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U.M. Chowdhury and Co. Vs. Jiban Krishna Ghose and Son - Court Judgment

LegalCrystal Citation
Decided On
Reported inAIR1922Cal447,69Ind.Cas.995
AppellantU.M. Chowdhury and Co.
RespondentJiban Krishna Ghose and Son
Cases ReferredBritish Westinghouse Electric and Manufacturing Co. Ld v. Underground Electric Railways Company of London
arbitration act (ix of 1899), section 13(1) - arbitration--award, remission of, for re-consideration--error of law. - .....aside or remitted and that the attachments male in execution of the awards might be removed. the learned judge decided that the a wards should be remitted to the arbitrator, and m(sic)s. u. m. chowdhury & co. have appealed from that decision.2. the respondents, messrs. j. k. ghose & son, have filed objections contending that the learned judge should have set aside the awards.3. it appears that the reference to arbitration related to the alleged liability of messrs. j. k, ghose & son to messrs. u.m. chowdhury & co. in respect of certain contracts, which were specified in the awards, whereby u. m. chowdhury and co., had bought certain jute from j. k, ghose and son and in respect of certain home arbitration allowances.4. the awards were in favour of the buyers, messrs. u. m. chowdhury &.....

Lancelot Sanderson, C.J.

1. This is an appeal by U.M. Chowdhury and Company from the judgment of my learned brother Greaves, J. The decision was given in respect of an application by J. K. Ghose and Son for an order that six awards made be an arbitrator on the 7th October 1920 might be set aside or remitted and that the attachments male in execution of the awards might be removed. The learned Judge decided that the a wards should be remitted to the arbitrator, and M(SIC)s. U. M. Chowdhury & Co. have appealed from that decision.

2. The respondents, Messrs. J. K. Ghose & Son, have filed objections contending that the learned Judge should have set aside the awards.

3. It appears that the reference to arbitration related to the alleged liability of Messrs. J. K, Ghose & Son to Messrs. U.M. Chowdhury & Co. in respect of certain contracts, which were specified in the awards, whereby U. M. Chowdhury and Co., had bought certain jute from J. K, Ghose and Son and in respect of certain Home arbitration allowances.

4. The awards were in favour of the buyers, Messrs. U. M. Chowdhury & Co.

5. For the purpose of dealing with the matters which were argued in this Court, Exhibit G-6 may be taken as a specimen of the awards, which on ail points material to the case were in the same form. Exhibit G 6 is as follows:

Award.Messrs. U.M. Chowdhury & Co.versusMessrs. Jiban Krishna Ghose & Son.Bought by Messrs. U. M. Chowdhury & Co. from Messrs. Jiban Krishna Ghose and Son under Messrs. Sarkies & Co.'s Cont. Nos. 2006 of 1st November 1919 and 2042 of 9th December 1919 and 2043 of 9th December 1919.'

This arbitration is to determine liability for value of 1,462 bales jute invoiced back marked 'Ghose' and Home arbitration allowance on 20 bales plus charges thereon shipped under above contract par Sections Malakuta to Dundee.

Sellers having failed to appoint an arbitrator to act on their behalf under terms of the contract, 1, the undersigned, having been duly appointed by buyers, acted as sole arbitrator as per Clause 17 of the contract.

I. After careful perusal of all documents submitted to me by the buyers in connection with this arbitration I do hereby award that sellers will pay to the buyers within one week from date of this award

15.287 0 3 made up as follows:

Section d. Value of 1,462 bales weighingtons 263.10.0-25 at 57-10per ton ... ... ... 15,151 17 10Home arbitration allowance on20 bales retained by buyersweighing tons 3-12-0-11 at55/per ton ... ... 9 13 3 Section d. Association andarbitration fees 14 16 0 Charges on arbitra-tion bales ... 25 2 6Cartage ... 63 19 3Storing ... 19 6 5Telegraphic expens-... 2 0 0----------- 125 4 2-------------15,287 0 3-------------II. Sellers will also pay to buyers interest at the rate of six per sent, per annum on the above amount from 9th June 1920 until date of payment.

