Punjab-Haryana High Court
M/S Clinirx Research Pvt Ltd vs M/S Bilcare Ltd India on 23 September, 2014
Author: Rajiv Narain Raina
Bench: Rajiv Narain Raina
FAO No. 3765 of 2014 -1-
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
FAO No. 3765 of 2014
Date of Decision: 23.09.2014
M/s CliniRx Research Private Ltd. ... Appellant
Versus
M/s Bilcare Limited ... Respondent
CORAM:- HON'BLE MR. JUSTICE RAJIV NARAIN RAINA
Present: Mr.ML Saggar, Senior Advocate, with
Mr. JS Dhaliwal, Advocate,
for the appellant.
Dr. Anand Kumar Bishnoi, Advocate,
for the respondent.
1. To be referred to the Reporters or not? Yes.
2. Whether the judgment should be reported in the Digest? Yes.
RAJIV NARAIN RAINA, J.
This is an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (for short 'the Act') challenging the order dated 26 th April, 2013 passed by the learned Additional District Judge, Gurgaon, dismissing the application under Section 9 of the Act presented by the appellant for securing interim measures of protection. Learned District Judge, Gurgaon, has arrived at the conclusion that there was no agreement between the parties which contained an arbitration clause and therefore, the disputes between the parties are not arbitrable on which premiss the application has been declined. The appellant has relied upon a draft quotation dated 4th May, 2010 signed and issued by the respondent- Company and mailed to the appellant through a covering letter of even date requesting the appellant to sign the accompanying document and to send it back by e-mail if they wished to enter into a business relationship on the terms proposed. They went further to suggest that if the quotation was FAO No. 3765 of 2014 -2- accepted and signed, it would be mutually beneficial to both the parties in the long term. This quotation together with the rates at which the respondent was agreeable to enter into a business relationship were recorded in the opening sheet of the quotation. The interpretation of the termms and condotions of the proposed quotation is directly in issue in the present case as to whether it is an offer agreement duly acknowledged and accepted by the other side which is sufficient to make it a binding contract between the parties. If it is a contract pure and simple, then the further question is; does it contain an arbitration clause? If yes, then its terms and conditions would become relevant to the moot issue and lie within the jurisdiction of the arbitrator. Clause 20 of the quotation pertains to dispute resolution and reads as under:-
"20. Dispute resolution, if a dispute arises between the parties in connection with this quotation, the respective presidents or senior executives of Bilcare and Client shall first attempt to resolve the dispute. If such parties cannot resolve the dispute, such dispute shall be resolved in courts of India by binding arbitration in accordance with the then existing commercial arbitration rules of the Arbitration and Conciliation Act. Judgment on any arbitration award may be entered by any court having jurisdiction."
Clause 21 goes further when deals with survival of the quotation, subject to execution. Clause 21 reads as follows:-
"21. Survival, subject to execution, the rights and obligation of Client and Bilcare in paragraphs 4, 5, 8, 9, 10, 12, 14, 15, 17, FAO No. 3765 of 2014 -3- 18, 19, 20 & 21 of these standard terms and conditions shall survive termination or expiration of this quotation."
What is meant by this clause is that when once the quotation is accepted as a contract and business dealings begin upon its terms and the goods are supplied then is it that the rights and obligations of the parties enumerated in paragraphs 4, 5, 8 to 10, 12, 14, 15 and 17 to 21 would operate as binding on the parties; which respondent called the standard terms and conditions of the proposed quotation which when accepted by the appellant would survive the termination or expiration of the quotation.
It is not far to see that it would be another matter if the quotation was not accepted by the appellant to mature into a contract, but that is not the case. On their part, the appellant agreed in writing to abide by the terms and conditions of the draft quotation dated 4 th May, 2010. Their acknowledgment due is found at page No.69 of the paper book to abide by those clauses. It is the common case of the parties that this quotation was worked by both the parties for numerous transactions in doing business mutually for each other's benefit in performance of the contract on terms agreed upon by acceptance of the offer by the appellant. Sadly, disputes and differences arose between the parties with respect to custody and storage of medicines/clinical drugs used for research by the appellant and storage charges claimed by the respondent company and the return of remanent drugs for their destruction after the research work was complete, as law required by law. The appellant is a clinical research organization which has no storage facility of its own and have to spend money for care of drugs imported from the producer in Italy. The subject matter medicines/drugs are imported from a company in Italy, who are the sponsors of the products for FAO No. 3765 of 2014 -4- their India clients, including the appellant. There is no dispute that the terms of import are regulated by the Drugs Controller General of India (DCGI) under the Drugs and Cosmetics Act, 1940. The respondent company runs its specialized storage facility at Pune with a facility within the jurisdiction of this Court under permissions granted by the regulatory authority in government to run and operate such a facility in which these hazardous drugs are stored for them to be rendered safe for nearby humanity and to accessed from by requisition whenever research purposes require transport to Gurgaon.
It is trite that the law of Arbitration does not require any particular standard form agreement to be a binding contract with an arbitration clause. Much would depend on the intention of the parties to contract which purpose can take many forms including an offer and acceptance based on correspondence exchanged between the parties or as in this case where a proposed agreement was transmitted to the client for its consideration to enter into a contract which was accepted without demur. It was a proposal to enter into a contract and when acted upon and partly performed then it would take the many colours of a binding contract between the parties, call it a 'quotation' or by any other name. Description of the document is inconclusive of its binding nature. The nomenclature is not determinative of such a participatory exercise, one proposing, the other accepting in principle the working relationship in terms of money. Thus read, the quotation seen by clauses 20 and 21 reproduced above are clear enough that the disputes, in case they arise, would be settled by arbitration process when the quotation was communicated by the respondent and duly accepted, signed and sent back to the appellant as the acceptable conditions FAO No. 3765 of 2014 -5- of business. The deal clinched by both parties to be the terms of a business relationship later to be duly acted upon. In this way, all the essential ingredients of a contract proper stand satisfied to bring forth a binding document. In this view of the matter, the learned court a quo had clearly misread the quotation as one which is neither an agreement nor a contract nor one containing any arbitration clause. There has therefore been a monumental failure to notice, understand and deal with the crucial clauses 20 and 21 of the quotation which is found to be an enforceable agreement by itself containing an arbitration clause. The Court a quo kept in sub silentio without taking any notice of the most material aspect of the case only to burden this Court to spend time on such a non-issue but to reach a conclusion by recording reasons. The trial court must understand that the less it appreciates the niceties of law the more it costs this Court very expensive time. A few extra minutes spent on a case at the trial court level in court to come to grips with a case will grant more time to this Court to address more important matters of the day. If the trial court fails to read a document on which the foundation of the case rests, then God help us. The trial court appears to have be looking for a contract signed on 'one page' as one would look to a format prescribed in the Appendix to the Civil Procedure Code, 1908 and in many other such enactments which prescribe model forms, directory by nature. The trial court failed to appreciate that it is the substance that matters and not the form.
Aggrieved by the order of the learned District Judge, Gurgaon, the appellant, almost blind to the surrreality of a non-single page signed proposed contract containing an arbitration clause therein, written albeit by the respondent company itself, after which it was duly forwarded by it to the FAO No. 3765 of 2014 -6- appellant by electronic mail, which was readily acceded to and signed in tokence of its acceptance of the terms and conditions of the proposed agreement to be the governing relationship between the disputing parties. filed a review application to assail the order of the learned trial court. But the same was dismissed on 21st April, 2014. The Court has held that the review application is not maintainable on the provisions of Section 114 of the Code of Civil Procedure, 1908 and still further, there is no provision in the Arbitration and Conciliation Act, 1996 for such a judicial review. Aggrieved by both the orders, the present appeal was filed on 26 th May, 2014 and notice of motion was issued by this court on 28 th May, 2014 to the respondent by a partially reasoned interim order on the issues arising for consideration with respect to the interpretation of the term 'quotation' in the present scenario.
The respondent entered appearance and contested the appeal. It is their reiterated submission that there is no agreement much less an arbitration clause and the quotation is of mere paper value and of no legal consequence and therefore the disputes are not open to be settled by arbitration. On merits the respondent company urges that right to custody of goods enures till they recover money claimed as due to them from the appellant for storage of the goods and this is a legally permissible act in distraint of movable property since the respondent has a legal right to retain lien on the goods (clinical drugs) in their storage in discharge of debt owed to them. However, this Court is not called upon to express a view on merits since I find presence of an arbitration clause and the disputes would have to be arbitrated before the private forum which alone has the jurisdiction to adjudicate.
FAO No. 3765 of 2014 -7-
As to the correctness of the order passed by the learned Additional District Judge, Gurgaon, on the application under Section 114(a) of CPC for review of judgment dated 26th April, 2013, the Court has found no error on the face of the order since viewed from narrow and restricted review jurisdiction. I have no doubt in my mind that the offer made by the respondent to the appellant through a quotation accepted by them and business transacted over a period of time then clause 20 would come into operation and the disputes can only be decided through arbitration. If the quotation is terminated disputes are still arbitrable not because the appellant says so but because of what the respondent offered as an integral part of business dealings for a mutually beneficial business relationship.
For the foregoing reasons, the appeal is accepted and both the impugned orders are set aside.
Since serious issues of human health arise from the possibility of exposure to hazardous drugs stored by the respondent and are involved it will serve no useful social purpose if the matter is unnecessarily delayed and therefore, while setting aside the orders in appeal, a direction is issued to the learned Additional District Judge, Gurgaon to examine the merits of the case in accordance with the mandates of Section 9 of the Arbitration and Conciliation Act, 1996 and to pass a fresh order. The parties are directed to appear before the learned Additional District Judge, Gurgaon, on 20.10.2014. Learned Additional District Judge, Guragon, would hear both the parties and pass final orders on the application for interim measures within the next 14 working days from the date of appearance.
23.09.2014 (RAJIV NARAIN RAINA)
monika JUDGE
MONIKA VERMA
2014.10.10 09:52
I attest to the accuracy and
authenticity of this document
chandigarh