J. Agarwalla and Sons Ltd. vs Kanoria General Dealers Ltd.

Bachawat, J.—By a contract dated the 31st March, 1952, the petitioner agreed to buy and the respondents agreed to sell 60,000 bags of heavy cees, delivery April, 1952. By another contract dated the 1st April, 1952, the petitioner agreed to buy and the respondent agreed to sell 20,000 bags of heavy cees, delivery April, 1952. Both contracts are on the standard Indian Jute Mills Association contract form which contains the following arbitration clause :-

"All matters, questions, disputes, differences and/or claims arising out of and/or concerning and/or in connection with and/or in consequence of or relating to this contract whether or not the objections of either or both parties under this contract be subsisting at the time or such dispute and whether or not this contract has been terminated or purported to be terminated or completed shall be referred to the arbitration of the Bengal Chamber of Commerce and Industry under the rules of its Tribunal of Arbitration for the time being in force and according to such rules the arbitration shall be conducted."

The petitioner gave shipping instructions on or about the 19th April, 1952, and asked for inspection orders on or about the 21st April, 1952. Inspection orders as for the 29th April, 1952, were sent by the respondent on or about the 24th and the 28th April, 1952, but they were returned by the petitioner. The respondent tendered pucca delivery orders and on the refusal of the petitioner to accept the delivery orders resold the goods on the 2nd May, 1952. The respondents claimed the difference of price as damages and referred the claim to the arbitration of the Bengal Chamber of Commerce and Industry.

On June 2, 1952, the respondents made on application for arbitration of disputes under both the contracts claiming Rs.31,291-7-3. The arbitration case was marked Case No.457G of 1952. The Registrar constituted a Court for the adjudication of the disputes referred to the arbitration of the Chamber. The petitioner filed its statement counter- claiming a sum of Rs.40,000. further statements were filed by both the parties. On or about September 22, 1952, the Chamber gave to the parties notice of hearing on the 1st October, 1952. An application by the petitioner for adjournment was refused and the arbitrators made two awards, both dated the 13th October, 1952. There was Award No.1023 of 1952 regarding contract No.135 and Award No.1024 of 1952 regarding contract No.136.

On or about March 19, 1952, the petitioner made two applications for setting aside the two awards inter alia on the ground (a) that the arbitrators had misconducted the proceedings in refusing the adjournment asked for and (b) that one reference and one hearing and mixing up of disputes under two separate arbitration agreements were illegal.

Das Gupta, J., who heard the applications was of the opinion that the arbitrators had proceeded too hastily and that the award should be set aside but the arbitration should not be superseded. On the 8th July, 1953, he passed two orders, disposing of the two applications. The order in the application to set aside the Award No.1024 was as follows:-

"It is ordered that the Award being No.1024 of 1952 dated the thirteenth day of October, one thousand nine hundred and fifty two made in Case No.457/G of 1952 by the Tribunal of Arbitration Bengal Chamber of Commerce and Industry be and the same is hereby set aside. And it is further ordered that the subject matter of the arbitration herein be referred back to the said Tribunal of Arbitration Bengal Chamber of Commerce and Industry for re-hearing and that the same be heard on notice to the parties by the Arbitrator or Arbitrators to be appointed y the said Bengal Chamber of Commerce and Industry other than the Arbitrator who made the said Award. And it is further ordered that the new Arbitrator or Arbitrators so to be appointed as aforesaid do make their Award in writing within four months from the date of signing of this order. And it is further ordered that the Registrar of this Court do at the expense of either of the parties appearing as aforesaid send back forthwith to the said Bengal Chamber of Commerce and Industry the records and minutes of the arbitration proceedings in the said Case No.457/G of 1952. And it is further ordered that the parties appearing as aforesaid do bear and pay their respective costs of and incidental to this application to be if necessary taxed by the Taxing Officer of this Court."

An order in similar terms was passed in the application to set aside the Award No.1023 of 1952.

