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HIGH COURT OF CALCUTTA
CHAKRABARTI, S. R. DAS GUPTA
HANUTMULL BOID - Appellant
Versus
FATEHCHAND MURLIDHAR - Respondent
Award Case 158 Of 1951
Decided On : AUGUST 25, 1952
ARBITRATION - AWARD - MISCONDUCT OF ARBITRATORS - AWARDING ILLEGAL AND BLACK MARKET DAMAGES - CUSTOM - PLEADING AND PROOF - ARBITRATORS CANNOT AWARD DAMAGES ON THE BASIS OF BLACK MARKET RATES - AWARD SET ASIDE.
Fact of the Case:
The respondent Fateh Chand Muralidhar sold 12 lacs yards of Hessian cloth to S. Debi Dutt and Co. by a contract No. 3641 dated 8-2-1946 and 6 lacs yards of Hessian cloth by a contract No. 3637 also dated 8-2-1946. S. Debi Dutt and Co. sold 6 lacs of Hessian cloth to the appellant by a Contract No. 3637 also dated 8-2-1946. The appellant sold back these goods to S. Debi Dutt and Co. by a Contract No. 3662 dated 22-3-1946. The respondent entered into contract No. 155 dated 25-4-1946 and Contract No. 158 dated 29-4-1946 with the appellant through broker Sohonlal Hirawat. By the said contracts the respondent bought 2 lacs yards of Hessian and 4 lacs yards of Hessian respectively from the appellants. Both the said contracts contained the usual arbitration clause for reference of the disputes to the Bengal Chamber of Commerce. The respondent delivered to S. Debi Dutt and Co. the March portion of Contract No. 3641 on 25-3-1946 and the April portion thereof on 24-4-1946. The respondent entered into contract No. 155 dated 25-4-1946 and Contract No. 158 dated 29-4-1946 with the appellant through broker Sohonlal Hirawat. By the said contracts the respondent bought 2 lacs yards of Hessian and 4 lacs yards of Hessian respectively from the appellants. Both the said contracts contained the usual arbitration clause for reference of the disputes to the Bengal Chamber of Commerce. The respondent delivered to S. Debi Dutt and Co. the March portion of Contract No. 3641 on 25-3-1946 and the April portion thereof on 24-4-1946. The respondent by its letter dated 13-6-1946 demanded delivery of the outstanding goods from the appellant under contracts Nos. 155 and 158. The appellants pleaded inability to deliver the goods on the ground that they had not received the goods from S. Debi Dutt and Co. In November 1946, S. Debi Dutt and Co. referred to the arbitration of the Bengal Chamber of Commerce their claim against the respondent for non-delivery of the goods under Contracts Nos. 3637 and 3641. There were protracted arbitration proceedings and eventually the said disputes were settled by payment of large sum of money by the respondent to S. Debi Dutt and Co. On 21-3-1949 the respondent referred to the arbitration of Bengal Chamber of Commerce their claim under contract No. 155 against the petitioner for non-delivery and claimed Rs. 24,000/-. The appellant filed a statement in reply in which the appellant without submitting to the jurisdiction of the Arbitrators 'inter alia' alleged that there was no valid and/or legally enforceable contract but only an arrangement made for the sole purpose of withholding delivery of the goods in question from S. Debi Dutt and Co. Ltd. On 24-5-1950 the arbitrators made their award. On 25-8-1950 the appellant made an application to this Court for an order (a) that the award be set aside, (b) for a declaration that the award was a nullity, (c) for costs, (d) such further or other orders as may be deemed fit and proper.
Finding of the Court:
The arbitrators are guilty of misconduct because they decided matters which could not be decided by them and were totally outside the reference. The arbitrators awarded illegal and black market damages. The arbitrators could not award damages on the basis of black market rates.
Issues: Whether the arbitrators are guilty of misconduct by deciding matters outside the reference and awarding illegal and black market damages.
Ratio Decidendi: The arbitrators are guilty of misconduct because they decided matters which could not be decided by them and were totally outside the reference. The arbitrators awarded illegal and black market damages. The arbitrators could not award damages on the basis of black market rates.
