Case ID: 1045

Judgment:
Appeal No. 264 of 1956. Appeal by special leave from the Judgment and Order dated June 29	 1954	 of the Bombay High Court in Appeal No. 127 of 1953. A. V. Viswanatha Sastri	 Hemendra Shah	 section N. Andley	 J. B. Dadachanji	 Rameshwar Nath and P. L. Vohra	 for	the Appellant. J. C. Bhatt	 C. J. Shah and Naunit Lal	 for the Respondent. 1960. November 30. The Judgment of the Court was delivered by SARKAR	 J. The appellant is a commission agent and pucca aratiya and has been acting as such for the respondent since November 7	 1951	 in the course of which various contracts were made between them in Greater Bombay. On February 26	 1952	 two of such contracts were outstanding	 one of which was in respect of groundnuts and was a forward contract. In March 1952	 disputes arose between the parties as to whether these contracts had been closed	 each side making a claim on the other on the basis of its own contention. Eventually	 on March 18	 1952	 the appellant referred the disputes to arbitration under the arbitration clause contained in the contracts. On October 7	 1952	 the arbitrators made one composite award for Rs. 22	529 15 9 against the respondent in respect of the said disputes. It is not very clear whether this award covered other disputes also. This award was duly filed in the Bombay City Civil 99 782 Court under the 	 for a judgment being passed on it. Thereafter	 on July 17	 1953	 the respondent made an application to the Bombay City Civil Court for setting aside the award contending that forward contracts in groundnuts were illegal as the making of such contracts was prohibited by the Oilseeds (Forward Contract Prohibition) Order	 1943	 issued under the Essential Supplies (Temporary Powers) Act	 1946	 and hence the arbitration clause con tained in the forward contract in groundnuts between the parties was null and void. It was said that the award based on that arbitration clause was therefore a nullity. The appellant 's answer to this contention was that the Essential Supplies (Temporary Powers) Act did not apply to Greater Bombay where forward contracts were governed by the Bombay Forward Contracts Control Act	 1947	 hereafter called the Bombay Act	 and as the contract in groundnuts had been made in terms of that Act	 it was legal	 and	 therefore	 the award in terms of the arbitration clause contained in it was a valid and enforceable award. The learned Principal Judge of the Bombay City Civil Court accepted the respondent 's contention and set aside the award. An appeal by the appellant to the High Court at Bombay against the judgment of the City Civil Court failed. The appellant has now come to this Court in further appeal. The only question in this appeal is whether the Essential Supplies (Temporary Powers) Act	 which was passed by the Central Legislature in 1946	 applied to Bombay? If it did	 then the Oilseeds (Forward Contract Prohibition) Order	 1943	 hereafter called	 the Oilseeds Order	 issued under it would make the contract in groundnuts illegal and no award could be made under the arbitration clause contained in it. This is not in dispute. Now	 the Oilseeds Order was first passed in 1943 under r. 83 of the Defence of India Rules. The Defence of India Rules ceased to be in force on September 30	 1946. In the meantime however	 as the situation had not quite returned to normal in spite of the termination of the war	 the British Parliament passed 783 an Act on March 26	 1946	 called the India (Central Government and Legislature) Act	 1946 (9 & 10 Geo. VI	 Ch. 39)	 hereafter called the British Act. Section 2 of this Act provided that the Central Legislature of India would have power to make laws with respect to various matters therein mentioned notwithstanding anything in the Government of India Act	 1935	 and that that power could be exercised during the period mentioned in section 4 and further that the laws so made to IV he extent they could not have been otherwise made	 would cease to have effect at the expiration of that period. The Governor General under the powers reserved in section 4 and subsequently	 the Constituent Assembly of India	 under the powers conferred on it under the Indian Independence Act	 1947	 extended the period mentioned in section 4 of the British Act from time to time and eventually up to March 31	 1951. It would be unprofitable for our purposes to refer to the various statutory provisions and orders under which this was done for	 the extension is not in dispute. Under the powers conferred by the British Act	 the Governor General promulgated the Essential Supplies (Temporary Powers) Ordinance	 1946	 which came into force on October 1	 1946. On November 19	 1946	 the Central Legislature under the same powers	 passe the Essential Supplies (Temporary Powers) Act	 1946	 hereafter called the Central Act	 repealing the Ordinance and substantially incorporating its terms. The Central Act originally provided that it would cease to have effect on the expiration of the period mentioned is section 4 of the British Act. As the life of the British Act was extended from time to time	 suitable amend ments were made in the Central Act extending its life also. Our Constitution came into force on January 26	 1950 and by virtue of article 372 the Central Act was continued as one of the existing laws. On August 16	 1950	 under powers conferred by article 369 of the Constitution	 Parliament passed the Essential Supplies (Temporary Powers) Amendment Act	 1950	 Act LII of 1950	 amending the Central Act in various respects and extending its life up to December 31	 