FORT GLOSTER INDUSTRIES LTD. versus SETHLA MERCANTILE (P) LTD.

Citation: [1968] 3 S.C.R. 450 · Decided: 19-03-1968 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Remitted to Lower Court
Open in Lexace · Ask the AI about this case
Judgment (excerpt)

FORT GLOSTER INDUS'IRIES LTD. 
A 
v. 
SEDllA MERCANTILE (P) LTD. 
March 19, 1968 
[1. C. SHAH, V; RAf.usWAMI AND G. K. MITTER, 11.] 
B 
Forward Contract-Discrepancy behveen bought and sold 11otes-
Contrac1 whether binding-Other evidence whether may be looked inJD-
Forward Controcts (Regulation) Act 14 of 1952, s. 11-Bye-/aws framed 
under-Effect of bye-laws 1(c) and 8(b) on construction of contract. 
The appellant and the respondent were both members of the East 
lrulia Jute aod Hessian Exchange Ltd., aod were bound by its rules and 
regulations framed under s. 11 of the Forward Contracts (Regulation) 
Act 74 of 1952 for regulating aod conl!Olliog forward cootraets in the 
jute trade. 
The appellant in August 1960 agreed to purchase aod the 
respondent to sell 750 bales of Pakistan raw jute for delivery during 
October and/orNovember, 1960. According to the custom of the trade 
which was recognised by the bye-laws. the brokers sent a sold note on 
behalf of the respondent to the appellant, and issued a• bought oote oo 
behalf of the appellant which was sent to the respondent. 
Differences 
arose between the parties in respect of the execution of the contract and 
the appellant referred a claim against the respondent to the Tribunal of 
Arbitration of the Bengal Chamber of Commerce aod Industry. 
The 
respondent thereupon moved oo the original side of the Calcutta High 
Court, a petition under s. 33 of the Arbitration Act, 1940 challenging the 
existence and validity of the alleged arbitration agreement between the 
parties. 
The principal ground in support of the petition was that the 
terms of the bought and sold notes in respect of payment and otherwiso 
did not tally, and on that account there was no concluded contract. lo the 
affidavit filed by the appellant the genuineness of the sold note set up hr 
the respondent was questioned. The High Court decided in favour of the 
resporulent and the appellant by special leave came to this Court. 
HELD : (i) The term as to payment is an important term of a written 
conll"act. The bought and the sold notes have the bye-laws to be in 
writing and in the prescribed form and if. there be any discrepancy bet-
ween the two i.e. the tenns as to payment are specified in one note and 
not in the other, prima facie, there is no concluded contract. [455 B-CJ 
(ii) In view. of the bye-laws of the Association which make it obliga-
tory on the parties that the terms of the contract shall be in writing and 
that they shall be in the fo'rm prescribed, it could not be held tha~ apart 
from the terms of the bought and the sold notes which by custom of the 
market are issued, evidence may be Jed to prove that the parties had 
aifeed to certain terms not set out in the bought and sold notes. [456 El 
(iii) The bought note did not comply with bye-law 7(c) in so far 
as the latter required a letter of authority to import Pakistan jute. 
In 
bye-law 8(b) two alternative methods of payment were 
provided; 
the 
bouaht note mentioned one of them, while · the sold note 
mentioned 
neither. 
In these circumstances, even if bye.Jaws 7(c) and 8(b) were 
read into the contract it. could not be said that there was no discrepancy 
between the houltht and the sold notes. The bought and sold notes as 
produced in Court could not be regarded as creating a binding contract. 
(457 F-458 CJ 
c 
D 
E 
F 
G 
ff 
A 
c 
D 
E 
F 
G 
H 
F. G. INDUSTRIES V. S. MERCANTILE LTD. (Shah, J.) 
451 
(iv) The question whether the sold note 
produ""d in Court was 
genuine must be decided by the trial court after taking fresh evidene<:. 
(Case remanded to trial court for this purpose.) [458 DJ 
Cowie & Ors. v. Wil/iani Remjry and others, 3 M.I.A. 448. 
Durga 
Prosad Sureka & Ors. v. Bhajan Lall & Ors. L.R. 31 
I.A, 
122 and 
Rodhakrislma Sil'adutta Rai & Ors. v. Tayebol/i Dawoodbhal, [1962) 
Supp. 1 S.C.R. 81, referred to. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 573 of 
1965. 
Appeal by special leave from the judgment and order dated 
July 26, 1962 of the Calcutta High Court in Awaid No. 181 of 
1961. 
S. T. Desai, S. Tibriwala, Sobhag Mal Jain and B. P. Mahesh-
wari, for the appellants. 
S. V. Gupte, C. M. Kohli and G. R. Chopra, for the res-
pondent. 
The Judgment of the Court was delivered by 
Shah, J. The East India Jute & Hessain Exchange Ltd.-
hereinafter called "the Association"-is recognized for the pur-
pose of the Forward Contracts (Regulation) Act 74 of 1952 as 
an association concerned with the regulatio
Excerpt shown. Read the full judgment & AI analysis in Lexace.