Judgment :- THANGAMANI, J. 1. Govindji Jeevat and company the appellant in all the three Civil Misellaneous Appeals is a North Indian firm of cotton merchants carrying on business from Bombay. They sold 1200 bales Gujarat 797 cotton to the respondent Sree Saraswathi Mills Limited, Madurai through Rajalakshmi & co., Madurai EXs. A-1 and A-2 are the letters dated 16.5.1977 and 27.5.1977 respectively confirming the sales. The relevant terms and conditions of sale as per these two letters are as under: 1. Description:- Gujarat 797 cotton Quality:- Sample No. 316 approved by respondent). Quantity:- Bales 700 Price:- Rs. 1311.11p per quintal of 100 kgs. F.O.R. Tiruttani. Delivery:- June 1977 dispatch (subject to availability of freight). It is the case of the appelant that the respondent failed to furnish them the necessary agricultural textile licence for despatch of the said bales with the result that under the first contract dated 16.5.1977 they were able to despatch only 250 bales within the agreed delivery period. Another 350 bales of cotton were despatched against the first contract after 30th June 1977, against the second contract dated 26.5.1977, 100 bales of cotton were despatched. Thus 100 bales of cotton against the first contract and 400 bales of cotton against the second contract remained undelivered on account of the failure of the respondent to procure the required ATLs. The said 500 bales of cotton were lying ready with the appellant for despatch and they were incurring carrying charges. On, 3.4.1978, 250 out of the said 500 bales were disposed of by the appellant on account and at the risk of the respondent at the rate of Rs. 2500/- per candy. The remaining 250 bales of cotton were disposed of on the same terms on 7.4.1978. The appellant has suffered loss of Rs. 77,620-42 on the sale of the said 100 bales of cotton pertaining to the first contract and Rs. 2,99,267-39 on the sale of 400 bales of cotton relating to the second contract. The aggregate sum of Rs. 3,76,887-81 represents the difference between the contracted price in respect of the said 500 bales of cotton and the price prevailing in the market as on 3.4.1978 and 7.4.1978, the dates on which the 500 bales were disposed of. Besides, the respondent is liable to pay the appellant carrying charges whose total comes to Rs. 2,61,247.36. 3,76,887-81 represents the difference between the contracted price in respect of the said 500 bales of cotton and the price prevailing in the market as on 3.4.1978 and 7.4.1978, the dates on which the 500 bales were disposed of. Besides, the respondent is liable to pay the appellant carrying charges whose total comes to Rs. 2,61,247.36. After giving credit to the respondent for the sum of Rs. 3,970-64 and Rs. 11,587.05 being the difference in carrying charges on 100 bales under the first contract and 400 bales on the second contract Rs. 6,70,797-58 is due by them to the appellant. 2. On 19.4.1978 the appellant sent to the respondent their statement of claim for the abovesaid sum. On 26.4.1978 the Company forwarded their reply repudiating their liability. Thereupon, on 3.5.1978 alleging that the respondent-Company is unwilling to remit the claim the appellant addressed the Secretary East India Cotton Association Limited seeking appointment of arbitrators to resolve the dispute. The East India Cotton Association entered on the arbitration and issued notice to the respondent. The latter did not however, pay heed to the notice. Instead, it moved the Sub-Court, Madurai denying the arbitration agreement relied on by the appellant and praying for adjudication in that regard under S. 33 of the Arbitration Act. The Sub Court accepted the contention of the present appellant and made a declaration that an arbitration agreement in writing existed between the parties as found from Ex. A.2 letter dated 27.5.1977 of the appellant to the respondent. This adjudication by the Sub Court was the subject of challenge by the respondent herein in C.R.P. No. 2181 of 1979 on the file of this Court. A single judge of this Court held that there existed valid arbitration agreement between the parties and accordingly dismissed the Civil Revision Petition. On 1.3.1982 the Arbitrators held that 500 bales of Gujarat 797 cotton delivery of which was not taken by the respondent be invoied back at the rate of the contracted variety as on 31st August 1977. Accordingly, they passed an award that the appellant shall get the rate of Gujarat 797 cotton fixed by the by-law 34-A Committee of the Association as on 31.8.1977 and the claim from the respondent the difference between the contract rates and the rate fixed by By-law 34-A Committee. Accordingly, they passed an award that the appellant shall get the rate of Gujarat 797 cotton fixed by the by-law 34-A Committee of the Association as on 31.8.1977 and the claim from the respondent the difference between the contract rates and the rate fixed by By-law 34-A Committee. And the appellant is also entitled to claim from the respondent the actual carrying charges in respect of the bales delivery of which was not taken, carrying charges for 2 months at the rate of 2 1/2 per month. The respondent is liable to pay interest at the rate of 10 1/2% per annum on the amount due to the appellant from 31.8.1977 till the date of payment. The respondent was also directed to meet the cost of arbitration which was fixed at Rs. 2090/- Thereafter, the respondent Mill preferred an appeal before