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HIGH COURT OF CALCUTTA
Harries, Banerjee
BIJOY SINGH - Appellant
Versus
BILASROY - Respondent
A. F. O. O. 81 Of 1951
Decided On : AUGUST 20, 1951
ARBITRATION - AWARD - SETTING ASIDE - GROUNDS - AWARD BAD ON THE FACE OF IT - ARBITRATORS GIVING DAMAGES ON THE BASIS OF THE RATE PREVAILING ON A DATE OTHER THAN THE DATE OF BREACH - ARBITRATORS MISCONDUCTING THE PROCEEDINGS - COMING TO A FINDING WITHOUT EVIDENCE.
Fact of the Case:
A seller appealed against an order refusing to set aside an arbitration award. The buyers had referred a dispute arising out of a contract of sale of goods to the Bengal Chamber of Commerce. The contract was made on May 10, 1946, for the sale of B-Twills at Rs. 66-12-0 per hundred bags, delivery July to September, 1946, at the rate of 15,000 bags monthly. The buyers sold the goods to Messrs. Sohanlal Karnawat, who, upon the seller's failure to deliver, purchased the goods in the open market at Rs. 78-4-0 per hundred bags and claimed the difference from the seller. The seller did not reply to the buyers' letters demanding payment. The buyers submitted their statement to the arbitrators, referring to the contract, their sale to Messrs. Sohanlal Karnawat, and the submission of the difference bill to the seller. The seller submitted his statement, denying the buyers' readiness and willingness to take delivery and the demand for delivery, and stating that the time for delivery was never extended. The buyers, in their further statement, alleged that the due date had been extended on account of the seller's assurance that the goods would be delivered on receipt. The seller denied this assurance and any extension. The arbitrators awarded damages to the buyers on the basis of the rate prevailing on October 1, 1946, finding that there was no free market available for the goods on the contract due dates of July, August, and September 1946, and that the first free market available thereafter was on October 1, 1946.
Finding of the Court:
The court held that the award was bad on the face of it as the arbitrators had given damages on the basis of the rate prevailing on October 1, 1946, which was not the date of breach. The court also held that the arbitrators had misconducted the proceedings by coming to a finding of extension of the due date without any evidence.
Issues: 1. Whether the award was bad on the face of it? 2. Whether the arbitrators had misconducted the proceedings?
Ratio Decidendi: 1. The court held that the award was bad on the face of it as the arbitrators had given damages on the basis of the rate prevailing on October 1, 1946, which was not the date of breach. The court stated that the law is that the damage must be calculated on the basis of the contract rate and the rate on the date of breach. 2. The court held that the arbitrators had misconducted the proceedings by coming to a finding of extension of the due date without any evidence. The court stated that the onus to prove extension was on the buyers, but they did not tender any evidence on the point.
Final Decision: The court allowed the appeal, set aside the learned Judge's order, and set aside the award. The respondents were ordered to pay the costs of the appeal and of the proceedings in the Court below.
( 1 ) THIS is a seller's appeal against an order of Bachawat, J. , refusing to set aside an award.
( 2 ) UNDER an arbitration clause contained in a contract of sale of goods, the buyers referred their dispute with the seller that arose out of the contract to the Bengal Chamber of Commerce. The contract was made on May, 10, 1946, for sale of B-Twills. The buyers agreed to buy the goods at Rs. 66-12-0 per hundred bags delivery July to September, 1946, at the rate of 15,000 bags monthly.
( 3 ) THE buyers in their turn sold the goods to Messrs. Sohanlal Karnawat. As the goods were not delivered to the buyers, they in their turn could not give delivery to Messrs. Sohanlal Karnawat who, thereupon, by two letters dated October 1, 1946, and October 7, 1946, to their sellers asked for the difference being the difference between the contract rate and the rate prevailing on October 1, 1946, namely, Rs. 78-4-0 per hundred bags, amounting Rs. 5175/ -. The Jute Control Order was at the time when the contract was made in force and expired on September 30, 1946.
( 4 ) RECEIVING the letters from Messrs. Sohanlal Karnawat, the buyers on October 7 and 18, 1846, wrote to the seller as follows:"referring to the above our buyers Messrs. Sohanlal Karnawat write us as under in theirs of 1st instant received by us this day which please note in our turn and oblige. As you have failed to deliver the above goods on the respective due dates I have purchased the above goods to-day in open market at Rs. 78-4 per cent. bags against you which please note. The difference bill will be presented to you in due course. "
( 5 ) THE other letter was substantially in the same terms. The seller did not reply to these letters.
( 6 ) IT is to be noted that though the first of these letters was written on October 7, 1946, that is to say, shortly after September 30, there is no reference in it of any extension of the due date having been agreed to between the parties. Nor is there any such reference in the other letter.
( 7 ) ON July 7, 1949, the buyers submitted their statement before the arbitrators. In that statement they referred to the contract and to their sale to Messrs. Sohanlal Karnawat. They said that the difference bill had been duly submitted to the seller, but the seller had not paid the amount due: hence the reference.
( 8 ) IN the statement also there is no reference of any extension of the due date.
( 9 ) THE seller submitted his statement to the Bengal Chamber of Commerce in which he said that the buyers were not ready and willing to take delivery and there was no demand for delivery. He further stated: The time for delivery was never extended either by consent or otherwise. . . . . . . . . . . . "
( 10 ) WHY the seller pleaded to an extension is not very clear: because the buyers in their statement had not made any case of extension.
( 11 ) IN reply to this, the buyers in their further statement before the arbitrators said :"on account of the assurance that the goods would be delivered on receipt, the contract was extended till such time when goods could be available in the free market or it was possible to assess the damages. "
( 12 ) THE seller in his subsequent statement denied this assurance on any extension. Therefore there was an issue as to whether the due date had been extended which the arbitrators were bound to decide.
( 13 ) THE arbitrators made the award on March 20, 1950. The relevant portion of the award is as follows:"we. . . . . . . . . . . hereby decide and award as follows: 1. That there was no free market available for these goods on the contract due dates of July, August, and September 1946, and the first free market available thereafter was on the 1st October, 1946; 2. That Messrs. Bijoysing Karnawat shall pay to Messrs. Bilasroy and Co. , in full settlement of their claim herein the sum of Rs. 5175/- (Rupees five thousand one hundred and seventy five only) together with interest thereon at the' rate of 4 per c
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