On or about August 28, 1953, Messrs. Khaitan & Co., Attorneys for the respondent requested the Registrar to take necessary steps for arbitration. On or about the 1st September, 1953, the Registrar of the Chamber demanded from the respondent Rs.800 on account of fees, Rs.400 being required for each case. It appears that the respondent eventually paid the fees. The new arbitration case was marked as Case No.270G of 1953. On or about the 7th September, 1953, the Registrar gave notice to the parties that the Registrar had duly constituted a Court to adjudicate upon the disputes in Case No.270G of 1953, regarding contracts Nos.135 and 136, dated the 31st March, 1953, and the 1st April, 1953, the Registrar sent a letter to the petitioner stating that re-hearing would take place on due notices to the parties and requested the petitioner to send its statement by the 15th September, 1953, and to deposit Rs.800 on account of fees. It appears that the petitioner eventually deposited his fees. On or about the 11th September, 1953, the petitioner wrote to the Registrar stating that Case No.270G of 1953 was a new case before a new set of arbitrators under the orders, dated the 8th July, 1953, and was expected to be started de novo and that the statements in connection with Case No.437G of 1952 should not be taken into account in trying the new case and requested the Registrar to send the statement of the respondent in the new case. On or about the 16th September, 1953, the Registrar wrote to the petitioner stating that the Case No.270G of 1953, would be proceeded with on the records of Case No.457G of 1952, as submitted to and returned by the High Court and on such further statements and evidence as the parties might submit. Having registered to the objections raised by the petitioners Messrs. Khaitan & Co., on or about the 21st September, 1953, wrote to the Registrar requesting the Registrar (a) to mark and treat the reference with regard to the two contracts as two distinct cases and (b) to allow the respondents to file fresh statements. On or about the 26th September, 1953, the petitioner filed a statement under protest counter-claiming for Rs.40,000/- and contending that the arbitration Case No.270 of 1953 was a de novo case having no bearing to Case No.457G of 1952, that the respondent should have submitted a new statement of case before the arbitrators and that the two contracts were independent and could not be mixed up in any way. On or about the 6th October, 1953, the Registrar wrote to Messrs. Khaitan & Co., stating that the arbitrators would consider each contract on its merits and would make separate awards, but as the order of Court did not direct, (a) that there should be a de novo hearing commenced by filing a fresh statement and (b) that separate arbitration cases are to be instituted regarding each contract, the arbitrators would proceed in accordance with the letter of the Registrar, dated the 16th September, 1953, in the absence of any direction from the Court. On or about the 8th October, 1953, Messrs. Khaitan & Co., wrote to the Registrar requesting the Registrar to constitute two different Courts and give directions for filing two separate statements. On or about the 10th October, 1953, the Registrar wrote to Messrs. Khaitan & Co. stating that the arbitrators would proceed as already advised unless directions were obtained from the Court. On or about the 20th October, 1953, the petitioner wrote to the Registrar protesting against correspondence with lawyers and requesting the Registrar not to take any notice of the letters written by Messrs. Khaitan & Co. On or about the 12th November, 1953, the petitioner filed a statement reiterating its previous contentions. On or about the 25th November, 1953, the Registrar gave to both parties notice of hearing on the 1st December, 1953. On the 1st December, 1953, the arbitrators held a meeting and representatives of both parties were given full hearing. On or about the 7th December, 1953, the arbitrators made two separate awards in respect of two separate contracts and in respect of each award directed the petitioner to pay to the respondent a sum of Rs.300 as costs. The petitioner on receipt of the notices of making of the two awards protested against the awards.

The award is attacked by the petitioner upon the grounds set out in paragraph 58 of the petition Grounds (a) and (b) have been abandoned. Grounds (c) to (k) have been pressed. It is pointed out that there are two contracts, two orders of Court and two awards and fees for two cases have been charged by the Chamber. It is contended that (a) one reference of disputes relating to the two contracts was illegal (b) arbitration should have been started de novo after the orders, dated the 8th July, 1953, by filing of new statements and (c) appointment of one Court and joint hearing of the two disputes were illegal. It is submitted that the contention should be upheld having regard to (a) the orders dated the 8th July, 1953, (b) the general law, (c) the rules of the Tribunal of Arbitration of the Bengal Chamber of Commerce and Industry.

