SHAH NANCHAND ANANDJI v. VEGETABLES PRODUCTS LIMITED
1969-01-31
A.N.SEN
body1969
DigiLaw.ai
A. N. SEN, J. ( 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. ( 3 ) 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.
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. ( 4 ) 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.
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.
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. ( 5 ) THE grounds on which the validity of the award is challenged are contained in para 29 of the petition. But, as already noted, two main grounds were urged at the hearing of the application. The first ground urged on behalf of the petitioner has been that the arbitration was incompetent as there was no valid arbitration agreement between the parties. The next ground urged has been that the arbitrators have misconducted themselves and have misconducted the proceedings and under this broad head the following points were formulated :- (1) The arbitrators misconducted themselves and the proceedings by refusing to refer to the Court for opinion when they were requested to do so by the Dseller.
The next ground urged has been that the arbitrators have misconducted themselves and have misconducted the proceedings and under this broad head the following points were formulated :- (1) The arbitrators misconducted themselves and the proceedings by refusing to refer to the Court for opinion when they were requested to do so by the Dseller. (2) The arbitrators misconducted themselves and the proceedings by refusing to hear evidence and by refusing to take steps for issue of commission for examination of the witnesses as requested and prayed for by the seller. (3) The arbitrators misconducted themselves and the proceedings by refusing the petitioner to be represented by lawyer at the hearing of the reference. (4) The arbitrators misconducted themselves and the proceedings by not engaging an interpreter at the hearing of the reference. (5) The arbitrators misconducted themselves and the proceedings by awarding damages for Rs. 22,000/- in favour of the buyer without any evidence as to damages on the basis thereof. ( 6 ) MR. Gupta, learned Counsel appearing in support of this application, has contended that there is no valid arbitration agreement between the parties in the instant case as the alleged arbitration agreement between the parties is vague and the same lacks mutuality. He contends that the words 'at the option of the buyers' in the arbitration clause qualify the words 'shall be referred' therein, and it is his contention that as the disputes can be referred only at the option of the buyers, the said agreement must be held to be lacking in mutuality as the sellers have no option to refer the disputes to arbitration. He contends that if any arbitration agreement lacks mutuality the said agreement must be held to be bad. Mr. Gupta has strongly relied on the following observations in the decision of the Court of Appeal in (1) Baron v. Sunderland Corporation, (1966) 1 All ER 349 (351 ). It is necessary in an arbitration clause that each party shall agree to refer disputes to arbitration and it is an essential ingredient in that either party may in the event of a dispute arising refer it in the provide manner to arbitration. In other words, the clause must give bilateral rights of reference. ( 7 ) MR.
It is necessary in an arbitration clause that each party shall agree to refer disputes to arbitration and it is an essential ingredient in that either party may in the event of a dispute arising refer it in the provide manner to arbitration. In other words, the clause must give bilateral rights of reference. ( 7 ) MR. Gupta has next contended that as the words 'at the option of the buyers' qualify the words 'shall be referred', the arbitration agreement must also be held to be vague and uncertain as the disputes can be referred 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 arbitration, or the arbitration of the Indian Chamber of Commerce, Calcutta, or the arbitration of the Bengal Chamber of Commerce and Industry, Calcutta. ( 8 ) MR. Modak, learned Counsel appearing on behalf of the respondent buyer, has submitted that the arbitration agreement is perfectly valid and it is his submission that the words 'at the option of the buyers' in the arbitration clause do not qualify the words 'shall be referred' and are intended to apply and do apply to the personnel of the arbitrator to be appointed out of the three alternatives provided in the said clause. It is the contention of Mr. Modak that the option is given to the buyer to choose the personnel of the arbitrator only and it is his contention that, as the option refers only to the personnel of the arbitrator, there is no vagueness in the arbitration agreement and the said agreement does not also lack any mutuality. Mr. Modak has further submitted that even if there was any lack of mutuality the arbitration agreement could not be held to be bad, and Mr. Modak has referred to a decision of the Division Bench of this Court interest he case of (2) Kedarnath Atmaram v. Kesoram Cotton Mills Ltd. , ILR (1950) 1 Cal 550. ( 9 ) IN my opinion, on a true construction of the arbitration agreement in the instant case, the words 'at the option of the buyers' cannot be said to refer to or qualify the words 'shall be referred' and the said words refer to the various forums of arbitration mentioned in the said clause.
( 9 ) IN my opinion, on a true construction of the arbitration agreement in the instant case, the words 'at the option of the buyers' cannot be said to refer to or qualify the words 'shall be referred' and the said words refer to the various forums of arbitration mentioned in the said clause. In my opinion, on a true construction of the arbitration agreement the option is given to the buyers only in the matter of selecting the forum of which the disputes, if any, arising out of the contract are to be referred. If any dispute in relation to the agreement arises, it is open to any of the parties, in my view, to refer such dispute to arbitration and the option that has been given to the buyers by the said clause is to decide as to which forum the disputes should be referred. In case the seller chooses to refer the disputes to arbitration, it will be for the buyer to say whether disputes should be referred to the arbitration of two independent persons experienced in the trade, one to be nominated by each party, or to arbitration of the Indian Chamber of Commerce, Calcutta, or to the arbitration of the Bengal Chamber of Commerce and Industry, Calcutta. The option to decide on the forum out of these three alternatives agreed upon in the arbitration clause, rests with the buyer, and as the option rests with the buyer it cannot be said that there is any vagueness about the agreement. As the option also governs only the selection of the forum, it cannot also be said that the agreement lacks mutuality in the sense that it is not open to the seller to refer the disputes to arbitration. In my opinion, the Court should so construe any agreement, if possible, without doing any violence to the language used, as will have the effect of upholding the bargain solemnly entered into by the parties. In the instant case, the arbitration agreement clearly expresses the intention of the parties to refer the disputes to arbitration and further expresses the intention that the buyer will have the option of selecting the forum of arbitration out of the three Tribunals mentioned in the said agreement. The contention of Mr. Gupta on this aspect is, therefore, negatived and I uphold the contention of Mr.
The contention of Mr. Gupta on this aspect is, therefore, negatived and I uphold the contention of Mr. Modak and I hold that the arbitration agreement is valid and binding. The next contention of Mr. Gupta relates to the question of legal misconduct on the part of the arbitrators. As already noted, Mr. Gupta has formulated and urged five grounds of misconduct on the part of the arbitrators in the instant case. ( 10 ) THE first ground of misconduct urged is, as already indicated the refusal on the part of the arbitrators to refer to the Court for the Court's opinion the question whether the contracts had been frustrated due to the two Government orders. The learned Counsel appearing in support of this application has argued that in the facts of the instant case a very important and substantial question as to the frustration of the contracts arises and it was the duty of the arbitrators to refer the said question of the Court for the Court's opinion under Section 13 of the Arbitration Act. The relevant portion of Section 13 on which reliance is placed by the learned Counsel reads as follows: 13. The arbitrator or umpire shall unless a different intention is expressed in the agreement have power to - (b) state a special case for the opinion of the Court on any question of law involved, or state the award, wholly or in part, in the form of a special case of such question for the opinion of the Court. The learned Counsel has contended that the power conferred on the arbitrators and umpires under Section 13 (b) to state a special case for the opinion of the Court imposes a duty on the arbitrators to exercise the said powers of refusal to exercise the said powers results in neglect or failure in the discharge of the duties cast on the arbitrators and amounts to misconduct on their part. The learned Counsel has submitted that the power conferred on the arbitrators does not leave much of discretion in them and it is the duty of the arbitrators to exercise the said power and to state a special case for the opinion of the Court if so required by any of the parties.
The learned Counsel has submitted that the power conferred on the arbitrators does not leave much of discretion in them and it is the duty of the arbitrators to exercise the said power and to state a special case for the opinion of the Court if so required by any of the parties. In support of this submission the learned Counsel has referred to the decision of the Supreme Court in the case of the (3) Chief Controlling Revenue Authority and Anr. v. Maharastra Sugar Mills Ltd. , AIR 1960 SC 218. The learned Counsel has also referred to the following passages in Russell on Arbitration (17th Ed. , Public Prosecutor. 339-40): it is not misconduct for an arbitrator or umpire to refuse to state a special case upon a question of law arising in the course of a reference, or to refuse to give his award in the form of a special case. It will be misconduct if, on a request being made to him, bona fide and on reasonable grounds, on any of the matters upon which a special case may be stated, either to state a special case or to delay the proceedings or his award until application can be made under Section 21 of the Act for an order directing him to do so, he refuses to comply, and by making his award forthwith attempts to preclude the party from making the application. ( 11 ) SECTION 21 of the English Act referred to above may be noted. The said Section 21 of the English Act is in the following terms.
