two statements, one dated the 15th December, 1953 and another dated the 17th February, 1954. The latter is headed 'Case No. 160-G of 1953', but from a further entry in the heading, viz. '(15th October, 1951 portion)', it would appear that the statement was intended for the present reference. Indeed, it is stated in Paragraph 9(i) of the statement of the 15th December, 1953, that there were three other references, viz., Nos. 160-G, 161-G and 163-G, in which the respondent had filed statements and those statements should also be treated as statements in this reference. One such statement or letter, headed 'Case No. 163-G of 1953 and dated the 31st October, 1953 but also purporting to deal with '(October 15, 1951 portion)', appears at page 44 of the Paper-book. Such were the nature and the number of the points raised by these statements and so multitudinous were the documents, many of them patently irrelevant, of which production was called for that the method which the respondent chose to adopt for conducting its defence can only he called vexatious. It had informed the appellant of its refusal to take delivery of the goods by a letter, dated the 13th October, 1951 and had said in that letter that it had returned the Railway Receipt along with the Appellant's bill, tendered by its Bankers. Yet a point was taken before the arbitrators that no bill had been sent with the Railway Receipt and no tender had been made through Bankers, as required by the contract. When the attention of the respondent's representative was drawn to the letter of the 13th October, 1951, he said it had been written under a mistake of fact. A next point taken was that the goods did not bear the marks specified in the shipping instructions. When it was pointed out that the respondent could not possibly contradict the appellant's statement that the goods did bear those marks, since it had refused to accept the Railway Receipt and had thus had no occasion to examine the goods, the ground was at once changed and it was said that the Railway Receipt did not bear the specified marks. In vain was it pointed out that a Railway Receipt would not bear the marks specified in the shipping instructions which would be imprinted on the bales and that it would only bear the booking marks and also that no complaint had been made in the letter of the 13th October, 1951 that the Railway Receipt did not bear the marks of the goods. The respondent insisted on the production of the Railway Receipt. The appellant obtained a letter from the Railway authorities, giving the particulars of the Railway Receipt and the despatch of the goods thereunder but the respondent, still not content, asked for the production of the original. It was produced by the Railway authorities and was found to bear the marks 'PRMS' and 'K.O.G.' and thereupon the respondent triumphantly declared that its case had been proved, because those were not the marks specified in the shipping instructions. It was explained that the letters PRMS stood for Purnea Rice Mill Siding and the letters KOG for Konnagar and the marks merely indicated that the goods covered by the Railway Receipt had been despatched from the former siding to the latter place. The respondent then contended that if the goods had been despatched from the Purnea Rice Mill Siding, the terms of the contract had not been complied with, because the contract required the goods to be despatched from the Katihar Jute Mill Siding. If, it was said, the goods had been despatched from another place, the fact proved the respondent's case that the appellant had not tendered goods of its own manufacture. It was explained that the appellant had actually despatched the goods from its own Mill Siding, for it was the Purnea Rice Mill which had been converted into the appellant's jute mill, but the Mill Siding, which had come to be called 'Purnea Rice Mill Siding' when the mill was a rice mill, was continuing to bear its old name. The respondent then contended that the goods had not been despatched to it in its name. It was pointed out in reply that under the ordinary trading practice as also the necessities of the case, a railway receipt for goods despatched by a seller by rail had to be in his own name and the name of his bankers and that it would be endorsed in favour of the buyer only when he paid the bill tendered along with it and took delivery of it on such payment.

