TaxTMI 
TaxTMI 
1962 (12) TMI 73
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.... Cane Commissioner, U. P., Lucknow, and the Cane Marketing Society Ltd., Bijnor, were the opposite parties. The petition asked for a number of writs in the alternative, but its purport was to seek to prohibit the two respondents from continuing certain proceedings pending before the Cane Commissioner under rule 23 of the United Provinces Sugar Factories Control Rules, 1938. That rule provides for arbitration in disputes touching agreements entered into by sugar cane factories and cane growers for supply of sugar cane as laid down by the United Provinces Sugar Factories Control Act, 1938. The facts of the case are as follows:- The appellant was at the material time the lessee and "Occupier" of Shiva Prasad Banarsi Das Sugar Mills, Bijnor, for five years from the crushing season 1946-47 to 1950-51. The second respondent is the Cane Marketing Society Ltd., Bijnor, which is a society registered under the Uttar Pradesh Co-operative Societies Act, and one of its objects is to supply sugar cane grown by its members to the sugar mills. Before the control of sugar cane, cane growers, whether they belonged to a co- operative society or not, sold sugar cane directly to the factories ....
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.... is a member of a Cane-growers' co-operative Society. (3)Except with the permission of the Provincial Government, cane grown in a reserved area shall not be purchased in such area by a purchasing agent, or by any person other than occupier of the factory for which such area has been reserved. (4)Cane grown in a reserved area shall not be sold by any person other than a cane-grower or a Cane-growers' Co-operative Society: Provided that a cane-grower or a Cane-growers' Co-operative Society may deliver cane intended for use in a factory through another cane- grower or through a carrier. (5)During the crushing season the Provincial Government may, if it is satisfied that there is likely to be in the area reserved for a factory any quantity of cane available for sale to the occupier of the factory in excess of the quantity for which he is required to enter into agree- ments, direct that cane shall not be purchased outside the reserved areas until the occupier of the factory enters into agreements to purchase all the cane offered to him in the reserved area : Provided that such prohibition shall not apply in respect of cane for the supply of which agreements in wr....
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....ong others) were framed "15. Purchase of cane growing in a reserved area.-(1) The occupier or manager of a factory shall estimate or cause to be estimated by 30th September, the quantity of sugarcane with each grower enrolled in the Growers' Register and shall submit the estimates to the Collector. The Collector may, after such enquiries as he considers necessary, modify the estimates and cause them to be published in such manner as he may direct, In framing these estimates, sugarcane grown in more than one-third of the area of land suitable for sugarcane cultivation in the holding of each grower may be excluded. (2)A cane-grower or a cane grower's co- operative society in a reserved area may offer in form 10, Appendix III, by the 15th October each year to supply during the crushing season to the occupier or manager of the factory for which the area has been reserved, cane not exceeding, in the case of a cane-grower, the quantity estimated in accordance with sub rule (1). (3)The occupier or manager of the factory for which the area is reserved shall enter into an agreement with the cane-grower or the cane growers' co-operative society as the case may be, in forms ....
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....(3)The sole arbitrator or the President of the Board, of Arbitration shall have the full power of a court in respect of summoning the parties, witnessess and records. (4) The decision of the sole arbitrator or Board of Arbitration shall be final and binding on both parties and shall not be called in question in any civil or revenue court. (5) The sole arbitrator or the Board of Arbitration shall give an award within the time fixed by the Cane, Commissioner, failing which the Cane Commissioner may decide the dispute himself or appoint another arbitrator or arbitrators for the purpose. (6)Any party considering himself aggrieved by an award may appeal to the Commissioner of the Division in which the factory is situated within one month of the date of the communication of the award and the Commi- ssioner shall pass such order as he deems fit. (7)The Commissioner's order in appeal shall be final. (8)On application to the Civil Court having jurisdiction over the subject matter of the decision or award, the decision of the Cane Commissioner, or the award of the arbitrator or arbitrators, or the Commissioner's order in a peal against an award, shall be enforced by the C....
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....-13-0 in full satisfaction of the claim. This cheque was accepted by the Society but under protest. The real dispute was about the compensation for short supplies which the Society did not admit. According to the Society they had a claim for Rs. 2,63,624-2-6 and they also moved the Cane Commissioner under Rule 23 (1) of the U. P. Sugar Control Act and Rules, 1938, for arbitration. The Cane Commissioner, who had not acted on the letter of the appellant, then passed an order on July 26, 1951, calling upon the parties to be present before him on August 18, 1951, for the decision of the dispute. On September 3, 1951, the appellant filed a petition under Art. 226 of the Constitution for a Writ of Certiorari to quash the proceedings pending before the Cane Commissioner, for a Writ of Prohibition for restraining the Cane Commissioner from continuing the proceedings and for a writ of quo warranto for a declaration that the Cane Commissioner had no right to assume the office of arbitrator in the dispute. In support of the petition the appellant contended that there could be no arbitration in this dispute because the agreement was not a proper agreement as the Society had omitted to complete....