the Board of Directors of East India Cotton Association. On 30.7.1982 the Board set aside the award of Arbitrators and passed an order that the respondent Mill shall pay to the appellant Rs. 5,02,000/- within a fortnight from the date of receipt of that award, failing which they shall further pay interest at the rate of 19 1/2% per annum from 30th July 1982 till the date of payment. On 18.2.1983 the respondent preferred Arbitration Petitioner No. 24 of 1983 on the Ordinary Original Civil Jurisdiction of the High Court of Bombay to set aside the award under S. 30 of the Arbitration Act. That was transferred to the Court of Additional Sub Judge, Madurai and taken on file as O.P. No. 410 of 1983. O.P. Nos. 235 of 1984 of 236 of 1984 were also preferred in that Court by the appellant and respondent respectively. While the first petition sought a decree on the basis of the award passed by the Arbitrators and the Appellate Board, the next petition is to set aside those awards. By common consent all the petitions were enquired together by learned Sub-Judge, Madurai and a common judgment was rendered. O.P. No. 235 of 1984 was dismissed and O.P. Nos. 410 of 1983 and 236 of 1984 were allowed setting aside the award passed by the Arbitrators and the Appellate Board, the parties were directed to bear their respective costs. And these appeals are directed against the said judgment and decrees. 3. O.P. No. 235 of 1984 was dismissed and O.P. Nos. 410 of 1983 and 236 of 1984 were allowed setting aside the award passed by the Arbitrators and the Appellate Board, the parties were directed to bear their respective costs. And these appeals are directed against the said judgment and decrees. 3. The lower Court set aside the award of the Arbitrators and the Appellate Board principally on these grounds:— 1. The awards are arbitrary, capricious and improperly procured; 2. The Arbitrators and the Arbitration Board have violated the principles of natural justice. 3. No opportunity had been given to the respondent Mill to nominate its own Arbitrator as per the provisions of the East India Cotton Association Limited. 4. The refusal of the Arbitrators to permit the respondent Mill to let in evidence is a misconduct on their part under S. 30(a) of the Arbitration Act. 5. The extension of time even by mutual consent for the supply of cotton beyond June 1977 is contrary to the provisions of S. 23 of the Indian Contract Act. 6. The Mill is not liable to pay any carrying charges. 7. The award is bad to the extent of granting of interest beyond the date of decree. 4. The Arbitrators in their Award dated 1.3.1982 have stated that they examined all the papers produced before them by the parties heard the Advocates of both sides, considered all the aspects of the case and held that 500 bales delivery of which is not taken by the respondent, be invoiced back at the rate of the contracted variety as on 31.8.1977. Accordingly, the award was passed entitling the appellant to claim the difference in rate of Gujarat 797 cotton fixed by the bye-law 34-A Committee of the Association as on 31.8.1977, and the contract rates. The Appellate Board passed a modified award stating that they have gone through the statement of grounds of Cross-Appeals, rejoinders thereto and the papers in the case filed and the arguments of both sides. 5. Thiru V. Srinivasan, learned counsel for the appellant submitted that the Arbitrators need not give any reason for their findings. The trial Court erred in finding that the awards are vitiated for lack of details and excess of jurisdiction in view of the principles laid down in Firm Madanlal Roshanlal v. Hukumchand Mills ( AIR 1967 S.C. 1030 ). 5. Thiru V. Srinivasan, learned counsel for the appellant submitted that the Arbitrators need not give any reason for their findings. The trial Court erred in finding that the awards are vitiated for lack of details and excess of jurisdiction in view of the principles laid down in Firm Madanlal Roshanlal v. Hukumchand Mills ( AIR 1967 S.C. 1030 ). The Apex Court in that case rejected the contention that when an arbitrator has given no reason for the award, nor there is any legal proposition as basis of award then the award must be rejected on the ground that there are errors of law on the face of award. Held that arbitrators award on both fact and law is final and there is no appeal from his verdict. The Court cannot review his award and correct any mistake in his adjudication, unless an objection to the legality of the award is apparent on the face of it. The Court also extracted what the Privy council has stated in Champsy Bhara and Company v. Jivraj Baloo Spinning and Weaving Company Limited (AIR 1923 P.C. 66) as under: “An error in law on the face of the award means, that you can find in the award or a document actually incorporated thereto, as for instance a note appended by the Arbitrartor stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous.” In Chellappan v. Kerala S.E. Board (AIR 1975 Supreme Court 230) it has been laid down that the Arbitrator is not bound to give a reasoned award and if, in passing the award he makes a mistake of law or of fact that is no ground for challenging the validity of the award. It is only when an erroneous proposition of law is stated in the award and which is the basis of the award, can the award be set aside or remitted on the ground of error of law apparent on the face of the record. It is only when an erroneous