# JUTE & GUNNY BROKERS LTD v. M/S. NEW CENTRAL JUTE MILLS CO., LTD

- **Citation:** [1959] Supp. 2 S.C.R. 79
- **Court:** Supreme Court of India
- **Decided:** 1959
- **Bench:** S. R. Das, s. K. DAS, P. B. Gajendragadkar, K. N. W Anchoo, M. Hidayatullah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/jute-gunny-brokers-ltd-v-m-s-new-central-jute-mills-co-ltd-1675
- **Pages:** 8

## Headnote

.
Contract-Validity-Ordinance making provision of regulation
of trade-Act replacing Ordinance-Deeming
provisions-Legal
fiction-Effect-Raw Jute (Central Jute Board and Miscellaneous
Provisions) Ordinance, r950 (W. Ben. r7 of r950), ss. 5, 6 and 7Raw Jute (Central Jute Board and Miscellaneous Provision.s) Act,
r95r (W. Ben. 6 of r95r), ss. 5, 6, 7, r6.
In respect of a dispute between the appellant company and
the respondent company which ;was referred to the arbitration of
the Bengal Chamber of Commerce in terms of the arbitration
clause contained in the contract entered into on April 6, 1951,
an award was made on February 29, 1952, allowing the claim of
the appellant. The respondent made an application in the High
Court for having the award set aside on the ground, inter alia,
that the contract was void under the provisions of the Raw Jute
(Central Jute Board and Miscellaneous Provisions) Act, 1951,
inasmuch as it had not been entered into in the manner specified
in ss. 5, 6 and 7 of the Act as required therein. On December
14, 1950, the Government of West Bengal had promulgated an
Ordinance called the Raw Jute (Central Jute Board and Miscellaneous Provisions) Ordinance, 1950, for the better regulation of
the trade, and on December 29, 1950, a notification was issued
specifying December 30, 1950, as " the appointed day for the
purposes of ss. 5, 6 and 7 of the said Ordinance." Subsequently
the Ordinance was replaced by the Act which bys. 16, provided:
" ............ any notification issued ......... under the Raw Jute
(Central Jute Board and Miscellaneons Provisions) Ordinance,
1950, shall, on the said Ordinance ceasing to operate, be deemed
to have been .. .issued ... under this Act as if this Act had commenced on the 14th day of December 1950." It was contended
for the appellant that the notification dated December 29, 1950,
could not be read as having brought ss. 5, 6 and 7 of the Act
into force, because, on a plain reading of it, the notification did
not purport to bring any of the sections of the Act into force,
but expressly brought ss. 5, 6 and 7 of the Ordinance into force
and that the said sections of the Act not having been brought
into force, the contract in question was valid and, consequently,
the award was binding and enforceable.
Held, that in order to give full effect to the two legal
fictions created in s. 16 of the Act that the Act shall be
deemed to have commenced on December 14, 1950, and that the
notification issued under the Ordinance shall be deemed to have
I959
January 20.
80
SUPREME COURT REPORTS [1959] Supp.
I959
been issued under the Act, the principle of mutatis midandis has
to be adopted and the word "Act" substituted for the word
jute G Gunny "Ordinance" used in the notification dated December 29, 1950.
B•okcrs Ltd.
Consequently, the provisions of ss. 5, 6 and 7 of the Act were
v.
applicable to the contract in question.
M/s. New Central
jute Mills Co., Ltd.

## Text

•
(2) S.C.R, SUPREME COURE.r REPORTS
79
JUTE & GUNNY BROKERS LTD.
v.
M/S. NEW CENTRAL JUTE MILLS CO., LTD.
(S. R. DAS, c. J., s. K. DAS, P. B. GAJENDRAGADKAR,
K. N. W ANCHOO and M. HIDAYATULLAH JJ.)
.
Contract-Validity-Ordinance making provision of regulation
of trade-Act replacing Ordinance-Deeming
provisions-Legal
fiction-Effect-Raw Jute (Central Jute Board and Miscellaneous
Provisions) Ordinance, r950 (W. Ben. r7 of r950), ss. 5, 6 and 7Raw Jute (Central Jute Board and Miscellaneous Provision.s) Act,
r95r (W. Ben. 6 of r95r), ss. 5, 6, 7, r6.