III. Rate of exchange for payment will be calculated at the Telegraphies Transfer rate of the rupee on the date of payment.

IV. Fees and all other charges in connection with this arbitration to be paid by the sellers.

D.S. Henderson's fee ... 80Stamp for award ... 5------85------D.S. Henderson, Sole Arbitrator.

6. The matters in dispute between the parties wore referred to the arbitrator in pursuance of arbitration clauses in the contracts and they arose by reason of claims which had been made by the buyers in Great Britain against U. M. Chowdbury and Co., in respect of which awards bad been made in Groat Britian against U. M Chowdhury and Co. In respect of these matters Messrs. U. M. Chowdhury & Co chimed against J. K. Ghose and Son under what has been called a 'Home guarantee.' The guarantee is contained in the document marked Exhibit A at page which is as follows:

Calcutta, the 9th January 1920.Messrs. U.M. Chowdhury & Co.Gentlemen,With reference to all sales to your goodselves during the season of 1919-20 of our marks specified on pages 88, 89 and 342 of the Association Book of Marks for this season. We hereby guarantee:

(a) To indemnify you against any loss you may sustain by reason or in consequence of allowance and penalties (if any) to which you may become liable under award or otherwise in respect of the above mark or description as delivered or discharged at destination on the ground of quality and/or condition and/or weight especially (but without prejudice to the generality of this provision) including penalties under Clause 1 (i) (a) (6) of the London and/or Dundee Jute Association (as will be specified in the contract). Contract form adopted 1919. it is expressly understood that condition and weight guarantee applies only to Daisee, Tossa and Hoart Marks.

(b) To accept the award or awards of arbitrators purporting to he made at the port of destination or elsewhere in respect of such jute as evidence of the qualification and authority of the arbitrators, of the identity of the jute arbitrated on, and of the quality of the jute on the delivery and discharge thereof at destination.

(c) To be bound by such award or awards us conclusive of our liability to yon tinder our indemnity hereby given.

(d) Any claim from Home to be notified to sellers within 35 days from the official date of arrival of the steamer at port 'of destination.

And we declare that the signatures on any award shall for the purpose hereof be deemed to be sufficiently proved by the production of the award purporting to be signed by them. Yours faithfully Jiban Krishna Ghose and Son.

7. Four points, which are set out in the learned Judge's judgment, were relied upon in the Court of first instance and the learned Judge came to the conclusion that the arbitrator had erred in law and that the error of law appeared upon the face of the awards and on that ground he remitted the awards to the arbitrator. The learned Judge said that as he was remitting the awards on the above-mentioned ground, he would farther direct the arbitrator to determine what was to be done with the jute, if payment were made by Messrs. J. K. Ghose & Son.

8. In this Court the argument was principally directed to the question whether there was a mistake of law apparent on the face of the awards.

9. Two other Question?, however, were argued, (i) that the awards are bad on account of uncertainly, and (ii) that the arbitrator had failed to decide all the points in dispute, inasmuch as he bad given no decision with regard to the return of the jute.

10. With regard to the last mentioned point the learned Counsel for the appellants was desirous of patting in the letter of reference, which was not before Greaves, J., in order that the Court might be in a position to deride whether the awards disposed of all matters referred to the arbitrator. The learned Counsel for the respondents, however, stated that be did not propose to argue the point raised in paragraph 10 of the petition which related to this matter, and consequently the letter of reference was not put in and the appeal was confined to the two above-mentioned matters, viz., (i) error of law apparent on the face of the awards, and (ii) uncertainty.

11. With regard to the first above-mentioned question the alleged error of law was that the rate of exchange for the purpose of payment was directed by the awards to be calculated at the date of payment, whereas it was urged that the direction should have been that the calculation should be made at the respective dates when the bills demanding payment were presented by Messrs. Chowdhury & Co. to Messra. Ghose & Son which were alleged to be the dates of the breaches of the contracts.

