Waverly Jute Mills Co. Ltd vs Raymon and Company (India) Pvt. Ltd

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Appeal (civil) 389-392 of 1960

Decision Date: 04/05/1962

Coram: B.P. Sinha, K. Subbarao, N.R. Ayyangar, J.R. Mudholkar, T.L.V. Aiyyar

In the matter of Waverly Jute Mills Co. Ltd versus Raymon & Company (India) Pvt. Ltd, decided on 4 May 1962, the Supreme Court of India heard appeals numbered 389‑392 of 1960. The petitioner was Waverly Jute Mills Co. Ltd and the respondent was Raymon & Company (India) Pvt. Ltd. The judgment, reported in 1963 AIR (SC) 90 and also cited as 1962 (3) SCR 209, was delivered by Justice Venkatramia Aiyar. The case arose from special‑leave appeals against decisions of the High Court of Calcutta that had set aside arbitration awards directing the respondents to pay compensation to the appellants for breach of contract, on the ground that the contracts violated a Central Government notification dated 29 October 1953 and were therefore illegal and void. These appeals were heard together with Civil Appeals Nos. 98 and 99 of 1960 because they involved common questions of law. In Civil Appeals Nos. 389 and 390 of 1960, the factual matrix was as follows: on 7 September 1955, the appellants, a company that owned a jute mill in Calcutta, entered into an agreement with the respondents, a company engaged in the business of dealing in jute, for the purchase of 2,250 bales of jute cuttings at a price of Rs 80 per bale, each bale weighing 400 pounds. The contract required delivery of 750 bales each month during October, November and December 1955. Clause 14 of the agreement stipulated that any dispute arising out of or concerning the contract should be referred to arbitration before the Bengal Chamber of Commerce. The respondents, performing under the contract, delivered a total of 2,000 bales but failed to deliver the remaining balance. Consequently, the appellants invoked Clause 14 and applied to the Bengal Chamber of Commerce for arbitration. The respondents appeared before the arbitrators and contested the claims on their merits. The arbitrators rendered an award in favour of the appellants for a sum of Rs 10,525, which the appellants filed under Section 14(2) of the Indian Arbitration Act in the original jurisdiction of the High Court of Calcutta, and notice of the award was served on the respondents. Thereafter, the respondents filed an application, presumably under Section 33 of the Arbitration Act, seeking a declaration that the contract dated 7 September 1955 was illegal because it contravened the Central Government notification of 29 October 1953, and that the arbitral award should be declared null and void. The learned judge of the original side dismissed the application and passed a decree in accordance with the award. Dissatisfied with both the judgment and the decree, the respondents appealed to a Division Bench of the High Court, filing Appeals Nos. 148 and 141 of 1957, which were heard by Chief Justice Chakravartti and Justice Lahiri, who held that the contract dated

In the earlier dispute, the Court held that the contract dated 7 September 1955 was illegal because it fell within the prohibition specified in the Central Government notification of 29 October 1953. Consequently, the Court allowed the appeals filed by the respondents, set aside the arbitral award and entered a decree in favour of the respondents. Following that decision, the appellants applied to the Supreme Court for a certificate under Article 133(3) of the Constitution; that application was refused. The appellants then sought and obtained leave to appeal to this Court under Article 136 of the Constitution, and that leave was granted. This procedural history explains how the present appeals have arrived before the Court. In Civil Appeals Nos. 391 and 392 of 1960, the factual matrix is essentially the same as in the earlier case.

The appellants, a company engaged in the manufacture of jute, entered into a contract with the respondents on 17 October 1955 for the purchase of five hundred bales of jute cuttings, each bale weighing four hundred pounds and priced at Rs 87‑8‑0 per bale. The contract required the goods to be delivered in two equal instalments of two hundred and fifty bales, one in November 1955 and the other in December 1955. Clause 14 of the agreement stipulated that any dispute arising out of or relating to the contract should be referred to the Bengal Chamber of Commerce for arbitration. When the respondents failed to deliver the goods as agreed, the appellants invoked Clause 14 and moved the Chamber of Commerce to arbitrate the dispute. The respondents appeared before the arbitrators and contested the claim on its merits. The arbitrators rendered an award in favour of the appellants for the sum of Rs 17 500. The award was thereafter filed in the original side of the High Court of Calcutta, and a notice in accordance with Section 14(2) of the Arbitration Act was served upon the respondents.

