Calcutta High Court
Karam Chand Thapar And Bros. (Coal ... vs Aravali Goods & Suppliers Pvt. Ltd. & Anr on 21 October, 2020
Author: Arindam Mukherjee
Bench: Arindam Mukherjee
ORDERSHEET
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
ORIGINAL SIDE
COMMERCIAL DIVISION
I.A. No.GA 1 of 2020
C.S. No. 106 of 2020
KARAM CHAND THAPAR AND BROS. (COAL SALES) LIMITED
.....PLAINTIFF/PETITIONER
VS.
ARAVALI GOODS & SUPPLIERS PVT. LTD. & ANR.
......DEFENDANTS/RESPONDENTS
I.A. No.GA 1 of 2020 C.S. No. 86 of 2020 KARAM CHAND THAPAR AND BROS. (COAL SALES) LIMITED .....PLAINTIFF/PETITIONER VS.
ARAVALI GOODS & SUPPLIERS PVT. LTD. & ANR.
......DEFENDANTS/RESPONDENTS BEFORE:
THE HON'BLE JUSTICE ARINDAM MUKHERJEE DATE: 21ST OCTOBER, 2020 Mr. Ratnanko Banerji, Sr. Advocate, Mr. Ashwin Sarkar, Mr. Subhojit Roy, Mr. Kuldip Mallick, Ms. Labanyasree Sinha, Ms. Sayantika Mitra, and Mr. Satyaki Mitra, Advocates ...... For the Plaintiff/Petitioner Mr. Rudrajit Sarkar, Mr. Soumalya Ganguli, Advocates ....... for the Defendant No.1/Respondent No.1 Mr. Anirban Ray, Mr. Varun Kothari, Mr. Debangshu Dinda, Advocates ........ for the Defendant No.2/Respondent No.2 The Court:
The petitioner instituted the above suit seeking, inter alia, the following reliefs:-
" 49. In the aforesaid circumstances your petitioner has filed the instant suit praying, inter alia, the following reliefs:-
(a) Decree for a principal sum of Rs.6,74,32,897.00 against the defendant No.1 as per particulars pleaded in paragraph 49 read with Annexure "J" hereto;
1
(b) Interest pendent lite and interest of judgment;
(c) Declaration that the Notice of Assignment dated May, 19, 2020 appended to e-mail dated July 30, 2020, copy whereof has been annexed hereto as Annexure "D:
is illegal, fraudulent, null and void and incapable of being enforced;
(d) Declaration that the purported reference to foreign arbitration made by three letters all dated September 28, 2020, copies whereof are annexed hereto and contained in Annexure "F-1", "F-2" respectively are illegal, null and void;
(e) Declaration that purported reference to foreign arbitration made by three letters all dated September 28, 2020, copies whereof are annexed hereto and marked as Annexure "F-1" "F-2" and "F-3" are acts of fraud committed by the defendants;
(f) Delivery up and cancellation of the three purported notices for commencement of the arbitration all dated September 28, 2020, copies whereof are annexed hereto and marked as Annexure "F-2" and "F-3" upon the same being adjudged null and void;
(g) Declaration that the documents purporting to be invoices issued by the Defendant No.1 as are contained in Annexure "G" hereof are not subject to any foreign law or arbitration agreement;
(h) Declaration that the documents purporting to be invoices issued by the Defendant No.1 copies whereof are contained in Annexure "G" hereto are subject to laws of India and Jurisdiction of Courts in India;
(i) Decree for perpetual injunction restraining the Defendant No.1, or its agents, assignees or representatives, from invoking or pursuing or taking any step against the Plaintiff in arbitration outside India;
(j) Decree for perpetual injunction restraining the defendant No.2 from proceeding with or taking any step in any arbitral reference pursuant to the three several purported notices for commencement of arbitration all dated September 28, 2020 copies whereof have been annexed hereto and marked "F-1", "F-2" and "F-3" respectively;
(k) Decree for perpetual injunction restraining the defendants and/or each one of them their men, agents, assigns, representatives and nominees from taking any steps against the plaintiff in the arbitration at any place whether in respect of the purported notices for commencement of arbitration all dated September 28, 2020 contained in Annexure "F" series hereto or otherwise;
(l) Receiver;2
(m) Injunction;
(n) Attachment
(o) Costs;
(p) Further or other reliefs."
