BELSAND SUGAR CO LTD Vs. THAKUR GIRJA NANDAN SINGH

JUDGEMENT

(1.) THIS appeal by the plaintiff arises out of a suit by a Sugar company, having a sugar factory, for recovery of a loan on the basis of a promissory note for Rs. 2000 executed by the defendant respondent in favour of the plaintiff on the 11th February, 1957. The defendant took two main pleas: (1) the suit did not lie on the ground that it was barred by rule 42A of the Bihar Sugar Factories Control Rules, 1938, made in pursuance of certain provisions of the Bihar Sugar Factories Control Act, 1937, and (2) the loan on the basis of the promissory note was not an independent one, inasmuch as this transaction was connected with the supply of sugarcane to the plaintiff company. Both the courts upheld the defence, but they did not record any finding on the other issues arising out of the pleadings.

(2.) MR. Lalnarayan Sinha, who appeared for the appellant, has contended that Rule 42A is invalid, because the Bihar Act has been found by this court to be unconstitutional in the unreported decision in Cr. WJC Nos. II and 31 of 1966 (Pat) A. K. Jain v. Government of India decided by a Bench of this court on 4-7-1966 and rule 42A has been found to be invalid by another unreported bench decision of this court in Misc. JC No. 1344 of 1964 (Pat) Sugauli Sugar Works Pvt. Ltd. v. Co-operative Development and Cane Marketing Union disposed of on 20-7-1966.

(3.) AN alternative argument of Mr. Janardan Sinha was that the promissory note, on the basis of which the plaintiff instituted the suit, was not independent of the contract entered into between the appellant and the respondent. Exhibits C and C-1 dated 2-11-55 and 4-11-55 are agreements in the prescribed form--Ext. C1 being in Form XI under Section 18(1) in respect of the offer by a cane grower in a reserved area for supply of cane to the factory and Ext. C being in Form XIII under Section 18(2) between the factory and the cane grower in a reserved area. These forms are in Appendix III to the Rules made under Sections 18(1) and 18(2), respectively, of the 1937 Act, read with rules 25 and 28 of the Rules of 1938. The respondent executed these agreements in favour of the appellant company. Ext. C1 was required to be executed by the respondent only as a canegrower. Ext. C was to be executed by the respondent as well as by the factory representative, but the signature of the latter is wanting. There is a Clause in Ext. C to the effect that any dispute between the parties regarding the quality and condition of the cane, the place of delivery, the instalments and other matters pertaining to this agreement, shall be referred to the Cane Commissioner for decision or if he so directs to arbitration in the manner provided for in the rules, and that no suit shall lie in a civil or revenue court in respect of any such dispute. In pursuance of this clause, it is alleged by the respondent, the dispute regarding the promissory note has been already referred to the Cane Commissioner; but, as was rightly contended by Mr. Lalnarayan Sinha, in view of the decision that Rule 42A, which provides for arbitration, and Section 18 of the Bihar Act became void after 1-4-55, the agreements in pursuance of that Section entered into between the parties sometime in November, 1955, are also void, and therefore, the arbitration Clause mentioned in Ext. C became inoperative. (In the portion of the judgment that followed it was held that there was nothing in the agreements or in the promissory note that one is dependent or connected with the other. Judgment then proceeds:) Mr. Janardan Sinha, however, submitted that the agreements should be interpreted as contracts between the parties independently of the Act and the rules as well. Even if that contention be accepted the respondent has not adduced evidence in the suit for the purpose of showing that he has supplied sugarcane to cover the whole or part of the dues of the company based on the promissory note and the advance for implements and manures. We are unable to agree with Mr. Janardan Sinha that the arbitration Clause mentioned in Ext. C should also be treated as an agreement independent of the Act and the Rules. But it will be noticed that the arbitration Clause was incorporated in Ext. C because the agreement form itself was prescribed under Subsection (2) of Section 18. It is, therefore, difficult to accept the contention of Mr. Janardan Sinha that such an arbitration Clause bringing in the Cane Commissioner as arbitrator would have been incorporated by the parties in the contract independently of the form prescribed by Section 18(21 of the Act.