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Nanalal M. Varma and Co. (Gunnies) Private Ltd. Vs. G. Ambalal (Export) - Court Judgment

LegalCrystal Citation
SubjectArbitration;Constitution
CourtKolkata High Court
Decided On
Case NumberAward No. 66 of 1956
Judge
Reported inAIR1956Cal476,60CWN810
ActsConstitution of India - Articles 6, 14, 19, 19(1) and 22; ;Arbitration Act, 1940 - Sections 13 and 30; ;Bengal Chamber of Commerce Arbitration Rules - Rules 6 and 8; ;Evidence Act, 1872 - Section 115
AppellantNanalal M. Varma and Co. (Gunnies) Private Ltd.
RespondentG. Ambalal (Export)
Appellant AdvocateT.P. Das and ;A.C. Bhabra, Advs.
Respondent AdvocateA.K. Basu and ;S. Tibriwalla, Advs.
DispositionApplication dismissed
Cases ReferredEbrahim Cassim Cochinwala v. Northern Indian Oil Industries Ltd.
Excerpt:
- .....in the case of personal liberty in preventive detention implies non-recognition of such right as a constitutional right in other cases. in india a person's right to the help of a lawyer remains a contractual right and is not a constitutional right except in the case of preventive detention. it will be wrong in my opinion to apply american constitutional doctrines in the indian context on this point. under the american constitution by the application of the 'due process' clause assistance of adequate legal counsel has in some cases been successfully invoked. the indian constitution, however, does not recognise the american variety of 'due process' concept. its nearest indian approach is in article 21 of the constitution where life and personal liberty of the citizen cannot be.....
Judgment:
ORDER

P.B. Mukharji, J.

1. This is an application by Nanalal M. Varma & Co. (Gunnies) Private Limited for setting aside award No. 166 of 1956 of the Bengal Chamber of Commerce dated 3-2-1956 in case No. 861 of 1955.

2. The award is challenged on five grounds. The first ground is that the arbitration clause and the rules of arbitration of the Bengal Chamber of Commerce and Industry, Calcutta are ultra vires the Constitution of India. The second ground is that the award is bad for erroneous exercise of discretion by the Arbitrators in refusing to state a case for the opinion of the Court. The third ground is that there was an erroneous exercise of discretion by the Arbitrators in refusing to permit Lawyers to represent the case of the applicant before the Arbitrators. These last two grounds are put forward as legal misconduct. The fourth ground is that the Arbitrators have no jurisdiction because the contract under which they were acting had been rescinded by one of the parties. The fifth ground is that the Arbitrators were not appointed in writing under the hands of the Registrar.

3. I shall first take up the constitutional objection. The objection is that the present arbitration agreement and the arbitration rules of the Bengal Chamber of Commerce are contrary to the Constitution of India, Nothing in the Indian Constitution is an express bar to arbitration in the form specified in the present arbitration agreement or under the rules of the Bengal Chamber of Commerce. The question therefore must be answered by interpretation of the Constitution. Arbitration is a matter of contract between the parties. The parties in this case agreed to settle their disputes by the method and procedure of arbitration according to the arbitration rules of the Bengal Chamber of Commerce. Such an arbitration agreement is a well-known standard arbitration clause familiar to the commercial community of Calcutta. The curse of the Constitution cannot be visited on such a private contract between citizens. The argument that such a contract is unconstitutional is advanced on two grounds. One is the specific ground that denial of representation by lawyer to a party who claims such representation is a breach of a constitutional right. The other is the more general ground that arbitration is a kind of unconstitutional discrimination in the procedure of justice. I find it difficult to accept the soundness of either of these two contentions, although I must confess to a sense of novelty when these contentions are put forward.