13. I have referred to some of the points taken by the respondent before arbitrators in order to give the background of frivolous and multifarious contentions, by reference to which their alleged misconduct of denying assistance and facilities to the respondent in regard to the production of some material evidence on which it was relying is to be judged. The material evidence, it is said, consisted of the production and stock returns submitted by the appellant to the Indian Jute Mills Association. The respondent's case was that the goods tendered by the appellant were not of its own manufacture and that they could not be of its own manufacture because, at the relevant time, it had no stock of its own products in its hands. In order to establish that contention, the respondent asked for the production of the appellant's own production and stock registers and they were produced. The appellant also produced its Ledger and Journal, of both the Mill office at Katihar and the Head Office in Calcutta, and supplied the arbitrators with English translations of relevant extracts. The respondent expressed its apprehension that the arbitrators were being misled and thereupon one of its representatives, conversant with the vernacular in which the books were written, examined them and verified the submissions made on behalf of the appellant. The arbitrators had thus before them the Railway Receipt, showing that the appellant had despatched the goods from its own Mill Siding and the appellant's production and stock registers and other books of account, showing that the goods had been supplied from the appellant's stock of goods of its own manufacture. Those books had been called for by the respondent itself. But from before the arbitration commenced and during its progress, the respondent, by letters written or statements filed from time to time, had been calling for the production of documents of a bewildering number and variety. Among them were monthly returns of production submitted by the appellant to the Indian Jute Mills Association. By a statement filed on the 31st October, 1953 in Case No. 163-G, the respondent requested the arbitrators to call for the production of the appellant's 'Report and/or Return of the monthly production from January, 1951 upto December, 1951'. The statement dated the 15th December, 1953, filed in the present case contained a request that the arbitrators should call for the originals of the appellant's 'Returns of production of jute goods for the months of January to October, 1951'. Likewise, the statement, dated the 17th February, 1953 said that the respondent required the production of copies of the appellant's own production and stock register and 'Returns of monthly production from January, 1951 to August, 1951, which they re-billed to the Indian Jute Mills Association'. Those were all the requests made in statements filed before the arbitrators before they held their first meeting on the 24th February, 1954.

14. It will be seen that the only returns mentioned in these letters and statements were returns of production. Those returns would not by themselves prove the respondent's case, because even assuming that there had been no production during the period mentioned, the appellant may yet have had in hand a sufficient stock of goods produced during previous months. While in the case of the appellant's own books, the respondent called for the production of both stock and production registers, in the case of returns submitted to the Indian Jute Mills Association, it said that it required only the returns of production. In the second place, it was for the respondent to produce its own evidence which was to come from third parties or, in any event, to make an attempt in the first instance to cause its production, it is true that in its statement of the 15th December, 1953, the respondent drew the attention of the arbitrators to Rule XXI of the Rules of Arbitration, but quite apart from the fact that the Rule applies only when the court itself considers the evidence of a witness necessary, it applies only when it is found that the witness concerned is not willing to give evidence or is resident outside the city of Calcutta. Upto the date of the first meeting of the arbitrators, nothing had happened which required the arbitrators to exercise their power under Rule XXI or would justify them in exercising it. The respondent had not asked the Indian Jute Mills Association to produce the returns and they had not declined to produce them.

15. At the meeting of the 24th February, 1954, the appellant produced its books of account which showed that the goods had been supplied from the stock of its own products, but the respondent stated that it was not prepared to accept the entries in the books as correct, unless they were supported by the monthly returns. The minutes of the meeting show that all that was stated further was in its letter of the 17th February, 1954, the respondent had asked for certain documents to be produced. It appears that not content with the numerous statements already filed, the representative of the respondent went to the meeting with another statement which, paradoxically enough, he tendered as his 'oral evidence'. That statement made no mention of monthly returns at all. It is true that on returning from the meeting of the 24th February, 1953, the respondent's representatives addressed two letters to the arbitrators on the same day, purporting to place on record what had taken place at the meeting. In the first of the letters he said that he had wanted the production of the monthly returns filed by the appellant with the Indian Jute Mills Association and further that he required the production of 'all the documents asked for in our previous statements and letters.' That statement adds nothing to what is shown by the minutes. It does not show that the representative had mentioned any returns other than returns of production or that he had represented to the arbitrators that the Indian Jute Mills Association were not willing to produce the returns and therefore he required their assistance under Rule XXI.

16. The next meeting of the arbitrators was not held till the 1st April, 1954. The responsibility for the delay lay apparently with the respondent. On the 12th February, 1954, it had brought a suit on the Original Side of this Court, being Suit No. 495 of 1954, for a declaration that the contract relating to the transaction was itself void. On the 25th February, 1954, the day next to the date of the first meeting of the arbitrators, it addressed a letter to the Registrar of the Tribunal, informing him of the institution of the suit and asking him to treat the letter as a notice under Section 35 of the Arbitration Act and to stay all proceedings in the reference. If the respondent thought that Section 35 applied and that in view of the institution of the suit, the reference should not be allowed to proceed, it is not easy to see why the matter was not brought to the notice of the Tribunal before the arbitrators held their first meeting and why a notice under Section 35 shduld have been thought of immediately after the meeting of the 24th February, 1953. Be that as it may, en the 13th March, 1954, the Registrar referred the respondent's letter to the solicitors for the appellant and wanted to be informed whether the subject-matter of the reference was covered by the suit and on the 17th March following, the appellant's solicitors replied to say that since no writ of summons had till then been served on their client or themselves, they could not say what the scope of the suit was. The respondent does not appear to have pursued the matter further and seems to have accepted the position that Section 35 did not apply. No mention of the matter was made at the meeting of the 1st April, 1954, nor does any subsequent communication from the respondent contain any reference to it.