In the instant application, the plaintiff / petitioner seeks an interim order of injunction, inter alia, restraining the respondent no.1, its name, its agent, assigns and representatives from taking any step or further step or acting in furtherance of the notices of reference to arbitration under the electronic mail communication dated 28th September, 2020 and further for stay of operation of such notices in aid of the final reliefs claimed in the suit. At the motion stage plaintiff / petitioner prays for an ad interim order in terms of the prayer made in the said application.
The plaintiff / petitioner says that it had entrusted transportation of indigenous coal from the subsidiaries of Coal India Ltd. to various thermal plants in India from Paradip port to Krishna Patnam port. Three "Fixture Note" respectively dated 27th May, 2019, 27th June, 2019 and 31st October, 2019 were executed by and between the petitioner and the defendant no.1 / respondent no.1. It is the further case of the petitioner that in all the said three fixture note in clause 30 thereof it is recorded that "rest as per GENCON 94". The plaintiff / petitioner says that though GENCON 1994 in clause 19 thereof speaks of an arbitration agreement but the same has not been specifically incorporated in the said three fixture note. The plaintiff / petitioner refers to Section 7 of the Arbitration and Conciliation Act, 1996 and in particular sub-Section (5) thereof and the judgment reported in (2009) 7 SCC 696 (M.R. Engineers and Contractors Private Limited vs. Som Datt Builders Limited) (paragraph 24) in this regard and submits that in 3 absence of specific incorporation of the arbitration agreement, it should be construed that there is no arbitration agreement between the plaintiff / petitioner and the defendant no.1 / respondent no.1. The defendants / respondents, therefore, cannot invoke the arbitration agreement or refer any dispute to arbitration. The plaintiff / petitioner also relies on the judgments reported in (2001) 7 SCC 473 (Owners and Parties Interested in the Vessel M.V. "Baltic Confidence" & Anr. Vs. State Trading Corporation of India Ltd. & Anr.) (paragraph 19) and (2008) 14 SCC 271 (TDM Infrastructure Private Limited vs. UE Development India Private Limited) (paragraphs 19, 23 and
25) and (2003) 4 SCC 341 (Modi Entertainment Network vs. W.S.G. Cricket PTE. Ltd.) to further support their case.
The plaintiff / petitioner further says that there is no valid assignment by the defendant no.1 / respondent no.1 in favour of the defendant no.2 / respondent no.2. The plaintiff / petitioner in this regard refers to a notice of assignment dated 19th May, 2020 and suggests that such document cannot be construed as a valid assignment by defendant no.1 / respondent no.1 in favour of defendant no.2 / respondent no.2 by virtue of which the arbitration agreement contained the said three fixture note through purported incorporation and/or the benefits thereunder could be assigned to the defendant no.2 / respondent no.2. In absence of any valid assignment, the defendant no.2 / respondent no.2 cannot also claim that the arbitration agreement between the plaintiff / petitioner and the defendant no.1 / respondent no.1 if at all any could be assigned to the defendant no.2 / respondent no.2. As a consequence thereof, the defendant 4 no.2 / respondent no.2 cannot claim any benefit of any alleged arbitration agreement between the plaintiff / petitioner and the defendant no.1 / respondent no.1.
The plaintiff / petitioner has further urged that the purported assignment is without any consideration and as such void being hit by the provisions of Section 25 of the Indian Contract Act, 1872. The purported assignment, therefore, cannot also be acted upon and the arbitration agreement, if any, cannot also be invoked.
It is the further case of the plaintiff / petitioner that the said three fixture note were executed between two Indian parties and, as such, the same does not attract the provision of Part II of the Arbitration and Conciliation Act, 1996 pertaining to foreign arbitration. The defendant no.2 / respondent no.2 has referred the purported disputes between itself and the plaintiff / petitioner to arbitration treating the same to be between a foreign party and an Indian party on the basis of the arbitration agreement between the plaintiff / petitioner and the defendant no.1 / respondent no.1 as if the same has been assigned to the defendant no.2 / respondent no.2. The plaintiff / petitioner, therefore, submits that the invocation of the arbitration by the defendant no.2 / respondent no.2 as contained in the three notices all dated 28th September, 2020 is bad in law and the arbitration proceedings in terms thereof should not be allowed to be proceeded with.