Subsequently, the respondents filed an application in the High Court of Calcutta, apparently under Section 33 of the Arbitration Act, seeking a declaration that the contract dated 17 October 1955 violated the Central Government notification of 29 October 1953, was therefore illegal, and that the arbitration proceedings and the award were void. The learned single Judge hearing the application dismissed the petition and entered a decree enforcing the award. The respondents appealed that judgment and order to a Division Bench of the High Court (Appeals Nos. 142 and 143 of 1957), which was heard by Chief Justice Chakravartti and Justice Lahiri. The Division Bench held that the contract dated 17 October 1955 was illegal because it fell within the prohibition contained in the same 29 October 1953 notification, allowed the appeals, and set aside the arbitral awards. After that decision, the appellant applied for a certificate under Article 133(1)(c) of the Constitution; that request was also refused. The appellant then obtained leave to appeal to this Court under Article 136 of the Constitution, and that is how the present appeals are before us. The questions for determination in all of these appeals are identical, and the judgment delivered today will govern each of them. The appellants have advanced several contentions in support of their appeals, the first of which is that the Forward Contracts (Regulation) Act, 1952 is ultra‑vires and that the notification dated 29 October 1953 is consequently null and void.

The appellants argued that the notification dated October 29, 1953, should be treated as null and void. They further submitted that, according to the arbitration clause, the determination of whether the contracts dated September 7, 1955, and October 17, 1955, were illegal fell within the jurisdiction of the arbitrators, and consequently the respondents could not raise the same issue in applications made under section 33 of the Arbitration Act. The appellants also maintained that the respondents had submitted to the jurisdiction of the arbitrators, which they said amounted to a fresh agreement to arbitrate, thereby rendering the award valid and binding on the respondents. In addition, the appellants contended that the contracts dated September 7, 1955, and October 17, 1955, were non‑transferable specific delivery contracts and therefore were not affected by the notification of October 29, 1953. The first issue for consideration was the constitutional validity, or vires, of the Forward Contracts (Regulation) Act, 1952 (Act 74 of 1952), hereinafter referred to as the Act. The Act had been enacted by Parliament and had received the President’s assent on December 26, 1952. Its validity was challenged on two grounds: firstly, that Parliament lacked the competence to enact the legislation, and secondly, that the provisions of the Act were inconsistent with Articles 14 and 19(1)(g) of the Constitution and therefore void. The appellants argued that, if their contention were correct, the notification dated October 29, 1953, which had been issued by the Central Government under the authority of section 17 of the Act, would also be null and void. To address the question of parliamentary competence, the Court found it useful to set out the relevant entries in the Seventh Schedule of the Constitution. List I, entry 48, deals with stock exchanges and futures markets. List II, entry 26, concerns trade and commerce within the State subject to entry 33 of List III, while entry 27 covers production, supply and distribution of goods, also subject to entry 33 of List III. List III, entry 7, relates to contracts, including partnership, agency, contracts of carriage and other special forms of contracts, but excludes contracts relating to agricultural land. The appellants contended that the subject‑matter of the impugned legislation fell within either trade and commerce or production, supply and distribution of goods, corresponding to entries 26 or 27 of List II, and therefore belonged exclusively to the State Legislature. The respondents, supported by the Union of India which had intervened, argued that the Act concerned “futures markets” and thus fell within entry 48 of List I, a matter over which Parliament has exclusive competence; alternatively, they claimed that the Act dealt with contracts, which are covered by entry 7 of List III and are intra vires. The Court explained that resolving the competence issue required an examination of the true nature, scope and pith and substance of the legislation. The preamble of the Act states that its purpose 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 declares its purpose as “forward contracts, the prohibition of options in goods and for the matters connected therewith”. It distinguishes between “ready delivery contracts” and “forward contracts”. According to the Act, a contract that requires delivery of goods and payment of price either immediately or within a period not exceeding eleven days is classified as a ready delivery contract; every other contract is treated as a forward contract. Forward contracts are further separated into two sub‑categories: “specific delivery contracts” and “non‑transferable specific delivery contracts”. “Specific delivery contracts” are forward contracts that provide for the actual delivery of particular goods at a price fixed for a specified future period. “Non‑transferable specific delivery contracts” are those specific delivery contracts whose rights or liabilities cannot be transferred to another party. Section 15 empowers the Government to issue notifications that declare certain forward contracts illegal with reference to particular goods, classes of goods or specified areas. 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 section 15 have not been applied. Section 18 exempts non‑transferable specific delivery contracts from the operation of sections 15 and 17. Consequently, the legislation is expressly a law regulating forward contracts. Having established the scope of the enactment, the Court considered whether the law falls within the domain of trade and commerce, production, supply and distribution of goods under entries 26 or 27 of List II, or whether it pertains to futures markets under entry 48 of List I. It was noted that entries 26 and 27 of List II are subject to entry 33 of List III, which, in its current form, reads: “Trade and commerce in, and the production, supply, distribution of … (e) raw jute”. The impugned Act, insofar as it concerns raw jute—the subject of these appeals—would be intra‑vires if it were placed within that entry. However, clause (e) of entry 33 was inserted by the Constitution (Third Amendment) Act, 1954, whereas the impugned Act was enacted in 1952; therefore, its validity must be assessed according to the constitutional provisions that existed before the 1954 amendment, and entry 33 of List III must be excluded from consideration. Turning to the central question of whether the Act is legislation on futures markets or on trade and commerce, the appellants argued that a law governing forward contracts does not constitute a law on futures markets, contending that the ordinary meaning of “market” refers to a place where buying and selling of goods takes place. To support this argument, reference was made to the dictionary definition of “market” and to decisions of the Madras High Court reported in Public Prosecutor v. Cheru Kutti.

