LexMODI & CO. versus UNION OF INDIA
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A B c D E F G H MODI & CO. v. UNION OF INDIA December 1, 1967 (J. C. SHAH, V. R.AMASWAMI AND V. BHARGAVA, JJ.) 565 Forward Contract (Regu/aJion) Act 74 of 1952, ss. 2(/) and 15(1)- C on tract for sale of Twills providing for delivery on specified date-if ~ 'non-transferable specific delivery contact tvitltin s. 2(/l-Principles for determinin1:. The appellant entered into a contract in September 1960 With the res- pondent through the Director-General. Supplies and Disposals, whereby ® agreed to sell 500 bales Twills on terms and conditions contained in an exchange of letters. 'file date of delivery , .. ·as fixed as November 30, 1960 and after the contract was entered into, the appellant depositecl with the Resen·e Bank of India an amount by way of security deposit in accor- dance with the terms of the contract. On November 30, the appellant informed the respondent t:hat the contract was void and illegal being in violation of the provisions of the:Forward Contract (Regulation) Act 74 of 1952 and that the security deposit should therefore be refunded. The respondent however took the position that the contract was legal ~nd bincling and as the appellant had .failed to deliver the goods as stipulated, it would purchase the goods elsewhere at the risk of the appellant. The respondent thereafter incurred an extra expenditure of about Rs. 76,000 and after giving credit to the app.ellant for the amount of security deposit claimed the balance amount of about R,. 56.000 from the appellant. Upon the latter's failure to pay, the respondent took recourse to the arbitration clause of th~ contract and appointed an arbitratr1r to determine the dis- pute. Before the arbitrator could give his award. the appellant filed an appli- cation before the High Court under s. 33 of the Arbitration Act, praying for a declaration that the arbitration clause was illegal and, void and fo1 an injunction restraining the respondent from prosecuting the arbitratiOn proceedings. The High Court dismissed the application holding that the contract \Vas a "non-transferable specific delivery contract'' ri.nJ. was not hit by the provisions of the Act. On appeal to this Court, HELD : (dismissing the appeal) The questioo as to whether the coo.tract was a transferable or non-transferable specific delivery contract is a question \vhich ultimately depends on a reasonable construction of the contract. On a proper construction of the terms of the contract and hB.ving regard to the surrounding circumstances, there was an implied agreement between the parties that the rights and liabilities under the cont'ract were not to be transfeFrc<l and the bill of lading relating to the contract was also not to be transferred. It follows therefore that the contract in question was a non-transferable specific delivery contract with- in the meaning of s. 2(f) of the Act and was not hit by the notifieation iSllUed on March 29, 1958 issued by the Central Government under s. 15 ( l) of the Act relating to jute/goods. [569 E; 571 C-E] Khardoh Company Ltd. v. Raymon & Co. (India) Private Ltd. (1963) 3 S.C.R. 183. referred to. 566 SUPRH!E COURT REPORTS [1968] 2 S.C.R. Civ11. APPELLATE JURISDICTION: Civil Appeal No. 395 of A 1965. Appeal by special leave from the judgment and order dated September 18. 1963 of the Calcutta }iigh Court in Matter No. 97 of 1963. A. K. Sen and D. N. Mukherjee, for the appellant. B. R. L. l,vengar and R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought, by special leave, from the judgment of the Calcutta High Court dated September 18, 1963 dismissing an application under s. 33 of the Arbitra' tion Act. By its letter dated September 14, 1960, the appellant made an offer for sale to the respondent of 500 Bales (1,50,000 bags) 'B' Twills on the terms and conditions mentioned in the said letter. The offer was accepted by the Director-General. Supplie;; & Disposals on behalf of the respondent by his letter No. CAL/ DL·l/5750-L/ll/Modi/158 dated September 16, 1960. The appellant depositc<l with the Reserve Bank of India the sum of Rs. 20, 182.50 P. towarc.s security deposit on September 22. 1960 as required by the acceptance letter. The date of delivery fixed under the contract was November 30, 1960 and the ~ pondent sent the appellant despatch instructions dated Novem- ber 21. 1960, through the Director of S
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