Shah Nanchand Nandji vs Vegetable Products Ltd.

A.N. Sen, J.—This is an application for setting aside an award made 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 Gujarat, who has been directed by

the said award to pay a sum of Rs. 22,000 to Vegetable Products Ltd., the Respondent herein.

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 tonnes of pure groundnut 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 tonnes of pure

groundnut 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 filed in the proper Court.

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. Two

references had been made by the buyer, Vegetable Products Ltd., 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

Anandji 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.

The validity of the award has been challenged on the two main grounds, viz. (i) 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 Gujrat

Ground Nut (Transport Control) Order, 1964 and (ii) The Gujrat Ground Nut (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 Ltd. 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, insisted on

shipment or local delivery. The buyer by letter of July 27, 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 the buyer filed his statement of claim before 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. 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 cases 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, no

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 Ltd., the Respondent herein.

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 pf 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 seller.

(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 or the basis thereof.

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 Baron v. Sunderland Corporation (1966) 1 All E.R. 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 provided manner to arbitration. In other words, the clause must give bilateral rights of reference.

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.

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 in the case of Kedarnath Atmaram v. Kesoram Cotton Mills Ltd. ILR (1950)

Cal. 550.

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 to 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. 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.

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 pi 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 to the Court for the Court''s opinion u/s 13 of the Arbitration Act, The relevant

portion of Section 13 on which reliance is placed by the learned Counsel reads as follows:

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 u/s 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. In support of this submission the learned Counsel has referred to the

decision of the Supreme Court in the case of the Chief Controlling Revenue Authority and Anr. v. Maharastra Sugar Mills Ltd. AIR 1960 S.C.

The learned Counsel has also referred to the following passages in Russell on Arbitration (17th ed., pp. 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 u/s 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.

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 or

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 the 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, 1925, (which relates to the jurisdiction of the Court of Appeal to 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 section without the leave of the High Court or of the Court of Appeal.

The learned Counsel has submitted that even if the powers conferred u/s 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.

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 p. 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 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 Russell on Arbitration (17th ed., p. 59):

Similarly, an arbitrator may injure a party by refusing to hear evidence as to claims duly 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 a jury. 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 is 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 arbitrator? 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 L.T. 325 at 327.

The award may be impeached if the arbitrator makes his award without having heard ail the evidence or having allowed the parties a reasonable

opportunity of proving their whole case.

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 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.

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. 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 partner of the Petitioner was not in a position to participate

effectively in the proceeding 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 practically 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.

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 draws 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 filed 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 : Bajranglal Laduram Vs. Ganesh Commercial Co. Ltd, , AIR 1931 65 (Lahore) , Messrs. Khusiram Benarshilal Vs. Messrs.

Mathuradass Goverdhandass , Chhogmal Rawatmal v. Sankalchand G. Shah 53 C.W.N. 828, Bijoy Singh Vs. Bilasroy and Co., Hanutmull Boid

Vs. Fatehchand Murlidhar, . Reliance has also been placed on an unreported decision of the Court of Appeal in the case of 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 set 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 evidence 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 set aside on the ground of mistake. It is not for this Court to scrutinise the quantum of evidence and to pronounce

upon the correctness of the award.

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 any injustice on the part of the arbitrators. The learned Counsel has referred to the decision of Sinha J. in the case of Khusiram

Benarshilal v. Mathuradass Goberdhandass Supra (830-31) and has placed particular reliance on the following observations:

It is quite true that this 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. This power conferred on them involves a duty on their part to hear 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.

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.

Mr. Modak, the learned Counsel on behalf of the Respondent, has submitted that there has been no misconduct on the part of the arbitrators.

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 Russell 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 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 cast 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, p. 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. On the strength of this provision it was contended that in references governed by that

Code, the special case need not be confined to questions of law, but it was decided in Lamman v. Ramchandra ILR 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''.

The learned Counsel has also relied on two decisions of this Court, the decision in the case of Haji Ebrahim Kassam Cochinwalla Vs.

