Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | Government notification forbidding forward contracts other than non- transferable specific delivery contracts Forward Contract Contract for sale of goods Validity of the contract |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Allowed |
Headnote | Forward Contract—Contract for sale of goods—Government notification forbidding forward contracts other than non- transferable specific delivery contracts—Validity of the contract— Clause providing fer arbitration—Clause, if valid even if contract were invalid—Parties appearing before arbitrator--Estoppel —Forward Contracts (Regulation) Act, 1952 (74 of 1952), as. 2 (c) (f) (4) (m) (n), 15(1), 17, 18(2).On September 7, 1955, the appellant company entered into a contract with the respondents for the purchase of certain bales of jute cuttings to be delivered by the respondents in equal instalments every month in October, November and December, 1955. Under cl. 3 of the agreement the sellers were entitled to receive the price only on their delivering to the buyers the full set of shipping documents. Clause 8 conferred on the sellers certain rights against the buyers such as the right to resell if the latter refused to accept the documents. Clause 14 provided that all disputes arising out of or concerning the contract should be referred to the arbitration of the Bengal Chamber of Commerce. As the respondents failed to deliver the goods as agreed the appellants applied to to the Bengal Chamber of Commerce for arbitration. The respondents appeared before the arbitrators and contested the claim, but an award was made in- favour of the appellant. Thereupon the respondents filed an_ application in the Court of Calcutta under s, 33: of the Arbitration Act, 1940, challenging the validity of the award on the ground that the contract dated September 7, 1955, was illegal as it was in contravention of the notification of the Central Government dated October 29, 1953, issued under s. 17 of the Forward Contracts (Regulation) Act, 1952, which declared that no person ‘‘shall enter into any forward contract other than a non- transferable specific delivery contract for the sale or purchase of raw jute in any form........ ”. The appellant pleaded (1) that on the terms of the arbitration clause the question whether the contract dated September 7, 1955, was illegal was one for the arbitrator to decide and that it was not open to the respondents to raise the same in proceedings under s. 33 of the Arbitration Act; (2) that the respondents were estopped from questioning the validity of the award by reason of their having submitted to the jurisdiction of the arbitrators ; and (3) that, in any case, the contract was a non-transferable specific delivery contract within s. 2(f) of the Forward Contracts (Regulation) Act and was not hit by the notification dated October 29, 1953. Held, that: (1) the dispute as to the validity of the contract dated September 7, 1955, was not one which the arbitrators were competent to decide under cl. 14 and that - in consequence the respondents were entitled to maintain the application under s, 33 of the Arbitration Act. When an agreement is invalid every part of it including the clause as to arbitration contained therein must also be invalid. (2) the respondents were not estopped by their conduct from questioning the validity of the award. (3) on the true construction of the contract dated September 7, 1955, read with the terms of the import licehce in favour of the appellant, the agreement between the parties was that the contract was not to be transferred. In construing a contract it would be legitimate to take into ‘account surrounding circumstances and, therefore, on the question whether there was an agreement between the parties that the contract was to be non-transferable, the absence of a specific clause forbidding transfer was not conclusive. Accordingly, the contract in question was not hit ‘by the notification dated October 29, 1953. |
Judge | Hon'ble Mr. Justice T.L Venkatarama Aiyyar |
Neutral Citation | 1962 INSC 202 |
Petitioner | Khardah Company Ltd. |
Respondent | Raymon & Co. (india) Private Ltd. |
SCR | [1963] 3 S.C.R. 183 |
Judgement Date | 1962-05-04 |
Case Number | 98 |
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