Judgment Case ID: 1736

Judgment:
Appeal No. 73 of 1961. Appeal from the judgment and order dated January 23	 1961	 of the Bombay High Court	 in Appeal No. 5 of 1960. C. K. Daphtary	 Solicitor General of India	 Purshottam Tricumdas	 F. section Nariman	 Suresh D. Parekh and I. N. Shroff	 for the appellants. M. K. Nambiar	 K. section Cooper	 Anil Dewan	 RaMesh A. Shroff	 section N. Andley	 J. B. Dadachanji	 Rameshwar Nath and P. L. Vohra	 for the respondents. February 27. The Judgment of the Court was delivered by HIDAYATULLAH	 J. This is an appeal (with certificate) by Messrs. Dhanrajamal Gobindram against a judgment of the Divisional Bench of the High Court of Bombay	 by which a petition under section 20 of the Indian was held to be maintainable and the decision of the learned Judge (Original Side) who held otherwise	 was reversed. The respondents are Messrs. Shamji Kalidas & Co. (a registered firm)	 who were the petitioners in the High Court. The facts of the case are as follows: On October 24	 1957	 Messrs. Dhanrajamal Gobindram (referred to as buyers	 hereafter) entered into an agreement with Messrs. Shamji Kalidas & Co. (referred to as sellers	 hereafter)	 for purchase of 500 bales of African raw cotton. The contract was in the form of a letter 1023 written by the sellers and confirmed by the buyers. The material portions of the letter	 which bears No. SK/Bom/13/2014 and was stamped as an agreement	 ' are as follows: "We confirm having sold to you African raw cotton on the following terms and conditions subject to the usual Force Majeure Clause: Description: ARBP 52 F. A. Q. Crop/58. Quality : 500 (Five Hundred) bales. Price : at Rs. 1	401 nett per candy CIF Bombay. Payment : Against shipping documents in Bombay. Packing : 420 lbs. approximately per bale. Shipment : February/March 1958. Remarks: The terms and conditions on the reverse form part of the contract. This contract is subject to the Bye laws of East India Cotton Association	 Ltd.	 Bombay	 other than the bye law 35 for arbitration on Quality in case of East African cotton. Terms and Conditions. The shipment is subject to any cause beyond seller 's or seller 's shipper 's control and is also subject to availability of freight. This contract is subject to the jurisdiction of the High Court of Bombay. It will be the duty of the buyers to obtain the import licence and to communicate the number thereof to the sellers immediately on the same being obtained but in any event	 not later than 20th February	 1958	 and in the event of their failure to do so for any reasons whatsoever including the reason that the Government of India may not allow the imports of the contracted goods	 the sellers shall be entitled at their discretion either to carry over the goods	 in which event the buyers shall pay to the seller all carry over charges in addition to the contracted price or to call upon the buyers to pay for the contracted goods and take immediate delivery thereof in. British East Africa and upon 1024 the buyers failing to do so	 to sell the contracted goods at Kampala or Mombasa at the rates prevalent there in convenient lots and as and when it may be practicable to do so at the risk and account of the buyers and to claim from them any deficit that arise between the contracted price and such resale price and also all expense incidental thereto. Even if the Government of India may announce the import policy of the contracted goods in such manner that only the consumers would be entitled to obtain the licences	 it will be the duty of the buyers to see that necessary import licences for the contracted goods are obtained in the consumers ' name or in the joint names of themselves and those of the consumers the intention being that in all eventualities it is the duty of the buyers to obtain licences under any policy that may be followed by the Government of India for the import of the contracted goods and to communicate the number thereof to the sellers within the time as specified hereinabove and on the buyer 's failure to do so all the eventualities contemplated under clause 6 shall operate. " By a letter dated November 30	 1957	 the contract was later amended by the parties as follows : " With reference to the above mentioned contracts we hereby confirm that	 if necessary	 we shall carry over the contracted goods for two months	 namely	 March and April and you will pay as the carry over charges for the same. The interest payable under such carry over charges will be at the rate prevalent in Mombasa. The other terms and conditions remain unaltered. " The contract was not performed. The sellers wrote as many as five letters between March 1	 1958	 and May 26	 1958	 before they received a reply from the buyers dated June 3	 1958. By that time	 the sellers had carried forward the contract	 and also invoked their right of resale after giving notice	 and claimed Rs. 34	103. 15 nP. for which a debit note had been issued. This note was returned by the buyers with a letter of June 3	 1958	 stating that the contract was 1025 void and/or illegal"	 that they were not obliged to perform it	 that there was no right of any sale on their.	 account and/or on their behalf	 and that the alleged" sale was not binding upon them. [exhibit " D " (Colly) No. 6.] The sellers then invoked the arbitration clause of the agreement and Bye law 38 A of the Bye laws of the East India Cotton Association	 Ltd.	 