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Chandmul Mulchand Vs. S. and C. Nordlinger - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata
Decided On
Judge
Reported inAIR1924Cal490,80Ind.Cas.151
AppellantChandmul Mulchand
RespondentS. and C. Nordlinger
Cases ReferredLandauer v. Asser
Excerpt:
arbitration - award--error of law, apparent on face of award, what amounts to--sale of goods--dispute as to quality--burden of proof--reference stipulating survey of goods--award made without survey--jurisdiction. - .....this is based upon the contention that it was the duty of the arbitrators before making any award to survey the goods. this contention is met by learned counsel for the defendants by the submission that the original agreement of the 2nd january, 1918, did not contain the submission under which the arbitration was held, for which the subsequent documents to which i have already referred must alone be looked at. incidentally i may observe that notwithstanding the cross-examination of the record-keeper of the bengal chamber of commerce i have no doubt that the copy of the agreement of the 2nd january, 1918, which has been produced by the defendants was before the arbitrators. learned counsel's cross-examination, in the course of which he put a number of questions suggesting fraud.....
Judgment:

Buckland, J.

1. This is a suit for a declaration that an award dated the 3rd September, 1921, made by the Bengal Chamber of Commerce is invalid and inoperative.

2. On the 2nd January, 1918, the parties-to this suit entered into an agreement containing terms under which they would conduct business with each other, and amongst other terms the second provides that 'in the event of any dispute arising as to inferiority of quality, defects or differences in the goods, the same shall be referred within 90 days of the arrival of the goods in Calcutta to the Bengal Chamber of Commerce unless a special agreement exists on the subject between the said parties, and no claim will be entertained if made after 90 days from date of arrival of goods.' The latter part of the same clause provides that 'the Chamber shall arrange for survey in accordance with its rules, that surveys shall be held on the actual goods and not on shipment samples, and that all survey reports, accompanied by samples, signedi and sealed by the surveyors, showing the basis on which their award has been made must be forwarded to the sellers whenever the award has been given against; them.' On the 7th December, 1920, the-parties entered into a contract whereby the-plaintiffs agreed to buy from the defendants 60 bales finished Dhootis of rangin descriptions at prices stated in para. 1 of the plaint. The goods in due course arrived and disputes arose with reference to the number of counts and lengths of the Dhootis. The parties accordingly went to arbitration and on the 1st March, 1921, there was submitted to the Bengal Chamber of Commerce Tribunal an application-signed by the plaintiffs applying for the-'appointment of two arbitrators and the issue of an award for cancellation of the contract or allowance or such other relief as the arbitrators may think fit to award upon the under mentioned complaint and upon investigation of all facts arising out of the contract.' On the same form against the printed title 'Buyer's Complaints' are the words 'see letter dated the 1st March,' and against the printed title 'Seller's Remarks' some five lines of typed matter are succeeded by a copy of a letter dated the 15bh November, 1920, from the defendants to the plaintiffs. This is succeeded by further type written matter which is signed by the defendants. At the conclusion appear the words : 'The survey should be held on the goods and not on the shipment samples.' For some reason or other which is not clear, a further document had to be, or, at all events, was filed before the Bengal Chamber of Commerce. It purports to be a brief memorandum of agreement made on the 5th April between the parties and recites that disputes have arisen between the parties as per Buyer's Statement of 1st March, 1921, submitted with Application Form No. 1 and as per Seller's Statement of 1st March, 1921, submitted with Application Form No. 1, and then proceeds to say : The matters in dispute are referred to the Tribunal of Arbitration of the Bengal Chamber of Commerce to be determined in accordance with the rules for the time being of the said Tribunal as far as such rules be applicable to the submission. This document which bears an eight annas stamp is signed by the parties. In due course, the arbitration was held and on the 3rd September, 1921, the award was communicated to the parties over the signature of the Registrar of the Bengal Chamber of Commerce Tribunal of Arbitration and is in the following terms:

We have considered the papers and as buyers Messrs. Chandmul Mulchand are unwilling to produce the bales required for inspection, their claim cannot be upheld and we award that they pay for and take delivery of the goods in terms of the contract.

Buyers to pay cost of this reference, amounting to Rs. 101.

3. It is now contended that the award should be set aside, firstly for an error of law apparent on the face of it and secondly on account of the arbitrators having exceeded their jurisdiction in that they made an award without first having held a survey of the goods in question.

4. The first point, therefore, which I have to consider is whether or not there was an error of law apparent on the face of the, award.