( 11 ) SECTION 21 of the English Act referred to above may be noted. The said Section 21 of the English Act is in the following terms. An arbitrator umpire may and shall, if so directed by the High Court, state - (A) any question of law arising in the course of the reference; or (b) an award or any part of an award, in the form of a special case for the decision of High Court; (c) a special case with respect to an interim award or with respect to a question of law arising in the course of a reference may be stated, or may be directed by the High Court to be stated, notwithstanding that proceedings under reference are still pending; (d) a decision of the High Court under this Section shall be deemed to be a judgment of the Court within the meaning of Section 27 of the Supreme Court of Judicature (Consolidation) Act, hear and determine appeals from any judgment of the High Court, but no appeal shall lie from the decision of the High Court on any case stated under paragraph (a) of sub-section (1) of this Sections without the leave of the High Court or of the Court of Appeal. The learned Counsel has submitted that even if the powers conferred under Section 13 be considered to be discretionary, the arbitrator or umpire must exercise their discretion in a judicial manner in the best interest of the parties and erroneous exercise of discretion by the arbitrators will amount to legal misconduct on their part. It is the contention of the learned Counsel that in the facts and circumstances of the instant case and in view of the important question as to frustration being involved it was undoubtedly the duty of the arbitrators to refer the question to Court for its opinion and in any event the arbitrators should have exercised their power and should have referred the said question to the Court, particularly when they were so requested and required by the applicant.
The learned Counsel submits that the said application of the seller to the arbitrators cannot be said to be mala fide or unreasonable and the arbitrators have exercised their discretion erroneously and improperly by refusing to state a special case for the Court's opinion and the erroneous and improper exercise of the discretion, if any, on the part of the arbitrators has resulted in substantial injury to the applicant. It is the submission of the learned Counsel that the said act on the part of the arbitrators amounts to legal misconduct which vitiates the proceedings and the award. ( 12 ) THE second ground which has been strongly urged by the learned Counsel on behalf of the applicant is the refusal on the part of the arbitrators to hear evidence by refusing to take steps for issue of commission for examination of the witnesses as requested and prayed for by the sellers. The application for the issue of the commission appears at page 102 in the annexure to the petition and the learned Counsel has argued that the persons mentioned therein were very material witnesses for the determination of the disputes and particularly for determination of the question whether the contracts were frustrated or not. The learned Counsel has contended that by refusing the said application the arbitrators virtually prevented the applicant from adducing necessary evidence on its behalf and the arbitrators did in fact refuse to hear the evidence on behalf of the seller. The learned Counsel has drawn my attention to Section 43 of the Arbitration Act and has contended that it was the duty of the arbitrators to take necessary steps for arranging for the evidence of the said persons and it was not possible for the applicant to take any steps in the matter apart from applying before the arbitrators for doing the needful in the matter. The learned Counsel has argued that there cannot be any question that the persons named in the petition for examination on commission are very material witnesses and the said persons were not in the control of the sellers and it was the duty of the arbitrators to have arranged for their evidence on commission.
The learned Counsel has argued that there cannot be any question that the persons named in the petition for examination on commission are very material witnesses and the said persons were not in the control of the sellers and it was the duty of the arbitrators to have arranged for their evidence on commission. The learned Counsel contends that by refusing to accede to the said prayer of the sellers and by refusing to arrange for the evidence of any of the said persons, the arbitrators have virtually refused to hear any evidence on behalf of the sellers and have prevented the sellers from adducing necessary evidence. It is the contention of the learned Counsel that this act which results in the refusal on the part of the arbitrators to hear any evidence on behalf of the sellers and prevents the sellers from adducing necessary evidence in the proceeding, clearly amounts to misconduct on the part of the arbitrators and vitiates the proceedings and the award. The learned Counsel has referred to the following observations occurring in Russel on Arbitration (17th ed. , p. 59):- similarly, an arbitrator may injure a party by refusing to hear evidence as to claims duty submitted to him for his adjudication. The learned Counsel has also placed reliance on the following passages of the same book (pp. 181-82):- the arbitrator should hear all the evidence material to the question which the parties choose to lay before him as on a trial before injury. It has been said that he may exercise some discretion as to the quantity of evidence he will hear, but declining to receive evidence on any matter is, in ordinary circumstances, a delicate step to take, for the refusal to receive proof, where proof its necessary, is fatal to the award. ?the first and most important question in this case is, what was the subject in dispute between the parties when this arbitration was had recourse to? That is a subject upon which, according to all the authorities, parol testimony may be received, and of course must be received, because otherwise arbitrators might be taking upon themselves to determine matters which had never been in any way submitted to them?: Per fry, J. Re Green and Co. and Balfour and Co. , (1890) 63 LT 325 at 327.
and Balfour and Co. , (1890) 63 LT 325 at 327. The award may be impeached if the arbitrator makes his award without having heard all the evidence or having allowed the parties a reasonable opportunity of proving their whole case. ( 13 ) THE next ground that has been urged is that the arbitrators misconducted themselves and the proceedings by refusing the petitioner to be represented by lawyer at the hearing of the reference. It has been argued that difficult and important questions were involved in the instant case and, for a proper determination of the disputes involved, the arbitrator should have permitted the applicant to be represented by lawyer at the hearing of the reference. It is the argument of the learned Counsel that in the facts of the instant case it was not right and proper for the arbitrators to refuse permission to the applicant to be represented by lawyer and, as such, refusal on the part of the arbitrators has seriously prejudiced the case of the petitioner. ( 14 ) THE next ground that has been advanced is that the arbitrators misconducted themselves and the proceedings by not arranging for an interpreter at the hearing of the reference. It has been argued that without the aid of an interpreter it was not possible for the petitioner to participate properly in the reference, and the case of the petitioner seriously suffered and its defence was hampered and prejudiced for want of an interpreter. The learned Counsel has drawn my attention to the letter dated April 20, 1966, written by the Registrar to the petitioner. The said letter appears at p. 105 of the annexure to the petition and in that letter the Registrar informed the petitioner that arrangement would be made at the time of the hearing for some person to act as an interpreter. The learned Counsel has argued that in spite of the aforesaid assurance contained in the said letter no arrangement for the presence of an interpreter was made with the result that the petitioner was prevented from properly participating in the proceeding and presenting its case before the arbitrators.
The learned Counsel has argued that in spite of the aforesaid assurance contained in the said letter no arrangement for the presence of an interpreter was made with the result that the petitioner was prevented from properly participating in the proceeding and presenting its case before the arbitrators. It is the contention of the learned Counsel that as there was no interpreter the case of the petitioner before the arbitrators really went by default, as the petitioner of the petitioner was not in a position to participate effectively in the proceedings in the absence of an interpreter. The learned Counsel submits that by not arranging for an interpreter at the hearing the arbitrators made the hearing particularly an one-sided affair and it is his submission that not making necessary arrangement for the presence of an interpreter in spite of the assurance given in the letter of April 20, 1966, vitiates the proceeding and the award. ( 15 ) THE learned Counsel has finally contended that the award must be considered to be bad in any event as the amount awarded as damages in favour of the buyer has been arrived at without any evidence as to the same or the basis thereof. The learned Counsel argues that the amount of damages cannot be arrived at without proper evidence and without a proper basis on which the damages can be awarded. It is the argument of the learned Counsel that the question of damages and the quantum thereof are basic questions of fact which must be established on proper evidence and it is his contention that there was no evidence before the arbitrators as to the basis on which the damages could be awarded in favour of the buyer. The learned Counsel argues that in the facts of the instant case it was not possible for the arbitrators as experts in the trade to come to any conclusion as to the quantum of damages without evidence and it is his argument that in any event no such case has been made in the affidavit that the arbitrators acted as experts and arrived at the figure of damages as experts in the trade. He drawns my attention to the statements made in para 22 of the affidavit of Biswanath Tatia affirmed on behalf of the respondent on November 27, 1967, wherein he has stated.
