TaxTMI 
TaxTMI 
1959 (12) TMI 62
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....time for shipment under the first two contracts was from September to November, 1947 and under the last two contracts was from December, 1947 to January, 1948. The contracts were made through the exchange o usual Bought Notes. 3. The plaintiff supplied certain bales but not all under these contracts. In fact, the plaintiff's case is that the plaintiff shipped 842 bales against the said four contracts; 742 bales were shipped in May, 1948 and 100 bales in July, 1948. 4. The plaintiff's reason for non-performance of these contracts with respect to the balance of the goods is that in spite of best efforts the balance could not be supplied because of the inability of the plaintiff to receive the quotas from the Government of India and Pakistan under which the export of jute was then regulated. 5. The defendant, however, demanded delivery, and thereupon disputes arose between the parties. Under the Arbitration Clause contained in those contracts, the defendant referred the dispute to the Arbitration of London Jute Association. The defendant's claim before the Arbitrators failed. But then the defendant appealed to the Committee of London Jute Association and on such a....
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....o fulfil the whole of their contracts; moreover the sellers knew, as the buyers did not, that the basic year which they had chosen was one in which they had no Italian contracts". "(3) The steps to be taken were for the sellers to determine and it is not clear that steps were taken or indeed how far they took all reasonable measures to fulfil their obligations. There is no finding as to the reason why no application to ship from Chittagong was made until so late a period, and the onus being on the sellers to establish a defence, one is not entitled to infer that they had a valid excuse for their failure to obtain a licence to ship". "(4) A further difficulty in finding or implying in a contract such as this a term that the seller should be excused if he did not obtain a sufficient quota is to know what is meant by the word 'sufficient'. Not only must it depend upon the choice of the basic year and upon the exertions made to carry out the bargain but it must also depend upon what other contracts the sellers had to fulfil to Italian buyers and possibly to foreign buyers elsewhere. On these facts your Lordships are ignorant and it is for the sellers to establ....
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....ngs when the respondent made an application in this Court under Section 5 of the Arbitration (Protocol and Convention) Act, 1937 to file the foreign award, the appellant instituted this suit on the Original Side of this Court on 28-11-1952 for the reliefs mentioned above. The plaint covers again many of the grounds decided by the English Courts. 10. Paragraph 4 of the plaint pleads an express oral agreement instead of an implied term, between the parties that (1) that the supply will be solely dependent on obtaining licence or quota from the Government of India to export jute to Itlay; (2) that the aforesaid condition will be the condition precedent to the said contract; and (3) that the plaintiff would make the best effort to obtain the said licence or quota for Itlay covering the full quantity of goods. The plaintiff has lost before the learned trial Judge here on the ground that there was no such agreement and there was no such condition precedent, 11. The plaintiff-appellant claims the present right of suit against almost on the same grounds pleading that this foreign award is not enforceable under Section 7 of the Arbitration (Protocol and Convention) Act, 1937 the only ....
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....was not stated there that they were subject to any condition of the appellant obtaining licence from the Government. All the other details in these contracts were duly filled up but so important a term which would go to excuse the appellant seller from performing the contract under the clause "licence" was not expressly included and the clause was left blank. This consideration taken along with the paramount clause in Clause 18 of the contract which does not include failure to obtain licence or quota as a specified ground of avoiding the contract goes against the whole case of the appellant that the contracts were subject to any condition about quota or licence. Secondly, this very point was agitated by the appellant in all the arbitration proceedings in England, first before the Arbitrators, second before the Appeal Committee, third before the Lord Chief Justice, fourth before the Court of Appeal and fifth before the House of Lords although not on the ground of an express oral condition but as an implied term. In all the three Courts in England, the appellant lost on these points and all the English courts on the facts and construction came to the unanimous conclusion that the con....
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....for quota before the Government chose to give a basic year which was significant in the sense that in that basic year the appellants did not export any jute to Italy at all. It was, therefore, inconceivable how the appellants could expect to get a quota for export to Italy when they deliberately chose a basic year in their application to the Government showing no export to Italy at all. There is also a further finding of fact by the Courts of England including the House of Lords to the effect that no reason has been furnished by the appellants why no application for shipment from Chittagong was made until so late as February 1948. The learned trial Judge here in this suit comes to the same finding of fact that there was no difficulty in the way of the appellants to ship jute from Calcutta under other licence or quota before the issue of Notification No. 56 dated 31-1-1948 and that so far as export from Chittagong was concerned, there seemed to have been no restriction within the period of contract and that the appellants did not make any effort in that behalf until September, 1948. 17. Nothing has been said in argument before us in this appeal to challenge these findings of fact....
