Aghore Nauth Bannerjee vs The Calcutta Tramways Co. Ltd. on 12 February, 1885

Calcutta High Court
Aghore Nauth Bannerjee vs The Calcutta Tramways Co. Ltd. on 12 February, 1885
Equivalent citations: (1885) ILR 11 Cal 232
Author: R Garth
Bench: R Garth, Wilson


Richard Garth, C.J.

1. The point referred to us raises the question whether Article 7 of the agreement between the parties can be enforced by the law of this country?

2. Under article 6 the Company are at liberty, in case of any breach of the rules by the conductor, to retain the whole of the Rs. 15, which the latter deposited as security for his good behaviour, as liquidated damages for the breach; and they are also in the same way at liberty to retain any wages due to him; and then article 7 provides that the Manager of the Company for the time being shall be the sole judge between the Company and the conductor, as to whether the Company, in the event of any breach of the rules, is entitled to retain the whole or any part of the deposit of Rs. 15, and also all wages due at the time of his discharge, as liquidated damages; and the Manager’s certificate in writing is to be conclusive evidence before any Court of Justice that the amount certified to be retained is correct, and that there is sufficient cause for its retention.

3. It is contended, that this article is in direct contravention of Section 28 of the Contract Act as ousting the jurisdiction of the Courts to adjudicate between the conductor and the Company under such circumstances.

4. Now Section 28, as I take it, intends to enact, as nearly as may be, what the law of England is upon the subject. It says, that “every agreement by which any party: is restricted absolutely from enforcing his right under it, or in respect of any contract by usual legal proceedings in the ordinary tribunals or which limits the time within which he may thus enforce his rights is void to that extent.”

5. But then the first exception to the section provides, “that this is not to render illegal a contract, by which two or more persons agree that any dispute which may arise between them in respect of any subject shall be referred to arbitration, and that only the amount awarded in such arbitration shall be recoverable in respect of the dispute so referred.”

6. The point which we have to determine here is, whether article 7 of the agreement now in question comes within that exception. I am of opinion that it does. The Manager of the Company is by that clause constituted by both parties the sole arbitrator between the Company and the conductor, as to whether, in the event of the conduetor’s misconduct, the Company is entitled to retain the whole or any part of the deposit of Rs. 15, and of any wages which may be due to him at the time of his discharge; and the certificate of the Manager is to be conclusive evidence in all Courts of Justice of the amount which the Company are entitled to retain. That seems to me precisely such a case as comes within exception I of Section 28 of the Contract Act; and the dispute between the parties which has arisen in this instance has been decided by the Manager under the arbitration clause.

7. The point is very similar to those which so frequently occur in England, where an engineer or architect is constituted the arbitrator between a contractor and the person who employs him as to what should be allowed in case of dispute for extras or penalties.

8. It has been argued for the plaintiff’, that the Manager in this case is -virtually the Company. But this is not so. The Manager here is no more the Company than the engineer or the architect in the cases to which I have just referred is the employer. Both parties have faith in the Manager, and are content to place themselves in his hands, as an arbitrator between them in the event of dispute.

9. In the English case of the London Tramways Company against Bailey L.R. 3 Q.B.D. 217, to which we were referred, a precisely similar clause in the articles of agreement was held to be valid.

10. There the complainant was one of the conductors of the Tramways Company under an agreement very similar in its terms to that which we are now considering; and the Court held, that the certificate of the Manager was conclusive against the claim of the conductor.

11. If I am right in supposing that Section 28 of the Contract Act does virtually enact the law of England, that case is a direct authority in favour of the view which we take.

12. We therefore hold that the certificate of the Manager is conclusive evidence against the plaintiff’s claim.

13. We make no order as to costs.

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