SHIVA JUTE BALING LIMITED versus HINDLEY AND COMPANY LIMITED

Citation: [1960] 1 S.C.R. 569 · Decided: 21-08-1959 · Supreme Court of India · Bench: BHUVNESHWAR PRASAD SINHA · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

S.C.R. 
SUPREME COURT REPORTS 
569 
drawn to this aspect of the matter, they would not 
have permitted any question as to art. 115 being 
raised, and the parties would have saved considerable 
costs thereby. 
We therefore come to the conclusion that the appeal 
must be allowed. The judgment and order of the 
learned Judges of the appellate bench of the High 
Court are set aside and those of the learned Single 
Judge of the High Court are restored. The appellant 
will be entitled to the costs in this Court and of the 
hearing of the appeal before the High Court. 
Appeal allowed. 
SHIV A JUTE BALING LIMITED 
v. 
HINDLEY AND COMPANY LIMITED 
(B. P. SINHA, P. B. GAJENDRAGADKAR and 
K. N. W ANCHOO, JJ.) 
Arbitration-Contract--Award passed pending legal proceedings 
challenging the existence and validity of contract-Validity-Breach 
of contract-Contract providing for penalty as liquidated damages-
Award granting maximum-Legality--Indian Contract Act, r872 
(9 of r872), ss. 73, 74-Arbitration (Protocol and Convention Act, 
I937 (6 of r937) s. 7(e)-Arbitration Act, r940 (IO of I940), 
SS. 33, 35· 
The appellant company, incorporated in India, entered into 
a contract on June 18, 1945, for the supply of five hundred bales 
of jute, with the respondent company which was incorporated in 
England and which had its registered office in London. The 
contract, inter alia, provided that in the event of default of tender 
or delivery, the seller shall pay to the buyer as and for liquidated 
damages ms. per ton plus the excess (if any) of the market value 
over the contract price, the market value being that of jute 
contracted for on the day following the date of default. There 
was a provision for arbitration, under which any claim or dispute 
whatever arising out of, or in relation to this contract or its 
construction or fulfilment shall be referred to arbitration in 
London in accordance with the bye-laws of the London Jute 
Association. Disputes having arisen regarding the performance 
of the contract the respondent referred the matter to the arbitra-
tion of the London Jute Association, who appointed two of its 
members as the arbitrators. The appellant dicl not reply to the 
notice given by the arbitrators but filed an application on 
1959 
Hindustan Forest 
Company 
v. 
Lal Chand 
Sarkar]. 
1959 
A11gust ZI. 
570 
SUPREME COURT REPORTS 
[1960(1)] 
I959 
August IO, 1949· under s. 33 of the Arbitration Act, 1940, in the 
Calcutta High Court, praying, inter alia, (a) for a declaration that 
Shiva]uteBaling the arbitration agreement was void on the ground of uncertainty, 
Limited 
and (b) for a declaration that there was in fact and in law no 
v. 
contract between the parties on account of mutual mistake of the 
Hindley and 
parties. Notice was given by the appellant to the respondent 
Cqmpany Limited and the London Jute Association that further steps in the arbit-
ration proceedings should not be taken pending disposal of the 
application under s. 33 of the Arbitration Act, 1940. The 
arbitrators, however, proceeded with the arbitration and gave 
their award on October 17, 1949· On November 26, 1951, an 
application was filed by the respondent in the Calcutta High 
Court under s. 5 of the Arbitration (Protocol and Convention) 
Act, 1937. praying that judgment be pronounced in accordance 
with the award. The appellant contended that the award was 
invalid on the grounds, inter alia, (1) that the award was bad 
under s. 35 of the Arbitration Act, 1940, as it was made after the · 
receipt of the notice of filing of the petition dated August IO, 
1940, under s. 33 of the Arbitration Act, by the respondent and 
the arbitrators and during the pendency of the said application, 
and (2) that the liquidated damages provided under the award 
included not only the difference between the contract price and 
the market price on the date of default but also a further sum of 
lOs. per ton, that the extra amount was against the provisions 
of ss. 73 and 74 of the Indian Contract Act, 1872, and that, 
therefore, the award was bad on the face of it and could not be 
enforced in view .of the provisions of s. 7(e) of the Arbitration 
(Protocol and Convention) Act, 1937, which Jays down that an 
award cannot be enforced in India if it is contrary to the Law of 
India. 
Held: (1) that the subject-matter of the legal proceedings 
under s. 33 of the Arbitration Act, 1940, which relates to the 
existence and validity of the arbitration agreement, are no

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