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....s. 18. This disposes of the merits of the case. 19. It will be necessary now to deal with the procedural argument pleaded in paragraph 17 of the plaint. The first objection of the appellant is that the award has been made by a tribunal not provided by the agreement for arbitration. The contracts in suit contain the clause: "Arbitration - London or Private''. The document here on record shows first that the appellant plaintiff wanted to refer all their disputes to arbitration of the London Jute Association in preference to private arbitration tribunal and the defendant thereupon referred the matter to the London Jute Association for arbitration. Objection, therefore, is no longer open to the appellant that this tribunal had no jurisdiction. Secondly the appellant submitted to their jurisdiction. The statements and counter-statements of cases before them show such submission. They constitute a fresh arbitration agreement in any event. The appellant's own statement in paragraph 2 of their "case for the appellant" before the Court of Appeal in England made the following admission: "Each of the contracts was made on the terms and conditions of the London Jute ....
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....rm because it was their case at that stage that there was an implied term that the contracts were subject to the condition of quota or licence and they are now contending that because the arbitrators decided against their implied term, therefore they had decided on something which was beyond the agreement. The appellant cannot blow hot and cold at the same time. The appellant's own statement of case before the arbitrators and the respondent's statements in any event constitute a clear submission on this point to the arbitrators and they themselves therefore constitute the arbitration agreement on this point. We, therefore, overrule this objection also. 23. The learned Standing Counsel, on behalf of the respondent, has argued that this main contention of the appellant that the agreement and the awards are against the public policy of India is misconceived. He submits that the words of Section 7(i) of the Arbitration (Protocol and Convention) Act, 1937, are against this contention. He argued that the expression, "enforcement thereof", in that section means execution of these awards. It is said that the awards in this case only direct the appellant to pay a certain sum of m....
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....ould have arranged for shipment and, in fact, they were also guilty in their very application for quota and licence for choosing a basic year for which they had exported no jute to Italy. We hold upon the facts and construction of the contracts in this suit and the awards that neither the contracts nor the awards are against any public policy or law of India. 25. On the merits of this question whether contracts of this description can import a term, there are a number of decisions on the subject. It would be unnecessary to refer to all these decisions. It will serve our purpose to refer to one or two of the most recent cases for illustration. In the case of Peter Cassidy Seed Co. Ltd. v. Osuustukkuk-Auppa, reported in (1957) 1 WLR 273, the condition of delivery was stated to be "prompt, as soon as export licence granted." It was held there that on the construction of the contract, there was to be implied into the clause an absolute warranty by the sellers that they would obtain an export licence and not merely a warranty of diligence to do so. The case held that as the sellers had failed to carry out that obligation, they were liable in damages to the buyers. This case is very m....
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....have jurisdiction to try all suits of a civil nature. That appears to be arguing in a circle. No doubt Section 9 of the Civil Procedure Code says that courts shall have jurisdiction to try suits of a civil nature. But it is nowhere defined what are suits of a civil nature. This is a suit for a declaration of civil rights in respect of certain contracts, arbitration agreements and awards. Therefore, they are questions of a civil nature. But there is an exception in Section 9 of the Civil Procedure Code. That exception is contained in the expression: "excepting suits whose cognizance is either expressly or impliedly barred". The question then is whether suits ot" this nature are expressly or impliedly barred. No law expressly bars such suits. The point therefore boils down to the question whether such suits are impliedly barred. 30. At this stage our attention was drawn to the reliefs in the plaint which we have set out elsewhere in the judgment. The first relief claims for declarations that the contracts and the agreements are void and the subsequent reliefs claim for declarations that the awards are void and should be delivered up for cancellation. Taking the cue from the form o....
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....tled or claiming title to any "legal character" or "any right as to property". It is said that when a Tribunal or a court by its award or judgment has already declared the rights of a party there can be no further question of a suit being filed by a person claiming a legal character or title within the meaning of Section 42 of the Specific Relief Act. Once an award or judgment is given, further question of title or character does not arise and what remains is only a matter of enforcement or execution of such legal character or right conferred by such award or judgment, 33. Reliance at this stage is placed upon the famous observations of Sir Lawrence Jenkins, C. J. in Deokali Koer v. Kedar Nath, ILR 39 Cal 704 at p. 709, where it was said: "This section does not sanction every form of declaration, but only a declaration that the plaintiff is entitled to any legal character or to any right as to any property; it is the disregard of this that accounts for the multiform, and at times, eccentric declarations which find a place in Indian Plaints". 34. In support of this proposition the decision of the Privy Council in Sheoparsan Singh v. Ramnan-dan Prasad Narayan Singh, 43....