Bombay	 and moved the Bombay High Court	 on the Original Side	 under section 20 of the Indian 	 requesting that the agreement be filed in Court and the dispute referred to arbitration. The buyers appeared	 and resisted the petition on grounds which they set forth in affidavits filed from time to time. By their first affidavit dated July 31	 1958	 the buyers contended that cls. 6 and 7	 quoted above	 were unlawful	 as the liability created under them amounted to a contravention " of the import policy of Government of India " and the Foreign Exchange Regulation Act	 1947	 and the Rules made thereunder. They contended that	 in view of the invalidity of the contract as a whole	 the arbitration clause in the agreement was not binding	 and that the agreement could not be filed. In the second affidavit which was filed on February 4	 1959	 they added the reason that the words " subject to the usual Force Majeure Clause " were vague and uncertain	 and made the contract ' void ab initio	 as there was no consensus ad item between the parties. They contended that the con. tract being void	 the arbitration clause was also void. By yet another affidavit filed on February 27	 1959	 they averred that the letter dated November 30	 1957	 was void	 being in contravention of the Import Trade Control Act and the Foreign Exchange Regulation Act and the Rules made under the two Acts	 inasmuch as the consideration was one forbidden by law and was likely to defeat the provisions of law. They also stated that the words " if necessary " in that letter rendered the contract void ab initio for vagueness and uncertainty. The case was heard by K. T. Desai	 J. (as he then war	). On March 3	 1959	 the learned Judge dismissed 1026 the petition as not maintainable on the ground that 	the dispute was about the legality or validity of the contract including the agreement about arbitration	 and that such a dispute could only be considered under sections 32 and 33 of the by the Court and not by the arbitrator in a reference under section 20 of the Act. He declined to consider the question under the former sections	 because the petition had not asked for that relief	 observing that if by a proper petition the question were raised	 it would be decided. Against the order of the learned Judge (0. section)	 an appeal was filed by the sellers. This appeal was heard by Chainani	 C. J. and section T. Desai	 J. on April 28	 1959. The learned Judges held that a claim was made by the sellers and was denied by the buyers; that there was thus a dispute arising out of or in relation to a contract as contemplated by Bye law 38 A; that in showing cause against the petition under section 20	 the buyers had averred that the contract was illegal and void; and that such a question could be decided by the Court before making the reference. The learned Judges pointed out that a petition under sections 32 and 33 of the Indian questioning the existence or validity of an arbitration agreement was not to be expected from one making a claim under a contract	 that the plea was always likely to be raised by one resisting the petition	 and that when such a plea was raised	 the Court must decide it	 even though the proceedings be under section 20 of the Act for making a reference. The case was	 therefore	 remanded with the following direction: " As the respondents have challenged the validity of this agreement	 the Court will have to decide this question before passing further orders in the matter. Accordingly we set aside the order passed by Mr. Justice K. T. Desai	 dismissing the petition filed by the petitioners	 and remand the matter to the trial court for deciding the objections	 raised by the respondent under sub section (3) of section 20 of the Act	 to the arbitration agreement being filed in Court	 and then disposing of the matter in accordance with law." 1027 When the case went back for retrial	 the buyers filed their fourth affidavit on November 16	 1959. They stated in that affidavit that Bye law 38 A was a statutory Bye law of the East India Cotton Association	 Ltd.	 Bombay	 a recognised Institution under the Forward Contracts Regulation Act	 No. 74 of 1952	 and that section 46 of the was ap plicable. They contended that inasmuch as the Bye laws of the Association prescribed a different machinery inconsistent with and repugnant to section 20 of the 	 the latter section was inapplicable	 and that the petition was incompetent. By his order dated November 26 and 27	1959	 K. T. Desai	 J. hold that the petition did not disclose sufficient materials	 and that the sellers were not entitled to have the agreement of reference filed	 or to have an order of reference made. Though be held that the Bye laws of the East India Cotton Association	 Ltd. were statutory	 and that sections 46 and 47 of the applied	 he was of opinion that section 20 could not be invoked	 because no action under sub section (4) of a. 20 could be taken. The reason given by the learned Judge was that under that sub section the Court had to appoint an arbitrator	 if the parties failed to agree	 and that sub section was not applicable	 because the machinery of Bye law 38 A left no power of action to the Court. He also felt that there was no averment in the petition that the parties had not agreed. On the rest of the points raised by the buyers in their affidavits	 the learned Judge held against them. He held that	 in view of sections 21(2) and 21(3) of the Foreign Exchange Regulation Act	 there was no infringement of that Act by the agreement entered into	 though he expressed a doubt if the words " legal proceedings " in section 21(3) were wide enough to include an arbitration. He also held that cl. 7 of the conditions under which the contract was to be performed was	 at least in part and under certain circumstances	 not a contravention of the Import and Export Control Act	 1947	 or the Import Trade Control Order issued Under sections 3 and 4 A of that Act	 and thus not wholly void. He held lastly that the contract was not void for vagueness or 1028 uncertainty either on account of the reference to " the usual Force Majeure Clause "	 or because of the words if necessary " in the letter of November 30	 1957. The sellers appealed against the dismissal of the petition	 and the buyers cross objected against the adverse findings and the disallowance of costs. The appeal was heard by Tarkunde and Chitale	 JJ.	 and by separate but concurring judgments	 the