In respect of a dispute between the appellant company and
the respondent company which ;was referred to the arbitration of
the Bengal Chamber of Commerce in terms of the arbitration
clause contained in the contract entered into on April 6, 1951,
an award was made on February 29, 1952, allowing the claim of
the appellant. The respondent made an application in the High
Court for having the award set aside on the ground, inter alia,
that the contract was void under the provisions of the Raw Jute
(Central Jute Board and Miscellaneous Provisions) Act, 1951,
inasmuch as it had not been entered into in the manner specified
in ss. 5, 6 and 7 of the Act as required therein. On December
14, 1950, the Government of West Bengal had promulgated an
Ordinance called the Raw Jute (Central Jute Board and Miscellaneous Provisions) Ordinance, 1950, for the better regulation of
the trade, and on December 29, 1950, a notification was issued
specifying December 30, 1950, as " the appointed day for the
purposes of ss. 5, 6 and 7 of the said Ordinance." Subsequently
the Ordinance was replaced by the Act which bys. 16, provided:
" ............ any notification issued ......... under the Raw Jute
(Central Jute Board and Miscellaneons Provisions) Ordinance,
1950, shall, on the said Ordinance ceasing to operate, be deemed
to have been .. .issued ... under this Act as if this Act had commenced on the 14th day of December 1950." It was contended
for the appellant that the notification dated December 29, 1950,
could not be read as having brought ss. 5, 6 and 7 of the Act
into force, because, on a plain reading of it, the notification did
not purport to bring any of the sections of the Act into force,
but expressly brought ss. 5, 6 and 7 of the Ordinance into force
and that the said sections of the Act not having been brought
into force, the contract in question was valid and, consequently,
the award was binding and enforceable.
Held, that in order to give full effect to the two legal
fictions created in s. 16 of the Act that the Act shall be
deemed to have commenced on December 14, 1950, and that the
notification issued under the Ordinance shall be deemed to have
I959
January 20.
80
SUPREME COURT REPORTS [1959] Supp.
I959
been issued under the Act, the principle of mutatis midandis has
to be adopted and the word "Act" substituted for the word
jute G Gunny "Ordinance" used in the notification dated December 29, 1950.
B•okcrs Ltd.
Consequently, the provisions of ss. 5, 6 and 7 of the Act were
v.
applicable to the contract in question.
M/s. New Central
jute Mills Co., Ltd.
CIVIL
APPELLATE JURISDICTION :
Civil Appeal
Ko. 92 of 1954.
Das C. ).
Appeal from the judgment and order _dated January 28, 1953, of the Calcutta High Court in Award
Case No. 105 of 1952.
ill. Q. Setalvad, Attorney-General for India, B. Sen,
P. D. Himatsinghka and B. P. Maheshwari, for the
appellant.
N. C. Chatterjee, M. G. Porf,dar and Ganpat Rai, for
the respondent.
1959. January 20.
The Judgment of the Court
was delivered by
DAS, C. J.-This is an appeal filed upon a certificate
of fitness granted by the High Court of Calcutta
impugning the judgment pronounced by the said High
Court on January 23, 1953, declaring null and void an
award (No. 209 of 1952) made by the Bengal Chamber
of Commerce in case No. 855 of 1951, whereby they
ordered the respondent company to pay to the appellant company a sum of Rs. 1,95,000 besides interest
and costs.
The facts giving rise to the present appeal are
simple and may briefly be summarised as follows: On
Apr~l 6, 1951, the appellant company entered into a
contract with the respondent company for the supply
of 5,000 maunds of Nikhli and/or Ashuganj Jute on
certain prices according to quality, "shipment during
July and/or August, 1951, guaranteed". That contract, which was entered into by bought and sold notes
exchanged between the parties through brokers, contained a very wide arbitration clause. When shipping
documents were presented to the respondent company
by the bankers of the appellant company, they were
not honoured on the plea that the same were not in
order and the respondent company failed to take
delivery of the goods.
