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1. This appeal, by special leave, is directed against a judgment of a single Judge of the Calcutta High Court declaring arbitration agreement contained in certain contracts between the parties to be invalid on the ground that the contracts were illegal under Section 15, Sub-section (3A) of the Forward Contracts (Regulation) Act, 1952 (hereinafter referred to as the Forward Contracts Act).

2. The appellants and the respondents were both at all material times members of the East India Jute & Hessian Exchange Ltd. (hereinafter referred to as the Exchange). On 13th June, 1969, the appellants entered into two contracts with the respondents agreeing to purchase 12,00,000 yards of hessian cloth at the price of Rupees 70.50P. per hundred yards and 6,00,000 yards of hessian cloth at the price of Rs. 70/ - per hundred yards on the terms and condition's set out in the respective contract notes which were in the printed contract form prescribed in Appendix IV to . the bye-laws of the Exchange. These two contracts were transferable specific delivery contracts, for jute goods in the city of Calcutta. It was stated in the body of each of the two contract notes within the cage that the contract was one for delivery alongside export vessel in the port of Calcutta. The other terms and conditions set out in the two contract notes were identical but it is not necessary to refer to all of them. We may reproduce only a few which are material:

3. Goods to be packed folded, well pressed, marked and snipped by sellers in covered cargo boats in iron bound bales of 2000 yards or 1829 metres each.

4. Delivery of the said goods in to be given and taken as follows:

September 1969 (Payment against P.D.O.) Each delivery under this contract shall be treated as a distinct and separate contract.

5. Arbitration: The Bengal Chamber of Commerce & Industry/The Indian Chamber of Commerce.

The printed contract form prescribed in Appendix 17 to the bye-laws of the Exchange contained Clause 2, which was as follows:

4. On 4th November, 1969, the appellants entered into three contracts with the respondents and under each of these three contracts the appellants agreed to sell to the respondents 6,00,000 yards of hessian cloth at the price of Rs. 87/- per hundred yards. Rs. 84.50 per hundred yards and Rs. 82.50 per hundred yards respectively. The terms and conditions on which these three contracts were entered into between the appellants and the respondents were set out in contract notes in the printed contract form prescribed in Appendix II to the bye-laws of the Exchange. These three contracts were also transferable specific delivery contracts in jute goods in the city of Calcutta. The terms and conditions of these three contracts were identical with those of the earlier two contracts dated 13th June, 1969 save and except that the provision in regard to delivery in Clause (4) of the terms and conditions was "October, 1969 (Due Date P.D.O.)" in respect of the first contract, "November, 1969 (Due Date P.D.O.)" in respect of the second contract and "December, 1969 (Due Date P.D.O.)" 'in respect of the third contract. Here also Clause 2, of the printed contract form was scored out and cancelled and the contract notes in respect of these three contracts did not contain any provision requiring the buyers to give any particular number of clear working days' notice to the seller to place goods alongside export vessel in the port of Calcutta.

5. Since the three contracts dated 4th November, 1969 were cross-contracts by way of settlement of the earlier two contracts dated 13th June, 1969, the deliveries under the two sets of contracts were set off against each other and differences in price became due and payable by the respondents to the appellants. The appellants accordingly submitted five bills for an aggregate amount of Rupees 2,76,000/- to the respondents and called upon the respondents to make payment of this amount to the appellants. The respondents, however, failed to pay any amount to the appellants under the said five bills and the appellants, therefore, relying on the arbitration clause contained in each of these several contracts, referred their claims under the said five bills to the arbitration of the Bengal Chamber of Commerce and Industry, Calcutta. These references were numbered as Case Nos. 58, 59, 61, 62 and 64 of 1970. The notices of these references were given to the respondents and they were called upon to file written statements in answer to the claims preferred by the appellants. The respondents from time to time applied to the arbitration tribunal of the Bengal Chamber of Commerce and Industry, Calcutta for extension of time for filing their written statements and, though extension of time was granted, the respondents did not ultimately file their written statements but instead preferred an application under Section 23 of the Arbitration Act challenging the existence and validity of the arbitration clause contained in each of these several contracts entered into between the parties. The main ground on which the existence and validity of the arbitration clauses was challenged was that though the contracts giving rise to the disputes between the parties were forward contracts entered into between members of a recognised association, they were in contravention of bye-laws l(b) and 15 read with bye-law 17 contained in Chapter V of the Bye-Laws of the Exchange and were, therefore, illegal and void under Section 15, Sub-section (3A) of the Forward Contracts Act. This ground appealed to Mr. Justice S.C. Ghose, who heard the application, and he allowed the plea of the respondents holding that since Clause 2 of the printed contract form was scored out and cancelled in the contract notes in respect of all these contracts, they could not be said to be in the prescribed form as required by bye-law 1(b) nor could they be said to be entered into on the terms and conditions prescribed under the bye-laws as mandated by Bye-law 15 and consequently, they were illegal and void by reason of Section 15, Sub-section (3A) of the Forward Contracts Act and the arbitration clauses contained in these contracts must also, therefore, fall along with the contracts of which they formed part. This decision of Mr. Justice S.C. Ghose is impugned in "the present appeal preferred by the appellants with special leave obtained from this Court.