Skip to content


Bhagwati Prosad Harlalka Vs. Kamala Mills Ltd. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberA.F.O.O. No. 193 of 1958
Judge
Reported inAIR1959Cal687
ActsArbitration Act, 1940 - Section 34; ;Contract Act, 1872 - Section 29
AppellantBhagwati Prosad Harlalka
RespondentKamala Mills Ltd.
Appellant AdvocateBhabra, Adv.
Respondent AdvocateSubrata Roy Chowdhury, Adv.
DispositionAppeal dismissed
Cases ReferredIn Basantlal v. Dominion of India
Excerpt:
- .....the miliowners' association, bombay'. supposing, as i have for the purpose of argument, that the words 'reference has to be made in accordance with the rules of the miliowners' association, bombay,' make the agreement unenforceable because of uncertainty, it seems to me clear and reasonable to read into these words the meaning that 'the reference will be to arbitration and the arbitration will be in accordance with the rules of the miliowners' association, bombay.' the words used are quite apt to give expression to such an intention that 'the disputes shall be referred to arbitration and that the arbitration will be in accordance with the rules of the miliowners' association.' that this is a very reasonable interpretation appears further clear from the fact that the preamble of the.....
Judgment:

Das Gupta, C.J.

1. The main question for decision in this appeal against an order of Ray, J., allowing an application, under Section 34 of the Arbitration Act for the stay of a suit, is whether the agreement as contained in the arbitration clause in the contract, in respect of which the suit was brought, is void and unenforceable because of vagueness and uncertainty. The clause is in these words :

'All disputes and questions whatsoever which shall arise between the parties hereto out of or in connection with this agreement or as to the construction or application thereof or the respective rights and obligations of the parties hereunder or as to any clause or thing herein contained or any account or valuation to be made hereunder or as to any other matter in any way relating to these presents shall be referred to arbitration in accordance with the rules of the Miliowners' Association. Bombay, for the time being in force regulating arbitrations with respect to piecegoods.'

According to the plaintiff who resisted the application for stay, the agreement was void for uncertainty the uncertainty being the result of the use of the words in the concluding portion of the clause, namely, 'shall be referred to arbitration in accordance with the rules of the Miliowners' Association, Bombay, for the time being in force regulating arbitrations with respect to piecegoods.' The main contention, on which it was urged before the learned Judge and also here that these words introduced an element of uncertainty and vagueness, is that the phrase 'in accordance with the rules of the Mill-owners' Association, Bombay,' really modifies the verbal verb (sic) 'shall be referred'. It is said that if the rules of the Miliowners' Association, Bombay, do not contain any provision as regards how a reference shall be made, an agreement to make a reference in accordance with the rules of the Miliowners' Association--which, it is stated was meant by the words used--will be uncertain as it will not be known in accordance with what rules the reference should be made. It is proper for me to mention that in the facts of this particular case, this argument is of little avail as turning to the rules of the Mill-owners' Association, Bombay, a copy of which is in the paper book, we find that Rules 7(a), and (b) provide for the mode of appointment of arbitrators. It is reasonable in my mind to hold that when a party to a dispute appoints an arbitrator, he is hereby, by the very act of appointment of the arbitrator, also referring the dispute to the arbitrator. A reasonable construction of Rules 7 (a) and (b) of these Rules, therefore, justifies in my opinion the conclusion that these Rules do provide for a reference to arbitration. The basis of the argument that once the clause is interpreted so as to mean that the reference has to be made in accordance with the Rules of the Miliowners' Association, Bombay, the agreement becomes unenforceable because of uncertainty, therefore disappears.

2. Assuming, however, the Rules did not contain any provision as regards the mode how a reference to arbitration should be made and assuming also that the result of that would be that a reference could not be made in accordance with the Rules, it should, I think, be the attempt of anybody trying to interpret the clause to see if on a reasonable interpretation some other meaning could be attached to the words used--some meaning which would instead of frustrating the obvious intention of the parties give effect to it. In my opinion, such an interpretation is not only possible but reasonable.