He drawns my attention to the statements made in para 22 of the affidavit of Biswanath Tatia affirmed on behalf of the respondent on November 27, 1967, wherein he has stated. I say that the evidence of the market rates were given by the respondent before the said arbitrators and it is to be presumed that the arbitrators took into consideration the evidence before them and also of the relevant documents and statements that were find before them. The learned Counsel has referred to the proceedings before the arbitrators and has pointed out that the same do not show that any such evidence had at all been adduced on behalf of the respondent. The learned Counsel has contended that the aforesaid statement of the respondent in the said affidavit is untrue and the same is not borne out by the reference in proceedings before the arbitrators and it is his contention that it must, therefore, be held that the amount of damages was awarded without any evidence of market rate whatsoever. The learned Counsel has argued that coming to any conclusion as to the damages and the amount thereof without any evidence in the facts of the instant case clearly amounts to legal misconduct on the part of the arbitrators. In support of his contention that any decision with regard to the question of damages and the amount thereof without any evidence will amount to legal misconduct on the part of the arbitrators, the learned Counsel has referred to the following decisions: (4) Bajranglal Laduram v. Ganesh Commercial Co. Ltd. , AIR 1951 Cal 78 , (5) Ram Chand and Anr. v. Buta Ram and Ors. , AIR 1931 Lahore 65, (6) M/s. Khusiram Banershilal v. Mathuradass Goberdhandass, 52 Calwn 826, (7) Chhogmal Rawatmal v. Sankalchand G. Shah, 53 Calwn 828, (8) Bijoy Singh v. Bilasroy and Co. , AIR 1952 Cal 440 , (9) Hanutmull Boid v. Fatehchand Murlidhar, AIR 1954 Cal 1 .
v. Buta Ram and Ors. , AIR 1931 Lahore 65, (6) M/s. Khusiram Banershilal v. Mathuradass Goberdhandass, 52 Calwn 826, (7) Chhogmal Rawatmal v. Sankalchand G. Shah, 53 Calwn 828, (8) Bijoy Singh v. Bilasroy and Co. , AIR 1952 Cal 440 , (9) Hanutmull Boid v. Fatehchand Murlidhar, AIR 1954 Cal 1 . Reliance has also been placed on an unreported decision of the Court of Appeal in the case of (10) Mukhram Luchminarain v. Khusiram Benarashilal, (Unreported judgment in Appeal from Original Order No. 2 of 1949) delivered on March 29, 1949 Harris, C. J. observed at P. 10 of the judgment: it is quite clear that a Court on an application to setting aside an award cannot sit as an Appellate Court over the arbitrators and hold that findings of fact of the arbitrators are not justified. It is, however, contended that where there is no evidenced at all the Court can hold the arbitrators guilty of legal misconduct in deciding the matter referred without hearing any evidence. There might be considerable force in this contention, if we were satisfied that there was no material at all before the arbitrators upon which they could arrive at the conclusion which they did. Chatterjee, J. who concurred with the decision of Harris, C. J. observed:- the rules of the Bengal Chamber of Commerce should not be construed as granting a charter to the Tribunal of arbitration to decide all questions without taking any evidence. But inasmuch as there were some materials before the arbitrators, we cannot say that there was such a mishandling of the arbitration as to cause substantial miscarriage of justice in this case. In that view it is safer to abide by the general rule of law which is well-settled that awards should not be setting aside on the ground of mistake. It is not for this Court to scrutinize the quantum of evidence and to pronounce upon the correctness of the award. ( 16 ) MR. Gupta has finally submitted that in the facts of the instant case there has been a substantial miscarriage of justice and the petitioner has been seriously prejudiced by reason of the aforesaid acts and conduct on the part of the arbitrators and it is his submission that, in the instant case, for the ends of justice the Court should interfere and set aside the award in question.
He has argued that although this Court does not sit in appeal over the decision of the arbitrators, yet this Court retains sufficient and effective control over the arbitrators and the arbitration proceedings to prevent and redress and injustice on the part of the arbitrators. The learned Counsel has referred to the decision of Sinha, J. in the case of M/s. Khusiram Benarshilal v. M/s. Mathuradass Goberdhandass (Supra) and has placed particular reliance on the following observations:- it is quite true that the Court will not allow itself to be made a Court of Appeal against the decision of the arbitrators. This Court must also give a wide latitude to the arbitrators to decide rightly or wrongly and the mistake of the arbitrators, if they proceed honestly and impartially, will not be corrected unless it appears on the face of the award. This Court must also 'go very far in ignoring technicalities and irregularities on the part of the arbitrators unless there is some real substance of error behind them'. The Court will not, however, release real and effective control over arbitrators or give them a free hand to decide according to law or not according to law as they think fit. The Court must retain sufficient control over them to prevent and redress any injustice on the part of the arbitrators. If the arbitrators do not appreciate the points involved in the case and do not apply their minds to them or if they decide in a way in which no reasonable man occupying a judicial or a quasi-judicial position would decide, it is open to the Court to interfere with the award in the interest of justice. Misconduct is an ambiguous word and includes any mishandling of the arbitration proceedings or any neglect of duty on the part of the arbitrators which is likely to lead to substantial miscarriage of justice. A gross mistake may be evidence of misconduct. It does not mean personal turpitude such as corruption and bribery. Further, the arbitrators in deciding whether they will take oral evidence or not must exercise their discretion judicially, even where the parties have left it to the arbitrators to decide whether to take oral evidence or not. Rule 15 of the Rules of Arbitration of the Bengal Chamber of Commerce gives power to the arbitrators, if they think fit, to hear oral evidence.
Rule 15 of the Rules of Arbitration of the Bengal Chamber of Commerce gives power to the arbitrators, if they think fit, to hear oral evidence. This power conferred on them involves a duty on their part to her oral evidence where the nature and circumstances of the case are such that it is impossible for them to decide one way or the other without taking oral evidence. It is true that the Rule gives them a wide power, but if the arbitrators do not exercise the power in a judicial manner, the Court may interfere on the ground of misconduct. ( 17 ) THE learned Counsel submits that the improper acts of the arbitrators complained of have seriously prejudiced the case of the petitioner and have resulted in a gross miscarriage of justice in the instant case and the Court should, therefore, interfere on the ground of misconduct and should set aside the award in question. ( 18 ) MR. Modak, the learned Counsel on behalf of the respondent, has submitted that there has been no misconduct on the part of the arbitrators. ( 19 ) DEALING with the first ground urged on behalf of the applicant, Mr. Modak has contended that the refusal on the part of the arbitrators to refer any matter to the Court or to state a case for the Court's opinion, although so required by any of the parties, cannot and does not constitute an act of misconduct on the part of the arbitrators under the law prevailing in India. It is his contention that Section 13 only empowers the arbitrator or the umpire to state a case for the Court's opinion, if the arbitrator or the umpire consider it necessary. Mr. Modak argues that Section 13 has been enacted with the intention of conferring necessary powers on the arbitrator or the umpire for the guidance and assistance from the Court, if they need it, and it is his argument that the said Section does not impose any duty or obligation upon the arbitrator or umpire to make any such reference to the Court and does not confer any right on any of the parties to require the arbitrator or umpire to make any such reference.
He has argued that Section 13 is an enabling Section for the benefit and guidance of the arbitrators or umpire to enable the arbitrators or umpire to get necessary assistance from the Court by way of its opinion or advice in proper discharge of their duties in the interest of justice. He has drawn my attention to the language used in the English Arbitration Act and has argued that, in view of the provisions contained in the English Act, the principles enunciated in Russel on Arbitration or in any of the English decisions are of no assistance in the instant case. He has argued that the decision of the Supreme Court in the case of the Chief Controlling Revenue Authority and Anr. v. Maharastra Sugar Mills Ltd. (Supra), which was concerned with the provisions of the Stamp Act, 1899, and the discharge of public duty of a Public Officer, has no application to the facts of the instant case and is of no assistance in construing Section 13 of the Arbitration Act which is concerned in construing Section 13 of the Arbitration Act which is concerned with the arbitration and arbitration proceedings and the powers and duties of an arbitration Tribunal, a private Tribunal chosen by the parties for an adjudication of disputes between them. In support of his contention that there is no duty or obligation case upon the arbitrator to make any reference to Court and to state a case for the Court's opinion, although so required by any of the parties, the learned Counsel has referred to and relied on the following passage in Sarkar's Tagore Law Lecture, 1942, (The Law of Arbitration of British India by Nripendranath Sarkar, pages 159):- it has already been explained that although arbitrator under the English Law could be compelled to state a special case where circumstances justified such a case. Yet in India such compulsion is not possible. The statement of a special case under the Civil Procedure Code, 1908, Second Schedule, was confined to questions of law just as it was under English Arbitration Act, 1899, where the words 'on any question of law involved' were included. In the Second Schedule of the Civil Procedure Code, 1908, the language is 'a special case for the opinion of the Court' and the limiting words 'on any question of law' do not appear.
