CASE NO.: Appeal (civil) 389-392 of 1960 PETITIONER: WAVERLY JUTE MILLS CO. LTD. RESPONDENT: RAYMON & COMPANY (INDIA) PVT. LTD. DATE OF JUDGMENT: 04/05/1962 BENCH: B.P. SINHA (CJ) & K. SUBBARAO & N.R. AYYANGAR & J.R. MUDHOLKAR & T.L.V. AIYYAR JUDGMENT:
JUDGMENT
1963 AIR (SC) 90 = 1962 (3) SCR 209
VENKATARAMA AIYAR, J. –
These are appeals by special leave against judgments of High Court of
Calcutta setting aside awards which directed the respondents to pay
compensation to the appellants for Breach of contracts, on the ground that
they were in contravention of a notification of the Central Government
dated October 29, 1953, and were in consequence illegal and void. These
appeals were heard along with Civil Appeals Nos. 98 & 99 of 1960 as there
were common questions of law to be decided in all.
In Civil Appeals Nos. 389 & 390 of 1960 the facts are that on September 7,
1955, the appellants who are a company owning a Jute Mill at Calcutta
entered into an agreement with the respondents who are also a Company doing
business as dealers in jute, for the purchase of 2, 250 bales of the jute
cuttings at Rs. 80 per bale of 400 lbs. to be delivered 750 bales every
month in October, November and December, 1955. Clause 14 of the agreement
provides that all disputes arising out of or concerning the contract should
be referred to the arbitration of the Bengal Chamber of Commerce. The
respondents delivered, pursuant to the contract, in all 2000 bales and made
default in the delivery of the balance. The appellants then applied to the
Bengal Chamber of Commerce for arbitration in accordance with cl. 14 of the
agreement. The respondents appeared before the arbitrators and contested
the claims on the merits. The arbitrators made an award in favour of the
appellants for Rs. 10, 525, and that was filed under s. 14(2) of the Indian
Arbitration Act in the High Court of Calcutta on its original side and
notice was issued to the respondents. Thereupon they filed an application
presumably under s. 33 of the Arbitration Act for a declaration that the
contract dated September 7, 1955, was illegal as it was in contravention of
the notification of the Central Government dated October 29, 1953, and that
the award based thereon was a nullify. The learned Judge on the original
side before whom the application came up for hearing dismissed it, and
passed a decree in terms of the award. Against both the judgment and the
order, the respondents preferred appeals to a Division Bench of the High
Court appeals Nos. 148 & 141 of 1957. They were heard by Chakravartti,
C.J., and Lahiri, J., who held that the contract dated September 7, 1955,
was illegal, as it fell within the prohibition contained in a notification
of the Central Government dated October 29, 1953, and accordingly allowed
the appeals and set aside the award. The appellants then applied for a
certificate under Art. 133(3) of the Constitution by the same was refused.
Thereafter they applied to this Court for leave under Art. 136 of the
Constitution and that was granted. This is how these appeals come before
us.In Civil Appeals Nos. 391 and 392 of 1960 the facts are similar. The
appellants who are a company carrying on business in the manufacture of
jute entered into a contract with the respondents on October 17, 1955, for
the purchase of 500 bales of jute cuttings at Rs. 87-8-0 per bale of 400
lbs., to be delivered in equal instalment of 250 bales in November and in
December 1955. Clause 14 of the agreement provides that all differences
arising out of or concerning the contract should be referred to the Bengal
Chamber of Commerce for arbitration. The respondents made default in the
delivery of the goods and thereupon the appellants moved the Chamber of
Commerce for arbitration under cl. 14 of the agreement. The respondents
appeared before the arbitrators and contested the claim on the merits. The
arbitrators made an award in favour of the appellants for Rs. 17, 500, and
that was filed in the High Court of Calcutta on it original side and notice
under s. 14(2) of the Arbitration Act was served on the respondents.
