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TMI Blog1962 (5) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... ontemplated that in case the buyer failed to furnish the license to import Pakistan Jute within the period mentioned, the contract would be deemed to be cancelled which meant that the contract was to be treated as non est for all purposes. If the contract was deemed to be cancelled, it must mean that the right and obligations of the parties came to an end simultaneously. It was not really necessary to insert the words "with out any difference on both sides" in the bought notes and such addition in the sold notes did not make any difference to the rights of the parties. Appeal dismissed. - C.A. 640 OF 1961 - - - Dated:- 3-5-1962 - S.K. DAS, M. HIDAYATULLAH AND J.C. SHAH, JJ. JUDGMENT These four appeals, all with special leave of this Court, have been heard together because they raise common questions of law' and fact. This judgment will govern them all. In the High Court of Calcutta, in or about February-July, 1961, a series of applications numbering about 170 were filed by sellers of raw jute. The main relief asked for by those applications was the revocation of the authority of an arbitrator appointed under certain contracts Which the applicants had entered into wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c delivery contract in raw jute, the contract providing by a guarantee clause for "shipment or despatch during August/September, 1960". By the operation of the provisions of the Forward Contracts (Regulation) Act 1952 (Act 74 of 1952), and the notifications made by the' Central Government thereunder, forward contracts for the sale or purchase of raw jute in the city of Calcutta which included the area within the municipal limits of Calcutta, the Port of Calcutta and the districts of 24 Parganas, Nadia, Howrah and Hooghly, could only be entered into between members of a recognised association or through or with any such member. The exchange was such a recognised association. The Act empowered recognised associations to make bye-laws for the regulation and control of forward contracts subject to the previous approval of the Central Government. The Exchange made such bye-laws relating to the transferable specific delivery contracts in raw jute which bye-laws will be found in Chapter IX of the Working Manual issued by the Exchange. Terms and conditions of transferable specific delivery contracts in raw jute as prescribed by the said byelaws provided for arbitration of all claims and di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the goods have not been shipped and buyers shall exercise their aforesaid option on the fifth working day after expiration of the extended date and notify sellers. ........................" The case of the appellant was that at the relevant time certain emergent conditions srose in the raw jute trade and industry, which prevented the appellant from supplying the raw jute stipulated for in the contract within the time mentioned in the guarntee clause. By a letter dated October 10, 1960, the respondent exercised its option under para. 1 1 quoted earlier, cancelled the contract and charged the appellant for the difference in price between the contract rate' and the market rate prevailing on the date of cancellation. The appellant denied that it bad any liability to pay the difference. Thereupon the respondent applied for arbitration by the Tribunal of Arbitration constituted in accordance with the rules of the Bengal Chamber of Commerce and Industry. The Registrar of the Chamber wrote to the appellant that the arbitration case (No. 10 of 1961) would be heard by the Tribunal on a certain date. The date was then extended and before the Arbitration Tribunal could decide the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under s. 5 of the Arbitration Act, 1940. . The application was opposed by the respondent which denied the allegations made by the appellant both as to the facts and circumstances which were said to constitute the emergency and as to the alleged reasonable apprehension of bias in the appointed Arbitration Tribunal. We have stated earlier that in the High Court to main controversy between the parties centred round the question, (1) if there was such an emergent condition in the jute trade and industry at the relevant time as divided the sellers and buyers of raw jute into two opposing camps, and (2) if the existence of such opposing camps, provided such opposing camps were proved to exist, would justify the revocation of the authority of the appointed arbitrator. The learned Judge who heard the applications dealt first with the legal position in England and India, in the matter of revocation of the authority of an appointed arbitrator. Having dealt with the legal position, he Went into the facts of the case and held that no such emergent condition has been proved as would justify the revocation of the authority of an appointed arbitration. He expressed his final conclusion in these w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lls, and a reduction in working hours. The affidavits filed on behalf of the appellants do not, however, establish that there had been any failure of the jute crop in Bengal, Bihar and Assam or that jute had become unavailable at its normal sources or that such a crisis had arisen as would divide the buyers and sellers into conflicting camps. It is Worthy of note that like any other trade in goods in a short market, the jute trade, especially the trade in future contracts, is very sensitive and readily responds to any stimulus, including forces which affect supply and demand even temporarily. Such responses can even be said to be the normal feature of the jute trade like any other trade in commodities. As there was no evidence of the rise and fall in prices of raw jute during the relevant period except from what we could gather from the differences in price between the contract rate and the market rate claimed by. the respondents, we allowed the parties to produce before us the rates quoted by authorised brokers for various kinds of jute from April 1960 to August These figures show that the market in raw jute almost always fluctuates; sometimes there is steady rise'; sometimes a fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Jute Mills Association, as may from time to time be selected by the Registrar". In this respect there is a difference in the rules made by the Indian Chamber of Commerce, Calcutta. Those rules provide for an unrestricted selection and say that in making an appointment and nomination, the Registrar shall select, as far as possible, persons or a person having practical knowledge of the subject matter of the contract or contracts in question and the Registrar shall not appoint any person who for any reason within his knowledge would not be a proper person to act as Arbitrator etc. in the parti- culor matter. The appellant in Civil Appeal No. 640 brought to our notice the circumstance that his solicitor wrote to the Registrar of the Bengal .Chamber of Commerce and Industry for the names of the arbitrators and was told in reply that it was not the practice of the Tribunal to disclose the names of the arbitrators; but a classification of arbitrators of some of the cases was furnished and this showed that one of the arbitrators would be a mill representative and the other a jute broker or baler. We have taken all these circumstances into our consideration and we are unable to agree wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into sharply divided conflicting camps." We are in agreement with the view thus expressed by the High Court. As to the arbitrators to be appointed by the Indian Chamber of Commerce, Calcutta, and in some of the appeals before us the arbitrators have to be so appointed, there can hardly be any ground for a reasonable apprehension. The names of the arbitrators are not known nor even their classification. The rules contemplate that the Registrar shall not appoint any person as arbitrator who for any reason within his knowledge would not be a proper person to act as arbitrator. What grounds can there be of a reasonable apprehension in such cases? We have held that there are no conflicting camps of buyers and sellers and even if there are such camps, the Registrar can select persons who have practical experience of the subject matter of the contract and not other wise improper persons to act as arbitrators. The difference between an 'application under a. 5 of the Arbitration Act and one under a. 34 is a difference as to the point of time when the application is made. If proceedings are commenced in Court, application is made under s. 34; if. proceedings have not commenced in Court t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the arbitrators appointment will not in general disqualify him, nor will the fact that he stands in a particular relationship to the parties or to the matters in dispute, if it can be said that the parties selected him with knowledge that this was or must be so. Nor are we concerned with the exception to which the aforesaid rule is subject in relation to arbitrators appointed to determine future disputes, and the statutory changes made in English law relating thereto. There are, however, four decisions of the Calcutta High Court which bear an apparent resemblance to the cases under our consideration and to those decisions we must now turn. In Balabux Agarwala v. Lachminarain Jute Manufacturing Co. Ltd (1947)51C.W.N.863, 875. the question was of a certain suits on applications under s. 34 of the Arbitration Act and one of the grounds taken was that persons interested in or connected with various jute mill companies were members of the Bengal Chamber of Commerce and were on the panel from which arbitrators were chosen; and a reference was made to a circular letter which showed that the arbitrators or the firms they represented were all buyers and as such interested in seeing that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question the honesty and integrity of the two arbitrators, but, in the circumstances appearing in the evidence before me, it will be unfair alike to them and to plaintiff-firm to put them in a position of conflict with their own associations. On the whole I have come to the conclusion that this is a case *here circumstances exist which are calculated to bias the mind,% of the arbitrators and where the plaintiff-firm may legitimately ask the Court to release it from its bargain to go to arbitration". The decision rested on the facts established in that case and cannot help the appellants to prove their case, on the present applications. In fairness to learned Counsel for the respondents we must say that he submitted before us that the decision in Tolaram Nathmull v. Birla Jute Manufacturing Co. Ltd. (1948) 2 Cal. 171, 196. went much beyond what was accepted as the correct legal position in English decisions referred to by the learned Judge; but that is an aspect of the matters which we consider it unnecessary to decide. We hold that the facts which must be established to call in aid that decision have not been established in these cases. In Dwarkadas Co. v. Keshardeo Bubna (1948) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to sellers, or sellers' nominee, letter of authority to import the Pakistan Jute or open confirmed, irrevocable Letter of Credit in terms of paragraph 8(b)(ii) within 14 working days from the commencement of the delivery period of the contract failing which there shall be free extension for delivery equal to the period of delay occurring after the 14 working days but where stipulated quantities monthly are sold the free extension shall only be in respect of the delivery for the first month. If buyers do not deliver letter of authority or open confirmed irrevocable Letter of Credit within one month from. the commencement of the delivery period of the contract, the sellers shall be entitled to exercise any One of the following options on the next working day .following the expiry of the said month:--- (i) Cancelling the contract. (ii) Cancelling the contract and charging buyers the difference (if any) between the contract price and the market price on the date of cancellation of the contract. The clause in the bought note said : "The buyers to give letter of authority to the sellers and the sellers to open letter of credit. If the buyers fail to furnish the license up to Decemb ..... X X X X Extracts X X X X X X X X Extracts X X X X
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