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PETITIONER: M/S.  AMARCHAND LALITKUMAR

       Vs.

RESPONDENT: SHREE AMBICA JUTE MILLS LTD.

DATE OF JUDGMENT: 03/05/1962

BENCH: DAS, S.K. BENCH: DAS, S.K. HIDAYATULLAH, M. SHAH, J.C.

CITATION:  1966 AIR 1036            1963 SCR  (2) 953  CITATOR INFO :  R          1992 SC 188  (5)

ACT: Arbitration--Revocation--Power      of       Court--Periodic fluctuation of price, if an emergency--Arbitration Act, 1940 (10  of 1940), ss. 5,34-- Working Manual of the  East  India Jute and Hessian Exchange, Ch.  IX. paras. 7(c), 11.

HEADNOTE: The  appellants as sellers of raw jute entered into  forward contracts  with the respondent jute mills to sell such  jute to them.  The contracts being transferable specific delivery contracts,were entered into in the standard printed forms of the  East India Jute & Hessian Exchange Ltd., which  was  an association   recognised   under   the   Forward   Contracts (Regulation)  Act, 1912, and thus were subject to the  rules and  bye-laws  made  by  the  Exchange  which  provided  for arbitration  of disputes by the tribunal of  Arbitration  of the 954 ,Bengal  Chamber  of  Commerce and Industry  or  the  Indian Chamber  of Commerce in Calcutta.  The appellants failed  to supply the stipulated jute within the time mentioned in  the guarantee  clauses.  The respondents exercised their  option under  the  rules  aforesaid, cancelled  the  contracts  and charged  the appellants for the difference in price  between the  contract  rate and the market rate  prevailing  on  the dates  of cancellation and on the appellants  denying  their liability applied for arbitration.  The appellants thereupon applied to the High Court under s. 5 of the Arbitration Act, 1940, for revoking the authority of. the arbitrator.   There case  in contemplated in Para 11, in Ch.  IX of the  Working Manual  of  the  Exchange substance was that  there  was  an emergency as due to scarcity of raw jute and speculation  at the  relevant  time  and  the price  of  raw  jute  shot  up abnormally,  this placed the buyers and sellers of raw  jute in two conflicting camp, and the majority of the arbitrators in  the  panel  of  arbitration of  the  Bengal  Chamber  of Commerce and Industry being connected with the buyers of raw jute,  the  jute  mills, were disqualified  from  acting  as impartial  arbitrators.   The High Court held that  no  such

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emergent   condition  had  been  proved  as  would   justify revocation of the authority of an appointed arbitrator. Held, that the normal periodical fluctuation in the price of raw  jute  could  not constitute  an  emergency  within  the meaning  of  para.  11 in Ch.  IX of the Manual  since  such fluctuations have been taken into consideration by those who entered  into forward contracts.  Such an emergency must  be one  which  is abnormal and which none  could  foresee.   It could not, therefore, be said that in the present case there was  such a conflict of interest between sellers and  buyers as would tender the panel of arbitrators having a  practical experience   of  the  normal  fluctuations  of  the   market disqualified to act as impartial arbitrators. The  object of ss. 5 and 34 of the Arbitration Act  was  the same,  namely, to prevent arbitration, with this  difference that  an application under s.5 would lie if proceedings  had not  yet  been  commenced in Court whereas under  s.  34  an application lay when they had commenced. But  a Court would not lightly exercise its  discretion  to, grant leave to revoke an arbitrator’s authority.  Before  it would  do  so  it  must, be  satisfied  that  a  substantial miscarriage be relieved from a tribunal of their own  choice simply  because  they  feared that  its  decision  might  go against them,  955 and  the court had to base its decision on one on  other  of five  grounds, namely, excess or refusal of jurisdiction  by arbitrator,  misconduct of arbitrator,  disqualification  of arbitrator,  charges  of fraud and lastly the  existence  of exceptional circumstances. In the instant cases there were no exceptional circumstances to   justify   the  conclusion  that  the   arbitrator   was disqualified by bias due to conflicting class interest. Balabux Agarwala v. Lachminarain Jute Mfg.  Co. Ltd.  (1947) 51 C.W.N. 863, Tolaram Nathmull v. Birla Jute  Manufacturing Co.  Ltd.  (1948)  2 Cal. 171, Dwarkadas  Co.  v.  Keshardeo Bubna,  (1948)  1  Cal.  190 and  Bhuwalka  Bros.   Ltd.  v. Petechand Murlidhar, (1951) 2 Cal. 115, distinguished. The  extension of time given to the buyers by the  contracts beyond  a  month specified by para, 7(c) in Ch.  IX  of  the Working  Manual for delivering letter of authority  did  not bring  the  contracts  materially into  conflict  with  that provision  nor could the absence of the expression  "without any  difference on both sides", which occurred in  the  sold notes,  from  the bought notes make any  difference  to  the rights of the parties.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 640 of 1961. Appeal  by special leave from the judgment  and  order-dated September 14, 1961, of the Calcutta High Court in Matter No. 44 of 1961.                             WITH Civil Appeals Nos. 173 to 175 of 1962. Appeal  by special leave from the judgments and order  dated September  14  and 21, 1961, of the Calcutta High  Court  in Matters Nos. 149, 258 and 162 of 1961. M.C. Setalvad, Attorney General  of India, B. Sen and  P. K. Boae, for the appellants in C.A. No. 640 of 61. Sachine Chaudhuri, Ellis Meyer, Subrota K. Chaudhuri and  I. N. Shroff, for the respondent in C.A. No. 640/61. 956 N.C.  Chatterjee, B. L. Kanodia and B. P. Mahemari, for  the

