JUDGMENT - This revision application is against an order passed in Civil Appeal No. 229 of 1971 allowing that appeal and setting aside an order passed by the Third Joint Civil Judge, Junior Division, Akola in Regular Civil Suit No 330 of 1968, making a decree on the basis of the award which was filed before that-Court. 2. The petitioners before me, M/s Chandak and Company of Katol, had certain forward delivery contracts with M/s Deokaran Kanaiyalal, Akola in cotton seed According to the petitioners, there were two transactions which they entered into with M/s Deokaran Kanaiyalal, original defendants and respondents before me, hereinafter referred to as Deokaran Kanaiyalal, which resulted, alter the contracts being squared up, in a profit to them of Rs. 3418. The petitioners demanded that amount from Deokaran Kanaiyalal and as Deokaran Kanaiyalal did not pay the amount, a notice was issued. Thereafter as Deokaran Kanaiyalal was a member of the M. P. Commercial Exchange, the plaintiff, hereinafter referred to as Chandak and Co. referred the matter to an Arbitrator by making an application to the Exchange appointing its own Arbitrator. M /s Deokaran Kanaiyalal declined to appoint an Arbitrator and declined to accept the jurisdiction of the Arbitrators denying that there was any subsisting arbitration agreement between them and Chandak and Co. According to them, Chandak and Co. also had one more contract with them and that these contracts were not "subject to arbitration bye-laws of the Exchange." They, therefore, objected to the jurisdiction of the Arbitrators. Nonetheless the Arbitrators entered upon the reference. Deokaran Kanaiyalal appeared before the Arbitrators, under protest objecting to the jurisdiction of the Arbitrators. But the Arbitrators in due Course made an award in favour of Chandak and Co. awarding a sum of Rs. 3418 to them. The award was then filed in Court for being made into a decree and that is how these proceedings started which have come up before this Court now by way of revision application. 3. Deokaran Kanaiyalal appeared before the trial Court and objected to the award being converted into a decree on several grounds. 3418 to them. The award was then filed in Court for being made into a decree and that is how these proceedings started which have come up before this Court now by way of revision application. 3. Deokaran Kanaiyalal appeared before the trial Court and objected to the award being converted into a decree on several grounds. Their first contention was that the Arbitrators had no jurisdiction to enter upon the arbitration, that there was no arbitration agreement between them and Chandak and Co., that the Arbitrators acted in a highhanded manner and improperly, that they did not decide the question of jurisdiction and also did not pay any attention to the contention of Deokaran Kanaiyalal that "the contract was not subject to the bye-laws of the Exchange, that the transactions are not noted in the Exchange, nor the claimant was registered as a non-member, as required under the Rules. They, therefore, contended that no decree can be passed on such an award, the award being without jurisdiction. 4. The learned trial Judge framed issues on these pleadings of the parties and held that the award was not without jurisdiction, nor was it otherwise invalid or improperly procured In the view which he took, therefore, he decreed the claim and made the award into a decree of the Court. It was against this judgment and order that Deokaran Kanaiyalal appealed to the District Judge in Regular Civil Appeal No. 229 of 1971. 5. The Assistant Judge, Akola who beard the appeal held, disagreeing with the trial Court, that the Arbitrators bad no jurisdiction and that there was no valid arbitration agreement between the parties. He also held that the contract in question which gave rise to the award was not in accordance with law and, therefore, also the plaintiff, Chandak and Co., was not entitled to the award and the decree. It is against this judgment and order of the Assistant Judge, Akola that the present revision application is directed. 6. It is not in dispute before me that there were forward delivery contracts in cotton seed between Chandak and Co. of Katol and Deokaran Kanaiyalal of Akola. It is against this judgment and order of the Assistant Judge, Akola that the present revision application is directed. 6. It is not in dispute before me that there were forward delivery contracts in cotton seed between Chandak and Co. of Katol and Deokaran Kanaiyalal of Akola. It is also not in dispute and the parties have proceeded on the assumption that so far as Akola is concerned and so far as forward delivery contracts in cotton seed are concerned, they are regulated and governed by the Forward Contracts (Regulation) Act, 1952 According to Chandak and Co., there were only two such contracts, while according to Deokaran Kanaiyalal there was in addition a third contract which resulted in a loss to Chandak and Co. and when accounts were taken, the only amount which was due to Chandak and Co from Deokaran Kanaiyalal Was a sum of Rs. 1,000 and odd. The question whether there were two contracts or three contracts between the parties, as contended by