4. Right to be represented by a lawyer is not expressly recognised by the Indian Constitution with perhaps one exception. It is not a fundamental right under the Constitution of India except under Article 22 of the Constitution in the case of preventive detention where personal liberty is involved. As the Constitution does not recognise the right of a citizen to be represented by a lawyer, except in that particular ease, refusal to permit lawyers representing parties in a civil dispute over a contract before the Arbitrators cannot, therefore, be regarded as an infraction of any constitutional provision. It was then argued that the arbitration infringed Article 19(1)(g), Constitution of India. The right there recognised, however, is confined to the right of a citizen to practise a profession which in this case is profession of law. It is not necessarily the same thing for an applicant to claim a right to be defended by a lawyer in a civil dispute over a contract. It is not the applicant's right but the lawyer's right. This arbitration agreement expressly incorporating the rules of the Bengal Chamber of Commerce specifically recognising the right to exclude lawyers except with the permission of the Arbitrators, is not in my opinion a denial of the citizen's right to practise the profession of law. It is left to the Arbitrator to judge each individual case on its merit and to consider whether it is a fit and proper case to permit lawyers to appear. Even were it a denial, I would justify it as a reasonable restriction imposed by the existing law under Sub-clause 6 of Article 19 of the Constitution. Ordinarily in India a person certainly has a right to engage any qualified lawyer to represent his case. But that is a contractual right and not a Constitutional right. It is a matter of contract between the litigant and his lawyer and not a subject of Constitutional provision. It is normally a permissible contract but it is always subject to rules, of those particular Courts and Tribunals before whom the lawyers are licensed to appear and those restrictions are justifiable restrictions on the ground of reasonableness under Sub-clause 6 of Article 19, Constitution of India.

5. In the case of preventive detention where the high right of personal liberty of the citizen is involved, the Constitution in its wisdom expressly recognises the right of a citizen to defend himself with the help of a lawyer. The express singularity in the case of personal liberty in preventive detention implies non-recognition of such right as a Constitutional right in other cases. In India a person's right to the help of a lawyer remains a contractual right and is not a constitutional right except in the case of preventive detention. It will be wrong in my opinion to apply American constitutional doctrines in the Indian context on this point. Under the American Constitution by the application of the 'due process' clause assistance of adequate legal counsel has in some cases been successfully invoked. The Indian Constitution, however, does not recognise the American variety of 'due process' concept. Its nearest Indian approach is in Article 21 of the Constitution where life and personal liberty of the citizen cannot be taken away except according to 'procedure established by law. 'It is therefore limited only to life and personal liberty, it therefore does not apply to support the claim to the assistance of a lawyer in a civil dispute over a contract. American 'due process' should not be confused with Indian 'procedure established by law' in this context.

6. The second argument on this branch contends that arbitration as such is discrimination against the established public Courts of the land and therefore the Arbitrators are a kind of a Special Tribunal which militates against the doctrine of equality before the law and equal protection of the laws as enshrined in Article 14 of the Indian Constitution. To my mind this attractive argument is fundamentally unsound, first because Article 14 in its terms does not apply. Article 14 of the Constitution prevents the State from denying any person equality before the law or equal protection of the laws but does not prevent parties by a private agreement to make the contract to go to arbitration as an alternative method of settling their disputes without going through the formalities of a public trial in the public Courts of the land. I am disinclined to restrain the liberty of the citizens and their freedom to enter into private bargains except of course where such restraints are clearly imposed by the laws of the land. No one compelled the parties here to go to arbitration. It is they themselves who agreed to do so. The Arbitration Act does not make it compulsory either for any class of citizens or for any class of disputes to be sent to Arbitration or Tribunal of Arbitration. The State sets up no special courts in this respect. Most of the parties agree upon or nominate their own Arbitrators. What the Statute of Arbitration does is merely to assist the machinery of arbitration either by appointment of Arbitrators when the parties fall out or setting up machinery to make the award of the Arbitrators effective or to determine the effect or validity of private contracts for arbitration. The whole statute of arbitration is only an auxiliary to give impetus to a private bargain for arbitration which the parties are left free either to contract or not to do so. When the parties, therefore, agree to such a procedure by arbitration, it is not for such consenting parties to come to this Court and complain that that procedure of justice is discriminatory when compared to trials by public Courts of the land. There is yet a second reason why I consider this argument must be rejected. Its first premise is a comparison between arbitration and trial in public Courts of the land. To my mind that first premise is wrong. This is not a comparison between equal things but an unjustified attempt to compare the incomparable. Arbitration is a category entirely different from trial by Court. Neither the Evidence Act nor the Civil Procedure Code in its strict formality applies to arbitration. Its fruit, an Award, is in many respects different from decree, the fruit of a trial by Court. An award unlike a decree can hardly be reopened on merits and is normally final and conclusive. It can only be challenged on limited and specified grounds. In fact the arbitrators who can be judges of facts and law need have no legal training or legal qualification at all. They are ad hoc judges appointed to decide individual cases. Nor is the procedure same or uniform in all arbitrations for such procedure being a private procedure depends on the terms of each arbitration agreement. Arbitration therefore is not a formal legal trial at all and it is wrong in my judgment to compare arbitration with public trials in Courts of law and to seek to establish unconstitutional discrimination by applying the forms, standards and procedure of the latter to the former. The constitutional doctrine of equality before the law or equal protection of the laws does not signify that the same law applies to every situation. It means the same law for the same situation and not when the situations are different and entirely dissimilar. I am therefore of opinion that arbitration does not mean or involve any unconstitutional discrimination such as is prohibited by the Indian Constitution.