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....r adjudication elsewhere. We are only con- cerned with the. legality of the proceedings before the Cane Commissioner. This dispute has been referred to him under Rule 23 not only by the Society but earlier also by the appellant. The appellant now says that he had made a mistake arid seeks to avoid a decision by the Cane Commissioner or by arbitrator and has set up two contentions. The first is that by reason of three defects in the agreement of 1949-50 season and two in the agreement of 1950-51 season there is no binding contract as is contemplated by s. 18(2) and the agreement not having come into force the Commissioner has no power to act under Rule 23. The defects are : (a) Absence of signature for the mills in both agreements, (b) Schedule left blank in both agreements, (c) Two blanks left in the agreement for 1949-50 season where an area and a quantity had to be mentioned. The second contention is that Rule 23 enjoining arbitration is void under Arts. 13 and 14 of 'the Constitution as, on its face it allows discrimination and sub-Rule (6) of Rule 23 making provision for an appeal is beyond the rule-making power conferred by s. 30 of the Act....
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....ly, and the purchase and sale of sugar cane should follow a particular pattern. The failure to enter into an agreement in the prescribed form was made an offence to compel the factories to keep to the scheme. Here the form in fact has been used. All the terms are included and none has been altered or new terms added. The agreement has also been acted upon. The question is whether they want of signature of the complaining party and the existence of the blanks render the contract void and non- existing. There is no doubt that in the agreement for the season 1949- 50 the area of the crop in one place and the approximate yield from that area in another have not been filled in the blank space provided for that purpose. The form in 1950-51 has no such blanks. The agreement was preceded by from No. 10 which showed these particulars. That form was with the appellant and it supplied these two details, namely, the area under cultivation and the estimated yield. 'Indeed, the two forms between them contained all the particulars which are required to be entered in the body of the agreement. As regards the schedule to the agreement the headings read as follows:- Village Area unde....
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....ns of a writing or writings signed by both parties, I do not think the words necessarily have that meaning. A document purporting to be an agreement may be an agreement in writing sufficient to satisfy the requirements of an Act of Parliament though it is only verified by the signature of one of the parties. " The learned Attorney General, however, contends that the prescriptions of s. 18(2) being manda tory they had to be followed to the letter. He urges that in as much as the Act and the rules prescribe a penalty for breach the section cannot but be regarded as mandatory in all its parts. He assumes that the appellant may be guilty and punished but, says he, the mandatory provision not having been followed according to the letter there can be no resulting valid contract. A large number of rulings on how to distinguish between mandatory and directory provisions of law were cited before us, in support of the contention. More cases were cited' to show that where a form is prescribed, the form and must be used otherwise there is no contract. We shall only. briefly refer to them. The general rule as to which provision of law, can be regarded as mandatory and which directory ....
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....ary to multiply these cases which are based upon the statement in Maxwell which is quoted over and over again. Now the prescription of the law in the present case was that the cane growers and the factory must enter into an agreement in a prescribed form. That form has in fact been used, only there are certain blanks and the appellant has not signed where he was expected to do so. Reliance is placed by the appellant upon a decision of the House of Lords reported in Thomas v. Kelly (1) particularly the observations of Lord Macnaghten where a distinction was made between the words "in accordance with the form" and "in the form". It is argued that the Act and the rules in the present case require the agreement to be in the form prescribed and not in accordance with the form. It is submitted that a substantial compliance may be permissible when the words of the statute are "'in accordance with the form" but that strict compliance is necessary when the words are "in the form": The form in Thomas v. Kelly (1) was in a different category from their form which we have. Under the statute, which prescribed the form (a bill of sale), it was provided that a bill of sale given by way of ....
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.... as stated in the prescribed form are the terms in the form used. We have pointed out that no consequence attaches to the failure to observe the form except punishment by fine and s. 18 (2) is capable of being read as directory. Even if it be read as mandatory we have shown already that the failure of the appellant to sign the form is not a matter of which he can take advantage regard being had to his own conduct. The blanks also do not matter in view of the existence of form No. 10 which suppli- ed the information accidentally omitted from the agreement. The form is also sufficiently identified by the signature on behalf of the Society and it has been acted upon not only by the Society but also by the appellant who is complaining of the want of signature. In our opinion, the agreement was binding. It may be pointed out that the arbitration clause in the agreement was enforceable, if agreed to, even without the signature of the appellant as it is settled law that to constitute an arbitration agreement in writing it is not necessary that it should be signed by the parties and it is sufficient if the terms are reduced to writing and the agreement of the parties thereto is established....
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.... from the rest of the rule. The arguments are somewhat conflicting. If sub-r. (6) was ultra vires the Provincial Government and must be struck down then one of the reasons on which the complaint of discrimination is based must disappear provided the sub-r. is severable, because the decision in either case then would be final. It is only if it is unseverable that other considerations would arise. It is therefore necessary to see if s. 30 of the Act confers power to provide for appeal from the award of the arbitrators. An appeal is no doubt a creature of statute and does not lie in the nature of things. Under the general law relating to arbitration there is no appeal against an award. The power to provide for an appeal by a rule must, therefore, flow from s. 30 of the Act. Section 30 first confers a general power to make rules and then enumerates, as illustrative of the general power, certain topics on which rules in particular may be made' The general power is conferred by the first sub section which reads:- "The Provincial Government may make rules to carry out the provisions of this Act." It is argued by the appellant that this sub-section does not use the....