In the Second Schedule of the Civil Procedure Code, 1908, the language is 'a special case for the opinion of the Court' and the limiting words 'on any question of law' do not appear. On the strength of this provision it was contended that in reference governed by that Code, the special case need not be confined to questions of law, but it was decided in Lamman v. Ramchandra, ILR 48 Bom 663, that the special case must be confined to questions of law, thus establishing the uniformity of the law under the Indian Arbitration Act, 1899, and the Second Schedule of the Civil Procedure Code, 1908. But there has been left no ambiguity in the Indian Arbitration Act, 1940, as the language in Section 13 (B) is 'state as special case for the opinion of the Court on any question of law involved'. ( 20 ) THE learned Counsel has also relied on two decisions of this Court, the decision in the case of (11) Hazi Ebrahim Kassem Cochinwalla v. Northern Indian Oil Industries Ltd. , AIR 1951 Cal 230 and the decision in the case of (12) Nanalal M. Varma and Co. (Gunnies) v. G. Ambalal (Export), 60 Calwn 810, Mr. Modak has further argued that in the facts of the instant case the arbitrators rightly rejected the said application of the petitioner for stating a case for the Court's opinion as there was in fact no important question of law or any question of law at all involved in the disputes between the parties. He has argued that by the orders of the Government the contract itself is not hit as permission is expressly provided for in the said order itself. He contends that it is well-settled that the arbitrators are competent to decide the question of frustration, if any, and he refers to the decision of the Supreme Court in the case of (13) Union of India v. Kishorilal Gupta and Bros. , AIR 1959 SC 1362 and also to the decision in the case of (14) Naihati Jute Mills Ltd. v. Khyaliram Jagannath, AIR 1968 SC 522 . The learned Counsel has further argued that the arbitrators refused the said application of the petitioner after considering the said application after having applied their mind.
, AIR 1959 SC 1362 and also to the decision in the case of (14) Naihati Jute Mills Ltd. v. Khyaliram Jagannath, AIR 1968 SC 522 . The learned Counsel has further argued that the arbitrators refused the said application of the petitioner after considering the said application after having applied their mind. He has drawn my attention to the letter of the Registrar dated April 20, 1966, to the applicant at p. 105 of the annexure to the petition, and in the said letter it has been stated by the Registrar that the applications have been considered by the Arbitration Tribunal and they were unable to accept any of the requests made therein. The learned Counsel contends that as the arbitrator had considered the said application of the petitioner and had refused to state a case for the Court's opinion after having considered the matter, there cannot be any question of any misconduct on the part of the arbitrators, even if the said decision of the arbitrators was erroneous. It is the contention of the learned Counsel than an erroneous exercise of the discretion on the part of the arbitrators does not amount to any misconduct, and in support of this contention the learned Counsel relies on the decision in the case of (15) Sewdutrai Narsaria v. Tata Sons Ltd. , 27 Calwn 494 and also to the decision of the Judicial Committee in the case of (16) Louis Dreyfus and Co. v. R. A. Arunachala Ayyar, AIR 1931 PC 289. ( 21 ) DEALING with the next contention of the applicant that the arbitrators misconducted themselves and the proceedings by refusing to take necessary steps for examination of witnesses on commission as requested by the applicant and thereby refusing to her evidences to be adduced on behalf of the applicant, Mr. Modak has argued that the refusal by the Arbitration Tribunal of the said application of the seller for taking steps for issue of commission for examination of the witnesses named by the applicant, does not amount to any misconduct on the part of the arbitrators. He has drawn my attention to Rules XV and XXI of the Rules of the Tribunal of Arbitration of the Bengal Chamber of Commerce and Industry. The said Rule may be set out :xv.
He has drawn my attention to Rules XV and XXI of the Rules of the Tribunal of Arbitration of the Bengal Chamber of Commerce and Industry. The said Rule may be set out :xv. The dispute will be decided by the Court on the written statements of the parties and oral evidence will not be taken nor will the parties be entitled to appear, nor any formal hearing be held provided that the Court shall have power to take such evidence as, in its absolute discretion, if thinks proper and for such purposes the Court may, if it thinks fit, appoint a time and place for hearing such evidence. At such hearing, none of the parties to the reference or their representatives shall be entitled to examine or cross-examine any witness or the other party or his representatives but the Court only shall have power to examine the witnesses, the parties on their representatives. XXI. If the Court shall at any stage of an arbitration be of the opinion that it is desirable to examine other party or any witness who may not be willing to give evidence before the Court or may be resident outside the city of Calcutta, the Court may apply to the Civil Court having jurisdiction in that behalf to issue process to such party or witness, including the issue of summonses and commission for the examination of witnesses and summonses to produce document and may at its discretion one or both the parties to deposit such fee or fees to cover the cost of any such process as the Court shall consider necessary and in the event of any party who has been called on to deposit such fees failing to do so may deal with the matter in any way the Court may think just. He has contended that these Rules are binding on the parties, and in support of this contention he has referred to the decision in the case of (17) Chaitram Rambilas v. Bridhichandi Keshrichand, 42 ILR (Cal) 1140 and also to the decision in the case of (18) Chandrabhan Bilotia and Anr. v. Ganpatrai and Sons, AIR 1944 Cal 127.
He has contended that these Rules are binding on the parties, and in support of this contention he has referred to the decision in the case of (17) Chaitram Rambilas v. Bridhichandi Keshrichand, 42 ILR (Cal) 1140 and also to the decision in the case of (18) Chandrabhan Bilotia and Anr. v. Ganpatrai and Sons, AIR 1944 Cal 127. Relying on the aforesaid Rules, the learned Counsel has contended that the parties have agreed that it will be in the absolute discretion of the arbitrators as to whether and to what extent any oral evidence should be taken and it is entirely for the arbitrators to take steps for the issue of any commission for examination of any witness if the arbitrators consider evidence of such persons necessary. He has argued that it is not a case where the arbitrators have refused to hear evidence actually tendered by the applicant. The learned Counsel argues that the application for commission had been made after the written statements of the parties have been filed. On the basis of the statements and documents, the arbitrators might have considered that the oral testimony of the witnesses sought to be examined on commission was not necessary. It is his argument that the arbitrators applied their minds and considered the application of the petitioner and upon such consideration refused to entertain the same. The learned Counsel has contended that taking into consideration the written statements of the parties and the documents referred to and in view of the further fact that the arbitrators are not bound by any rules of evidence as to proof of documents, the arbitrators rightly refused to entertain the said application which had been made with the intention of delaying the proceedings. It is his contention that, even if there had been any erroneous exercise of the discretion on the part of the arbitrators, such erroneous exercise of the discretion cannot constitute an act of misconduct on the part of the arbitrators. ( 22 ) WITH regard to the next ground urged on behalf of the petitioner that the arbitrators are guilty of misconduct for not having allowed the petitioner to be represented by a lawyer in the proceedings, Mr.