Final Decision: The appeal is allowed. The order of Bachawat J. is set aside and the award made by the Bengal Chamber of Commerce being award No. 656 of 1950 and dated 24-5-1950 is also set aside. The appellant will get the costs of this appeal and also of the application before Bachawat J.
( 1 ) THIS is an appeal against an order of Bachawat J. dismissing an application to set aside an award of the Bengal Chamber of Commerce.
( 2 ) BY a contract No. 3641 dated 8-2-1946 the respondent Fateh Chand Muralidhar sold 12 lacs yards of Hessian cloth to S. Debi Dutt and Co. , delivery March to June, 1946. By a contract No. 3637 also dated 8-2-1946 the respondent sold 6 lacs yards of Hessian cloth to Section Debi Dutt and Co. , delivery April to June, 1946. By another Contract No. 3637 also dated 8-2-1946 S. Debi Dutt and Co. sold 6 lacs of Hessian cloth to the appellant. By a Contract No. 3662 dated 22-3-1946 the appellant sold back these goods to S. Debi Dutt and Co. The last two contracts were set off against each other and the difference in price became payable by S. Debi Dutt and Co. The respondent delivered to S. Debi Dutt and Co. the March portion of Contract No. 3641 on 25-3-1946 and the April portion thereof on 24-4-1946. The respondent entered into contract No. 155 dated 25-4-1946 and Contract No. 158 dated 29-4-1946 with the appellant through broker Sohonlal Hirawat. By the said contracts the respondent bought 2 lacs yards of Hessian and 4 lacs yards of Hessian respectively from the appellants. Both the said contracts contained the usual arbitration clause for reference of the disputes to the Bengal Chamber of Commerce. It is said that the said two contracts being contracts Nos. 155 and 158 were entered into by the respondent in order to enable it to implement its contract of sale No. 3637 to S. Debi Dutt and Co. The appellant asked the respondent to take delivery of the 2 lacs yards of Hessian under Contract No. 155 from S. Debi Dutt and Co. alleging that the said goods were deliverable by S. Debi Dutt and Co. under Contract No. 3637 and wrote a similar letter to S. Debi Dutt and Co. S. Debi Dutt and Co. denied that any goods were deliverable to the appellant and alleged that Contract No. 3637 was settled by Contract No. 3662. The respondent however delivered to S. Debi Dutt and Co. the April portion of Contract No. 3637 on 29-4-1946 and May portion thereof on 24-5-1946. The respondent by its letter dated 13-6-1946 demanded delivery of the outstanding goods from the appellant under contracts Nos. 155 and 158. The appellants pleaded inability to deliver the goods on the ground that they had not received the goods from S. Debi Dutt and Co.
( 3 ) IN November 1946, S. Debi Dutt and Co. referred to the arbitration of the Bengal Chamber of Commerce their claim against the respondent for non-delivery of the goods under Contracts Nos. 3637 and 3641. There were protracted arbitration proceedings and eventually the said disputes were settled by payment of large sum of money by the respondent to S. Debi Dutt and Co.
( 4 ) ON 21-3-1949 the respondent referred to the arbitration of Bengal Chamber of Commerce their claim under contract No. 155 against the petitioner for non-delivery and claimed Rs. 24,000/ -. In their statement of claim filed before the arbitrators the respondent 'inter alia' pleaded as follows :"we further beg to state that during the period of subsistence of the Jute Price Control Order when the black market flourished and goods became scarce in the open market a new custom sprang up in the Hessian Market in Calcutta well sponsored by the said Gunny Trades Association, the custom being that the due dates of delivery under unfulfilled contracts for purchase and/or sale of Hessian became and stood automatically extended until such time as the purchaser may allow or choose to wait unless in the meantime the goods are delivered or a settlement is reached. "
( 5 ) THE appellant filed a statement in reply in which the appellant without submitting to the jurisdiction of the Arbitrators 'inter alia' alleged that there was no valid and/or legally enforceable contract but only an arrangement made for the sole purpose of withholding delivery of the goods in question from S. Debi Dutt and Co.
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