17. I should add that some part of the time before the next meeting was held was also spent over correspondence regarding the production of the original of the Railway Receipt and the papers of the appellant's bankers. It has been seen that two of the respondent's contentions were that the Railway Receipt had not been tendered through the appellant's bankers, as required by the contract, and that the Railway Receipt did not bear the marks specified in the shipping instructions. It was pointed out that by its letter of the 13th October, 1951, the respondent had itself informed the appellant that it had refused the Railway Receipt tendered by the appellant's bankers, but the respondent's representative wanted to explain away the admission as made under a mistake of fact. A plea of a mistake of fact in regard to such a matter is not very convincing, but it becomes wholly incredible when one finds that in two subsequent letters, dated respectively the 16th October, and the 19th November, 1951, the respondent was referring back to the letter of the 13th October and saying that its reasons for the refusal of the Railway Receipt had been given there. It was not even then said that another reason for the refusal to take delivery of the Receipt was that it had not been tendered through the appellant's bankers, although such a tender had been mentioned in the letter of the 13th October by mistake. In spite of those letters of its own, the respondent insisted on the production of the Bank's papers to show that the Railway Receipt had really been tendered through the Bank. Similarly, the respondent insisted on the production of the original Railway Receipt for proving, as it said, that it did not bear the specified marks and would not - be content with the letters which the appellant had obtained from the Railway authorities. A part of the month of March, was spent on the steps taken to produce the aforesaid papers.

18. The meeting of the 1st April, 1954 was concerned with the respondent's contentions regarding the despatch and disposal of the goods and the marks borne on the Railway Receipt. The minutes do not show that any reference was made by the representative of the respondent to the monthly returns submitted by the appellant or that he raised again the question as to who the manufacturer of the goods was. As in the case of the first meeting, the respondent's representative, on returning from the second meeting, addressed a letter to the Registrar on the subject of the evidence led at the proceedings. The letter was dated the 2nd April, 1954. The representative did not say in that letter that he had asked at the meeting for the production of the returns or made a request for an opportunity to cause their production or required the arbitrators to take action under Rule XXI. When, at the meeting of the 24th February, 1954, he had said that his principal had asked for the production of certain documents by its statement of the 17th February, including, let it be assumed, the monthly returns submitted by the appellant, the arbitrators had observed that they had noted the contents of the statement, but it was for them to decide what documents were required. The returns mentioned by the respondent were only returns of the production which the arbitrators did not apparently consider necessary, in view of the other evidence produced by the appellant and in view of the fact that they could not prove whether or not the appellant had been in a position to supply goods of its own manufacture. That position the respondent appears to have accepted, seeing that it did not seek to return to the subject at the next meeting held on the 1st April, 1954. At the end of that meeting, there was no evidence left which either party wished to adduce and the proceedings came to a close. The minutes of the meeting end with the following sentence :

'The parties having no further evidence to adduce, were informed that the proceedings were at an end and that the court would now consider their award, copies of which would be issued to the parties in due course.'

19. There was no protest against the closure or the proceedings in the letter of the 2nd April, 1954 and the respondent did not say therein that the monthly returns or any other evidence remained to be produced and that therefore in declaring the proceedings closed, the arbitrators had acted arbitrarily. On the other hand, it was submitted that a direct breach of the contract had been 'revealed' by ,the evidence in the case and an award in the respondent's favour was asked for. 'Considering the above', the letter said in the end, 'please cancel our sellers' claim, awarding costs in our favour.'

