A contract that contravenes a notification issued under Section 17 of the Forward Contracts (Regulation) Act, 1952, is illegal and unenforceable.

( 1 ) THIS is an application to set aside an award of the Bengal Chamber of Commerce and Industry on two grounds, the first being that there was no dispute between the parties which could be referred to the said Chamber for arbitration. The second ground taken is that the contract being a forward contract within the meaning and definition of the expression in the Forward Contracts (Regulation) Act, 1952 was illegal inasmuch as it contravened the notification of the Central Government dated January 25, 1955, by virtue of which no such contract could be entered into in respect of the goods specified in the schedule including groundnut oil except with the permission of the said Government.

( 2 ) THE contract between the parties was entered into on November, 24, 1959, by exchange of bought and sold notes by brokers K. D. More and Co. The relevant clauses of the sold note are as follows:- Articles Groundnut Oil.

Rs . 59. 19 pp. per md. loose free delivered to buyer's

factory including excise duty with gate pass.

Terms Full payment within ten days after presentation of the bill.

Delivery January delivery 1960.

Rate

( 3 ) THE buyer had enquired of the seller by a letter dated January 19, 1960 as to when goods would be delivered. In reply thereto the seller by letter dated January 22, 1960, informed the buyer that for unavoidable reasons it was not able to deliver the goods within the specified time and requested the buyer to give an extension of the period of delivery by one month. On February 3, 1960, the buyer wrote to the seller that the delivery period had been extended up to February 15, and in default to deliver within that date the buyer would be at liberty to purchase the material from elsewhere and charge the difference to the seller. There does not seem to have been any reply to this. On February 17, 1960, the buyer wrote again to the seller pointing out that the goods had not been delivered by February 15, 1960, and that unless delivery was given within 72 hours the buyer would proceed to purchase the goods in the market and the seller would be responsible for the payment of difference, if any. There was no reply to this either. Thereafter the buyer without sending a bill of difference to the seller as is generally done, referred the matter to the Tribunal of Arbitration of the Bengal Chamber of Commerce and Industry and the said Chamber made an award on July 1, 1960 directing the seller to pay the buyer Rs. 2,783. 70 np. in settlement of the buyer's claim besides the cost of arbitration.

( 4 ) THE above pearly shows that there was a dispute between the parties prior to the reference to the Bengal Chamber of Commerce and Industry. The parties were not agreed about the date of extension. The seller never offered to deliver and the buyer made it known unmistakably to the seller that unless the goods were delivered as demanded they would be free to buv the same from elsewhere and charge the difference. It was not necessary for the buyer to quantify its claim of difference before referring the matter to arbitration.

( 5 ) THE second ground of objection however is more vital one. By the Forward Contracts (Regulation) Act, LXXIV of 1952, a 'forward Contract' means a contract for the delivery of goods at a future date and which is not a ready delivery contract. A 'ready Delivery Contract' for the purpose of the Act means a contract which provides for the delivery of goods and the payment of a price therefor, either immediately or within such period not exceeding eleven days after the date of the contract and sublet to such conditions as the Central Government may, by notification in the Official Gazette specify in respect of any goods, the period under such contract not being capable of extension by the muual consent of the parties thereto or otherwise. By Section 2 (m) 'specific delivery contract' means a forward contract which provides for the actual delivery of specific qualities or types of