Delhi High Court
State Trading Corporation Of India vs Stora Kvanransveden Ab And Ors. on 5 April, 1995
Equivalent citations: 58(1995)DLT515
Author: N.G. Nandi
Bench: N.G. Nandi
JUDGMENT N.G. Nandi, J.
(1) In the petition under Section 33 of the Indian Arbitration Act (hereinafter referred to as "the Act"), seeking declaration that there is no valid arbitration agreement between the petitioner and respondent No. 1; that the alleged arbitration agreement contained in the proposed contract is of no effect; a declaration that there is no contract and/or privity of contract much less a valid arbitration agreement between the petitioner and respondents 2-4; that the Indian Council of Arbitration has no jurisdiction to arbitrate on the claims against the petitioner, of respondents 1-4, as contained in the statement of claim filed before the ICA in matter titled "Stora Kvarnasvenden Ab and Ors. v. Stc of India Ltd."Case No. 1CA/AC/452; and that the arbitration proceeding before the Indian Council of Arbitration in Case No. 1CA/AC452 is illegal and without jurisdiction,on the grounds that there is no arbitration agreement between the petitioner andrespondent No. 1 and there is no privity of contract much less an arbitration agreement between the petitioner and respondents 2-4, the petitioner, by this I.A.under Section 41 of the Act, seeks stay of the arbitration proceedings pending before the Indian Council of Arbitration being titled "Stora Kvarnasvenden Ab and Ors. v. Stc of India Ltd.", Case No. 1CA/AC/452 and also restraining the respondents from proceeding with the same in any manner till the final disposal of , main petition.
(2) The say of the petitioner is that in May, 1991, petitioner was required to import standard news print on an emergent basis; that the petitioner issued a Tender Notice dated 26.2.1991 inviting offers for up to 40,000 Mt standard newsprint as per its stated requirement/specifications; that respondent No. 1 submitted its offer dated 11.3.1991 for 15000 Mt standard newsprint through its Indian agent Anika Internation Pvt. Ltd. for supplies to be made by it through certain Scandinavian Producers; that respondent No. 2 negotiated with the petitioner through its agent Anika; that the quantity in the above said offer was subsequently enhanced by respondent No. 1 to 20,000 MT; that the petitioner placed an order for 20,000 MT of standard newsprint with respondent No. 1 vide telex dated 30/31.3.1991, which contained various terms relating to price and deliver; that all other terms and conditions were to be separately agreed to; that respondent No. 1 informed petitioner through Anika's letter dated 15.4.1991 that their principal i.e. Stora was not agreeable to certain terms and that it was returning the contract (three copies)with the request that the proposed contract be modified; that respondent No. 1 inthis manner declared that there was no consensus-ad-idem of the parties with respect to the other contractual terms. Therefore, in the circumstances, there wasno agreement between the parties except as to price and delivery terms and penalty for late delivery; that petitioner did not effect any modification in the proposed contract and returned the copies of the proposed contract for acceptance and signatures by respondent No. 1; that respondent No. 1 did not sign the same and returned the same to the petitioner; that on 20.10.1991 petitioner asked for signed proposed contract as it had to satisfy various governmental agencies. That Anika,through its letter dated 11.2.1991 informed the petitioner that respondent No. 1 had not yet signed the proposed contract as it found certain ambiguities therein. That in a malafide manner and for ulterior purposes, respondent No. 1 has filed copy of the proposed contract purported to be signed by it although all along respondent No. 1 refused to sign it as a token of its acceptance and returned it to the petitioner,be speaking of a belated and misconceived effort to invoke the arbitration clause inthe proposed contract; that the only contract between the petitioner and respondent No. 1 is contained in the telex order i.e. the telex order dated 30-31.3.1991,which accepts respondent No. l's offer dated 11.3.1991 which contained the basic terms of price and delivery and all other terms were not agreed to by the parties;that the petitioner did sent to respondent No. 1 the proposed contract which contained an arbitration clause. That respondent No. 1 intends to invoke the arbitration clause which is a misconceived and malafide act; that there is no arbitration agreement between the parties.On these averments, the petitioner prays for the reliefs in the petition and theI.A. respectively, as aforestated.
