Full Judgment Text
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PETITIONER:
JUTE & GUNNY BROKERS LTD.
Vs.
RESPONDENT:
M/S. NEW CENTRAL JUTE MILLS CO., LTD.
DATE OF JUDGMENT:
20/01/1959
BENCH:
DAS, SUDHI RANJAN (CJ)
BENCH:
DAS, SUDHI RANJAN (CJ)
DAS, S.K.
GAJENDRAGADKAR, P.B.
WANCHOO, K.N.
HIDAYATULLAH, M.
CITATION:
1959 AIR 569 1959 SCR Supl. (2) 79
ACT:
Contract--Validity--Ordinance making Provision of regulation
of trade--Act replacing Ordinance--Deeming provisions-Legal
fiction--Effect--Raw Jute (Central Jute Board and
Miscellaneous Provisions) Ordinance, 1950 (W. Ben. 17 of
1950), ss. 5, 6 and 7 Raw jute (Central Jute Board and
Miscellaneous Provisions) Act, 1951 (W. Ben. 6 of 1951),
ss.5, 6, 7, 16.
HEADNOTE:
In respect of a dispute between the appellant company and
the respondent company which was referred to the arbitration
of the Bengal Chamber of Commerce in terms of the
arbitration clause contained in the contract entered into on
April 6, 1951, an award was made on February 29, 1952,
allowing the claim of the appellant. The respondent made an
application in the High Court for having the award set aside
on the ground, inter alia, that the contract was void under
the provisions of the Raw jute (Central jute Board and
Miscellaneous Provisions) Act, 1951, inasmuch as it had not
been entered into in the manner specified in ss. 5, 6 and 7
of the Act as required therein. On December 14, 1950, the
Government of West Bengal had promulgated an Ordinance
called the Raw jute (Central jute Board and Miscellaneous
Provisions) Ordinance, 1950, for the better regulation of
the trade, and on December 29,1950, a notification was
issued specifying December 30, 1950, as " the appointed day
for the purposes of ss. 5, 6 and 7 Of the said Ordinance."
Subsequently the Ordinance was replaced by the Act which by
s. 16, provided:.............. any notification
issued......... under the Raw Jute (Central jute Board and
Miscellaneons Provisions) Ordinance, 1950, shall, on the
said Ordinance ceasing to operate, be deemed to have been
issued under this Act as if this Act had commenced on the
14th day of December 1950." It was contended for the
appellant that the notification dated December 29, 1950,
could not be read as having brought ss. 5, 6 and 7 Of the
Act into force, because, on a plain reading of it, the
notification did not purport to bring any of the sections of
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the Act into force, but expressly brought ss. 5, 6 and 7 of
the Ordinance into force and that the said sections of the
Act not having been brought into force, the contract in
question was valid and, consequently, the award was binding
and enforceable.
Held, that in order to give full effect to the two legal
fictions created in s. 16 of the Act that the Act shall be
deemed to have commenced on December 14, 195o, and that the
notification issued under the Ordinance shall be deemed to
have
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been issued under the Act, the principle of mutatis mutandis
has to be adopted and the word " Act " substituted for the
word " Ordinance " used in the notification dated December
29, 1950. Consequently, the provisions of ss. 5, 6 and 7 Of
the Act were applicable to the contract in question.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 92 of 1954.
Appeal from the judgment and order dated January 28, 1953,
of the’ Calcutta High Court in Award Case No. 105 of 1952.
M. C. Setalvad, Attorney-General for India, B. Sen,
P. D. Himatsinghka and B. P. Maheshwari, for the
appellant.
N. C. Chatterjee, M. 0. Poddar and Ganpat Rai, for the
respondent.
1959. January 20. The Judgment of the Court was delivered
by
DAS, C. J.-This is an appeal filed upon a certificate of
fitness granted by the High Court of Calcutta impugning the
judgment pronounced by the said High Court on January 23,
1953, declaring null and void an award (No. 209 of 1952)
made by the Bengal Chamber of Commerce in case No. 855 of
1951, whereby they ordered the respondent company to pay to
the appellant company a sum of Rs. 1,95,000 besides interest
and costs.
The facts giving rise to the present appeal are simple and
may briefly be summarised as follows: On April 6, 1951, the
appellant company entered into a contract with the
respondent company for the supply of 5,000 maunds of Nikhli
and/or Ashuganj Jute on certain prices according to quality,
" shipment during July and/or August, 1951, guaranteed ".
That contract, which was entered into by bought and sold
notes exchanged between the parties through brokers, con-
tained a very wide arbitration clause. When shipping
documents were presented to the respondent company by the
bankers of the appellant company, they were not honoured on
the plea that the same were not in order and the respondent
company failed to take delivery of the goods. The last date
on which the
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documents were so presented was September 17, 1951. On
September 26, 1951, the appellant company, through their
solicitors, wrote to the respondent company intimating that
they had exercised their option of cancelling the contract
and demanding the payment of the sum of Rs. 1,95,000 as
damages on the basis of the difference between the contract
price and the market price of the goods as on September 17,
1951. The respondent company having by their letter dated
October 25, 1951, denied their liability to pay any amount,
the appellant company on November 2, 1951, referred the
dispute to the arbitration of the Bengal Chamber of Commerce
in terms of the arbitration clause contained in that
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contract. The respondent company submitted to the
jurisdiction of the Tribunal of arbitration by appearing and
adducing evidence before it. On February 29, 1952, the
arbitrators made their award by which they allowed the claim
of the appellant company in full with interest and costs.