proposition of law is stated in the award and which is the basis of the award, can the award be set aside or remitted on the ground of error of law apparent on the face of the record. The next decision cited in Raipur Development Authority v. Chokhamal Contractors (AIR 1990 Supreme Court 1426) is also to the effect that an award passed under the Arbitration Act is not liable to be remitted or set aside merely on the ground that no reasons have been given in its support except where the arbitration agreement or the deed of submission or an order made by the Court such as the one under S. 20 or S. 212 or S. 34 of the Act or the statute governing the arbitration requires that the arbitrators or the umpire should give reasons for the award. In Tamil Nadu Electricity Board v. Larsen & Toubro Limited 1991-2-L.W. 464) a Division Bench of this Court following the above cited decision of the Supreme Court rejected the contention that an award is liable to be set aside merely on the ground that no reason has been given in its support, and the Arbitrators had given a single line award. In Hindustan Construction Co. Ltd. v. State of Jammu and Kashmir ( AIR 1992 S.C. 2192 ) the Arbitrators have just awarded amounts to the contractor without referring to the contract or any of its clauses. It was contended that the Court should have looked into the terms of the contract and interpreted them. Had it been done, it would have shown that the Arbitrators were wrong. The Supreme Court repelled this argument and held that could not be done. Even if the Arbitrators had arroneously interpreted the relevant clauses of the contract is making their award, the Court cannot touch the award as it is with in the jurisdiction of the Arbitrators to interpret the contract. Whether the interpretation is right or wrong, the parties will be bound only if they set out their line of interpretation in the award and that it is found erroneous can the court interfere. The Court, however, said that apart from existence of an “error apparent on the face of the award”, there was another angle from which a non-speaking award can be considered by the Court and, if necessary, interfered with. The Court, however, said that apart from existence of an “error apparent on the face of the award”, there was another angle from which a non-speaking award can be considered by the Court and, if necessary, interfered with. This rule and its limitation s have been explained by the Supreme Court in Sudarasan Trading Company v. Government of Kerala , A.I.R. 1989 Supreme Court 890) of these lines:— “It is not open to the court to probe the mental process of the arbitrator and speculate, where no reasons are given by the Arbitrator, as to what impelled the Arbitrator to arrive at his conclusion. In the instant case the Arbitrator has merely set out the claims and given the history of the claims and then awarded certain amount. He has not spoken his mind indicating why he has done what he has done: he has narrated only how he came to make the award. In the absence of any reasons for making the award, it is not open to the court to interefere with the award. Furthermore, in any event, reasonableness of the reasons given by the Arbitrator, cannot be challenged. Appraisement of evidence by the Arbitrator is never a matter which the Court questions and considers. If the parties have selected their own forum, the deciding forum must be conceded the power of appraisement of the evidence. The Arbitrator is the sole judge of the quality as well as the quantity of evidence and it will not be for the Court to take upon itself the task of being a judge on the evidence before the arbitrator.” 6. Learned counsel for the respondent relied on the decision of the Supreme Court in Continental Construction Company Limited v. state of M.P. (A.I.R. 1988 S.C. 1166) wherein it has been laid down that the Arbitrator is not a conciliator and cannot ignore the law or misapply it in order to do what he thinks is just and reasonable. Learned counsel for the respondent relied on the decision of the Supreme Court in Continental Construction Company Limited v. state of M.P. (A.I.R. 1988 S.C. 1166) wherein it has been laid down that the Arbitrator is not a conciliator and cannot ignore the law or misapply it in order to do what he thinks is just and reasonable. The Arbitrator is a tribunal selected by the parties to decide their disputes according to law, and so is bound to follow and apply the law, and if he does not he can set right by the Court provided his error appears on the face of the be award if no specific question of law is referred, the decision of the Arbitrator on that question is not final however much it may be within his jurisdiction and indeed essential for him to decide the question incidentally. It has been held in Associated Engineering Company v. Government of Andhra Pradesh (A.I.R. 1992 Supreme Court 232), the Arbitrator cannot act arbitrarily, irrationally, capriciously or independently of the contract. His sole function is to arbitrate in terms of the contract. He has no power apart from what the parties have given him under the contract. If he has travelled outside the bounds of the contract, he has acted without jurisdiction. But if he has remained inside the parameters of the contract and has construed the provisions of the contract, his award cannot be interefered with, unless he has given reasons for the award disclosing an error apparent on the face