The Court referred to the definition of “market” given in the Concise Oxford Dictionary, which describes it as “a gathering of people for purchase and sale of provisions, livestock, etc.; an open space or covered building in which cattle etc. are exposed for sale.” The Court then discussed two earlier decisions that examined the meaning of the term. In Public Prosecutor v. Cheru Kutti [1956 (2) MLJ 563] the accused had been charged under section 170 of the Madras Local Boards Act, 1920 for operating a new private market without a licence. The accused argued that the place where the sales occurred was not truly a market, and the court accepted that argument. While considering the meaning of “market,” the court observed that the word signified “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 issue involved a provision of the Madras District Municipalities Act, 1920 which required a licence for any place used as an open market under the Act. The court held that the ordinary meaning of market was a location where the public could go at specified times for the purpose of buying and selling, and concluded that the place in question qualified as a market. The appellants relied on these rulings to argue that the impugned Act, which does not concern a building where business is transacted, cannot be classified as legislation relating to markets. The Court could not accept that contention. While acknowledging that “market” ordinarily denotes a place where business is carried out—a meaning that applied when trade was confined to specific locations—the Court noted that commercial practice has evolved. With the growth of commerce, transactions are frequently concluded through correspondence, and the connotation of “market” has expanded accordingly. In contemporary usage the term can refer both to the business activity itself and to the physical venue. For example, “labour market” denotes the conditions of labour trade rather than a specific site where labourers are recruited. Because “market” can signify both the activity and the location, the Court stated that the sense in which the word appears in any statute must be determined by examining the statutory context. Consequently, although in Public Prosecutor v. Cheru Kutti and Commissioner, Coimbatore Municipality v. Chettimar Vinayagar Temple Committee the term was interpreted as referring to a place for licensing purposes, the Court emphasized the need to ascertain the meaning of “market” within the particular entry under consideration.

The entry numbered forty‑eight in List I refers to “Futures Markets.” In the Encyclopaedia Britannica the term “Futures” is explained as contracts that contain a promise to deliver a specified quality of a commodity at a future date, with the obligation covering a single quantity for a particular month, and it is further described as a kind of security comparable to a bond or a promissory note. In this definition the notion of a market relates solely to commercial activity and does not denote any physical place. Consequently, the Court held that a statute governing forward contracts would in substance be a statute governing futures markets.