1952. By another amendment made by Act LXV of 1952	 the 784 life of the Central Act was extended till January 26	 1955. Section 3(1) of the Central Act is in these terms: "The Central Government	 so far as it appears to it to be necessary or expedient for maintaining or increasing supplies of any essential commodity	 or for securing their equitable distribution and availability at fair prices	 may by notified order provide for regulating or prohibiting the production	 supply and distribution thereof	 and trade and commerce therein. " Section 2 of the Act provides that foodstuffs would be an essential commodity within the meaning of the Act and would include edible oilseeds. We have earlier stated that the Oilseeds Order was originally passed under the Defence of India Rules	 which expired on September 30	1946. The Ordinance of 1946 continued in force	 orders issued under the Defence of India Rules in so far as they were consistent with it and provided that such orders would be deemed to be orders made under it. Section 17(2) of the Central Act provided that an order deemed to be made under the Ordinance and in force immediately before its commencement would continue in force and be deemed to be an order made under it. As a result of the Ordinance and the Central Act replacing it and the extension of the life of the latter from time to time	 the Oilseeds Order so far as it related to edible oilseeds including groundnuts	 continued in force after the expiry of the Defence of India Rules till January 26	 1955. That Order	 as so continued	 prohibited the making of forward contracts	 that is to say	 contracts providing for delivery at a future date	 in respect of certain specified oilseeds including groundnuts. It is the respondent 's contention that it is because of this order	 read with the Central Act	 that the contract in groundnuts between the parties was illegal and therefore the award made under the arbitration clause contained in it was void. Now the British Act under which the Central Act was passed	 provided in sub sec. (4) of section 2 that	 "Sub section (2) of section 107 of the Government of India Act	 1935	 and sub section (2) of section 126 785 of that Act shall apply in relation to a law enacted by virtue of this section with respect to any matter being a matter with respect to which a Province has power to make laws as if that matter were a matter specified in Part 11 of the Concurrent Legislative List. " Section 107(2) of the Government of India Act	 1935	 laid down that	 "Where a Provincial law with respect to one of the matters enumerated in the Concurrent Legislative List contains any provision repugnantto the provisions of an earlier Federal lawthen if the Provincial law	 having been reserved for the consideration of the Governor Generalhas received the assent of the Governor Generalthe Provincial law shall in that Province prevail It would follow from these provisions that if a Provincial Act which had received the assent of the Governor General	 contained anything repugnant to a Central Act passed under the powers conferred by the British Act	 then in the Province concerned	 the Provincial Act would apply and not the Central Act. Now	 the Bombay Act which had been passed by the Provincial Legislature of Bombay in 1947	 came into operation in 1948. That Legislature had power to pass the Act and the Act had received the assent of the Governor General. At that time the Central Act deriving its force from the British Act	 was in	 operation. If	 therefore	 the Bombay Act was repugnant to the Central Act	 in Bombay	 the Bombay Act would apply and not the Central Act. This is not in dispute. The appellant contends that the Bombay Act is so repugnant and therefore the Central Act cannot render the forward contract in groundnuts made in	 Greater Bombay	 illegal and void. The question	 therefore	 is whether the Bombay Act	 contains any provision repugnant to the Central Act. The preamble of the Bombay Act states that it was enacted as it was thought expedient to regulate and control forward contracts and for certain other matters. Section 1 of this Act came into force at once and gave power to the Government to bring into force by notification the remaining sections of the Act in the 786 whole of the Province of Bombay or parts thereof on such date and in respect of such goods as might be specified. The Government of Bombay issued notifications under this section on December 19	 1950	 applying the remaining provisions of the Act to the area called Greater Bombay in respect of all varieties of oilseeds as from the said date. Section 8 of the Bombay Act provides as follows: section 8. (1) Every forward contract for the sale or purchase of	 or relating to	 any goods specified in the notification under sub section (3) of section I which is entered into	 made or to be performed in any notified area shall be illegal if it is not entered into	 made or to be performed (a)In accordance with such bye laws	 made under section 6 or 7 relating to the entering into	 making or performance of such contracts	 as may be specified in the bye laws	 or (b) (i) between members of a recognised association	 (ii) through a member of a recognised association	 or (iii) with a member of a recognised association	 provided that such member has previously secured the written authority or consent	 which shall be in writing if the bye laws so provide	 of the person entering into or making the contract	 and no claim of any description in respect of such contract shall be entertained in any civil court. (2) Any person entering