of it. A conscious disregard of the law or the provisions of the contract from which he has derived his authority vitiates the award. Learned Counsel for the respondent also relied on the decision in State of Kerala v. V.P. Jolly (A.I.R. 1992 Kerala 187) wherein it has been held that even non-speaking awards are liable to be set aside if the awards are contrary to the basic or rather obvious feature of the contract or traverse beyond the obvious terms of such contracts and so long as such decisions can be arrived at without interpreting or construing the terms of the contract. The violation must be evident from a mere look at the terms of the contract. The violation must be evident from a mere look at the terms of the contract. In this case it is not possible to say that the arbitrators and the Board have passed the award in regard to matters beyond the scope of reference. The award does not state any legal proposition which is the basis of the award and which is erroneous. And it cannot be challenged on the ground that it is unreasonable since the Arbitrators have not chosen to give the reasons. In Jagdish Chander Bhatiav Lachman Das Bhatia (Judgements Today 1993(1) S.C. 232) it is stated that coming to an arroneous conclusion is not a misconduct on the part of the Arbitrators. The Court does not sit in appeal or re-assess the evidence. It is not necessary for a court to examine the merits of the award with reference to some material produced before the Arbitrator. It cannot re-examine and reassess the material. 7. There can be no dispute as regards the principles enunciated in the decisions referred to above. However, as argued by learned counsel for the respondent, in this case the Appellate Forum also has not given any reason for its conclusion. We have already seen that the Appellate Board has simply set aside the award of the Arbitrator and passed a fresh award without any speaking order. Though it is necessary to pass a speaking order by an arbitrator, the Appellate Forum has to indicate its reasons for the conclusion, in Ram Chander v. Union of India (1986)(3) S.C.C. 103) the appellant preferred an appeal under R. 18(ii) of the Railway Servants (Discipline and Appeal) Rules, against an order of removal passed against him. The Railway Board rejected the appeal against the impugned order stating that the findings of the disciplinary authority were warranted by the evidence on record and that the penalty of removal was merited. The Supreme Court held that the impugned order of the Railway Board was just a mechanical reproduction of the phraseology of R. 22(2) of the Railway Servants Rules without any attempt on the part of the Board either to marshal the evidence on record with a view to decide whether the findings arrived at by the disciplinary authority could be sustained or not. There is also no indication that the Board applied its mind as to whether the act of misconduct with which the appellant was charged together with the attendant circumstances and the past record of the appellant were such that he should have been visited with the extreme penalty of removal from service for a single lapse in a span of 24 years of service. In the case on hand also it does not appear that the Appellate Board applied its mind as to whether the findings of the Arbitrator were proper. It is not the requirement of the rules of natural justice that in every case the appellate authority should, in its order, state its reasons except where the appellate authority disagreed with the findings of the Tribunal. No doubt, in the absence of a requirement in the statute or the rules, there is no duty cast on the appellate authority to give reasons where the order is one of affirmance. In Union of India v. Ranganathan (1987 Writ L.R. 290) a Division Bench of this Court to which one of us (Srinivasan, J.) was a party has followed the abovesaid decision of the Supreme Court and pointed out as under: “Accordingly, the Supreme Court has taken the view that the delinquent employee is entitled to an opportunity to show that he should be exonerated from the charge by showing that the evidence adduced at the enquiry is not worthy of evidence or consideration or that the charges proved against him are not of such a character as to merit the extreme penalty of dismissal or removal or reduction of rank and that any of the lesser punishments ought to have been sufficient in his case only at the stage of hearing of the departmental appeal. Construing R. 22(2) of the Railway Servants (Discipline and Appeal) Rules, 1968, the Supreme Court, therefore, held that the Appellate Authority must not only give a hearing to the Government servant concerned, but also pass a reasoned order dealing with the contention raised by him in the appeal. Construing R. 22(2) of the Railway Servants (Discipline and Appeal) Rules, 1968, the Supreme Court, therefore, held that the Appellate Authority must not only give a hearing to the Government servant concerned, but also pass a reasoned order dealing with the contention raised by him in the appeal. It was pointed out that although in the absence of a requirement in the statute or the rules, there is no duty cast on an appellate authority to give reasons where the order is one of affirmance, R. 22(2) of the Railway Servants Rules in express terms requires the Railway Board to record its findings on the three aspects stated therein. Construing the word “consider” used in R. 22(2) of the Rules in the context in which it appears in that rule, the Supreme Court took the view that it only means an objective consideration by the Railway Board after due application of mind, which implies the giving of reason for its decision.” So it is evident that the order of Appellate Board setting aside the award of the Arbitrator without marshalling the evidence on record and applying its mind is unsustainable. There is no question of second arbitration and the Appellate Board cannot pass a fresh award. 