one and the other, can be left aside for the time being as the question which arises for consideration before me does not turn upon it for, it is an admitted position that whether the contracts were two or three, they are not in accordance with the requirements of the byelaws and the Rules of the M. P. Commercial Exchange Ltd. That, therefore, is a common ground between the parties. Degkaran Kanaiyalal admittedly was a member-firm: of the M. P. Commercial Exchange Ltd. of Akola. It is also an admitted position that plaintiff Chandak and Co. was not a member and could not be a member of the M. P. Commercial Exchange Ltd. The firm was also not registered as a non-member with the M. P. Commercial Exchange Ltd. It is also common ground between the parties that there was no written contract between them either to refer any dispute in regard to any contract which might take place between them to an Arbitrator or set of Arbitrators, nor was there any contract in writing between them in regard to the forward delivery contract of cotton seed, whether 2 or 3, as contended by the respective sides. The question which arises for determination, therefore, is 00 facts which are either admitted or established and not disputed. These facts, as I have pointed out, are first that Chandak and Co. The question which arises for determination, therefore, is 00 facts which are either admitted or established and not disputed. These facts, as I have pointed out, are first that Chandak and Co. was not registered as a nonmember of the M. P. Commercial Exchange Ltd. while Deokaran Kanaiyalal was a member. That the contracts between Chandak and Co. and Deokaran Kanaiyalal were not reduced to writing. No kabalas were exchanged. The transactions were not noted with the M. P. Commercial Exchange Ltd. No statement was submitted in regard to these contracts by Deokaran Kanaiyalal to the Exchange and the contracts were entered into orally by means of telephone, and are otherwise evidenced by letters written by Deokaran Kanaiyalal to Chandak and Co. 7. The questions of law which have arisen on these facts, which are proved, are whether there is a valid arbitration agreement between Chandak and Co. and Deokaran Kanaiyalal which would confer jurisdiction upon the Arbitrators to decide the dispute between them, and essentially whether the very contracts which gave rise to the disputes between the parties are contracts which are eoforceable at the instance of Chandak and Co. It seems to me and it is beyond dispute that if the contracts entered into by Chandak and Co. are any way unenforceable or not legal, then the claim to refer the dispute to the Arbitration falls with them. The reason is simple. It is not the case of Chandak and Co. that there is any written agreement to refer the dispute to the Arbitrators. According to the Chandak and Co., Deokaran Kanaiyalal being a member-firm under the bye-laws and the Rules of the M. P. Commercial Exchange Ltd. has bound itself to refer any dispute between a member and non-member to the Arbitration under the Rules of M. P. Commercial Exchange. It is the contention of the Chandak and Co. that by virtue of this regulation, which Deokaran Kanaiyalal has accepted, there being a contract between them and Deokaran Kanaiyalal, they were entitled to invoke the Arbitration clause by which Deokaran Kanaiyalal was bound and they having accepted to be bound by that Arbitration clause there should be deemed to be a subsisting arbitration agreement between Chandak and Co. and Deokaran Kanaiyalal enabling a reference of the dispute to the Arbitrators. and Deokaran Kanaiyalal enabling a reference of the dispute to the Arbitrators. It will be immediately seen that this argument depends for its validity and sustenance on the very contracts which were entered into by Chandak and Co. with Deokaran Kanaiyalal found to be in order and legal. They are the very basis of the Arbitration clause sought to be invoked. If these contracts or agreements fail, and for any reason found to be unenforceable, then the clause of Arbitration and the arbitration agreement will fall with them. It is, therefore necessary, in my opinion, in the first instance to consider the question whether the agreements in question themselves are valid and enforceable. 8. Now section 15, sub-section (1) of the Forward Contracts (Regulation) Act, 1952 provides two things, (l) for a declaration by notification by Central Government in respect of certain goods or class of goods and for certain areas which may be notified as being subject to the provisions of the forward Contracts (Regulation) Act. Where no such notification is issued both in regard to the goods or class of goods and in regard to the areas, wherever any contract is entered into in regard to the specific goods in the notified area, then such contract would be illegal unless it is entered into "between members of a recognised association or through or with any such member". Since Chandak and Co.'s contracts were entered into through Deokaran Kanhaiyalal, a member of the recognised association, namely, the M. P. Commercial Exchange Ltd., the contracts would be legal and would not be hit by section 15 (1) of the Forward Contracts (Regulation) Act. However, sub-section (2) of that section is material. That sub-section lays down that where such a contract is not in accordance with any of the bye-laws specified in that behalf under clause (a) of sub-section (3) of section 11, then such a contract shall be void. Now clause (a) of sub-section (3) of section 11 says that the Association shall make bye-laws specifying the contravention of which will make the contract entered into otherwise than in accordance with such bye-laws void, under subsection (2) of section 15. Now clause (a) of sub-section (3) of section 11 says that the Association shall make bye-laws specifying the contravention of which will make the contract entered into otherwise than in accordance with such bye-laws void, under subsection (2) of section 15. So far as the M. P. Commercial Exchange Ltd. is concerned, its bye-law 239 of the Bye-laws provides that any forward contract entered into in pursuance of section 15 (I), which was contrary to the provisions of bye-laws 26 (2), 28 (a), 28 (b), 28 (c), 35 (5), 39 and 214-II, shall be void in accordance with sub-section (2) of section 15. Now here we are concerned with bye-law No. 28 (b) which provides that forward delivery contract or a hedge contract between a member or a non-member shall be in writing and in the specified form given in Appendix. Where, therefore, a contract between a member and a non-member, either hedge contract or forward delivery contract, if it is not in accordance with bye-law No. 28 (b), namely, in the form and in writing, then it would contravene bye-law No. 28 (b) and, therefore, would come within the mischief of section 11, sub-section (3), clause (a). From the facts which I have stated above and which are not in dispute, the present contracts between Chandak and Co. and Deokaran Kanhaiyalal are in not writing and are not in the form as contemplated in the Appendix. Therefore, they would be per se not enforceable and void. It follows that if the contracts are void, then there can be nothing which can be enforced on the basis of those contracts. From what I have stated above, when the contracts fail, then the Arbitration clause must also fail with them. 9. However, what is sought to be urged is that the contracts in question are saved, as the case of Chandak and Co. falls within the proviso of sub-section (3) of section IS. Now, sub-section (3) of section IS provides the rights of non-members in respect of such contracts, and to recover any sum under such contract is saved provided "such person had no knowledge that such transaction was in contravention of any of the bye-laws specified under clause (a) of sub-section (3) of section II. Now, sub-section (3) of section IS provides the rights of non-members in respect of such contracts, and to recover any sum under such contract is saved provided "such person had no knowledge that such transaction was in contravention of any of the bye-laws specified under clause (a) of sub-section (3) of section II. "In other words, the person seeking to enforce such a contract which is in contravention of any of the bye-laws of the M, P. Commercial Exchange Ltd. will have to show before being able to enforce it and avoid the consequences of its being void, that he had no knowledge that the transactions were required to be in a particular form or were in contravention of the bye-laws, in this particular case bye-law 28 (b). 10. Kasturchand who gave evidence on behalf of Chandak and Co. claimed that he was unaware of any such contravention or any such requirement of the M. P. Commercial Exchange Rules and Bye-laws. His evidence, however, was di5believed by the learned lower appellate Judge and in my opinion rightly so. It may be mentioned that Kasturchand was himself a dealer in cotton at Katol, which is a cotton producing centre. He was the President of the Agricultural Produce Market Committee at Katol and was himself a trader in cotton and cotton seed. He himself had transactions with merehants at Akola and had in fact entered into such forward delivery contracts with a Firm of which one of the Arbitrators was a partner. He also stated during his examination-in-Chief that when he had made enquiries, Ratanlal of Deokaran Kanhaiyalal had told him that there would be certain formalities regarding the Exchange which he would get completed. He says "I was not knowing about the formalities of the Exchange which were to be completed. I was not knowing that a nonmember was required to be registered with the Exchange." 