12. By Section 13(1) of the Indian Arbitration Act, 1889, the Court has power to remit the award to there consideration of the arbitrator or umpire.

13. This power, however, in my judgment, should be sparingly exercised and only upon certain well known principles. The Courts in England have always been exceedingly cautions in dealing with awards, as was pointed out by Kay, L. J., Keighley and In Re: Durant (1893)1 Q.B. 405 at p 414 : 62 L.J.Q.B. 105 : 4 B. 136 : 68 L.T. 61 : 41 W.R. 437 : 7 Asp. M.C. 268.

14. The passage is as follows:

The Courts have always been exceedingly cautious in dealing with awards. Prima facie, an award is final and not subject to appeal the arbitrator is chosen by the parties who presumably prefer a domestic Tribunal which is not bound rigidly by the rules of evidence; and a mistake of law or fact is not, per se, a ground for sending back the award of such a Tribunal. The cases lay down with sufficient clearness the rules on which the Court ought to act when asked to remit an award to enable us on this appeal to gay that this case is brought within the rules.

15. In Hodgkinson v. Fernie (1857) 3 C.B. (N.S.) 189 at p. 202 : 27 L.J.C. P. 66 : 3 Jur. (N.S.) 818 : 6 W.R. 181 : 140 E.R. 712 : 111, R.R. 614., Williams, J., in his judgment (page 202), said: 'The law has for many years been settled, and remains so at this day, that, where a cause or matters in difference are referred to an arbitrator, whether a lawyer or a layman, he is constituted the sole and final judge of all questions both of law and of fact. Many cases Lave tally established that position, where awards have bean attempted to be set aside on the ground of the admission of an incompetent witness or the rejection of a competent one. The Court has invariably met those applications by saying, you have constituted your own Tribunal; you are bound by its decision.' The only exceptions to that rule, are, cases where the award is the result of corruption or fraud, and one other, which, though it is to be regretted, is now, I think, firmly established, viz., where the question of law necessarily arises on the face of the award, op upon some paper accompanying and forming part of the award, Though the propriety of this latter may very wall be doubted, I think ii may be considered as established.'

16. In the case of Montgomery, Jones & Co, and In Re: Liebenthal & Co. (1888) 78 L. T. 406, the Court of Appeal was considering Section 10 of the English Arbitration Act of 1889, which is in all material respects similar to Section 13 of the Indian Arbitration Act, and Smith, L, J., at page 403, said: 'I think that Counsel for the respondents has correctly stated the law under that section. It was so laid down in In Re: Keighley and Durant (1893)1 Q.B. 405 at p 414 : 62 L.J.Q.B. 105 : 4 B. 136 : 68 L.T. 61 : 41 W.R. 437 : 7 Asp. M.C. 268. I, for my part, have always understood the general rule to be that the parties took their arbitrators for better or for worse, both as to decisions of fast and decisions of law. That is clearly the law. There are, however, certain grounds upon which the matter may be remitted to the arbitrator for re-consideration. Those grounds have been correctly stated by Counsel for the respondents, and I will not recapitulate them.'

17. The grounds upon which the Court will remit the matter for re-consideration, as stated by me, when appearing as Counsel for the respondents, were (i) that the award is bad on the face of it, (ii) that there has been misconduct on the part of the arbitrator, (iii) that there has been an admitted mistake and the arbitrator asks that the matter may be remitted, (iv) when additional evidence has been discovered after the making of the award. Chitty, L. J., in his judgment stated again these four grounds, and approved of them.

18. In my judgment, it is necessary that the Courts should be very cautions in interfering with awards and that the abovementioned principles should be followed in considering whether an award should be remitted to the arbitrator.

19. Submission to arbitration is a method of settling disputes of the parties' own choosing and it is important that persons who submit their disputes to arbitration should realize that they take the arbitration for better and. for worse, that the award of the person to whom they submit their dispute has the peculiar characteristic of being final both in face and in law and that the Courts will not interfere except on well-recognised principles and in certain well-defined circumstances. The Indian Arbitration Act appears to recognise the finality of the arbitrator's decision and has emphasised it by providing, in Section 10 that the arbitrator may state a special case for the opinion of the Court on a question of law involved, and that the arbitrator has power to correct in an award any clerical mistake or error arising from any accidental slip or omission.

