Absolute contract terms and foreign award challenge under the 1937 Act: implied licence conditions and public policy objections failed.

An absolute jute contract was not converted into a conditional bargain by implication or an unproved oral understanding that performance depended on export licence or quota. The licensing regime did not render the contracts illegal or void, as the sellers had not shown due diligence or exhaustion of available means of performance, and the resulting awards were not contrary to public policy on that basis. In relation to a foreign award under the Arbitration (Protocol and Convention) Act, 1937, the statute did not expressly bar a civil suit to challenge it, so such a suit was maintainable in principle; however, objections based on jurisdiction, omitted issues, and alleged misconduct failed on the facts, and the challenge did not succeed.

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Issues: (i) Whether the jute contracts contained an implied or oral term making performance dependent on obtaining export licence or quota, and whether the awards founded on the contracts were void or unenforceable on that basis; (ii) Whether a suit lay to challenge and denounce a foreign award governed by the Arbitration (Protocol and Convention) Act, 1937, including objections based on jurisdiction, misconduct, public policy, and statutory bar.

Issue (i): Whether the jute contracts contained an implied or oral term making performance dependent on obtaining export licence or quota, and whether the awards founded on the contracts were void or unenforceable on that basis.

Analysis: The contracts were expressed in absolute terms and the blank against the licence clause, coupled with the paramount clause, indicated that no such condition was part of the bargain. The alleged oral agreement was not pleaded in the earlier proceedings and was unsupported by satisfactory proof. The findings also showed that the sellers did not establish due diligence in obtaining quota or licence and had not exhausted available means of performance. The contracts were therefore not rendered illegal or void by the licensing regime, and the awards did not require violation of Indian law or offend public policy.

Conclusion: The contention that the contracts were subject to an implied or oral quota or licence condition failed, and the awards were not void or unenforceable on that ground.

Issue (ii): Whether a suit lay to challenge and denounce a foreign award governed by the Arbitration (Protocol and Convention) Act, 1937, including objections based on jurisdiction, misconduct, public policy, and statutory bar.

Analysis: The statutory scheme of the Arbitration (Protocol and Convention) Act, 1937 provided machinery for filing and enforcing foreign awards and expressly permitted reliance on such awards by way of defence or set-off. It did not create an express remedy for a person aggrieved by the award, nor did it expressly or impliedly bar a civil suit to challenge it. The objections that the tribunal lacked jurisdiction, that the awards omitted issues, and that misconduct in taking evidence could be raised were rejected on the facts and on the construction of the statute. Sections 32 and 33 of the Arbitration Act, 1940 were held not to govern foreign awards in this context.

Conclusion: The suit was maintainable in principle, but the foreign award and the English decisions furnished a complete defence on the facts, so the challenge failed.

Final Conclusion: The appeal was not sustainable on either the merits of the contracts or the procedural challenge to the foreign award, and the dismissal of the suit was upheld.

Ratio Decidendi: A foreign award under the Arbitration (Protocol and Convention) Act, 1937 may be challenged by civil suit where the Act does not expressly bar such action, but an absolute contract will not be converted into a conditional one by implication or by an unproved oral understanding, and an award based on such absolute contract is not contrary to public policy merely because performance depended on compliance with export control regulations.

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