20. The letter, however, contained a statement to the effect that the respondent was ready to 'prove further' the appellant's neglect and failure to comply with the terms of the contract, if a 'further opportunity' was given to it. Apparently out of a desire not to give the slightest cause for complaint, the arbitrators decided to give the respondent a further opportunity, as asked for, and they forwarded a copy of the letter to the appellant for its information and remarks. The appellant naturally objected to the respondent filing another statement after the evidence had been closed and intimated its protest to the arbitrators by a letter dated the 22nd April, 1954. At the same time, it offered its comments on the submissions made on the evidence in the respondents' letter. It appears that before the appellant sent its reply, the arbitrators had already fixed the 27th April, 1954 for another sitting.

21. The respondent's letter of the 2nd April, 1954 suggested that it had then some further evidence in its possession and control and that it desired to have an opportunity for producing that evidence in order to prove its case 'further'. Pull three weeks later, however, on the 22nd April, 1951, just five days before the date of the next sitting conceded to it, the respondent addressed another letter to the Registrar through itg solicitors and stated that by its first statement of the 3lst October, 1953 as well as by all subsequent statements, it had insisted on the production of 'the report and/or return on the monthly production and stock from January, 1951 up to December, 1951', filed by the appellant with the Indian Jute Mills Association and that it had 'throughout requested' the arbitrators to call for production of the same. It will be noticed that this time and for the first time, the appellant added returns of stock to returns of production and it stated, contrary to what the fact was, that it had always asked for the production of the stock returns as well. The letter went on to say that the Indian Jute Mills Association maintained their own record of the stock and production! of their member mills. It then asked the Registrar to call for the appellant's returns of its stock and production for the relevant period from the Indian Jute Mills Association as also the Association's own records and to proceed under Rule XXI if the Association were found unwilling. to produce the books and documents. It appears that, on the same date, the respondent's solicitors wrote to the Secretary of the Indian Jute Mills Association, asking him to produce before the arbitrators at their next meeting 'the original Reports and/or Returns of stock and also of the Monthly production' filed by the appellant or failing such documents, the records Kept by the Association of the appellant's stock and production for the relevant period. On the 23rd April, 1954, the Registrar of the Tribunal sent the appellant a copy of the respondent's letter of the 22nd and the appellant filed its reply to it on the 26th. it protested against the 'submission of new matters in an unlimited series of letters' sent from time to time and particularly against the attempt to bring in new matters at the final stage when the reference was about to be disposed of. The appellant also referred to the manner in which the respondent had been pouring in huge masses of irrelevant letters and papers with a view to confusing the issues and delaying the hearing, then submitted that the Railway Receipt and its own stock Register proved conclusively that it had its own goods in stock and had despatched such goods in fulfilment of the contract and further submitted that the arbitrators should discourage mala fide attempts to hold up the award and should take no notice of the respondent's letter of 22-4-1954.

22. It appears from the minutes of the meeting of 27-4-1934 that the arbitrators had understood the respondent's letter of the 2nd April to mean that it had some further evidence to adduce and wanted an opportunity for adducing it. The first enquiry they made of the representative of the respondent was whether he had any fresh evidence to adduce and when the representative started formulating certain points on which he wished to offer comments, they told him that those points had been raised and dealt with in the written statements and that what they wanted to see was only whether the respondent had 'any fresh evidence to submit'. The respondent's representative then said that the Indian Jute Mills Association has been written to for the production of the appellant's stock returns and that 'he had nothing fresh to submit'. He then proceeded to comment on the appellant's letter of 26-4-1954 and after he had finished, the proceedings were declared to be at an end and the arbitrators said they would consider their award. It appears that they made their award later on the same day.