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appellants in C.A. No. 173 of 1962. B.Sen,  B.  L.  Kanodia and B.  P.  Maheshwari,  for  the appellants in  C.As. No. 174 and 175 of 1962. G.S.  Pathak,  M. G. Poddar and D. N. Mukherjee  for  the respondents in C.A. No. 173/62. P.L.  Khaitan, S. N. Andley and Rameshwar Nath,  for  the respondents in C A. No. 174/62. A.O.  Bhabra,  M.  G.  Poddar, P.  L.  Khaitan  and  D.N. Mukherjee for the respondents in C. A. No. 175/62. 1962.  May .3. The Judgment of the Court was delivered by S.K.  DAS, J.-These four appeals, all with special  leave of  this Court, have been heard together because they  raise common  questions  of  law’ and fact.   This  judgment  will govern them all.  In  the High Court of Calcutta, in or about  February-July, 1961,  a  series of applications numbering  about  170  were filed by sellers of raw jute.  The main relief asked for  by those applications was the revocation of the authority of an arbitrator  appointed  under  certain  contracts  Which  the applicants   had  entered  into  with  the  respondents   in circumstances which we shall presently state.  Except in two or three casts the respondents were all jute mill  companies which  purchase  raw  jute and  manufacture  finished  goods therefrom.   The main controversy which  these  applications gave  rise  to  was  dealt with by the  High  court  in  its judgment  dated  September  14.  1961,  in  the  application entitled  Ram Kumar Chhotaria v. Titaghur Jute  Factory  Co. Ltd. (Matter No. 20 of 1961 before the High Court).  957 Certain  special  points  arising  in  some  of  the   other applications  were dealt with in separate’  judgments..  The High Court stated in its judgment in Ram Kumar Chhotaria  v. Titaghur.  Jute Factory Co. Ltd. that the only relief, among the  many included in the petition, pressed at  the  hearing was   leave  to  revoke  the  authority  of  the   appointed arbitrator  under the provisions of s. 5 of the  Arbitration Act,  1940  (Act  10  of  1940)  which  provides  that  "the authority of an appointed arbitrator or umpire shall not  be revocable  except  with  the leave of the  Court,  unless  a contrary   intention   is  expressed  in   the   arbitration agreement." We   shall  now  state  the  circumstances  in   which   the applications were made for leave to revoke the authority  of the  appointed  arbitrator and in doing so  we  shall  state somewhat fully the facts alleged in the application of  M/s. Amarchand  Lalitkumar  a firm registered  under  the  Indian Partnership Act, and carrying on business in Calcutta, which firm is the appellant  before us in Civil Appeal No. 640  of 1961.  The facts being similar we shall not repeat them with regard to the other three appeals, but refer to such special facts or points in those appeals as have been pressed before us. On April 22, 1960, M/s.  Amarchand Lalitkumar, whom we shall refer  to  as the appellant, entered into a  contract  being contract  No.  1786  with  Shree  Ambica  Jute  Mills  Ltd., respondent  in  Civil Appeal No. 640 of  1961,  whereby  the appellant  agreed to sell and the respondent agreed  to  buy some 10,000 maunds of Middle and Bottom Jute at a particular price.   The  Contract was negotiated by a firm  of  brokers M/s.  A. M. Mair & Co. (Private) Ltd., and was entered  into in  the standard printed form prescribed by the  East  India Jute & Hessian Exchange Ltd. (hereinafter referred to as the 958 (Exchange)  and was subject to the rules and bylaws made  by it.    The  contract  was  a  ’forward  contract   being   a

