SITARAM SARAOGI Vs. KANCHAN OIL INDUSTRIES PVT LTD

JUDGEMENT

(1.) IN this application under sections 30 and 33 of the Arbitration Act, 1940 the petitioner seeks an order that the Award no. 85 of 1977 dated 19th of may, 1977, made by the Tribunal of to Arbitration. Bengal Chamber of Commerce and INdustries in Case No. 229 of 1976 be declared null and void, illegal and/or set aside. At the outset I must record that when the matter had came up for hearing originally, the matter had been set down to be tried on evidence. It would, therefore, be necessary at the relevant stage to discuss the evidence, both documentary and oral, adduced in this case to resolve the controversy. But before I do so in order to appreciate the contentions urged it would be relevant to refer to certain facts. The petitioner is one Sitaram Saraogi who claims to be carrying on business under the name and style of Messrs. Benhoor Radiant Company as sole proprietor thereof, inter-alia, at No. 23 A, Netaji Subhas Road, Calcutta. It is the case of the petitioner that by exchange of a Sale Note and a corresponding Bought Note both hearing No. 726 and dated the 2nd April, 1976 entered through the brokers, Gopal Company, the petitioner had purported to sell to the respondent Kanchan Oil INdustries Private Limited and the respondent had purported and agree to buy from the petitioner 1000 Metric tones (plus/minus 50%) Pure Sal-seeds Kernels Decorticated-collection of year 1976-Bengal origin, 8% moisture guarantee at the rate of Rs.811.00 metric tonne gross, including sound secondhand gunnies, tax extra, S.T.D. form extra as applicable to be delivered at the respondent's factory at Jhargram and to be commenced form 1st June, 1976 onwards payment within a week from date of delivery of the goods by bank draft. As this is the most important document in resolving the controversy it would, in my opinion, be relevant to refer tot h copy of the said document the Seller's Note containing the terms which has been annexed as Annexure A to the said petition. The said document is as follows :- Gopal Company Oil and Produce Brokers 29/1 Armenian Street, Calcutta-1 Seller's Note. Confirmation of Bargain closed No. 726 Date. 2.4.1976. Dear sirs, We have closed to day the following bargain as per your order on your account :- <FRM>JUDGEMENT_34_CALLT1_1979Html1.htm</FRM> Yours faithfully. For GOPAL COMPANY SD/- N. D. Bajoria. N. B. Brokerage due is without any abatement confirmation cancelled or not cancelled, goods delivered or not delivered no deduction will be allowed. Broker is not responsible for any loss and/or damage sustained by parties in case any dispute arising out of this confirmation. IN case of dispute, this confirmation is subject to Calcutta Jurisdiction."

(2.) IT is the case of the petitioner that the subject matter of the said contract was "Sal-seeds" which are sold and purchased in the trade and/or market as Pure Sal seeds Kernels Decorticated. The petitioner further states that the petitioner was the lessee under the Government of West Bengal at the relevant time in respect of certain forest areas in Bankura Division. Therefore, the produce which were the subject mater of the said contract were dependant on whether condition and the weather condition, according to the allegations of the petitioner at the relevant time became such that the contract could not be performed and stood terminated and this position was accepted. This contention, however, I am merely referring in passing because this contention was not pressed before me and no evidence or arguments were advanced on this basis. The main contention upon which the petitioner relied upon was that the purported contract in question was covered by the Forward Contracts (Regulation) Act, 1952 and as according tot the petitioner the contract in question was not a "ready delivery contract" nor a "specific delivery contract" nor a "non-transferable specific delivery contract" within the said Act, the contract come within the said Act, the contract come within the mischief of the said Act and as no permission was obtained from the Government the contract was void. I will presently refer to the relevant provisions of the Act. But before I do so in order to complete the narration of events leading to the making of this application it would not be inappropriate to refer to the fact that as there was non-delivery of the goods in question the respondent preferred a claim for Rs. 7,33, 500/- being the alleged difference between the contract price and the market price of 1500 tonnes to the Tribunal of Arbitration, Bengal Chamber of Commerce and Industry where the same was registered and marked as Case No. 229 of 1976. The petitioner challenged the jurisdiction of the Tribunal. But in spite of the same the Tribunal made an award being Award No. 85 of 1977 whereby the petitioner has been directed to pay to the respondent a sum of Rs. 2,08,000/- together with costs at Rs. 660/-. The petitioner, therefore in this application under the Arbitration Act, challenges the said award as void and illegal on the ground that the said contract contravened the provisions of the Forward Contract (Regulation) Act, 1952 and as such was illegal and void and therefore are unenforceable.

(3.) IT may be mentioned in this connection that by a notification bearing No. S. O. 63(E) dated 1st of February, 1975 duly published in the Gazette of India, the Central Government declared that no person shall save with the permission of the Central Government enter into any forward contract for the sale, purchase of, inter-alia, "Sale-seed." This position is not disputed by the respondent. IT is also not disputed that no permission of the Central Government was obtained for entering into the said contract either by the petitioner or by the respondent. IT is now necessary to consider the stand point of the respondent. The respondent in its affidavit-in-oppositions through one Sanjeev Gupta affirmed on the 30th of November, 1977 has affirmed that Pure Sal-seeds Kernels Decorticated is not the same as Sal-seeds. He has also denied that Sal-seeds are sold on purchased or marketed as Pure Sal-seeds Kernels Decorticated. The respondent has asserted that the contract in question expressly stated the same to be non-transferable specific contract to be performed wholly by actual tendering of the goods and the payment of full price thereof. The respondent has also denied that the contract was given a go-by and the same was agreed to be the respondent as alleged by the petitioner. I need no as I have mentioned before, deal with this question in any detail because this point was not stressed before me in this application. Furthermore, this point had been specifically taken before the arbitrators and the arbitrators had specifically negatived this contention which they were competent to do. According to the respondent Pure Sal-seeds Kernels Decorticated are required as raw materials for the oil extraction plant of the respondent. The said contract was to be performed wholly by actual delivery of the goods mentioned therein to the factory of the respondent. The respondent has further reiterated that it was not the business of the respondent to buy Pure-Sale-seeds Kernels Decorticated Oil as a commodity. The respondent buys the said goods only for the purpose of actual consumption as raw material for running oil extraction plant of the respondent. In the premises, according to the respondent the contract was not in contravention of any of the provisions of the Forward Contract (Regulation) Act, 1952, and as such the notification dated 1st of February, 1975, had no application to the contract which is the subject-matter of his application, because according tot eh respondent, the said contract was non-transferable specific deliver y contract and secondly, the said contract was to be performed wholly by actual tendering of goods and payment thereof and thirdly, the subject mater of the said contract was Pure Sal-seeds Kernels Decorticated. The respondent has also taken the plea that after participation in the arbitration and after having failed to perform its contract the petitioner has taken this plea of the contract being void being in violation of law as an after thought and as such should not be allowed to agitate this ground. These in essence are the points upon which respondent has based its opposition to this application.