GROVER, J - (1.) THESE two appeals by special leave are from ajudgment of the Calcutta High court holding that the disputes between the parties could not be referred to arbitration.
(2.) IT is necessary to state the facts only in Civil Appeal No. 2012/66. The appellant was and still is a member of the East India Jute and Hessian Exchange Limited, hereinafter called the "Exchange", which is the only association recognised under the provisions of the Forward Contracts (Regulation) Act, 1952, hereinafter called the ''Act". The respondent is not a member of the said association. On 21/12/1962, a transaction was entered into between the parties by means of a letter written by the respondent to the appellant. This letter was in the following terms : "We have today bought from you the following goods : JUDGEMENT_168_3_1970Html1.htm All other terms and conditions of the East India and Hessian Exchange standard contract will be applicable to this contract. Please sign your acceptance on the duplicate copy of this letter." The appellant from time to time delivered certain rolls of the Jute Carpet Backing cloth under the aforesaid contract, the price of which was paid 170 by the respondent. As regards the balance number of rolls deliverable under the contract the appellant purchased back and the respondent resold the balance quantities of goods by a contract, dated 9/12/1963, which transaction was embodied in a letter of the appellant to the respondent, dated 9/12/1963, and which was countersigned by the respondent. According to the appellant it was agreed or understood between the parties that deliveries under the two contracts of 21/12/1962 and De 9/12/1963, would be set off against each other. As regards 1,000.00 rolls deliverable for the months of August and September 1963, under the contract, dated 21/12/1962, the appellant is stated to have received from the respondent difference in the price of goods but in respect of the balance of 1,500 rolls the respondent did not pay the diffet rence. The appellant demanded the difference payable by the responden under the said contracts. Disputes and differences having arisen between the parties in the matter the appellant referred its claim to the arbitration of Bengal Chamber of Commerce and Industry. This was purported to have been done on the footing that the contracts provided that all terms and conditions thereof would be governed by the bye-laws of the Exchange for trading in transferable specific delivery contracts. The standard contract forms and the rules and byelaws of the Exchange, inter alia, provided for arbitration of the Bengal Chamber of Commerce and Industry. When the Chamber proceeded with the arbitration pursuant to the reference the respondent filed a petition before the Calcutta High Court on 19/02/1966, under Section 33 of the Indian Arbitration Act, 1940. It was prayed that the extent and validity of the arbitration agreement contained in the contracts be determined and it be declared that there was no valid arbitration agreement between the parties in respect of the contracts, dated 21/12/1962 and De 9/12/1963. The main point raised in the respondent's petition was that the contracts were not in accordance with the provisions of the Act or the bye-laws of the Exchange and were not in the forms prescribed and were, therefore, void and illegal. This petition was heard by A. N. Sen, J., who allowed the petition and held that the contracts were illegal and there was no valid arbitration agreement between the parties. The Act provides for regulation of certain matters relating to forward contracts, the prohibition of options in goods and for matters connected therewith including the setting up of a Forward Markets Commission, recognition of association for the purpose of the Act, for issuing notifications for regulating or prohibiting forward contracts and option in goods, etc. Section I I empowers a recognised association to make bye-laws for the regulation and control of forward contracts subject to previous approval of the central government. Ss. (3) of Section 11 is as follows : "(3) The bye-laws under this section may (a) specify the bye-laws the contravention of any of which shall make a contract entered into otherwise than in accordance with the byelaws void under Ss. (2) of Section 15 ; (aa) specify the bye-laws the contravention of any of which shall make a forward contract entered into otherwise than in accordance with the bye-laws illegal under Ss. (3-A) of Section 15 ; (b)...................................."
(3.) UNDER Section 15(1) the central government may by notification declare the circumstances in which the forward contracts in notified goods would be void and illegal. Ss. (2) of Section 15 provides that any forward contract in goods entered into in pursuance of Ss. (1) which is in contravention of any of the bye-laws specified in this behalf under clause (a) 171 of Ss. (3) of Section 11 shall be void. Ss. (3-A) makes any forward contract in goods entered into in pursuance of Ss. (1) which at the dale of the contract is in contravention of any of the bye-laws specified in this behalf under clause (aa) of Ss. (3) of Section 11 illegal. By means of a notification, dated 29/03/1958, the central government declared as follows: "In exercise of the powers conferred by Ss. (1) of Section 15 of the Forward Contracts (Regulation) Act, 1952 (74 of 1952), the central government hereby declares that the said section shall apply to jute goods (hessian cloth made of jute or bags of such hessian cloth and sacking cloth) in the City of Calcutta." Pursuant to the provisions of Section 111 of the Act the Exchange made byelaws for trading in transferable specific delivery contracts injute goods. These bye-laws and the forms of the contract prescribed are contained in Working Manual, Volume III. Ch. V of the bye-laws contains the general trading provisions. According to bye-law (1) (b) all transferable specific delivery contracts shall be in writing in the prescribed forms (Appendix II fur jute goods and Appendix IV for raw jute). Clause (g) of the aforesaid bye-law (1) laid down that all transferable specific delivery contracts shall be subject to the provisions of the bye-laws. Bye-laws 15 and 17 may be reproduced : "15. No member shall enter into a transferable specific delivery contract in raw jute and/or jute goods otherwise than on the terms and conditions prescribed under these Bye-laws." 17. Any transferable specific delivery contract entered into in raw jute and/or jute goods which at the date of the contract is in contravention of the provisions of any of the Bye-laws (l)(c)) 13. 14, 15 and 16 of Chapter, V shall be illegal under the provisions of Section 15(3-A) of the Forward Contracts (Regulation) Act, 1952." ;