Calcutta High Court
Modern Malleables Ltd vs Nuova Elettromeccanica Sud. S.P.A on 11 December, 2014
Author: I. P. Mukerji
Bench: I. P. Mukerji
ORDER SHEET
AP NO.855 OF 2013
GA NO.3851 OF 2014
GA NO.3778 OF 2014
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
MODERN MALLEABLES LTD.
Versus
NUOVA ELETTROMECCANICA SUD. S.P.A
............
BEFORE:
The Hon'ble JUSTICE I. P. MUKERJI Date : 11th December, 2014.
Mr. R. Banerjee, senior advocate, Mr. S. Chowdhury, Mr. V.V.V. Sastry...for petitioner.
Mr. T. Bose, senior advocate, Mr. S. Banerjee, Mr. S. Roy, Mr. A. Sinha, Mr. R. Mukherjee...for respondent.
The Court :- GA 3851 of 2014 and GA 3778 of 2014 are treated as on the day's list.
Two parties are involved. One is Indian, Modern Malleables Ltd.. The other is Italian, Nuova Elettromeccanica Sud. S.P.A. Modern Malleables Ltd. moved a section 9 application in this court [AP No.6 of 2012]. It was on the basis of an agreement dated 3rd March, 2009 stated to be executed in Italy, between the parties. It allegedly contained an arbitration clause, which is clause 9.
The section 9 application was entertained by this court on the assumption that the arbitration clause existed, which is now seriously disputed by the Italian company.2
Several orders were passed in that section 9 application. The Italian company did not appear. According to the Indian company they were served and did not appear. According to the Italian company they were not served with the petition at all.
The section 9 application was disposed of on 27th January, 2012 in terms of prayer [e] thereof which restrained the Italian company from manufacturing and selling spacer dampers in India. The plaintiff was given the liberty on their prayer to deposit 22,000 Euros with the Registrar, Original, Side on 31st January, 2012 the plaintiff was granted the option, which they exercised of directly paying the amount to the defendant. The interim order passed earlier on 11th January, 2012 restrained the Italian company from taking any steps in terms of their notice terminating the agreement. It was confirmed.
The position is that on 23rd January, 2012 the Italian company instituted a civil proceeding in a learned court at Rome.
On 7th August, 2013, the Indian company filed an application for an order restraining the Italian company from taking any steps in the proceeding. It is numbered as AP No.855 of 2013. On 3rd December, 2014 the Italian company filed an application [GA No.3778 of 2014] for stay of all proceedings in the application [AP No.855 of 2013] filed by the Indian company. On 9th December, 2014 they took out another application [GA No.3851 of 2014] connected with the section 9 application [AP No.6 of 2012] asking for vacation of all the orders passed in that application. They are up for consideration, for the first time, today.
The current position is that the proceeding before the Italian court at Rome has proceeded ex parte. Witness action will commence from 5th February, 2015.3
The first point raised by Mr. Bose, learned senior advocate for the Italian company attacking clause 9 is that there is no arbitration agreement.
At this point of time it is essential to set out clause 9 of the agreement.
"9. Arbitration - Applicable law 9.1. Any dispute arising from or in connection with this agreement shall be settled by mutual agreement between the parties, failing which it will be referred to Arbitration by English speaking personnel.
9.2. In case the parties do not settle the dispute by mutual agreement, then it will be settled under the competence of the Law Court of Rome, Italy."
He argues that this clause is void for uncertainty. First of all it states that the dispute between the parties would be referred to arbitration, without stating anything further. Thereafter he contends that a stipulation that the Arbitrators are to be English speaking is vague.
Secondly, he submits that by virtue of 9.2 an application in the nature of Section 9 has to be filed in a Court at Rome.
As far as the first point of Mr. Bose is concerned I am of the opinion that it can only be decided after filing of affidavits and inviting legal arguments.
As far as interpretation of the second clause 9.2 is concerned reference may be made first to clause 9.1. It says that, first, an attempt will be made to "settle" disputes by mutual agreement, failing which "it will be referred to arbitration". Therefore, the reference to settle in the first clause means settlement by mutual agreement. However, clause 9.2 stipulates that in case the parties "do not settle the disputes by mutual agreement" then it will be "settled" under the competence of the Law Court of Rome of Italy. 4
In my opinion if a dispute if arbitrated upon, it can never be called settlement of a dispute in the sense used in these clauses. The arbitration might end in mutual settlement or compromise. But the reference of arbitration cannot be called "settlement of disputes" in terms of this clause.
Therefore, in my view the Courts of Rome would only be utilized for "settlement process".
But the above view is prima facie and will be tested upon filing of affidavits and inviting further legal arguments.
The Section 9 application was moved on 6th January, 2012. The proceeding in Rome was filed on 23rd January, 2012. Therefore, the Indian Court is in seisin of the disputes between the parties first in point of time. Therefore, this Court is required to decide inter alia whether an arbitration clause exists and if it is found to exist to take further steps in the matter.
All the three applications are being moved today.
But the conduct of the parties shows that the proceeding before the Italian Court has proceeded to the point of a date being fixed for witness action in early February 2015. If it is the contention of a party that another Court is in seisin of the dispute between the parties and that the Court before which an action is subsequently filed should relinquish jurisdiction, it is up to that party to approach that Court and seek appropriate orders. Unfortunately the plaintiff has not done so. Neither any substantive order in this direction was taken by the plaintiff.
Therefore, the net result is that proceedings in India as well as in Italy are pending at the same point of time.
The letter dated 22nd January, 2012 of the Italian Company to the Indian company is important for the following reasons :
i] The Italian company was fully aware of the above Indian proceedings by 6th February, 2012;5
ii] There was no complaint therein that service had not been effectged upon them.
iii] Euro 22,000 was received without prejudice. iv] A settlement of disputes process was initiated.
The parties or either of them will have the option for citing this order before the Italian Court to pass appropriate orders. The Italian company is free to proceed before the learned court at Rome, but the Italian company will take no steps to execute the decree, if any passed, till a decision is made by this Court.
Let affidavits be exchanged in each application according to the following direction:-
Affidavit-in-opposition by 12th January, 2015. List this application on 28th January, 2015. Affidavit-in-reply may be filed in the meantime.
Certified copy of this order, if applied for, be supplied to the parties upon compliance with requisite formalities.
(I. P. MUKERJI, J.) Pkd/GH A.R.[C.R.]