appeal was allowed and the cross objection dismissed	 and the buyers were ordered to pay costs throughout. The Divisional Bench agreed with K. T. Desai	 J. on all the points decided by him against the buyers. They left open the question whether " legal proceedings " in section 21(3) of the Foreign Exchange Regulation Act were wide enough to include an arbitration for the decision of the arbitrators to be appointed	 and addressing themselves to the question raised about section 20	 held that the petition was maintainable. They were of opinion that the Court could order the arbitration agreement to be filed and also to refer the dispute to arbitrators to be chosen in accordance with Bye law 38 A	 though they felt that if the latter action could not be taken	 at least the first could be	 because the procedural part could not destroy the power conferred to file the agreement. In this appeal	 all the arguments which had failed before the High Court were urged before us. Shortly stated	 they are: that the contract was void (a) for illegality and (b) for uncertainty and vagueness on two grounds; that the petition under section 20 of the Indian was incompetent	 as that section was inapplicable; and that the law governing the parties was not the Indian law but the law of British East Africa. We shall now deal with these contentions. The first contention is that cl. 7 of the agreement involves a breach of the Foreign Exchange Regulation Act. Reliance is placed upon section 5 of the Act	 which reads as follows: " (5) Restrictions on payment8. (1) Save as may be provided in and in accordance with any general or special exemption from the provisions of this subsection which may be granted conditionally or 1029 unconditionally by the Reserve Bank	 no person in	 or resident in	 British India shall (e) make any payment to or for the credit of any person as consideration for or in association with(1) the receipt by any person of a payment or the acquisition by any person of property outside India; (ii) the creation or transfer in favour of any person of a right whether actual or contingent to receive a payment or acquire property outside India: " It is contended that the agreement envisaged (a) payments for goods in Africa against shipping documents	 (b) payment in Africa of carrying over charges	 and (c) in the event of resale	 payment of deficit also in Africa. It is also contended that the two clauses (6 and 7) contemplate acquisition of property in Africa. The clauses	 it is submitted	 also involved acquisition of foreign exchange	 if the goods were resold in Africa and credit for the price was given to the buyers. This	 it is argued	 was a breach of section 5	 unless there was a general or special exemption granted by the Reserve Bank in connection with this contract	 and that no such exemption was in existence when the contract was made. In this connection	 section 21 of the Foreign Exchange Regulation Act may be read. It provides: " 21. Contracts in evasion of this Act. (1) No person shall enter into any contract or agreement which would directly or indirectly evade or avoid in any way the operation of any provision of this Act or of any rule	 direction or order made thereunder. (2) Any provision of	 or having effect under	 this Act that a thing shall not be done without the permission of the Central Government or the Reserve Bank	 shall not render invalid any agreement by any person to do that thing	 if it is a term of the agreement that thing shall not be done unless permission is granted by the Central Government or the Reserve Bank	 as the case may be; and it shall be an implied term of every contract governed 1030 by the law of any part of British India that anything agreed to be done by any term of that contract which is prohibited to be done by or under any of the provisions of this Act except. with the permission of the Central Government or the Reserve Bank	 shall not be done unless such permission is granted. (3) Neither the provisions of this Act nor any term (whether expressed or implied) contained in any contract that anything for which the permission of the Central Government or the Reserve Bank is required by the said provisions shall not be done without that permission	 shall prevent legal proceedings being brought in British India to recover any sum which	 apart from the said provisions and any such term	 would be due	 whether as a debt	 damages or otherwise	 but (a) the said provisions shall apply to sums required to be paid by any judgment or order of any Court as they apply in relation to other sums; and (b) no steps shall be taken for the purpose of enforcing any judgment or order for the payment of any sum to which the said provisions apply except as respects so much thereof as the Central Government or the Reserve Bank	 as the case May be	 may permit to be paid; and (c) for the purpose of considering whether or not to grant such permission	 the Central Government or the Reserve Bank	 as the case may be	 may require the person entitled to the benefit of the judgment or order and the debtor under the judgment or order	 to produce such documents and to give such information as may be specified in the requirement. " No doubt	 sub section (1) prohibits contracts in contravention or evasion	 directly or indirectly	 of the Foreign Exchange Regulation Act	 and if there was nothing more	 then the argument would be understandable. But	 sub section (2) provides that the condition that a thing shall not be done without the permission of the Reserve Bank shall not render an agreement 1031 invalid	 if it is a term of the agreement that the thing shall not be done unless permission is granted by the Central Government or the Reserve Bank and further that it shall be an implied term of every contract governed by the law of any part of India that anything agreed to be done by any term of that contract	 which cannot be done except with the permission