8. On 3.5.1978 the appellant addressed the East India Cotton Association Limited under Ex. A14 placing the dispute for arbitration. They also gave the name of Shri Suresh A. Kotak as their Arbitrator. On being called upon to name his Arbitrator, the respondent denied the factum and existence of the second contract dated 27.5.1977 under Ex. A-2. On 16.5.1978 it filed a petition under S. 33 of the Arbitration Act 1940 in the Court of Subordinate Judge Madurai for a declaration that there did not exist any arbitration agreement on the basis of Ex. A-2. By an order dated 24.7.1979 the Sub Court dismissed the said petition. The respondent took up the matter before this Court in C.R.P. No. 2183 of 1979 which was dismissed on 1.7.1981. In the meanwhile the Chairman has appointed both Suresh A. Kotak and one Ramangilal Shah as Arbitrators. According to the respondent, it was wrongfully denied an opportunity to appoint its own arbitrator in the arbitration reference. The respondent took up the matter before this Court in C.R.P. No. 2183 of 1979 which was dismissed on 1.7.1981. In the meanwhile the Chairman has appointed both Suresh A. Kotak and one Ramangilal Shah as Arbitrators. According to the respondent, it was wrongfully denied an opportunity to appoint its own arbitrator in the arbitration reference. The East India Cotton Association has acted against the respondent and in collusion with the appellant with the mala fide intention of helping the appellant who is the member of the Association. The respondent contended before the Sub Court that there was no proper, valid and legal appointment of Arbitrators since the Chairman of the East India Cotton Association had no authority or power to appoint Arbitrators by invoking the provisions of Bye-law 38-B of the Association. 9. Whereas learned counsel for the appellant argues that in C.R.P. No. 2183 of 1979 this Court has negatived the plea of the respondent that there was no contract dated 27.5.1977 under Ex. A-2 and consequently no arbitration agreement between the parties. The negation of plea relates back to the date when the respondent having been called upon to appoint their Arbitrator refused to act. So it is no longer open to him to reagitate the issue and challenge the validity of the forum of arbitration constituted in accordance with the bye-law of East India Cotton Association. Bye-law 38-A of Bye-Laws of East India Cotton Association Limited provides that all unpaid claims whether admitted or not and disputes and differences arising out of or in relation to (a) cotton transactions between members including any dispute as to the existence of such transactions or (b) cotton contracts whether forward or ready and whether between members or between a member or non-member) made subject to these bye-laws or subject to East India Cotton Association arbitration; (c) Cotton contracts covered by any such arbitration agreement shall be referred to arbitration of two disinterested persons, one to be chosen by each party from amongst the members, or their authorised agents or nominated representatives for the purpose of determination settlement and adjustment of disputes differences in respect of cotton transactions referred to above. Bye-law 38-B of the Bye-laws of the East India Cotton Association stipulates that upon application and on payment in advance of the minimum fees of arbitrators by either disputant the Chairman shall appoint the two arbitrators if after one party has appointed an arbitrator ready and willing to act, the other party refuses or neglects to appoint a second arbitrator (ready and willing to act) within four days after service of written notice of that appointment in Bombay or within seven days after service thereof elsewhere in India or within fourteen days after service thereof elsewhere than in India. So according to learned counsel for respondent it is mandatory on the part of East India Cotton Association to see that one of the two arbitrators is a nominee of the respondent. Since the respondent was disputing the very existence of the arbitration agreement under Ex. A-2 and this controversy was resolved only on the disposal of C.R.P. No. 2183 of 1979 on 30.6.1981, the question of the respondent nominating his arbitrator arose only on that day. Learned counsel for respondent also points out that in view of the injunction order the arbitration proceedings were postponed. After the dismissal of C.R.P. No. 2989 of 1979 on 1.7.1981 the respondent participated in the proceedings and represented that an arbitrator had to be nominated for it. However, it was rejected by the Board. The denial of the opportunity to the respondent to appoint their arbitrators after the decision in civil revision petition is wrongful. While so, there is no substance in the claim of the appellant that on 16.5.1978 even after filing of O.P. No. 82 of 1978 the respondent did not come forward to name his arbitrator. 