WAVERLY JUTE MILLS CO. LTD versus RAYMON & CO. (INDIA) PRIVATE LTD

Citation: [1963] 3 S.C.R. 209 · Decided: 04-05-1962 · Supreme Court of India · Bench: T.L. VENKATARAMA AIYYAR · Disposal: Appeal(s) allowed
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Judgment (excerpt)

3 S.O.R. 
StJl>REME COURT REPORTS 
I 
WAVERLY JUTE MILLS CO. LTD. 
v. 
RAYMON & CO. (INDIA) PRIVATE LTD. 
(And connected appeals) 
209 
.. ,' 
(B. P. SINHA, c. J., K. SUBBA RAO, N. RAJAGOPALA 
AYYANGAR, J. R. ALUDHOLKAR, and 
. 
-
• 
T. L. VENKATARAMA AIYAR, JJ,) 
Forward Gontract-iegiBlative validity of enactment-
Gonstitutlonal 
validity-Notification. prohibiting . forward 
contracts other than non-transferable specific delivery contract-
Gontract for sale of goods-Validity--Glause providing 
for 
arbitration-Parties appearing 
before 
arbitration-Effect-
Forward Contracts (Regulation) Act, 1952 (74 of 1952), ss.2(f), 
17, 18-Gonstitution of India, Art. 14, Sch. 7, List I, EnJry 48, 
Li&t II, Entries 26, 27, List fl!, Entry 7. 
The appellant company entered into a contract with the 
respondents on September 7, 1955, 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. 14 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, an application was made by the 
appellant for the arbitration as provided in cl. 14. 
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 
Court of Calcutta under s. 33 of the Arbitration Act challeng-
ing the validity of the award on the ground that the contract 
dated-September 7, 1955, was illegal as it was in contraven-
tion of the notification of the Central Government dated 
October 29, 1953, issued under s. 17 of the Forward Contracts 
(Regulation) Act, 1952, by which 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 the Forward 
Contracts (Regulation) Act, 1952, was invalid and ultra vires 
because (a) Parliament had no competehce to enact it, and (b) 
the provisions of the Act were repugnant to Art. 14 of the 
Constitution of India, and, therefore, the notification dated 
October 29, 1953, was null and void; (2) that on the terms of 
the arbitration clause the question whether the contract dated 
196! 
Moiy 4. 
Waverl1 Jut1 Mills 
Co. Lid. 
•• 
Raymon dJ Oo. 
(India) P•t. Lid. 
• 
210 
SUPREME COURT REPORTS 
~1963] 
September 7, 1955, was illegal was one for the arbitrators to 
decide and that it was not open to the respondents to raise the 
same in an applicaticm under s. 33 of the Arbitration; (3) 
that the respondents submitted to the jurisdiction of the 
arbitrators and that amounted to a fresh agreement for arbit-
ration and tiierefore, the award was valid and binding on 
them; and (4) 
that, in any case, 
the contract dated 
September 7, 1955, was a non-transferable specific delivery 
contract and, therefore, was not hit by the' notification 
dated October 29, 1953. 
Held, that: ( 1) a legislation on Forward Contracts would 
be a legislation on Futures Markets and, therefore, the' "' 
Forward Contracts (Regulation) Act, 1952, fell within the 
exclusive competence of Parliament under entry 28 List I of 
Sch. 7 of the Constituti.on of India, accordingly, the Act could 
not be challenged on the ground of legislative incompetence . 
Duni Chand Rateria v. Dhuwalka Brothers Ltd., (1955] 
I S.C.R. 1071, follow~d. 
(2) the Act did noi infringe Art. 14 of the Constitution. , 
M/s. Ragh'llbar Dyal Jai Prakash v. The Union of India. 
[1962] 3 S. C.R. 547, followed, 
' 
(3) if a contract was illegal and void, an a~bitration 
clause which was one of the terms thereof must perish along 
with it, and a dispute relating to the validity of ~ contract 
was in auch cases, for the court and not the arbitrators to. 
' 
decide. 
Khardah Company Ltd. v. Raymon & Co. (India) 
Private Ltd., [1963] 3 s.c.R. 183, followed. 
(4) the respondents were not.pre~luded by what they did 
before the arbitrators from agitatmg the .quesuon of the 
validity of the contract in the present proceedmgs before the 
High Court. 
. 
Sh'va Jute Baling Ltd. v. Hindley and Company Ltd.' 
(l9GO] l 's.c.R. 569 and East India '!rading Co. v. Badat and 
Co., 1.L R. [l959] Born. 1004, considered. 
(5) the contract dated September 7, 1955,. was a non• 
transferable specific delivery coutr~ct as define
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