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HIGH COURT OF CALCUTTA
P. B. Mukharji
NANALAL M. VARMA AND CO. (GUNNIES) PRIVATE LTD. - Appellant
Versus
G. AMBALAL (EXPORT) - Respondent
Award 66 Of 1956
Decided On : MAY 17, 1956
ARBITRATION - CONSTITUTIONALITY - BENGAL CHAMBER OF COMMERCE AND INDUSTRY RULES - ULTRA VIRES - RIGHT TO REPRESENTATION BY LAWYER - DISCRIMINATION - APPOINTMENT OF ARBITRATORS - FORMALITIES.
Fact of the Case:
The applicant, Nanalal M. Varma and Co. (Gunnies) Private Limited, challenged an arbitration award on five grounds: (1) the arbitration clause and rules of the Bengal Chamber of Commerce and Industry were ultra vires the Constitution of India; (2) the Arbitrators erroneously exercised their discretion by refusing to state a case for the Court's opinion; (3) the Arbitrators erroneously exercised their discretion by refusing to permit lawyers to represent the applicant's case; (4) the Arbitrators lacked jurisdiction because the contract under which they were acting had been rescinded; and (5) the Arbitrators were not appointed in writing under the Registrar's hand.
Finding of the Court:
The Court dismissed the application and upheld the arbitration award. It held that: (1) the arbitration agreement and rules of the Bengal Chamber of Commerce were not ultra vires the Constitution; (2) the Arbitrators did not misconduct themselves by refusing to state a case for the Court's opinion; (3) the Arbitrators did not misconduct themselves by refusing to permit lawyers to represent the applicant's case; (4) the arbitration clause was not rescinded by the rescission of the contract; and (5) the Arbitrators were duly appointed, despite the lack of formal writing under the Registrar's hand or formal consent of the Arbitrators to act.
Issues: 1. Whether the arbitration clause and rules of the Bengal Chamber of Commerce and Industry were ultra vires the Constitution of India. 2. Whether the Arbitrators erroneously exercised their discretion by refusing to state a case for the Court's opinion. 3. Whether the Arbitrators erroneously exercised their discretion by refusing to permit lawyers to represent the applicant's case. 4. Whether the Arbitrators lacked jurisdiction because the contract under which they were acting had been rescinded. 5. Whether the Arbitrators were not appointed in writing under the Registrar's hand.
Ratio Decidendi: 1. The arbitration agreement and rules of the Bengal Chamber of Commerce were not ultra vires the Constitution because: (a) the right to be represented by a lawyer is not a fundamental right under the Constitution of India, except in the case of preventive detention; (b) the arbitration agreement expressly incorporated the rules of the Bengal Chamber of Commerce, which specifically recognized the right to exclude lawyers except with the permission of the Arbitrators; and (c) the arbitration agreement was a private contract between the parties and not a constitutional right. 2. The Arbitrators did not misconduct themselves by refusing to state a case for the Court's opinion because: (a) Section 13 of the Arbitration Act, 1940 gives the power to the Arbitrators to state a case for the opinion of the Court, but it is for the Arbitrators to decide whether they should do so; (b) the rules of the Bengal Chamber of Commerce also made a provision for the Arbitrators to state a special case, but it was for the Court of Arbitrators to decide whether to accede to such a request; and (c) the applicants had waived any objection to the Arbitrators' refusal to state a case by continuing to appear before them. 3. The Arbitrators did not misconduct themselves by refusing to permit lawyers to represent the applicant's case because: (a) Rule 16 of the Arbitration Rules of the Bengal Chamber of Commerce expressly provided that a party should not be allowed to appear by a lawyer without the permission of the Arbitrators; and (b) the applicants had agreed to the arbitration clause, which incorporated the rules of the Bengal Chamber of Commerce. 4. The arbitration clause was not rescinded by the rescission of the contract because the arbitration clause expressly provided that it would continue to apply even if the contract was terminated or completed. 5. The Arbitrators were duly appointed, despite the lack of formal writing under the Registrar's hand or formal consent of the Arbitrators to act, because: (a) the applicants had appeared before the Tribunal of Arbitrators without any protest on these grounds; and (b) the Court inferred the consent of the Arbitrators by reason of the fact that they had acted under the arbitration clause.
Final Decision: The Court dismissed the application and upheld the arbitration award.
( 1 ) THIS is an application by Nanalal M. Varma and Co. (Gunnies) Private Limited for setting aside award No. 166 of 1956 of the Bengal Chamber of Commerce dated 3-2-1956 in case No. 861 of 1955.
( 2 ) THE award is challenged on five grounds. The first ground is that the arbitration clause and the rules of arbitration of the Bengal Chamber of Commerce and Industry, Calcutta are ultra vires the Constitution of India. The second ground is that the award is bad for erroneous exercise of discretion by the Arbitrators in refusing to state a case for the opinion of the Court. The third ground is that there was an erroneous exercise of discretion by the Arbitrators in refusing to permit Lawyers to represent the case of the applicant before the Arbitrators. These last two grounds are put forward as legal misconduct. The fourth ground is that the Arbitrators have no jurisdiction because the contract under which they were acting had been rescinded by one of the parties. The fifth ground is that the Arbitrators were not appointed in writing under the hands of the Registrar.
( 3 ) I shall first take up the constitutional objection. The objection is that the present arbitration agreement and the arbitration rules of the Bengal Chamber of Commerce are contrary to the Constitution of India, Nothing in the Indian Constitution is an express bar to arbitration in the form specified in the present arbitration agreement or under the rules of the Bengal Chamber of Commerce. The question therefore must be answered by interpretation of the Constitution. Arbitration is a matter of contract between the parties. The parties in this case agreed to settle their disputes by the method and procedure of arbitration according to the arbitration rules of the Bengal Chamber of Commerce. Such an arbitration agreement is a well-known standard arbitration clause familiar to the commercial community of Calcutta. The curse of the Constitution cannot be visited on such a private contract between citizens. The argument that such a contract is unconstitutional is advanced on two grounds. One is the specific ground that denial of representation by lawyer to a party who claims such representation is a breach of a constitutional right. The other is the more general ground that arbitration is a kind of unconstitutional discrimination in the procedure of justice. I find it difficult to accept the soundness of either of these two contentions, although I must confess to a sense of novelty when these contentions are put forward.
( 4 ) RIGHT to be represented by a lawyer is not expressly recognised by the Indian Constitution with perhaps one exception. It is not a fundamental right under the Constitution of India except under Article 22 of the Constitution in the case of preventive detention where personal liberty is involved. As the Constitution does not recognise the right of a citizen to be represented by a lawyer, except in that particular ease, refusal to permit lawyers representing parties in a civil dispute over a contract before the Arbitrators cannot, therefore, be regarded as an infraction of any constitutional provision. It was then argued that the arbitration infringed Article 19 (1) (g), Constitution of India. The right there recognised, however, is confined to the right of a citizen to practise a profession which in this case is profession of law. It is not necessarily the same thing for an applicant to claim a right to be defended by a lawyer in a civil dispute over a contract. It is not the applicant's right but the lawyer's right. This arbitration agreement expressly incorporating the rules of the Bengal Chamber of Commerce specifically recognising the right to exclude lawyers except with the permission of the Arbitrators, is not in my opinion a denial of the citizen's right to practise the profession of law. It is left to the Arbitrator to judge each individual case on its merit and to consider whether it is a fit and proper case to pe
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