# 429• UNION TEXTILE TRADERS v. SURI BHAWANI COTION MILLS LTD

- **Citation:** [1970] 2 S.C.R. 429
- **Court:** Supreme Court of India
- **Decided:** 1969-09-15
- **Case number:** Civil Appeal No. 1658 of 1966
- **Bench:** J. C. Shah, A. N. Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/429-union-textile-traders-v-suri-bhawani-cotion-mills-ltd-4838
- **Pages:** 5

## Headnote

Indian Arbitration Act, 1940 (10 of 1940), ss. 5, 11, 30-These sec-·
tion.i whether violated by r. 111(3) of the Rules of Arbitration of the Indian·
L'haniber of Commerce ('alcutta-Said Rule empowering Registrc.r
of
Tribunal o.f Arbitration not to disclose names of arbitrators appointed by
Chamber to a pc..,rt,v who was not meniber of Cha1nber-Appoint1nent of
arbitra1or whe:iher not co1nu/,ete if nan1e of arbitrator not disclosed /1()1>-
parry-Com1nerciaf practice of not disclosinR na1nes-Justification for.
A contract was entered into between the appellant and the respondent
in 1964 for sale of 200 bags of Cone yarn. "fhe \:Ontract inter alia con-·
tained the condition that in case of any dispute arising out of the contract
"the matter in Jispute shall he referred to the arbitration of the Indian
Chamber of C0n11ne1-..;¢ whose decision shall be bin.ding on both
the
p::trtic::.··.
The appellant was not a member of the said Chamber of Comme'rce; 1.hc respondent v:as.
On dispute arising between the parties and
being referred to the Chamber for arbitration the appellant wrote to the
Registrar of the Tribunal of Arbitration of the Chamber to intimate to·
it the names of the persons constituting the court to enable the appellant
to ascertain whether they v.'ere independent and disintersted persons. The'.
Registrar refused to disclose H1e names on the ground that under the rules
of the ·Chamber they could not be disclosed to a non-member. On persistent refusal to disclose the names the appellant filed an application under
s. 33 cf the Indian Arbitration Act, 1940 before the Cakutta High Court.
The .applic·ation was dismissed, whereupon appeal by special leave was
filed iO this Court.
It v.1as urgid that the non-disclosure of the names of
the arbitrators by the Registrar was violative not only of the rules of
natural iustice but also infring~d the orovisions of the Arbitration Act.
It was contended that there was a co"ftict between r. 111(3) of the Rules
of Arbitration of the Chamber of Commerce and ss. 5 and 11 or s. 30'
of the Act,
HELD : The appeal must be dismi'8ed.
(i) The power given to the Registrar not to disclose names of the
members of the arbitration court to non·members is di'scretiOnary ·and heis not bound in everv case to refuse to disclose the names. At any rate
as soon as the proceedings coinmence the parties will know the names of the·
arbitrators and obj~ction can be taken at that ·stage.
lind'er s. 5 of the·
Arbitration Act it is not essential that the authority
of an
appointed'
arbitrator "hould be .izot revoked before the commericement of the arbiration proceedines.
section 11 contem1Jlates a st:ige subsequent to the·
arbitrator enterin2 on the reference.
There is thus rro conflict between
r. IIJ(3) of the ·Rules of Arbitration of the Chamber end "· 5 and 11
and 30 of the Act.
These Rules do not interfere with cir take away thepowers an j jurisdiction of the court under the afore_·said. rrovisions. The
aonellant -itself had agreed to submit to the arbitration of the Chamber
which meant that it was bound bv all the Rules of Arbitration of the said
bodv.
No iHegalitv or invaliditV coul<l be proje-<:ted into- tlie agreement
by the presence of r. III(3). [434 C-F].
430
SUPREME COURT REPORTS
[1970) 2 S.C.R.
