NAIHATI JUTE MILLS LIMITED Vs. KHYALIRAM JAGANNATH

JUDGEMENT

(1.) This appeal by special leave is directed against the judgment and order of the High Court of Calcutta rejecting the application by the appellants for setting aside the award in Award Case No. 70 of 1959 passed by the Arbitration Tribunal constituted by the Bengal Chamber of Commerce.

(2.) The said arbitration arose out of a contract dated July 7, 1958 whereunder the appellants agreed to purchase and the respondents agreed to sell two thousand bales of Saidpur N. C. Cuttings. The contract was in the standard form prescribed by the Indian Jute Mills Association. It provided that shipment or rail despatch from agencies was to be made during August and/or September and/or October and/or November, 1958. As the import of Pakistan jute required an import licence the contract provided:-

(3.) In their said application, the appellants raised the following contentions; (a) that they could not be held to have committed breach of the contract as they had done all that could be expected of them to obtain the licence; (b) that owing to the intervening causes, in the present case change in the policy of the Government, which the parties could not foresee when they entered into the contract, the contract became impossible of performance and that therefore under Section 56 of the Contract Act the contract ought to have been treated as void and (c) that the arbitrators had no jurisdiction as the arbitration clause in the said contract perished along with the contract. The respondents, on the other hand, denied that the performance of the contract became Impossible, and asserted that in any event the appellants had taken upon themselves the absolute obligation to procure the licence and lastly that even if the contract was discharged by frustration, the arbitration clause would still survive as there would be disputes and differences between the parties as to whether (i) there was frustration and (ii) even if so, the consequences thereof. They pleaded that the contract could not be construed to mean that an unilateral allegation by one of the parties that there was frustration would put an end to the contract. It would be for the arbitrators to decide whether the said contract was discharged by frustration.