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transferable  specific  delivery contract in raw  jute,  the contract  providing by a guarantee clause for  "shipment  or despatch  during August/September, 1960".  By the  operation of the provisions of the Forward Contracts (Regulation)  Act 1952  (Act 74 of 1952), and the notifications made  by  the’ Central  Government  thereunder, forward contracts  for  the sale  or purchase of raw jute in the city of Calcutta  which included  the area within the municipal limits of  Calcutta, the  Port  of  Calcutta and the districts  of  24  Parganas, Nadia,  Howrah  and  Hooghly, could  only  be  entered  into between  members of a recognised association or  through  or with  any such member.  The exchange was such  a  recognised association.   The Act empowered recognised associations  to make  bye-laws  for the regulation and  control  of  forward contracts  subject to the previous approval of  the  Central Government.  The Exchange made such bye-laws relating to the transferable  specific delivery contracts in raw jute  which bye-laws  will be found in Chapter IX of the Working  Manual issued   by   the  Exchange.   Terms   and   conditions   of transferable  specific  delivery contracts in  raw  jute  as prescribed  by the said byelaws provided for arbitration  of all  claims  and disputes arising out of or in  relation  to such contracts by the Tribunal of Arbitration, of the Bengal Chamber  of Commerce and Industry or the Indian  Chamber  of Commerce in Calcutta in accordance with the rules framed  by the said Chambers.  In some appeals before us the  contracts provided  for arbitration by the Bengal Chamber of  Commerce and  Industry and some by the Indian Chamber of Commerce  in Calcutta.   The rules of the two Chambers  for  constituting Tribunals of Arbitration are similar and such difference  as is  material  for our purpose will be adverted to  later  in this judgment.  Paragraph 11 in Ch.  IX of the 959 Working  Manual of the Exchange made certain provisions  for unavoidable  delay in the supply of goods by the sellers  of jute.   In order to appreciate the main controversy  between the  parties it is necessary to quote the relevant,  portion of that paragraph.                "11. (a) In the case of jute and in the event               of  seller  being  prevented  or  delayed   in               carrying out their obligations under the  con-               tract  by  the occurrence  of  fire,  strikes,               riots,  political  or  communal  disturbances,               hartals and or civil ’Commotions, breakdown of               public   transport  services,  suspension   of               bookings, they shall give immediate intimation               thereof  to buyers.  The sellers’ and  buyers’               rights shall thereupon be as follows :               (i)On  the  sellers  ’Producing   satisfactory               evidence  of  the prevention  or  delay,  they               shall  be  granted an extension  of  time  for               delivering not exceeding thirty days from  due               date of all penalties.               (ii)If the contract be not implemented  within               the extended period referred to in clause  (i)               above  buyers shall thereupon be  entitled  to               exercise any one of the following option               (1)   of cancelling the contract,               (2)   of  buying against sellers in  the  open               market  on  the  day on which  the  option  is               declared and charging them any difference,               (3)of  cancelling the ’contract  and  charging               sellers  the difference between  contract  and               the  market  price  on the day  on  which  the                             option is declared

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             960               Sellers  shall  notify buyers that  the  goods               will  or  will  not  be  shipped  within  such               extended period referred to in clause (i)  and               in  the case of sellers intimating  that  they               will  be  unable to ship within  the  extended               time  buyer shall exercise their option  under               clause  (ii)  on  the  fifth  working  day  of               receiving  such  notice and  notify,  sellers.               In’  the  absence  of  any  such  notice  from               sellers it shall be deemed that the goods have               not  been  shipped and buyers  shall  exercise               their  aforesaid option on the  fifth  working               day after expiration of the extended date  and               notify sellers.               ........................" The  case  of the appellant was that at  the  relevant  time certain emergent conditions srose in the raw jute trade  and industry,  which prevented the appellant from supplying  the raw  jute  stipulated for in the contract  within  the  time mentioned in the guarntee clause.  By a letter dated October 10, 1960, the respondent exercised its option under para.  1 1  quoted  earlier, cancelled the contract and  charged  the appellant  for the difference in price between the  contract rate’  and  the  market  rate  prevailing  on  the  date  of cancellation.    The  appellant  denied  that  it  bad   any liability  to pay the difference.  Thereupon the  respondent applied  for  arbitration  by the  Tribunal  of  Arbitration constituted  in  accordance  with the rules  of  the  Bengal Chamber  of  Commerce and Industry.  The  Registrar  of  the Chamber  wrote  to the appellant that the  arbitration  case (No. 10 of 1961) would be heard by the Tribunal on a certain date.  The date was then extended and before the Arbitration Tribunal  could  decide the matter the applications  in  the High  Court  were  made for revoking the  authority  of  the appointed arbitrator. The  facts and circumstances which according  the  appellant situated the emergency were 961 stated  in para 11 of the petition and the substance of  the allegations was that owing to the two causes of scarcity  of raw  jute  and speculation, the prices of raw jute  shot  up abnormally giving rise to an emergent condition in the  jute trade  and industry and especially in respect of trading  in future contracts in raw jute.  The appellant’s case was that by  reason of that emergency the buyers and sellers  of  raw jute  were  placed  in two conflicting camps  and  the  vast majority  of  the arbitrators in the  panel  of  arbitration comprising the Tribunal of Arbitration of the Bengal Chamber of Commerce and Industry were either directly or  indirectly connected with one or other of the jute mills which were all buyers of raw jute.  In paras. 21, 22 and 23 of its petition the appellant stated that when the parties entered into  the contract  they  never contemplated that there  would  happen such  an  exceptional situation as arose in the  jute  trade during the relevant period of September-October, 1960 ; that the arbitrators of the Tribunal of Arbitration of the Bengal Chamber  of  Commerce and Industry  were  disqualified  from acting  as arbitrators inasmuch as they were  all  connected with  the buyers and there was every probability  that  they would  be  biased in favour of the  buyers;  therefore,  the appellant  reasonably  apprehended  that  it  would  not  be possible  for  the  arbitrators  to  act  as  impartial   or disinterested judges.  In para 33 the appellant stated :               "The  interest of the sellers of raw jute  are