( 22 ) WITH regard to the next ground urged on behalf of the petitioner that the arbitrators are guilty of misconduct for not having allowed the petitioner to be represented by a lawyer in the proceedings, Mr. Modak has submitted that in view of the provisions contained in Rule XVI of the Rules of the Tribunal of Arbitration of the Bengal Chamber of Commerce the refusal on the part of the Arbitrators does not amount to any misconduct. The said Rule XVI reads as follows: in any case of formal hearing no party shall, without the permission of the Court, be entitled to appear by Counsel, Attorney, Advocate or other lawyer or adviser, but the Court in its discretion may require the parties with or without witness to attend before it to be examined. At the hearing before the Court any party may be represented by a representative, but where the party desires to be represented by a representative, he shall at least two days before the hearing inform the Register in writing of his intention to be so represented and such party shall produce evidence to the satisfaction of the Court that the person by whom the purposes to be represented is in fact his representative and has been duly authorized to represent him. In support of his submission that refusal on the part of the arbitrators to allow the petitioner to be represented by a lawyer does not amount to an act of misconduct in view of the aforesaid Rule XVI, Mr. Modak has referred to and relied on the decision in the case of Nanalal M. Varma and Co. (Gunnies) v. G. Ambala, (Export) (Supra), in which P. B. Mukherji, J. negatived a similar contention upon consideration of the said Rule. ( 23 ) DEALING with the ground that the arbitrators misconducted themselves and the proceedings by not engaging an interpreter, Mr.
(Gunnies) v. G. Ambala, (Export) (Supra), in which P. B. Mukherji, J. negatived a similar contention upon consideration of the said Rule. ( 23 ) DEALING with the ground that the arbitrators misconducted themselves and the proceedings by not engaging an interpreter, Mr. Modak has submitted that there was no request by the seller for engaging any interpreter, but in view of the statements made in the application for allowing the sellers to be represented by lawyer to the effect that the partner of the petitioner who is conducting the case will be in difficulty in conducting the case in English as he does not know English to that extent, the arbitrators of their own accord had suggested that arrangement would be made at the hearing for some persons to act as an interpreter. It is the argument of the learned Counsel that, that suggestion was made by the arbitrators for assisting the petitioner and for doing proper justice to the parties. He has argued that as no interpreter could be arranged at the hearing the arbitrators conducted the proceedings in Hindi, so that there would be no difficulty on the part of the petitioner in properly participating in the proceedings. The learned Counsel points out that the petitioner fully participated in the proceedings, made no grievance of any difficulty and did not raise any objection whatsoever. Mr. Modak has drawn my attention to the proceedings before the arbitrators and he has also commented that even in the petition no case has been made out that the petitioner had asked for an interpreter at the hearing. He has argued that in para 23 and 25 of the petition the petitioner has deliberately made false and misleading statements. He has drawn my attention to the statements made in para 23 (b) and also to the application at p. 101 of the annexure to the petition and has commented that in the said application no such case that the petitioner was not conversant with the Hindi language was at all made as alleged in para 23 (b) of the petition. He has submitted that the falsity of the statements made in para 25 of the petition is clearly established by the minutes of the proceedings before the arbitrators.
He has submitted that the falsity of the statements made in para 25 of the petition is clearly established by the minutes of the proceedings before the arbitrators. He comments that in the petition in para 25 a case is made that Chimanlal Chhotalal Sha, partner of the petitioner who was present, was not at all conversant with English or Hindi languages, but in the affidavit-in-reply affirmed by the said Chimanlal Chhotalal Shah on December 29, 1967, the deponent in para 12 has to abandon that case and has sought to make out a case that his knowledge of Hindi is poor. He points out that in the said para 12 in the affidavit-in-reply a further false case that his request for an interpreter was not acceded to and no adjournment was allowed, is sought to be made out, although no such case was made in the petition itself. Mr. Modak, therefore, submits that there is no merit in this connection. ( 24 ) WITH regard to the last ground urged on behalf of the petitioner, namely, that the arbitrators awarded damages without any evidence, Mr. Modak has submitted that there were enough materials before the arbitrators to come to necessary conclusion as to damages and the quantum thereof. Mr. Modak has stated that the statements of the parties were there and there were also other documents which had been produced before the arbitrators and which the arbitrators had considered. He has argued that on the basis of the materials before the arbitrators, the arbitrators have decided the question of damages and it is not for this Court to consider whether the decision is right or not on the materials before the arbitrators. Mr. Modak contends that even if there had been no evidence as to the market rate before the arbitrators, the arbitrators, who are experts in the trade, are perfectly competent to decide on the question without any such evidence.
Mr. Modak contends that even if there had been no evidence as to the market rate before the arbitrators, the arbitrators, who are experts in the trade, are perfectly competent to decide on the question without any such evidence. He has referred to Rule V (3) of the Rules of the Tribunal to Arbitrators of the Bengal Chamber of Commerce and Industry and the said Rule reads as follows: in constituting any Court the Registrar shall select from the Tribunal as Arbitrator or Arbitrators or Umpire, as the case may be, so far as possible, persons or a person having a practical knowledge of the subject-matter of the contract or contracts in question, and the Registrar shall not select any person who for any reason within his knowledge would not be a proper person to act as Arbitrator or Umpire in the particular matter, but no award shall be invalid nor shall any objection be taken thereto by any party on the ground that any person so selected did not possess such practical knowledge, or was not in fact a proper person to act as Arbitrator or Umpire. ( 25 ) MR. Modak has also referred to para 27 of the petition to show that in fact this Rule has been followed and the arbitrators were persons in the trade itself. The learned Counsel has referred to and relied on the following observations of Rankin, C. J. in the case of (19) Bhican Chand Charoria and Ors. v. G. and M. Fogi and Ors. , AIR 1927 Cal 227 (228-9): it appears to me that the nature of the arbitration before the Bengal Chamber of Commerce is such that one is quite safe in saying that prima facie it is not necessary for the arbitrators to hear oral evidence about market rates which are as a rule well within their own knowledge and within the special experience for which arbitrators are selected. The learned Counsel contends that in the instant case the arbitrators would have been perfectly justified, even if they had decided the question of damages without any evidence because of their said knowledge for which they were selected. He has also referred to the decision in the case of (20) Mediterranean and Eastern Export Co.
The learned Counsel contends that in the instant case the arbitrators would have been perfectly justified, even if they had decided the question of damages without any evidence because of their said knowledge for which they were selected. He has also referred to the decision in the case of (20) Mediterranean and Eastern Export Co. Ltd. v. Fortress Fabrics (Manchester) Ltd. , (1948)2 All ER 186 (187-8) andhas placed particular reliance on the following observations of Lord Godard, C. J. :- the more serious question that was argued was that neither side had tendered evidence with regard to damage and, therefore, the arbitrator had no material before him on which he could fix the amount which the sellers were entitled to receive. This would be a formidable and, indeed, fatal objection in some arbitrations. If, for instance a lawyer was called on to act as arbitrator on a commercial contract he would not be entitled, unless the terms of the submission clearly gave him power so to do, to come to a conclusion as to the amount of damages that should be paid without having evidence before him as to the rise or fall of the market, as the case may be, or as to other facts enabling him to apply the correct measurer of damage, but in my opinion the case is different where the parties select an arbitrator or agree to arbitrate under the rules of a chamber of commerce under which the arbitrator is appointed for them, and the arbitrator is chosen or appointed because of his knowledge and experience of the trade. There can be no doubt that with regard to questions of quality and matters of that description an arbitrator of this character can always act on his own knowledge. As Lord Esher, M. R. said in Writ v. Howson where it was suggested that the umpire ought to have received evidence from experts (4 T. L. R. 386, 387): what would this experienced manufacturer care for the opinion of the weaver? He was selected and appointed on account of his own superior experience. Lopes, L. J. said (ibid) such a man is selected for the very purpose of deciding according to his own experience and examination.
He was selected and appointed on account of his own superior experience. Lopes, L. J. said (ibid) such a man is selected for the very purpose of deciding according to his own experience and examination. It is well-known in the experience of the Courts that many trades have their own Tribunals of arbitration - the Corn Trade, the Produce Broker's Association, the Oil and Fat Trades Association are instances - and no one has doubted - certainly not in modern times - that it is open to an arbitrator skilled in the trade to use his own knowledge and experience on many matters, such as quality, without having witnesses called before him. One of the reasons why commercial men like to go to arbitration before arbitrators of this description is because it saves the expense of calling witnesses and having the conflicting views of experts thrashed out and decided on. The parties are content and intend to accept the judgment of a man in their own trade on whose judgment they know they can rely. This, indeed, I thin, has long been the law. An early illustration is Eads v. Williams. The arbitrators were there appointed to settle the amount to be paid as the rent of a coal mine and Lord Cranworth, L. C. said (22 L. T. O. S. 162, 163): i do not agree in the suggestion that it was incumbent upon those parties to examine witnesses; I do not think that is the meaning when a matter is referred to a surveyor, and people of skill to value, and settle what the value of the property to be bought or let is. . . . . they are entrusted, from their experience and from their observation, to form a judgment which the parties referring to them agree shall be satisfactory; therefore, I do not think that there was anything of importance in their not examining witnesses, provided bona fide they meant to say 'we know sufficiently of the subject to decide properly without examining witnesses'. There are other decisions to a like effect and I would only mention Jordeson and Co. v. Store Etc. Aktiebolag to which counsel for the sellers called my attention.