Thereupon they filed an application in the High Court of Calcutta,
presumably under s. 33 of the Arbitration Act, for a declaration that the
contract dated October 17, 1955, was in contravention of the notification
of the Central Government dated October 29, 1953, and was therefore illegal
and that the arbitration proceedings pursuant thereto and the award passed
therein were all void. The learned single Judge on the original side before
whom the application came up for hearing dismissed it and passed a decree
in terms of the award. Against the above judgment and order the respondents
preferred appeals to a Division Bench of the High Court, Appeals Nos. 142
and 143 of 1957. They were heard by Chakravartti, C.J., and Lahiri, J., who
held that the contract dated October 17, 1955, was illegal as it fell
within the prohibition contained in the notification of the Central
Government dated October 29, 1953, and accordingly allowed the appeals and
set aside the awards. The appellant thereafter applied under Art. 133(1)(c)
for a certificate and that having been refused they obtained from this
Court leave under Art. 136 of the Constitution and that is how these
appeals come before us. The points for decision in all these appeals are
the same and this Judgment will govern all of them.The following
contentions have been urged in support of these appeals :-
(1) The Forward Contracts (Regulation) Act, 1952, is ultra vires and the
notification dated October 29, 1953, is in consequence null and void.
(2) On the terms of the arbitration clause the question whether the
contracts dated September 7, 1955, and October 17, 1955, are illegal is one
for the arbitrators to decide and that it was not open to respondents to
raise the same in applications under s. 33 of the Arbitration Act.
(3) The respondents submitted to the jurisdiction of the arbitrators and
that amounts to fresh agreement for arbitration and the award is
accordingly valid and binding on them.
(4) The contracts dated September 7, 1955, and October 17, 1955 are non-
transferable specific delivery contracts and they are not hit by the
notification dated October 29, 1953.
(1) The first question relates to the vires of Forward Contracts
(Regulation) Act, 1952 (Act 74 of 1952), hereinafter referred to as ‘the
Act’. This statute was enacted by Parliament and received the assent of the
President on December 26, 1952. Its validity is attacked on two grounds;
that Parliament had no competence to enact it, and that the provisions of
the Act are repugnant to Art. 14 and Art. 19(1)(g) of the Constitution and
therefore void. If this contention is well founded, then the notification
dated October 29, 1953, which was issued by the Central Government in
exercise of the powers conferred by s. 17 of the Act would be null and
void.
Dealing first with the question as to the competence of Parliament to enact
the impugned law, it will be convenient to set out the entries in the
Legislative Lists in Seventh Schedule of the Constitution bearing on this
question.
List I-Entry 48 – Stock Exchanges and Futures Markets.List II-Entry 26 –
Trade and commerce within the State subject to the provisions of entry 33
of List III.
Entry 27 – Production, supply and distribution of goods subject to the
provisions of entry 33 of List III.
List III-Entry 7 – Contracts, including partnership, agency, contracts of
carriage, and other special forms of contracts, but not including contracts
relating to agricultural land.
Now the contention of the appellants is that the subject-matter of the
impugned legislation is either Trade and Commerce or Production, supply and
distribution of goods, within entries 26 or 27 in List II of the Seventh
Schedule, and that it is within the exclusive domain of the State
Legislature. The contention of the respondents, and of the Union which has
intervened, is that the impugned Act is legislation on ‘Futures Markets’
falling under entry 48 in List I and that it is Parliament which has the
exclusive competence over it, and in the alternative it is one on
contracts, and that is covered by entry 7 in List III in the Seventh
Schedule and is intra vires. To decide this question, it is necessary to
ascertain the true nature and scope of the legislation, its pith and
substance. The object of the Act as stated in the preamble is
“to provide for the regulation of certain matters relating to forward
contracts, the prohibition of options in goods and for the matters
connected therewith”. The statute makes a distinction between” ready
delivery contracts”and” forward contracts.”
When a contract provides for the delivery of goods and payment of price
therefor either immediately or within a period not exceeding eleven days it
is a ready delivery contract. All other contracts are forward contracts.