The award having been filed in the Calcutta High Court on
April 23, 1952, the respondent company on June 9,1952, filed
an application in that Court praying, inter alia, that the
award be declared null and void and be set aside. The main
ground urged in that application was that the award was a
nullity in that the contract containing the arbitration
clause was void under the provisions of the Raw Jute
(Central Jute Board and Miscellaneous Provisions) Act, 1951,
(W. Ben. VI of 1951) which was then in force. In order to
appreciate the points raised before the High Court and
before us it is necessary at this stage to refer to some of
the statutory provisions bearing on the question.
To regulate the prices of jute and to empower the Government
to fix its maximum prices, the West Bengal Legislature
passed an Act called the West Bengal Jute (Control of
Prices) Act, 1950, (W. Ben. VI of 1950) which came into
force on March 15,1950. On December 14,1950, the Government
of West Bengal promulgated an Ordinance called the Raw Jute
(Central Jute Board and Miscellaneous Provisions)
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Ordinance, 1950 (XVII of 1950) for the better regulation of
the jute trade. The preamble to that Ordinance recited
that, as the owners of jute mills were not being able to
secure adequate supplies of jute on the maximum prices fixed
under the West Bengal Jute (Control of Prices) Act, 1950, it
had become expedient to set up a Central Jute Board in West
Bengal for ensuring an equitable supply of raw jute to the
owners of the jute mills. That Ordinance consisted of only
15 sections. Section.4 of that Ordinance provided for the
constitution of the Central Jute Board. Section 5 was
expressed in the following terms :-
" 5. (1) No person shall sell or agree to sell raw jute to
the owner of a jute-mill and no owner of a jute mill shall
buy or agree to buy raw jute save and except in pursuance of
a contract for the sale or the supply of raw jute entered
into in the manner provided in section 6.
(2) Any contract entered into for the sale or the supply of
raw jute with the owner of a jute-mill save and except in
the manner provided in section 6 shall be
void and of no effect.
(3) Any person contravening the provisions of sub-section
(If shall be guilty of an offence under this Ordinance and
shall be punishable with imprisonment which may extend to
six months or with fine or with both."
Section 6 laid down the manner in which all contracts for
the sale or supply of raw jute with the owners of jute mills
were to be entered into. Section 7 ran as
follows:-
" 7. (1) No person shall deliver or cause to be delivered to
the owner of a jute-mill and no owner of a jute-mill shall
accept or cause to be accepted any raw jute save and except
in pursuance of a contract for the sale or the supply of raw
jute entered into in the manner provided in section 6.
(2) Any person contravening the provisions of sub-section
(If shall be guilty of an offence under this Ordinance and
shall be punishable with imprisonment which may extend to
six months or with fine or with both.
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(3) The provisions of section 5, section 6, and this
section shall have effect on and from the appointed day."
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The expression " appointed day " occurring in s. 7 (3)
quoted above was thus defined in s. 2 (1) of that Ordinance
:-
" 2 (1) I appointed day’ means the date specified by the
State Government by notification in the Official Gazette as
the appointed day for the purpose of this Ordinance; "
By a notification dated December 29, 1950, published in an
extraordinary issue of the Calcutta Gazette of the same
date, December 30, 1950, was specified as " the appointed
day for the purposes of ss. 5, 6 and 7 of the said
Ordinance."
The said Ordinance was subsequently replaced by an Act
called the Raw Jute (Central Jute Board and Miscellaneous
Provisions) Act (W. Ben. Act VI of 1951), hereinafter
referred to as " the Act ", which came into force on March
21., 1951. The first fifteen sections of the Act were
almost verbatim reproductions of the fifteen sections of the
Ordinance and only one new section was added as the
sixteenth section reading as follows:-
" 16. The Central Jute Board constituted, any rule made,
any notification or licence issued, any direction given, any
contract entered into, any minimum price fixed, anything
done or any action whatsoever taken under the Raw Jute
(Central Jute Board and Miscellaneous Provisions) Ordinance,
1950, shall, on the said Ordinance ceasing to operate, be
deemed to have been constituted, made, issued, given,
entered into, fixed, done or taken under this Act as if this
Act had commenced on the 14th day of December, 1950. " The
Act was in force at all times material to these proceedings
though the same was subsequently repealed on August 5, 1952.
