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In Re: Arbitration Between Gulzarilal Kanoria and Co. Vs. Busi and Stephenson Ltd. - Court Judgment

LegalCrystal Citation
SubjectArbitration
CourtKolkata High Court
Decided On
Case NumberSuit No. 82 of 1952
Judge
Reported inAIR1953Cal621,57CWN482
ActsArbitration Act, 1940 - Sections 2, 14, 17 and 30
AppellantIn Re: Arbitration Between Gulzarilal Kanoria and Co.
RespondentBusi and Stephenson Ltd.
Appellant AdvocateD.C. Sethia, Adv.
Respondent AdvocateR.C. Deb, Adv.
DispositionApplication dismissed
Cases ReferredChhogmal Rawatmal v. Sankarchand G. Shah
Excerpt:
- .....to a finding on the extension of due dates under contract before them without taking evidence or award damages at a rate higher than that fixed by the law, they are guilty of legal misconduct and their award should be set aside. mr. sethia has relied on this principle which is accepted by mr. deb appearing for the respondents. the dispute is not with regard to these principles that the arbitrators' award of damages at a rate higher than that fixed by law would be illegal. but the question is what is damage, if any, fixed by any law in this case and, if so, do the awards in this case contain any indication whatever that the arbitrators have followed such an illegal principle? i have no hesitation in holding that the arbitrators have not done anything illegal in this case. the case.....
Judgment:

P.B. Mukharji, J.

1. This is an application to set aside the two awards of the Bengal Chamber at Commerce, each dated 21-12-1951. The dispute is between the seller who is the applicant and the buyer who is the respondent in the matter of a contract of sale of B twills.

2. It is the seller's application to set aside the awards on various grounds. Fourteen different grounds have been urged in para. 23 of the petition. It is unnecessary for me to refer to all these grounds because Mr. D.C. Sethia, learned counsel appearing for the applicant, has abandoned the other grounds except grounds 4, 5, 7 and 11 in para. 23 of the petition. In other words, Mr. Sethia has argued that these two awards should be set aside on the ground first that the arbitrators had no power to make two awards in this case and secondly, on the ground that their award gave damages on the basis of rates exceeding the official ceiling price at the relevant time. The third ground of attack is that the extension of due date had been pleaded by the respondent beyond 16-2-1951, and the award must have been on the basis of a later date and therefore illegal and void because no evidence had been taken on the question.

3. Taking the first ground of objection that the arbitrators in this case could not make two awards, 1 find that the whole basis of the argument of Mr. Sethia is based on a misconception of fact. The point of his argument was that there was only one letter, dated 20-6-1951, which his clients have annexed to the petition & that is only with regard to 250 bales of B twill bags. Prom the file of the records of the arbitrators which has been sent to this Court, it appears that on the same date, i.e., 20-G-1951, the buyers wrote two letters of submission, one in respect of 250 bales, a copy of which has been annexed to the petition claiming 3037-10s. and the other in respect of 100 bales of B twills claiming 1005. That being so, although the disputes arose under the same contract, there being two separate submissions before the Tribunal of Arbitration, the arbitrators in my view were quite within the bounds of law to make two separate awards, each on the different submission, and not to combine them in one award simply because the contract was one. There is in the law nothing which makes this illegal on the part of the arbitrators. I, therefore, hold that this ground of objection that the arbitrators could not make two award, on two separate letters of submission under the same contract in respect of different bales of twill bags has no substance whatever and I overrule such objection.

4. It is on the second ground on which the main argument has been concentrated by Mr. Sethia. He has relied on the Jute Goods Export Control Order, 1849, and the provisions contained therein. Briefly his argument may be formulated in this way. According to him under this Order there is a ceiling price fixed in relation to any quantity of manufactured jute goods and which means the price determined in accordance with the provisions of the Schedule annexed to that Order. No person under this Export Control Order can export manufactured jute goods of any quality specified in the Schedule except under and in accordance with the conditions of a licence issued by the Licensing Officer. It is provided further in that Export Control Order that no licence shall be granted by the Licensing Officer unless he is satisfied in respect of any manufactured jute goods to be exported, that the price at which they have been or are being sold by the applicant for the licence is not more than the ceiling price and the additional sum, if any, received or receivable by the licencee on account of brokerage or commission paid or to be paid to the shipping agent, or to the selling agent abroad, or howsoever otherwise, is not more than 5 per cent. of the ceiling price. The Schedule referred to in that Export Control Order fixes the sch. price of this particular type of twills which are the subject-matter of the contract in these proceedings at Rs. 155-12 as per hundred bags. It is the contention of the applicant that the award of damages by the Tribunal of Arbitration, Bengal Chamber of Commerce has violated the ceiling price. In fact Mr. Sethia has relied on the decision in -- 'Bijoy Singh v. Bilas Rai & Co.', : AIR1952Cal440 (A) for this purpose as well as on the question of the extension of time, and there being no evidence about such extension, the main point of his submission is that if the law prohibits a certain rate, it is not for the arbitrators to award that rate.