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             in conflict with the interest of the buyers of               raw  jute.  In the events that  have  happened               the sellers of raw jute have formed themselves               into  a group and the buyers of raw jute  have               formed  another group.  The Indian Jute  Mills               Association  is dominated by the buyers.   The               Indian Jute Pi) ills Association dominates the               said  Chamber and its Arbitrator.  The  Indian               Jute Mills Association is committed               962               to  the view that the said contracts have  not               been  frustrated.   The said  Association  has               also  formed  an  opinion in  respect  of  the               disputes between the buyers and the sellers of               raw jute." These  were  the allegations on which the  appellant  prayed that  the  authority of the appointed arbitrator  should  be revoked under s. 5 of the Arbitration Act, 1940. . The  application was opposed by the respondent which  denied the  allegations made by the appellant both as to the  facts and   circumstances  which  were  said  to  constitute   the emergency  and as to the alleged reasonable apprehension  of bias in the appointed Arbitration Tribunal. We  have  stated  earlier that in the  High  Court  to  main controversy between the parties centred round the  question, (1)  if  there was such an emergent condition  in  the  jute trade  and  industry  at the relevant time  as  divided  the sellers and buyers of raw jute into two opposing camps,  and (2)  if the existence of such opposing camps, provided  such opposing  camps  were  proved to exist,  would  justify  the revocation  of  the authority of the  appointed  arbitrator. The  learned  Judge who heard the applications  dealt  first with the legal position in England and India, in the  matter of  revocation of the authority of an appointed  arbitrator. Having dealt with the legal position, he Went into the facts of  the  case and held that no such emergent  condition  has been proved as would justify the revocation of the authority of an appointed arbitration. He    expressed   his    final conclusion in these words:               "In  my  opinion, the  allegations  about  the               buyers  and sellers in raw jute  being  thrown               into  conflicting  camps by the  operation  of               emergent circumstances or above               963               reasonable  apprehension of bias in the  minds               of the sellers that they will not get  justice               from  the  persons whose names appear  on  the               list of the panel of arbitrators of the Bengal               Chamber   of   Commerce   and   Industry   are               unsubstantial." He accordingly dismissed the applications with costs. We consider that as a matter of logical sequence, we  should deal  with the question of fact first whether there was  any such  emergent condition in the jute trade aid  industry  at the  relevant time as divided the sellers and buyers of  raw jute  into  two conflicting camps so as to give  rise  to  a reasonable  apprehension  in the minds of the  sellers  that they  will  not  get  a just  decision  from  the  appointed arbitrator.  It, is only when we answer the question of fact in  favour  of the appellants that a  consideration  of  the legal position would be necessary. What are the circumstances on which  the appellants rely  in support of their allegation of an emergent condition in  the jute   trade  dividing  the  buyers  and  sellers   of   raw conflicting  camps ?  It is pointed out that on October  18,