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....366: (AIR 1922 PC 374) that S, 42 of the Specific Relief Act applies. Mr. Roy for the appellant also relied on the Indian decision reported in Firm Jai Narain Babu Lal v. Firm Narain Das Jaini Mal, ILR 3 Lah 296 at pp. 315-6: (AIR 1922 Lah 369 at p. 378) but that was also before the Arbitration Act, 1940 and also not concerned with foreign award or an award under the Arbitration (Protocol and Convention) Act, 1937. Viscount Cave gave no reasons but his conclusion that Section 42 of the Specific Relief Act applies, and his observation can be supported by the reason that where the award is not conclusive on the "right" or "legal character" and is open to further challenge, a declaration for right or legal character is permissible notwithstanding the award, 37. Reverting therefore to the exception contained in Section 9 of the Civil Procedure Code, the ultimate question remains whether a suit of this description is "expressly or impliedly barred by any law". The new law on the subject is the elaborate provisions made in the Arbitration (Protocol and Convention) Act, 1937. If there be any implied bar against the present suit then it must be sought in that statute. It follows therefo....
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....reign award. 41. These conclusions appear to indicate that the foreign award under the Arbitration Protocol and Convention Act can be used both as a weapon and as a shield. The party in whose favour the foreign award is made can take steps to enforce it or he can take it as a defence or set off. Section 4(2)expressly lays down that such a foreign award can be relied on as a defence or set off in any legal proceedings in India. From this it is not unreasonable to conclude that an action or a suit if brought by party to denounce a foreign award then the fact of the foreign award may be taken as a defence or a set off by the party relying on it. 42. The fourth conclusion follows from Section 9 of the Act which expressly provides first that "nothing in this Act shall prejudice any rights which any person would have had of enforcing in India any award or of availing himself in India of any award if this Act had not been passed" and secondly, "nothing in this Act shall apply to any award made on arbitration agreement governed by the law of India". Consequently, Section 9 is a double-barrelled saving. First it does not prejudice the rights which any person in India would have of enf....
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....ion Act, there is no conflict and I do not consider the expression "notwithstanding any law for the time being in force" in Section 32 of the Arbitration Act helps the Respondent's contention. 44. The other argument against any right of suit to denounce the foreign award governed by the Protocol Act is based on the principle that where a remedy is provided by special statute that remedy must be followed and no other. Esher M. R. in R. v. Essex County Court Judge, (1887) 18 QBD 704 at p. 707 and Wulles, J. in Wolverhampton New Waterwords Co. v. Hawkesford, (1859) 6 CBNS 336 at p. 356 have discussed and summarised the law on the subject which has become classic. The proposition of law as laid down by Willes J. is as follows: "There are three classes of cases in which a liability may be established founded upon a statute. One is, where there was a liability existing at common law, and that liability is affirmed by a statute which gives a special and peculiar form of remedy different from the remedy which existed at common law; there, unless the statute contained words which expressly or by necessary implication exclude the common law remedy, the party suing has his ele....
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.... the award will be at large and he will have to wait until the award holder chooses to bring proceedings to enforce it. I see no reason why he should not have a right to clear his title or right by challenging the award by bringing an independent action of course on the grounds only on which such awards are liable to be challenged under Section 7 of the Protocol Act and not on other grounds of challenge which were open to him under the law of arbitration of the country where the award was made under the Convention and Protocol of the Act. The common law recognises a suit on foreign judgment and here in India Section 13 of the Civil Procedure Code provides for cases where a foreign judgment is not conclusive. Cheshire's Private International Law, 4th Edition at page 589 states that "a foreign arbitral award is on the same footing as a foreign judgment in the sense that an action to recover the sum awarded may be brought in England." The express provision in Section 4(2) of the Protocol Act here permitting foreign award to be taken as a defence appears to indicate that a suit or an action on a foreign arbitral award governed by that Act is a possibility. The framers of the Protoc....
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....as laid down in Notifications issued by the Government from time to time. The appellant's case as laid in the plaint is that at the time the contracts were entered into it was orally agreed that the performance by the appellant of the contracts would be solely dependent on obtaining licence or quota from the Government of India to export jute to Italy and if the appellant failed to obtain after best efforts any licence or quota for Italy the contracts would either wholly or to the extent of the failure to obtain such quota or licence, cease to be binding. The appellant experienced difficulty in obtaining quota and the time for shipment was extended by mutual consent from time to time up to October 1948. In April 1948 and May 1948 the appellant succeeded in obtaining quota of 277 tons of jute amounting to 1552 bales for export to Italy and out of this the appellant shipped 742 bales in May 1948 and 100 bales in July 1948 against the four contracts with which we are concerned. The balance quantity was shipped against contracts with other parties. 52. In respect of the unshipped balances the respondent claimed damages for breach of contract and referred the disputes to the arbi....