of the Reserve Bank	 shall not be done	 unless permission is granted. Sub section (3) allows legal proceedings to be brought to recover sum due as a debt	 damages or otherwise	 but no steps shall be taken to enforce the judgment	 etc.	 except to the extent permitted by the Reserve Bank. The effect of these provisions is to prevent the very thing which is claimed here	 namely	 that the Foreign Exchange Regulation Act arms persons against performance of their contracts by setting up the shield of illegality. An implied term is engrafted upon the contract of parties by the second part of sub section (2)	 and by sub section (3)	 the responsibility of obtaining the permission of the Reserve Bank before enforcing judgment	 decree or order of Court	 is transferred to the decree holder. The section is perfectly plain	 though perhaps it might have been worded better for which a model existed in England. It is contended that section 21 uses the word " permission "	 while section 5 speaks of an exemption	 and that sections 21(2) and 21(3) do not cover the prohibition in a. 5. The Foreign Exchange Regulation Act	 no doubt	 uses diverse words like	 " authorise "	 " exempt " and " permission " in different parts. The word " exempt " shows that a person is put beyond the application of law	 while " permission " shows that he is granted leave to act in a particular way. But the word SC permission " is a word of wide import. " Permission " in this section means only leave to do some act which but for the leave would be illegal. In this sense	 exemption is just one way of giving leave. If one went only by the word and searched for those sections where the word " permission " is expressly used	 sections 21(2) and (3) are likely to prove a dead letter. This could not have been intended	 and the very 1032 elaborate provisions in those sub sections show that those matters were contemplated which are the subject of prohibition in section 5. In our opinion	 the argument is without foundation. The contention	 that on resale the price would have accrued to the buyers in the first instance	 as the sellers would be acting as the agents of the buyers	 is also incorrect. It has been rightly pointed out by K. T. Desai	 J. that the right of resale given by sections 54(2) and (4) of the Indian Sale of Goods Act is exercised by the seller for himself and not as an agent of the buyer	 when the latter is given a notice of sale. This is indeed clear from the fact that the buyer is not entitled to the profit on resale in that contingency	 though liable for damages. The position is different when no notice is so sent. Then the profits go to the buyer. Perhaps	 in that event it may be possible to say that the seller acted as an agent. But	 in the case of resale with prior notice	 there is no payment to the buyer and no contravention of the Foreign Exchange Regulation Act. The contention that the contract involved an actual or	 at least	 a contingent right to or acquisition of property abroad is not correct. Even if it were so	 the contract is saved by section 21	 as already explained. In our opinion	 the contract was not void for illegality. The agreement is said to be void because of vagueness and uncertainty arising from the use of the phrase " subject to the usual force majeure clause ". The argument is that there was no consensus ad idem	 and that the parties had not specified which force majeure clause they had in mind. We were taken through the Encyclopaedia of Forms and Precedents and shown a number of force majeure clauses	 which were different. We were also taken through a number of rulings	 in which the expression force majeure " had been expounded	 to show that	 there is no consistent or definite meaning. The contention thus is that there being no consensus ad idem	 the contract must fail for vagueness or uncertainty. The argument	 on the other side	 is that this may be regarded as a surplusage	 and	 if meaningless	 ignored. It is 1033 contended by the respondents that the addition of the word " usual" shows that there was some clause which used to be included in such agreements. The ' respondents also refer to section 29 of the Indian Contract Act	 which provides: "Agreements	 the meaning of which is not certain	 or capable of being made certain	 are void	 " and emphasise the words " capable of being made certain "	 and contend that the clause was capable of being made certain	 and ex facie	 the agreement was not void. McCardie J. in Lebeaupin vs Crispin (1) has given an account of what is meant by "force majeure " with reference to its history. The expression "force majeure " is not a mere French version of the Latin expression" Vis major ". It is undoubtedly a term of wider import. Difficulties have arisen in the past as to what could legitimately be included in "force majeure ". Judges have agreed that strikes	 break down of machinery	 which	 though normally not included in" Vis Major" are included in "force majeure ". An analysis of rulings on the subject into which it is not necessary in this case to go	 shows that where reference is made to "force majeure "	 the intention is to save the performing party from the consequences of anything over which he has no control. This is the widest meaning that can be given to " force majeure "	 and even if this be the meaning	 it is obvious that the condition about "force majeure	 " in the agreement was not vague. The use of the word " usual " makes all the difference	 and the meaning of the condition may be made certain by evidence about a force majeure clause	 which was in contemplation of parties. Learned counsel for the appellants relies strongly on a	 decision of McNair	 J. in British Industries vs Patley Pressings(2). There	 the expression used was "subject to force majeure conditions ". The learned Judge held that by conditions " was meant. clauses and not contingencies or circumstances	 and that there being a