7. I, therefore, overrule this objection and hold that the arbitration agreement in this case and the rules of the Bengal Chamber of Commerce relating to arbitration are not ultra vires the Constitution.

8. The second objection is based on the refusal by the Arbitrators to state a case for the opinion of this Court. It is plain that Section 13, Arbitration Act, 1940 gives the power to the Arbitrators to state a case for the opinion of the Court inter alia on any question of law involved. Now the Arbitrators are the only authority in that respect. It is for them under the Indian law to judge whether they should state a case or not. The language of the section is that the Arbitrators 'shall have the power'. I have already expressed my opinion drawing attention to the difference between the English law and the Indian law on this point in the case of Ebrahim Cassim Cochinwala v. Northern Indian Oil Industries Ltd., : AIR1951Cal230 (A). In fact, the rules of the Bengal Chamber of Commerce also make a provision on this point. That is Rule 23. It lays down the procedure where the Arbitrators decide to state a special case. In that Rule it is provided inter alia as follows:

'If the Court decides to accede to such request, the party applying shall also be responsible for all legal or other costs, charges and expenses that may be incurred by the Arbitrator or Arbitrators or Umpire of and incidental to the same and shall make such deposit on account thereof as the Court may decide.'

9. The party asking for the statement of the ease to be made by the Arbitrators for the opinion of the Court has to apply before the Arbitrators. But the Rules make it clear that it is for the Court of Arbitrators to decide whether they should accede to such request.

10. Having regard, therefore, to Section 13, Arbitration Act, 1940 as well as the special Rule of the Bengal Chamber of Commerce incorporated in this Arbitration agreement, it is clear to my mind that there was no misconduct in so far as the Arbitrators refused to state a case for the opinion of the Court in this particular instance.

11. There are other aspects to this question. The Arbitrators' refusal to state a case cannot be a misconduct in this particular instance for obvious reasons. If the applicants were dissatisfied with the refusal of the Arbitrators to state a case, they should have either applied for the removal of the Arbitrators or for determining the effect of the arbitration agreement. Instead of doing that the applicants continued to appear before the Arbitrators even after they had refused to state the case for the opinion of the Court. Therefore, objection, if any, to such misconduct must be deemed to have been waived by their subsequent appearance. Besides, I am satisfied that such a refusal to state a case cannot necessarily be a legal misconduct because such refusal might be consistent with the fact that the award which ultimately follows would nevertheless rightly decide the disputes between the parties. Lastly, the actual point of law which the applicants wanted the Arbitrators to state for the opinion of this Court is a point which is well-settled to-day. In fact, the point which the applicants wanted the Arbitrators to refer to the Court for opinion was: --

'Whether in the presence of an express declaration of cancellation of a contract by G. Ambalal (Export) Ltd. by their letter dated 14-4-1955 enclosed, can the Bengal Chamber of Commerce entertain their application for arbitration and constitute a competent Court to adjudicate upon the alleged disputes.'

