P. CHAKRAVARTTI, C. J.

( 1 ) THIS is an appeal from a judgment and order, dated 7th March, 1955, of Bachawat, J. , who has rightly observed that the case involves certain important questions of arbitration law. Those questions, some of which concern particularly arbitrations by the Bengal Chamber of Commerce and Industry, have arisen in the following way.

( 2 ) BY a contract entered into on 9th February, 1953, the appellant, The Baranagore Jute Factory Co. Ltd. , agreed to buy and the respondent, Messrs. Hulaschand Rupchand, agreed to sell a certain quantity of jute of certain specifications. The contract contained an arbitration Clause in the standard form prescribed by the Indian Jute Mills Association and provided inter alia that all disputes and claims"shall be referred to the arbitration of the Bengal Chaniber of Commerce and Industry under the rules of its Tribunal of Arbitration for the time being in force and according to such rules the arbitration shall be conducted"'. In addition to that general provision, the contract also contained certain special provisions regarding arbitration on claims relating to the quality or the condition of the goods. Clause 10 (2) of the contract emphasised further the obligation of the parties to have such claims decided by the arbitration of the Chamber and at the same time prescribed a period within which a reference to arbitration was to be made. It said :"all claims in relation to quality and/or condition shall be settled in no other way than by a reference to arbitration, as is in the contract provided for : but none shall be entertained unless submitted by the buyers to arbitration within two months of the date of delivery of the jute at the buyers' mill. "

( 3 ) CLAUSE 10 (3) of the contract provided what the form and contents of an award in favour of the buyers would be, if they succeeded on a claim in respect of the quality of the goods and/or excessive moisture in them. It said that if the award provided for an allowance of a certain percentage of the market difference between the grades of the goods contracted for and the next lower grade and/or found a moisture content in the goods supplied in excess of a certain percentage and stipulated an allowance therefor, the buyers would accept the goods with the allowance awarded and the sellers would be liable to pay to the buyers, in addition to the allowance, a penalty or penalties computed in a certain manner.

( 4 ) IN pursuance of the contract, the respondent delivered a portion of the jute contracted for, but the appellant, while accepting the goods, raised a question as to their quality and also alleged that they contained excessive moisture. The respondent was not prepared to admit those allegations and a dispute having thus arisen between the parties, it was referred by the appellant on 16th March, 1953, to the arbitration of the Bengal Chamber of Commerce and Industry. Thereupon, the Registrar of the Chamber numbered the reference as Case No. 233 of 1953 and constituted for its consideration a Court, consisting of one Mr. Carstairs and one Mr. Mccraw. The arbitrators made their award on 2nd April, 1953 after they had inspected the goods and by it directed that the appellant would retain the jute and the respondent would pay it certain allowances and penalties. The respondent did not accept the award and after sundry correspondence between the parties and certain further proceedings before the arbitrators to which it is not necessary to refer, the award was filed in Court. Thereupon the respondent made an application for setting aside the award and by an order, dated 28th August, 1953, S. R. Das Gupta, J. set it aside. The learned Judge held that the 'award had been made without jurisdiction but what he found was nof that the arbitral Court had been illegally constituted, nor that the Court was not competent to entertain the reference but only, as he made it clear in his judgment, that by reason of the provisions of Clause

Click Here to Read the rest of this document