There are other decisions to a like effect and I would only mention Jordeson and Co. v. Store Etc. Aktiebolag to which counsel for the sellers called my attention. Branson, J. in giving judgment said (41 Lloyd L. R. 201, 203): now I think that the fact that this umpire was an expert in the timber trade and was appointed because he was such an expert must not be lost sight of. I think the parties must be taken to have assented to his using the knowledge which they chose him for possessing; I do not mean to say knowledge of special facts relating to a special or particular case, but that general knowledge of the timber trade which a man in his position would be bound to acquire. I can see no reason why this principle should not be applied to a question of damages just as much as to a question of quality. ( 26 ) THE learned Counsel has finally submitted that the said applications before the arbitrators had been mala fide with the intention of delaying the hearing of the arbitration proceeding. It is his submission that if the petitioner had any genuine grievance for refusal of the prayers by the arbitrators, the petitioner would have moved this Court earlier for appropriate reliefs, either by revocation of the authority of the arbitrators or by their removal. He contends that the petitioner chose not to take any such steps to participate in the proceedings in the expectation of having an award in its favour and has now made this application after having taken its chance before the arbitrators and having lost there. ( 27 ) ON the question whether the arbitrators have misconducted themselves and the proceedings the first contention urged and which falls for determination is whether the act of refusal on the part of the arbitrators to refer to the Court and state a special case for the Court's opinion, amounts to misconduct on the part of the arbitrators or not. Section 13 of the Arbitration Act, relevant portion of which I have already quoted is, in my opinion, an enabling section which empowers the umpire to state a special case for the opinion of the Court on a question of law involved.
Section 13 of the Arbitration Act, relevant portion of which I have already quoted is, in my opinion, an enabling section which empowers the umpire to state a special case for the opinion of the Court on a question of law involved. The said section, to my mind, does not impose any duty or obligation to state any such case for the opinion of the Court and the arbitrators are under no compulsion to state a case for the opinion of the Court at the request of any of the parties. The said power of the arbitrators or umpire to state a case for the opinion of the Court is conferred for the benefit of the arbitrators to enable the arbitrators to seek the assistance and advice of the Court on a question of law for their guidance in deciding such question of law properly for doing justice to the parties. If the arbitrators do not consider it necessary in any given case to refer to Court any such case for the Court's opinion, they are under no compulsion to do so and they cannot be compelled by any of the parties to do so under the Indian Law. The position under the English law in this respect is different, as the provisions of the English Arbitration Act, which I have already noted earlier in this judgment, are quite different; and the English authorities are therefore of no assistance on this particular question. The decision of the Supreme Court in the case of the Chief Controlling Revenue Authority and Anr. v. The Maharastra Sugar Mills Ltd. (Supra), relied on by the learned Counsel for the petitioner, is, in my opinion, not of any assistance in construing Section 13 of the Arbitration Act. In the said decision (3) the Supreme Court was considering a case under the Stamp Act and the interpretation of Section 57 of the said Act. The material part of Section 57 of the Stamp Act with which the Court was concerned reads as follows: 57 (1) - The Chief Controlling Revenue Authority may state any case referred to it under Section 56, sub-section (2), or otherwise coming to its notice, and refer such with its own opinion thereof: (b) if it arises in the Province of Bombay, to the High Court at Bombay. . . . . . . . . . . . . .
. . . . . . . . . . . . . In construing the said section the Supreme Court holds that the power to make a reference under Section 57 is not only for the benefit of the Chief Controlling Revenue Authority but enures also for the benefits of the party affected by the assessment and can be demanded to be used also by such a party; it is coupled with a duty cast on him as a public officer to do the right thing and when an important and intricate question of law in respect of the construction of a document arises, as a public servant it is his duty to make the reference and, if he omits to do so, it is within the power of the Court to direct him to discharge that duty and make a reference to the Court. The Supreme Court observed (3) : in our opinion, in the present case, the power to make a reference under Section 57 is not only for the benefit of the appellant. It is coupled with a duty cast on him, as a public officer to do the right thing and when an important and intricate question of law in respect of the construction of a document arises, as a public servant it is his duty to make the reference. If he omits to do so it is within the power of the Court to direct him to discharge that duty and make a reference to the Court. The aforesaid observations of the Supreme Court, to my mind, clearly indicate that the Supreme Court came to the said conclusion in view of the important consideration that the said Section concerned the public duty of a public servant or a public officer. The arbitrators or umpire, in my opinion, cannot be said to be public servants or public officers. The arbitration Tribunal is essentially a private Tribunal chosen by the parties for adjudication of their private disputes. The arbitrators, undoubtedly, discharge quasi-judicial function and must act honestly, clearly and in accordance with the principles of natural justice; but they, by no means, can be considered to be public servants or public officers and the duties they discharge cannot be said to be public duties.
The arbitrators, undoubtedly, discharge quasi-judicial function and must act honestly, clearly and in accordance with the principles of natural justice; but they, by no means, can be considered to be public servants or public officers and the duties they discharge cannot be said to be public duties. The principle which was applied by the Supreme Court in construing Section 57 of the Stamp Act concerned a public officer in the discharge of a public duty cannot be made applicable, in my view, in interpreting Section 13 of the Arbitration Act which is concerned with the powers of an arbitrator. In the case of Hazi Ebrahim Kassem Cochinwalla v. Northern Indian Oil Industries Ltd. (Supra, p. 231), P. B. Mukharji, J. observed: section 13, Indian Arbitration Act, 1940, provides in sub-para (b) thereof that the arbitrators have power to state a special case for the opinion of the Court on any question of law involved. While English decisions offer valuable guide, it is essential to observe that there is a very important difference in this particular matter between the Indian Law and the English Law. Section 9, English Arbitration Act, 1934, empowers the Court to direct an arbitrator to state a question of law, but not so under the Indian Arbitration Act. There are no powers in the Courts in India under the Indian Arbitration Act, 1940, to direct the arbitrator to state a special case Mr. S. K. Das, learned Counsel for the applicant, relied on the well-known observation in Czarnikow v. Roth, (1922) 2 K B 478 : 127 L T 924, where it has been said that the arbitrators are guilty of misconduct in not granting adjournment for enabling the parties to apply in the Court for the submissioin of a special case. In my judgment, that is not misconduct under the Indian Arbitration Act, 1940. The principles of English decisions in the case I have mentioned as well as in V. Palmer and Co. , (1898) 1 Q B 131, are, in my view, not applicable in India. The view that I have expressed finds support from Sir N. N. Sarkar's Tagore Law Lecture on the Law of Arbitration in 1942 at page 130-1.
The principles of English decisions in the case I have mentioned as well as in V. Palmer and Co. , (1898) 1 Q B 131, are, in my view, not applicable in India. The view that I have expressed finds support from Sir N. N. Sarkar's Tagore Law Lecture on the Law of Arbitration in 1942 at page 130-1. I respectfully agree with the view of the learned J. I am, therefore, of opinion that the refusal to state a case for the opinion of the Court is not an act of misconduct on the part of the arbitrators under the arbitration law in India. I may note that the same views were also reiterated in the decision in the case of Nanalal M. Varma and Co. (Gunnies) v. G. Ambalal (Export) (Supra ). ( 28 ) IN the facts of the present case, I am further of the opinion that the arbitrators were justified in refusing the request of the petitioner to state as case for the opinion of the Court. The order of the Gujarat Government which imposes restrictions of transport of ground nut oil outside the State and on which the petitioner relies in support of his frustration of the contract, itself speaks of and provides for permission for effecting such transport. The contract itself was not hit by the order and performance was possible with the necessary permission of the Government as provided in the order. To establish impossibility of performance of the contract it was essential to establish the necessary facts. Questions of fact were, therefore, primarily involved and not substantial questions of law. It is well-settled now that the arbitrators are competent to decide the question of frustration of any contract. The Supreme Court in the case of the Union of India v. Kishorilal Gupta and Bros. (Supra), held: if an arbitration clause is couched in widest terms as in the present case, the dispute, whether there is frustration or repudiation of the contract, will be covered by it. It is not because the arbitration clause survives, but because, though such repudiation ends the liability of the parties to perform the contract, it does not put an end to their liability to pay damages for any breach of the contract. The contract is still in existence for certain purposes.