variety of force majeure clauses in the trade	 there (1) (2) 1034 was no concluded agreement. The: case is distinguish. able	 because the reference to force majeure clauses was left at large. The addition of the word " usual " makes it clear that here some specific clause was in the minds of the parties. Learned counsel also relies upon a decision of the House of Lords in Scammell (G.) and Nephew Ltd. vs Ouston (H.C. and J.G.) (1)	 where the reference to " on hire purchase terms" was held to be too vague to constitute a concluded contract. It will appear from the decision of the House of Lords that the clause was held to be vague	 because no precise meaning could be attributed to it	 there being a variety of hire purchase clauses. The use of the word "usual" here	 enables evidence to be led to make certain which clause was	 in fact	 meant. The case of the House of	 Lords does not	 therefore	 apply. Both the cases to which we have referred were decided after parties had entered on evidence	 which is not the case here. Our case is more analogous to the decision referred to in Bishop & Baxter Ld. vs Anglo Estern Trading & Industrial Co. Ld. (2)	 namely	 Shamrock section section Co. vs	 Storey (3). In speaking of the condition there	 Lord Goddard observed as follows: " Abbreviated references in a commercial instrument are	 in spite of brevity	 often self explanatory or susceptible of definite application in the light of the circumstances	 as	 for instance	 where the reference is to a term	 clause	 or document of a wellknown import like c.i.f. or which prevails in common use in a particular place of performance as may be indicated by the addition of the epithet 'usual ' : see Shamrock section section Co. vs Storey (a)	 where 'usual colliery guarantee ' was referred to in a charter party in order to define loading obligations. " The addition of the word " usual " refers to something which is invariably to be found in contracts of a particular type. Commercial documents are sometimes expressed in language which does not	 on its face	 bear a clear meaning. The effort of Courts is to give a meaning	 if possible. This was laid down by the (1) (2) (3) 	 1035 House of Lords in Hillas & CO. vs Arcos Ltd. 1	 and the observations of Lord Wright have become classic	 and have been quoted with approval both by the Judicial Committee and the House of Lords ever since. The latest case of the House of Lords is Adamastos Shipping Co. Ltd. vs Anglo Saxon Petroleum Co. Ltd.(2). There	 the clause was " This bill of lading "	 whereas the document to which it referred was a charter party. Viscount Simonds summarised all the rules applicable to construction of commercial documents	 and laid down that effort should always be made to construe commercial agreements broadly and one must not be astute to find defects in them	 or reject them as meaningless. Applying these tests to the present case and in the light of the provisions of section 29 of the Indian Contract Act	 it is clear that the clause impugned is capable of being made certain and definite by proof that between the parties or in the trade or in dealings with parties in British East Africa	 there was invariably included a force majeure clause of a particular kind. In 'our opinion	 the contract was not void for vagueness or uncertainty by reason of the reference in the terms stated	 to the force majeure clause. Mr. Daphtary posed the question as to on whom was the burden of proving the usual force majeure clause. In our opinion if the agreement is not void for uncertainty	 that question would be a matter for the decision of the arbitrators. It is too early to say by what evidence and by whom the usual force	 majeure clause must be established. The next ground on which it is said that the agreement was void for uncertainty has reference to the employment of the words " if necessary " in the letter of November	 30	 1957. The effect of that letter is to make an alteration in cl. 6 of the agreement	 which has been quoted already. Under that clause	 the buyers were to obtain the import licence and to communicate the number thereof to the sellers not later than February 20	 1958	 and in the event of their failure to do so for any reason whatsoever	 the sellers (1) ; (2) 	 153. 132 1036 were entitled "at their discretion " either to carry over the goods or to ask the buyers to pay for the contracted goods and take delivery in British East Africa. By that letter	 the sellers confirmed that " if necessary " they would carry over the contracted goods for two months	 namely	 March and April	 subject to payment of charges. It is contended that the words " if necessary " are entirely vague and do not show	 necessary for whom	 when and why. In our opinion	 this argument has no force whatever. Under cl. 6	 the sellers had an absolute discretion either to carry over the goods or to insist on delivery being taken. By this letter	 they have said that	 if necessary	 that is to say. if the buyers find it difficult to supply the number of the import licence	 the contract would be carried over to March and April. By this amendment	 the sellers surrendered to a certain extent their absolute discretion. The clause means that the contract was not extended to March and April	 but that the sellers would extend it to that period	. if occasion demanded. Since both the parties agreed to this letter and the buyers confirmed it	 it cannot be said that there was no consensus ad idem	 or that the whole agreement is void for uncertainty. We shall now consider the next argument	 which was very earnestly urged	 before us. It is that section 20 of the cannot be made applicable to this case at all. We have already quoted extracts from the agreement which include the clause by which the Bye laws of the East India Cotton Association Ltd.	 