5 On behalf of defendant no.2 / respondent no.2 it is submitted that the said respondent entered into an agreement with the plaintiff / petitioner on 3rd May, 2019 wherein the defendant no.2 / respondent no.2 was described as owner / performing owner. The said defendant was empowered to nominate an Indian company for the purpose of performance of the agreement. The defendant no.2 / respondent no.2 as per the said agreement is shown to be a Singapore party and the defendant no.1 / respondent no.1 is shown as its nominee, i.e., the Indian company. Clause 31 of the said agreement dated 3rd May, 2019 is then referred to show that "rest all as per GENCON 94". The defendant no.2 / respondent no.2 says that the said agreement dated 3rd May, 2019 is the main agreement between the plaintiff / petitioner and the defendant no.2 / respondent no.2. The said three fixture note have been entered into by and between the plaintiff / petitioner and the defendant no.1 / respondent no.1 on the basis of the said main agreement for separate consignments of coal to be transported through different vessels. The defendant no.2 / respondent no.2 then refers to the addendum no.1 dated 29th May, 2019 annexed to the said petition to show the recording therein "ALL OTHER TERMS AND CONDITIONS AS PER FIXTURE NOTE AGREED DATED 27/05/2019 AND MAIN TERMS AGREED ON 03/05/19 BY BOTH PARTY WILL REMAIN UNCHANGED AND IN FORCE" to suggest that the said three fixture note respectively dated 27th May, 2019, 27th June, 2019 and 31st October, 2019 are in terms of the main agreement dated 3rd May, 2019. The said addendum dated 29th May, 2019 and the addendum to the other two Fixture Note are also in line with the two documents referred to 6 therein. It is further submitted that the main agreement has GENCON 1994 incorporated therein. The same provision is incorporated in the said three fixture note and the addendum to them. The arbitration agreement contained in "clause 19" of GENCON 1994, therefore, is incorporated in all the agreements be it the fixture note or the addendum thereto. Admittedly, the defendant no.2 / respondent no.2 is a foreign party and as such according to the said defendant it is entitled to invoke the arbitration as has been done by the three notices dated 28th September, 2020. The defendant no.2 / respondent no.2 refers to the judgments reported in (2012) 9 SCC 552 (Bharat Aluminium Company vs. Kaiser Aluminium Technical Services Inc.) (paragraph 119), (2016) 10 SCC 813 (Sasan Power Limited vs. North Americal Coal Corporation (India) Private Limited) (paragraphs 39 to
50) and (1999) 7 SCC 61 (Altas Export Industries vs. Kotak & Company) (Paragraphs 6 to 11) and submits that the arbitration clause in GENCON 94 has been duly incorporated in the three Fixture Note and as such the said defendant is entitled to invoke the arbitration agreement and refer the matter to arbitration.
The defendant no.2 / respondent no.2 further refers to an application being GA no.1 of 2020 filed in CS No.86 of 2020 (Karam Chand Thapar and Bros. (Coal Sales) Limited vs. Aravali Goods & Suppliers Pvt. Ltd. and Anr.) and submits that the plaintiff / petitioner has also understood that there exists an arbitration clause and have themselves appointed their arbitrator in response to the notice from the defendant no.2 / respondent no.2. In this regard the defendant no.2 / respondent no.2 refers to page 206 of the 7 application being GA 1 of 2020 filed in CS 86 of 2020 to show the invocation of arbitration by the plaintiff / petitioner. It is further submitted by the defendant no.2 / respondent no.2 that after having acted in terms of the arbitration agreement contained in GENCON 1994, the plaintiff / petitioner cannot resile out of the same to now suggest that there exists no arbitration agreement between the parties or that the arbitration is not a foreign arbitration. The defendant no.2 / respondent no.2 submits that the application should be dismissed far less to grant any interim order staying the three notices dated 28th September, 2020 caused to be issued by the defendant no.2 / respondent no.2 invoking the arbitration agreement and referring the matter to arbitration.
The defendant no.1 / respondent no.1 is represented by an advocate appearing through virtual mode and submits that copy of the application in GA 1 of 2020 filed in CS 86 of 2020 has not been served on the said respondent. This submission is, however, disputed by the plaintiff / petitioner by referring to the affidavit of service filed in Court today which has been taken on record.