into or making such illegal contract shall	 on conviction	 be punishable with imprisonment for a term which may extend to six months or with fine or with both. "Recognised association" is defined in the Bombay Act as an association recognised by the Provincial Government and on December 19	 1950	 the Bombay Oilseeds Exchange Limited was recognised as such an association by the Government of Bombay. The appellant is a member of this association. The contracts between the parties were all expressly made subject to the rules and regulations of this Association. The case before us has proceeded on the basis that the impugned contract in groundnut had been made in compliance 787 with the requirements of section 8 and there is no finding to the contrary by the Courts below. We have hence to proceed on the same basis. The appellant contends that section 8 of the Bombay Act and section 3 of the Central Act are repugnant to each other. Now section 8 of the Bombay Act	 it will	 be noticed	 does not purport to make any contract legal. Its only effect is to render forward contracts in all varieties of oilseeds illegal if not made in compliance with its terms. The learned Advocate for the appellant says that the effect of section 8 was to render a forward contract in all oilseeds made in terms of it	 legal and	 therefore	 a repugnancy arose between its terms and the terms of the Oilseeds Order issued under the Central Act which made forward contracts in edible oilseeds illegal. The learned Advocate referred to various other provisions of the Bombay Act and the bye laws of the Association made in terms of the Act to show that the Bombay Act was intended to cover the entire field of forward contracts with respect to all varieties of oilseeds and was therefore intended to oust the operation of the Central Act in Greater Bombay with regard to the forward contracts covered by the former. It does not seem to us that a reference to the other provisions in the Bombay Act or to the bye laws	 is relevant in deciding the question. If the effect of section 8 of the Bombay Act was not to render forward contracts made in terms of it legal	 then no question of repugnancy with the Central Act can arise whatever may be the scope of the Bombay Act and the provisions in the bye laws. Therefore	 it seems to us that the question is whether section 8 of the Bombay Act by its terms makes any forward contract legal. Section 3 of the Central Act	 as already seen	 gives power to the Central Government to prohibit trade and commerce in oilseeds. That Act	 therefore	 enable& the Central Government to make forward contracts in essential commodities as defined in it	 illegal. That is what the Central Government did by the Oilseeds Order in so far as edible oilseeds are concerned. We find nothing in section 8 from which it can be said 788 that it rendered any contract legal. Its only intent and effect is to declare certain forward contracts illegal. We think that the matter was very correctly put by Chagla	 C. J.	 who delivered the judgment of the High Court. He said	 "All that Sec. 8 does is to declare that forward contracts will be illegal unless they comply with the procedure laid down in Sec. 8. But it is one thing to declare a certain contract illegal. It is entirely another thing to declare an illegal contract legal. Sec. 8 does not even make an attempt to declare that forward contracts declared illegal by the Central legislation shall be legal if they comply with the technicalities laid down in Sec. 8. The assumption underlying Sec. 8	 it seems to us	 is that forward contracts which the Legislature is dealing with are legal contracts	 but even if they are legal they are declared to be illegal unless they are performed or made or entered into in the manner laid down in Sec. 8". With these observations we fully agree. In regard to the contention that section 8 of the Bombay Act necessarily implies that contracts made in terms of it would be legal	 it seems to us that there is no such necessity indicated in the Act. The Act clearly intends only to create an illegality	 that is to say	 as Chagla	 C. J. said	 it takes a legal contract and imposes on it certain conditions and makes it illegal if those conditions are not fulfilled. If a contract is already illegal	 there is no scope for applying the Bombay Act. Furthermore	 the Bombay Act deals with all kinds of goods. Sub section (4) of section 2 of this Act defines goods as any kind of movable property including securities but not including money or actionable claims. Now the Central Act only applies to essential commodities as defined in it. Therefore	 there would be many contracts to which the Central Act would not apply and such contracts may be rendered illegal by the Bombay Act if they come within its scope and are made in disregard of the conditions laid down in section 8. We	 therefore	 come to the conclusion that there is no repugnancy between the Bombay Act and the Central Act. It follows that there is no scope for 789 applying the provisions of section 107(2) of the Government of India Act	 1935. That would be the position in 1948	 when the Bombay Act came into force and the Central Act was already in existence. Both the Acts would then be applying to Greater Bombay as there is no inconsistency between them. Article 372 of the Constitution continued both these Acts after the Constitution came into force and there is nothing in the Constitution which provides that any one of two existing laws	 both of which had applied up to the coming into force of the Constitution	 would apply to the