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Supreme Court Of India
AMAR CHAND LALITKUMAR
Versus
Shree Ambica Jute Mills Limited
Decided On : May 3, 1962
ARBITRATION - Revocation of Authority of Appointed Arbitrator - Grounds - Reasonable Apprehension of Bias - Conflict of Interests Between Buyers and Sellers of Raw Jute - Emergency Conditions - Interpretation of Arbitration Rules and Bye-Laws.
Fact of the Case:
Numerous applications were filed in the Calcutta High Court by sellers of raw jute seeking revocation of the authority of an arbitrator appointed under contracts entered into with jute mill companies. The main controversy centered around whether there was an emergent condition in the jute trade and industry that divided buyers and sellers into conflicting camps, and if so, whether it justified revoking the arbitrator's authority.
Finding of the Court:
The High Court held that no such emergent condition had been proven to justify revoking the arbitrator's authority. It found that the alleged rise in prices and fluctuations in the jute market were normal and did not constitute an emergency. The Court also noted that the applicants were both buyers and sellers of jute, and thus had conflicting interests.
Issues: 1. Whether there was an emergent condition in the jute trade and industry that divided buyers and sellers into conflicting camps? 2. If so, whether it justified revoking the arbitrator's authority?
Ratio Decidendi: 1. The Court held that there was no emergent condition in the jute trade and industry that divided buyers and sellers into conflicting camps. It found that the alleged rise in prices and fluctuations in the jute market were normal and did not constitute an emergency. 2. The Court held that even if there were conflicting camps of buyers and sellers, the Registrar of the Bengal Chamber of Commerce and Industry could select arbitrators who had practical experience of the subject-matter of the contracts and were not otherwise improper persons to act as arbitrators.
Final Decision: The Court dismissed the applications for revocation of the arbitrator's authority.
Judgment
S. K. DAS, J.
( 1 ) 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.
( 2 ) 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 with the respondents in circumstances which we shall presently state. Except in two or three cases the respondents were all jute mill companies which purchase raw jute and manufacture finished goods therefrom. The main controversy which these applications gave rise to was dealt with by the High Court in its judgment dated 14/09/1961, in the application entitled Ram Kumar Chhotaria v. Titaghur Jute Factory Co. Ltd. , (Matter No. 20 of 1961 (Cal ) before the High Court ). Certain special points arising in some of the other applications were dealt with in separate judgments. The High Court stated in its judgment in Matter No. 20 of 1961 (Cal), that the only relief, among the many included in the petition, pressed at the hearing was leave to revoke the authority of the appointed arbitrator under the provisions of S. 5 of the Arbitration Act, 1940 (Act 10 of 1940) which provides that "the authority of an appointed arbitrator or umpire shall not be revocable except with the leave of the Court, unless a contrary intention is expressed in the arbitration agreement.
( 3 ) WE shall now state the circumstances in which the applications were made for leave to revoke the authority of the appointed arbitrator and in doing so we shall state somewhat fully the facts alleged in the application of M/s. Amarchand Lalitkumar, a firm registered under the Indian Partnership Act and carrying on business in Calcutta, which firm is the appellant before us in Civil Appeal No. 640 of 1961. The facts being similar we shall not repeat them with regard to the other three appeals, but refer to such special facts or points in those appeals as have been pressed before us.
( 4 ) ON 22/04/1960, M/s. Amarchand Lalitkumar, whom we shall refer to as the appellant, entered into a contract being contract No. 1786 with Shree Ambica Jute Mills Ltd. , respondent in Civil Appeal No. 640 of 1961, whereby the appellant agreed to sell and the respondent agreed to buy some 10. 000 maunds of Middle and Bottom Jute at a particular price. The contract was negotiated by a firm of brokers M/s. A. M. Mair and Co. (Private) Ltd. , and was entered into in the standard printed form prescribed by the East India Jute and Hessain Exchange Ltd. (hereinafter referred to as the Exchange) and was subject to the rules and byelaws made by it The contract was a forward contract being a transferal le specific 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 delive
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