The appellants then contended that even if a law on forward contracts could be characterised as a law on futures markets, it should nevertheless be placed under entry twenty‑six of List II rather than under entry forty‑eight of List I. Their argument rested on the observation that forward contracts constitute a major segment of contemporary trade and form the very core of that trade; therefore, to exclude forward contracts from the ambit of entry twenty‑six would effectively deprive that entry of a substantial portion of its subject matter. The appellants relied on the rule of construction that the entries in the constitutional lists are to be interpreted liberally, and they cited the decision in Bhuwalka Brothers Ltd. v. Dunichand Rateria, AIR (Cal) 740 (1952), a principle that was later affirmed by this Court in Duni Chand Rateria v. Bhuwalka Brothers Ltd., (1) SCR 1070 (1955). The Court acknowledged that the rule that the list entries must be read broadly rather than narrowly is well settled.

However, the Court observed that the appellants did not need to invoke this rule because, in ordinary and accepted usage, the term “trade and commerce” already embraces forward contracts. This view had been adopted in the Bhuwalka Brothers case of 1952 and was reiterated in the Duni Chand Rateria case of 1955, where the Court confirmed that forward contracts fall within the scope of trade and commerce.

Thus, if the only issue were whether a law concerning forward contracts falls within the domain of trade and commerce, the answer would be straightforwardly affirmative. The real question before the Court, however, was how to interpret the entry “trade and commerce” when it is read alongside entry forty‑eight of List I. The two entries allocate powers to two different legislatures that are mutually exclusive, and the Court needed to determine a method of reconciliation. The Court reiterated the well‑established construction principle cited by the appellants: the entries must be construed so that each retains effect, and any construction that would render any entry ineffective or redundant must be avoided. From this principle it follows that where one entry is general and another is specific, the general entry must be construed so as to exclude the specific one. This application of the general maxim guides the Court’s analysis of the present conflict between the two constitutional entries.

The Court explained that the general maxim “generalia specialibus non derogant” means that a general provision does not override a specific one. Accordingly, if entry 26 were interpreted to include forward contracts, the specific reference to “Futures Markets” in entry 48 would become ineffective. Therefore the Court held that legislation concerning forward contracts must be regarded as falling within the exclusive competence of the Union because it is covered by entry 48 of List I.

The Court then turned to the authorities cited by the appellants to support the view that the legislation in question was actually a law on trade and commerce and therefore fell under entry 26. The appellants relied on the decision in Bhuwalka Brothers Ltd., reported in 1952 AIR (Cal) 740, which concerned the validity of the West Bengal Jute Goods Futures Ordinance of 1949. That Ordinance had been issued by the Governor without the prior consent of the Governor‑General, and the challengers argued that the Ordinance fell within entry 7 “Contracts” of List III; consequently, the lack of the Governor‑General’s consent rendered it invalid. The opposite argument submitted was that the Ordinance related to trade and commerce, a matter enumerated in List II, and therefore did not require the Governor‑General’s consent. The Court that had considered the matter accepted the latter submission and observed that, “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.” An appeal against that judgment was taken to the Supreme Court, which affirmed the correctness of that view, and the decision was subsequently cited in Duni Chand Rateria’s case, 1955 (1) SCR 1071.

The present Court considered whether, on the basis of that authority, the West Bengal ordinance should be treated as legislation on trade and commerce falling under entry 26. The Court found that this approach could not be accepted. It observed that the validity of the 1949 ordinance must be examined according to the Government of India Act, 1935, which was the constitutional instrument in force at the time. Under that Act there was no specific entry dealing with “Futures Markets”; such a specific entry first appeared in the present Constitution in 1952. Consequently, the dispute in Bhuwalka Brothers Ltd. was not between a general entry on trade and commerce and a specific entry on futures markets, as the present case presents, but rather between trade and commerce in List II and contracts in List III. In the absence of a specific entry like entry 48 of List I, the earlier decision would have been appropriate, but it is no longer applicable because the Constitution has been amended to include the specific entry.

Finally, the Court noted that the respondents had argued that the impugned legislation fell within entry 48 of List I. They also indicated that, should that argument fail, they were prepared to rely on entry 7 of List III as a fallback position. The Court recorded this additional contention for consideration in the subsequent analysis.

The Court examined the argument that entry 7 of List III could serve as a second line of defence, observing that entry 7 is worded in a general manner and therefore cannot prevail over the specific entries such as entry 48 in List I or entry 26 in List II. In reaching this conclusion, the Court aligned itself with the decision in Bhuwalka Brothers Ltd. case 1952 AIR(Cal) 740, and consequently held that the challenge to the impugned Act on the basis of legislative incompetence must fail.