(3) The say of respondents 1-4 is that the petitioner has suppressed material facts and has rather misrepresented the true and correct facts in order to suit itsconvenience; that the petitioner is estopped from challenging the existence and/or authority of the arbitration agreement; that the contract was duly entered into between the parties; that the respondents effected sales of material to the petitioner under terms of the said written contract entered into between the parties; that the petitioner accepted the material sold/consigned to it under the contract; that the payments were effected in terms of the contract save and except the claims of the respondents against the petitioner and the relationship and terms and conditions of such sales between the parties wherein terms and conditions are stipulated in the contract bearing No. STC/PN/STORA/11/SWEDEN/91-92 dated 30.3.1991 signed and executed by and between the parties; that the petitioner can not challenge the existence and/or the authority of the arbitration agreement in terms of which the petitioner accepted the goods unconditionally and unequiably; that the petition is liable to be dismissed on this ground as well; that the petitioner never ever allegdly and/or challenged the existence and/or validity of the arbitration agreement during the course of the entire transaction, during the various correspondences exchanged between the parties, and thereafter. Even in the reply sent by the petitioner to the notice in the year 1994, the petitioner never ever challenged and/or questioned the existence and/or validity of the contract. The petition is evidently an after thought, is motivated and has been made in a mischievous attempt to delay the proceedings and frustrate the valid and legitimate claims of the answering respondents; that the transaction under reference is not the first transaction entered into by the petitioner with the respondents. The respondents have been regular suppliers of the news print to the petitioner and have been supplying news print to the petitioner since last many decades; that the respondent duly signed the contract, shipped the material and the same was duly accepted and acknowledged by the petitioner unconditionally and without any protest or demur ever save and except the petition; that the respondents, vide its letter dated23.10.1991 informed the petitioner that the signed contract would be sent "in a day or two" which was eventually sent by respondent No. 1 under cover of its letter dated 18.11.1991. That the shipment under the contract was effected in April, May1991 and the payments made in July, August 1991.91. It is denied that there was nonconsensus-ad-idem of the parties with respect to the contract as respondent No. 1had already under the cover of letter dated 18.11.1991, dispatched the duly executed signed contract.
(4) It will be seen from the above that the existence of the contract with regard to the price and delivery terms and penalty for late delivery is not in dispute. What the petitioner disputes is that there was no concluded contract with regard to the arbitration clause. In other words, there was no contract containing clause of arbitration concluded between the parties to the arbitration proceeding. The initialfacts, viz. the petitioner inviting tender for the purchase of standard new spring and respondent No. 1, through its agent Anika, submitted its offer dated 11.3.1991 for15000 Mt of standard newsprint is not in dispute and also the subsequent enhancement of the offer by respondent No. 1 to 20000 Mt is also an admittedposition. Annexure 2 dated 11.3.1991 is the offer by respondent No. 1. The conditions to be found in Annexure 2 suggest that the same would be as per earlier supplies and standard contract of STC. Annexure 3 is the order placed by the petitioner for 20000 Mt standard newsprint of which 15000 Mt were to be supplied by 15.4.1991 and 5000 Mt by 25.4.1991. The said order was in response to the offer by respondent No. 1 through its agent Anika International. The said order also suggest that all other terms and conditions shall be as per STC's standard contract for standard newsprint. Thus, it will be seen that respondent No. 1, vide Annexure2 offered to supply 15000 Mt of standard newsprint on condition as per the earlier supplies and standard contract of Stc, which offer has been accepted and in pursuance thereof, vide Annexure 3, petitioner placed order which contained that all other terms and conditions shall be as per STC's standard contract for standard new spring. So the tender Annexure 2 offered by the petitioner has been accepted and order placed pursuant thereof vide Annexure 3 by the petitioner.
(5) It is suggested from Annexure 6 dated 11.4.1991 by the petitioner to respondent No. 1 that three copies of the contract No. STC/NP/STORA/11/SWEDEB/91-92 dated 13.3.1991 for import of 20000 Mt of standard news print duly signed by the petitioner as the buyer, have been sent to respondent No. 1requiring respondent No. 1 to sign the same as the seller and return two copies to the petitioner for its record. Thus, three copies of the contract duly signed by the petitioner have been sent on 11.4.1991 by the petitioner to respondent No. 1 for signing the same and return of two copies thereof. Page 30 to 36 is the disputedcontract. Clause 17 of the contract at internal page No. 34 contains the arbitrationclause, which reads as follows :- "17.ARBITRATION: All disputes or defference concerning or arising out of or in connection with or under this contract shall be settled by arbitration in the country of defendant according to the laws applicable there. Where STC is a defendant, the Rules of Arbitration of the Indian Council of Arbitration shall apply and the arbitration shall take place at New Delhi (India), and where the Seller is defendant, the Rules and Procedure of the Seller's country will apply and the arbitration will take place in Seller's country. Any award made in pursuance of the arbitration proceedings shall be final and binding on both the parties"
Clause 18 of the said contract at internal page 35 contained clause regarding force majure.
(6) It is not disputed that the goods have been supplied by respondent No. 1and payments thereof made by the petitioner under this very contract, and as faras the price, quantity, delivery, payment etc. are concerned, the same has been fully acted upon by both the parties.