(ii) The statement in ~ussel on Arbitration (17th &Jn. p. 207) that
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·the appointment of an arbitrator by a party is· not complete without communication hereof to the other party could be of no avail to the appellant
'.Since in the present case the appointment of the ·arbitrator, namely, the
Chamb~r of Commerce, was in every ·sense r.omplete., [434 G-H]
(iii) The rule objected to by the appellant is part of the long standing
practice of Chambers of Commerce in this/ counl.ry its justification being
the elimination of all possibility or chance .Pf a party trying to influence the
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members of the Arbitration court before/they enter upon or proceed with
the reference. [435 C-D]
Unreported iudgment of Calcutta High Co

## Text

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429•
UNION TEXTILE TRADERS
v.
SURI BHAWANI COTION MILLS LTD.
September 15, 1969
[J. C. SHAH AND A. N. GROVER, JJ.J
Indian Arbitration Act, 1940 (10 of 1940), ss. 5, 11, 30-These sec-·
tion.i whether violated by r. 111(3) of the Rules of Arbitration of the Indian·
L'haniber of Commerce ('alcutta-Said Rule empowering Registrc.r
of
Tribunal o.f Arbitration not to disclose names of arbitrators appointed by
Chamber to a pc..,rt,v who was not meniber of Cha1nber-Appoint1nent of
arbitra1or whe:iher not co1nu/,ete if nan1e of arbitrator not disclosed /1()1>-
parry-Com1nerciaf practice of not disclosinR na1nes-Justification for.
A contract was entered into between the appellant and the respondent
in 1964 for sale of 200 bags of Cone yarn. "fhe \:Ontract inter alia con-·
tained the condition that in case of any dispute arising out of the contract
"the matter in Jispute shall he referred to the arbitration of the Indian
Chamber of C0n11ne1-..;¢ whose decision shall be bin.ding on both
the
p::trtic::.··.
The appellant was not a member of the said Chamber of Comme'rce; 1.hc respondent v:as.
On dispute arising between the parties and
being referred to the Chamber for arbitration the appellant wrote to the
Registrar of the Tribunal of Arbitration of the Chamber to intimate to·
it the names of the persons constituting the court to enable the appellant
to ascertain whether they v.'ere independent and disintersted persons. The'.
Registrar refused to disclose H1e names on the ground that under the rules
of the ·Chamber they could not be disclosed to a non-member. On persistent refusal to disclose the names the appellant filed an application under
s. 33 cf the Indian Arbitration Act, 1940 before the Cakutta High Court.
The .applic·ation was dismissed, whereupon appeal by special leave was
filed iO this Court.
It v.1as urgid that the non-disclosure of the names of
the arbitrators by the Registrar was violative not only of the rules of
natural iustice but also infring~d the orovisions of the Arbitration Act.
It was contended that there was a co"ftict between r. 111(3) of the Rules
of Arbitration of the Chamber of Commerce and ss. 5 and 11 or s. 30'
of the Act,
HELD : The appeal must be dismi'8ed.
(i) The power given to the Registrar not to disclose names of the
members of the arbitration court to non·members is di'scretiOnary ·and heis not bound in everv case to refuse to disclose the names. At any rate
as soon as the proceedings coinmence the parties will know the names of the·
arbitrators and obj~ction can be taken at that ·stage.
lind'er s. 5 of the·
Arbitration Act it is not essential that the authority
of an
appointed'
arbitrator "hould be .izot revoked before the commericement of the arbiration proceedines.
section 11 contem1Jlates a st:ige subsequent to the·
arbitrator enterin2 on the reference.
There is thus rro conflict between
r. IIJ(3) of the ·Rules of Arbitration of the Chamber end "· 5 and 11
and 30 of the Act.
These Rules do not interfere with cir take away thepowers an j jurisdiction of the court under the afore_·said. rrovisions. The
aonellant -itself had agreed to submit to the arbitration of the Chamber
which meant that it was bound bv all the Rules of Arbitration of the said
bodv.
No iHegalitv or invaliditV coul<l be proje-<:ted into- tlie agreement
by the presence of r. III(3). [434 C-F].
430
SUPREME COURT REPORTS
[1970) 2 S.C.R.
