TaxTMI 
TaxTMI 
1967 (5) TMI 75
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....;s case is that the de fendants entered into certain forward transactions with the plaintiff by retaining the contract forms or returning them duly signed One of the conditions of the contract printed on the reverse of the contract forms was thai the rules of the Chamber and also the commercial rules and conditions were acceptable to the defendants. The plaintiff's case further is that numerous contract forms were sent to the defendant firm some of which were returned duly signed and the others were not returned and in view of the contract, non-returu of the contract forms amounted to acceptance, and the contract form* were not only evidence of the transactions in question but also showed that there was an agreement for compulsory arbitration. 3. When disputes arose between the parlies, the plaintiff moved the present petition under Section 20 of the Arbitration Act for the filing of the arbitration agreement and also for reference of the dispute to arbitration. 4. Roshan Lal, defendant, alone contested the proceeding. His case is that he was not the 'karta of the joint Hindu family, the 'karta' of the family being his father. HiraLal, and hence he could not r....
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....e in writing. As an arbitration agreement is an agreement, both the parties must be consenting parties to the agreement. To put it in the words of the Contract Act, there must be a proposal followed by acceptance. Consequently, all that happened before the despatch of the contract forms in dispute cannot convert the agreement into an arbitration agreement, for the simple reason that the agreement was oral and was not reduced to writing. 8. With regard to the contract forms the plaintiff's case is that prior to the defendant-firm entering into forward transactions, Roshan Lal, defendant, has come to Agra when the terms of the transactions and also the byelaws of the Agra Merchants' Chambers, Limited, Agra, were communicated and explained to him and it was settled that with regard to the forward transactions entered into by the defendant-firm contract forms shall be sent to the defendant-firm for acceptance and the defendant shall either return the forms duly signed or retain them with it. But if the defendant was not accepting any transaction, it shall return the contract form with a letter. The existence of such a contract can be believed not only because Phool Chand, P.....
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....ct forms, even though not signed by the defendants, amount to an agreement and as therein there is a provision for compulsory arbitration, for purposes of the Arbitration Act also, they amount to an arbitration agreement. 12. The first point which deserves consideration is whether in the circumstances of the present case omission on the part of the defendant-firm or the conduct of the defendants in not returning the contract forms can amount to acceptance of the proposal within the meaning of Section 7 of the Contract Act? 13. Sections 7 to 9 of the Contract Act are material on this point. Section 7 provides that, "In order to convert a proposal into a promise the acceptance must be absolute and unqualified and be expressed in some usual and reasonable manner, unless the proposal prescribes the manner in which it is to be accepted". Section 9 lays down that, "In so far as the proposal or acceptance of any promise is made in words, the promise is said to be express. In so far as such proposal or acceptance is made otherwise than in words, the promise is said to be implied". The Contract Act thus recognises both express and implied acceptance of a proposal. Implied acceptance i....
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...., an omission to reply will not constitute an illegal omission and, therefore, cannot fall within the definition of act as contained in the General Clauses Act. Section 3(2). Act 10 of 1897." The above observations are clearly based upon the definition of 'act' as contained in the General Clauses Act, and consequently if on the facts and circumstances of the case an omission amounts to an illegal omission, a contrary view can be taken, and hence an act. That would clearly be a case where acceptance of the proposal can be assumed from mere silence. In such circumstances, silence shall amount to assent by positive conduct. 16. A similar proposition of law was laid down in Alfred William Domingo v. L. C. De'Souza, AIR 1928 All 481. Except for the observation no comments were made, appa rently, because the question had been considered in detail in the earlier decision of this Court. This later decision thus does not re quire any further comment 17. In Haji Mohomed Haji Jiya v. E. Spin ner & Co., (1900) ILR 24 Bom 510, at all the previous occasions indent was signed by the purchaser. It was only in the transaction in dispute that no such indent had been signed. Appa....
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....rding implied acceptance of a proposal were exhaustive, the Courts of law could not be justified in extending the scope of the enactment; but where the provisions are merely illustrative, the Courts can adopt a view which is equitable and reasonable. 22. To put it differently, if there exists a prior agreement among the parties laying down how the transactions shall be undertaken, that agreement shall determine whether in the subsequent transactions governed by or flowing out of such agreement there was acceptance of proposal, i.e., the proposal became a promise ana hence a fresh agreement enforceable independently of the earlier transactions. Further, if the agreement makes a provision for acceptance of the proposal by mere omission or silence, failure to return the goods or papers, as the case may be, shall signify acceptance of the proposal. But if there was no prior agreement as to the implied acceptance of the proposal by not returning the goods or papers mere nonreturn, i.e., omission or silence shall not signify acceptance of the proposal 23. Coming to the instant case, there was prior agreement between the plaintiff and Roshan Lal, acting for the defendant-firm, that ....
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....itten agreement within the mean-ing of Section 2(a) of the Arbitration Act. iN the instant case, however, oral acceptance of the rules of the Chamber was followed by nonreturn of contract forms which by itself amounted to a fresh agreement in writing. 26. A similar question was considered in Varadam Shetty Jambulanna v. Narshi Mulji and Co., ATR 195R Bom 720. where it was held that: "There ,nt: instances where a non-member \vould be bound by the arbitration rules of the agreement, where, for instance, the non-member enters into a contract with a member in the prescribed form. Where the contract it under the prescribed form, then the reference to arbitration is implied by the conduct of the party, namely, signing that particular form but until that is done there could be no imposition of the rules as regards arbitration on a third party." In substance, what has been laid down is that unless the parties agree to refer the disputes to arbitration, i. e., the agreement contains a clause for compulsory arbitration, the rules and byelaws of an Aiiociation cannot be bindiag on non-members. In the instant case, the nonreturn of the contract forms takes the place of signing t....