3. The relevant words we have to consider are 'shall be referred to arbitration in accordance with the Rules of the Miliowners' Association, Bombay'. Supposing, as I have for the purpose of argument, that the words 'reference has to be made in accordance with the Rules of the Miliowners' Association, Bombay,' make the agreement unenforceable because of uncertainty, it seems to me clear and reasonable to read into these words the meaning that 'the reference will be to arbitration and the arbitration will be in accordance with the Rules of the Miliowners' Association, Bombay.' The words used are quite apt to give expression to such an intention that 'the disputes shall be referred to arbitration and that the arbitration will be in accordance with the rules of the Miliowners' Association.' That this is a very reasonable interpretation appears further clear from the fact that the preamble of the Rules clearly states that these Rules have been framed 'for the conduct of such arbitration.' I have no hesitation in holding that these words 'the following rules have been framed for the conduct of such arbitrations' were in the Preamble at the date of the contract. If we bear, in mind that the parties to the contract, who were spealding of certain rules, must be supposed to have known that these rules had been framed for the conduct of such arbitrations, it will be proper to think that when they were speaking of reference to arbitration 'in accordance with the rules * * e', they were thinking of the rules in so far as they provided for the conduct of such arbitrations. That is a good reason for holding that by using the words 'shall be referred to arbitration in accordance with the rules of the Millowners' Association, Bombay,' the parties meant two things--that there should be a reference to arbitration and, secondly that that arbitration should be in accordance with the rules of the Millowners' Association. The agreement was on both these matters. There was thus a complete and concluded agreement to refer to arbitration. The addition of the words to mean that the arbitration shall be held in accordance with the rules of the Millowners' Association, cannot make the agreement to refer to arbitration, as mentioned in the previous words, invalid in any way.

4. It was next argued that the use of the words 'for the time being in force' has at least made it uncertain as to what rules they had agreed upon. Even if there had been any doubt about the meaning which should properly be attached to these words, I would have been unable to think that the parties themselves had not a clear meaning in their own minds when these words were used. find, however, no reason to think that the meaning of these words is not clear. On a purely grammatical construction I would have no hesitation to say that by the use of the words 'for the time being in force' qualifying the word 'rules', the parties intended that the Rules, which will be in force at the time when the reference shall be made, would be applicable. The meaning of these words is in my opinion clear and the argument that the use of these words has made the agreement uncertain must, therefore, fail.

5. Reliance was placed by Mr. Bbabra on behalf of the appellant on a decision of S. B. Sinha, J., in Ganapatrai Gupta v. Moody Brothers Ltd., 83 Cal LJ 136, where somewhat similar words fell to be considered. In considering an arbitration clause in the following words: 'All disputes whatsoever arising on or out of this contract shall be referred to arbitration under the rules of the Tribunal of Arbitration. Bengal Chamber of Commerce or Indian Chamber of Commerce applicable for the time 'being for decision', Sinha. J., pointed out that there was no provision in the rules whereby there could be a reference to arbitration under the rules of the Bengal or Indian Chamber of Commerce; that the rules contemplated a prior reference by the parties to the Chamber of Commerce and in that event they provided for appointment of arbitrators and for conduct of arbitrations. Consequently, he held the rules could have no application where there was no reference to the Chamber of Commerce. In this view, he held that, the clause as mentioned above would be vague and uncertain and, therefore, unenforceable.

6. In spite of the great respect I have for every pronouncement by that very learned Judge, I am unable to persuade myself that Sinha J. was right in thinking that if the rules did not provide for reference to arbitration there could be no interpretation of the clause in the way suggested above, namely, that the parties agreed that there would 'be a reference to arbitration and that arbitration would be in accordance with the rules. But apart from that it is important to remember that in that case there was, apart from the above clause which was typewritten in the document, another clause in print in the following words : 'All disputes regarding this contract to be settled bv two arbitrators, one nominated by 'buyers and sellers respectively in accordance with the Indian Arbitration Act.' The Question which the learned Judge had to consider was whether the typewritten clause should prevail over the printed clause. Holding that there was no prima facie inconsistency between the printed clause and tbe type written clause, except in some matters which did not affect this question, he held that if the two clauses were read together, the arbitration agreement was uncertain and vague and could not be given effect to. It seems to me that the fact of this uncertainty did colour to a great extent the learned Judge's interpretation of the typewritten clause also.