(7) The petitioner has been contending that the proposed contract in three copies sent by the petitioner was not a concluded one and respondent No. 1 did return the same.Annexure 8 is the letter dated 28.10.1991 by the petitioner whereby respondent No. 1 has been told that in spite of lapse of more than six months, respondent No. 1 has not returned the said contract to the petitioner for their record and that they have been facing great problem to satisfy various Government agencies about import of newsprint under the afore said contract i.e. contract No. STC/NP/STORA/11 /SWEDEN/91-92 dated 30.3.1991. In the said letter, respondent No. 1has been requested to immediately courier to the petitioner two copies of the afore said contract duly signed by respondent No. 1. The petitioner also relies on Annexure 9 dated 23.10.1991, a fax message by respondent No. 1 to the petitioner where in respondent No. 1 has regretted the delay in returning the contract with assurance that it will now be sent in a day or two. According to the petitioner, on23.10.1991, respondent No. 1 had assured the return of the contract in a day or two.Referring to Annexure 10 dated 11.12.1991, it has been stated that the contract was not concluded even by that date inasmuch as Anika writes to the petitioner that respondent No. 1 had sent the message to Anika today i.e. 11.12.1991 about signing of contract as stated therein. It is suggested from this letter that some objections had been raised by respondent No. 1 through its agent Anika, as there was some ambiguity for which respondent was not able to sign the contract.It may be appreciated that the ambiguity raised in Annexure 10 is with regard to one of the terms of the shipment of cargo and that Stc has stipulated in the contract that the goods will be shipped on liner term basis, and according to respondent No. 1, if the goods are shipped on liner term basis, the date of B/L is taken as the basis of shipment and if the penalties are to be levied for delay and in this board certificate, as insisted by the petitioner. That board certificate can betaken as a base if the cargo is shipped by Charter Party vessel and this is as per international contract terms. Thus, the ambiguity, as suggested in Annexure 10 is to this effect.
(8) It may be appreciated that respondent No. 1 on 14.3.1991 served the petitioner with registered notice through its solicitor, copy whereof is to be found at page 98. In this notice, respondent No. 1 has specifically referred to contract No.STC/NP/STORA/11/SWEDEN/91-92 dated 30.3.1991 for sale and supply of20,000 Mt of standard newsprint at the price of Us $ 625 per MT. By this notice,the petitioner is called upon to pay a sum of Us $ 3,83,266.60 along with interest atthe rate of 18% p.a. The petitioner is also cautioned that in the event of failure to comply with the requisition of this notice within 15 days, respondent No. 1 would proceed to file their claims before the Indian Council of Arbitration, New Delhi, as provided for in the agreement for their claim towards the said amount and such other amount, which may further be found due and owing from the petitioner to respondent No. 1 Along with interest. It is pertinent to note that the petitioner has filed reply to this notice, which is to be found at page 68 dated 27.4.1994. It is pertinent to note that in this reply, the petitioner has not denied the contract containing arbitration clause. It is pertinent to note that in this reply it has been stated by the petitioner that in view of the applicability of force majure, the petitioner cannot accept any liability whatsoever on this account. I put a question to myself as to what made the petitioner to invoke "force majure":. In this context,reference may be made to clause 18 of Annexure2,contract No. STC/NP/STORA/II/SWEDEN/91-92 dated 30.3.1991. As pointed out above, clause 18 of the contract deals with the 'force majure'. Now, unless there was a concluded contract,where would be the question of invoking force' majure clause'.Moreover the petitioner in reply dated 27.4.1994 writes that the respondents would be suitably advised to not to resort to any litigation and/or initiate arbitration proceedings as against the petitioner. If there was no concinded contract containing arbitration clause, that the reaction of the petitioner would be different and the one as suggested by the reply dated 27.4.1994 as pointed outabove.
(9) As seen above, the contract Annexure 6 dated 30.3.1991 has been acted upon by both the parties, which is an admitted position. The contract is according to the STC's standard contract for standard newsprint as suggested in Annexure 2& 3 by respondent No. 1 as well as the petitioner, i.e. in the offer and the subsequentorder.placed by respondent No. 1 and the petitioner respectively. The petitioner accepts the contract in all material particulars including the clause of force majure,disputes, the arbitration clause therein. As pointed above, the ambiguity raised by respondent No. 1 is with regard to the shipment and that was the reason assigned for not signing the contract by respondent No. 1 by its communication dated23.10.1991. The contract has been implemented and executed in all particulars and the same has been according to the offer by respondent No. 1 and acceptance of the same by Annexure 2 by the petitioner, as pointed out above. It seems the parties went ahead with the arrangement arrived at by Annexure 2 and the formal contract was reduced in writing later on but it was agreed that the contract shall be according to the standard contract of Stc for the supply of newsprint and that condition seems to have been carried out by Annexure 6.
(10) Under the circumstances, on prima-facie consideration of the material onrecord, I am of the view that there exists a contract between the petitioner and respondent No. 1 containing arbitration clause for reference of the disputes arising between the parties out of the contract for adjudication to the arbitration as pointed out in clause 17 reproduced above, and I do not find any prima-facie substance in the contention of the petitioner raised in this regard and the Ia being devoid ofmerits, is liable to be dismissed.
(11) In the result, the I.A. fails. Ordered accordingly.