20. The ground relied on in this case is an alleged error of law appearing on the face of the awards, but I have dealt with the matter generally for the purpose of emphasising, how important it is to recognise that the finality of the award, which prima facie exists, should only be interfered with great caution.

21. With regard to the principle upon which the particular point in question in this case, should be decided, reference may be made to the judgment of Wilde, C.J. in Duller v. Fenwick (1846) 16 L.J C.P. 79 at p. 80 : 3 C.B. 705 : 10 Jur. 1057 : 186 E.R. 282 : 71 R. R. 467. The passage is as follows: ' Unless, therefore, upon the face of the award we can distinctly collect what the arbitrator intended to decide and that we can see that he decided wrongly, the Court will not interfere.' Again, in Holgate v. Killick (1861) 31 L. J. Ex. 7 at p 9 : 7 H. & N. 418 : 5 L.T. 358 : 10 W.R. 19 : 158 E.R. 536. Wilde, B, in giving judgment said: ''The principle to be collected from the later cases is very plain, and it is that the Court will not look at anything to induce it to review the decision of an arbitrator on any matter submitted to him for his decision except it be something appearing on the face of the award, or, in a document forming part of the award. If the rule were otherwise, affidavits might, and probably would, be made in many cases by the losing party to induce the Court to interfere with the decision of the arbitrator.'

22. Reference was made by the learned Counsel for the respondents to two cases, viz. Landauer v. Asser (1905) 2 K.B. 184 : 74 L.J K. B 659 : 93 L.T. 20 : 53 W.R. 534 : 10 Com. Cas. 265 : 21 T.L.R 429 and British Westing-house Electric and . v. Underground Electric Railways Company of London, Ld. (1912) A.C. 673 : 8 L.J.K. B. 1132 : 107 L.T. 325 : 56 S.J. 734.

23. In the former case Kennedy, L J., was at pains to point out at pages 191 and 198 that the umpire had expressly and implicitly based his decision entirely upon the terms of the contract of March 3,1903, which contract was referred to in the award. The Court held that the contract properly construed did not justify the umpire's conclusion and that, therefore the award was, upon the face of it, bad in point of law.

24. In the other case British Westinghouse Electric and Manufacturing Co. Ld v. Underground Electric Railways Company of London, Ld. (1912) A.C. 673 : 8 L.J.K. B. 1132 : 107 L.T. 325 : 56 S.J. 734 the arbitrator had acted upon the opinion of a Divisional Court which had been given upon a special case stated by the arbitrator and he had annexed to his award, so as to form part of it, the special case and the answers of the Court. The House of Lords held that it was competent for the House to review the law which the arbitrator had adopted from the Divisional Court and had set out in his award, on the ground that an error of law appeared on the face of the award and could, therefore, be reviewed.

25. The two last mentioned cases seem to me to tome within the principle enunciated, by the earlier cases, to which I have referred, and to involve no new departure.

26. The question, therefore, in the case it, can the Court upon looking at the awards or some papers or documents so connected with the awards as to form part of them, distinctly collect what the arbitrator in- tended to decide and that he decided wrongly in point of law?

27. The learned Judge held that 'the arbitrator has erred in law and that his error of law appears on the face of the awards, having regard to the date from which he directs interest to be paid which naturally refers one to other documents.'

28. The learned Judge did not specifically mention what the ''other documents' were, to which reference could be made, but, judging from other parts of his judgment, I think he must have meant, the awards made in Great Britain and bills of accounts, which were sent by the appellants to the respondents; this appears further from the fact that the learned Judge remitted the awards in order that the ' arbitrator might amend his awards or make fresh awards embodying therein the rates of exchange prevailing at the time the bills in respect of the awards made in Great Britain were served on the respondent and of in order that ha might calculate the rate of exchange prevalent on those dates.

