1952 Supreme(Cal) 170

HIGH COURT OF CALCUTTA
Bachawat
JUGGILAL KAMLAPAT - Appellant
Versus
N. V. INTERNATIONALE CREDIET-EN-HANDELS VEREENINGING rotterdam - Respondent
Award 14  Of  1952
Decided On : AUGUST 08, 1952

The arbitration agreement was not rescinded or superseded by the subsequent modifications to the contract.

Headnote:

ARBITRATION - Award - Setting aside - Grounds - Rescission of original contract - Subsequent modifications - Arbitration clause - Subsisting - Rule 7, Rules of Arbitration, Bengal Chamber of Commerce - Legality - Misconduct of arbitrators - Damages - Assessment - Jurisdiction - Error apparent on the face of the award - Bias - Controlled price - Deduction of duty, Port Commissioners' charges, freight, etc. - Extension of time for making award.

Fact of the Case:

The petitioner, Juggilal Kamlapat, agreed to sell and the respondent, a Dutch Company, agreed to buy 500 bales of certain jute goods at a specified price, subject to export license and the terms and conditions of the Calcutta Jute Fabrics Shippers Association contract form. The contract contained an arbitration clause and a clause providing that the Letter of Credit must be dispatched to the sellers within 7 days of the contract. The letter of credit was dispatched after a delay but the buyers accepted and acted upon it. Meanwhile, the export duty was enhanced. The parties agreed that the buyer would accept a Bank guarantee for payment of the increased duty pending amendment of the Letter of Credit. The amendment was received soon thereafter. The petitioner shipped 200 bales under the contract and informed the respondent that they were unable to ship the balance goods due to the default of their sellers. The price control legislation was repealed in March 1951 and the respondent pressed for delivery of the goods. The petitioner requested an extension of time for shipment until July 1951, which was refused by the respondent. The petitioner stated that they were ready to ship the goods per S. S. Hoegh Silver Spray and shipping instructions were given by the respondent. The freight had been increased and the respondent requested the petitioner to send a separate debit note for the amount of the increase in freight. The petitioner did not ship the goods and wrote to the respondent stating that the goods could not be loaded alongside the steamer as their quota had expired and that the contract should be treated as lapsed. The respondent asserted that the fact that the quota had expired could not be a reason for annulment of the contract and requested the petitioner to hand over delivery orders in respect of the balance goods. The petitioner informed the respondent that they had not been allotted any new quota and that they could not keep the contract pending and the same should be treated as cancelled. The respondent referred the dispute to the arbitration of the Bengal Chamber of Commerce. The respondent enclosed copies of entire correspondence with their statement. The last paragraph of their statement is as follows: "we await your decision whether we are entitled to claim from the sellers the difference between the contract price and the price at which we have been obliged to cover, and also costs and interest for having had to keep letters of credit available."

Finding of the Court:

The court held that the arbitration agreement was not rescinded or superseded by the subsequent modifications to the contract. The modifications did not go to the very root of the first contract and did not change its essential character. The facts did not warrant the inference that the parties intended to rescind the contract, dated 10-8-1950. The April arrangement was entered into in response to pressing demands for delivery under that contract and with a view to implement it. The arrangement had no independent contractual force, no meaning and content separately from and independently of the original contract. The effect of the alterations or modifications was that there was a new arrangement; in the language of Viscount Haldane in 1918 A. C. 1 at p. 17 (A), "a new contract containing as an entirety the old terms together with and as modified by the new terms incorporated."

Issues: 1. Whether the arbitration agreement was rescinded or superseded by the subsequent modifications to the contract? 2. Whether the Rule 7 of the rules of arbitration of the Bengal Chamber of Commerce is illegal and opposed to Section 28, Arbitration Act? 3. Whether the arbitrators misconducted themselves? 4. Whether the arbitrators had jurisdiction to award payment of the difference in price? 5. Whether the arbitrators had jurisdiction to decide the quantum of damage? 6. Whether there was an error apparent on the face of the award? 7. Whether the Arbitrators were biased? 8. Whether the respondent was entitled to recover damages on the basis of rates not exceeding the maximum controlled price? 9. Whether the time for making the award should be extended?

Ratio Decidendi: 1. The court held that the arbitration agreement was not rescinded or superseded by the subsequent modifications to the contract. The modifications did not go to the very root of the first contract and did not change its essential character. The facts did not warrant the inference that the parties intended to rescind the contract, dated 10-8-1950. The April arrangement was entered into in response to pressing demands for delivery under that contract and with a view to implement it. The arrangement had no independent contractual force, no meaning and content separately from and independently of the original contract. The effect of the alterations or modifications was that there was a new arrangement; in the language of Viscount Haldane in 1918 A. C. 1 at p. 17 (A), "a new contract containing as an entirety the old terms together with and as modified by the new terms incorporated." 2. The court held that Rule 7 of the rules of arbitration of the Bengal Chamber of Commerce is not illegal and opposed to Section 28, Arbitration Act. The constitution of a second Tribunal under that Rule is not ultra vires and the second Tribunal had legal authority to arbitrate upon the disputes between the parties. 3. The court held that there was no material to support the allegation that the arbitrators misconducted themselves. 4. The court held that the arbitrators had jurisdiction to award payment of the difference in price. The wording of the prayer in the respondent's statement before the Bengal Chamber of Commerce was unhappy but the arbitrators were entitled to look at the substance of the matter and to find out the real relief asked for. 5. The court held that the arbitrators had jurisdiction to decide the quantum of damage. The dispute referred was whether the respondent was entitled to claim the difference between the contract price and the price at which they were obliged to cover. There was therefore an admission in the petition that the dispute with regard to the claim for the difference between the contract price and the price at Which the petitioner had been obliged to cover arose before the reference commenced. 6. The court held that there was no error apparent on the face of the award. 7. The court held that there was no evidence of any bias on the part of the Arbitrators. 8. The court held that the respondent was not entitled to recover damages on the basis of rates not exceeding the maximum controlled price. The West Bengal Jute (Control of Prices) Act 1950 was not in force at the time of the breach. 9. The court held that the time for making the award should be extended until 17-10-1951.

Final Decision: The petition for setting aside the award was dismissed with costs. The application for extension of time to make the award until 17-10-1951 was allowed. The matter of judgment upon award-matter was adjourned until 15-3-1953.