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1960,  the  Exchange  issued a press note in  which  it  was stated inter alia that owing to emergent conditions prevail- ing  in  the jute trade, the Director of  the  Exchange  had imposed  from  time  to time  various  control  measures  in respect  of trading in future contracts in raw jute and  had taken  up a review of the trading position  in  transferable specific delivery contracts.  On October 31, 1960, a  notice by  the  Exchange  directed  that  trading  in  transferable specific delivery contracts in raw jute shall be  registered with  the Exchange.  In their petitions for leave to  revoke the  authority  of  the  arbitrator,  the  appellants   also referred to reports made   by reporters of 964 certain newspapers as also news items published therein.  We do  not  think  that  these  newspapers  reports   establish anything beyond. what the reporters heard from people  whose identity  is not disclosed, and they are not  admissible  in evidence to establish either that an emergency had arisen or the  nature  thereof.   At best they show  that  there  were reports in the market of a short-fall in jute production,  a shortage  of  supply of raw jute from Pakistan,  sealing  of some of the looms in the raills, and a reduction in  working hours.  The affidavits filed on behalf of the appellants  do not,  however, establish that there had been any failure  of the  jute crop in Bengal, Bihar and Assam or that  jute  had become  unavailable  at its normal sources or  that  such  a crisis  had  arisen as would divide the buyers  and  sellers into conflicting camps.  It is Worthy of note that like  any other  trade  in goods in a short market,  the  jute  trade, especially the trade in future contracts, is very  sensitive and readily responds to any stimulus, including forces which affect  supply and demand even temporarily.  Such  responses can even be said to be the normal feature of the jute  trade like  any  other  trade in commodities.   As  there  was  no evidence  of the rise and fall in prices of raw jute  during the  relevant period except from what we could  gather  from the  differences in price between the contract rate and  the market  rate  claimed by. the respondents,  we  allowed  the parties to produce before us the rates quoted by  authorised brokers for various kinds of jute from April 1960 to  August These figures show that the market in raw jute almost always fluctuates;  sometimes  there is steady rise’;  sometimes  a fall; sometimes there is a steep rise or a steep fall.  Take for example, the period between August 1960 to January 1961- the  period of delivery in most of the cases-in one  of  the varieties of jute viz.  Assam Bottom Jute. 965 August  1960 there was a steady rise from Rs.35/-  to  about Rs.40/- per maund.  In September 1960 the rise continued and reached to about Rs. 43/-.  It continued also in October and reached  about  Rs. 54/-.  Towards the  middle  of  November there  was a fall.  In January 1961 there was again  a  rise which continued till March.  In April there was again a fail which  continued  till July 1961.  We have  taken  only  one example,  but  these  ups  and downs  in  price  levels  are noticeable  in  other  varieties  of  jute  also,  such  as, Pakistan-N.   C. Cuttings etc.  A person trading  in  future contracts  must take these ups and downs into  consideration when entering into contracts, and we fail to appreciate  how these  ups  and downs can constitute an  emergent  condition which   will  divide  the  buyers  and  sellers   into   two conflicting  camps.   The question whether  the  seller  was entitled  to an extension of time in the circumstances  then prevailing would undoubtedly arise for determination by  the appointed arbitrator, who having practical experience of the

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fluctuations which the trade normally undergoes would be  in a position to judge the validity of such a claim.  But it is difficult to appreciate how this periodical rise or fall  in prices  can be called an emergency which made the  contracts impossible of performance or divided’ the buyers and sellers into two conflicting camps at the relevant time. Much  was  made  of  the fact that  the  Indian  Jute  Mills Association was a very influential body of jute mill owners, affiliated with the Bengal Chamber of Commerce and Industry. It  was  alleged that they were sister bodies  having  their offices at the came place and that they carried out a common policy  in matters of trade.  It was pointed out  that  the- majority  of arbitrators in the panel of arbitration of  the Behgal Chamber of Commerce and Industry were either directly or in. directly connected with one or other of the jute 966 mills.  The relevant rules of Bengal Chamber of Commerce and Industry,  it was pointed out, provided that  "the  Tribunal shall  consist of such members or assistants to members  and of  such  other persons who were from time to  time  on  the panel  of  special Advisory Board to the Indian  Jute  Mills Association,  as  may from time to time be selected  by  the Registrar".   In this respect there is a difference  in  the rules  made  by the Indian Chamber  of  Commerce,  Calcutta. Those  rules provide for an unrestricted selection  and  say that in making an appointment and nomination, the  Registrar shall select, as far as possible, persons or a person having practical knowledge of the subject matter of the contract or contracts  in question and the Registrar shall  not  appoint any person who for any reason within his knowledge would not be  a proper person to act as Arbitrator etc. in the  parti- culor matter.  The appellant in Civil Appeal No. 640 brought to  our notice the circumstance that his solicitor wrote  to the  Registrar  of  the  Bengal  .Chamber  of  Commerce  and Industry  for the names of the arbitrators and was  told  in reply  that  it  was not the practice  of  the  Tribunal  to disclose the names of the arbitrators; but a  classification of  arbitrators of some of the cases was furnished and  this showed  that  one  of  the  arbitrators  would  be  a   mill representative and the other a jute broker or baler. We have taken all these circumstances into our consideration and  we  are unable to agree with the appellants  that  they made out a case of a reasonable apprehension of bias on  the basis alleged, namely, that of a clash of interests  between buyers  and sellers on the ground of a rise in prices.   The High  Court  has rightly pointed out that it  is  not  quite correct  to say that the persons who made  the  applications were  only  sellers of raw jute and not buyers  their  turn’ they are people who carry 967 on  business  in  Calcutta and some of  them  probably  have buying  agencies in the mofussil.  They must be buying  jute from  others and selling them to shippers, balers, and  jute mills.   The  jute mills usually buy raw jute and  turn  out manufactured  products therefrom, which they  sell.   Balers and  shippers buy raw jute and sell the same after  pressing and baling.  At one end of the chain there are jute  growers who  are  only  sellers while others  are  both  buyers  and sellers  of  jute or jute goods.  This  latter  category  of persons  must be taking note of the trends in the market  in entering  into  their  contracts and  unless  there  was  an emergency  of  the kind which nobody could  foresee,  it  is impossible  to say that there was such a clash of  interests between  buyers  and sellers that the  appointed  arbitrator having  practical experience of normal fluctuations  of  the