29. With math respect to the learned Judge, in my judgment, ill was not legitimate to refer to the above mentioned bills. No have reference is made to them in the awards; the awards do not on the face of them house give any indication of the reasons, which actuated the arbitrator in fixing the dates from which interest should run, or the principal upon which he acted in respect thereof.

30. Further there is no document so connected with the awards so as to form part of them which throws any light on this question.

31. Again, there is no reference in the Calcutta awards, to the awards which were made in Great Britain, beyond the words Home arbitration allowance' which, in my judgment are not sufficient to justify the learned Judge in referring to the awards made in Great Britain for the purpose of ascertaining whether the arbitrator had made a mistake in law.

32. It is to be noted that the liability, if any, of the respondents must have depended largely upon the document tailed the 'Home guarantee'' to which I have already referred.

33. That document is not set out in the awards and no reference is made thereto except in the words 'Home arbitration allowance; which, in my judgment, are not sufficient to make the 'Home guarantee' document part of the award.

34. The awards provided that the sellers were to pay the buyers within a week from the respective dates of the awards the respective amounts awarded, and that the rate of ex change for payment should be calculated at the Telegraphic Transfer rate of the rupee on the date of payment. It was argued that inasmuch as the arbitrator had fixed a date in each award from which interest was to run to the date of payment, the arbitrator had decided that the date mentioned was the date on which the sellers became liable to pay the buyers-that may raise a suspicion that the arbitrator may have made a mistake in law as to the date upon which the rate of exchange was to be calculated. But suspicion is not enough. The error in law must be distinctly collected from the face of the awards. There may have been reasons arising out of the contract, express or implied or arising otherwise, for the arbitrator's conclusion on this point of which I am not aware, and which 'may have justified it-and I am not able distinctly to collect form the face of the awards or from any document accompanying or forming part of the awards or from ' any paper so connected with the awards as (0 form part of them that the arbitrator' conclusion as to the dates when the rate of exchange should be calculated was necessarily wrong in point of law. It is even possible that the parties may have agreed that the rale of exchange should be calculated on the date of payment.

35. The second point relied upon by the respondents was that the awards were bad on the fate of them for uncertainty, inasmuch as Clause 3 thereof was ambiguous and no definite earns were ascertained by the said awards.

36. The awards did specify definitely the sums in pounds sterling, which were to be paid by the sellers to the buyers, but it was urged that an ambiguity arose by reason of the direction as to the calculation of exchange in Clause 3 of the awards. It is true that the awards did not specify the amounts which had to be paid by the seller in rupees, but, in my judgment, that is not sufficient ground for remitting the awards, if the arbitrator has given the rule for calculating the amounts to be paid.

37. It was argued, however, on behalf of the respondents that Clause 3 of the award did not contain a definite role for calculating the amounts. It was said during the argument by the learned Counsel for the respondents that the Telegraphic Transfer rate varied from day to day, and sometimes varied in the coarse of the day.

38. There is do evidence on this point, and indeed, having regard to the ground relied upon, viz., that the awards were bad on the face of them for uncertainty and ambiguity, it is doubtful if any evidence in respect of this point would have been admissible. It is sufficient for me to pay that 1 am by no means satisfied that there would have been any difficulty in ascertaining the Telegraphic Transfer rale of the rupee if the sellers had wished to carry out the award. As regards the time for payment, in my judgment, that is sufficiently definite in the awards the arbitrator directed that the respective amounts were to be raid within one week from the respective dates of the awards.

39. The result is that, in my judgment, this appeal should be allowed, and the respondents' objections should be dismissed. The order of the learned Judge should be ret aside, and the application of J. K. Ghose and son should be dismissed.

40. The respondents must pay the costs of the appellants in this Court and in the Court of first instance.

Richardson, J.

41. I have had the advantage of reading the judgment just delivered and, with great respect to the learned Judge of the Court of first instance, I agree with the conclusion arrived at by my Lard that this appeal should be allowed.

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