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1946 DIGILAW 215 (CAL)

Modi Bros. v. S. Mahabir and Bros.

1946-07-24

body1946
JUDGMENT Clough, J. - This is an application by Messrs. Modi Brothers to set aside an award made by the Tribunal of Arbitration of the Bengal Chamber of Commerce. On the 29th October, 1942, Messrs. Modi Brothers of Calcutta, (whom I shall call the buyers) ordered from Messrs. S. Mahabir and Brothers of Delhi (whom I shall call the sellers) 1000 maunds of waste paper. The terms agreed upon were; price Rs. 7 per maund f.o.r. Rajmundry, payment against documents through the Nath Bank, Calcutta. On the 1st December, 1942, the sellers despatched from Delhi a first consignment of 252 maunds; on the 7th December the relative documents were presented to the buyers, who paid for them Rs. 1,111-6, the contract price. Approximately, on the 16th December, 1942, the buyers rejected the goods on the ground that they were of inferior quality. Meanwhile, a 2nd consignment of 209 maunds had been despatched from Delhi. On the 21st December, 1942, the documents relating to this 2nd consignment were tendered to the buyers through the Nath Bank. The buyers refused to pay on the ground of quality. No further deliveries were made under the contract. The goods, the subject of this second consignment, were in fact shortly after the date I have just mentioned, taken delivery of and used by the Andhra Mills at Rajmundry, the party for whom the goods had originally been purchased by the buyers. 2. Disputes arose between the parties to the contract regarding their respective rights and liabilities. On the 12th July, 1943, the parties entered into an agreement in writing to refer their differences to arbitration. This agreement, after referring to the contract, is in the following terms:-- And whereas disputes and differences in respect of the construction and performance of the aforesaid contract and the liability of the respective parties thereunder have arisen and are still subsisting between the parties above-named. It is hereby agreed that by and between the parties above-named to refer and they do hereby refer all disputes and differences between them to the award order and final determination of the Tribunal of arbitration of the Bengal Chamber of Commerce, Calcutta in accordance with the Indian Arbitration Act of 1940 and the laws and bye-laws now in force of the said tribunal of arbitration. It is further agreed that the award made by the learned arbitrators or the award of the umpire whom they may appoint shall be binding on both the parties and they also agree to accept the award as final and conclusive on all matters at issue between the parties. It is further agreed that the costs of the reference and award shall be in the discretion of the learned arbitrators who shall state in the award which of the parties hereto shall pay and bear the same. 3. The parties filed their statements of case in the arbitration proceedings. 4. On the 21st December, 1944, the arbitrators made and published their award, which is as follows:-- 1. That Messrs. Modi Brothers shall accept and pay for the two consignments of 252 mds. and 209 mds. waste paper (described in the buyers' bills as "floor sweep paper") delivered against the contract at the contract rate subject to an allowance of Re. 1 (Rupee one) per maund. 2. That on receipt of payment as aforesaid neither party shall have any claim against the other under the contract which stands cancelled. 3. That Messrs. S. Mahabir Brothers shall pay to Messrs. Modi Brothers the costs of this arbitration which we fix at Rs. 310 and which are to be recovered by the tribunal from the sum of Rs. 350 deposited by Messrs. Modi Brothers. 5. The objections to this award taken on behalf, of the Petitioners--the buyers--are as follows :-- (a) That Messrs. Modi Brothers, having admittedly, so they say, paid the price of the consignment of 252 maunds, there was no jurisdiction in the arbitrators to award that they shall pay for them: (b) That with regard to the consignment of 209 maunds, it was the sellers' case that they had been delivered to and used by not the buyers but by the Andhra Mills; and the applicants should not in the circumstances be directed to accept and pay for them; (c) That the tribunal of arbitration had no jurisdiction to award that the consignments be accepted and paid for at the contract rate, subject to an allowance of Re. 1 per maund This amounted to the making of a new contract between the parties; and (d) That the tribunal of arbitration had no jurisdiction to award that on receipt of payment mentioned by them, neither party shall have any claim against them under the contract, which stands cancelled. 6. One of the disputes between the parties which was before the tribunal was whether the buyers were entitled to reject the goods, including the first consignment, or whether they were bound to accept and pay for them. Payment of the price was not an accepted and concluded matter. The payment already made was being repudiated by the buyers, and they in their case before the tribunal were claiming back the amount which had been paid by them in respect of the price of the first consignment. 