10. Learned counsel for the respondent next submits that the Court must find out whether the arbitrator has misconducted himself or there was any infirmity in procedure or there being an error apparent on the face of the award. The decision in Food Corporation of India v. Joginderpal Mohinderpal ( AIR 1989 S.C. 1263 = 1989-1-L.W. 440) is to the effect that an award can also be set aside if, inter alia, the arbitrator is misconducting himself or the proceedings. It is difficult to give an exhaustive definition as to what may amount to misconduct on the part of the arbitrator. It is difficult to give an exhaustive definition as to what may amount to misconduct on the part of the arbitrator. One of the grievances put forward by the respondent before the lower court is that during the proceedings before the Arbitrator on 26.11.1981 he applied in writing for evidence being recorded and direct the present appellant to lead evidence in support of their claim and an opportunity afforded to the respondent to cross-examine the witnesses of the appellant. This letter marked as Ex. D before the Arbitrator is annexed to O.P. No. 24 of 1983 and is found at page 62 of the Typed set. It is the argument of learned counsel for the appellant that the Court below has erroneously concluded that the Arbitrator has improperly rejected to receive evidence. The respondent has sought to create a false impression that they were prevented from leading any evidence or examining witnesses. What the respondent sought by the application dated 26.11.1981 was to direct the appellant to lead oral evidence. But he has no right to compel the appellant to examine any witnesses. The right to cross-examine arises only if the witness is examined in chief in the first instance. As there was enough evidence on record of the Arbitrator, the appellant did not choose to examine any oral evidence. But we have to bear in mind that the claim of the appellant for carrying charges and damages are based on the allegation that the respondent has committed breach of the two contracts Exs. A-1 and A.2. There is force in the submission of the respondent that the nature of the claim requires that they be afforded an opportunity to cross-examine the appellant since evidently the findings of the arbitrators were based mainly on the statement furnished by the appellant. In any event, it does not appear from records that the respondent was given any opportunity to lead oral evidence. In Tirath Singh v. Isher Singh (AIR 1948 Lahore 50) a Division Bench has held that it is not open to the arbitrator to refuse to grant an opportunity to a party to produce evidence on the ground that there was no necessity to examine witnesses. By telling the parties that there was no necessity to examine witnesses or hear counsel the arbitrator is guilty of judicial misconduct. By telling the parties that there was no necessity to examine witnesses or hear counsel the arbitrator is guilty of judicial misconduct. A Division Bench of Calcutta High Court has also ruled in Bijoy Singh v. Bilasroy & Co. (AIR 1952 Calcutta 440) that where the arbitrators came to a finding without evidence it must be held that they have misconducted the proceedings. So on this score also the proceedings before the Arbitrators are vitiated. 11. Under clause (c) of S. 2 of the Forward Contracts, (Regulation) Act 74 of 1952, “forward contract” means a contract for the delivery of goods at a future date and which is not a ready delivery contract. “Ready delivery contract” is defined in Cl. (i) of S. 2 as a contract which provides for the delivery of goods and the payment of a price therefor, either immediately or within such period not exceeding eleven days after the date of the contract and subject to such conditions as the Central Government may, by notification in the Official Gazette, specify in respect of any goods, the period under such contract not being capable of extension by the mutual consent of the parties thereto or otherwise. As per Cl. (m) of S. 2 “specific delivery contract” means a forward contract which provides for the actual delivery of specific qualities or types of goods during a specified future period at a price fixed thereby or to be fixed in the manner thereby agreed and in which the names of both the buyer and the seller are mentioned. And as per Cl. (f) of S. 2 “non-transferable specific delivery contract” means a specific delivery contract, the rights or liabilities under which or under any delivery order, railway receipt, bill of lading, warehouse receipt or any other document of title relating thereto are not transferable. Under Bye-law 67 of the Bye-laws of the East India Cotton Association Limited all cotton contracted for under a Delivery Contract shall be ready and the delivery order shall be tendered not later than 1 pm on the latest date for delivery specified in the contract. Bye-law 69 (a) of the Bye-laws provides that a Delivery Contract under any delivery order or railway receipt or bill of lading or any other documents of title relating thereto shall not be transferable. Under the terms of Ex. Bye-law 69 (a) of the Bye-laws provides that a Delivery Contract under any delivery order or railway receipt or bill of lading or any other documents of title relating thereto shall not be transferable. Under the terms of Ex. A-1 and A-2 contracts delivery of the Gujarat 797 cotton bales had to be made in May/June 1977, F.O.R., Tiruttani. So both the agreements under Ex. A-1 dated 16.5.1977 and Ex. A-2 dated 27.5.1977 are non-transferable specific delivery (NTSD) contracts. 