1959 (12) TMI 62 - HC - Indian Laws

Court upholds jute contracts and arbitration agreements, rejecting claims of oral agreement and arbitrator misconduct.

Pratabmull Rameshwar Versus K.C. Sethia (1944), Ltd.

The court dismissed the appeal and upheld the validity and enforceability of the jute contracts and arbitration agreements. The plaintiff's claims ... - Issues Involved:1. Validity and enforceability of jute contracts and arbitration agreements.2. Performance and non-performance of the contracts.3. Jurisdiction and conduct of the arbitration tribunal.4. Existence of an oral agreement.5. Applicability and interpretation of the Arbitration (Protocol and Convention) Act, 1937.6. The right to maintain a suit to set aside a foreign award.Detailed Analysis:1. Validity and Enforceability of Jute Contracts and Arbitration Agreements:The plaintiff sought a declaration that the jute contracts and arbitration agreements were void and unenforceable. The contracts did not expressly state that they were subject to obtaining licenses or quotas from the Government. The House of Lords concluded that 'the contract contains no limitation on the sellers' obligation to supply or ship the goods,' and the onus was on the sellers to establish circumstances that would discharge their liability. The contracts were deemed absolute in their terms, and the absence of an express clause regarding the necessity of licenses or quotas went against the plaintiff's case.2. Performance and Non-Performance of the Contracts:The plaintiff failed to deliver the balance of the jute bales and attributed this to the inability to obtain quotas from the Government. The House of Lords found that the sellers did not make the best efforts to obtain the necessary quotas and licenses. The plaintiff chose a basic year in which they had no Italian contracts, which affected their quota allocation. Additionally, there was no valid excuse for the delay in applying for shipment from Chittagong. The court held that the contracts were not subject to any condition about obtaining quotas or licenses, and the plaintiff's failure to perform was not excused.3. Jurisdiction and Conduct of the Arbitration Tribunal:The plaintiff argued that the awards were made by a tribunal not provided for by the agreements and were without jurisdiction. However, the contracts contained an arbitration clause specifying 'London or Private,' and the plaintiff had chosen to refer disputes to the London Jute Association. The court found that the plaintiff had submitted to the jurisdiction of the tribunal, and the objection to jurisdiction was overruled. The plaintiff also claimed misconduct by the arbitrators for not taking evidence regarding the alleged oral agreement. The court held that no case of oral agreement was made before the arbitrators, and even if there was a failure to take evidence, it constituted legal misconduct, which is not a ground to challenge the award in a suit.4. Existence of an Oral Agreement:The plaintiff claimed there was an oral agreement that the contracts were subject to obtaining licenses or quotas. The trial judge found this claim to be 'a myth' and 'an obvious lie.' The court noted that this alleged oral agreement was never pleaded in the numerous statements of case filed before the arbitration proceedings and courts in England. The court concluded that there was no such oral agreement on the facts of the case.5. Applicability and Interpretation of the Arbitration (Protocol and Convention) Act, 1937:The plaintiff argued that the foreign awards were not enforceable under Section 7 of the Arbitration (Protocol and Convention) Act, 1937. The court analyzed the provisions of the Act and found that the awards were enforceable. The Act provides for the enforcement of foreign awards and allows them to be relied on as a defense or set-off in any legal proceedings in India. The court held that the awards were not against the public policy of India and did not require the seller to violate Indian law.6. The Right to Maintain a Suit to Set Aside a Foreign Award:The court considered whether the plaintiff had the right to maintain a suit to set aside a foreign award governed by the Arbitration (Protocol and Convention) Act, 1937. The court concluded that the plaintiff had the right to institute the suit but found that the awards and judgments by the English courts constituted a valid defense to the action. The court held that the procedural objections raised by the plaintiff were untenable and overruled them.Conclusion:The appeal was dismissed, and the court upheld the validity and enforceability of the jute contracts and arbitration agreements. The plaintiff's claims regarding the existence of an oral agreement, misconduct by the arbitrators, and the applicability of the Arbitration (Protocol and Convention) Act, 1937, were rejected. The court affirmed that the awards were enforceable and not against the public policy of India.