The second ground of attack asserted that the Act was repugnant to Article 14 and to Article 19(1)(g) of the Constitution and therefore void. Concerning Article 14, the Court noted that the matter had already been settled by its own earlier decision in M/s Raghubar Dayal Jai Prakash v. Union of India [1962 (3) SCR 547], where it was held that the impugned Act does not infringe Article 14 and is constitutionally valid. Accordingly, that issue was no longer open for debate, and the appellants had raised no further arguments on it.

With respect to the contention based on Article 19(1)(g), the Court observed that although the appellants had raised the issue in their pleadings, they did not press it before the learned judges of the lower court because a decision of the Calcutta High Court had already resolved the point against them. The appellants revived the issue only in the appeal before this Court. The respondents rightly complained that allowing such a fresh contention at this stage would require an investigation of facts that had not been undertaken. Moreover, the Court emphasized the strong presumption in favour of the constitutionality of legislation, noting that the appellants had produced no material to rebut that presumption. The appellants responded that, on the face of the Act, there was a violation of the fundamental right guaranteed by Article 19(1)(g); therefore, the burden was on the other side to demonstrate that the restriction fell within Article 19(6) as a reasonable measure in the public interest, citing the observations of this Court in Saghir Ahmed v. State of Uttar Pradesh [1955 (1) SCR 707, 726]. The Court was of the opinion that those observations could not be read as negating the presumption of constitutionality, and since the appellants abandoned the point after some argument, the contention was to be decided against them.

Finally, the appellants contended that the question of the validity of the contracts between the parties was a matter for the arbitrators to decide.

The appellants contended that, because the contract between the parties was illegal and void, the respondents were not entitled to invoke section 33 of the Arbitration Act in a separate application. We had examined that issue earlier in Khardah Company Limited v. Raymon & Company (India) Private Limited, a decision that was considered when hearing these appeals. In that precedent we held that when a contract is illegal and void, any arbitration clause that forms part of the same contract must also become void and cannot survive the contract’s demise. Consequently, a dispute concerning the validity of such a contract is a matter for the court and not for an arbitrator to determine. Applying that principle, we must overrule the appellants’ submission that the respondents could not raise the question under section 33. The appellants further argued that, even if the original arbitration clause became inoperative because the contract’s validity was doubtful, the respondents’ later appearance before the arbitrators and filing of defensive statements created a new arbitration agreement. According to that argument, the arbitrators would then possess jurisdiction, and the award could not be challenged on the ground of lack of jurisdiction. The respondents opposed this view, maintaining that mere participation in arbitration does not constitute a fresh agreement to arbitrate and that jurisdiction should be assessed solely on the basis of clause fourteen of the original agreement. The issue before us is therefore to determine the true effect of the parties’ conduct before the arbitrators on the arbitrators’ authority to hear the dispute. Established principles state that a dispute over the validity of a contract may be the subject of an arbitration agreement in the same way as a claim arising under the contract. However, this is permissible only when the arbitration agreement is separate and independent of the contract that is alleged to be illegal. When the arbitration clause is itself a term of the contract whose legality is challenged, it ceases to exist independently and must perish along with the contract, as we affirmed in the Khardah case. We now refer to other authorities that illustrate the distinction between these two categories of agreements. In Shiva Jute Baling Limited v. Hindley and Company Limited, the court observed the difference between such agreements, although the factual context differed from the present matter. A directly relevant decision is East India Trading Company v. Badat and Company, where the facts involved a general agreement outlining the terms of business. That agreement provided that all disputes arising from the contract would be settled by arbitration.