Forward contracts are again divided into two categories ‘specific delivery
contracts’ and ‘non-transferable specific delivery contracts’, ‘Specific
delivery contracts’ mean forward contracts which provide for actual
delivery of specific goods at the price fixed during specified future
period. ‘Non-transferable specific delivery contracts’ are specific
delivery contracts the rights or liabilities under which are not
transferable. Section 15 confers power on the Government to issue
notifications declaring illegal forward contracts with reference to such
goods or class of goods and in such areas as may be specified. Section 17
authorises the Government to prohibit by notification any forward contract
for the sale or purchase of any goods or class of goods to which the
provisions of s. 15 have not been made applicable. Section 18 exempts non-
transferable specific delivery contracts from the operation of these
sections. Thus the law is what is purports to be, a law regulating Forward
Contracts.That being the scope of the enactment, the point debated before
us is whether it is a law on Trade and Commerce of Production, supply and
distribution of goods within entries 26 or 27 in List II or on Futures
Markets within entry 48 in List I. It would be noticed that both the
entries 26 and 27 in List II are subject to entry 33 in List III. Entry 33
as it now stands is :
“Trade and commerce in, and the Production, supply distribution
of………. (e) raw jute”
. The impugned Act in so far as it relates to raw jute – and that is what
we are concerned with in these appeals – will clearly be intra vires if it
fell under this entry. But it should be mentioned that cl. (e) in entry 33
was inserted by the Constitution (Third Amendment) Act, 1954 and as the
impugned Act was passed in 1952, its validity must be determined on the
provisions of the Constitution as they stood prior to the Amendment Act in
1954 and entry 33 in List III therefore must be excluded from
consideration.
Now turning to the question whether the impugned Act is legislation on
Futures Markets or on Trade and commerce, the contention of the appellants
is that a law with respect to Forward Contracts, is not a law with respect
to Futures Markets, because the ordinary and accepted meaning of ‘Market’
is that it is a place where business in the sale and purchase of goods in
carried on. In support of this contention we are referred to the Dictionary
meaning of the word ‘Market’ and the decisions of the Madras High Court
reported in Public Prosecutor v. Cheru Kutti 1925 AIR(Mad) 1095.] and
Commissioner, Coimbatore Municipality v. Chettimar Vinayagar Temple
Committee [ 1956 (2) MLJ 563.]. According to the Concise Oxford Dictionary
the word ‘Market’ means
“gathering of people for purchase & sale of provisions, livestock, etc.;
open space or covered building in which cattle etc. are exposed for sale”
. In Public Prosecutor v. Cheru Kutti [ 1956 (2) MLJ 563.] the facts were
that the accused was charged under facts were that the accused was charged
under s. 170 of the Madras Local Boards Act, 1920 for keeping open a new
private market without a licence. His defence was that the place where the
sales were held was not truly a market, and that was accepted. In that
context, discussing the meaning of the word ‘market’, the Court observed
that it meant
“a place set apart for the meeting of the general public of buyers and
sellers, freely open to any such to assemble together, where any seller may
expose his goods for sale and any buyer may purchase”
. In Commissioner, Coimbatore Municipality v. Chettimar Vinayagar Temple
Committee [ 1956 (2) MLJ 563.], the question arose this time with reference
to the Provision in Madras District Municipalities Act, 1920 requiring a
place used as an open market under the Act to be licensed. The Court held
that the ordinary meaning of market was place where the public could go
during particular times for purpose of buying and selling and that on the
facts the place in question was market. It is contended on the strength of
the above rulings that as the impugned Act is not one with reference to
building where business is being transacted it is not a law with reference
to markets.We are unable to agree with this contention. Market no doubt
ordinarily means a place where business is being transacted. That was
probably all that it meant at a time when trade was not developed and when
transactions took place at specified places. But with the development of
commerce, bargains came to be concluded more often than not through
correspondence and the connotation of the word ‘market’ underwent a
corresponding expansion. In modern parlance the word ‘market’ has come to
mean business as well as the place where business is carried on. Labour
Market for example, is not a place where labourers are recruited but the
conditions of the business of labour. The word ‘market’ being thus capable
of signifying both business and the place where the business is carried on,