7. The question whether the use of words, similar to a nature we have to consider in this case, produces an element of uncertainty in the agreement was considered by my Lord Bachawat, T., in Bajranglal Shroff v. Ramchander Hanumanbux (unreported) Awar.d Case No. 221 of 1950, D/- 9-2-1951 (Cal). The rules mentioned therein were the rules of the Bengal Chamber of Commerce and the position was not exactly the same as in the present case. Bachawat. J., held that the agreement did not suiter from the defect of uncertainty.

8. The authoritative value of this decision is no doubt somewhat reduced by the. fact that when this question was raised again before the Court of Appeal in the appeal from his judgment, the two learned Judges who heard the appeal could not agree. Though both of them, Chakravartti, C. J., and S. R. Das Gupta, J., were of opinion that no appeal lay and so it was unnecessary to consider whether the view taken by Bachawat, J. was right, both proceeded to give their own views. Chakra vartti, C. J., thought that it would be proper to in terpret the words used to mean that there would be reference to arbitration and the arbitration would be conducted in accordance with the rules men tioned. That interpretation would remove, according to him, all confusion and there could be no criticism of uncertainty in the agreement. S. R. Das' Gupta, J., took a different view and relying to a great extent on the decision of Sinha, J., mentioned earlier, thought that the agreement was uncertain. It is unfortunate that S. R. Das Gupta J.' s attention was not drawn at that time to an earlier decision by himself in Jardine Henderson Ltd. v. Umesh Chandra Hariprosad Ahmedabadwalla (unreported) in which he expressed a definite opinion that the view taken bv Bachawat, T. in this very case. Award Case No. 221 of 1950, D/- 9-2-1951 (Cal), was correct. It is interesting to mention that after having1 expressed on 4-7-1952, views against the views taken by Bachawat, J.. S. R. Das Gupta, I. changed Ms opinion again when considering similar words in 1955. In that later decision in Kajaria Sons Ltd. v. East Indian Commercial Co. Ltd. (unreported) (Award Suit No. 146 of 1955, D/-' 22-11-1955), S. R. Das Gupta. J., delivering- his judgment refer red to the view taken by Bachawat, t., in Award Case No. 221 of 1950, D/- 9-2-1951 (Cal) and also to his own view taken in Jardine Henderson Ltd. v. Umeshchandra Hariprassd Ahmedabadwalla, in which he had followed Baghawat, J. in preference) to the view taken by Sinha, T. in 85 Cal LJ 136, and held that 'the intention of the parties seems to be quite clear and that intention was to refer the dispute to the arbitration of the Calcutta Shellac Tra.de Association to be conducted by the rules of the said Association.'

9. While in view of what I have said above much authority cannot be cleaned from the decision of Bachawat. J., the views of Chakravartti, C. J., and also the views of S. R. Das Gupta, J., on two of the three occasions when he considered the question, I think it right to say that the preponderance of judicial opinion in this Court seems to be in favour of the view that use of words as in the present case, does not make the agreement uncertain.

10. I have, accordingly, come to be conclusion that Ray, J., was right in rejecting the contention of the plaintiff that the agreement to refer was void for uncertainty.

11. Another ground taken by the plaintiff in resisting the application for stay was that the defendant being a millowner in Bombay while he, the plaintiff, had no connection with millowners in Bombay, it was unlikely that any arbitrator, who is a millowner, would go against the petitioner. It was also, said that Sri Motilal Tapuria who was a representative of the defendant was in the list of the panel of arbitrators of the Millowners' Association, Bombay, and that even if he was not appointed as an arbitrator, his being in the panel of arbitrators might serve to influence the other arbitrators. It is important to notice that Rule 8 of the Rules of the Millowners' Association as regards arbitration of piecegoods provides against any interested person eing appointed an arbitrator. There is. therefore practically no risk of Motilal Tapuria, if he is a representative of the defendant as alleged, being appointed an arbitrator. It is idle to say that the mere fact that a representative of the defendant is in the list of arbitrators would prevent the other arbitrators from proceeding with the arbitration fairly and properly. In my opinion, the learned Judge is right in thinking that the apprehension of the appellant that he may not get fair justice from arbitrators, if the arbitration be held in accordance with the agreement, is more imaginary than real. The argument therefore, that the learned Judge ought to have refused the stay in the exercise of his discretion cannot be accepted.

