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HIGH COURT OF CALCUTTA
Bachawat
NANDRAM HANUTRAM - Appellant
Versus
RAGHUNATH AND SONS LTD. - Respondent
Suit 331 Of 1952
Decided On : DECEMBER 10, 1953
ARBITRATION - DISPUTE - EXISTENCE - FAILURE TO PAY CLAIM - INFERENCE OF DISPUTE - SELECTION AND APPOINTMENT OF ARBITRATORS - RULE 6 OF THE RULES OF ARBITRATION OF THE BENGAL CHAMBER OF COMMERCE - INTERPRETATION - MISCONDUCT OF ARBITRATORS - REFUSAL TO GIVE OPPORTUNITY TO SUBMIT STATEMENT.
Fact of the Case:
The petitioner failed to take delivery of the goods tendered by the respondent on the due dates. The respondent re-sold the goods for and on account of the petitioner and submitted bills of difference in price, which the petitioner did not pay. The respondent referred its claim to arbitration, and the Bengal Chamber of Commerce made an award in its favor. The petitioner challenged the award on the grounds that there was no dispute between the parties prior to arbitration, that the arbitrators were not duly selected and appointed, and that they were guilty of misconduct.
Finding of the Court:
The court held that there was a sufficient dispute or difference prior to the reference attracting the jurisdiction of the Bengal Chamber of Commerce to arbitrate upon these disputes. The court also held that the arbitrators were duly selected and appointed in accordance with Rule 6 of the Rules of Arbitration of the Bengal Chamber of Commerce and that there was no misconduct on their part.
Issues: 1. Whether there was a dispute between the parties prior to arbitration? 2. Whether the arbitrators were duly selected and appointed in accordance with the Rules of Arbitration of the Bengal Chamber of Commerce? 3. Whether the arbitrators were guilty of misconduct?
Ratio Decidendi: 1. The existence of disputes or differences contemplated by the arbitration clause is an essential condition of and prerequisite to the exercise of the jurisdiction by the Arbitrator. 2. Failure to perform the contract and to pay the amount claimed may take place under such circumstances as may justly lead to the inference of repudiation and denial of the right of the other party. 3. The arbitration clause in this case is very wide and confers jurisdiction upon the Bengal Chamber of Commerce to decide all matters, questions, disputes, differences and/or claims arising out of the contract. 4. The petitioner's failure to pay the amount claimed, coupled with its silence in response to the respondent's demands, constituted a sufficient dispute or difference to attract the jurisdiction of the Bengal Chamber of Commerce. 5. Rule 6 of the Rules of Arbitration of the Bengal Chamber of Commerce requires the Registrar to select and appoint the arbitrators in writing under his hand. 6. The Registrar is defined as the Secretary of the Chamber or such other member of the Secretarial staff of the Chamber as shall be acting for him from time to time. 7. In this case, Mr. Philips, a member of the secretarial staff of the Chamber, was acting for the Registrar at the relevant time and made the selection and appointment of the arbitrators. 8. Therefore, the arbitrators were duly selected and appointed in accordance with Rule 6. 9. The petitioner did not provide any evidence to support its allegation that the arbitrators were guilty of misconduct.
Final Decision: The court declared that the award was not bad on the grounds that there was no dispute between the parties prior to the reference or that the arbitrators were not duly selected and appointed. The court also held that there was no misconduct on the part of the arbitrators. The court ordered the petitioner to pay the costs of the hearing and adjourned the matter for adjudication of the outstanding disputes.
( 1 ) THIS is an application to declare an award to be null and void.
( 2 ) THE arbitration clause is contained in a contract dated 2-1-1952, for sale by the respondent to the petitioner of hessian cloth delivery April to June in equal monthly instalments.
( 3 ) THE respondent tendered the goods to the petitioner on the due dates. The petitioner failed to take delivery and thereupon on due notice to the petitioner the respondent re-sold the goods for and on account of the petitioner. Bills of difference in price were duly submitted but the petitioner did not pay those bills. The petitioner maintained an unusual silence throughout and did not send any letters to the respondent in answer to the several demands made by the petitioner.
( 4 ) THE respondent referred its claim to the arbitration of the Bengal Chamber of Commerce on 7-7-1952. The petitioner did not file any statement before the Bengal Chamber of Commerce. The Bengal Chamber thereupon made its award on 24-9-1952.
( 5 ) IT is contended on behalf of the petitioner that there was no dispute between the parties prior to arbitration and that therefore the Bengal Chamber had no jurisdiction to make the award. This contention is raised in paras 9 and 17 (c) of the petition.
( 6 ) THE arbitration clause is as follows : "13. All matters, questions, disputes, differences and/or claims arising out of and/or concerning and/or in connection with and/or in consequence of or relating to this contract whether or not the obligations of either or both parties under this contract be subsisting at the time of such dispute and whether or not this contract has been terminated or purported to be terminated or completed shall be referred to the arbitration of the Bengal Chamber of Commerce under the rules of its Tribunal of Arbitration for the time being in force and according to such rules of arbitration shall be conducted. "
( 7 ) THERE is no doubt that the existence of disputes or differences contemplated by the arbitration clause is an essential condition of and prerequisite to the exercise of the jurisdiction by the Arbitrator. A dispute implies an assertion of a right by one party and a repudiation thereof by another --'chandmull Ganeshmull v. Nippon Munkwa Kabushiki Kaisha', AIR 1921 Cal 342 (A ). The repudiation by the other party may be either express or implied and may be by words or by conduct.
( 8 ) FAILURE to perform the contract and to pay the amount claimed may take place under such circumstances as may justly lead to the inference of repudiation and denial of the right of the other party. Such conduct and stoic silence may be more eloquent than words and may show that the party is disputing his liability. Coupled with other circumstances a failure to pay a claim may constitute a difference between the parties. See -- 'james Finlay and Co. v. Jeshanmal', 12 Ind Gas 188 (Sind) (B); -- 'donald Graham and Co. v. Asumal', 12 Ind Gas 187 (Sind) (C); -- 'berth, Stevenson and Co. Ltd. v. Firm of Naroomal Khem-chand', AIR 1924 Sind 117 (D) at pp. 118-119; --'tyebally Abdul Hussain v. James Finlay and Co. ', AIR 1924 Sind 105 (2) (E) at p. 110. Failure to pay under a claim of right is certainly a dispute.-- 'uttamchand Saligram v. Mahmood Jewa Mamooji', AIR 1920 Cal 143 (F ). The claim of right need not necessarily be express. It may and should justly be inferred against the defendant from his sphinx-like silence in an appropriate case. It is not the law that a person who desires to evade arbitration may not write letters in answer to a claim explaining and justifying his conduct and then turn round and say there is no dispute. I can well imagine that in certain circumstances the Court will not infer the existence of a dispute from a mere failure to pay (Russell on Arbitration, 14th Edn. 252 ).-- 'mathuradas Goverdhonedas v. Khusiram Benarshilal', 53 Cal WN 873 (G) at p. 875.
( 9 ) IF the defendant maintains complete silence in answer to demands made against him un
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