The two orders, dated the 8th July, 1953, referred back the subject matters of arbitration in Case No.457G of 1952 to the Tribunal of Arbitration of the Bengal Chamber of Commerce and Industry and directed a re-hearing (a) of the said matters, (b) by the said Tribunal of arbitration with the direction that the Tribunal is to act through new Arbitrators to be appointed by the Chamber. The order directed that the records and the minutes of the arbitration proceedings in Case No.457G of 1952, be sent back to the Chamber.

A ''re-hearing'', strictly speaking, is a new hearing and a new consideration of the case by the Court in which the suit was originally heard and upon the pleadings and depositions already in the case (see P. Ramanathan Ayyar, the Law Lexicon of British India, p. 1099). I am of the opinion that the orders, dated the 8th July, 1953, directed a new hearing and a new consideration of the matters in Case No.457G of 1952, upon the pleadings and evidence already on the record by the Tribunal of arbitration of the Bengal Chamber of Commerce and Industry to whom the reference was originally made in case No.457G of 1952. The Tribunal was enjoined to act through new arbitrators to be selected by the Chamber.

On a proper interpretation of the orders, dated the 8th July, 1953, there is no room for any of the objections raised by the petitioner.

There was to be re-hearing of the matters in Case No.457G of 1952 upon the pleadings already on the records. The records of Case No.457G of 1952 was sent back to the Tribunal for the purpose of re-hearing. In the face of the two orders it is not possible to contend that the arbitration had to be started de novo or that the records of Case No.457G of 1952, could not be used at the new hearing.

There was to be reconsideration of the matters which were already referred to the Tribunal in Case No.457G of 1952, and which were referred back to the Tribunal by the two orders. There is no scope for any new reference or references.

Looking back beside the two orders I am of the opinion that the Arbitrators did not act in excess of jurisdiction or in contravention of any mandatory provision of law or any rule of the Tribunal of Arbitrations of Bengal Chamber of Commerce and Industry in entertaining one application for arbitration in respect of disputes relating to the two contracts.

The Arbitration agreement is the source and fountain-head of the jurisdiction of the Arbitrator. Where there are two separate contracts between the same parties, each containing an arbitration clause referring the disputes to the same Arbitrator, the two arbitration agreements confer jurisdiction upon the Arbitrator to settle the disputes with regard to the subject matter of the two contracts. Where the two arbitration agreements are in common form, so that the Arbitrator''s power and procedure with regard to the subject matter of both contracts is identical, the Arbitrator has jurisdiction to entertain one reference and to make one award in respect of the disputes relating to the two contracts; See, Graham v. Chandulal Paramanand (AIR 1935 Sind 228 at p. 231); Graham v. Kewalram (9 IC 712 at p. 715). The power and the procedure of the Tribunal with regard to both disputes being the same the joint trial of the two disputes is legal. Instead of making of one award the arbitrator has power to make two awards in respect of the two separate disputes arising out of the two contracts. The two arbitration agreements separately confer power upon the arbitrator to settle the disputes relating to each contract and to make a separate award in respect thereof. In fact the making of one award in respect of disputes referable under two separate arbitration agreements is irregular, where the circumstances are such that it is necessary to make two awards. The authority of the arbitrator is not exhausted by the making of one award. The arbitrator may make separate awards even in respect of two distinct disputes arising out of the same contract and referable under the same arbitration clause see Balmukund v. Gopiram (24 CWN 775) and In Re: Arbitration between Gulzarilal Kanoria and Co., .

The material rules of the Tribunal of Arbitration of the Bengal Chamber of Commerce and Industry are Rules I(5), V(1) and V(2). They are as follows:

"I(5) : ''REFERENCE'' means any agreement to refer a difference or dispute (present or future) to the Tribunal. Any agreement to refer more than one difference or dispute between the same parties which arise under separate contracts shall be treated as a separate reference in respect of each contract.

V(1) : In every case where a dispute or difference has arisen between parties, who have agreed that such dispute or difference shall be referred for decision to the Chamber or the Tribunal, an application for arbitration may be addressed by either party to the Registrar, which application in the case of disputes relating to piece-goods, shall be in such form as the Committee of the Chamber may from time to time prescribe.

V(2) : On receipt of such application, the Registrar shall constitute a Court for the adjudication of the dispute."