It is not because the arbitration clause survives, but because, though such repudiation ends the liability of the parties to perform the contract, it does not put an end to their liability to pay damages for any breach of the contract. The contract is still in existence for certain purposes. But where the dispute is whether the suit contract is void ab initio, the arbitration clause cannot operate on those disputes, for its operative force depends upon the existence of the contract and its validity. So too, if the dispute is whether the contract is wholly superseded or not by a new contract between the parties, such a dispute must fall outside the arbitration clause, for, if it is superseded the arbitration clause falls with it. The argument, therefore, that the legal position is the same whether the dispute is in respect of repudiation or frustration or novation is not borne out by these decisions. In case of The Naihati Jute Mills Ltd. v. Khyaliram Jagannath (Supra), the Supreme Court reiterated the same principle and observed: in cases of frustration it is the performance of the contract which comes to an end, but the contract would still be in existence for purposes such as the resolution of disputes arising under or in connection with it. The question as to whether the contract became impossible of performance and was discharged under the doctrine of frustration would still have to be decided under the arbitration clause which operates in respect of such purposes. The contention of the petitioner on this aspect must, therefore, be negatived. ( 29 ) THE next question that has been raised is that the arbitration misconducted themselves and the proceedings by refusing to hear evidence and by refusing to take steps for issue of a commission for examination of the witnesses as requested by the petitioner. Mr. Modak, learned Counsel for the respondent, rightly points out, in my view, that it is not a case of the arbitrators refusing to hear evidence actually tendered on behalf of the petitioner.
Mr. Modak, learned Counsel for the respondent, rightly points out, in my view, that it is not a case of the arbitrators refusing to hear evidence actually tendered on behalf of the petitioner. Rules of the Tribunal of Arbitration of the Bengal Chamber of Commerce and Industry, and the provisions contained in Rules XV and XXI in particular, clearly provide that it is essentially a matter for the arbitrators to decide as to whether and to what extent any oral evidence should be taken and it is entirely for the arbitrators to take steps for the issue of any commission for examination of any witness, if the arbitrators consider evidence of such person necessary. The question whether any commission should be issued for examination of any witness, rests essentially on the discretion of the arbitrators. If the arbitrators consider it necessary to have the evidence of any particular person for proper adjudication of the dispute, the arbitrators are empowered to take steps for examination of any such witness by applying to appropriate Civil Court for issue of process to such person, including the issue of summonses and commission for the examination of such witness. If, however, the arbitrators are of the opinion in any particular case that the evidence of such person is not necessary, they need not take any steps to have such person examined, even if any particular party wants a commission to be issued for his examination. The position in refusing to entertain an application for issue of a commission for examination of any witness and of taking necessary steps for the said purpose is not the same as refusing to hear any evidence actually tendered. It may be noted that, even in an action in Court, the Court is not compelled to issue a commission as a matter of course on the application of any party, and whether any commission should be issued or not is in the discretion of the Court and the Court exercises its discretion on consideration of the relevant materials. Of course, the power and the discretion that the arbitrators enjoy in the matter of taking steps for issue of commission for examination of any witness have to be exercised properly and in accordance with the principles of natural justice.
Of course, the power and the discretion that the arbitrators enjoy in the matter of taking steps for issue of commission for examination of any witness have to be exercised properly and in accordance with the principles of natural justice. If the arbitrators apply their minds to the questions involved and act honestly and impartially, the act of the arbitrators in either entertaining or refusing application for commission cannot and does not amount to misconduct on their part. Blagden, J. in the case of Chandrabhan Bilotia v. Ganpatrai and Sons (Supra), observed: just as a statutory Tribunal must follow its statutory procedure (if any) right or wrong so all decisions as to the course to be adopted in general by a contractual Tribunal must be read as subject to that course, if any, which the parties to the dispute in a particular case have agreed that their Tribunal shall adopt. Subject to this, according to the high authority of Lord Shaw, the rule about 'natural justice' only really means that a Tribunal which is to apply 'natural justice' must act honestly and impartially. In the present case, the arbitrators applied their minds to the question and they have considered the request of the petitioner. They have, upon consideration, refused to accede to the request of the petitioner to take steps for issue of commission for examination of the witnesses named. To my mind, it appears that the arbitrators were justified in the facts of the instant case in their refusal. Two of the witnesses named in the application of the petitioner, namely, (i) A. Jaswantrai and Co. and (ii) Port Officer of Bhavanagar were sought to be examined for proving certain documents. It is well-settled that the arbitrators are not bound by the rules of evidence and the strict formality of proof of any document. For proof of the documents the arbitrators might have considered examination of any of the said witnesses not to be necessary. With regard to the two other witnesses cited, the arbitrators on the materials on record might have considered their evidence to be unnecessary, particularly in view of the fact that the petitioner had not at all made any application to the Government of Gujarat for permission, as provided in the order of the Government of Gujarat.
With regard to the two other witnesses cited, the arbitrators on the materials on record might have considered their evidence to be unnecessary, particularly in view of the fact that the petitioner had not at all made any application to the Government of Gujarat for permission, as provided in the order of the Government of Gujarat. It is clear that the arbitrators considered the said application of the petitioner and upon consideration refused to accede to the said prayer, and I am satisfied that the refusal by the arbitrators was upon a proper consideration and not capricious and arbitrary. Even if the arbitrators had erred in the exercise of their discretion in refusing to entertain the said application of the petitioner, such erroneous exercise of the discretion would not amount to an act of misconduct on the part of the arbitrators. The Rules of the Bengal Chamber of Commerce confer an absolute discretion on the arbitrators and the parties have bargained for arbitration on the basis of the said Rules. A bona fide exercise of the discretion and power by the arbitrators, conferred on them by the said Rules, cannot constitute an act of misconduct on the part of the arbitrators, even if the decision of the arbitrators may appear to the Court to be erroneous; and that by itself is no ground, in my view, of setting aside of an award of an arbitrator. The arbitrator is the only Judge of the quality and the quantity of evidence and it is familiar learning that the Evidence Act in its rigour is not intended to apply to proceedings before an arbitrator. This contention of the petitioner also fails. ( 30 ) THE next ground of misconduct urged is the refusal on the part of the arbitrators to allow the petitioner to be represented by lawyers before them. The very same contention had been raised in the case of Nanalal M. Varma and Co. (Gunnies) v. G. Ambalal (Export) (Supra ). The learned Judge on a consideration of the relevant Rules of the Rules of the Tribunal of arbitration of the Bengal Chamber of Commerce and Industry repelled the contention and the learned Judge observed: the third objection is about the refusal of the arbitrators to permit the appellant to take the help of lawyers to represent their case before the arbitrators.
Here again the Rule of Arbitration of the Bengal Chamber of Commerce is quite specific. By Rule XVI it is expressly declared and provided, inter alia, 'in any case of a formal hearing no party shall without the permission of the Court be entitled to appear by Counsel, Attorney, Advocate or other legal adviser'. Here again it is clear enough that normally a lawyer will not be allowed to appear or rather a party should not be allowed to appear by Counsel, Attorney, Advocate or other lawyer. If they want to appear, they can only appear with the permission of the arbitrators. It is for the arbitrators to permit or refuse. In this case the arbitrators have refused the applicants' claim to be represented by lawyers. In so refusing, therefore, there cannot be any misconduct because they acted within their powers expressly conferred under the Rules of Arbitration. The parties had agreed in the clause of arbitration set out above that the arbitration should be according to the Rules of the Bengal Chamber of Commerce. That being so, it is not for the applicant now to complain that they were not allowed to be represented by lawyer. I respectfully agree with the observations and I am in entire agreement with the said decision, which it is also duty to follow. The objection of the petitioner is, therefore, over-ruled. ( 31 ) THE next act of misconduct complained of is not engaging an interpreter at the hearing of the reference. It is to be noted that there was no prayer by the petitioner for engaging an interpreter. In view, however, of the statement made by the petitioner that the partner of the petitioner who was looking after the arbitration was not properly conversant with the English language in its application for permission to be represented by a lawyer, the arbitrators of their own accord had suggested that an interpreter would be arranged for helping the petitioner in properly participating at the hearing for doing proper justice to the parties. It appears that for some reason or other an interpreter could not be arranged at the hearing. As no interpreter had been arranged, the arbitrators had conducted the proceedings in Hindi for the benefit of the petitioner. It does not appear that the petitioner raised any objection or made any grievance at the time of the hearing.