23. The minutes of the meeting of 27-4-1954 do not show that the representative of the respondent either asked the arbitrators to take action under Rule XXI for production of the appellant's returns by the Indian Jute Mills Association or asked for an adjournment. He simply said that his principal had written to the Association for the production of the returns and then said that he had nothing fresh to submit. There is no reason at all to think that the minutes do not represent correctly what happened at the meeting. It has been seen that it was the habit of the respondent's representative to return from attending a meeting and then address a letter to the Registrar in which he purported to place on record his version of what had taken place before the arbitrators. No such letter was written after the meeting of 27-4-1954. If the representative had asked the arbitrators to take action under Rule XXI for the production of the returns or had asked for an adjournment and if the arbitrators had refused such prayers, it is inconceivable, having regard to the manner in which the respondent's defence was throughout conducted, that the representative should not have addressed to the Registrar a letter of protest and, to use his own language, 'placed on record' the fact that he had made those prayers and they had been refused. It cannot be said that no purpose would be served by writing such a letter, since the arbitrators had declared proceedings closed and had said that they would now consider the award, because the meeting of 1-4-1954 also had ended with a similar declaration. It is not without significance that even in the letter which the respondent's solicitors addressed to the Registrar on 3-5-1954 and in which the award was impugned on eight grounds, all that was said on this matter was that the arbitrators had failed to take steps under Rule XXI for the production of the returns, but it was not said that besides being requested by the statements to do so, the arbitrators had been 'asked at the meeting of 27-4-1954 or at any other meeting to proceed under Rule XXI or that an adjournment had been asked for and refused at the last meeting. In the above state of the facts, I am unable to agree with the learned trial Judge that the affidavit of the respondent's representative who was present at the meeting should be preferred to the appellant's representative who was not and that it should be held that an adjournment was asked for at the meeting of 27-4-1954 and it was refused.

24. Generally too, I find myself unable to agree with the learned Judge that the arbitrators shut out the respondent from adducing material evidence and thereby made themselves guilty of misconduct. It is not alleged that the respondent was ready at any stage of the proceedings to produce the returns and that the arbitrators did not allow it to produce them or refused to admit them, when tendered. All that is alleged is that the arbitrators did not themselves take any steps under Rule XXI or otherwise to cause production of the returns and that an adjournment, asked for in the last resort, in order that the respondent might itself try to cause them to be produced, was not granted. I have already dealt with the case of a prayer for an adjournment which, in my opinion, is not worthy of belief. As regards the grievance that the arbitrators did not take any steps under Rule XXI, it is to be remembered that no occasion for resorting to that Rule arises unless the arbitrators themselves consider the proposed evidence to be material and unless they find that the party in possession of the evidence is not willing to give it to the Court. In the present case, the only returns which the respondent had been calling for by its successive statements right up to the meeting of the 2-4-1954 were the appellant's returns of its production. As I have already explained, even if the returns showed that there had been no production during the relevant months, it would not necessarily follow that the appellant could not have been in a position to supply goods of its own manufacture, because it might well have had a stock of its own products carried over from the prior period. But It was not merely that hypothetical basis on which the arbitrators need have proceeded. They had before them the positive evidence furnished by the appellant's own stock and production registers which the respondent had itself called for and the evidence of other books of account, kept both at the Mill site and at the Head Office in Calcutta, which showed that the appellant could supply goods of its own manufacture and had in fact done so. If, in those circumstances, the arbitrators considered the production returns unnecessary, it cannot be said that by taking that view they had committed misconduct. In the next place, before the meeting of 27-4-1954, the respondent had never represented to the arbitrators that the Indian Jute Mills Association had been approached for a production of the returns but they were unwilling to produce them. Indeed no approach had been made to the Association at all. I am, therefore, entirely unable to see -- limiting myself for the time being to the period upto the meeting of 1-4-1954 -- how the arbitrators could he expected to take any steps under Rule XXI for the production of the returns and how it could be misconduct on their part not to have done so. The learned trial Judge has observed that the arbitrators did not even give a simple direction to the Indian Jute Mills Association to produce the returns. I do not find that they were required by any rule or law to do so and as to giving such a direction in the exercise of their discretion, I cannot regard their omission as an unjudicial exercise of it, since the returns called for were only production returns, since there was a large mass of direct evidence in the appellant's favour which such returns could not in any event displace and since acceptance of the respondent's case would mean -- seeing that despatch of the goods had been proved by the Railway Receipt --that the appellant had, at an out of the way place like Katihar with no other jute mill near about, purchased or procured the goods from some other mill and then despatched them.