exclusion of the other. It follows that in 1951 or 1952	 when the contract in groundnuts which it is not disputed	 was a forward contract within the meaning of both the Acts was made	 both the Acts applied to it. The Constitution had not affected such application. That being the position	 the contract in groundnuts must be held to be illegal under the Central Act which clearly prohibited the making of it. The Bombay Act could not make it legal for	 as we have said	 it was not intended to make any contract legal. It would follow that the arbitration clause contained in that contract was of no effect. It has therefore to be held that the award made under that arbitration clause is a nullity and has been rightly set aside. The award	 it will have been noticed	 was however in respect of disputes under several contracts	 one of which we have found to be void. But as the award was one and is not severable in respect of the different disputes covered by it	 some of which may have been legally and validly referred	 the whole award was rightly set aside. The appeal	 therefore	 fails and is dismissed with costs. Appeal dismissed. 100 619 of the Act. These rules are called the Bihar Preservation and Improvement of Animals Rules	 1960. The provisions of r. 3 have also been impugned by the. petitioners by an amendment petition filed by them. Rule 3 so far as it is material. for our purpose is in these terms: "3(1). For the purpose of section 3 of the Act	 the Veterinary Officer and the Chairman or Chief Officer	 as the case may be	 shall be the prescribed authority: Provided that where there is no Chairman or Chief Officer in respect of any area	 the Veterinary Officer shall be the sole prescribed authority. (2) Where the authority prescribed under subrule (1) or sub rule (5) refuses to issue a certificate under the proviso to section 3	 it shall record the reasons for the refusal and no such refusal shall be made unless the person 'applying for the certificate has been given a reasonable opportunity of being heard. (3). . . . . . . . . . (4)A bull	 bullock or she buffalo in respect of which a certificate has been issued under section 3 shall not be slaughtered at any place other than the place indicated in the certificate and it shall be slaughtered within 20 days of the date of the receipt of the certificate by the person in whose favour it is issued. (5) In case of difference of opinion between the Veterinary Officer and the Chairman or Chief Officer	 the matter shall be referred to the Sub divisional Animal Husbandry Officer or the District Animal Husbandry Officer	 as the case may be	 and the certificate shall be issued or refused according to the decision of the Sub divisional Animal Husbandry Officer or the District Animal Husbandry Officer	 as the case may be.

Summary:
Various contracts for sale of goods had been made between the parties in Bombay each of which contained an arbitration clause. Disputes having arisen in March	 1952	 in respect of these contracts	 they were referred to arbitration and a composite award was made on October 7	 1952	 against the respondent. One of these disputes had arisen out of a forward contract in groundnuts. The respondent applied to have the award set aside on the ground that the forward contract in groundnuts was illegal as such a contract was prohibited by the Oilseeds (Forward Contract Prohibition) Order	 1943	 issued under the Essential Supplies (Temporary Powers) Act	 1946	 passed by the Central Legislature. The appellant contended that the Essential Supplies (Temporary Powers) Act	 1946	 was repugnant to the Bombay Forward Contracts Control Act	 1947	 passed by the Provincial Legislature of Bombay which had received the assent of the Governor General of India and therefore under section 107(2) of the Government of India Act	 1935	 which applied	 the Bombay Act prevailed in Bombay in preference to the Central Act and under the Bombay Act Forward Contract in groundnut was valid. The High Court accepted the contention of the respondent and set aside the award. Section 8 of the Bombay Act provided: "Every forward con tract for the sale or purchase of	 or relating to	 any goods specified in the notification under sub section (3) of section 1 which is entered into	 made or to be performed in any notified area shall be illegal if it is not entered into	 made or to be performed" and thereafter	 set out the manner in which and the persons between whom such contracts could be made and also made punishable a person making a contract declared illegal. Section 3 of the Central Act provided	 "The Central Govern ment may by notified order provide for prohibiting trade and commerce" in any essential commodity. Under this section the Oilseeds (Forward Contract Prohibition) Order was passed prohibiting forward contracts in groundnuts	 which was one of the essential commodities specified in the Central Act. Held	 The Bombay Act did not make any contract legal. Its only effect was to render certain forward contracts illegal if not 781 made in compliance with its terms while the Central Act made the contracts to which it applied	 illegal. There was	 therefore	 no repugnancy between the Bombay Act and the Central Act and both of them applied to Bombay. Article 372 of the Constitution continued both these Acts	 and so there is no provision in the Constitution under which any one of them may be said to apply to the exclusion of the other. A composite award in respect of more than one dispute which is not severable	 must be set aside as a whole if any of the disputes had been illegally referred.