(ii) The statement in ~ussel on Arbitration (17th &Jn. p. 207) that
A
·the appointment of an arbitrator by a party is· not complete without communication hereof to the other party could be of no avail to the appellant
'.Since in the present case the appointment of the ·arbitrator, namely, the
Chamb~r of Commerce, was in every ·sense r.omplete., [434 G-H]
(iii) The rule objected to by the appellant is part of the long standing
practice of Chambers of Commerce in this/ counl.ry its justification being
the elimination of all possibility or chance .Pf a party trying to influence the
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members of the Arbitration court before/they enter upon or proceed with
the reference. [435 C-D]
Unreported iudgment of Calcutta High Court in Suraj Ratan Birany v.
Hindustan Moton Ltd. decided on April 10, 1964, disapproved.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1658 of
1966.
Appeal by special leave from the judgment and order dated
November 19, 1965 of the Calcutta High Court in Matter No. 213
of 1964.
D. N. Mukherjee, for the appellant.
A. N. Sinha and B. P. !ha, for the respondent.
The Judgment of the Court was delivered by
Grover, J. This is an appeal by special leave from a judgment of the Calcutta High Court dismissing a i;etition filed under
s. 33 of the Indian Arbitration Act, hereinafter called the Act.
A contract was
entered into between .appellant and
the
respondent on January 28, 1964 for sale of 200 bags of Cone
yarn.
The contract inter alia COjlltained the following terms. and
conditions :
"(a) In case of any dispute arising out of this contract the matter in dispute shall be referred to the arbitration of the Indian Chamber of Commerce whose
decision shall be binding on both the parties.
(b) The Court
at Calcutta alone
and no other
court whatsoever shall have jurisdiction to entertain and
try suits in respect of any claim or disputes arising out
of or under this contract or in any way relating to the
same".
'Certain disputes arose between the parties relating to the supply
of goods
and
the
respondent demanded
a
payment of
Rs. 25,658.90 as price of the goods alleged to have been sup-
.plied.
The appellant maintained that the said goods were not
.atcording to the contract and had been rightly rejected.
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UNION TEXTIELS TRADERS v. BHAWANI MILLS (Grover, J.)43I
The appellant did not happen to be a member of the Indian
Chamber of Commerce, Calcutta, whereas the respondent was a
member. The dispute having been referred to the Chamber the
appellant wrote to the Registrar of the Tribunal of Arbitration
of the Chamber of Commerce to intimate the names of the persons
constituting the court to enable the appellant to ascertain v. hether
they were independent and. disinterested persons. The Registrar
sent a reply saying that the names of the arbitrators constituting
the court could not be disclosed to the appellant as it was a nonmember.
Later on a list of the office-bearers and committee
members was sent but according to the appellant the names of the
arbitrators were not disclosed.
In September 1964 the Registrar
intimated that the meeting of the court of the arbitrators would
be held on September 24, 1964 .. There was further corresponder.ce.
The
appellant's attorney again
sought
information
regarding the names and particulars of the arbitrators but without
success.
Ultimately the appellant filed an application under
s. 33 of the Act. The case of the appellant was that the arbitration agreement contained in th~ contract was void and ineffective
as clauses (a) and (b) reproduced above were in conflict with
each other c.nd that the Rules of the Tribunal of Arbitration of
the Indian Chamber of Commerce were illegal and void.
The
High Court repelled all the contentions raised before it and dismissed the application.
The main emphasis before us has been laid by learned counsel
for the appellant on R. III of the Rules of Arbitration of the
Indian Chamber of Commerce which, according to him, comes
into conflict with the provisions of the Act.
That Rule provides
that the Tribunal shall consist of such persons as may be selected
by the Committee of the Chamber from time to time.
Sub-Rule
(3) reads :
"The Committee may, at any time if they think
proper so to do, add to the said list the names of other
persons qualified as aforesaid.
A list of the members of
the Tribunal complete for the time being shall be kept by
the Registrar, and shall always be open for inspection
by members on application and at the discretion- of the
Registrar, also by persons other than members".
It is urged that the non-disclosure of the names of the arbitrators
by the R~gist.rar is violative ~~t only of the rules of natural justi.;e
but also mfnnges the prov1S1ons of the Act.
Before the High
~ourt and before us reliance has been placed on an unreported
3udgment of the Calcutta High Co~rt in Matter No. 95 of 1963
(Suraj Ratan Binany v.
