TaxTMI 
TaxTMI 
1962 (5) TMI 24
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....tled Ram Kumar Chhotaria v. Titaghur Jute Factory Co. Ltd. (Matter No. 20 of 1961 before the High Court). Certain special points arising in some of the other applications were dealt with in separate' judgments.. The High Court stated in its judgment in Ram Kumar Chhotaria v. Titaghur. Jute Factory Co. Ltd. that the only relief, among the many included in the petition, pressed at the hearing was leave to revoke the authority of the appointed arbitrator under the provisions of s. 5 of the Arbitration Act, 1940 (Act 10 of 1940) which provides that "the authority of an appointed arbitrator or umpire shall not be revocable except with the leave of the Court, unless a contrary intention is expressed in the arbitration agreement." We shall now state the circumstances in which the applications were made for leave to revoke the authority of the appointed arbitrator and in doing so we shall state somewhat fully the facts alleged in the application of M/s. Amarchand Lalitkumar a firm registered under the Indian Partnership Act, and carrying on business in Calcutta, which firm is the appellant before us in Civil Appeal No. 640 of 1961. The facts being similar we shall not repeat them wit....
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....the Indian Chamber of Commerce in Calcutta. The rules of the two Chambers for constituting Tribunals of Arbitration are similar and such difference as is material for our purpose will be adverted to later in this judgment. Paragraph 11 in Ch. IX of the Working Manual of the Exchange made certain provisions for unavoidable delay in the supply of goods by the sellers of jute. In order to appreciate the main controversy between the parties it is necessary to quote the relevant, portion of that paragraph. "11. (a) In the case of jute and in the event of seller being prevented or delayed in carrying out their obligations under the con- tract by the occurrence of fire, strikes, riots, political or communal disturbances, hartals and or civil 'Commotions, breakdown of public transport services, suspension of bookings, they shall give immediate intimation thereof to buyers. The sellers' and buyers' rights shall thereupon be as follows : (i)On the sellers 'Producing satisfactory evidence of the prevention or delay, they shall be granted an extension of time for delivering not exceeding thirty days from due date of all penalties. (ii)If the contract be not implemented within the exte....
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....raw jute shot up abnormally giving rise to an emergent condition in the jute trade and industry and especially in respect of trading in future contracts in raw jute. The appellant's case was that by reason of that emergency the buyers and sellers of raw jute were placed in two conflicting camps and the vast majority of the arbitrators in the panel of arbitration comprising the Tribunal of Arbitration of the Bengal Chamber of Commerce and Industry were either directly or indirectly connected with one or other of the jute mills which were all buyers of raw jute. In paras. 21, 22 and 23 of its petition the appellant stated that when the parties entered into the contract they never contemplated that there would happen such an exceptional situation as arose in the jute trade during the relevant period of September-October, 1960 ; that the arbitrators of the Tribunal of Arbitration of the Bengal Chamber of Commerce and Industry were disqualified from acting as arbitrators inasmuch as they were all connected with the buyers and there was every probability that they would be biased in favour of the buyers; therefore, the appellant reasonably apprehended that it would not be possible for th....
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....mber of Commerce and Industry are unsubstantial." He accordingly dismissed the applications with costs. We consider that as a matter of logical sequence, we should deal with the question of fact first whether there was any such emergent condition in the jute trade aid industry at the relevant time as divided the sellers and buyers of raw jute into two conflicting camps so as to give rise to a reasonable apprehension in the minds of the sellers that they will not get a just decision from the appointed arbitrator. It, is only when we answer the question of fact in favour of the appellants that a consideration of the legal position would be necessary. What are the circumstances on which the appellants rely in support of their allegation of an emergent condition in the jute trade dividing the buyers and sellers of raw conflicting camps ? It is pointed out that on October 18, 1960, the Exchange issued a press note in which it was stated inter alia that owing to emergent conditions prevail- ing in the jute trade, the Director of the Exchange had imposed from time to time various control measures in respect of trading in future contracts in raw jute and had taken up a review of the ....
