LexKHARDAH COMPANY LTD. versus RAYMON & CO. (INDIA) PRIVATE LTD.
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a s.e.R. SUPREME COURT REPORTS -....,1 183 • remaining appeals and passed appropriate orders therein; but this is unnecessary as my brethren take a different view in the two ma:in appeals. BY CouRT: In view of the majority Judgment, there will be decree in terms as stated in ·the '>' -< Judgment of the majority. KHARDAH COMPANY LTD. v. .,,-: RAYMON & CO. (INDIA) PRIVATE LTD. (B. P. SINHA, C. J., K. SuBBA RAo, N. RAJAGOPALA AYYANGAR, J.R. MunHOLKAR and T. L. VENKATARAMA AIYAR, JJ.) Forward Contract-Contract for Bale ·of goods-Govern- ment notification forbidding forward contracts other than non- transferable specific delivery contracts-Validity of the contract- Clause providing' for arbitration-Clause, if valid even if con- tract were invalid-Parties appearing before arbitrator-Estoppel -Forward Contracts (Regulation) Act, 1952 (74 of 1952), ss. 2 (c) (f) (i) (m) (n), 15(1), 17, 18(1). - On September 7, 1955, the appellant company entered into a contract with the respondents for the purchase of cer- tain bales of jute cuttings to be delivered by the resp@ndents in equal instalments every month in October, November anc;I 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 docu- ments. Clause 14 provided that all disputes arising out of or concerning the contract should be referred to the arbitratiou 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 High poµrt of Calcutta under. s. 33 · of the Arbitration Act, 1940, 1962 fl.. Vishwanitlhiin v. Rukn·ul-mulk Sy1d Abdul Wajiit Hidaya/ullah J, 1962 May4 • 1962 Khariah ClfTIP••J Lid •• ltaP,in "' c .. (Tndi•} Pfl1. ltd,. 184. SUPREME COURT REPORTS [1963J challenging the validity of the award on the ground that the contract dated September 7, 1955, was illegal as it was in contravfntion of the notification of the Central Government dated October 29, 1953, issue.cl under s. 17 of the Forward Contracts lRegulation) Act, 1952, which declared that no persOn '.'shall enter ihto 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 (I) 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 r_aise the same in proceedings under s. 33 of the Arbitration Act; (2) that the respondents were estopped froin 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-trans_fcrablc specific delivery contract within s. 1 (f) of the Forward Contracts (Regulation) Act and was not hit by the notifica- tion dated October 29, 1953. ' Held, that : (I) 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. ( ~. l When an agreement is invalid every part of it including the clause as to arbitration contained therein must also bC invalid. Leyman v. Darwins Lid., [1942] A. C. 356 Union of India v. Kishorilal Gupta una Brothers, [1960] 1' S. C.R. 493, Tnlaram v. Birla Jute Manufacturiug Company Ltd I.,L. R. [1948] 2 Cal,' 17, relied on. . " . (2)' the respondents were not estopped by their conduct from questioning the validity Of the award. Ex parte Wyld, ( 1861) 30 Law J. Rep. (N. S.) Bank. 10, explained. · . (3) on the true co~struction of the co~tract dated Sep- tem.ber 7, 1955, read ·with the terms of the import licence iri favour of the appellan[, the agreement between the parties was that the contract was not to "be transferred. · · In. construing a contract it would be legitimate to take i~t_o~~cCO
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