Hindustan Motors Ltd.)('). In that
Deciaed on 'C-4-· 964.
432
SUPREME COURT REPORTS
[1970] 2 S.C.R..
case a similar contention had been raised and it was held that if
the names of .the arbitrators were not known to the parties until
the award was filed the parties would not be in a position to know
whether the arbitrators had misconducted themselves entailing
remaval under s. 11 of the Act or a case had arisen for moving
the court under s. 5 of the Act for leave to revoke the authority of
an appointed arbitrator.
In the judgment under appeal, how~ver,
that view was not followed and it has been held that the Arbitration Rules of the Chamber of Commerce did not offend any of
the sections of the Act as the powers of the court under ss. 5 and
11 remained unaffected by the aforesaid Rules.
In our judgment there is no merit in the challenge to the
validity of"the arbitration agreement on the ground that the Rules
of the India,1 Chamber of Commerce which is to be the arbitrator,
enable the Registrar of that Chamber to withold disclosure of the
names of the Arbitration Court to a p~rty which does not happen
to be a memb~r of the Chamber.
The power given to the Registrar is discretionary and he is not bound in every case to re:Use
to disclose the names.
At any rate, as soon as proceedin~s before
the arbitrators commence both parties are in a position to know
the names and particulars of the arbitrators and if there is any
objection on well known grounds to their conducting the arbitration the same can be taken at that stage.
Under s. 5 it is not
essential that the authority of an appointed arbitrator should be
got revoked before the commencement of the arbitration proceedings.
Section 11 contemplates a stage subsequent to the arbitrators entering on tLe reference.
We can see no conflict between
Rule III(3) of the Rules of Arbitration of Chamber of Commerce
and ss. 5 and 11 or s. 30 of the Act.
These Rules do not interfere with or take away the powers and the jurisdiction of the court
under the aforesaid provi<ions. It must be remembered that the
a!_Jpel!ant agreed to submit to the arbitrJtion of Indian Chamber
of Commerce which meant that it was bound by all the Rules 0f
Arbitration of the said body.
No illegality or invalidity can be
projected into the agreement by the presence of Rule III(3).
Our attention has been drawn to a statement i!l Russell
on
Arbitration, 17th Edn., at page 207 that the appoii1tment of an
arbitrator by a party is not complete
without
communication
thereof to the other party.
This Rule can be of 110 avail 10 the
appellant because in the present case the arbitrator was known,
the arbitrator beir,g the Chamber of Commerce.
Under its Rules
the Chamber is authorised to delegat" its power to a smaller body.
As the Rules were expressly or by necessary implication incorporated into the contract the Chamber would have the power to
appoint a court, by its Registrar, to decide the dispute.
The
appointment of the arbitrator was thus complete in every sense in
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UNION TEXTIELS TRADERS v. BHAWANI MILLS (Grover, J.) 433
the present case.
It could not be said that it would become
complete only when the names of persons constituting the court
of arbitration were communicated.
Those persons only discharge
the duty which lay on the Chamber in the matter of arbitration.
It is noteworthy that the Rules of Chamber of Commerce in
various parts of the country contain provisions similar to the one
the validity of which has been impugned.
For instance Rule
V ( 4) of the Rules of Bengal Chamber of Commerce provides that
the names or name of the persons or person constituting the court
shall not ordinarily be disclosed to the parties nor shall the parties
be entitled to such information as of right. A similar rule is to
be found in bye-law 8 of the Bombay Chamber of Commerce and
Rule V ( 5) of Arbitration Rules of Madras Chamber of Commerce.· It appears that the aforesaid Rule .which has been framed
by all these bodies of long standing and experience in the field of
business is based on the elimination of all possibility or chance of
a party trying to inf!μence the members of the Arbitration Court
before they enter upon or proceed with the reference.
It is axiomatic that as soon as a party appears before them or the ;:irbitration
proceedings commence the names of the. arbitrators can no longer
remain a secret and it is always open to a party to initiate proceedings on the1 ground of bias or prejudicial interest even at that stage
or after the award is made.
The appeal fails and it is dismissed. There will be no order
as to costs.
G.C.
Appeal dismissed.