7. I read the paragraph numbered 1 in the award as a finding on the disputed question of liability and not as a direction to pay again an amount which had already been paid, in respect of the 1st consignment. It is a finding which negatives the buyers' contention that they had a right to reject the goods, and their claim to recover the turn already paid by them for the first consignment. 8. With regard to the price of the second consignment, namely, the quantity of 209 maunds, the tribunal was, I think, entitled from the sellers' case contained in their letter dated the 8th July, 1944, and other prayers before them to hold a view that it was the contention of the sellers that the Andhra Mills when they took delivery of the goods did so far and on behalf of and as agents of the buyers and also that the sellers were right in their contention; and the goods having been accepted by the mills in that way and used by them, the buyers had lost the right to reject and were bound to pay for the goods. In these circumstances, a claim was made for the price, and the right to recover the price was a matter which the tribunal of arbitration had jurisdiction to decide. That part of the award which relates to acceptance of the consignment of 209 maunds is not, I think, defective. In these circumstances, a claim was made for the price, and the right to recover the price was a matter which the tribunal of arbitration had jurisdiction to decide. That part of the award which relates to acceptance of the consignment of 209 maunds is not, I think, defective. It is a finding against the buyers on the question whether the goods were goods which they were entitled to reject, and, in the circumstances, an award which the tribunal of arbitration had jurisdiction to make. 9. The award that the buyers shall pay for the goods at the contract rate, subject to an allowance of Re. 1, is said to be an award in excess of the claim made by the buyers, for they do not either in their correspondence or in their statement of case claim any allowance. As such it is urged that the award cannot be sustained and should be remitted for re-consideration. If the award is in excess of the several claims upon which the tribunal was adjudicating, no doubt the contention is correct. [See Nabin Chandra Saha Vs. Sinclair Murray and Co., AIR 1914 Cal 818 ]. But I do not think that that award is in fact in excess of the claims made. The sellers were claiming that they were entitled to the full price of the goods. The buyers were claiming that they were entitled to reject the goods. By its award the tribunal negatived the buyers' claim that they were entitled to reject. It awards to the sellers something lass than they were claiming. 10. In my judgment, the Tribunal had jurisdiction to do this. What had been submitted to it for adjudication were the disputes and differences between the parties in respect of the construction and performance of the contract. The sellers were asking for the price; the question of the quality of the goods was before the Tribunal, so was the question whether the contract had been performed by the sellers. If the goods were not of the contract quality, then whether there had been a breach of condition or a breach of warranty depended on a question of construction. In view of the buyers' claim to be entitled to reject the goods, it was for the tribunal to decide whether, in view of the quality of goods supplied, there had been a breach of condition. In view of the buyers' claim to be entitled to reject the goods, it was for the tribunal to decide whether, in view of the quality of goods supplied, there had been a breach of condition. It negatived this when it negatived the right to reject. If there was no right to reject, the buyers were bound to pay for the goods but it is not necessarily a question of all or nothing. The question of the quality of the goods was before the Tribunal for its adjudication, and the submission of the dispute as to the liability under the contract of the parties, respectively, entitled the Tribunal to award to the sellers something less than the contract price, for the Tribunal was of the opinion that the quality of the goods supplied amounted to a breach of warranty. The sellers had claimed the full price. The Tribunal need not award it to them if it held that they were not entitled to it even though the buyers had not claimed damages for breach of warranty, if, as was the case here, it was the buyers' contention that the quality of the goods entitled them to reject. 11. In this connection, the sellers have relied on the case of Heyworth v. Hutchinson [1867] L.R. 2 Q.B. p. 447. There a party had bought 413 bales of wool to arrive by a named vessel or any Vessel to which they might be transhipped, the wool to be guaranteed about similar to sample in the selling broker's possession. There was a provision in the contract that if any dispute should arise it should be decided by the selling brokers, whose decision would be final. On arrival of the goods, they turned out not to be about similar to sample, and the selling brokers awarded that the buyers should take delivery of the goods at a certain abatement of the price of some of the bales. It was contended that the submission of any dispute that might arise amounted to a submission only of the question whether or not the goods were about similar. It was held that that was not so, and that if any dispute