Northern Indian Oil Industries Ltd., and the decision in the case of Nanalal M. Varma and Co. (Gunnies) Private Ltd. Vs. G. Ambalal (Export), .

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 the The Union of India Vs. Kishorilal Gupta and Bros., and also to the decision in the case of the The Naihati

Jute Mills Ltd. Vs. Khyaliram Jagannath, . The learned Counsel has further argued that the arbitrators refused the said application of the Petitioner

after considering the said application and 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 arbitrators 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 that 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 Sewdutrai Narsaria v. Tata Sons Ltd. 27

C.W.N. 494 and also to the decision of the Judicial Committee in the case of AIR 1931 289 (Privy Council) .

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 hear evidence 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 Rules may be set out:

XV. The dispute will be decided by the Court on the written statements of the parties and oral evidence will hot 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, it

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 or 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 documents 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

Chaitram Rambilas v. Bridhichandi Keshrichand ILR Cal. 1140 and also to the decision in the case of Chandrabhan Bilotia and Another Vs.

Ganpatrai and Sons, . 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 oh the part of the arbitrators, such erroneous exercise of the discretion cannot constitute an act of

misconduct on the part of the arbitrators.

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 a 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 Registrar 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 he proposes: to be represented is in fact his representative and has been

duly authorised 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. Ambalal (Export) Supra in which P.B. Mukharji J. negatived a similar contention upon consideration of the said Rule.

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 paras. 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 comments that in

the petition in para. 25 a case is made that Chimanlal Chhotalal Shah, 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 poof. 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 contention.

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, He has referred to Rule V(3) of the Rules of the Tribunal of

Arbitration 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 hot 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.

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 Bhican Chand Charorla and

Others Vs. G. and M. Fogt and Others, :

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

Mediterranean and Eastern Export Co. Ltd. v. Fortress Fabrics (Manchester) Ltd. (1948) 2 All. E.R. 186 (187-8) and has placed particular

reliance on the following observations of Lord Goddard 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 measure 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 MR. said in Wright 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. It is well-known in the experience of the

Courts that many trades have their own Tribunals of arbitration the Corn Trade, the Produce Brokers'' 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 think, 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. Branson J. in giving judgment said (41 Llo 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.

The learned Counsel has finally submitted that the said applications before the arbitrators had been made 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 the 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.

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 arbitrators or 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 u/s 56, Sub-section (2), or otherwise coming to its notice and

refer such case, with its own opinion thereon:

* * * *

(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 u/s 57 is not only for the benefit of the Chief Controlling

Revenue Authority but ensures also for the benefit 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 Supra (221):

In our opinion, in the present case, the power to make a reference u/s 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 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. P.B. Mukharji J. observed Supra (231):

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 tinder 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 submission 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.

I respectfully agree with the view of the learned Judge. 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.

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 a

case for the opinion of the Court. The order of the Gujarat Government which imposes restrictions of transport of groundnut oil outside the State

and on which the Petitioner relies in support of his case of 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, held Supra (1370):

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. But where the dispute is whether the said 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 notation is not

borne out by these decisions.

In case of The Naihati Jute Mills Ltd. v. Khyaliram Jagannath Supra (528) 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.

The next question that has been raised is that the arbitrators 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. 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 he 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 a 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 an 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 observed Supra (131):

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. 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.

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 (816). 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 Applicant 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 my duty to follow. This objection of

the Petitioner is, therefore, over-ruled.

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. 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.

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. The market rate 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 arbitrators 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. 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 effects 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.

The observation of Rankin C.J. in the case of Bhican Chand Charoria and Ors. v. G. and M. Fogt and Ors. Supra (228-9), 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. 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.

In the present case, I am therefore of the opinion that the arbitration was by commercial men with 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

CJ. 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.

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 contentions raised by the Petitioner, this

contention of Mr. Modak is not of any material consequence and I do not consider it necessary to decide the same.

This application, therefore, fails and is 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.