11. It is not, however, possible to accept the position that Kasturchand was unware either of what the formalities were or the existence of the bye-laws of the M. P. Commercial Exchange Ltd. for the reasons which I shall presently give. In his cross-examination Kasturchand (P.W. 1) admitted that he had a few transactions in forward delivery contracts, but says that he did not take actual delivery as the transactions were squared up before the due date. In his cross-examination Kasturchand (P.W. 1) admitted that he had a few transactions in forward delivery contracts, but says that he did not take actual delivery as the transactions were squared up before the due date. That in the year 1969-70 he also entered into forward delivery contract with one Sadhuram Satya prasad of Akola. He was also aware of the commercial exchange building situated in cotton market at Akola and had seen businessmen doing business there in the ring of the Exchange and finally that he "only knew that the transactions are carried on in forward contract under the aegis of the Exchange and they are legal". Kasturchand, therefore, was not a novice to forward delivery contracts, he having himself entered into them and having successfully ended them by squaring them up. If he had, therefore, any forward delivery contracts, which went through, then it would follow that he must have known the procedure, the formalities and the requirements of such valid contracts which were honoured and accepted. 12. In the face of this and particularly when Kasturchand (P. W. 1) says that for 10 years before he gave evidence he was "knowing about the transactions in forward contract through the Exchange at Akola", his statement in his examination-in-chief that "he was not knowing about the byelaws of the exchange" has to be considered. When he had talks with Ratanlal of Deokaran Kanhaiyalal for the first time he says "I also did not know as to what were the bye-laws of the Exchange when I began to have transactions with the defendant." The transactions in suit are of the year 1968 and Kasturchand gave his evidence in 1970. It would be difficult to accept, under the circumstances, that having commenced such transactions in the year 1960, in the year 1968 Kasturchand was such a novice and so ignorant of the forward delivery contracts that he merely accepted when Ratanla1 says that there were some formalities to be completed with regard to the Exchange in respect of the contracts, and that he will look to them. It is also interesting to note that as there were certain formalities in connection with the Exchange which were to be completed, he did not see to it that those formalities were completed. It is also interesting to note that as there were certain formalities in connection with the Exchange which were to be completed, he did not see to it that those formalities were completed. From what he had stated and to which I have made a reference above, it seems that he was aware of the exact requirements and the formalities and also the bye-laws requiring those formalities to be completed. This conclusion is further strengthened by the notice which he had addressed to the M. P. Commercial Exchange Ltd just before the commencement of the Arbitration proceedings, on 21st April 1968 Ex. 127. In this letter to the President he says that he had entered into hedge contract "subject to the Arbitration bye-laws in Exchange" and further that he desired settlement thereof by Arbitration as per bye-laws of the Exchange". He then quoted bye-law No. 167 (I). It is true that in his evidence he has stated that he came to know about the bye-laws subsequent to the starting of the dispute and that he got them later, This statement of his, however, is too thin to bear any examination. As I pointed out, it is difficult to conceive in the circumstances and the background of Kasturchand's forward and other cotton transactions that he would be unaware, particularly when he was made aware even, according to him, of the necessity of completing certain formalities in regard to the transactions with the Exchange, by Ratanlal. If he was aware and I have no hesitation in holding that Kasturchand was aware of the requirements of the bye-laws and the Rules of the M. P. Commercial Exchange Ltd., then it follows that his case cannot be brought under the proviso to sub· section (3) of section 15. If his case cannot come under the proviso to sub-section (3) of section 15, then it follows that there was no valid or enforceable contract between Chandak and Co. and Deokaran Kanhaiyalal. This itself is the basis of the existence of the Arbitration agreement. If the very contract itself fails and is unenforceable between the two persons, then even assuming that such a contract provides for an Arbitration and the Arbitrators proceed to arbitrate upon the dispute and make an award, the award itself would be without jurisdiction and also illegal. This itself is the basis of the existence of the Arbitration agreement. If the very contract itself fails and is unenforceable between the two persons, then even assuming that such a contract provides for an Arbitration and the Arbitrators proceed to arbitrate upon the dispute and make an award, the award itself would be without jurisdiction and also illegal. Under the circumstances, since the very contracts which are the basis of the dispute are unenforceable at the instance of Chandak and Co. and void being against the prohibition of the Forward Contracts (Regulation) Act, no relief can be granted to the plaintiff and the Arbitrators' award was wholly illegal and without jurisdiction. Consequently the order passed by the lower appellate Court is correct and will have to be upheld. 13. In the result, the revision application fails and is dismissed. In the circumstances of the litigation and as rightly observed by the lower appellate Court, the parties must be directed to bear their costs throughout. Revision application dismissed.