the question in what sense it is used in a particular statute must be
decided on a consideration of the context of that statute. Thus in Public
Prosecutor v. Cheru Kutti 1925 AIR(Mad) 1095.] and Commissioner, Coimbatore
Municipality v. Chettimar Vinayagar Temple Committee [ 1956 (2) MLJ 563.],
the question arose with reference to provisions as to licensing by local
authorities, and for that purpose market was interpreted as meaning a
place. So we must examine what the word market means in entry 48 “Futures
Markets” in List I. The word ‘Futures’ is thus defined in Encyclopaedia
Britannica :
“contracts which consists of a promise to deliver specified qualities of
some commodity at a specified future time. The obligation is for a single
quantity in a given month….. Futures are thus a form of security,
analogous to a bond or promissory note”
. In this sense a market can have reference only to business and not to any
location. In our opinion a legislation on Forward Contracts would be a
legislation on Futures Markets.It is next argued for the appellants that
even if a law on Forward Contracts can be said to be a law on Futures
Markets, it must be held to be legislation falling under entry 26 in List
II, and not entry 48 in List I, because Forward Contracts form a major
sector of modern trade, and constitute its very core, and to exclude them
from the ambit of entry 26 in List II, would be to rob it of much of its
contents. Reliance was placed in support of this contention, on the rule of
construction that the entries in the Lists should be construed liberally
and on the decision in Bhuwalka Brothers Ltd. v. Dunichand Rateria 1952
AIR(Cal) 740.], which, on this point was affirmed by this Court in Duni
Chand Rateria v. Bhuwalka Brothers Ltd. [ 1955 (1) SCR 1070.] The rule of
construction is undoubtedly well established that the entries in the Lists
should be construed broadly and not in a narrow or pedantic sense. But
there is no need for the appellants to call this rule in aid of their
contention, as trade and commerce would, in their ordinary and accepted
sense, include forward contracts. That was the view which was adopted in
Bhuwalka Brothers Ltd. case 1952 AIR(Cal) 740.] and which commended itself
to this Court in Duni Chand Rateria’s case [ 1955 (1) SCR 1071.].
Therefore, if the question were simply whether a law on Forward Contracts
would be a law with respect to Trade and commerce, there should be no
difficulty in answering it in the affirmative. But the point which we have
got to decide is as to the scope of the entry ‘Trade and commerce’ read in
juxtaposition with entry 48 of List I. As the two entries relate to the
powers mutually exclusive of two different legislatures, the question is
how these two are to be reconciled. Now it is a rule of construction as
well established as that on which the appellants rely, that the entries in
the Lists should be so construed as to give effect to all of them and that
a construction which will result in any of them being rendered futile or
otiose must be avoided. It follows from this that where there are two
entries, one general in its character and the other specific, the former
must be construed as excluding the latter. This is only an application of
the general maxim that Generalia specialibus non derogant. It is obvious
that if entry 26 is to be construed as comprehending Forward Contracts,
then “Futures Markets” in entry 48 will be rendered useless. We are
therefore of opinion that legislation on Forward Contracts must be held to
fall within the exclusive competence of the Union under entry 48 in List
I.It now remains to deal with the decisions on which the appellants rely in
support of their contention that the legislation is really one on Trade and
commerce falling within entry 26. In Bhuwalka Brothers Ltd. case 1952
AIR(Cal) 740.] the question was with reference to the validity of the West
Bengal Jute Goods Futures Ordinance, 1949. That Ordinance had been
promulgated by the Governor without obtaining the consent of the Governor-
General and the contention was that the legislation fell within entry 7
‘Contracts’ in List III and as the consent of the Governor-General had not
been obtained it was invalid. As against this it was contended that the
legislation was with respect to Trade and commerce which fell within List
II and that therefore the consent of the Governor-General was not
necessary. In accepting the latter contention the Court observed :
“In pith and substance the legislation was one on trade and commerce and
not on contracts and that therefore it was within the powers of the
provincial legislature”
. There was an appeal taken against this decision to this Court and there
the correctness of this view was accepted. Vide Duni Chand Rateria’s case [
1955 (1) SCR 1071.]. Now the contention before us is that on this authority
it should be held that the legislation was one on Trade and commerce
falling within entry 26.