The plaintiff / petitioner in reply admits the issuance of the notice appointing arbitrator appearing of GA 1 of 2020 filed in CS 86 of 2020 at page 206 but seeks to draw a distinction as to acceptance of the arbitration agreement by referring to the language of the letter. It is submitted that objection to substantive jurisdiction of the Tribunal and the right to challenge the same in appropriate forum at an appropriate time has been clearly mentioned therein. It is submitted that by objecting to the 8 substantive jurisdiction and reserving the right to challenge the same in the appropriate forum should be construed that the plaintiff / petitioner did not accept the arbitration agreement or submit to the jurisdiction of the arbitral tribunal thereby disentitling them to deny the arbitration agreement. On a reading of the reliefs claimed in the suit and the prayers made in the said application, it appears that the plaintiff / petitioner has couched the same in a manner as if it is not seeking an anti-arbitration injunction but certain declaratory relief and injunction in aid thereof. The declaratory relief and the injunction as prayed for, if granted, will amount to anti-arbitration injunction. The Hon'ble Supreme Court in M.V. Baltic Confidence (supra) has clearly held in paragraph 19 thereof that "while ascertaining the intention of the parties, attempt should be made to give meaning to the incorporation clause and to give effect to the same and not to invalidate or frustrate it giving a literal, pedantic and technical reading of the clause". The Court has to see whether the incorporation leads to inconsistency or insensibility or absurdity in the agreement wherein the arbitration agreement is sought to be incorporated or that any inherent inconsistency is created to the terms of the agreement wherein it is incorporated. If it is not so the arbitration clause as agreed should be made binding on the parties. In the instant case, it prima facie appears that the arbitration agreement contained in clause 19 of the GENCON 1994 has been incorporated in the said three fixture note and the addendum thereto. No absurdity or inherent inconsistency is created apparently on such incorporation. Even the summary of the scope and intent of Section7(5) of the Arbitration and 9 Conciliation Act, 1996 as laid down in paragraph 24 of the judgment in M.R. Engineers (supra) when considered in the context of the instant case will prima facie lead this Court to believe in the existence of an arbitration agreement between the parties than disbelieving the same. At the interlocutory stage before exchange of affidavits it is, however, very difficult to form even a prima facie opinion as to the assignment of the agreement or the rights and benefit thereunder to the defendant no.2 / respondent no.2. Even when it is noticed that defendant no.1 / respondent no.1 is the Indian nominee of the defendant no.2 / respondent no.2 under the main agreement dated 3rd May, 2019 being an agent of a disclosed principal and the defendant no.1 / respondent no.1 is said to have entered into the agreements with the plaintiff / petitioner in the form of the said three fixture note by virtue of the main agreement it still requires the issue of assignment to be decided after a detailed hearing after exchange of affidavits. It is always open to the plaintiff / petitioner even if the matter has been referred to arbitration by the defendant no.2 / respondent no.2 to challenge the jurisdiction of the Arbitral Tribunal contending that there exists no arbitration agreement between the parties and as such no inconvenience will occur to the plaintiff / petitioner. On the contrary by staying the arbitration at this stage greater inconvenience will be created for the defendant no. 2 / respondent no.2.
Considering the submissions made on behalf of the parties, the judgments cited at the bar and the materials on record, I am not inclined to pass any order of ad interim injunction at this stage as prayed for by the plaintiff / 10 petitioner. The application is required to be heard on affidavits when all materials that may be disclosed by the parties before the Court will help in forming conclusive opinion in the matter.
The defendants / respondents shall file their respective opposition peremptorily within 18th November, 2020. Reply, if any, thereto by 2nd December, 2020. The application shall appear on 7th December, 2020 or on any date immediately thereafter subject to convenience of the Court.
: GA 1 of 2020 in CS 86 of 2020 :
The facts in the application being GA 1 of 2020 filed in CS 86 of 2020 are more or less identical save it involves five Fixture Note and except the fact that the plaintiff / petitioner being also the plaintiff / petitioner in the said application has itself by a letter dated 25th August, 2020 caused to be written through their Solicitors in England has appointed its arbitrator responding to the arbitration notice dated 30th July, 2020 given by the defendant no.2 / respondent no.2 through their Solicitor in England. Considering this fact, the materials on record, the submissions made by the parties and in view of the discussion made in respect of the injunction application (GA 1 of 2020) in CS 106 of 2020, I am not inclined to pass any ad interim order of injunction as prayed for by the plaintiff / petitioner at this stage. The matter requires to be heard on affidavits. The defendants / respondents shall file their respective opposition peremptorily within 18th November, 2020. Reply, if any, thereto by 2nd 11 December, 2020. The application shall appear on 7th December, 2020 or on any date immediately thereafter subject to convenience of the Court.
(ARINDAM MUKHERJEE, J.) 12