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TMI Blog1962 (5) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... month in October, November and December, 1955. Clause 14 of the agreement provides that all disputes arising out of or concerning the contract should be referred to the arbitration of the Bengal Chamber of Commerce. The respondents delivered, pursuant to the contract, in all 2000 bales and made default in the delivery of the balance. The appellants then applied to the Bengal Chamber of Commerce for arbitration in accordance with cl. 14 of the agreement. The respondents appeared before the arbitrators and contested the claims on the merits. The arbitrators made an award in favour of the appellants for ₹ 10, 525, and that was filed under s. 14(2) of the Indian Arbitration Act in the High Court of Calcutta on its original side and notice was issued to the respondents. Thereupon they filed an application presumably under s. 33 of the Arbitration Act for a declaration that the contract dated September 7, 1955, was illegal as it was in contravention of the notification of the Central Government dated October 29, 1953, and that the award based thereon was a nullify. The learned Judge on the original side before whom the application came up for hearing dismissed it, and passed a dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals Nos. 142 and 143 of 1957. They were heard by Chakravartti, C.J., and Lahiri, J., who held that the contract dated October 17, 1955, was illegal as it fell within the prohibition contained in the notification of the Central Government dated October 29, 1953, and accordingly allowed the appeals and set aside the awards. The appellant thereafter applied under Art. 133(1)(c) for a certificate and that having been refused they obtained from this Court leave under Art. 136 of the Constitution and that is how these appeals come before us. The points for decision in all these appeals are the same and this Judgment will govern all of them.The following contentions have been urged in support of these appeals :- (1) The Forward Contracts (Regulation) Act, 1952, is ultra vires and the notification dated October 29, 1953, is in consequence null and void. (2) On the terms of the arbitration clause the question whether the contracts dated September 7, 1955, and October 17, 1955, are illegal is one for the arbitrators to decide and that it was not open to respondents to raise the same in applications under s. 33 of the Arbitration Act. (3) The respondents submitted to the jurisdict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertain the true nature and scope of the legislation, its pith and substance. The object of the Act as stated in the preamble is to provide for the regulation of certain matters relating to forward contracts, the prohibition of options in goods and for the matters connected therewith . The statute makes a distinction between ready delivery contracts and forward contracts. When a contract provides for the delivery of goods and payment of price therefor either immediately or within a period not exceeding eleven days it is a ready delivery contract. All other contracts are forward contracts. Forward contracts are again divided into two categories 'specific delivery contracts' and 'non-transferable specific delivery contracts', 'Specific delivery contracts' mean forward contracts which provide for actual delivery of specific goods at the price fixed during specified future period. 'Non-transferable specific delivery contracts' are specific delivery contracts the rights or liabilities under which are not transferable. Section 15 confers power on the Government to issue notifications declaring illegal forward contracts with reference to such goods or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 56 (2) MLJ 563.] the facts were that the accused was charged under facts were that the accused was charged under s. 170 of the Madras Local Boards Act, 1920 for keeping open a new private market without a licence. His defence was that the place where the sales were held was not truly a market, and that was accepted. In that context, discussing the meaning of the word 'market', the Court observed that it meant a place set apart for the meeting of the general public of buyers and sellers, freely open to any such to assemble together, where any seller may expose his goods for sale and any buyer may purchase In Commissioner, Coimbatore Municipality v. Chettimar Vinayagar Temple Committee [ 1956 (2) MLJ 563.], the question arose this time with reference to the Provision in Madras District Municipalities Act, 1920 requiring a place used as an open market under the Act to be licensed. The Court held that the ordinary meaning of market was place where the public could go during particular times for purpose of buying and selling and that on the facts the place in question was market. It is contended on the strength of the above rulings that as the impugned Act is not one with r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this contention, on the rule of construction that the entries in the Lists should be construed liberally and on the decision in Bhuwalka Brothers Ltd. v. Dunichand Rateria 1952 AIR(Cal) 740.], which, on this point was affirmed by this Court in Duni Chand Rateria v. Bhuwalka Brothers Ltd. [ 1955 (1) SCR 1070.] The rule of construction is undoubtedly well established that the entries in the Lists should be construed broadly and not in a narrow or pedantic sense. But there is no need for the appellants to call this rule in aid of their contention, as trade and commerce would, in their ordinary and accepted sense, include forward contracts. That was the view which was adopted in Bhuwalka Brothers Ltd. case 1952 AIR(Cal) 740.] and which commended itself to this Court in Duni Chand Rateria's case [ 1955 (1) SCR 1071.]