5. Now there are a number of answers to that point.

6. The first and the obvious answer is that the question whether such rate was permissible or not was a question of law and could be submitted to the arbitrators as laid down by the Privy Council in -- 'Government of Kelanton v. Duff Development Co. Ltd.', (1923) A C 395 (B). As I understand the law on the point, if there is a due submission on a question of law before the arbitrators, it is not only proper for them to decide it, but it is also their duty to do so. In this case I find that among the submission made before the Arbitrators this was one of the very points. Indeed in the letter of 27-6-1951 of the buyers to the Arbitrators it is said that while official ceiling price was at the time Rs. 270/-, everyone in the trade knew that it was quite impossible to buy bags at that price at that time or subsequently, and in fact, since they bought, the price had continued to advance and at that time it was considerably higher. That being so, the Arbitrators' award on the point would be final and conclusive. He might have decided erroneously and he might have taken a view which, left to myself, I might not have taken, but that 13 a consideration which is not relevant for purposes of this enquiry. So long as the award is not bad on the face of it -- and I do not find anything on the face of the award to suggest that -- I cannot constitute myself a Court of Appeal over the Arbitrators' decision on a point of law.

7. The second answer is that the award of the Arbitrators on the face of it does not show the basis on which the damage is given. It is quite true that some idea could be obtained from the proceedings before the Arbitrators. But in an application to set aside an award, this Court does not make a sifting investigation of the entire proceedings before the Arbitrators. Before that can be done, the award must be shown to be bad on the face of it. The award itself in this case does not show the grounds on the basis of which the damage was given. Here, again, Mr. Sethia has relied on the case of the Court of Appeal in --' : AIR1952Cal440 (A)'. But then the point was entirely different in that case. There the Arbitrators in the award itself gave the ground about the availability of the market and goods on the contract date and came to a conclusion regarding the availability of markets on a particular date. This will be found at page 441 of the report. Entirely different considerations apply in the case of an award such as the one before me. No ground here is given on the face of the award and it is not possible to fathom the processes of reasoning by which the Arbitrators came to the conclusion in awarding a particular sum as damage.

In order to get rid of the rigour of the law on the subject, Mr. Sethia naturally referred to the fact that the contract and the claim made, have been referred to in the opening prefatory words of the award. He contended that because the contract and the claim were referred to they had become part of the award itself. I am entirely unable to assent to that argument. Here, again, there is too much of confusion of thought. The law is quite clear and all the pronouncements of the Judicial Committee of the Privy Council on this point will be found collected by me in my judgment at page 234 of : AIR1951Cal230 in the case of -- 'Ebrahim Kochinwalla v. Northern Oil Industries Ltd', (C). In -- 'Champsey Bhara & Co. v. Jivraj Balloo Spinning & Weaving Co. Ltd.', AIR 1923 PC 66 (D) as well as in -- 'Saleh Mohamed Umer Dossal v. Nathoomal Kessamal', and in -- 'Durga Prosad v. Sew Kishen Das', the law has been very clearly laid down, and this reference to the contract or to the claim of the buyers does not make them part of the award itself.

8. The third answer is that while it is true that a ceiling price is fixed under the Jute Goods (Export Control) Order 1949 for 'B' Twills, it is quite a different thing to say that having made a contract under that Control Order damages could not be on a oasis which was higher than the price fixed. What are the damages in a particular case will depend 011 the facts in the first instance and in the second instance on the principle of law which will regulate the measure of damages. Now suppose a contract is made under this Export Control Order. Having made that contract, the breach is committed by the seller and the buyer then suffers damages. How much that damage is will depend as an ordinary rule on the difference between the contract price and the market price at the date of the breach. The market price at the date of the breach may have to depend on considerations of such facts as-- (1) either the controlled market under the Export Control Order was no longer controlled at the time of the breach, or (2) even with the control of the market it may be impossible to get those goods at such prices and yet the buyer may have to satisfy his own obligations by buying in any market where he can get it. If it is impossible to get it in the market or the place where the goods were bought, there is no rule of law which prevents the buyer from getting it anywhere else so long as he can show that that was a reasonable market in which he could fairly have bought it. The point of this illustration is to show that the fixing of the ceiling price under the Export Control Order need not necessarily as a matter of fact make damages beyond the ceiling price illegal. (3) In a contract of this nature such as the one before me, there is yet a third consideration. The ceiling price under the Export Control Order naturally operates within the boundaries of the Indian market. Normally it is quite true that damages are to be assessed at rates available at the Indian market because that is the place from which goods are to be supplied and the contract is F. O. B. But here, again, if the Indian market is not available, then as I have said the buyer can go to any foreign market where he can buy against the seller, so long as he does so at a reasonable price and satisfies the Court or the Tribunal that that was the best market in which he could have bought in the circumstances. Here the foreign market will not suffer under any consideration of a ceiling price under the Indian Export Control Order for jute goods. The learned editor of Mayne's 11th Edition on the Treatise on Damages observes at page 183--'Further it may be proper for him (buyer) to regard a distant market as an available market, subject to proper allowance for additional cost of carriage.' The rule is one of 'available market' and not of an impossible market and the overriding principle as laid down by the Privy Council in -- 'Wertheim v. Chicoutiuir', (1911) A C 301 (G) is that damages should place the plaintiff in the same position as if the contract had been performed. The fact of the impossibility or non-availability of material at ceiling prices in India was itself one of the submissions made in the letter of 27-6-1951 by the buyers to the Arbitrators where they said definitely and categorically that it was quite 'impossible' to buy bags at the ceiling price.z