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market  would  not  be  able  to  judge  with  fairness  and impartiality  the  claim  of  the  sellers  that  they  were entitled to an extension of time or other relief.  The  high Court   further   pointed  that  though   there   were   170 applications, the number of applicants was only 42 and  some only  of the. jute mills in West Bengal were involved.   The High Court then said:               "If one takes into consideration the number of               jute  mills  situate  in  the  district-of  24               Parganas,   Howrah,  Hooghly  and  Nadia   and               considers further that there are thousands  of               persons  who are engaged in the trade  of  raw               jute  it is significant that only a few  dozen               of them have come to this Court in between the               period  February,  1961, to the end  of  June,               1961.   It appears to me that the  difficulty,               real  or assumed, is confined to a very  small               number  of persons, not brought about  by  any               emergent conditions at all as alleged.   There               can be no denying the fact that the outturn of               jute has been smaller               968               thaw expected and that jute mills have had  to               reduce  their working hours.  Such a  shortage               in  jute cannot be said to have brought  about               an  upheaval in the trade throwing buyers  and               sellers   into  sharply  divided   conflicting               camps." We are in agreement with the view thus expressed by the High Court. As to the arbitrators to be appointed by the Indian  Chamber of Commerce, Calcutta, and in some of the appeals before  us the arbitrators have to be so appointed, there can hardly be any ground for a reasonable apprehension.  The names of  the arbitrators  are  not known nor even  their  classification. The rules contemplate that the Registrar shall not   appoint any  person  as  arbitrator who for any  reason  within  his knowledge would not be a proper person to act as arbitrator. What  grounds can there be of a reasonable  apprehension  in such  cases?   We have held that there  are  no  conflicting camps  of  buyers  and sellers and even if  there  are  such camps,  the Registrar can select persons who have  practical experience  of  the subject matter of the contract  and  not other  wise  improper persons to act  as  arbitrators.   The difference  between  an  ’application  under  a.  5  of  the Arbitration  Act and one under a. 34 is a difference  as  to the  point  of  time  when  the  application  is  made.   If proceedings  are  commenced in Court,  application  is  made under s. 34; if. proceedings have not commenced in Court the application  is  made  under s. 5. The object  of  both  the section  is the same, namely, to prevent  arbitration.   But different  considerations would arise on an  application  to set  aside  an award on the ground that the  arbitrator  was biased.  It is true that on an application under s. 5 it  is not necessary to show that. the arbitra or is in fact biased and it is enough to show that 969 there  is  a  reasonable ground for  apprehension  that  the arbitrator  will be biased.  But the reasonable ground  must be established to the satisfaction of the Court to which  an application  for  leave  to  revoke’  the  authority  of  an appointed arbitrator is made.  No such reasonable ground  is made out in the present appeals. We  now turn to the legal position which seems to us  to  be quite  clear.  Before the Court exercises its discretion  to

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give leave to revoke an arbitrator’s authority, it should be satisfied  that  a substantial miscarriage of  justice  will take place in the event of its refusal.  In considering  the exercise by the Court of the power of revocation it must not be forgotten that arbitration is a particular method for the settlement  of  disputes.  Parties not  Wishing  ’the  law’s delays’ know, or ought to know, that in referring a  dispute to arbitration they take arbitrator for better or worse, and that his decision is final both as to fact and law.  In many cases the parties prefer arbitration for these’reasons.   In exercising  its  discretion cautiously  and  sparingly,  the Court  has  no  doubt  these  circumstances  in  view,   and considers  that  the parties should not be relieved  from  a tribunal  they  have  chosen  because  they  fear  that  the arbitrator’s  decision way go against them. (See  Russel  on Arbitration,  16th edition, page 54).  The grounds on  which leave to revoke may be given have been put under five  heads :- 1 .Excess or refusal of jurisdiction by arbitrator. 2.   Misconduct of arbitrator. 3.   Disqualification of arbitrator. 4.   Charges of Fraud. 5.  Exceptional cases. 970 We   have   held  that  there  were  no   such   exceptional circumstances in these cases as would justify us to come  to the  conclusion  that  the  appointed  arbitrator  would  be disqualified as a result of bias by reason of a  conflicting class  interest.  In view of this finding it is  unnecessary to examine the decisions, English or Indian, as respects the principle  that an interest of which the parties were  fully aware at the date of the arbitrators appointment will not in general disqualify him, nor will the fact that he stands  in a  particular relationship to the parties or to the  matters in dispute, if it can be said that the parties selected  him with  knowledge  that this was or must be so.   Nor  are  we concerned with the exception to which the aforesaid rule  is subject  in relation to arbitrators appointed  to  determine future  disputes, and the statutory changes made in  English law relating thereto. There  are,  however, four decisions of  the  Calcutta  High Court which bear an apparent resemblance to the cases  under our  consideration and to those decisions we must now  turn. In  Balabux Agarwala v. Lachminarain Jute Manufacturing  Co. Ltd(1)  the question was of a certain suits on  applications under  s. 34 of the Arbitration Act and one of  the  grounds taken  was  that  persons interested in  or  connected  with various  jute  mill  companies were members  of  the  Bengal Chamber  of  Commerce  and  were on  the  panel  from  which arbitrators  were  chosen;  and a reference was  made  to  a circular  letter  which showed that the arbitrators  or  the firms   they  represented  were  all  buyers  and  as   such interested  in seeing that the points in issue were  decided against the others.  After scrutinising the allegations made in support of this ground, the Court said :               "For  all know the tremendous rise  in  prices               which, it is said, will prompt the               (1)   (1947)51C.W.N.863,875.               971               arbitrators  who are buyers to decide  against               the  plaintiffs who are sellers so as to  make               huge  profit  for themselves,  may  well  have               induced   the   plaintiffs   to   make   these               allegations  against the arbitrators or  their               firms so as to get out of their submission and

