BALDEVDAS C PARIKH Vs. KHIMJI POONJA AND CO

JUDGEMENT

(1.) THIS is an appeal from the judgment of Mr. Justice Chagla dated July 2, 1946, dismissing the petition of the appellant in this Court, whereby he prayed that certain arbitration agreements contained in contract notes, including contract note No.17996, should be declared to be invalid, void and unenforceable. Secondly, that the purported award made by the arbitrators referred to in paragraph 3 of the petition be set aside, thirdly, he prayed for an injunction against the respondents in this Court, from proceeding with an appeal from the arbitrators to the Board of the East India Cotton Association, and for certain other ancillary relief. The principal question that arises is whether certain contracts with regard to cotton are void, since, if they are void, the arbitration agreements contained within them must obviously fail. The respondents in this Court are members of the East India Cotton Association and the appellant is not. Between April 9 and August 10, 1945, the appellant employed the respondents in accordance with the bye-laws of the East India Cotton Association with regard to certain forward transactions in cotton and by August 10 the appellant's commitments were to take delivery of 900 bales for September delivery at the rate of Rs. 432 per candy and in those circumstances a dispute arose, the dispute having reference as to whether or not the appellant had given directions to the respondents to cover his commitments.

(2.) THE form of contract note entered into by the respondents is set out at pp. 12 and 13 of the record and so far as material it is as follows: We have this day sold for you in Bombay subject to the following conditions and to the by-laws of the East India Cotton Association Ltd. , in force from time to time and subject also to our usual charges and terms of business as Commission Agents five hundred full pressed bales of New M. G. . . cotton for delivery in Bombay for September 1 to September 25, 1945. THE type of cotton is described by reference to the locality from which it comes and then are details with regard to price, some restrictions on weight and measurement, and after certain other provisions not material comes this clause: A margin of Rs. . . for Rs. . . per 50 bales to be paid to and maintaind by you with us until completion of this contract. Difference between the contract price and the market price arising against you owing to fluctuations of the market to be paid by you in cash to us in Bombay as and when they arise.

(3.) IN fact that form of contract note, except for the addition by the rubber stamp, is the form of contract-note current up to the year 1935, and the rubber stamp addition appears to have been added some time later. That is very material because on September 19, 1944, the Government of Bombay, by an emergency notification of the Finance Department, amended the official forms of clients contract notes contained in the bye-laws of the Association to which I will refer in a moment, and it is those amendments and additions which are omitted from the relevant contract notes altogether. The whole position is governed by the Bombay Cotton Contracts Act, 1932, and Section 8 of that Act provides: Save as hereinafter provided in this Act, any contract (whether either party thereto is a member of a recognised cotton association or not) which is entered into after the date on which this Act comes into operation and which is not in accordance with the bye-laws of any recognised cotton association shall be void.