12. The notification marked as Ex. A-3 at page 24 of the Indian Cotton Annual of E.I.C.A. Limited 1976-1977 Volume No. 58 relates to Digvijay variety of cotton. Perhaps by oversight the Court below has referred to this notification instead of the passage immediately beneath the same which alone is in respect of V-797 variety of cotton. This notification reads that in exercise of the powers vested in the E.I.C.A. Limited under Bye-law 47(2), the Board has with the concurrence of the Forward Markets Commission, permitted with effect from 21.1.1977, trading in Non-transferable Specific Delivery Contracts on Types, Samples, Stamped Bales and/or Descriptions in V-797 varieties of cotton of the 1976-1977 season grown in the State of Gujarat providing for delivery in the month following the month in which the contract has been entered into (i.e. to say that contracts entered into in January 1977 shall result in actual delivery on or before 20.2.1977). Exs. A-1 and A-2 stipulate that the delivery of Gujarat 797 cotton purchased thereunder has to be effected in May/June 1977. However, we find from Ex. A.5 that the period of despatch has been extended beyond June. The delivery Schedule in Ex. A-5 provides that the last consignment is to be on 12.9.1977. In Ex. A-5 the letter dated 20.6.1977 from the respondent Mill to the appellant the former had requested the latter to supply the cotton against the said contracts as per the schedule furnished thereunder. The letter envisages despatch of cotton from 7.7.1977 to 12.9.1977. Ex. A-6 is the reply sent by the Advocate for the appellant on 28.6.1977. This reads that all the 1200 bales referred to in Ex. A-5 were contracted for despatches during May/June 1977. Since the despatches were being withheld on instructions from the respondent Mill, these 1200 bales would attract carrying charges with effect from 1.7.1977. Ex. A-6 is the reply sent by the Advocate for the appellant on 28.6.1977. This reads that all the 1200 bales referred to in Ex. A-5 were contracted for despatches during May/June 1977. Since the despatches were being withheld on instructions from the respondent Mill, these 1200 bales would attract carrying charges with effect from 1.7.1977. The bales have been contracted by the appellant with their sellers for despatches and if the despatches were not made by 30.6.1977, they shall have to pay for carrying on the bales to the seller and the same will have to be borne by the respondent. The provisions of the Forward Contracts (Regulation) Act, 1956 envisage the despatch of this quality of cotton to be completed on the month following the month of May 1977 in which the agreement was entered into. In other words, the delivery has to be over in June 1977. No doubt under Bye-law 67-A of the Bye-laws, time for delivery in n.t.s.d. Contracts may be extended from time to time by mutual consent but such extension shall not be beyond the period prescribed in the order permitting such trading. If the contract is not performed till the last date or partly performed till the last date of the contract, the party in default will be liable for resultant consequences. And learned Subordinate Judge has held that when initially no contract in law could be entered into for providing delivery beyond the month following the date of contract, it could not be extended even by mutual consent. So any understanding between the parties that the despatch could be postponed beyond 1977 is violative of the provisions of law mentioned above. 13. Bye-laws 77 onwards relate to Forward Contracts As per Bye-law 114(A), if the contract is for delivery by tender of a railway receipt or a bill of lading the seller shall be entitled to the full payment of the invoice value of cotton consigned on presentation to the buyer of the receipt or bill of lading under Bye-law 114(E) the buyer shall not take delivery except upon presentation to the carrier of the railway receipt or bill of lading. Bye-law 50(k) stipulates that any Forward Contract entered into in the commodities for which the Association is granted recognition under the Forward Contracts (Regulation) Act, 1952, which at the date of the contract is in contravention of the provisions of any of the Bye-laws enumerated therein shall be illegal under S. 15(3A) of the Forward Contracts (Regulation) Act, 1952, Bye-law 114(F) reads where the contract is F.O.R. point of destination the seller shall be responsible for all risks of the goods until they are delivered into the custody of the carrier and he shall provide at his expense but for account of the buyer an insurance cover until the goods reach the place named in the Railway receipt. From these provisions it is evident that the appellant has to deliver the cotton in the Mill premises at Tiruttani. And any extension of time for such delivery beyond June 1977 is violative of the provisions of the Foreward Contracts (Regulation) Act. The trial Court has also found that the agreements under Exs. A-1 and A-2 are void on the basis of S. 18 of the Forward Contracts (Regulation) Act read with Bye-law 67 because no extension could be mutually agreed upon beyond the period prescribed in the Bye-laws for delivery. 