In the case that the Court examined, the parties had earlier entered into a general agreement that all disputes arising out of any contract between them would be settled by arbitration. After that, they executed several separate contracts, and a dispute later arose concerning one of those contracts. One of the parties denied the existence of the later contract, and the question before the Court was whether the arbitral award rendered in that dispute was rendered without jurisdiction. The Court held that the arbitrators possessed jurisdiction because the earlier, independent arbitration agreement gave them authority, and it quoted the earlier judgment as follows: “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.” The Court agreed that this statement accurately reflected the correct legal position. The remaining issue for determination was whether, in the present case, there existed an arbitration agreement that was separate from clause 14 of the contract dated 7 September 1955. The appellants did not argue that any express agreement had been made to refer disputes under that contract to arbitrators. Their contention was merely that the respondent had filed statements before the arbitrators, setting out a defence on the merits, and that this filing should be interpreted as an independent arbitration agreement, relying on the authorities cited 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]. The Court observed that an arbitration agreement is the foundational basis for the arbitrators’ jurisdiction, and where such an agreement does not exist at the time the arbitrators assume their duties, the proceedings are wholly without jurisdiction. The Court further noted that the mere participation of the parties in those proceedings, even without objection, does not cure the defect, because consent alone cannot confer jurisdiction. Nonetheless, the Court clarified that the parties are free to create a fresh arbitration agreement while the matter is pending before the arbitrators, and if such a new agreement were formed, the subsequent proceedings could be validated as referable to arbitration.

The Court explained that an arbitral award cannot be attacked on the ground of lack of jurisdiction only when the parties have executed a proper arbitration agreement that satisfies the definition in section 2(a) of the Arbitration Act. If such an agreement exists, the award is valid; if the parties have merely taken procedural steps that they assumed or believed to be valid without a formal agreement, the award is treated as a nullity. Turning to the facts of the present case, the Court examined the statements filed by the respondents before the arbitral tribunal and found no indication of a fresh agreement to refer the dispute to arbitration. The respondents’ submission consisted of a contest of the claim on its merits followed by the remark, “The sellers submit that this reference is improper, unwarranted, frivolous and vexatious and should be dismissed with cost.” The Court held that this language cannot be interpreted as an agreement to refer the matter to arbitration. The authorities cited by the appellants, namely National Fire and General Insurance Co. Ltd. (1956 AIR (Cal) 1) and Pratab Mull Rameswar v. K. C. Sethia Ltd. (1959 64 C.W.N. 616), were deemed inapplicable because, in those cases, the parties had made a valid submission that enlarged the scope of the original reference. In those precedents, the parties filed statements containing claims not covered by the original reference, thereby invoking the jurisdiction of the arbitrators under section 2(a) of the Arbitration Act. The Court emphasized that those decisions involved an expansion of an existing jurisdiction rather than a deficiency of initial jurisdiction.

The Court further observed that the statutory scheme of the Arbitration Act makes clear that an award addressing matters outside the scope of the agreement may be either modified under section 15(a) or remitted under section 16(1)(a). When parties, by their statements, invite the tribunal to consider additional issues, the arbitrators are deemed to be acting within their jurisdiction. In the present matter, however, the Court found that the arbitral tribunal lacked jurisdiction at the time it assumed its duties, and there was no subsequent agreement or submission that could be treated as an acceptance of jurisdiction over the validity of the contracts in dispute. Consequently, the Court concluded that it was of the opinion that the respondents were not bound by any implied arbitration agreement and that the award could not stand on a foundation of jurisdiction.

The Court concluded that the respondents were not barred by any prior conduct before the arbitrators from raising the question of the contracts’ validity in the present proceedings. The appellants' final argument asserted that the agreements dated September 7, 1955, and October 17, 1955, constitute non‑transferable specific delivery contracts within the meaning of section 2(f) of the Act. According to section 18, such contracts are exempt from the operation of section 17, and consequently the appellants argued that the notifications issued on October 29, 1953, could not affect those agreements. The factual matrix presented in the present appeals closely mirrors the circumstances examined by the Court in the Khardah Company Ltd. decision reported in 1963 (3) SCR 183. Having previously considered those facts, the Court applied the same reasoning articulated in its earlier judgment delivered today, and therefore accepted the appellants’ submission. Accordingly, the Court held that the contracts dated September 7, 1955, and October 17, 1955, are not subject to the October 29, 1953, notification. On that basis, the Court allowed the appeals, ordered costs to be awarded throughout the proceedings, and directed that a hearing fee be paid. The successful appeals comprise one set of Civil Appeals numbered 389 and 390 of 1960 and another set numbered 391 and 392 of 1960. The order for costs required the respondents to bear all legal expenses incurred by the appellants in both the civil and appellate stages.