- (1.) THIS is an application for setting aside an award by the Bengal Chamber of Commerce. The applicant is Shah Nanchand Anandji, a registered partnership firm carrying on business at Danapith, Bhavnager, in the State of Gujrat, who has been directed by the said award to pay a sum of Rs.22,000/- to Vegetable Products Ltd., the respondent herein.
(2.) ON June 10, 1964, the applicant entered into an agreement in writing with the respondent and by the said agreement the applicant agreed to sell to the respondent 55 metric tones of pure ground nut oil on terms and conditions mentioned in the said agreement. The applicant had also entered into another contract with the respondent on June 11, 1964, for sale to the respondent another quantity of 55 metric tones of pure ground nut oil on terms and conditions mentioned in the said contract. Both the said contracts contain an arbitration clause in identical terms and the said arbitration clause reads as follows:- All disputes arising on or out of this contract shall be referred at the option of the buyer either to the arbitration of two independent persons experienced in this trade (one to be nominated by each party) and an umpire to be chosen by them before proceeding with the arbitration or to the arbitration of the Indian Chamber of Commerce, Calcutta, or to the arbitration of the Bengal Chamber of Commerce and Industry, Calcutta, and the decision of such arbitration shall be accepted as final and binding on both the parties to the contract. This reference to arbitration shall be deemed to be a submission under the Indian Arbitration Act. The award may at the instance of either party, with or without notice to either of them, be filled in the proper Court. The applicant Shah Nanchand Anandji, the seller, had not delivered the goods mentioned in the said contracts to the buyer Vegetable Products Ltd., the respondent herein, and disputes and differences had arisen between the parties out of the said contracts. The buyer Vegetable Products Limited, the respondent herein, had referred the said disputes to the arbitration of the Bengal Chamber of Commerce and Industry, Calcutta. Two references had been made by the buyer, Vegetable Products Limited, to Bengal Chamber of Commerce and Industry, Calcutta, in respect of the disputes arising out of the two contracts between the parties. On the said two references Bengal Chamber of Commerce made two separate awards. This application is concerned with the validity of the award made by the Bengal Chamber of Commerce on September 21, 1966, in case No. 231 of 1965, being Award No.155 of 1966 dated September 21, 1966. Another application has been made by the seller Shah Nanchand Anandi challenging the validity of the other award made in the other reference in respect of the contract dated June 11, 1964. That is the other application which was on my list immediately after this application. The parties agree that identical questions are involved in both the applications and the decision in the present application will govern the other case.
(3.) THE validity of the award has been challenged on the two main grounds viz., (1) there is no valid and binding arbitration agreement between the parties and (ii) the arbitrators have misconducted themselves and have misconducted the arbitration proceedings. Before dealing with the contention of the respective parties it will be convenient to set out certain relevant facts. Under the contract the date of delivery was originally against July 7, 1964, shipment free at the buyer's factory at Belgharia without any obligation on the part of the buyer to apply for delivery, and time for delivery was extended from time to time, ultimately extending the time of shipment till July 27, 1964. On July 22, 1964, the Government of Gujarat issued two orders in exercise of the powers conferred on them by Rule 125 of the Defence of India Rules, 1962, viz., (i) THE Gujarat Ground Nut (Transport Control) Order, 1964 and (ii) THE Gujarat Ground Not (Declaration of Stock) Order, 1964 and both these Orders came into force immediately. On July 23, 1964, the seller Shah Nanchand Anandji sent a telegram to the buyer Vegetable Products Limited to the effect that the goods could not be shipped due to the orders of the Government of Gujarat. THE buyer by their telegram of July 24, 1964, was willing to extend the time for shipment of the goods till such time the seller could effect shipment by first available steamer on receiving release order from the Government. THE seller, however, by their letter of July 29, 1964, contended that the contracts had become frustrated and the sellers were, therefore, not in a position to perform the same and could not be called upon to perform the same. THE buyer disputed the contention of the seller that the contracts were frustrated and had become impossible of performance and contended that the sellers were resorting to a breach thereof and demanded payment of compensation or damages for breach of the contract on the part of the sellers. THE claim and contention of the buyer were denied and disputed by the seller who insisted that the contracts had become impossible of performance and had become frustrated, and the seller in consequence thereof had no liability whatsoever to the buyer. THE disputes were ultimately referred by the buyer to the Bengal Chamber of Commerce and Industry sometime in June, 1965 claiming a sum of Rs.24,994.75 P. on account of damages from the seller on the basis of difference between the contract price and the market price. On and about October 11, 1965, the seller filed his counter statement of facts, and in the said counter statement the seller in addition to all the defence on merits also raised an objection as to the validity or competence of the reference. On March 15, 1966 usual notices were issued by the Registrar of the Bengal Chamber of Commerce to the parties on behalf of the Tribunal of arbitration, mentioning the date fixed for hearing and asking the parties to attend with their witnesses. THEreafter on and about April 9, 1966, the seller Shah Nanchand Anandji made four applications before the Bengal Chamber of Commerce. In the first application, they requested the Bengal Chamber of Commerce to state a case for the opinion of the High Court. In the second application, they asked for leave to appear before the Tribunal through a lawyer. In the third application, the seller asked the Bengal Chamber of Commerce for examination of certain witnesses named therein on commission, and in the last application, the seller wanted both the award case to be tried and decided together. All the aforesaid four applications of the seller were rejected and the Registrar of the Bengal Chamber of Commerce by his letter of April 20, 1966, informed the seller that the said four applications sent under cover of letter dated April 9, 1966, had been considered by the arbitrators and the arbitrators were unable to accept any of the requests made therein. THE Registrar, however, informed the seller by the said letter that arrangement would be made at the time of hearing for some person to act as interpreter. THE reference was thereafter heard by the arbitrators on due notice to the parties on August 19, 1966. At the hearing, one of the partners of the seller Chimanlal Chhotalal Shaw was present. THEre was, however, on interpreter. THE award in question was thereafter made by the arbitrators on September 21, 1966, and by the award the arbitrators awarded a sum of Rs.22,000/- in favour of the buyer, Vegetable Products Limited, the respondent herein.;