Judgement

WANCHOO J.: This is an appeal by special leave against the judgment of the Calcutta High Court. The appellant is a company, incorporated in India, with its registered office in Calcutta dealing in jute. It entered into a contract on June 18, 1945, with the respondent-company, which is incorporated in England and has its registered office in London. The contract was for the supply of five hundred bales of jute of crop 1945-46 to be shipped from Calcutta or Chittagong to Rio de Janeiro, when freight became available. The contract provides that in the event of default of tender or delivery, the seller shall pay to the buyer as and for liquidated damages 10s. per ton plus the excess (if any) of the market value over the contract price, the market value being that of jute contracted for on the day following the date of default. This date was to be the date in London on declaration of default by telegram or without such declaration if default was eventually made by lapse of time on the 21st day after expiry of the extended period. There is also a provision for arbitration, which lays down that any claim or dispute whatever arising out of, or in relation to this contract or its construction or fulfilment shall be referred to arbitration in London in accordance with the bye-laws of the London Jute Association, and it was open to either party to claim arbitration whenever and as often as disputes arose. The contract also provides for an appeal by any party dissenting from an arbitration award to the London Jute Association in accordance with the regulations in force for the time being. Lastly, it is provided that the contract would be construed according to the laws of England whatever the residence and nationality of the parties might be or become and would be deemed to be performed there. The courts of England or arbitrators, as the case might be, would have exclusive jurisdiction over all disputes which might arise under the contract, except for the purpose of enforcing in the Colonies or abroad any arbitration award made under this contract.

2. On June 23, 1947, thirty-nine bales of jute were consigned by the appellant to Rio de Janeiro in part performance of the contract and information of this was given to the respondent by letter on July 17, 1947. It was said in this letter that difficulty had arisen because of the non-availability of quota and it was hoped that the balance remaining under the contract would be shipped as soon as quota was available. The respondent sent a reply to this letter on July 25, 1947, and the appellant wrote a further letter on August 1, 1947, in which it was said that the remaining "amount of jute under the contract would be shipped as soon as the quota was available.

3. We do not know what happened thereafter till we come to August 1948. It seems that the respondent received a cable on August 12, 1948, from the appellant stating that the contract stood cancelled long ago. The respondent by its letter dated August 12, 1948, refused to accept this position. Thereafter there were disputes and differences between the parties and eventually the respondent claimed default on or about June 1949 in terms of the contract. On or about July 14, 1949, the respondent referred the matter to the arbitration of the London Jute Association, which appointed two of its members as arbitrators. The respondent filed its claim before the arbitrators on July 23, 1949. On July 27, 1949, the arbitrators gave notice to the appellant to file its answer by August 19, 1949. The appellant, however, filed no answer before the arbitrators. What the appellant did in reply was to file an application under S. 33 of the Indian Arbitration Act, No. X of 1940, (hereinafter called the Arbitration Act) on the original side of the Calcutta High Court, in which it made three prayers, namely-

(a) declaration that the arbitration agreement, if any, between the parties was void ah initio on the ground of uncertainty and was not binding on