Judgment

GROVER, J.: - These two appeals by special leave are from a judgment of the Calcutta High Court holding that the disputes between the parties could not be referred to arbitration.

2. It is necessary to state the facts only in Civil Appeal No. 2012/66 The appellant was and still is a member of the East India Jute and Hessain Exchange Limited, hereinafter called the "Exchange", which is the only association recognised under the provisions of the Forward Contracts(Regulation) Act, 1952, hereinafter called the "Act . The respondent is not a member of the said association On December 21, 1962 transaction was entered into between the parties by means of a letter written by the respondent to the appellant. This letter was in the following terms:

"We have today bought from you the following goods:

Description : Jute Carpet Backing cloth bound on cardboard cores 152" wide.

Weight : 9 oz. on 36".

Warp Ends : Per Inch 15.

Weft Ends : Per Inch 13.

Oil contents : Upto 2%.

Quantity : 5,000 Rolls, each roll having continuous length of 300 yards approximately.

Rate : Rs. 4,000/- per ton.

Delivery : 500 Rolls monthly March 63 to December 1963.

All other terms and conditions of the East India and Hessain Exchange standard contract will be applicable to this contract. Please sign your acceptance on the duplicate copy of this letter."

3. The appellant from time to time delivered certain Rolls of Jute Carpet Backing cloth under the aforesaid contract, the price of which was paid by the respondent. As regards the balance number of Rolls deliverable under the contract the appellant purchased back and the respondent resold the balance quantities of goods by a contract dated December 9, 1963 which transaction was embodied in a letter of the appellant to the respondent dated December 9, 1963 and which was countersigned by the respondent. According to the appellant it was agreed or understood between the parties that deliver under the two contracts of December 21, l962 and December 9, 1963 would be set off against each other. As regards 1000 Rolls deliverable for the months of August and September 1963 under the contract dated December 21, 1962 the appellant is stated to have received from the respondent difference in the price of goods but in respect of the balance of 1500 Rolls the respondent did not pay the difference. The appellant demanded the difference payable by the respondent under the said contracts. Disputes and differences having arisen between the parties in the matter the appellant referred its claim to the arbitration of Bengal Chamber of Commerce and Industry. This was purported to have been done on the footing that the contracts provided that all terms and conditions thereof would be governed by the bye-laws of the exchange for trading in transferable specific delivery contracts. The standard contract forms and the rules and bye-laws of the Exchange, inter alia, provided for arbitration of the Bengal Chamber of Commerce and Industry. When the Chamber proceeded with the arbitration pursuant to the reference the respondent filed a petition before the Calcutta High Court on February 19 1966 under Section 33 of the Indian Arbitration Act, 1940. It was prayed that the extent and validity of the arbitration agreement contained in the contracts be determined and it be declared that there was no valid arbitration agreement between the parties in respect of the contracts dated Dec 21, 1962 and December 9, l963. The main point raised in the respondent s petition was that the contracts were not in accordance with the provisions of the Act or the bye-laws of the Exchange and were not in the forms prescribed and were, therefore, void and illegal. This petition was heard by A. N. Sen, J., who allowed the petition and held that the contracts were illegal and there was no valid arbitration agreement between the parties

4. The Act provides for regulation of certain matters relating to forward contracts, the prohibition of options in goods and for ma