P.Chakravartti, C.J. - (1.) THE appellants obtained an arbitration award against the respondents in London and thereafter made an application to this Court under Section 15(1) of the Arbitration (Protocol and Convention) Act, 1937, for an order that the award be filed. On 3-8-1955, Sarkar, J., dismissed the application on the ground that the award related to a matter which could not be lawfully referred to arbitration in India and that to give effect to it would be to act against the law and the public policy of this country. THE appellants question the correctness of that decision and have appealed.
(2.) THE facts are these. By an exchange of Bought and Sold Notes, dated 15-10-1953, the appellants purported to purchase from the respondents and the respondents purported to sell to them 125 tons of Indian groundnut oil, the term as to delivery being that the goods would be shipped in bulk as per a bill or bills of lading, dated between the 1st of January and the 15th ot February, 1954, from a port or ports in India to Hamburg. THE Notes were in the standard printed form of the London Oil and Tallow Trades Association, but several of the printed clauses were scored through while several new clauses were added. According to the printed form, the invoice price was to include costs, freight and insurance, but it appears from the Bought Note that the words 'insurance (including War Risks)' were scored through. On the other hand, one of the added clauses provided that Marine and War Risk Insurance was to be covered by the buyers. THE contract contained a guarantee by the sellers that they would obtain the necessary export licence and a similar guarantee by the buyers as regards the import licence was also contained in the contract. As regards the payment of the price, one of the added clauses provided that the buyers were to open a confirmed and irrevocable letter of credit with a first class Bank in Calcutta in favour of the sellers for the full invoice amount and payment was to be made against the presentation ot and in exchange for shipping documents. For the purposes of all proceedings, whether at law or by arbitration, the contract was to be deemed to be in all respects an English contract and all disputes were to be decided in accordance with the law of England. THEre was, however, an arbitration clause which provided that any dispute arising out of tha contract was to be settled by arbitration in London in accordance with the Rules endorsed on the contract. One of those Rules provided that upon the arising of a dispute, each party would appoint one arbitrator and that if ona of the parties failed to appoint an arbitrator within seven days after receiving notice in writing of an appointment by the other party, the matter would be referred to the Secretary of the London Oil and Tallow Trades Association and thereupon the Council of that body would appoint an arbitrator to fill the vacancy. The respondents did not ship any groundnut oil. The appellants thereupon charged the respondents with breach of the contract and claimed damages by a letter to which they got no response and soon thereafter referred tha dispute to arbitration. They appointed their own arbitrator and notified the respondents of the appointment, but as the respondents failed to appoint an arbitrator on their behalf, the Council of the London Oil and Tallow Trades Association was duly approached and the Council appointed a second arbitrator. The two arbitrators, thus appointed, entered upon the reference and made an award in favour of the appellants. It was that award which the appellants wanted to be filed in this Court.
(3.) THE respondents did not deny the contract, nor did they contend that they had shipped the goods in compliance with its terms. THEir whole contention was that the contract, being in contravention of the Vegetable Oils and Oil Cakes (Forward Contracts Prohibition) Order, 1944, which applied to groundnut oil and was in force at the time was wholly void and could not lawfully be acted upon. In their affidavit-in-opposition, they also referred to a prohibition said to be contained in the Imports and Exports Control Act 1947, but no re-liance on that statute was placed in the course of the argument except for a minor purpose, to which I shall duly refer. THE main defence was that the contract was an illegal contract under the Indian law, the arbitration agreement, being contained in the contract itself, was equally illegal and therefore no award made on the basis of the contract and in pursuance of the agreement could be filed in India under the Arbitration (Protocol and Convention) Act, 1937.;