12. Apart from this particular point having been well-settled by decisions of this Court, it is plain that this was a point on which even if the Arbitrators refused to state a case for the decision of the Court, the applicants were always at liberty to move this Court and apply under Section 33. Arbitration Act to determine the effect and validity of this Arbitration clause on that particular point. The point here is that the applicants contend that they had cancelled the contract and because they had cancelled the contract, the Arbitration clause had necessarily been cancelled and, therefore, the Arbitrators could not function any more. A mere glance at the Arbitration clause would set at rest this point. The Arbitration clause in this case is in the following terms with express reference to termination of contract:

'13. All matters, questions, disputes, differences and/or claims arising out of and/or concerning and/or in connection with and/or in consequence of or relating to this contract whether or not the obligation of either or both parties under this contract be subsisting at the time of such disputes and whether or not this contract has been terminated or completed, shall be referred to the arbitration of Bengal Chamber of Commerce & Industry under the Rules of its Tribunal of Arbitration for the time being in force and according to such Rules the Arbitration shall be conducted.'

13. This clause by express reference to the case where the contract is subsisting or not or whether it is terminated or not continues the jurisdiction and power of the Arbitrators. I, therefore, am satisfied that the refusal of the Arbitrators to state a case was justified even on the merits and have no hesitation to reject the contention that their discretion in this respect was wrongly exercised.

14. I, therefore, overrule this objection.

15. The third objection is about the refusal of the Arbitrators to permit the applicants to take the help of lawyers to represent their case before the Arbitrators. Here again the Rule of arbitration of the Bengal Chamber of Commerce is quite specific. By Rule 16 it is expressly declared arid provided inter alia:

'In any case of a formal hearing, no party shall without the permission of the Court, be entitled to appear by Counsel, Attorney, Advocate or other lawyer adviser.'

16. Here again it is clear enough that normally a lawyer will not be allowed to appear or rather a party should not be allowed to appear by Counsel, Attorney, Advocate or other lawyer. If they want to appear, they can only appear with the permission of the Arbitrators. It is for the Arbitrators to permit or refuse. In this case the Arbitrators have refused the applicant's claim to be represented by lawyer. In so refusing, therefore, there cannot be any misconduct because they acted within their powers expressly conferred under the Rules of Arbitration. The parties had agreed in the clause of arbitration set out above, that the arbitration should be according to the Rules of the Bengal Chamber of Commerce. That being so, it is not, for the applicants now to complain that they were not allowed to be represented by lawyers. The discretion lies entirely with the Arbitrators, and I do not find any fact shown on the records of this case which can even lemotely suggest that such discretion was not rightly exercised by the Arbitrators. In fact, neither party was represented or allowed to be represented by any lawyer. The questions that were raised before the Arbitrators in this case are very common questions which Arbitrators in commercial arbitrations are deciding everyday in this city.

17. I, therefore, overrule this objection also.

18. The fourth objection relates to the point that the arbitration clause in this respect was rescinded because the contract was rescinded. I have already dealt with this point. This Court has repeatedly said, and in respect of this particular arbitration clause, that it is wide enough in express language to continue the jurisdiction of the Arbitrators even when the contention is that the contract is no longer subsisting or has been terminated. That is the express language of the arbitration agreement of the parties in this case.

19. I, therefore, overrule this objection.

20. The last objection is that the Arbitrators were not appointed in writing under the hand of the Registrar. The inspiration for this objection is Rule 6 and Rule 8 of the Arbitration Rules of the Bengal Chamber of Commerce. Rule 6 provides:

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

And Rule 8 says: --

'The consent to act as Arbitrator or Arbitrators or Umpire as the case may be, shall be obtained by the Registrar,'

21. The objections under this head are in my opinion entirely without merit. I have no doubt that none of these objections is valid in fact. I do not think that the applicants should be permitted to raise these questions because they had appeared before the Tribunal of Arbitrators without any protest on these grounds. It is before this Tribunal of Arbitrators that they had submitted their statements. It is before this Tribunal of Arbitrators that they had asked that a case be f stated for the opinion of this High Court. Having done so, I do not think that the applicants can now turn round and say that the Arbitrators themselves were not duly appointed either under the hand of the Registrar or by consent obtained. If there was any defect in the appointment of Arbitrators on this ground of lack of formality of writing under the hand of the Registrar or for lack of formal consent of the Arbitrators to act, it is at best a mere irregularity cured by the conduct of the applicants themselves appearing before such Arbitrators and treating them as Arbitrators. I infer the consent of the Arbitrators by reason of the fact that they had acted under this clause.

22. I, therefore, overrule this objection.

23. This disposes of all the objections. All the objections in my opinion must fail. I, therefore, dismiss this application with costs.


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