The last date on which the
(2) S.C.R.
SUPREME COURT REPORTS
81
documents were so presented was September 17, 1951.
z959
On September 26, 1951, the appellant company, Jute & Gunny
through their solicitors, wrote to the respondent comBrokers Ltd.
pany intimating that they had exercised their option
v.
of cancelling the contract and demanding the payment M/s. New Central
of the sum of Rs. 1,95,000 as damages on the basis Jute MillsCo.,Ltd.
of the difference between the contract price and the
-
market price of the goods as on September 17, 1951.
Das c. f.
The respondent company having by their letter dated
October 25, 1951, denied their liability to pay any
amount, the appellant company on November 2, 1951,
referred the dispute to the arbitration of the Bengal
Chamber of Commerce in terms of the arbitration
clause contained in that contract. The respondent
company submitted to the jurisdiction of the Tribunal
of arbitration by appearing and adducing evidence
before it. On February 29, 1952, the arbitrators made
their award by which they allowed the claim of the
appellant company in full with interest and costs.
;
The award having been filed in the Calcutta High
Court on April 23, 1952, the respondent company on
June 9, 1952, filed an application in that Court praying,
inter alia, that the award be declared null and void
and be set aside. The main ground urged in that
application was that the award was a nullity in that
the contract containing the arbitration clause was void
under the provisions of the Raw Jute (Central Jute
Board and Miscellaneous Provisions) Act, 1951, (W.
Ben. VI of 1951) which was then in force. In order
to appreciate the points raised before the High Court
and before us it is necessary at this stage to refer to
some of the statutory provisions bearing on the
question.
To regulate the prices of jute and to empower the
Government to fix its maximum prices, the West
Bengal Legislature passed an Act called the West
Bengal Jute (Control of Prices) Act, 1950, (W. Ben.
VI of 1950) which came into force· on March 15, 1950.
On December 14, 1950, the Government of West Bengal
promulgated an Ordinance called the Raw Jute
(Central Jute Board and Miscellaneous Provisions)
II
82
SUPREME COURT REPORTS
[1959] Supp.
'959
Ordinance, 1950 (XVII of 1950) for the better regulation of the jute trade. The preamble to that Ordinance
jute &·Gunny
Brokers Ltd.
recited that, as the owners of jute mills were not being
v.
able to secure adequate supplies of jute on the
M/s. N•w Central maximum prices fixed under the West Bengal Jute
Jut• Mills Co., Ltd. (Control of Prices) Act, 1950, it had become expedient
Da~
to set up a Central Jute Board in West Bengal for
· J.
ensuring an equitable supply of raw jute to the owners
of the jute mills. That Ordinance consisted of only
15 sections. Section 4 of that Ordinance provided for
the constitution of the Central Jute Board. Section 5
was expressed in the following terms :-
" 5.
(1) No person shall sell or agree to sell raw
jute to the owner of a jute-mill and no owner of a jute
mill shall buy or agree to buy raw jute save and except
in pursuance of a contract for the sale or the supply of
raw jute entered into in the manner provided in
section 6.
(2) Any contract· entered into for the sale or the
supply of raw jute with the owner of a jute-mill save
and except in the manner provided in section 6 shall be
void and of no effect.
(3) Any person contravening the provisions of
sub-section (1) shall be guilty of an offence under this
Ordinance and shall be punishable with imprisonment
which may extend to six months or with fine or with
both."
Section 6 laid down the manner in which all contracts
for the sale or supply of raw jute with the owners of
jute mills were to be entered into. Section 7 ran as
follows:-
" 7.
(1) N'o .person shall deliver or cause to be
delivered to the owner of a jute-mill and no owner of
a jute-mill shall accept or cause to be accepted any
raw jute save and except in pursuance of a contract
for the sale or the supply of raw .jute entered into in
the manner provided in section 6.