Bombay	 were applied to this contract	 except Bye law 35	which deals with arbitration on quality in case of East African cotton. Bye law 1(B) relates to East African cotton	 and it says that Bye laws 1 to 46 inclusive (with certain exceptions) shall apply to contracts in respect of East African cotton. It was conceded before the High Court and also before us that the Bye laws are statutory. The buyers were members of the Association but not the sellers; but the Bye laws on arbitration	 with which we are concerned	 include arbitrations between a member and a 1037 non member. We are concerned directly with Bye law 38 A. Bye law 38 A in its opening portion	 reads: All unpaid claims	 whether admitted or not	 and all disputes (other than those relating to quality) arising out of or in relation to contracts (whether forward or ready and whether between members or between a	 member and a non member) made subject to these Bye laws shall be referred to the arbitration of two disinterested persons one to be chosen by each party. The arbitrators shall have power to appoint an umpire and shall do so if and when they differ as to their award. " Then follow certain provisions	 which were stressed but which need not be quoted in extension Shortly stated	 they are that the arbitrators must make their award in 15 days	 unless time be extended by the Chairman. The umpire is to be appointed within 15 days or such extended period as may be fixed by the Chairman and the umpire is to make his award within 10 days	 unless time be extended by the Chairman. In case of disagreement or failure of a party to appoint an arbitrator	 the Chairman may appoint an arbitrator	 and similarly the Chairman is to appoint the umpire and he may even appoint himself. Other powers are conferred on the Chairman	 who is the Chairman of the Board of Directors of the East India Cotton Association Ltd. The contention is that arbitrations under the 	 like those under Sch. 11 of the Code of Civil Procedure	 are of three kinds described by Lord Macnaghten in Ghulam Jilani vs Muhammad Hassan (1)	 and that this belongs to the second category there described	 in which " all further proceedings are under the supervision of the Court ". It is argued that by the application of the Bye laws	 the Court is left no powers under section 20 which is being invoked	 and that section 20 cannot thus apply. Section 20 of the 	 in so far as it is material to this point	 is as follows: " 20. Application to file in Court arbitration agreement. (1) Where any persons have entered into an (1) (1901) L.R. 29 I.A. 51	 56	 57. 1038 arbitration agreement before the	 institution of any suit with respect to the subject matter of the agreement or any part of it	 and where a difference has arisen to which the agreement applies	 they or any of them	 instead of proceeding under Chapter II	 may apply to a Court having jurisdiction in the matter to which the agreement relates	 that the agreement be filed in Court. (3) On such application being made	 the Court shall direct notice thereof to be given to all parties to the agreement other than the applicants	 requiring them to show cause within the time specified in the notice why the agreement should not be filed. (4) Where no sufficient cause is shown	 the Court shall order the agreement to be filed and shall make an order of reference to the arbitrator appointed by the parties	 whether in the agreement or otherwise	 or where the parties cannot agree upon an arbitrator	 to an arbitrator appointed by the Court. (5) Thereafter the arbitration shall proceed in accordance with	 and shall be governed by	 the other provisions of this Act so far as they can be made applicable. " The sellers rely upon cl. (5)	 which enjoins the application of the provisions of the 	 so far as they can be made applicable. Reference is then made to provisions of Chap. II and the Schedule of the Act laying down the powers of the Court	 and they are contrasted with the provisions of the Bye. laws to show that if the latter prevail	 no residuum of power is left to the Court	 and that after filing the agreement	 the Court must abdicate in favour of the Chairman and the Act	 in terms	 ceases to apply. Reference is also made to section 47 of the 	 which provides: "Subject to the provisions of section 46	 and save in so far as is otherwise provided by any law for the time being in force	 the provisions of this Act shall apply to all arbitrations and to all proceedings thereunder " ' (Proviso omitted) 1039 The opening words of section 47 takes us to a. 46	 which may be read at this stage. It provides: "The provisions of this Act	 except subsection (1) of section 6 and sections 7	 12	 36 and 37	 shall apply to every arbitration under any other enactment for the time being in force	 as if the arbitration were pursuant to an arbitration agreement and as if that other enactment were an arbitration agreement	 except in so far as this Act is inconsistent with that other enactment or with any rules made thereunder." Section 46 makes the provisions of any other enactment or any rules made thereunder to prevail over the 	 if inconsistent with the latter. In view of these several provisions	 it is clear that the applies to all arbitrations and Chap. III makes it applicable also to arbitrations	 in which the arbitration agreement is asked to be filed in Court under section 20	 subject	 however	 to this that the provisions of any other enactment or rules made thereunder	 if inconsistent with the 	 are to prevail. Learned counsel for the buyers contends that nothing is saved of the Act. This is not correct. To begin with	 questions as to the existence or validity of the agreement are saved from decisions by arbitrators or umpires	 however appointed. Since such a plea can only be raised in bar of an application by persons seeking a reference to arbitration	 at least that portion of the Act still applies	 and that power can only be exercised by the Court. Other provisions of Chap. II	 like sections 15 and 16	 still remain applicable. We need not give a list of all the provisions which may be saved	 because that will involve an examination side by side	 of the sections of the Act and the provisions of the Bye laws. So long as something is saved	 it cannot be said that the Court after receiving the agreement and ordering that it be filed	 becomes completely functus officio. But the crux of the argument is that the provisions of tub.a. (4) of section 20 read with sub s.