9. These are considerations of fact which were certainly matters before the Arbitrators and as the award is not bad on the face of it, it is not possible for this Court to set aside the award on the ground urged by Mr. Sethia that prima facie the damages violate the ceiling prices.

10. This disposes of the main arguments made on behalf of the applicant.

11. There is one short point referred to by Mr. Sethia in the course of his arguments challenging the award on the ground that apart from the fact of ceiling prices the principle on which the damage were awarded by the Arbitrators is the loss suffered by the buyer because of the buyers' breach with their buyers. According to Mr. Sethia, that was a special damage. I am inclined to agree with him that that is so. But then what is the basis of saying that the Arbitrators awarded damages on that principle? Here, again, the answer to this breach of Mr. Sethia's argument is three-fold:

(i) First, the Arbitrators' awards in this case do not show any basis on which the award has been made such as was expressly stated in the award in the case of : AIR1952Cal440 (A),

(ii) secondly, in the letter of submission of 20-8-1951 the only submission that the buyers made before the Arbitrators is this: 'We contend that as they have sold to us with quota secured, they are responsible for the difference in price between the contract price and the price at which we bought in these bags.'

Therefore, the submission in this case was a claim for difference in price between the contract price and the price at which the buyers bought these bags. It may be a right submission; it may be a wrong submission. But then it does not entitle me to say that the Arbitrators in awarding the damages had proceeded on a wrong principle of law which is apparent on the face of the award. The award does not say on what principle they have decided. By no process of inference is it possible to extend the peculiarly technical legal doctrine of award being bad on the face of it, by these considerations. What Mr. Sethia tried to do was to show it by reference to the letter of the 31st October 1951 in which the buyers mentioned the fact of their contracts with their buyers. But that letter was only in answer to the arbitrators' order to furnish them with the original re-purchase contracts. Even there it would appear that while one of the companies like the Co-operative Wholesale Society Limited bought against the buyers at 338/4 1/2 d. f. o. b. Calcutta, in the buyers' claim against the present applicants the figure was 335/- f. o. b. But then, as I have said, it is not for this Court to go into all these controversies raised from time to time in different letters and submissions as long as i find that the awards on the face of them cannot be said to be bad on any considerations or principles that are illegal

12. Before I conclude, I would notice the decision of -- 'Chhogmal Rawatmal v. Sankarchand G. Shah', 53 Cal WN 828 (H). In that case the Court of Appeal says that where the Arbitrators come to a finding on the extension of due dates under contract before them without taking evidence or award damages at a rate higher than that fixed by the law, they are guilty of legal misconduct and their award should be set aside. Mr. Sethia has relied on this principle which is accepted by Mr. Deb appearing for the respondents. The dispute is not with regard to these principles that the Arbitrators' award of damages at a rate higher than that fixed by law would be illegal. But the question is what is damage, if any, fixed by any law in this case and, if so, do the awards in this case contain any indication whatever that the Arbitrators have followed such an illegal principle? I have no hesitation in holding that the Arbitrators have not done anything illegal in this case. The case considered in -- '53 Cal WN 828' (H) concerned entirely different set of facts from the one before me. On the extension of due dates, that apparently was in the main a hypothetical argument made on behalf of the applicant in order to come within the decision of -- '53 Cal WN 828' (H). There is no evidence whatever on this point in this case to suggest that the Arbitrators have decided anything oh the point without taking evidence, & on the facts I am satisfied that this is a point which cannot arise and this allegation has no substance.

13. The application, therefore, fails and is dismissed with costs.


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