(2) Any person contravening the provisions gf
sub-section (1) shall be guilty of an offence under this
Ordinance and shall be punishable with imprisonment
which may extend to six months or with fine or with
both.
(2) S.C.R.
SUPREME COURT REPORTS
83
(3) ·The provisions of section 5, section 6, and this
r959 ,
section shall have effect on and from the appointed
day."
jute & Gunny
Brokers Ltd.
The expression "appointed day" occurring in s. 7 (3)
v.
quoted above was thus defined in s. 2 (1) of that M/s. New Central
Ordinance:-
.
jute Mills Co., Ltd.
"2 (1) 'appointed day' means the date specified
by the State Government by notification in the Official
Das c. j.
Gazette as the appointed day for the purpose of this
· Ordinance ; "
.
By a notification dated December 29, 1950, published in
an extraordinary issue of the Calcutta Gazette of the
same date, December 30, 1950, was specified as "the
appointed day for the purposes of ss. 5, 6 and 7 of the
said Ordinance."
The said Ordihance was subsequently replaced by
an Act called the Raw Jute (Central Jute Board and
Miscellaneous Provisions) Act (W. Ben. Act VI of
1951), hereinafter referred to as "the Act", which
came into force on March 21, 1951. The first fifteen
sections of the Act were almost verbatim reproductions of the fifteen sections of the Ordinance and only
one new section was added as the sixteenth section
reading as follows :-
" 16. The Central Jute Board constituted, any
rule made, any notification or licence issued, any
direction given, any contract entered into, any minimum price fixed, anything done or any action whatsoever taken under the Raw Jute (Central Jute Board
and Miscellaneous Provisions) Ordinance, 1950, shall,
on the said Ordinance ceasing to operate, be deemed
to have been constituted, made, issued, given, entered
into, fixed, done or taken under this Act as if this Act
had commenced on the 14th day of December, 1950."
The Act was in force at all times material to these
proceedings though the same was subsequently repealed on August 5, 1952.
It may be mentioned here that both when the Ordinance was in force and after the Act had come into
operation, the Central Jute Board issued a series of
circulars by which it authorised the owners of jute
mills to purchase raw jute up to the extent of quotas
84
SUPREME COURT REPORTS
[1959] Supp.
'959
respectively allotted to them through " normal trade
Jute c;. Gunny channels" subject to their furnishing particulars of
Brokers Ltd.
the contracts and of deliveries under them to the
v.
Board. The contract in question was entered into
M/s. New Central through "normal trade channels" and not in the
Jute Mills Co., Ltd. manner specified in the said Act or the rules framed
thereunder. Indeed, it is conceded that no applicaDas C. j.
/
tion had been made by the appellant company to the
Board under s. 6(1) of the Act, that the Board did not,
under s. 6(2) of the Act select any jute mills as buyers
of these goods,' that the respondent company had not
signified in writing to the Board its intention to buy
the raw jute in question, that the Board did not specify a date within which the contract was to be
entered into and that, finally, the delivery period fixed
in the contract was in contravention of the provisions
of the Act and the rules and, therefore, the contract
was void under s. 5(2) of the Act, if ss. 5, 6 and 7 were
in force at the date of the contract.
The respondent company's aforesaid application for
setting aside the award having come on for hearing,
the learned Single Judge sitting on the Original Side
reported the matter, under r. 2 of c.h. V of the Original Side Rules, to the Chief Justice for forming a
larger Bench for hearing of the said application.
A
Special Bench ·was accordingly constituted by the
Chief Justice and the application came up for hearing
before that Bench. Three points were urged before
the High Court, namely, (1) that the Act was ultra
vires the Bengal Legislature; (2) that even if the Act
were intra vires ss. 5, 6 and 7 of the Act were never
brought into force and (3) that there was a subsequent
independent agreement to refer the disputes to the
arbitration of the Bengal Chamber of Commerce. The
High Court negatived all the contentions raised by
the appellant company and by its judgment dated
January 23, 1953,
allowed the application and
declared the award to be null and void, but directed
the parties to bear their own costs.