We are unable to accept this contention. The validity of the West Bengal
Jute Goods Futures Ordinance, 1949, has to be judged in accordance with the
provisions of the Government of India Act, 1935, which was the Constitution
Act then in force. In that Act there was no specific entry relating to
‘Futures Markets’. Such an entry was introduced for the first time in the
present Constitution in 1952. The contest in Bhuwalka Brothers Ltd. case
1952 AIR(Cal) 740.] therefore was not between a general entry on trade and
commerce and a specific entry on the futures markets, as in the present
case, but between Trade and commerce in List II and Contracts in List III.
In the absence of a specific entry like the one contained in entry 48 in
List I, the decision in Bhuwalka Brothers Ltd. case 1952 AIR(Cal) 740.]
would be correct but it is no longer law in view of the change in the
Constitution.In the present case the question was also raised whether the
impugned legislation would fall under entry 7 of List III. While the
respondents insisted that it fell under entry 48 in List I, they were also
prepared, in case that contention failed, to fall back on entry 7 in List
III as a second line of defence. Entry 7 is general in its terms and cannot
prevail as against specific entry such as entry 48 in List I or 26 in List
II. On this point, we are in agreement with the decision in Bhuwalka
Brothers Ltd. case 1952 AIR(Cal) 740.]. In the result we must hold that the
attack on the impugned Act on the ground of legislative incompetence must
fail.
The second ground of attack on the vires of the Act is that it is repugnant
to Art. 14 and to Art. 19(1)(g) of the Constitution and is, therefore,
void. So far as Art. 14 is concerned, the question is now concluded by the
decision of this court in M/s. Raghubar Dayal Jai Prakash v. The Union of
India [ 1962 (3) SCR 547.] where it has been held that the impugned Act
does not infringe that Article and is valid. This point is therefore on
longer open to debate and indeed the appellants addressed no arguments on
it.
Then as regards the attack based on Art. 19(1)(g) the position is that
though the appellants raised this contention in the pleadings they did not
press it before the learned Judges in the Court below because there was a
decision on the Bench of the Calcutta High Court which had decided the
point against the appellants. The point, however was taken in the grounds
of appeal to this Court, and has been sought to be pressed before us. The
respondents complain and rightly that a point like this should not be
allowed to be taken at this stage as a decision thereon will turn on
investigation of facts which has not been made. It is also contended that
there being a strong presumption in favour of the constitutionality of a
legislation the appellants must fail as they have not placed any materials
before the Court to rebut that presumption. The answer of the appellants to
this contention is that as the Act is on the face of it violative of the
fundamental rights under Art. 19(1)(g), it was for the other side to place
materials for showing that it was protected by Art. 19(6) as one which is
reasonable and made in the interests of the general public, and not for
them to show negatively that it was not and reliance was placed on the
observations of this court in Saghir Ahmed v. The State of Uttar Pradesh
and Others [ 1955 (1) SCR 707, 726.]. We are of opinion that those
observations cannot be read as negativing the presumption as to the
constitutionality of a statute. But it is unnecessary to say more about it,
as the appellants abandoned this point after some argument. This contention
this point after some argument. This contention also must therefore be
found against the appellants.(2) It is next contended for the appellants
that the question as to the validity of the contracts between the parties
was one for the arbitrators to decide and that in consequence it was not
open to the respondents to raise it in an independent application under s.
