HIRALAL PANNALALL Vs. DALHOUSIE JUTE CO LTD

JUDGEMENT

(1.) AWARD No. 118 of 1969 made by the Tribunal of Arbitration, Bengal Chamber of Commerce and Industry on 26th of Aug. 1969 is impugned in this application under Sections 30 and 33 of the Arbitration Act, 1940. Hiralal Pannalall is a firm registered under the Indian Partnership Act and is the petitioner in this application. On the 1st of July, 1968 the petitioner agreed to sell and the respondent Dalhousie Jute Company Ltd. agreed to buy 251 bales of 180 Kilograms each, of Dhubri Jute consisting of 76 bales of Mill Firsts quality at the rate of Rs. 441/- per bale and 175 bales of Mill Lights quality at the rate of Rs. 4017-per bale for shipment and/or despatch during July and/or August and/or September 1968. The contract was entered through the broker Messrs. Prakash Trading Company. The said contract was by a letter to the following effect: <FRM>JUDGEMENT_119_AIR(CAL)_1978Html1.htm</FRM> According to the petitioner the said contract is a purported contract. The respondent extended the due date for delivery under the said contract and the last of such extension was granted by the respondent, by the letter dated 2nd of January, 1969, upto 31st of Jan., 1969. The petitioner contended that the respondent had failed and neglected to perform its part of the contract and had refused to make payment. The respondent on the other hand contended that the petitioner had committed breach of the contract by refusing to deliver the goods and therefore, the respondent cancelled the contract and claimed two several sums of Rs. 8,664 and Rs. 16,065/-by way of difference between the contract rate and the market rate. As the petitioner failed to make payment in respect thereof the respondent referred the claim for a sum of Rs. 24,729/- to the Tribunal of Arbitration, Bengal Chamber of Commerce and Industry. On the 26th of Aug. 1969 the Tribunal of Arbitration of the Bengal Chamber of Commerce and Industry gave an award in favour of the respondent. The petitioner states that the petitioner received the notice of the making of the said award on the 28th of Aug., 1969. On that date before the receipt of the notice of the making of the award the petitioner instituted a suit being Suit No. 2323 of 1969 against the respondent, inter alia, for a declaration that the purported contract between the parties was dishonest, void, illegal invalid and unenforceable. On the 26th of November, 1969 the respondent made an application in the said suit praying, inter alia, that the plaint be rejected and/or for permanent stay of the suit. The suit application came up for hearing before Mr. Justice S.K. Roychoudhury and by an order dated 14th of November, 1975 the learned Judge directed as follows :

(2.) AT all material times the Forward Contracts (Regulation) Act, 1952 was in force throughout the whole of India. By Notification No. S. O. 375 dated 29th of March, 1968 as amended by Notification No. 331 dated 27th of January, 1966 (sic) the Central Government duly applied Section 15 of said Act to Transferable Specific Delivery Contract relating to raw jute, inter alia, in the State of West Bengal, By another Notification the Central Government granted recognition to East India Jute and Hessian Exchange Ltd. Calcutta in respect of forward contracts for raw jute. No other association was recognised by the Central Government in respect of raw jute. AT all material times both the petitioner and the respondent were members of the said association. It may be mentioned and it has not been disputed, that the contract in this case was a "Forward Contract" and was a "Transferable Specific Delivery Contract" and was not a "Ready Delivery Contract" within the meaning of the said Act. Under Section 11 (1) of the said Act power has been given to the said association to make bye-laws for the regulation and control of Forward Contracts. Under Section 11 (2) of the said Act such Bye-laws might provide for terms, conditions and incidence of contracts including the forms of contracts in writing as also regulating the entering into, making, performance, rescission and determination of contracts etc. Under Section 11 (3) of the said Act the said Bye-laws might specify the Bye-laws the contravention of any of which would make Forward Contract entered into otherwise than in accordance with Bye-laws illegal under Sub-section (3A) of Section 15 of the said Act and under Section 15 (3A) of the said Act it is provided that any contract for goods which on the date of the contract, is in contravention of any of the Bye-laws specified in this behalf under Clause (aa) of Sub-section (3) of Section 11 shall be illegal. It appears that the said association had duly framed Bye-laws for trading in Transferable Specific Delivery Contracts in jute which are contained in the Working Manual Vol. III duly published by the said association. Some of the said Bye-laws contained in Chap. V of the said Working Manual are as follows : "1 (b) All transferable specific delivery contracts shall be in writing in the prescribed forms (Annendix II for Jute Goods and Appendix IV for raw jute) serially numbered and supplied by the Association on payment. (c) No such contract in any delivery or deliveries as aforesaid shall be entered into before such date as may be fixed in that behalf by the Board with the prior concurrence of the forward market commission. Provided that subject to provisions contained in Bye-laws 2 herein below the prohibition contained in this clause shall not apply to contracts in respect of Jute goods of any description entered into, to cover actual sales effected of such goods for export outside India.

(3.) IN this application the petitioner contends that the contract in question was not in the form prescribed. It is apparent that it did not contain the term set out in the foregoing paragraph. On behalf of the respondent it was urged that the broker was a licensed broker and/or member of the East INdia Jute and Hessian Exchange Ltd. There is, however, no evidence or averment to that effect. It must therefore be held that the contract was not in the prescribed form in the instant case. It did not contain any serial member issued by the said association. The contract was, further, not registered with the said association either within 3 working days of the completion of the business under the said contract or not at all. The contract was not entered into by the form issued by the association for the purpose of entering into such contract. IN the aforesaid view of the matter the contract in question must be held to be illegal and void under Section 15 (3A) of the said Act. IN this case the term which was absent from the contract letter between the parties is a material term in my opinion. IN view of the decision of the Supreme Court in the case of Meghna Mills Co. Ltd. v. Ashoke Marketing Ltd., and the decision in the case of Jaikishan v. L. Kanoria and Co., and in view of the infirmity and the irregularity of the contract as mentioned hereinbefore it must be held that the contract in question was illegal and as such void.