with regard to the alleged inferiority of the goods arose the named arbitrators were to decide it. It was contended that the submission of any dispute that might arise amounted to a submission only of the question whether or not the goods were about similar. It was held that that was not so, and that if any dispute with regard to the alleged inferiority of the goods arose the named arbitrators were to decide it. Cockburn, C.J., at page 450 observes as follows:-- Possibly under this (submission) the brokers' authority would extend to deciding that the inferiority is so great that the buyer need not take them at all; but it is not necessary to decide this point. It is quite clear that it was intended that, if the wools should turn out not about similar to samples, the brokers should have power to decide how far they were inferior, and what reduction was to be made in consequence in the price, so as to prevent any litigation in the matter. The way Mr. James reads the contract would leave the parties still to the necessity of litigation after the brokers had decided the preliminary question as to quality of the wools. 12. In this case, also, it seems to me that the parties by their submission had agreed that the Tribunal should decide not only whether the goods were inferior, but, if so, what reduction shall be made in the price. This question is, I think, made clear when it is realised that the arbitration rules, of the Bengal Chamber of Commerce expressly provide that the arbitrators in their award may provide for an allowance. 13. In Sinidino, Ralli & Co. v. Kitchen & Co. 1 Cababe & Elliss's Reports p. 217 (1883) which had been relied upon by the buyers, the buyer of a consignment of wheat had claimed the right to reject it on arrival on account of inferiority of quality. The sellers called for arbitration, and an award was made that the purchaser may take the wheat subject to an allowance. It was held that the award was invalid; but it appears to me that in that case the ground of decision was that the only question submitted to the arbitrators was the buyer's right to reject. The sellers called for arbitration, and an award was made that the purchaser may take the wheat subject to an allowance. It was held that the award was invalid; but it appears to me that in that case the ground of decision was that the only question submitted to the arbitrators was the buyer's right to reject. The case is, therefore, distinguishable, for in the case before me much more was submitted--the sellers claimed the price and the disputes regarding this and all liabilities under the contract were submitted for the adjudication of the Tribunal. 14. The case of Hooper & Co. v. Balfour, Williamson & Co. 62 L.T.R. p. 646 (1890) has also been relied upon by the buyers on this part of the case. That decision is also, I think, distinguishable. There the award decided that the goods were a fair tender, but must be taken with a compensation of Is. It was held to be bad on its face, in that it disclosed a finding by the arbitrators that the goods were not in fact a fair tender, for having regard to the Merchandise Marks Act, the goods, if forced upon the buyer, would have to be re-marked by them with their true weight, the position being that a number of them were substantially underweight. In the circumstances, it was obvious that what had been delivered was not what had been contracted for. The express finding of the arbitrators in that case was that the deficiency in weight was irregular and unusual. On the face of the award a breach of condition was in fact disclosed. 15. Another case has been relied upon by the buyers, namely, Green & Co. v. Balfour, Williamson & Co. 63 T.L.R. p. 97 (1890). That, also, is, I think, distinguishable. There the arbitrators who awarded that the buyers must accept the goods, but with an allowance were sought to be justified on the footing that they had proceeded on an understanding that they were not merely to find whether the goods were inferior in quality, but also to decide whether the buyer was entitled to reject or not. That latter question, it was held, had not in fact been submitted to the arbitrators for their decision; that, what was submitted to them was only the question whether the goods were up to the guarantee. That latter question, it was held, had not in fact been submitted to the arbitrators for their decision; that, what was submitted to them was only the question whether the goods were up to the guarantee. In the, case before me, however, unlike that reported in Green & Co. v. Balfour, Williamson & Co. 63 T.L.R. p. 97 (1890), the question whether the buyer was entitled to reject is one which was expressly the subject of the dispute between the parties and a matter which was referred. 16. In my judgment, there is no force in a contention that the arbitrators had no jurisdiction to award that on receipt of payments mentioned by them neither party should have any claim against the other under the contract which stands cancelled, for all the rights and liabilities of the parties under the contract were in dispute. The whole matter was referred to the Tribunal, and the Tribunal has finally decided what the rights of the parties under this contract were. In my judgment, this application fails, and must be dismissed with costs.