25. Proceeding now to the meeting of 27-4-1954, it is true that five days before its date, the respondent had informed the arbitrators that it wanted production of both stock and production returns of the appellant. As I have already pointed out, it was only then for the first time that stock returns were mentioned, apparently because the respondent had come to realise under legal advice that production returns could be of no use, but I am clearly of opinion that at that late stage, after evidence had once been declared closed and after the case had been re-opened at the request of the respondent only to enable it to produce some further evidence which, it had said by its letter of 2-4-1954, it wanted to produce, the arbitrators could not fairly and properly be expected to come to the assistance of the respondent in collecting fresh evidence for it, The only material evidence was that constituted by the stock returns, but they had never been mentioned at any earlier stage of the proceedings. Besides, as I have also pointed out, it does not appear that even at the meeting of the 27th April, the arbitrators were told that the Indian Jute Mills Association being apparently not prepared to produce the returns voluntarily, they should use their powers under Rule XXI. Even if they had been so told and they had refused to have recourse to Rule XXI at that late stage, I would not have held them guilty of misconduct, because taking steps under Rule XXI would mean' applying to the Court for the issue of process on the Association for the production of the documents and it would mean a further prolongation of the proceedings in the interest of the respondent for the production of evidence which it had never mentioned till after the proceedings had been concluded. But as no request was made to the arbitrators at the meeting to take action under Rule XXI, the question does not arise.

26. In my view, much as I regret to have to differ from the learned trial Judge, there is no reason whatever to hold that the arbitrators shut out the respondent from adducing material evidence, either by withholding assistance under Rule XXI or by refusing to grant an adjournment in order that the respondent might itself try to cause production of the evidence. If anything, they were over-indulgent to the respondent. They gave it the fullest opportunity to make out each one of its numerous contentions, palpably untenable though many of them were, and looked into everything that it required then to see, including the original Railway Receipt which, it was seriously said, would bear the marks specified in the shipping instructions. They did not take steps under Rule XXI for the production of the production returns of the appellant, because they were never asked to do so and because such returns could obviously be of no use. They even re-opened the case at the instance of the respondent after the evidence had been closed in order that it might adduce some further evidence which it said it had, but it transpired at the next meeting that it had no such evidence to adduce. It is true that a few days earlier, it had asked for the production of the stock returns in addition to the production returns of the appellant, and if it could have such returns produced, the arbitrators would undoubtedly have looked into them. But it had no right at that stage to insist that the arbitrators should take steps under Rule XXI to cause production of the stock returns and in fact it made no such request. Nor, in my finding, did it make any request for an adjournment. In those circumstances, I am unable to see what the arbitrators did to merit the slur of misconduct. The rules of arbitration by which the respondent agreed to abide authorise the arbitrators to decide a case without hearing any evidence at all and authorise them, even when they decide to hear evidence, to determine what evidence will be relevant & necessary. Unless something glaringly unjust was done, it is not for the courts to revise their discretion & decide what evidence should or should not have been taken. But even that question does not arise here. The arbitrators did not refuse to receive any evidence tendered to them, nor did they refuse to lend their assistance for the production of material evidence, when properly approached for such assistance at the proper time. On the other hand, the course of the proceedings shows that the respondent had been conducting its defence in a most exasperating manner, taking point after point which only perversity could dictate, and the arbitrators had been patiently bearing all its extravagances of allegation and contention. In the matter of the production of the returns, they were guilty of no misconduct of any kind, as I have shown. It appears after trying to revoke the authority of the arbitrators and then trying to have a stay of the proceedings and failing in both, the respondent decided on offering opposition at every point and making demands of all kinds in regard to the production of evidence. But no reasonable demand and indeed no demand was refused. The complaint that the arbitrators shut out the respondent from adducing material evidence is clearly an after-thought for it found no expression at the meeting of 1st April 1954 when the hearing was first concluded or even in the letter of the next day. It was only thereafter that stock returns were thought of and it struck the appellant to ask the Indian Jute Mills Association to produce the stock and production returns and the complaint, now made, virtually is that the arbitrators did not help the respondent In obtaining the returns when the Association did not produce them, which is not justified, because the arbitrators were never asked to help and that the arbitrators refused an adjournment, which again is not a fact. In any event, the respondent had no right to expect the arbitrators, after the case had been closed, not only to give it an opportunity for adducing further evidence which they had done, but also to take steps on their own account to cause the production of evidence, a part of which at least was wholly new. In my opinion, the attack on the award on the ground of misconduct on the part of arbitrators must also fail.

27. For the reasons given above, this appeal is allowed. The Judgment and order of S. R. Das Gupta J., dated the 2-8-1955 are set aside and the respondent's application for setting aside the award, noted as made on 22-11-1954, is dismissed with costs.

28. Certified for two Counsel.

S.C. Lahiri, J.

29.I agree.


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