It may be mentioned here that both when the Ordinance was in
force and after the Act had come into operation, the Central
Jute Board issued a, series of circulars by which it
authorised the owners of jute mills to purchase raw jute up
to the extent of quotas
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respectively allotted to them through " normal trade
channels " subject to their furnishing particulars of the
contracts and of deliveries under them to the Board. The
contract in question was entered into through " normal trade
channels " and not in the manner specified in the said Act
or the rules framed thereunder. Indeed, it is conceded that
no application had been made by the appellant company to the
Board under s. 6(1) of the Act, that the Board did not,
under s. 6(2) of the Act select any jute mills as buyers of
these goods, that the respondent company had not signified
in writing to the Board its intention to buy the raw jute in
question, that the Board did not specify a date within which
the contract was to be entered into and that, finally, the
delivery period fixed in the contract was in contravention
of the provisions of the Act and the rules and, therefore,
the contract was void under s. 5(2) of the Act, if ss. 5, 6
and 7 were in force at the date of the contract.
The respondent company’s aforesaid application for setting
aside the award having come on for hearing, the learned
Single Judge sitting, on the Original Side reported the
matter, under r. 2 of ch. V of the Original Side Rules, to
the Chief Justice for forming a larger Bench for hearing of
the said application. A Special Bench was accordingly
constituted by the Chief Justice and the application came up
for hearing before that Bench. Three points were urged
before the High Court, namely, (1) that the Act was ultra
vires the Bengal Legislature; (2) that even if the Act were
intra vires ss. 5, 6 and 7 of the Act were never brought
into force and (3) that there was a subsequent independent
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agreement to refer the disputes to the arbitration of the
Bengal Chamber of Commerce. The High Court negatived all
the contentions raised by the appellant company and by its
judgment dated January 23, 1953, allowed the application and
declared the award to be null and void, but directed the
parties to bear their own costs. This appeal, as already
stated, has been filed against the judgment of the High
Court upon a certificate of fitness granted by the High
Court.
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The learned Attorney-General appearing in support of this
appeal has urged before us only the second point urged
before the High Court, namely, that even if the Act were
intra vires ss. 5, 6 and 7 had never been brought into force
and, therefore, the contract in question containing the
arbitration clause was valid and consequently the award was
binding and enforceable. He does not dispute that, by
virtue of s. 16 of the Act, the notification issued on
December 19, 1950, under s. 2(1) of the Ordinance has to be
deemed to have been issued under the Act, but he contends
that even so the notification dated December 29, 1950,
cannot be read as having brought ss. 5, 6 and 7 of the Act
into force, for it, in terms, specified December 30, 1950,
as the appointed day " for the purposes of ss. 5, 6 and 7 of
the Ordinance ". He urges that this Court has to take the
notification made under the Ordinance as it finds it and
then, under s. 16 of the Act, to deem it to have been made
under the Act. According to him the fiction created by s.
16 ends as soon as the notification is deemed to have been
made under the Act and goes no further. He concludes, on
the authority of the decisions in Hamilton and Co. v. Mackie
and Sons (1) and T. W. Thomas & Co. Limited v. Portsea
Steamship Company Limited (2), that, on a plain reading of
it, the notification, when it is deemed to have been made
under the Act, makes no sense, for it does not purport to
bring any of the sections of the Act into force but
expressly brings ss. 5, 6 and 7 of the Ordinance into force.
He submits that it is not for the court to alter the terms
of the notification so as to make it possible to read it as
a notification made under the Act. We are unable to accept
this line of argument. The decisions relied on by the
learned Attorney General can have no application to the pre-
sent case. In those cases there was no statutory provision
for deeming the provision of the charter party referring all
disputes under the charter party to arbitration as an
integral part of the provisions of the bill of lading and,
therefore, the only thing to be done in those cases was to
lift bodily the relevant provision
(1) [1889] 5 T. L. R. 677.
(2) L.R. [1912] A.C. 1.
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of the charter party and to insert it in and to read it as a
part of the bill of lading. It was held that so read it
became insensible, for an arbitration clause referring all
disputes arising out of the charter party was wholly out of
place and meaningless as a term of the bill of lading. A
cursory perusal of s. 16 will, however, show that there are
two fictions created by that section: One is that the Act
shall be deemed to have commenced on December 14, 1950, and
the other is that the notification issued under the
Ordinance shall be deemed to have been issued under the Act.
If the Act fictionally commenced on December 14, 1950, then
the Ordinance would have to be treated as not promulgated at
all, for the two could not have coexisted and when the Act
provided that the notification, which, for identification,
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is described as having been issued under the Ordinance,
should be deemed to have been made under the Act then,
unless we read the word " Ordinance " 7 as " Act ", we do
not give full effect to the twin fictions created by the
Act. In other words the creation of the statutory fictions
compels us to adopt the principle of mutatis mutandis and to
substitute the word " Act " for the word " Ordinance " used
in the notification, so as to give full effect to the
fictions created by the statute. We see no reason in
support of the contentions of the Attorney General that the
fiction raised by s. 16 stops short at mere issuing of the
notification. The ambit of the fiction appears to us to
cover not only the issuance of the notification but to
extend to our reading it as having been one issued under the
Act. We cannot read it as having been issued under the Act
unless we read the word " Ordinance " used in the
notification as " Act ".
No other point has been urged before us and for reasons
stated above this appeal must be dismissed. In view of the
circumstances referred to in the judgment of the High Court
and appearing in the record we make no order for costs of
this appeal.
Appeal dismissed.
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