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             to  take their chance of winning the  suit  in               Court and getting the benefit of that rise  in               prices.  In my opinion the allegations in  the               affidavits  are  not such as I  may  act  upon               them.   The  Bengal Chamber  of  Commerce  has               gained  a  reputation for  the  excellence  of               their  arbitration  proceedings  and  I  shall               require much more specific averments of  facts               properly   verified   showing  that   in   any               particular case justice will be denied by  the               Bengal Chamber of Commerce to any party." These observations do not help the appellants of the present oases.   Rather  they  show that the  Court  must  be  fully satisfied before it exercises its discretion under s. 5.  to revoke the authority of  an appointed arbitrator. The  same  learned Judge came to a  contrary  conclusion  in Tolaram  Nathmull v. Birla Jute Manufacturing  Co.  Ltd.(1), That  was  also a case of stay under s. 34, and one  of  the questions raised was whether there was sufficient reason why the  matter should not be referred to arbitration.   One  of the  points  to  be decided in that  connexion  was  whether ’mesta’  was  jute  within the meaning of  the  Jute  (Price Control) Order and if the Jute Mills Association had  issued a  circular, while the arbitration was pending, stating,  or deciding  that ’mesta’ was not included in that  Order.   It was  held that at a meeting of the representatives  of  five associations  the  view was expressed that ’mesta’  did  not come  within the Order.  In those circumstances the  learned Judge said (1) (1948) 2 Cal. 171,196. 972 "In  the light of these principles, the question I  have  to consider  is whether, in the events that have  happened,  it will be fair to drive the plaintiff-firm to a tribunal  both the members of which are members of associations which  have expressed   some   definite  views  on   the   question   in controversy.    There   is,   to   my   mind,   considerable justification   for  the  apprehension  expressed   by   the plaintiff-firm  of probable bias of the arbitrators.   I  do not   question  the  honesty  and  integrity  of   the   two arbitrators,  but,  in the circumstances  appearing  in  the evidence  before me, it will be unfair alike to them and  to plaintiff-firm  to put them in a position of  conflict  with their  own  associations.  On the whole I have come  to  the conclusion  that  this is a case *here  circumstances  exist which  are calculated to bias the mind,% of the  arbitrators and where the plaintiff-firm may legitimately ask the  Court to release it from its bargain to go to arbitration". The  decision rested on the facts established in  that  case and  cannot help the appellants to prove their case, on  the present applications. In  fairness to learned Counsel for the respondents we  must say that he submitted before us that the decision in Tolaram Nathmull v. Birla Jute Manufacturing Co. Ltd. (1) went  much beyond  what was accepted as the correct legal  position  in English decisions referred to by the learned Judge; but that is an aspect of the matters which we consider it unnecessary to decide.  We hold that the facts which must be established to  call in aid that decision have not been  established  in these  cases.  In Dwarkadas Co. v. Keshardeo Bubna  (2)  the same  learned  Judge explained the  position  succinctly  by holding (see headnote, pars, 4)- (1) (1948) 2 Cal. 171, 196. (2) (1948) 1 Cal. 190.  973