5. The most recent decision on this subject is that of the Judicial Committee of the Privy Council in Champsey Bhara & Co. v. Jivraj Bulloo Spinning and Weaving Co. Ltd. A.I.R. (1923) P.C. 66. There, in approval of the statement of the law of Mr. Justice Williams in Hodgkinson v. Fernie (1857) 3 C.B. (N.S.) 189, which is quoted in the judgment of the Board, 'an error in law on the face of the award is taken to mean that you can find in the award or a document actually incorporated thereto, as for instance, a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous.' The passage quoted from the judgment in Hodgkinson v. Fernie (1857) 3 C.B. (N.B.) 189 also shows how very narrow is the compass which, in fact, is limited to the award itself or matter incorporated in it, within which the error upon which the award may be impeached is to be found.

6. In this case there is no note appended by the arbitrator and I have to look at the-award itself alone. It is contended that, the words 'as the buyers Messrs. Chandmul Mulchand are unwilling to produce-the bales required for inspection, their claim cannot be upheld ' state reasons for the award which are erroneous in law.

7. With reference to consideration of the reasons stated by arbitrators in an award as grounds for impeaching it, the passage from the judgment of the Judicial Committee itself indicates that reasons stated' by an arbitrator for his award are matters to be considered, and in this connection-learned Counsel hag also drawn my attention to Landauer v. Asser (1905) 2 K.B. 184. In that case the umpire in his award said : 'I decide that as the parties to the contract, dated 3rd November, 1903, were by the terms thereof principals thereto, their interest and liability in insurance is defined to be the value of the invoices plus 5 per cent, etc.' This led to the award being set aside, and the concluding passage from-the judgment of Mr. Justice Kennedy indicates the ground, for he says : 'My view is that as the award wrongly decides that, in point of law under the contract Messrs. Asser have a title in the sum in dispute, itis had on point of law and must be set aside.'

8. I may therefore consider whether or not in this case the arbitrators reasons for the award are sufficient or good in law. In my judgment they are not. The plaintiffs wore the buyers the defendants were the sailors. The contract related to 60 bales. There was a dispute as to quality. The more fact that the buyers were unwilling to produce the bales required for inspection is not by itself a sufficient reason for making an award against them. I do not desire to go further than I should having regard to the strict limitations laid down by the authorities as to what may be considered in a case such as this, but, ordinarily, where there is a dispute between a buyer and a seller with reference to quality, it would be the duty of the seller to prove that the goods were of the quality contracted for. No question such as this might have arisen and it might have been extremely difficult for the plaintiffs to succeed had no reasons been stated for the award. But in view of the reasons stated for the award, in my opinion, the plaintiff's are entitled to impeach it and I hold that, the award is bad upon the face of it.

9. The other question that has been argued is as to the arbitrators having exceeded their jurisdiction. This is based upon the contention that it was the duty of the arbitrators before making any award to survey the goods. This contention is met by learned Counsel for the defendants by the submission that the original agreement of the 2nd January, 1918, did not contain the submission under which the arbitration was held, for which the subsequent documents to which I have already referred must alone be looked at. Incidentally I may observe that notwithstanding the cross-examination of the record-keeper of the Bengal Chamber of Commerce I have no doubt that the copy of the agreement of the 2nd January, 1918, which has been produced by the defendants was before the arbitrators. Learned Counsel's cross-examination, in the course of which he put a number of questions suggesting fraud against some individual or Individuals whom he did not name, was not pressed to the extent of making a definite charge though I pointed out to him that if he were going to argue anything of the sort it would be his duty to do so. Why a subsequent document in the form of a submission had to be signed or filed before the Chamber of Commerce has not been made clear. One may possibly conjecture that it was required, among other reasons, because the copy of the agreement which had been produced before them was not stamped, though the copy in the hands of the defendants does bear a stamp. Be that as it may, it is clear that according to the original agreement the parties intended that there should be a survey of the goods and that any award made by the arbitrators should be upon the basis of such survey. The subsequent application was not signed by both parties, and I am relegated to the agreement of 5th April which incorporates the points in dispute by reference to the parties' statements of the 1st March, 1921, submitted with the application form bearing that date. In the remarks offered by the defendants ifc is stated that the survey shall be held on the goods shipped and not on the shipment samples. The language does not merely suggest that a survey is necessary but takes it as a matter of course that there will be such a survey, the gist of the observation relating to what should be surveyed. I do not think there can be any question, but that there was a common agreement between the parties which was never rescinded or varied in that respect, that there should be a survey by the arbitrators of the goods out of which the disputes arose, and that that must be taken to have been a term of the submission. That being so, unless the arbitrators held their survey they were not entitled to make an award and the award made by them must be deemed to have been made without jurisdiction.

10. In the result, the suit must succeed and. I declare that the award, dated the 3rd September, 1921, is invalid and inoperative. The plaintiffs are entitled to the costs of the suit on Scale No. 2.


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