12. I would, therefore, dismiss this appeal with costs. The order made by this Court on 18-9-1958, staying the operation of the order appealed from is vacated.

Bachawat, J.

13. It is said that the arbitration agreement is void for uncertainty. I reject this contention, Having regard to Section 29 of the Indian Contract Act the agreement will be void for uncertainty only if its meaning is not certain or capable of being made certain. I ask myself the question in what respect the meaning of this agreement is not certain. It is not pretended that the agreement would have been uncertain if it had read : 'All disputes and questions whatsoever shall be referred to arbitration.' In the absence of the concluding words. Schedule I of the Indian Arbitration Act would be attracted and the arbitration would then have to be conducted in accordance with the machinery provided for in that Schedule. The parties intended to exclude the operation of the Schedule in connection with this arbitration agreement. Therefore, they went on to add the words following viz.: 'in accordance with the rules of the Millowners' Association, Bombay, for the time being in force regulating arbitrations with respect to piecegoods.' Now I ask myself, in what respect these additional words introduce an element of uncertainty. The parties agreed to refer all disputes to arbitration in accordance with the relevant Rules of the Millowners' Association, Bombay. Those rules have to be read as part of the arbitration agreement. The Rules particularly Rule 2 show that they apply to disputes arising out if contracts for the sale and purchase of Indian piece-goods or yarn which provide for arbitration in accordance with these Rules. The Rules on the face of them apply to arbitration agreement contained in this contract for purchase and sale of Indian piecegoods. Rules 7 to 10 and 27 provide machinery for appointment of arbitrators and umpire. Other Rules provide machinery for the conduct of arbitration by arbitrators and umpire so appointed. Reading the agreement with the Rules I see no element of uncertainty whatsoever. The meaning of what the parties intended is precise and certain.

14. In Award Case No. 221 of 1950 (Cal) (un-reported) decided by me on 9-2-1951, I had occasion to construe an arbitration agreement which provided for reference to arbitration under the Rules of the Bengal Chamber of Commerce applicable foe the time being, I then said 'Under the agreement the disputes must be referred to arbitration and the reference must be under the rules of the Bengal Chamber of Commerce. The only person who can arbitrate under such rules is the Bengal Chamber of Commerce. * * * Where there is a reference under the rules of the Bengal Chamber of Commerce it must be taken that the parties intend that the arbitration shall be made by the only person for whom! it is possible to arbitrate under such rules viz.. the Bengal Chamber of Commerce. The implication arises inevitably to effectuate the intention of the parties and to give business efficacy to the contract.' I adhere to the view which I then expressed. Some difficulty arose in construing the arbitration . agreement then under consideration in view of the argument that the Rules of the Bengal Chamber of Commerce having regard to their language could not apply where the arbitration agreement itself did not provide for reference of the disputes to the arbitration of the Bengal Chamber of Commerce. Even that difficulty does not arise in this case. The relevant arbitration rules of the Millowners' Association, Bombay apply where the arbitration agreement provides for arbitration in accordance with those Rules. There is therefore no scope for the argument that the Rules cannot apply because the arbitration agreement does not provide for reference to the Millowners' Association, Bombay.

15. I also agree that no element of uncertainty is introduced by the words 'for the time being' In the context of this arbitration agreement 'the time being' is the time when the disputes in question arise and are required to be referred to arbitration.

16. The use of the words 'for the time being' do not create any ambiguity. In Basantlal v. Dominion of India, : AIR1952Cal340 , Harries, C. J. had no difficulty in ascertaining the precise meaning of an agreement to refer disputes to the Superintending Engineer of the circle for the time being. Even Section 4 of the Indian Arbitration Act uses these words. The arbitration agreement may provide for reference to an arbitrator to be appointed by the holder for the time being of a certain office. It cannot possibly be said that the Statute uses uncertain words and that such an agreement is void for uncertainty.

17. I agree in the order made by my Lord.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //