Calcutta High Court
Siddhi Vinayak Industries Private ... vs Virgoz Oils & Fats Pte Limited on 7 September, 2009
Author: Biswanath Somadder
Bench: Surinder Singh Nijjar, Biswanath Somadder
In the High Court at Calcutta
Civil Appellate Jurisdiction
Original Side
Present:
The Hon'ble Justice Surinder Singh Nijjar, Chief Justice
And
The Hon'ble Justice Biswanath Somadder.
G.A. No. 1459 of 2009
APOT No. 190 of 2009
G.A. No. 640 of 2009
C.S. No. 61 of 2009
Siddhi Vinayak Industries Private Limited
Versus
Virgoz Oils & Fats PTE Limited
For the Appellant : Mr. S. N. Mukherjee, Sr. Adv.,
Mr. Moinak Bose, Adv
Mr. Aninda Bhattacharjee, Adv.
Ms. Rumpa Ghosh, Adv.
For the Respondent : Mr. Ranjan Bachawat, Adv.
Mr. Krishnaraj Thakkar, Adv.
Ms. Abha Pareek, Adv.
Heard on : 1.7.09, 7.7.09 & 14.7.09. Judgment on : 07.09.2009
SURINDER SINGH NIJJAR, C.J. : This is a plaintiff's appeal challenging the order of the Learned Single Judge dated 27th April, 2009 by which the Learned Single Judge vacated the ad interim order of injunction dated 20th March, 2009.
The plaintiff, hereinafter referred to as the appellant, is engaged in the business of import and sale of fats and oils of diverse nature. The respondents are engaged in business of sale of various kinds of fats and oils and are based in Singapore. In the usual course of business, between the period from December, 2007 to July, 2008, the appellant had imported for respondent about 2000 MT of various kinds of oils into India. The sale transactions between the parties were negotiated through brokers, namely, Raghunath Agency Pvt. Ltd. and one M/s. Green Commodities. Thereafter, the appellant did not enter into any further business transactions with respondent no.
1. It is pleaded by the appellant that in the usual course of business, brokers approach the appellant with offers from different exporters of edible oils for the plaintiff's consideration. On some occasions the offers were in the form of letters containing proposed terms and on some occasions the offers were in the form of proposed sale contracts. If the appellant expressed an interest in any of the deals, negotiations would follow, culminating in a contract, which would be executed by and between the appellant as purchaser and the foreign party as seller/exporter. The vice versa takes place where the appellant is the exporter from India and the foreign party is the purchaser.
The appellant relies on proposed sale of contracts forwarded by the two brokers to the appellant for its consideration dated July 22, 2008; July 23, 2008; August 6, 2008 and August 7, 2008. These are said to be amongst several proposed sale contracts received by the appellants in the usual course from the brokers at its office in Kolkata. The appellant not being interested in the proposed sales contracts mentioned above, negotiations did not follow. The appellant claims that no further contract was entered into by the parties. On 27th August, 2008, 23rd September, 2008, 25th September, 2008 and 9th October, 2008, the two brokers again forwarded vessel nominations to the appellant. Immediately, upon receiving the vessel nominations the appellant contacted brokers over telephone and informed them there was no contract between the parties nor had the appellant purchased any goods from respondent no. 1. Inspite of the firm refusal, one of the two brokers sent two e-mails dated 23rd September, 2008, informing that the shipment date had purportedly been extended by respondent no. 1. The two e-mails were also forwarded to respondent no. 1. On 24th September, 2008, the appellant through e-mail informed the two brokers that it was extremely surprised to receive the e-mails since it had already been conveyed by the appellant that there will no contract between the parties. There was no further response from respondent no. 1 or the two brokers. The appellant therefore, proceeded on the premise that the matter had been put to rest once and for all. Therefore, appellant was surprised to receive a communication from the respondent as well as the two brokers alleging breach of contract. On 28th February, 2009, the appellant received a communication dated 25th February, 2009 from respondent no. 2 requesting respondent no. 1 to nominate an arbitrator, as respondent no. 1 had initiated arbitration proceedings on the basis of the proposed contracts. This communication issued by respondent no. 2, according to the appellant, was illegal, null and void. In order to protect its interests, the appellant was left with no option but to file a civil suit no. 61 of 2009 in this court seeking annulment of the communication dated 25th February, 2009. Prayers were also made for perpetual injunction restraining respondent no. 1 from taking any step or further steps in connection with the reference commenced by it.
In that suit, the appellant took out an interlocutory application being GA no. 640 of 2009 seeking an interim order of injunction. The application came up for hearing on 20th March, 2009 and the Learned Single Judge was pleased to pass the following order:
"From the sales contracts filed it appears that the same have not been accepted by either the broker or the petitioner herein. Therefore, the question of the arbitration clause becoming operational does not arise. Based on the agreement a request for arbitration has been made and letter communicated invoking the arbitration clause has been forwarded to the petitioner on 28th February, 2009.
In view of Section 7 of the 1996 Act and non existence of an agreement the question of invoking the arbitration clause does not arise. Accordingly, the respondent no. 1 is restrained from taking any further steps in respect of the alleged sales contracts dated 22nd July, 2008, 23rd July, 2008, 6th August, 2008 and 7th August, 2008 till 31st March, 2009.
Matter to appear in the list on 27th March, 2009. All parties concerned are to act on a Xerox signed copy of this order on the usual undertaking."
This order was extended till 6th April, 2009 by order dated 30th March, 2009. On the returnable date, learned counsel for the respondents prayed for vacating of the interim order. After hearing the learned counsel for the parties, the Learned Single Judge on 27th April, 2009 vacated the interim order. Directions have been given for filing affidavits.
This appeal has been filed by the plaintiff/appellant challenging the aforesaid order.
We have heard the learned counsel for the parties. Mr. S. N. Mukherjee, learned senior counsel for the appellant submits that the Learned Single Judge erred in law in vacating the ad interim order of injunction, as there was no contract between the parties. So far as the appellant is concerned, the matter had been closed at the stage of proposal only. Since there was no binding contract between the parties, there was no question of breach of contract. No documents were produced by respondent no. 1 in court denying the plaintiff/appellant's e-mail dated 24th September, 2008. The proposed sale contracts were neither signed by the appellant, nor any acceptance or confirmation was given in respect of the contracts. The Learned Single Judge erred in law in concluding that sales contract dated 22nd July, 2008 confirms the business between the parties and that it needs no further confirmation from the appellant.
Anticipating the objections that would be taken by the respondents to the maintainability of the suit, the learned counsel submits that the injunction such as the one claimed in the present case, have been granted in other jurisdictions. In support of his submission the learned counsel relies on a judgment of the Court of Appeal in the case of Albon vs. Naza Motor Trading SDN BHD [Lloyd's Law Reports 2008 (1) 1]. Learned counsel further relies on a judgment of the Delhi High Court in the case of Union of India vs. Dabhol Power Company [IA No. 6663 of 2003 in Suit No. 1268 of 2003 decided on 5.5.2004] The learned counsel also relies on a judgment of the Supreme Court in the case of Atul Singh vs. Sunil Kumar Singh [(2008) 2 SCC 602] and submitted that since the appellant is claiming that there is no arbitration agreement between the parties, the communication sent by respondent no. 2 can be nullified by the civil court. Therefore, interim relief can be granted by the trial court. It is submitted that in case the interim relief is not granted, the appellant would suffer irreparable loss. Balance of convenience is also in favour of the appellant.
On the other hand, Mr. Ranjan Bachawat, learned counsel for the respondents submits that balance of convenience is not in favour of the appellant. In case interim order is granted, respondent no. 1 would be non-suited in the arbitration. On the other hand, if the arbitration proceedings are permitted to continue, the appellant will have a chance to challenge any award that may be made. In this case, there is no denial of the broker's agreements. However, it was suppressed before the Learned Single Judge. It is only when the appellant has been confronted with the broker's agreements, the same are accepted. However, new pleas are sought to be taken that the broker's agreement does not contain an arbitration clause. This factual submission has not been pleaded. It is only sought to be raised at the time of oral submissions made by Mr. Mukherjee. According to the learned counsel, such a plea cannot be permitted to be raised at this stage. In support of the submission, learned counsel relies on AIR 1965 Supreme Court 1752. According to the learned counsel, the appellant has told blatant lies in paragraphs 5, 6, 8 and 9 of the stay petition. On 23rd September, 2008, respondent no. 1 invokes the arbitration agreement. The proceedings have been continuing. The suit has been filed in March, 2009, only after the arbitral forum addressed a communication to the appellant. On merits it is submitted by Mr. Bachawat that in view the communication dated 22nd July, 2008, there was no further need for any confirmation from the appellant. In fact, the appellant is seeking to wriggle out of the contractual obligations as the price of oil has fallen. The appellant is well aware of usual practice. In fact, business continues as usual between the parties inspite of the present litigation. On law, it is submitted that under Section 16 of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as the Arbitration Act, 1996) the arbitral tribunal is empowered to rule on its own jurisdiction. It can also decide as to whether there is a valid arbitration agreement between the parties. Therefore, absolutely, no prejudice would be caused to the appellant in the arbitration proceedings.
The arbitral forum, in the present case, is situated in Malaysia. Therefore, any award made by the arbitral forum would be a foreign award. In case an award is made in favour of the respondent no. 1, the appellant shall be entitled to challenge the enforcement of the award. According to the learned counsel, in such circumstances, the arbitration proceedings would take preference to the civil suit. In support of his submission, learned counsel relies on the judgment of the Supreme Court in the case of Kvaerner Cementation India Ltd. vs. Bajranglai Agarwal [(2001) 6 Supreme Court 265]. Learned counsel submits that in view of Section 16 of the Arbitration Act, 1996 the civil suit would not be maintainable. Learned counsel also relies on the judgment of Dressor Rand S.A. vs. Bindal Agro Chem Ltd. & Anr. K.G.Khosla Compressors Ltd. & Anr. [Civil Appeal No. 1455-56 of 1994], in support of the submission that interim relief cannot be granted by domestic courts in respect of an international arbitration. Learned counsel also distinguished the judgment cited by Mr. Mukherjee in the case of Albon (supra) on the ground that it was based on a concession. In any case, in that case, JVA was forged to defeat the English proceedings, after the suit was filed. It was also held that the plaintiff had been able to show that the proceedings were oppressive and vexatious. Mr. Mukherjee in reply submits that there was no concession made in the Albon (supra) case. In fact the issue had been decided by the earlier judgment. Therefore, there was no contest. The judgment of the Supreme Court in the case of Kvaerner Cementation (supra) is no longer good law in view of the subsequent judgment of the Supreme Court in the case of SBP & Co. vs. Patel Engineering Ltd. [2005 (8) SCC 618]. In view of the aforesaid judgment there can be no exclusive conferment of jurisdiction on the arbitral tribunal. In the case of Dressor Rand (supra) the Supreme Court was considering the provisions of the old act. At that time, Section 32 was in operation which provided an express bar to jurisdiction of civil courts. In any event, in that case, the injunction sought in that case was against the arbitral tribunal and not against the party. Learned counsel submits that the objection with regard to new points raised at the appellate stage is without any basis. The submissions have been made on the basis of the documents produced by respondent no. 1.
We have considered the submissions made by the learned counsel for the parties.
Entire controversy between the parties, at this stage, is whether there is any concluded contract between the parties. The secondary issue raised by Mr. Mukherjee at the stage of arguments is that proposal sent by brokers, even if they are accepted as contracts, do not contain an arbitration clause. The Learned Single Judge by looking at the sale contracts relied on by the appellant in the interlocutory application prima facie formed an opinion that the documents do not disclose the concluded contract. The aforesaid opinion was based on the submission that the proposal had not been accepted by either the broker or the petitioner (appellant herein). However, after hearing the respondents, the Learned Single Judge has formed a prima facie opinion that the sales contract dated 22nd July, 2008 confirms the business between the parties and therefore, it needs no further confirmation from the appellant. The Learned Single Judge also observes that the appellant has failed to produce any document, for a period prior to the filing of the suit, from which it would appear that the confirmation was necessary even after issuance of the sales contract. Since, there was a concluded contract between the parties, respondent no. 1 was entitled to invoke the arbitration clause. Since, the aforesaid prima facie opinions have been recorded by the Learned Single Judge after hearing the parties, it would not be appropriate to enter into the merits of the controversy at this stage.
However, we have examined the judgments cited by the learned counsel for the appellant at this stage. In the case of Albon (supra), the plaintiff, Mr. Albon had filed an action claiming over payment to Naza Motors. The parties had entered into a Motor Vehicle Distribution Agreement governed by English Law. The defendants, Naza Motors, applied for a stay of the proceeding on the ground that the parties had entered into a JVA governed by Malaysian law and providing for arbitration in Malaysia. Mr. Albon asserted that his signature on the JVA had been forged and that the forgery was brought to the existence after Mr. Albon issued his proceedings in order to stop the English proceedings in that track. Injunction prayed for was granted to Naza Motors appeal against the aforesaid order. When the matter came up before the Court of Appeal, it was accepted that genuineness of the JVA is to be determined by the English Court. It was also submitted on behalf of the Naza Motors that it will not be asking the arbitration tribunal to determine that question. It was stated that in view of the above, there was no need for any injunction restraining the arbitrators from relying on the agreement's authenticity. The whole issue before the trial court as summed up by the Learned Single Judge was as to whether it is right to leave it to the Arbitrators to decide whether to proceed with the arbitration in the interim without prejudice and subject to any determination by the court on the issue of authenticity, and accordingly of their jurisdiction. By the time the matter reached the Court of Appeal, the position is summed up as follows:
"13 - if one does that, one reaches this position:
(i) there is a sufficiently good arguable case for Mr. Albon to be justified in issuing and continuing proceedings in England;
(ii) there is likewise a good arguable case not only that Mr. Albon's signature on the JVA has been forged but that the forgery was brought into existence after Mr. Albon issued his proceedings in order to stop the English proceedings in their tracks;
(iii) the present position is that the English Court is to the final judge on the question of the authenticity of the JVA so that the question will not at this stage be determined by the arbitrators."
Therefore, it was held as follows:
"In these circumstances it does seem to me that the immediate and co-extensive continuance of arbitration proceedings is indeed unconscionable (in the sense of being oppressive) for very much the reasons which the judge himself gave."
Paragraph 16 of the judgment leaves no manner of doubt that the Court of appeal dismissed the appeal in view of the exceptional circumstances of the case. It is observed as follows:
"16. That leaves for consideration the argument relating to the autonomy of the arbitration tribunal. It is said that the caution exercised by the court relating to anti-suit injunctions should be increased or even re-doubled in the case of an anti- arbitration injunction. It is further said that the judge is effectively ease-managing the arbitration and that it should be for the arbitrators, not the English Court, to decide whether the arbitration should proceed pending resolution of the genuineness of the JVA.
In our opinion, Mr. Bachawat is correct in his submission that this judgment can be of little assistance to the appellant as there are no exceptional circumstances involved in the present case. In the case of Atul Singh (supra) the appellant had filed a suit for a declaration that the reconstituted Partnership Deed was illegal and void. A prayer was made also for a decree for rendition of accounts.
There were protracted proceedings between the parties. The defendant at some stage moved an application for reference of the dispute to arbitration. The petition for reference was dismissed by the trial court. The civil revision filed by the defendant was allowed by the High Court. However, no specific order was passed making reference to arbitration. The plaintiff/appellant was in appeal before the Supreme Court against the order of the High Court. The appellant submitted before the Supreme Court that initially the defendant had moved an application for staying the suit under Section 34 of the Arbitration Act, 1940. Thereafter, the application was moved under Section 8 of the Act of 1996. Even this application was not accompanied by the original arbitration agreement.
Therefore, the High Court erred in law in not dismissing the aforesaid application.
On the other hand, the respondents submitted that the appellants were basing their claim on a Partnership deal which contains an arbitration clause. Therefore, the High Court rightly referred the dispute for arbitration. In these circumstances, the Supreme Court considered Sections 7 and 8 of the 1996 Act. On facts, it was held as follows:
"16. It is an admitted fact that neither Shri Rajendra Prasad Singh nor are the plaintiffs parties to the partnership deed dated 17.2.1992. There is no document as defined in Section 7 of the 1996 Act which may contain the signature of either Shri Rajendra Prasad Singh or the plaintiffs. Similarly, there is no document as contemplated by clauses (b) or (c) of sub-section (4) of Section 7 of the 1996 Act from which it may be spelled out that either Rajendra Prasad Singh or the plaintiffs were parties to clause relating to arbitration contained in the partnership deed dated 17.2.1992. It is also an admitted fact that Shri Rajendra Prasad Singh was alive when the said partnership deed dated 17.2.1992 was executed. Therefore, on the face of it Section 8 of the 1996 Act would not apply to any dispute concerning the said partnership deed dated 17.2.1992 and the matter cannot be referred to arbitration.
17. The first relief claimed by the plaintiffs in the suit is a decree for declaration that the reconstituted partnership deed dated 17.2.1992 was illegal and void and there was no intention or desire of Shri Rajendra Prasad Singh to retire from the partnership and further that the plaintiffs being heirs of Shri Rajendra Prasad Singh will be deemed to be continuing as partners to the extent of his share. It is true that the plaintiffs have also sought rendition of accounts and their share of profits from the partnership as well as interest over the unsecured loan and the principal amount of unsecured loan on rendition of accounts. For getting this relief, the plaintiffs undoubtedly rely upon the partnership deed dated 13.1.1989. However, this deed could be relied upon and form the basis of the claim of the plaintiffs only if the partnership deed dated 17.2.1992 was declared as void. If the deed dated 17.2.1992 was not declared as void and remained valid and operative, the plaintiffs could not fall back upon the earlier partnership deed dated 13.1.1989 to claim rendition of accounts and their share of profits. Therefore, in order to get their share of profits from the partnership business, it was absolutely essential for the appellant- plaintiffs to have the partnership deed dated 17.2.1992 declared as illegal, void and inoperative. The relief for such a declaration could only be granted by the civil court and not by an arbitrator as they or Shri Rajendra Prasad Singh through whom the plaintiffs derive title, are not party to the said deed. The trial court had, therefore, rightly held that the matter could not be referred to arbitration and the view to the contrary taken by the High Court is clearly illegal."
The aforesaid observations make it abundantly clear that the ratio of the aforesaid judgment would not be applicable in the facts and circumstances of this case. In the case of Dabhol Power Co. (supra), the plaintiff had filed a suit for a permanent injunction with the prayer to restrain the defendant from proceedings with the arbitral proceedings till the conclusion and final outcome of proceedings pending before the Bombay High Court and Supreme Court of India. On behalf of the defendants it was submitted that the plaintiff had no right to question the jurisdiction of the arbitral tribunal. Under the agreement the parties are agreed that the curial law applicable to the arbitral proceedings would be of U.K. Therefore, all applications touching the validity of the arbitration proceedings could only be entertained by the courts in England. Upon examination of the factual situation, in that particular case, a Learned Single Judge of the Delhi High Court held as follows:
"15. Coming to the question as to whether a prima facie case is made out or not in favour of the plaintiff for ad-interim injunction as prayed this Court finds that prima facie neither Section 5 nor Section 45 of the Arbitration and Conciliation Act, 1996 oust the jurisdiction of this Court from issuing an injunction if it finds that the arbitral proceedings against the plaintiff in a foreign country are oppressive and call for interference. The plaintiff is not asking this Court to stay the arbitral proceedings indefinitely but is merely praying that the defendant be restrained from prosecuting the arbitral proceedings till the time the Supreme Court of India returns its findings in regard to the jurisdiction of Maharashtra Electricity Regulation Commission......
17. The contention of learned counsel for the defendant that clauses (7) and (10(b)) of the Counter Guarantee clearly convey that payment was not subject to adjudication by any court or Tribunal and any sum expressed to be payable under the guarantee had to be paid by the plaintiff-guarantor is not prima facie sustainable on account of the fact that clause (1) of the Counter Guarantee is the soul of the Counter Guarantee and neither Clause (7) nor Clause (10(b)) can render Clause (1) otiose or meaningless is. No fixed sum was stipulated to be payable to the beneficiary under the Counter Guarantee and since Clause (1) says "sum of money validly due", the determination of the amount validly due to the defendant assumes great significance. Had the intention of the parties been to obtain or furnish an unconditional guarantee, under which any sum demanded by the defendant was payable by the guarantor without demur, it would have been specifically so stated instead of using words "sum of money validly due".
23. Learned counsel for the defendant has argued that the pleas that are being raised by the plaintiff before this court could be and have been raised before the arbitral Tribunal also. This submission has no force considering the fact that the highest court of the land is likely to pronounce its decision shortly on a crucial question and as such, there is no justification for the arbitral Tribunal to hold a parallel inquiry into the same question and give a finding thereon which may be contrary to the view of the Supreme Court. This court being a Court of equity has inherent powers to injunct a party from proceeding further with oppressive proceedings in a foreign country especially when temporary deferment thereof is not going to make much difference rather all the parties would be benefited by the pronouncement of the Supreme Court on a crucial question and the Arbitrators also would be guided on further course of action. In Hellsbury's Laws of England Volume 21 p. 407 with regard to foreign proceedings, it is stated that the court may restrain a person within its jurisdiction form institution or prosecuting proceedings in a foreign court whenever the circumstances of the case make such an interposition necessary or expedient. It is stated that this jurisdiction can be exercised whenever there is vexation or oppression. It is stated that this jurisdiction can be exercised whenever there is vexation or oppression. In ONGC vs. Western Company of North America the Apex Court passed an injunction restraining the respondent from proceeding further with an act on in the American Court on the ground that the proceedings were oppressive. The plea that the High Court had no jurisdiction to grant such a restraint order even if the proceedings in the foreign Court were oppressive was rejected and it was held that an a case where the foreign Court is found to be oppressive, the Courts have inherent jurisdiction to grant a restraint order.
24. At this stage, this court does not find it necessary to undertake an in-depth examination of various issues raised before this Court. These issues relate to the implications of rescission of PPA by MSEB; the liability of the guarantor if the principle obligors is not held liable to pay any amount etc. Suffice would it be to say that a guarantee is which the words "validly due" are deliberately introduced cannot be called an unconditional guarantee under which the guarantor is obliged to pay the demanded amount without raising any objection, without any demur and without any reference to the disputes between the main parties.
26. Under the circumstances, this Court is of the considered view that a prima facie case is made out for restraining the defendant from proceedings further with the Arbitral proceedings in London till the decision of the Supreme Court on the question of the jurisdiction of MERC is pronounced. The proceedings in London in which the plaintiff is already raising this question appear to be oppressive for the reason that in spite of the pendency of the matter before the Apex Court, the arbitrators are trying to proceed further without Realizing that decision of the Apex Court would go to the root of the matter pending before them. In case no ad interim injunction is granted the plaintiff would suffer irreparable loss/injury inasmuch as not only that it will have to participate in the arbitral proceedings at London buy may also suffer an Award in spite of the pendency of a crucial issue before Supreme Court. Balance of convenience also is more in favour of the temporary deferment of the arbitral proceedings rather than permitting these to go ahead which may ultimately turn out to be an exercise in futility at an exorbitant cost for the plaintiff. The mere fact that at the instance of Indian Financial Institutions, a Receiver has been appointed and the money, if paid by the plaintiff would go to them only, is not sufficient to hold that the balance of convenience is more in favor of the defendant. As discussed hereinbefore, the plaintiff prima facie does not appear to be liable to pay any amount to the dependant under the counter guarantee unless the said amount is found validly due to the defendant from the principle obligor. Had the plaintiff would have fallen flat on the ground but in view of the conditions laid down in Clause (1) of the counter guarantee, balance of convenience is more in favor of the plaintiff to stay the arbitral proceedings at least till the question of the jurisdiction of MER to look into the recession of PPA is decided by the Supreme Court of India. Temporary deferment of the arbitral proceedings are not going to cause any irreparable loss/injury to the defendant or put it to undue inconvenience. Law must not countenance amassment of one party by another. Technicalities cannot stand in the way of justice and obstruct its flow to the needy. Courts are always under a duty to ensure fair play and equal justice between the parties and for this purpose, Section 151 of the Core of Civil Procedure can be safely invoked."
We are of the considered opinion that the aforesaid judgment will be of no assistance to the appellant as the relief has been granted therein as the matter of temporary expedience to avoid the outcome of a crucial situation pending before the Supreme Court. It has been clearly observed by the Learned Single Judge that the dispute pending before the Supreme Court would strike at the very root of the matter. Furthermore, in the facts and circumstances of the case it has been held that to permit the arbitral proceedings to continue would be apprehensive and unconscionable.
We may now consider the judgment cited by Mr. Bachawat. In the case of Vaerner Cementation (supra) the Supreme Court has clearly held as follows:
"2. Mr. Dave, the learned senior counsel appearing for the petitioner contends that the jurisdiction of the Civil Court need not be inferentially held to be ousted unless any statute on the face of it excludes the same and judged from that angle when a party assails the existence of an arbitration agreement, which would confer jurisdiction on an arbitral Tribunal, the Court committed error in not granting an order of jurisdiction. There cannot be any dispute that in the absence of any arbitration clause in the agreement, no dispute could be referred for arbitration to an arbitral Tribunal. But, bearing in mind the very object with which the Arbitration and Conciliation Act, 1996 has been enacted and the provisions thereof contained in Section 16 conferring the power on the arbitral Tribunal to rule on its own jurisdiction including ruling on any objection with respect to existence or validity of the arbitration agreement, we have no doubt in our mind that the Civil Court cannot have jurisdiction to go into that question. A bare reading of Section 16 makes it explicitly clear that the arbitral Tribunal has the power to rule on its own jurisdiction even when any objection with respect to existence or validity of the arbitration agreement is raised and a conjoint reading of subsections (2), (4) and (6) of Section 16 would make it clear that such a decision would be amenable to be assailed within the ambit of Section 34 of the Act. In this view of the matter, we see no infirmity with the impugned order so as to be interfered with by this Court. The petitioner who is a party to the arbitral proceedings may raise the question of jurisdiction of the Arbitrator as well as the objection on the ground of non-existence of any arbitration agreement in the so-called dispute in question and such an objection being raised, the Arbitrator would do well in disposing of the same as a preliminary issue so that it may not be necessary to go into the entire gamut of arbitration proceedings."
In our opinion, the fact situation in the present proceeding would be governed by the aforesaid judgment of the Supreme Court. In the case of Dressor Rand (supra) the Supreme Court has again observed as follows:
"These appeals arise out of interim orders made by the High Court in the two suits staying further proceedings before the International Chamber of Commerce (ICC). We are afraid, this kind of relief may not be permissible at all in the domestic Courts in respect of an international arbitration regulated by the provisions of the Foreign Awards, 1961. The High Court, we regret to have to say, was in serious error in entertaining this plea and what is more, grating it ex-parte."
We, however, find substance in the findings of Mr. Mukherjee that in view of the law laid down by the Supreme Court in the case of Patel Engineering (supra) it would not be possible to accept the argument that there is an exclusive conferment of jurisdiction on the arbitral tribunal, to decide on the existence or validity of the arbitration agreement. In our opinion, Section 16 of the 1996 Act is an enabling Section providing that the arbitral tribunal shall be competent to rule on its own jurisdiction. This include ruling on any objection with respect to the existence or validity of the arbitration agreement. This provision would not exclude the jurisdiction of the civil courts. However, given the consensual nature of the arbitration proceedings, the Court would be cautious in entertaining a plea which could be raised by the parties before the arbitral tribunal. It would, however, be open to the court to examine the prayer for injunction in cases where it is pleaded that the continuation of arbitral proceedings would be vexatious, unconscionable or apprehensive. This would also seem to be the view expressed by the Court of Appeal in the case of Albon (supra). We are also of the opinion that before any injunction could be granted, a party would have to establish a strong prima facie case, especially if the arbitral proceedings are to be held in another country.
In the present case, the appellant had submitted before the Learned Single Judge that the contract had not been accepted, either by the appellant or by the broker. In fact, the broker's contract was not placed before the Learned Single Judge. The aforesaid broker contract was accepted before us. It was, however, submitted that it does not contain an arbitration clause. A bare perusal of the document dated 27th July, 2008 clearly shows that it is the sale contract with an assigned number. It makes a categoric statement that the broker confirms the details of the business tabulated in the documents. It has been addressed to the appellant. The date of contract is clearly stated as 22nd July, 2008. The appellant is indicated as buyer. The broker's reference is given with regard to the payment where it clearly provided that the same shall be by irrevocable, clean and unrestricted Letter of Credit at sight. It further provides that the Letter of Credit must be established/opened through a first class international bank and advised to the broker respondent no. 1. At the end of the contract, there is a clear stipulation to sign and return one copy of the sale confirmation by facsimile transmission to the broker. It is further provided that the validity of the contract will be unaffected by the non-return of the counter-confirmation duly signed by the appellants. Other sale contracts mentioned in the pleading are in identical terms.
In our opinion, the appellant has failed to make out a prima facie case of oppression. We are also of the opinion that the balance of convenience would not be in favour of the appellant. In such circumstances, we are of the opinion that the order of the Learned Single Judge does not call for any interference.
The appeal is, therefore, dismissed.
( Surinder Singh Nijjar, C.J.) I agree.
(Biswanath Somadder, J.) Later :
After the judgment is pronounced, Mr. Moinak Bose, learned counsel for the appellant prays for stay, which is considered and declined.
( Surinder Singh Nijjar, C.J.) I agree ( Biswanath Somadder, J.)