The words "a dispute or difference" in the singular in Rule V(1) includes "disputes and differences" in the plural and the Bengal Chamber of Commerce and Industry may entertain one application for arbitration of two distinct disputes arising between the parties, who have agreed to refer the disputes to its arbitration. The Chamber has jurisdiction to entertain one application for arbitration of two distinct disputes where the disputes are referable to the Chamber under one arbitration agreement. The Chamber has also jurisdiction under the Rules to entertain a single application for arbitration of two distinct disputes, where the disputes are referable to the Chamber under two distinct arbitration agreements between the same parties. In both cases the disputes have arisen between parties, who have agreed that the disputes shall be referred for decision to the Chamber.

The arbitrators did not act in excess of jurisdiction. There was no misconduct. Assuming that there was some irregularity, such irregularity did not result in any miscarriage of justice.

The respondent participated in the arbitration proceedings in Case No.457G of 1952, without any protest well knowing that there was one reference of disputes relating to two separate contracts and consequently could not object to the awards in Case No.457G of 1952, on the ground that a single reference of the disputes was illegal. Those awards were set aside by the orders, dated the 8th July, 1953, upon the ground that the arbitrators had proceeded too hastily. The objection that one reference was illegal was not given effect to and in my opinion was distinctly negatived by the two orders which referred back the subject matter of Case No.457G of 1952 for re-hearing.

The Chamber duly appointed new arbitrators in compliance with the orders, dated the 8th July, 1953. The Chamber was competent to appoint the same et of arbitrators under the two orders. The Tribunal was competent to deal with the subject matters of the two contracts in one hearing. In fact separate hearings were not seriously insisted upon. The Tribunal was bound to consider each contract on its merits and in fact did so.

When the Tribunal started reconsideration of the subject matters referred to arbitrations, the petitioner took technical objections and insisted that separate reference must be made in respect of the disputes under the two contracts and that arbitration must be started de novo. The respondents'' Attorneys, out of abundant caution and with a view to remove the possibility of technical objections requested the Arbitrators to adopt the course suggested by the petitioner. The Arbitrators acted impartially and firmly and clearly laid down the procedure which they would follow unless directions to the contrary was obtained from the Court. The petitioner did not press the objections by making an application to the Court. In the absence of any direction from the Court the arbitrators were competent to decide questions relating to their own procedure. The arbitrators gave a clear ruling on the questions raised. The petitioner should have persisted in the objection. If the arbitrators were going wrong the petitioner should have applied to this Court for revocation of their authority, so that the point might be determined by the Court. The petitioner allowed the awards to be made and did not interpose and the awards will not now be set aside at its instance; See Faviell v. The Eastern Countries Railway Company [ (1848) 2 Ex. 344 at p. 350].

Assuming that the absence of separate references, appointments of separate Courts, and separate hearings were irregularities, such irregularities did not result in any miscarriage of justice. In answer to a query put by me, Mr. Hazra stated that he was unable to point out in what way his clients were prejudiced by the procedure adopted by the Arbitrators. The subject matters of the two contracts were dealt with together in the correspondence and common questions of law and fact were involved. The contracts and the Arbitration clauses were in common form and the joint trial of the disputes relating to the two contracts was convenient to both the parties.

There has been no irregularity amounting to no proper hearing of the matter. The petitioner has been given sufficient opportunity to place its case and in fact there has been full hearing. There is no charge of partiality and bias. Dishonesty and corrupt motive are not imputed. There is no misconduct as indicated by Lord Parmoor in Amir Begam v. Badr-ud-din Husain and others (defdts) ( ILR 36 All 336 at p. 343).

Technical objections to the award are not to be encouraged where the Arbitrator has done substantial justice and where there is nothing radically wrong or vicious in the proceeding; Re. Hopper [ (1887) LR 2 QBD 378].

The parties ought not to be allowed to get out of an award upon objections which really do not affect the substantial justice of the case; See Chowdhuri Murtaza Hossein v. Mussumat Bibi Bechunnisa ( LR 3 IA 209 at p. 216).

Looking at all the circumstances of this case, I do not think that I should set aside the award upon the grounds taken by the petitioner. In the exercise of my discretion, I refuse to set aside the award.

The objections raised by the petitioner are dismissed.

The application is dismissed with costs.

Solicitors : Mukherjee & Biswas for the Petitioner; Khaitan & Co. for the Respondent.