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"The  fact that members of a committee of an association  of commercial  men  dealing  in  a  particular  commodity   are themselves  the arbitrators and ate also buyers and  sellers of  that  commodity  will not  ordinary  dispute  between  a particular buyer and a particular seller.  But extraordinary circumstance  may .nevertheless arise, as in the case  of  a commercial  crisis, when the members of the association  may be  sharply divided into two opposing groups, as  buyers  in general  and sellers in general as may make it improper  for the  committee,  which may be packed  with  an  overwhelming majority  of  buyers  or sellers, as the  case  may  be,  to adjudicate upon a dispute between a buyer and a seller." The  pre-requisite  condition  for the  application  of  the principle which be laid down is not fulfilled in the present cases. The  last  decision is Bhuwalka Brothers Ltd.  v.  Fatechand Murlidhar  (1).   That  was  a  case  which  .proceeded   on different   grounds,   viz.   (1)   frustration   and    (2) applicability   of  an  Ordinance  to  the  contract   under consideration.   On  those two grounds,  the  learned  Judge thought  that  he  should give leave to  the  petitioner  to revoke  the authority of the appointed arbitrator.   We  say nothing  as to the correctness of the decision,  but  merely point   out   that  the  facts  of  the  cases   under   our consideration are entirely different. We have, therefore, come to the conclusion that on the  main point  of  controversy between the parties, the  High  Court came to a correct finding on facts and there are no  grounds for interference. It  remains  now  to consider two special  points  taken  on behalf of the appellants’ in Civil Appeals (1)  (1951) 2 Cal. 115. 974 Nos.  174  and’175.  The points taken were :  (1)  that  the contracts were not in accordance with law, and (2) that  the parties  were not ad idem with regard to one of the  clauses thereof.   Both  these points have been dealt  with  by  the learned  Judge  of  the High Court  in  his  judgment  dated September  21,  1961,  in  great detail and  as  we  are  in agreement  with him it is not necessary to deal  with  these two  points  in detail.  On point number  (1)  the  argument before us was based on para. 7(c) of the byelaws in Ch.   IX of  the  Working Manual.  That paragraph, so far  as  it  is relevant here, reads as follows: "7(c)  In  the case of Pakistan Jute, buyers to  deliver  to sellers, or sellers’ nominee, letter of authority to  import the  Pakistan Jute or open confirmed, irrevocable Letter  of Credit in terms of paragraph 8(b)(ii) within 14 working days from the commencement of the delivery period of the contract failing  which  there shall be free extension  for  delivery equal to the period of delay occurring after the 14  working days  but where stipulated quantities monthly are  sold  the free extension shall only be in respect of the delivery  for the  first  month.   If  buyers do  not  deliver  letter  of authority  or  open confirmed irrevocable Letter  of  Credit within  one  month from. the commencement  of  the  delivery period  of  the contract, the sellers shall be  entitled  to exercise  any  One  of the following  options  on  the  next working day .following the expiry of the said month:---               (i) Cancelling the contract.               (ii)  Cancelling  the  contract  and  charging               buyers  the  difference (if any)  between  the               contract price and the market price                975               on the date of cancellation of the contract.

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             The clause in the bought note said :               "The buyers to give letter of authority to the               sellers  and  the sellers to  open  letter  of               credit.   If  the buyers fail to  furnish  the               license up to December 1960 the contract  will               be deemed-as cancelled."               The corresponding clause in the sold note said               "The buyers to give letter of authority to the               sellers  and  the sellers to  open  letter  of               credit.   If  the buyers fail to  furnish  the               license up to December 1960 the contract  will               be deemed as cancelled without any  difference               on the both sides." The  argument  was that the clauses in the bought  and  sold notes  were not in conformity with para. 7(c) and  therefore the  contracts were not in conformity with law.  We  do  not see any material conflict between para. 7(c) of the bye-laws and  the clauses in the. bought and sold note.   Instead  of one  month  given to the buyers for delivery of  letter  of. authority  in para 7(c) the time given in the contracts  was up to December 1960.  We do not think that this extension of time  brought the contracts into any material conflict  with the  provisions of para. 7 (c).  As to the second point  the argument was that the expression "without any difference  on both  sides"  occurred in the sold notes not in  the  bought notes,  and  therefore, the parties were not  ad  idem  with regard  to this clause.  The learned Judge  rightly  pointed out  that  the expression :,without any difference  on  both sides"  made  no  real  difference.   Clearly  the   parties contemplated  that in case the buyer failed to  furnish  the license to import Pakistan Jute within the period 976 mentioned,  the  contract would be deemed  to  be  cancelled which  meant that the contract was to be treated as non  est for  all  purposes.   If  the  contract  was  deemed  to  be cancelled,  it must mean that the right and  obligations  of the  parties  came  to an end simultaneously.   It  was  not really   necessary  to  insert  the  words  "with  out   any difference  on  both  sides" in the bought  notes  and  such addition  in the sold notes did not make any  difference  to the rights of the parties. For  the reasons given above we hold that there is no  merit in  any  of  the  appeals.   The  appeals  are   accordingly dismissed with costs ; one hearing fee. Appeals dismissed                    ----------