Summary
On September 7, 1955, the appellant company entered into a contract with the respondents for the purchase of certain bales of jute cuttings to be delivered by the respondents in equal installments every month in October, November and December, 1955. Under cl. 3 of the agreement the sellers were entitled to receive the price only on their delivering to the buyers the full set of shipping documents. Clause 8 conferred on the sellers certain rights against the buyers such as the right to resell if the latter refused to accept the documents. Clause 14 provided that all disputes arising out of or concerning the contract should be referred to the arbitration of the Bengal Chamber of Commerce. As the respondents failed to deliver the goods as agreed the appellants applied to the Bengal Chamber of Commerce for arbitration. The respondents appeared before the arbitrators and contested the claim, but an award was made in. favour of the appellant. Thereupon the respondents filed an application in the High Court of Calcutta under s. 33 of the Arbitration Act, 1940, 184
challenging the validity of the award on the ground that the contract dated September 7, 1955, was illegal as it was in contravention of the notification of the Central Government dated October 29, 1953, issued under s. 17 of the Forward Contracts (Regulation) Act, 1952, which declared that no person shall enter into any forward contract other than a nontransferrable specific delivery contract for the sale or purchase of raw jute in any form........... The appellant pleaded (1) that on the terms of the arbitration clause the question whether the contract dated September 7, 1955, was illegal was one for the arbitrator to decide and that it was not open to the respondents to raise the same in proceedings under s. 33 of the Arbitration Act ; (2 ) that the respondents were estopped from questioning the validity of the award by reason of their having submitted to the jurisdiction of the arbitrators ; and (3) that, in any case, the contract was a nontransferrable specific delivery contract within s. 2 (f ) of the Forward Contracts (Regulation) Act and was not hit by the notification dated October 29, 1933.Held, that : (1) the dispute as to the validity of the contract dated September 7, 1955, was not one which the arbitrators were competent to decide under cl. 14 and that in consequence the respondents were entitled to maintain the application under s. 33 of the Arbitration Act.When an agreement is invalid every part of it including the clause as to arbitration contained therein must also be invalid.Leyman v. Darwins Lid., [1942] A. C. 356, Union of India v.Kighorilal Gupta and Brothers, [1960] 1 S. C. R. 493, Tolaram v. Birla Jute Manufacturing Company Lid., I. L. R.[1948] 2 Cal. 17, relied on.(2)the respondents were not estopped by their conduct from questioning the validity of the award.Ex parte Wyld, (1861) 30 Law J. Rep. (N. S.) Bank. 10, explained.(3)on the true construction of the contract dated Sep- tember 7, 1955, read with the terms of the import licence in favour of the appellant, the agreement between the parties was that the contract was not to be transferred.In construing a contract it would be legitimate to take into account surrounding circumstances and, therefore, on the whether there was an agreement between the parties 185that the contract was to be non-transferable, the absence of a specific clause forbidding transfer was not conclusive.Virjee Daya & Co. v. Ramakrishna Rice & Oil Mills, A. 1. R.1956 Mad. 11O, approved.British Waggon Co. v. Lea, (1880) 5 Q. B. D. 149, dist- inguished.Accordingly, the contract in question was not hit by the notification dated October 29, 1953.See the full content of this document
Extract
Khardah Company Ltd. VS. Raymon & Co. (India) Private, Ltd.
PETITIONER: KHARDAH COMPANY LTD.Vs.RESPONDENT: RAYMON & CO. (INDIA) PRIVATE, LTD.DATE OF JUDGMENT: 04/05/1962BENCH: AIYYAR, T.L. VENKATARAMABENCH: AIYYAR, T.L. VENKATARAMASINHA, BHUVNESHWAR P.(CJ)SUBBARAO, K.AYYANGAR, N. RAJAGOPALAMUDHOLKAR, J.R.CITATION: 1962 AIR 1810 1963 SCR (3) 183CITATOR INFO : F 1963 SC 90 (17,18,24)APL 1964 SC1526 (8)R 1969 SC 9 (8)R 1974 SC1579 (6)D 1985 SC1156 (19,24,49,53)F 1989 SC 839 (18)ACT: Forward Contract-Contract for sale of goods-Government notification forbidding forward contracts other than non- transferable specific delivery contracts Validity of the contract--Clause providing for arbitration-clause, if valid even if contract were invalid-Parties appearing before arbitrator--Estoppel--Forward Contracts (Regulation) Act, 1952 (74 of 1952), ss. 2 (c) (f) (i) (m) (n), 15(1), 17, 18(1).JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 98 and 99 of 1960.Appeal from the judgment and order dated April 16, 1958, and April 11, 1958, of the Calcutta High Court in Appeal from Original Order and decree Nos. 173 and 151 of 1957, respectively.H.N. Sanyal, Additional Solicitor-General of Indin, M. G.Poddar and D. N. Mukherjee, for the appellant.C.B. Aggarwala and S. N. Mukherjee, for the respondent.1962. May 4. The Judgment of the Court was delivered byVENKATARAMA AIYAR, J.-These are appeals against the judgment of the High Court of Calcutta, setting aside an award of the arbitrators, which directed the respondent to pay to the appellants Rs. 41,250 as compensation for breach of contract, on the ground that the said contract was in con- travention of a notification of the Central Government dated October 29, 1953, and was in consequence illegal and void.The facts are that the appellants own a Jute Mill at Calcutta and carry on the business of manufacture and sale of Jute. On September 7, 1955 they entered into a contract with the respondents who are doing business as 186dealers in jute, for the purchase of 750 bales of Jute cutting 'raw) of Pakistan at Rs. 80 per bale of 400 lbs. to be delivered in October, November and Decemb...
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