14. S. 15 of the Forward Contracts (Regulation) Act 74 of 1952 provides that the Central Government may by notification in the Official Gazette, declare that every forward contract for sale or purchase of any goods specified therein shall be illegal. S. 17 clothes the Central Government with power to prohibit forward contracts in certain cases. And under S. 18 the abovesaid provision shall not apply to non-transferable specific delivery contracts for the sale or purchase of any goods. However under Cl. (3) of S. 18, the Central Government may declare that S. 15 shall not apply to certain clauses of non-transferable specific delivery contract in certain cases. Learned counsel for the appellant submits that a non-transferable specific delivery contract under S. 18 of the Forward Contracts (Regulation) Act 74 of 1952 is exempt from the operation of S. 17 and hence it is not hit by G.O. dated 29.10.1963 issued by the Central Government. And hence the Act is not applicable to the facts of this case. He further contends that under S. 18 of the Forward Contracts (Regulation) Act the agreements under Exs. And hence the Act is not applicable to the facts of this case. He further contends that under S. 18 of the Forward Contracts (Regulation) Act the agreements under Exs. A-1 and A-2 are exempt from the operation of S. 17 and therefore the same are not hit by the G.O. dated 29.10.1963. The extension of delivery time was only at the instance of the respondent. He having sought postponement of despatch of cotton bales, cannot turn round now and say that the contract is illegal. Only entering into a contract beyond the prescribed period is illegal. On the other hand if the Contract is valid at the inception any extension of time made later on by mutual consent is not violative of the above said provisions. The extension will not make the contract which is otherwise valid at its inception irregular. But we are unable to subscribe to this view. The provisions of Ex. A-5 which enable the supply to be made post June month clearly run counter to the provisions of Act 74 of 1952 referred to above. When initially no contract in law can be entered into for providing delivery beyond the month following that in which the contract is entered into, the despatch of goods in such. N.T.S.D. Contract could not be extended even by mutual consent of parties and thereby defeat the purpose or intention of the Legislature, imposing a prohibition postponing the period. In fact, Bye-law 67-A reads that time for delivery in NTSD contract may be extended from time to time by mutual consent but such extension shall not go beyond the period prescribed in the order permitting such trading. If the contract is not performed till the last date or partly performed till the last date of the contract, the party in default will be liable for resultant consequences. And this provision is the complete answer to the claim of the appellant. 15. The respondent disputed his liability to pay carrying charges as well as interest charged on him by the appellant. According to the respondent, the price prevailing in the market in respect of Gujarat 797 Cotton was not Rs. 2500 per candy on 3.4.1978 and 7.4.1978 as claimed by the appellant. Besides the appellant had not given the names of the parties to whom the 500 bales undelivered were stated to have been sold by them. According to the respondent, the price prevailing in the market in respect of Gujarat 797 Cotton was not Rs. 2500 per candy on 3.4.1978 and 7.4.1978 as claimed by the appellant. Besides the appellant had not given the names of the parties to whom the 500 bales undelivered were stated to have been sold by them. He disputes that there was any differences in price as alleged by the appellant. Even if it is taken that the respondent has committed breach of the contracts under Exs. A-1 and A-2, he could be directed to pay compensation only for the actual loss suffered by the appellant. It is the difference between the contracted rates and the rates of the said quality of cotton prevailing in the market as on 30.6.1977. The rate of the contracted quality of cotton prevailing in the market as on 30.6.1977 was Rs. 4,728/- per candy, F.O.R. Tiruttani. Whereas the contracted rate in respect of 100 bales of cotton on 16.5.1977 was Rs. 4691/- per candy, F.O.R., Tiruttani and that of 400 bales of cotton covered by Ex. A-2 dated 27.5.1977 was Rs. 4,587/- per candy F.O.R. Tiruttani. So there was no question of the appellant suffering any loss even if the respondent had committed breach of the said two contracts on 30.6.1977. Further learned counsel for the respondent points out that the Arbitrators and the Appellate Board went wrong in carrying the date of the alleged breaches of the two contracts beyond 30.6.1977. The entire claim of the appellant in the arbitration reference was based on the footing that the delivery periods in respect of the two contracts under Exs. A-1 and A-2 were 3.4.1978 and 7.4.1978 respectively. Since any extension of the delivery period beyond 30.6.1977 violates the provisions of Forward Contracts (Regulation) Act, The award based on such an extension is an error of law apparent in the fare of the record. Moreover, admittedly the undelivered bales of cotton were in possession of one Khander Kanhaialal Keshavlal. Since the appellant was never in possession of the said bales and proved that they paid carrying charges to their sellers, evidently they cannot fasten this liability on the present respondent. In the circumstances, we find that the Court below has rightly held against the appellant. 16. In the result, the appeals are dismissed. No costs.