The Judgment of the Court was delivered by
Chatterjee, J.:— This is an appeal from the judgment of my learned brother Sinha, J., whereby he set aside an award of the Bengal Chamber of Commerce dated September 17, 1947.
2. Two points were urged before Sinha, J. The first ground urged was that there was no valid reference to arbitration as there was no dispute which could be referred to the Bengal Chamber of Commerce. Sinha, J., held that there were disputes between the parties which were within the arbitration clause and that they were in existence before the date of reference. Accordingly, he overruled this contention. The next point urged was that the arbitrators were guilty of mis-conduct inasmuch as they made an award on the basis of an extension of the date of delivery without taking any evidence. Sinha, J., held that it was impossible for the arbitrators to decide this point one way or the other without taking oral evidence. Under the rules of the Bengal Chamber of Commerce wide powers have been conferred on the tribunal of arbitration and it is left to the arbitrators to decide whether they would take any oral evidence or not. Sinha, J., held that the arbitrators did not exercise the power in a judicial manner and he, therefore, set aside the award on the ground of misconduct.
3. Before us the contention has been urged by Mr. Bachawat, learned Counsel for the Respondents, that there was really no valid reference to arbitration inasmuch as prior to the date of reference no claim was made for damage on the basis of the difference between the contract rate and the market rate prevailing on October 31, 1946. The Appellants claimed Rs. 14,250 on the basis of the market rate prevailing at the end of October. The question is, had the tribunal of arbitration of the Bengal Chamber of Commerce jurisdiction to adjudicate upon this matter which was referred to them.
4. By contract No. 183 dated January 24, 1946, the Respondents Khusiram Benarshilal sold to the Appellants Mathurdas Goverdhandas 3,00,000 yards of hessian at Rs. 28 per 100 yds. Delivery under the contract was to be made in the months of April to June at the rate of 1,00,000 yds. monthly. The contract contained an arbitration clause in wide terms. It is admitted that goods were delivered in respect of the April portion, but there was default in respect of half of the quantity of the May and June portions, and the result was that a total quantity of 1,00,000 yds. of hessian remained undelivered.
5. On September 21, 1946, the Appellants wrote to the Respondents purporting to extend the delivery date of the contract to October 31 by mutual consent of parties. Promptly came a reply on the same date from the Respondents wherein they clearly stated that no arrangement had been made regarding extension of deliveries. They added that they were unable to deliver the goods as they had not received the same from their sellers and they requested the buyers to send their difference bill. At that time the Jute Price Control Order was in operation and no difference bills were sent.
6. A week later, that is, on September 28, the Appellants replied to the Respondents. The last paragraph of that letter is relevant. It reads as follows:—
“However, as yon do not agree now to the extended period of delivery please arrange to deliver the balance one 100 yds, Hassian Cloth immediately on receipt of this letter falling which we shall hold you responsible for any loss we will have to undergo in this transaction”.
7. There is no doubt that the Appellants jettisoned their case of extension of contract which they had alleged in the letter of September 21. Then there was further correspondence between the parties. On October 1, the Respondents replied that they had denied all responsibility. On October 7, the Appellants wrote asking for delivery of the goods without further delay and threatened legal steps in default of immediate delivery. This letter makes it clear that the Appellants had given the go-by to their case of extension of the date of delivery and wanted to claim damages for loss, unless there was immediate delivery of the goods. On October 9, the Respondents replied re-affirming their former position. On February 21, 1947, the Appellants made out two bills each for Rs. 1,750-0-0 and therein they claimed difference at Rs. 3-8 per 100 yds. There is some dispute as to whether these bills were actually sent to the Respondents. But it appears that on May 19, the bills were sent by the Appellants to the Gunny Traders Association for presentation to the Respondents for payment. According to the Respondents the Association sent the bills to them early in the month of June, 1947. They accepted liability for these bills and wanted the Appellants to send their man to collect the amount but nobody turned up to receive payment.
8. Nothing happened thereafter till June 4, 1947, when the Appellants sent a Letter of Reference to the Registrar, Tribunal of Arbitration, Bengal Chamber of Commerce. In the last paragraph of that letter it was stated that they were claiming Rs. 14,250 on the basis of the market rate prevailing on October 31, 1946, and that they had extended the date of delivery of the balance goods untill that day. The Respondents filed their statement in reply. They stated that they had admitted liability on the basis of the difference bills which had been forwarded to the Gunny Traders Association. They maintained that they had been all along agreeable to pay the amount mentioned in these bills. They accordingly demanded that the reference should be dismissed.
9. On September 17, 1947, the Tribunal of Arbiration of the Bengal Chamber of Commerce made an award for Rs. 11,000 against the Appellants together with interest and costs.