(1)	 ibid.	 cannot apply	 and the Court	 after filing the agreement	 will have 1040 to do nothing more with it	 and this shows that section 20 is not applicable. This argument overlooks the fact that this is a statutory arbitration governed by its own rules	 and that the powers and duties of the Court in sub section (4) of section 20 are of two distinct kinds. The first is the judicial function to consider whether the arbitration agreement should be filed in Court or not. That may involve dealing with objections to the existence and validity of the agreement itself. Once that is done	 and the Court has decided that the agreement must be filed	 the first part of its powers and duties is over. It is significant that an appeal under section 39 lies only against the decision on this part of sub section Then follows a ministerial act of reference to arbitrator or arbitrators appointed by the parties. That also was perfectly possible in this case	 if the parties appointed the arbitrator or arbitrators. If the parties do not agree	 the Court may be required to make a decision as to who should be selected as an arbitrator	 and that may be a function either judicial	 or procedural	 or even ministerial; but it is unnecessary to decide which it is. In the present case	 the parties by their agreement have placed the power of selecting an arbitrator or arbitrators (in which we include also the umpire) in the hands of the Chairman of the Board of Directors of the East India Cotton Association	 Ltd.	 and the Court can certainly perform the ministerial act of sending the agreement to him to be dealt with by him. Once the agreement filed in Court is sent to the Chairman	 the Bye laws lay down the procedure for the Chairman and the appointed arbitrator or arbitrators to follow	 and that procedure	 if inconsistent with the 	 prevails. In our opinion	 there is no impediment to action being taken under section 20(4) of the . We may dispose of here a supplementary argument that the dispute till now is about the legal existence of the agreement including the arbitration clause	 and that this is not a dispute arising out of	 or in relation to a cotton transaction. Reference was made to certain observations in Heyman vs Darwins Ltd.(1). In (1) 1041 our opinion	 the words of the Bye law "arising out 'of or in relation to contracts" are sufficiently wide to comprehend matters	 which can legitimately arise under section 20. The argument is that	 when a	 party questions the very existence of a contract	 no dispute can be said to arise out of it. We think that this is not correct	 and even if it were	 the further words " in relation to " are sufficiently wide to comprehend even such a case. In our opinion	 this argument must also fail. It was contended lastly that the law applicable to the case is the lex loci solutionis	 that is to say	 the law of British East Africa. Reference was made to a passage from Pollock and Mulla 's Contract Act	 Eighth Edn.	 p. 11	 where it is observed as follows: " In ordinary circumstances the proper law of a contract (to use Mr. Dicey 's convenient expression) will be the law of the country where it is made. But where a contract is made in one country and to be performed wholly or in part in another '	 the proper law may be presumed to be the law	 of the country where it is to be performed." (Auckland Corporation vs Alliance Assurance Co.) (1) The learned authors observe	 on the same page further : "But these rules are only in the nature of presumptions	 and subject to the intention of the parties	 whether expressly declared or inferred from the terms and nature of the contract and the circumstances of the case. " Reliance was also placed on Chitty 's Law of Contract and Rule 148	 sub r. (3)	 Second Presumption	 in Dicey 's Conflict of Laws	 Seventh Edn.	 p. 738	 on which the statement of the law in Pollock and Mulla is based. Whether the proper law is the lex loci contracts or lex loci solutionis is a matter of presumption; but there are accepted rules for determining which of them is applicable. Where the parties have expressed themselves	 the intention so expressed overrides any presumption. Where there is no expressed intention	 (1) ; 1042 then the rule to apply is to infer the intention from the terms and nature of the contract and from the general circumstances of the case. In the present case	 two such circumstances are decisive. The first is that the parties have agreed that in case of dispute the Bombay High Court would have jurisdiction	 and an old legal proverb says	 " Qui elicit judicem eligit jus" If Courts of a particular country are chosen	 it is expected	 unless there be either expressed intention or evidence	 that they would apply their own law to the case. See N. V. Kwick Who Tang vs James Finlay & Co. (1). The second circumstance is that the arbitration clause indicated an arbitration in India. of such arbitration clauses in agreements	 it has been said on more than one occasion that they lead to an inference that the parties have adopted the law of the country in which arbitration is to be made. See Hamlyn & Co. vs Tallisker Distillery (2)	 and Spurrier vs La Cloche (3). This inference	 it was said in the last case	 can be drawn even in a case where the arbitration clause is void according to the law of the country where the contract is made and to be performed. In our opinion	 in this case	 the circumstances clearly establish that the proper law to be applied is the Indian Law. In the result	 the appeal fails	 and is dismissed with costs. Appeal dismissed.

Summary:
The appellant entered into an agreement with the respondent to purchase African raw cotton. The agreement included a clause that the contract would be subject to the " usual Force Majeure clause "	 the Bye laws of East India Cotton Association Ltd.	 Bombay	 except bye law 35	 the said Bye laws having statutory force	 and to the jurisdiction of the Bombay High Court. Clause 6 of the agreement provided that the buyers were to obtain import licence from the Government of India	 failing which the seller would be entitled either to carry over the goods at the cost of the buyers or call upon them to take immediate delivery on payment in British East Africa	 and in default to sell the goods in British East Africa and claim the deficit	 if any between the contractual price and the price obtained on re sale. Clause 7 further provided that notwithstanding the import policy followed by the Government of India in respect of the import of the contracted goods	 the buyers would be bound to obtain the necessary import licences and communicate the numbers thereof to the sellers on specified dates	 failing which cl. 6 would operate. The buyers did not perform the contract and the sellers after notice to them re sold the goods and thereafter claimed the deficit which the	buyers refused to pay. The sellers invoked the arbitration clause and the rules contained in bye law 38A of the Bye laws and others following it	 which conferred on the Chairman of the Board of Directors of the East India Cotton Association Ltd.	 the power of selecting the arbitrator or arbitrators	 and applied to the High Court under section 20 of the Indian for filing the agreement and referring the dispute to arbitration. The buyers resisted and the trial judge dismissed the application	 but the Court of appeal reversed that decision. It was urged in this Court on behalf of the buyers that (1) cls. 6 and 7 contemplated acquisition of property or Exchange in Africa and thus involved a breach of section 5 of the Foreign Exchange Regulation Act	 since no general or special exemption had been granted thereunder by the Reserve Bank	 (2) that the expression " subject to the usual Force Majeure clause " was vague and uncertain and rendered the agreement void	 (3) that the application of bye law 48A et seq left no powers in the Court to act under sub sections (1) and (4) of section 20n 1021 of the and the section was thus inapplicable and (4) that the law applicable to the case was the law of British East Africa and not that of India. Held	 that the contentions must fail. The provisions of sub sections (2) and (3) of section 21 of the Foreign Exchange Regulation Act	 properly construed	 left no manner of doubt that they contemplated matters which were within the prohibition of section 5 of the Act and had the effect of engrafting on the agreement of parties a term that it would be for the decreeholder before he could enforce the decree or order of the court to obtain the permission of the Reserve Bank and were thus designed to prevent the non performance of the contract under a cover of illegality. The contract involved no actual or contingent right to acquisition of property abroad	 and even assuming it did	 it was saved by section 21 of the Act subject to its conditions. The agreement was thus enforceable. Nor was the contract void for uncertainty. It was clear from judicial decisions that a reference to "force majeure " means the saving of the performing party from the consequence of factors beyond his control. The condition in respect of "force majeure " did not	 therefore" make the contract vague. Further	 the use of the word " usual " made it clear that the clause could be made certain by evidence and so it was protected by section 29 of the Contract Act. Lebeaupin vs CriSpin	 	 referred to. British Industries vs Patley Pressing	 and Scammell (G) and Nephew Ltd. vs Ouston (H. C. and J. G.) 	 distinguished. Bishop & Baxter Ld. vs Anglo Eastern Trading & Industrial Co. Ld.	 [1944] I.K.B. 12	 Shamrock section section Co. vs Storey	 (1899) 5 Corn. Cas. 21	 Hillas & Co. vs Arcos Ltd.	 ; and Adamastos Shipping Co. Ltd. vs Anglo Saxon Petroleum Co. Ltd.	 L	959) A.C. 133	 relied on. Although by section 46 of the 	 the Bye laws	 if inconsistent with the provisions of the Act	 must prevail	 it was not correct to say that their application made the Courtfunctus officio under section 20 of the Act. It must not be overlooked that although the present was a case of statutory arbitration governed by its own rules	 the court under section 20(4) of the had two distinct powers	 (1) of judicially considering whether or not the arbitration agreement should be filed in court and (2) whether there should be a reference to the arbitrator or arbitrators appointed by the parties or selected by it. Since in the instant case the parties had by their agreement empowered the Chairman of the Board of Directors of the East India Cotton Association	 Ltd.	 to select the arbitrator or arbitrators	 the court could send the agreement to him to be dealt with under the pro	 cedure laid by the said Bye laws. 1022 Whether the law of the country where the contract is made or of the country where it is to be performed should apply is sometimes a matter of presumption. But the declared intention of the parties overrides such presumption. Where there is no such declaration	 the intention may be inferred from the terms and nature of the contract and the general circumstances of the case. In the instant case	 since the parties agreed that in case of dispute the Bombay High Court would have jurisdiction and the arbitration clause indicated arbitration in India	 there could be no doubt that the Indian law was to apply. N. V. Kwick Who Tong vs James Finlay & Co.	 [1927] A.C. 604	 Hamlyn & Co. vs Tallisker Distillery	 and Spurrier vs La Cloche	 	 referred to.