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1958 Supreme(Cal) 75
HIGH COURT OF CALCUTTA
P. B. CHAKRAVARTTI, S. C. LAHIRI
KATIHAR JUTE MILLS LTD. - Appellant
Versus
LACHMINARAYAN JUTE MANUFACTURING CO. LTD. - Respondent
A. F. O. O. 9 Of 1956
Decided On : MARCH 10, 1958
A.C.BHABRA, BIMAL C.MITTER, H.N.GHOSH, I.P.MUKHERJI, R.Choudhary
Headnote:
ARBITRATION - Second reference - Maintainability - Arbitration agreement - Subsisting - Reference superseded - Fresh reference - Arbitration Act, 1940, Section 19 - Misconduct of arbitrators - Refusal to grant adjournment - Denial of opportunity to adduce evidence.
Fact of the Case:
The appellant entered into a contract with the respondent for sale of Hessian cloth. Each month's delivery was to be treated as a separate contract and the contract contained an arbitration Clause in the standard form prescribed by the Indian Jute Mills Association. The goods due to be delivered in the first three months were duly delivered and accepted, but when the last instalment, deliverable in October, was despatched, the respondent refused to accept the goods on the ground that they were not of the appellant's manufacture. The appellant repudiated the allegation and after selling the goods, claimed damages from the respondent for loss suffered. The respondent refused to pay and dispute having thus arisen between the parties, the appellant referred it to the arbitration of the Bengal Chamber of Commerce and Industry. Thereupon, a Court was constituted to hear the reference, which was numbered 169 of 1952, but as the court failed to make an award within the time allowed, the Registrar of the Chamber constituted a second court under Rule VII of the Rules of Arbitration. That court made an award in the appellant's favour. The respondent, however, made an application to this court for setting aside the award on several grounds and the court set it aside on the ground that the second court, which had made the award, had been constituted of the same persons as had constituted the first court. Thereafter, on 22-4-1953, the appellant addressed a further communication to the Registrar of the Chamber which has been taken by the learned Judge as a second reference. By it, the appellant submitted a fresh statement of claim, but explained its reason for doing so by pointing out that though the previous award had been set aside, the arbitration had not been superseded and that the statement of claim, originally filed, had been forwarded by the Chamber to this Court along with the previous award and was lying here, as were the statements of the respondent and further statements of the parties. On receipt of the appellant's letter, the Registrar started a proceeding which he numbered as 162-G of 1953 and called upon the respondent to file its statement in reply. The respondent took up the position that there could be no further arbitration by the Chamber, since, with the making of the previous award, the arbitration agreement had been exhausted, but as that contention did not find favour with the Chamber, it asked for time to apply to the court for leave to revoke the authority of the arbitrators. An application was made, but it did not succeed. The respondent then filed its statement under protest and thereafter participated in the proceedings. As on the previous occasion, the court, first constituted, was unable to make an award within the time allowed, whereupon a second court was constituted and that court eventually made an award which was again in the appellant's favour. It is that award which the learned Judge has held to be bad on the ground that it was made on a second reference and therefore the decision of Bachawat J. , applied.
Finding of the Court:
The court held that the award in the present case cannot be impugned as invalid on the ground of its having been made on a second reference. The court further held that the arbitrators did not shut out the respondent from adducing material evidence and thereby made themselves guilty of misconduct.
Issues: 1. Whether a second reference of the same dispute under the same arbitration agreement is competent? 2. Whether in proper circumstances, a second reference may be treated as a revival and continuation of the first reference? 3. Whether the arbitrators shut out the respondent from adducing material evidence and thereby made themselves guilty of misconduct?
Ratio Decidendi: 1. A second reference of the same dispute under the same arbitration agreement is not competent, but in proper circumstances, a second reference may be treated as a revival and continuation of the first reference. 2. Where an award is set aside as a nullity on the ground that the constitution of the Court was illegal and thereupon a fresh statement of case is filed before the Chamber, the second reference may properly be treated as a revival and continuation of the original reference, because not having been superseded and not having been worked out upto an effective award, that reference was still pending and further proceedings therein were possible. 3. The arbitrators did not shut out the respondent from adducing material evidence and thereby made themselves guilty of misconduct.
Final Decision: The appeal was allowed. The Judgment and order of S. R. Das Gupta J. , dated the 2/8/1955 were set aside and the respondent's application for setting aside the award, noted as made on 22/11/1954, was dismissed with costs.
( 1 ) THIS is an appeal from an order of S. R. DAS Gupta J. , dated 2-8-1955, whereby the learned Judge set aside an award made by the Bengal Chamber of Commerce and Industry in the appellant's favour, superseded the reference to the Chamber and directed the arbitration agreement to cease to have effect with respect to the difference referred. The award was set aside on two grounds, first, that it was made on a second reference which was not maintainable in law and, secondly, that the arbitrators who made it had misconducted themselves by shutting out the respondent from adducing material evidence. The first ground did not reflect the learned Judge's own opinion which he expressly declared to be different but since there was a previous decision of Bachawat J. , according to which a second reference was not competent and since the practice of the court required a Judge, sitting singly on the Original Side, to follow an earlier decision of a Judge of co-ordinate jurisdiction, if any such decision on the same subject existed, he set aside the award on the first ground as well. The appellant questions that order and contends that neither of the grounds given in its support is sustainable.
( 2 ) THE decision of Bachawat J. , which the learned Judge purported to follow in setting aside the award on the first ground was that in the case of Hulaschand Bupchand v. The Baranagore Jute Factory Co. , Ltd. (A ). That case was itself brought up on appeal, and judgment in the appeal has Just been delivered by us. (Baranagore Jute Factory Co, Ltd. v. Hulaschand Rupchand. We have not been able to agree with Bachawat J. , In all the views expressed by him; but in his views as to cases of the present type, we have agreed. On the principles enunciated by Bachawat J. , and upheld by us, the award in the present case cannot be impugned as invalid on the ground of its having been made on a second reference. With great respect to S. R. Das Gupta J. , he seems to have been under some misapprehension as to what had been actually held by Bachawat J. , as I shall presently explain, but before I do so, I must state the relevant facts. They are as follows.
( 3 ) ON 26-3-1951, the appellant entered into a contract with the respondent for sale of 4,02,000 yards of Hessian cloth, manufactured in its own mills, of which 3,00,000 yards were to he delivered in July, August and September, 1951 at the rate of 1,00,000 yards per month and the remaining 1,02,000 yards were to be delivered in October next. The contract provided that each month's delivery was to be treated as a separate contract and it contained an arbitration Clause in the standard form prescribed by the Indian Jute Mills Association. The goods due to be delivered in the first three months were duly delivered and accepted, but when the last instalment, deliverable in October, was despatched, the respondent refused to accept the goods on the ground that they were not of the appellant's manufacture. The appellant repudiated the allegation and after selling the goods, claimed damages from the respondent for loss suffered. The respondent refused to pay and dispute having thus arisen between the parties, the appellant referred it to the arbitration of the Bengal Chamber of Commerce and Industry. Thereupon, a Court was constituted to hear the reference, which was numbered 16g of 1952, but as the court failed to make an award within the time allowed, the Registrar of the Chamber constituted a second court under Rule VII of the Rules of Arbitration. That court made an award in the appellant's favour. The respondent, however, made an application to this court for setting aside the award on several grounds and the court set it aside on the ground that the second court, which had made the award, had been constituted of the same persons as had constituted the first court. Thereafter, on 22-4-1953, the appellant addressed a further communication to the Registrar of the Chamber which has