This appeal, as
already stated, has been filed against the judgment of
the High Court upon a certificate of fitness granted by
the High Court.
(2) S.C.R.
SUPREME COURT REPORTS
85
•
The learned Attorney-General appearing in support
r959
of this appeal has urged before us only the second
C
1
h
jute & Gunny
point urged before the High ourt, name y, t at even
Brokers Ltd.
if the Act were intra vires ss. 5, 6 and 7 had never
v.
been brought into force and, therefore, the contract in M /s. New Central
question containing the arbitration clause was valid jute Mills Co., Ltd.
and consequently the award was binding and enforce-
-
able.
He does not dispute that, by virtue of s. 16 of
Das c. f.
the Act, the notification issued on December 19, 1950,
under s. 2(1) of the Ordinance has to be deemed to
have been issued under the Act, but he contends that
even so the notification dated December 29, 1950,
cannot be read as having brought ss. 5, 6 and 7 of the
Act into force, for it, in terms, specified December 30,
1950, as the appointed day" for the purposes of ss. 5,
6 and 7 of the Ordinance". He urges that this Court
has to take the notification made under the Ordinance
as it finds it and then, under s. 16 of the Act, to deem
it to have been made under the Act. According to
him the fiction created by s. 16 ends as soon as the
notification is deemed to have been made under the
Act and goes no further. He concludes, on the authority of the decisions in Hamilton and Co. v. M aclcie
and Sons (1) and T. W. Thomas & Co. Limited v. Portsea Steamship Company Limited (2), that, on a plain
reading of it, the notification, when it is deemed to
have been made under the Act, makes no sense, for it
does not purport to bring any of the sections of the
Act into force but expressly briμgs ss. 5, 6 and 7 of
the Ordinance into force. He submits that it is not
for the court to alter the terms of the notification so
as to make it possible to read it as a notification made
under the Act.
We are unable to accept this line of
argument. The decisions relied on by the learned
Attorney General can have no application to the present case. In those cases there was no statutory
provision for deeming the provision of the charter
party referring all disputes under the charter party to
arbitration as an integral part of the provisions of the
bill of lading and, therefore, the only thing to be done
in those cases was to lift bodily the relevant provision
(1) [1889] 5 T.L.R. 677.
(2) L.R. [1912] A.C. I.
86
SUPREME COURT REPORTS [1959] Supp .
•
z959
of the charter party and to insert it in a_nd to read it
as a part of the bill of lading. It was held that so
1;~:k;;sG~;;Y read it became insensible, for an arbitration clause
v.
referring all disputes arising out of the charter party
M/s. New Central was wholly out of place and meaningless as a term of
J"te Mills Co., Lid. the bill of lading. A cursory perusal of s. 16 will,
however, show that there are two fictions created by
Dos c. 1·
that section: One is that the Act shall be deemed to
have commenced on December 14, 1950,and the other
is ·that the notification issued under the Ordinance
shall be deemed to have been issued under the Act. If
the Act fictionally commenced on December 14, 1950,
then the Ordinance would have to be treated as not
promulgated at all, for the two could not have coexisted and when the Act provided that the notification, which, for identification, is described as having
been issued under the Ordinance, should be deemed to
have been made under the Act, then, unless we read
the word " Ordinance " as " Act ", we do not give full
effect to the twin fictions created by the Act. In other
words the creation of tlie statutory fictions compels us
to adopt the principle of mutatis mutandis and to substitute the word "Act" for the word " Ordinance"
used in the notification, so as to give full effect to the
fictions created by the statute. We see no reason in
support of the contentions of the Attorney General
that the fiction raised by s. 16 stops short at mere
issuing of the notification. The ambit of the fiction
appears to us to cover not only the issuance of the
notification but to extend to our reading it as having
been one issued under the Act.
We cannot read it as
having been issued under the Act unless we read the
word "Ordinance" used in the notification as "Act".
No other point has been urged before us and for
reasons stated above this appeal must be dismissed.
In view of the circumstances referred to in the judgment of the High Court and appearing in the record
we make no order for costs of this appeal.
Appeal dismissed.