It appears that for some reason or other an interpreter could not be arranged at the hearing. As no interpreter had been arranged, the arbitrators had conducted the proceedings in Hindi for the benefit of the petitioner. It does not appear that the petitioner raised any objection or made any grievance at the time of the hearing. The minutes of the proceedings before the arbitrators, on the other hand, clearly indicate that the partner of the petitioner had properly participated in the proceedings. I am unable to accept the case of the petitioner sought to be made in this application that the petitioner is not also conversant with Hindi language and could not effectively participate in the proceedings. It is also to be noted that the petitioner seeks to improve upon its case in its affidavit-in-reply and in para 12 thereof the petitioner seeks to make out a case that the petitioner's request for an interpreter and for an adjournment was not acceded to. No such case is made in the petition and the records of the proceedings clearly belie the case of the petitioner. I am, therefore, of the opinion that in the facts of the present case not engaging an interpreter at the hearing did not constitute an act of misconduct on the part of the arbitrators and the case of the petitioner was in no way prejudiced for non-engagement of an interpreter. I am, therefore, unable to accept this contention. ( 32 ) THE last ground that has been urged in support of this application is that the arbitrators misconducted themselves and the proceedings by awarding damages for Rs. 22,000/- in favour of the buyer respondent without any evidence as to the same or the basis thereof. It is to be noted that, in the present case, there is no dispute as to extension of time for shipment and the main contention of the petitioner has been that it was not possible for the arbitrators to come to any conclusion about the quantum of damages without proper evidence of the market rate. Mr. Gupta, in my opinion, has rightly contended that the case of the respondent made in its affidavit-in-opposition (para 22) that evidence as to market rate was given by the respondent before the arbitrators should not be accepted as the same is not corroborated by the minutes of the arbitration proceedings.
Mr. Gupta, in my opinion, has rightly contended that the case of the respondent made in its affidavit-in-opposition (para 22) that evidence as to market rate was given by the respondent before the arbitrators should not be accepted as the same is not corroborated by the minutes of the arbitration proceedings. The market rat and the quantum of damages that may follow on the basis thereof are questions of fact which can be adjudicated upon only on some materials. There cannot be any doubt, in my opinion, that it is not open to the arbitration to come to any conclusion on a question of fact arbitrarily without some materials. The Rules of the Bengal Chamber of Commerce cannot be construed, in my opinion, as granting a charter to the Tribunal of arbitration to decide any such question of fact arbitrarily or capriciously without some materials which might enable them to come to a reasonable conclusion on the question involved. If the arbitrators choose to decide any such question of fact arbitrarily or capriciously without any materials whatsoever, the arbitrators act improperly and commit an act of misconduct, and the Court, although it does not sit as a Court of Appeal over the decision of the arbitrators, retains sufficient power and jurisdiction to set aside such award of the arbitrators. As the position in law, to my mind, appears to be well-settled, I do not consider it necessary to discuss the various authorities cited by Mr. Gupta on this aspect. It is, however, equally well-settled that if there be some materials before the arbitrators which would enable the arbitrators to come to a conclusion on the question of fact involved, there could not be any mishandling of the arbitration proceedings if the arbitrators come to any conclusion on the basis thereof. It is not for this Court to appraise the quality and quantity of the materials available to the arbitrator and to sit in appeal over the award as to whether the same was given correctly on the basis of the said materials. It may be possible that on the same materials the Court might have come to a conclusion different from that of the arbitrators, but that by itself, in my opinion, is no ground for interfering with the award of the arbitrators.
It may be possible that on the same materials the Court might have come to a conclusion different from that of the arbitrators, but that by itself, in my opinion, is no ground for interfering with the award of the arbitrators. The question that requires consideration in the present case, therefore, is whether there were such materials available to the arbitrators as would enable them to come to the conclusion to which they came on the question of damages. The materials necessary for coming to a conclusion on the question of market rate and the quantum of damages on the basis thereof need not, in my opinion, necessarily consist of outside evidence and expert arbitrators with personal knowledge of the market fluctuations and rates can always draw on their own knowledge and act on the same. In the instant case, apart from other materials in the shape of statements and documents, I am clearly of the opinion that the arbitrators had expert personal knowledge of the question involved and were competent to come to a proper conclusion on the basis of their own expert knowledge. The following facts, to my mind, clearly establish that the arbitration in the present case was an arbitration by experts in the trade: (1) The nature of the arbitration agreement which clearly reflects the intention of the parties that the arbitration will be by experts. (2) The Rules of the Tribunal of Arbitration of the Bengal Chamber of Commerce and particularly the provisions contained in Rule V relating to 'constitution of Court'. (3) The statement made in para 27 of the petition. ( 33 ) THE observation of Rankin, C. J. in the case of Bhican Chand Charoria and Ors. v. G. and M. Fogt and Ors. (Supra), which I have earlier quoted in the judgment, to my mind, support this view. In this connection, the following observations of Chatterjee, J. in the case of Mukhram Luchminarain v. Khusiram Benarshilal (Supra), from his concurring judgment may be usefully quoted: in this case there was an arbitration by the members of a Chamber of Commerce who have special knowledge and experience of the trade and of all commercial contracts and transactions.
In this connection, the following observations of Chatterjee, J. in the case of Mukhram Luchminarain v. Khusiram Benarshilal (Supra), from his concurring judgment may be usefully quoted: in this case there was an arbitration by the members of a Chamber of Commerce who have special knowledge and experience of the trade and of all commercial contracts and transactions. Commercial men resort to such Tribunals because the arbitrators can use their knowledge with regard to the trade and thus evidence regarding matters relating to the trade or the fluctuations in the market can be dispensed with. They are eminently fitted to decide the questions which were raised before them. ( 34 ) IN the present case, I am therefore of the opinion that the arbitration was by commercial men wide experience and expert knowledge on the subject, eminently fitted to decide the question and they were in a position to dispense with evidence regarding matters relating to the trade or the fluctuations in the market and were perfectly competent to decide the question on the basis of their own experience and knowledge. The decision in the case of Mediterranean and Eastern Export Co. Ltd. v. Fortress Fabrics (Manchester) (Supra) and the observations of Lord Goddard, C. J. relied on by Mr. Modak and which I have already quoted, to my mind, clearly support the view I have taken. In view of my finding that the arbitrators had expert knowledge of the trade and were competent to decide the question of damages on the basis of their own knowledge and experience without any outside evidence, I do not consider it necessary to decide the question whether there were other materials in the shape of statements and documents available to the arbitrators which could enable them to come to their conclusion. The award of the arbitrators cannot, therefore, be assailed in the instant case on the ground that the arbitrators acted without any evidence and this contention of the petitioner is not, in my opinion, sound. ( 35 ) ALL the contentions raised by the petitioner, therefore, fail. I have to observe that there appears to be some force in the contention of Mr. Modak that the applications were made by the petitioner before the arbitration Tribunal mala fide with the object of delaying the proceedings.
( 35 ) ALL the contentions raised by the petitioner, therefore, fail. I have to observe that there appears to be some force in the contention of Mr. Modak that the applications were made by the petitioner before the arbitration Tribunal mala fide with the object of delaying the proceedings. It appears to my mind that if the petitioner had felt any genuine grievance for the refusal of the said applications by the arbitrators the petitioner would have taken steps earlier. In view, however, of my finding that there is no merit in any of the contention raised by the petitioner, this contention of Mr. Modak is not of any material consequences and I do not consider it necessary to decide the same. This application, therefore, fails and dismissed with costs. There will be judgment in terms of the award, interest on judgment @ 6% and costs which will include the costs of obtaining and filing the award. Application dismissed.