10. It is really difficult to follow on what basis the Appellants claimed the sum of Rs. 14,250 and how they could claim any damage on the basis of the market rate prevailing at the end of October, 1946, in view of the correspondence which had gone before and in view of their two bills whereby they claimed only Rs. 3,500. But the question we have to decide is whether the arbitrators had jurisdiction to entertain this claim for Rs. 14,250 on the basis of the rate prevailing at the end of October. That claim had never been put forward before the reference to the Tribunal of Arbitration on June 4, 1947, and the Respondents never had any opportunity of dealing with the same. Really the matter referred to in the letter, of reference was never in issue between the parties prior to that date.
11. The existence of a dispute is an essential condition for the jurisdiction of an arbitrator. If there is no dispute there can he no right to demand arbitration at all. This was clearly laid down by Rankin, J., as he then was, in Uttam Chand Saligram v. Jewa Mamooji(1). A point as to which there is no dispute cannot be referred to arbitration. Failure to pay does not necessarily constitute a dispute or difference (Russell on Arbitration 12th Ed., p. 334). Assuming that there was a failure or neglect to pay the amount of Rs. 3,500 mentioned in the two difference bills and there was no dispute with regard to that amount, we are satisfied that there was never any demand for Rs. 14,250 on the basis of the market rate prevailing at the end of October, 1946, and it cannot be said that there was any dispute between the parties with regard to the same.
12. The leading case on the subject is London & North Western & Great Western Joint Railway Companies v. J.H Billing-ton, Limited(2). Lord Halsbury, L.C pointed out in that case that there must be a difference between the parties before any arbitration can be claimed and that difference should be placed before the arbitrators for adjudication. In Ladha Singh Bedi v. Kalvani Prasad Singh Deo(3), R.C Mitter, J., dealing with this case pointed out as follows:
“The noble Lord then drew an analogy from an arbitration out of court. He said that before the arbitrator could enter upon the reference, it mast be shown that a differencs had arisen between the parties before the submission and but the arbitrator would have jurisdiction only to adjudicate upon the particular difference which had arisen before the submission”.
13. We agree with Mitter, J's reading of that judgment. He has correctly explained the view taken by the noble Lord in the above case. The same view has been taken by Wadia, J., in Dawood Bhai Abdul Kader v. Abdul Kader Ismailji(4).
14. In order to make out the jurisdiction of the tribunal of arbitration the Appellants must show that the subject-matter of the reference was some dispute between the parties and that the particular dispute had arisen actually before the matter went before the arbitrators. We hold that the Appellants have failed to satisfy this condition precedent. At no stage was any demand made for Rs. 14,000. It is not a question of quantum of damages merely with regard to the breach of the contract, as Mr. Chaudhuri on behalf of the Appellants wanted to put it. It is a different cause of action altogether. The claim that was referred in the two bills was the only claim which was before the parties. The claim that was made in the Letter of Reference was never communicated to the Respondents. A dispute implies an assertion of right by one party and repudiation thereof by another. There was no such assertion of right and, therefore, there could be no repudiation with regard to the matter which was actually referred to arbitration. The jurisdiction of an arbitrator depends not upon the existence of a claim or the accrual of a cause of action, but upon the existence of a dispute [Balmukund Ruia v. Gopiram Bhotica(5)].
15. It is unfair that a party should be driven to a tribunal of arbitration and confronted with a claim there which had never been put forward previously and which he had no chance of considering at all. We are not resting our decision on the ground of equity or fairplay. It is a question of authority or jurisdiction. It is only the existence of a difference or dispute which confers jurisdiction upon a private forum to adjudicate upon that dispute. At no point of time was any claim made on the basis put forward in that letter of reference to the Bengal Chamber of Commerce.
16. With respect to Sinha, J., we do not agree with him when he says that in this case the Appellants bills were merely an offer to take a lower sum in place of a higher sum to which the Appellants were entitled. This is not a correct view of the correspondence to which I have already referred. We do not agree with the learned Judge when he says that the question which the arbitrators were called upon to decide was the dispute which was in existence before the date of reference.
17. The particular dispute in respect of which the adjudication was sought never arose before the reference and, therefore, we cannot uphold the finding of the learned Judge that there was a pre-existing dispute between the parties which could be arbitrated upon by the Bengal Chamber of Commerce.
18. Having regard to the view we have taken on the question of jurisdiction, we need not discuss the question of misconduct. We are satisfied that the tribunal of arbitration had no jurisdiction to deal with the matter. Accordingly, we are of the opinion that the award was rightly set aside.
19. The appeal, therefore, fails and is dismissed with costs.
20. Certified for two Counsel.
Harries, C.J:— I agree.