. Therefore, if the question were simply whether a law on Forward Contracts would be a law with respect to Trade and commerce, there should be no difficulty in answering it in the affirmative. But the point which we have got to decide is as to the scope of the entry 'Trade and commerce' read in juxtaposition with entry 48 of List I. As the two entries relate to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods Futures Ordinance, 1949, has to be judged in accordance with the provisions of the Government of India Act, 1935, which was the Constitution Act then in force. In that Act there was no specific entry relating to 'Futures Markets'. Such an entry was introduced for the first time in the present Constitution in 1952. The contest in Bhuwalka Brothers Ltd. case 1952 AIR(Cal) 740.] therefore was not between a general entry on trade and commerce and a specific entry on the futures markets, as in the present case, but between Trade and commerce in List II and Contracts in List III. In the absence of a specific entry like the one contained in entry 48 in List I, the decision in Bhuwalka Brothers Ltd. case 1952 AIR(Cal) 740.] would be correct but it is no longer law in view of the change in the Constitution.In the present case the question was also raised whether the impugned legislation would fall under entry 7 of List III. While the respondents insisted that it fell under entry 48 in List I, they were also prepared, in case that contention failed, to fall back on entry 7 in List III as a second line of defence. Entry 7 is general in its terms and cannot prevail as against speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this point after some argument. This contention also must therefore be found against the appellants.(2) It is next contended for the appellants that the question as to the validity of the contracts between the parties was one for the arbitrators to decide and that in consequence it was not open to the respondents to raise it in an independent application under s. 33 of the Arbitration Act. This question has been considered by us in Khardah Company Ltd. v. Raymon company (India) (P.) Ltd. [ 1963 (3) SCR 183.] with which these appeals were heard and therein we have held that it a contract is illegal and void, an arbitration clause which is one of the terms thereof, must also perish along with it and that a dispute relating to the validity of a contract is in such cases for the Court and not for the arbitrators to decide. Following that decision we must overrule this contention. (3) The appellants next contend that even if the arbitration clause in the original agreement between the parties should be held to be inoperative by reason of the validity of the contract itself being in question, when the respondents subsequently appeared before the arbitrators and filed statements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nciple of the matter is this that when a party denies the arbitration agreement, the very basis on which the arbitrator can acts is challenged and therefore the Courts have taken the view that in such a case the arbitrator has no jurisdiction to decide whether he himself has jurisdiction to adjudicate upon the dispute.............. If the arbitration agreements is part and parcel of the contract itself, by denying the factum of the contract the party is denying the submission clause and denying the jurisdiction of the arbitrators. But in this case the position is different. We have an independent agreement by which the parties agreed to refer the disputes to arbitration. Pursuant to this agreement, contracts were entered into and when the plaintiffs made a claim against the defendents, the defendants denied their liability. Therefore, what was denied was not the jurisdiction of the arbitrators, not the submission clause, but business done pursuant to the submission clause and to which the submission clause applied That in our judgment is a correct statement of the true legal position.The point then for decision is whether there is in this case an agreement for reference to arbi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al) 1 1.] and Pratabmull Rameswar's case [(1959) 64 C.W.N. 616.] relied on for the appellants are not really in point. In both these cases there was a valid submission on which the arbitrators proceeded to act. Before them the parties filed statements and therein they put forward a claim which was not actually covered by the reference, and invited them to give their decision thereon. The party against whom the award had gone contended that the arbitrators had acted without jurisdiction in deciding that claim. In overruling this contention the Court held that it was open to the parties to enlarge the scope of a reference by inclusion of a fresh dispute, that they must be held to have done that when they filed their statements putting forward claims not covered by the original agreement, that these statements satisfied the requirements of s. 2(a) of the Arbitration Act, and that it was competent to the arbitrators to decide the dispute. The point to be noticed is that in both these cases there was no want of initial jurisdiction, but a feeding of existing jurisdiction by an enlargement of the scope of the reference. That this does not involve any question of jurisdiction of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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