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....about Rs. 43/-. It continued also in October and reached about Rs. 54/-. Towards the middle of November there was a fall. In January 1961 there was again a rise which continued till March. In April there was again a fail which continued till July 1961. We have taken only one example, but these ups and downs in price levels are noticeable in other varieties of jute also, such as, Pakistan-N. C. Cuttings etc. A person trading in future contracts must take these ups and downs into consideration when entering into contracts, and we fail to appreciate how these ups and downs can constitute an emergent condition which will divide the buyers and sellers into two conflicting camps. The question whether the seller was entitled to an extension of time in the circumstances then prevailing would undoubtedly arise for determination by the appointed arbitrator, who having practical experience of the fluctuations which the trade normally undergoes would be in a position to judge the validity of such a claim. But it is difficult to appreciate how this periodical rise or fall in prices can be called an emergency which made the contracts impossible of performance or divided' the buyers and sellers i....
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....nd not buyers their turn' they are people who carry on business in Calcutta and some of them probably have buying agencies in the mofussil. They must be buying jute from others and selling them to shippers, balers, and jute mills. The jute mills usually buy raw jute and turn out manufactured products therefrom, which they sell. Balers and shippers buy raw jute and sell the same after pressing and baling. At one end of the chain there are jute growers who are only sellers while others are both buyers and sellers of jute or jute goods. This latter category of persons must be taking note of the trends in the market in entering into their contracts and unless there was an emergency of the kind which nobody could foresee, it is impossible to say that there was such a clash of interests between buyers and sellers that the appointed arbitrator having practical experience of normal fluctuations of the market would not be able to judge with fairness and impartiality the claim of the sellers that they were entitled to an extension of time or other relief. The high Court further pointed that though there were 170 applications, the number of applicants was only 42 and some only of the. jute mi....
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....ed and it is enough to show that there is a reasonable ground for apprehension that the arbitrator will be biased. But the reasonable ground must be established to the satisfaction of the Court to which an application for leave to revoke' the authority of an appointed arbitrator is made. No such reasonable ground is made out in the present appeals. We now turn to the legal position which seems to us to be quite clear. Before the Court exercises its discretion to give leave to revoke an arbitrator's authority, it should be satisfied that a substantial miscarriage of justice will take place in the event of its refusal. In considering the exercise by the Court of the power of revocation it must not be forgotten that arbitration is a particular method for the settlement of disputes. Parties not Wishing 'the law's delays' know, or ought to know, that in referring a dispute to arbitration they take arbitrator for better or worse, and that his decision is final both as to fact and law. In many cases the parties prefer arbitration for these'reasons. In exercising its discretion cautiously and sparingly, the Court has no doubt these circumstances in view, and considers that the parties s....
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....ll have induced the plaintiffs to make these allegations against the arbitrators or their firms so as to get out of their submission and to take their chance of winning the suit in Court and getting the benefit of that rise in prices. In my opinion the allegations in the affidavits are not such as I may act upon them. The Bengal Chamber of Commerce has gained a reputation for the excellence of their arbitration proceedings and I shall require much more specific averments of facts properly verified showing that in any particular case justice will be denied by the Bengal Chamber of Commerce to any party." These observations do not help the appellants of the present oases. Rather they show that the Court must be fully satisfied before it exercises its discretion under s. 5. to revoke the authority of an appointed arbitrator. The same learned Judge came to a contrary conclusion in Tolaram Nathmull v. Birla Jute Manufacturing Co. Ltd. (1948) 2 Cal. 171,196., That was also a case of stay under s. 34, and one of the questions raised was whether there was sufficient reason why the matter should not be referred to arbitration. One of the points to be decided in that connexion was whether 'm....
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....icular buyer and a particular seller. But extraordinary circumstance may .nevertheless arise, as in the case of a commercial crisis, when the members of the association may be sharply divided into two opposing groups, as buyers in general and sellers in general as may make it improper for the committee, which may be packed with an overwhelming majority of buyers or sellers, as the case may be, to adjudicate upon a dispute between a buyer and a seller." The pre-requisite condition for the application of the principle which be laid down is not fulfilled in the present cases. The last decision is Bhuwalka Brothers Ltd. v. Fatechand Murlidhar (1951) 2 Cal. 115. That was a case which .proceeded on different grounds, viz. (1) frustration and (2) applicability of an Ordinance to the contract under consideration. On those two grounds, the learned Judge thought that he should give leave to the petitioner to revoke the authority of the appointed arbitrator. We say nothing as to the correctness of the decision, but merely point out that the facts of the cases under our consideration are entirely different. We have, therefore, come to the conclusion that on the main point of controversy ....