Forward Contract—Contract for sale of goods—Government notification forbidding forward contracts other than non- transferable specific delivery contracts—Validity of the contract— Clause providing fer arbitration—Clause, if valid even if contract were invalid—Parties appearing before arbitrator--Estoppel —Forward Contracts (Regulation) Act, 1952 (74 of 1952), as. 2 (c) (f) (4) (m) (n), 15(1), 17, 18(2).

On September 7, 1955,1427  the appellant company entered into a contract with the respondents for the purchase of certain bales of jute cuttings to be delivered by the respondents in equal instalments every month in October, November and December, 1955. Under cl. 3 of the agreement the sellers were entitled to receive the price only on their delivering to the buyers the full set of shipping documents. Clause 8 conferred on the sellers certain rights against the buyers such as the right to resell if the latter refused to accept the documents. Clause 14 provided that all disputes arising out of or concerning the contract should be referred to the arbitration of the Bengal Chamber of Commerce. As the respondents failed to deliver the goods as agreed the appellants applied to to the Bengal Chamber of Commerce for arbitration. The respondents appeared before the arbitrators and contested the claim, but an award was made in- favour of the appellant. Thereupon the respondents filed an_ application in the Court of Calcutta under s, 33: of the Arbitration Act, 1940, challenging the validity of the award on the ground that the contract dated September 7, 1955, was illegal as it was in contravention of the notification of the Central Government dated October 29, 1953, issued under s. 17 of the Forward Contracts (Regulation) Act, 1952, which declared that no person ‘‘shall enter into any forward contract other than a non- transferable specific delivery contract for the sale or purchase of raw jute in any form........ ”. The appellant pleaded (1) that on the terms of the arbitration clause the question whether the contract dated September 7, 1955, was illegal was one for the arbitrator to decide and that it was not open to the respondents to raise the same in proceedings under s. 33 of the Arbitration Act; (2) that the respondents were estopped from questioning the validity of the award by reason of their having submitted to the jurisdiction of the arbitrators ; and (3) that, in any case, the contract was a non-transferable specific delivery contract within s. 2(f) of the Forward Contracts (Regulation) Act and was not hit by the notification dated October 29, 1953.