Case: Jugal Kishore Rameshwardas Vs. Mrs. Goolbai Hormusji

accordingly competent, and that the award made there, in is not open to objection on the ground that Ex. A is void.8. It was next contended for the respondent that the contract notes were void under R. 167 of the Native Share and Stock Brokers" Association, and that on that ground also, the arbitration proceedings and the award were void. Rule 167 so far as it is material is as follows:"167. (a) Members shall render contract notes to non-Members in respect of every bargain made for such non-Members account, stating the price at which the bargain has been made. Such contract notes shall contain a charge for brokerage at rates not less than the scale prescribed in Appendix G annexed to these Rules, or as modified by the provisions of Rr. 168 and 170(b). Such contract notes shall show brokerage separately and shall be in Form A prescribed in Appendix H annexed to these Rules.. . . . . . ... .... . ... .. .. . . .(c) No contract note not in one of the printed Forms in Appendix H shall be deemed to be valid.. . . . . . . . . . . . . . . . . .(g) A contract note referred to in this rule or any other rule for the time being in force shall be deemed to mean and include a contract and shall have the same significance as a contract".Form A in Appendix H referred to in R. 167 (a) contains two columns, one showing the rate at which the securities are purchased or sold and the other, the brokerage. The contract notes sent to the respondent are not in this form. They are in Accordance with Form A in Appendix A, and show the rates at which the securities are sold or purchased, the brokerage not being separately shown. At the foot of the document, there is the following note :"This is net contract. Brokerage is included in the price".The contention of the respondent is that the contract notes are not in accordance with Form A in Appendix H, as the price and brokerage are not separately shown, and that therefore they are void under R. 167 (c). Now, R. 167 applies only to forward contracts, and the basis of the contention of the respondent is that inasmuch as the contract notes, Ext. A, have been held by the learned Judges of the High Court not to be ready, delivery contracts but forward contracts, they would be void under R. 167,(c), even if they were not hit by S. 6 of Act 8 of 1925.The assumption underlying this argument is that what is not a ready delivery contract under the definition in S. 3 (4) of Act 8 of 1925 must necessarily be a forward contract for purposes of R. 167. But that is not correct. The definition of a ready delivery contract in S. 3 (4) is only for the purpose of the Act, and will apply only when the question is whether the contract is void under S. 6 of that Act. But when the question is whether the contract is void under R. 167, what has to be seen is whether it is a forward contract as defined or contemplated by the Rules.The definition in S. 3 (4) of Act 8 of 1925 would be wholly irrelevant for determining whether the contract is a forward contract for purposes of R. 167, the decision of which question must depend entirely on the construction of the Rules.9. The relevant Rules are Nos. 359 to 363. Rule 359 provides that "contracts other than ready delivery contracts shall not be made or transacted within or without the ring." Rule 361 confers on the Board power to specify which securities shall be settled by the system of Clearance Sheets and which, by the process of Tickets. Rules 362 and 363 prescribe the modus operandi to be followed in effecting the settlement. It was with reference to these rules which under the contract notes were to be read as part of the contract, that the learned Judges held that the contracts were not ready delivery contract as defined in S. 3 (4) of Act 8 of 1925.But reading the above Rules with R. 359, there can be no doubt that the contract notes, Ex. A, would for the purpose of the Rules be ready delivery contracts. Indeed, the from of the contract notes , Ex. A, is the one provided under the Rules for ready delivery contracts, whereas Form A in Appendix H is, as already stated, for forward contracts.Thus, contracts which are regulated by Rr. 359 to 363 cannot be forward contracts contemplated by R.167, and they cannot be held to be void under that Rule.The error in the argument of the respondent is in mixing up two different provisions enacted by two different authorities and reading the one into the other. The Rules framed by the Association form a code complete in itself, and any question arising with reference to those Rules must be determined on their construction, and it would be a mistake to read into them the statutory provisions enacted in Act 8 of 1925.In this view, the contract notes, Ex. A, cannot be held to be void under R. 167.In the result, we must held, differing from the learned Judges of the Court below, that the arbitration proceedings are not incompetent and that the award made therein is not void on the ground that the contracts containing the agreement are void.10. The respondent contested the validity of the award on several other grounds.They were rejected by the City Civil Judge and in the view taken by the learned Judges of the High Court that the contract notes were void under S. 6 of Act 8 of 1925, they did not deal with them. Now that we have held that the contracts are not void, it is necessary that the appeal should be heard on those points.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]we are of opinion that the point is open to the appellant, and having heard counsel on both sides, we think that the appeal should succeed on thatquestion of sale or purchase would arise between the respondent and the seller or purchaser, as the case may be, with reference to the contract brought about by the appellant. But the relationship between the respondent and the appellant was one of principal and agent and not that of seller and purchaser.The contract of employment is no doubt connected, and intimately, with sales and purchases of securities; but it is not itself a contract of sale or purchase. It is collateral to it, and does not become ipso facto void, even if the contract of purchase and sale with which it is connected is void.It may be argued that if the contract note is only, intimation of a sale or purchase on behalf of the constituent, then it is not a contract of employment, and that in consequence, there is no agreement in writing for arbitration as required by the Arbitration Act.But it is settled law that to constitute an arbitration agreement in writing it is not necessary that it should be signed by the parties, and that it is sufficient if the terms are reduced to writing and the agreement of the parties thereto is established.Though the respondent alleged in her petition that she had not accepted the contract notes, Ex. A, she raised no contention based thereon either before the City Civil Judge or before the High Court, and even in this Court the position taken up by her counsel was that Ex. A constituted the sole repository of the contracts, and as they were void, there was no arbitration clause in force between the parties.We accordingly hold that the contract notes contained an agreement in writing to refer disputes arising out of the employment of the appellant as broker to arbitration, and that they fell outside the scope of S. 6 of Act 8 of 1925 that the arbitration proceedings are accordingly competent, and that the award made there, in is not open to objection on the ground that Ex. A iserror in the argument of the respondent is in mixing up two different provisions enacted by two different authorities and reading the one into the other. The Rules framed by the Association form a code complete in itself, and any question arising with reference to those Rules must be determined on their construction, and it would be a mistake to read into them the statutory provisions enacted in Act 8 of 1925.In this view, the contract notes, Ex. A, cannot be held to be void under R. 167.In the result, we must held, differing from the learned Judges of the Court below, that the arbitration proceedings are not incompetent and that the award made therein is not void on the ground that the contracts containing the agreement are void.10. The respondent contested the validity of the award on several other grounds.They were rejected by the City Civil Judge and in the view taken by the learned Judges of the High Court that the contract notes were void under S. 6 of Act 8 of 1925, they did not deal with them. Now that we have held that the contracts are not void, it is necessary that the appeal should be heard on those points.