33 of the Arbitration Act. This question has been considered by us in
Khardah Company Ltd. v. Raymon & company (India) (P.) Ltd. [ 1963 (3) SCR
183.] with which these appeals were heard and therein we have held that it
a contract is illegal and void, an arbitration clause which is one of the
terms thereof, must also perish along with it and that a dispute relating
to the validity of a contract is in such cases for the Court and not for
the arbitrators to decide. Following that decision we must overrule this
contention.
(3) The appellants next contend that even if the arbitration clause in the
original agreement between the parties should be held to be inoperative by
reason of the validity of the contract itself being in question, when the
respondents subsequently appeared before the arbitrators and filed
statements in support of their defence, that must be held to amount to a
new agreement by them for arbitration, on which the arbitrators would be
entitled to act and that in consequence the award could not be attacked on
the ground of want of jurisdiction. This the respondents dispute. They
contend that mere participation in the arbitration proceedings cannot be
held to be a new agreement for arbitration, and that the jurisdiction of
the arbitrators must be decided solely with reference to cl. 14 of the
agreement. The point for decision is as to the true effect of what happened
before the arbitrators on their jurisdiction to hear the dispute. The
principles applicable in the determination of this question are well
settled. A dispute as to the validity of a contract could be the subject-
matter of an agreement of arbitration in the same manner as a dispute
relating to a claim made under the contract. But such an agreement would be
effective and operative only when it is separate from and independent of
the contract which is impugned as illegal. Where, however, it is a term of
the very contract whose validity is in question, it has, as held by us in
Khardah Co. Ltd. case [ 1963 (3) SCR 183.], no existence apart from the
impugned contract and must perish with it.We shall now refer to the
decisions cited before us, bearing on this distinction between the two
categories of agreements. In Shiva Jute Baling Ltd. v. Hindley and Company
Ltd., [ 1960 (1) SCR 569.] the difference between these two classes of
agreements was noticed, though in a somewhat different context. A decision
directly bearing on this distinction is the one in East India Trading
Company v. Badat and Co. [(1959) I.L.R. Bom. 1004, 1018, 1019.]. There the
facts were that there was a general agreement between the parties as to the
terms on which they should do business and it was provided therein that all
disputes arising out of the contract should be settled by arbitration.
Subsequent thereto the parties entered into several contracts and then a
dispute arose with reference to one of them. One of the parties denied the
contracts and the question was whether an award passed by the arbitrators
with reference to that dispute was without jurisdiction. In holding that
the arbitrators had jurisdiction to decide the matter by virtue of the
agreement antecedent to the disputed one, the Court observed :
“Now, the principle of the matter is this that when a party denies the
arbitration agreement, the very basis on which the arbitrator can acts is
challenged and therefore the Courts have taken the view that in such a case
the arbitrator has no jurisdiction to decide whether he himself has
jurisdiction to adjudicate upon the dispute………….. If the
arbitration agreements is part and parcel of the contract itself, by
denying the factum of the contract the party is denying the submission
clause and denying the jurisdiction of the arbitrators. But in this case
the position is different. We have an independent agreement by which the
parties agreed to refer the disputes to arbitration. Pursuant to this
agreement, contracts were entered into and when the plaintiffs made a claim
against the defendents, the defendants denied their liability. Therefore,
what was denied was not the jurisdiction of the arbitrators, not the
submission clause, but business done pursuant to the submission clause and
to which the submission clause applied”
. That in our judgment is a correct statement of the true legal
position.The point then for decision is whether there is in this case an
agreement for reference to arbitration apart from cl. 14 of the contract.
It is not contended for the appellants that there was any express agreement
between the parties for referring the disputes under the contract dated
September 7, 1955, to arbitrators. All that is said is that the respondent
filed statements before the arbitrators setting out their defence on the
merits, and that must be construed as an independent agreement for
arbitration and the decisions in National Fire and General Insurance Co.
Ltd. v. Union of India 1956 AIR(Cal) 1.] and Pratabmull Rameswar v. K. C.