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....his will. The rule says that any dispute touching an agreement shall be referred to the Cane Commissioner for decision or if he so directs to arbitration. It also provides that no suit shall lie in a civil or- revenue court in respect of any such dis- pute. At first sight, it does look as if the Cane Commissioner can pick and choose between two disputes of like nature., keeping one two himself' and sending another for decision by a sale arbitrator or Board of arbitrators. But the purport of the first sub-Rule is that an arbitration can be with the permission of the Cane Commissioner and parties cannot go to arbitration without the permission of the Cane Commissioner. The rest of the rule shows that there can be no arbitration without the consent of the parties. If the reference to arbitration is purely on a voluntary basis then there can be no complaint that two different procedures are provided for the solution of the same kind of disputes. If parties cannot be compelled to go to arbitration and refuse to go to arbitration then the Cane Commissioner must decide the dispute himself. If this view was correct then there is but one mode of deciding disputes, namely, by the Cane Co....
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....both representatives. The Board is a three-member board and this eliminates from consideration s. 8. It also excludes s. 9, of the Arbitration Act which deals with situations in which the reference is to two arbitrators and if one party fails to appoint his arbitrator the other party after appointing his own arbitrator can give a notice and the appointed arbitrator becomes the sole arbitrator. Under Rule 23 this cannot happen. Section 9 is thus inconsistent with a three member board which is the sine qua non of the Rule. The Rule provides that each party must appoint his, own arbitrator and then the umpire is to be chosen by the two representatives. Tile Cane Commissioner comes into the picture again when the representatives are unable to agree regarding the umpire. But there is an initial stage at which any of the parties can frustrate the arbitration by declining in limine to select his own arbitrator. The arbitration must therefore be by agreement or it cannot take place at all. It remains to mention s. 10. That section has no relation to the appointment of arbitrators to begin with. It deals with the position of the third arbitrator chosen by two arbitrators appointed by the pa....
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....f parties. It is most unlikely that the Cane Commissioner would decline to refer a dispute to arbitration where the parties agree that it should be so referred. Where the Cane Commissioner declines to make a reference the question may arise whether he could not be compelled to do so and also whether his decision given against the wishes of the parties would be binding on the parties. But we cannot say that the rule offends Article 14 because the Cane Commissioner may himself decide a dispute which the parties wish to go to arbitration. In our opinion the agreement was a binding agreement and Rule 23(6) of the U.P. Sugar Factories Control Rules 1938 was not ultra vires the Provincial Government and the Rule as a whole does not offend Article 14 of the Constitution. This appeal must therefore fail. It is dismissed with costs. RAGHUBAR DAYAL, J.-I have had the advantage of perusing the judgment of my learned brother Hidayatullah,J., and I agree that there was a binding contract between the parties and in the view of cl. 10, the dispute was capable of being referred to arbitration. 1, however, do not agree that r. 23 of the U. P. Sugar Factories Control Rules, 1938 is not discrimina....
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....Arbitration be different. Sub-r.(2) or any other sub-rule of r.23, does not provide what is to happen when any of the parties does not appoint a representative. It does not necessarily follow from the absence of such a provision that the dispute goes back to the Cane Commissioner for decision or that the Cane Commissioner is empowered to withdraw his direction of referring the dispute to arbitration. Rule 23 has no such express provision in this regard, though sub-r. (5) expressly, provides for the Cane Commissioner to take charge of' the dispute afresh in another contingency. Once the Cane Commissioner has directed reference of the dispute to arbitration, he, in the absence of any provision in the rules empowering him to do so, is not to withdraw that direction and take over the decision of the dispute himself. The omission to provide for such a contingency can only mean that the rule does not contemplate a party not nominating his representative. This appears to be more reasonable to suppose than to hold that the reference of the dispute reverts to the Cane Commissioner who had already decided not to decide the dispute himself. Further, the party's nominating a repr....
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....the U. P. Sugar Factories (Control) Act empowers the State Government to make rules to carry out the provisions of that Act, There is nothing in the Act to the effect that provision be made for an appeal against the award of the arbitrator or arbitrators. A rule providing for appeal against the order of the arbitrator or arbitrators is therefore not a rule to carry out any provision of the Act. Clause (u) of sub-s. (2) of s. 30 states that the State Government may make rules to provide for the reference to the Cane Commissioner of disputes relating to the supply of cane for decision or, if he so directs, to arbitration, the mode of appointing arbitrator or arbitrators, the procedure to be followed in proceedings before the Cane Commissioner and such arbitrator or arbitrators and the enforcement of the decisions of the Cane Commissioner or of the award of the arbitrators. It is true that these provisions relate to the settlement of disputes between the parties, but that by itself does not mean that the State Government can provide for appeals against the orders of the arbitrator or arbitrators. These provisions of cl. (u) do not expressly state that the rule can provide for an appea....