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.... aluminium from the United Kingdom except on licence granted by the British Government. On 7th December 1915 an order was promulgated prohibiting any sale or dealing in aluminium without a permit whether or not the sale, purchase or dealing was effected in the United Kingdom. No aluminium was shipped under the contract and the buyers claimed damages for breach of contract. The disputes having been referred to arbitration and the arbitrators having differed, the Umpire made an Award in the form of a Special Case granting damages in favour of the buyers. Bailhache, J. in disposing of the Special Case held that the Umpire was right and the learned Judge confirmed the award. The sellers appealed. On behalf of the sellers it was contended before the Court of Appeal that a term must be implied in the contract that it was subject to a licence to export being obtained, or at the highest that the sellers would use due diligence to obtain a licence; and as the sellers had made all possible efforts to obtain a licence and failed, they were excused from performance of the contract. 54. On behalf of the buyers it was contended, on the other hand, that in order to give business efficacy to th....
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....has been no breach of contract." (page 686). 55. Lord Cozens Hardy M. R, and Scrutton L. J. agreed, with the view expressed by the learned Chief Justice. 56. It is to be noted that in this Anglo Russian Merchant Traders' case there was no question of any quota system being linked up with the licensing system. The obtaining of the licence was not dependent on any action on the part of the sellers other than that of making an application for licence and it had been satisfactorily established that the sellers had made all possible efforts to obtain the licence but did not succeed. In the case before us, under the regulation of shipment by quota, established shippers had to choose one particular year out of the years 1937 to 1946 as their basic year. The appellant as an established shipper chose 1946 as their basic year but in that year they had made no shipments to Italy and so in the allotment of quota that was made in their favour, they got no quota for shipment to Italy. Notwithstanding that they had no quota for Italy, they entered into contracts in July 1947 in absolute terms for shipment to Genoa. On the 9th August 1947 the plaintiff appellant wrote to the respondent t....
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....or restriction in respect of the free export of jute from Chittagong to foreign countries, for sometime after the 15th August 1947 and until about the beginning of 1948. So here again the appellant was in default. 59. The further fact which distinguishes this case from the Anglo Russian Merchant Traders' case, 1917-2 KB 679, is that besides the four contracts with the respondent the appellant had entered into other contracts with different parties for export of goods to Italy and out of the quota that they succeeded in getting in 1948 they had shipped1 a substantial quantity of goods to Italy in fulfilment of these other contracts. This is clear from paragraph 9 of the plaint and the other materials On record. So the non-fulfilment of the contracts with the respondent is not solely attributable to the appellant failing to obtain a licence. It has not been established that there was difficulty in obtaining a licence for export even if a particular quota Was allotted for export to a particular country. The position appears to be otherwise. At the material time the granting of licences was dependent Upon the quota being allotted and once a particular quota was sanctioned the li....
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.... It is argued that the only remedy which the appellant has is to resist the enforcement off the Foreign Award after a notice is served upon the appellant under Section 5(3) of the Act but it is not open to the appellant to attack the validity of the Award by a suit instituted, for the purpose. Section 7(3) of the Act of 1937 makes it clear that a party against whom an Award is sought to be enforced can resist the enforcement on any ground other than the non-existence of the conditions specified in Clauses (a), (b) and (c) of Sub-section (1) or the existence of the conditions mentioned in Clauses (b) and (c) of Sub-section (2) and the court may either refuse to enforce the Award or adjourn the hearing to enable that party to take steps to have the award annulled by the competent tribunal. So the party aggrieved by the Award can challenge the Award on any ground other than those mentioned in sections 7(1) and 7(2) and the court has the power to refuse the enforcement of the Award. Now if the party aggrieved can resist enforcement on any ground, I see no reason why he cannot take the initiative and attack the Award in an action filed by him, but must leave the Award, which is injuriou....
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....the court declaring in a properly constituted suit that there never was a contract at all or that the contract is void and of no effect. Banerjee, J., held that Section 32 does not have the effect of impliedly repealing Section 39 of the Specific Relief Act and so a suit which challenges the validity of a contract is not hit by Section 32 even though the arbitration agreement is contained in the Contract. So this case is an authority in support of the appellant's suit in so far as it seeks to challenge the four contracts in question. The further question that arises is whether Section 32 bars the suit in so far as it seeks to challenge the Awards. Mr. Bubimal Roy has argued that Section 32 does not apply to Foreign Awards and reference is made by the learned counsel to the decision of the Judicial Committee reported in 49 Ind App 174: (AIR 1922 PC 120), in which it has been held that in a suit in India upon an Award made upon a submission to arbitration in England irregularity or misconduct in arriving at the Award is not a defence; the award can be set aside on those grounds only on motion under the English Arbitration Act, 1889 made within the time limited by Order LXIV Rule ....