Sethia Ltd. [(1959) 64 C.W.N. 616.] are cited as authorities in support of
this contention.
Now an agreement for arbitration is the very foundation on which the
jurisdiction of the arbitrators to act rests, and where that is not in
existence, at the time when they enter on their duties, the proceedings
must be held to be wholly without jurisdiction. And this defect is not
cured by the appearance of the parties in those proceedings, even if that
is without protest, because it is well settled that consent cannot confer
jurisdiction. But in such a case there is nothing to prevent the parties
from entering into a fresh agreement to refer the dispute to arbitration
while it is pending adjudication before the arbitrators, and in that event
the proceedings thereafter before them might be upheld as referable to that
agreement, and the award will not be open to attack as without
jurisdiction. But it will make all the difference in the result whether the
parties have entered into an arbitration agreement as defined in s. 2(a) of
the Arbitration Act or have merely taken steps in the conduct of
proceedings assumed or believed to be valid. In the former case the award
will be valid; in the latter, a nullity.Now what are the facts in the
present case ? We have gone through the statements filed by the respondents
before the arbitrators, and we do not find any thing therein out of which a
new agreement to refer the dispute to arbitration could be spelt. The
respondents merely contested the claim on the merits, and then added :
“The sellers submit that this reference is improper, unwarranted, frivolous
and vaxatious and should be dismissed with cost.”
It is impossible to read this statement as meaning an agreement to refer to
arbitration.
The decisions in National Fire and General Insurance Co. Ltd’s. case 1956
AIR(Cal) 1 1.] and Pratabmull Rameswar’s case [(1959) 64 C.W.N. 616.]
relied on for the appellants are not really in point. In both these cases
there was a valid submission on which the arbitrators proceeded to act.
Before them the parties filed statements and therein they put forward a
claim which was not actually covered by the reference, and invited them to
give their decision thereon. The party against whom the award had gone
contended that the arbitrators had acted without jurisdiction in deciding
that claim. In overruling this contention the Court held that it was open
to the parties to enlarge the scope of a reference by inclusion of a fresh
dispute, that they must be held to have done that when they filed their
statements putting forward claims not covered by the original agreement,
that these statements satisfied the requirements of s. 2(a) of the
Arbitration Act, and that it was competent to the arbitrators to decide the
dispute. The point to be noticed is that in both these cases there was no
want of initial jurisdiction, but a feeding of existing jurisdiction by an
enlargement of the scope of the reference. That this does not involve any
question of jurisdiction of the arbitrators will be clear from the scheme
of the Act. If an award deals with a matter not covered by the agreement it
could either be modified under s. 15(a) or remitted under s. 16(1)(a). And
where such matter is dealt with on the invitation of the parties contained
in the statements, there can be no difficulty in holding that the
arbitrators actual within jurisdiction. In the present case the arbitrators
had no jurisdiction when they entered on their duties, nor is it
established that there was any subsequent agreement which could be held to
be a submission of the question as to the validity of the contracts. We are
accordingly of the opinion that the respondents are not precluded by what
they did before the arbitrators from agitating the question of the validity
of the contracts in the present proceedings.(4) The last contention of the
appellants is that the contracts dated September 7, 1955, and October 17,
1955, are non-transferable specific delivery contracts, as defined in s.
2(f) of the Act and under s. 18 they are exempt from the operation of s.
17, and that they are therefore not hit by the notification dated October
29, 1953. The facts are similar to those considered by this Court in
Khardah Company Ltd. case [ 1963 (3) SCR 183.] with which these appeals
were heard, and for the reasons given by us in our Judgment in those
appeals delivered to day, we accept the contention of the appellants, and
hold that the contracts in question are not hit by the notification dated
October 29, 1953.
In the result the appeals are allowed, with costs throughout, one set in
Civil Appeals Nos. 389 and 390 of 1960 and one in Appeals Nos. 391 and 392
of 1960, and one hearing fee.
