Calcutta High Court
Sesa International Limited vs Macsteel International Fzco on 27 January, 2009
Author: Patherya
Bench: Patherya
GA No. 179 of 2009
CS NO.11 OF 2009
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
SESA INTERNATIONAL LIMITED Plaintiff/Petitioner/Applicant
Versus
MACSTEEL INTERNATIONAL FZCO Defendant/Respondent
MR.ANINDYA MITRA,SR. ADVOCATE WITH MR.ABHRAJIT MITRA,ADVOCATE APPEAR BEFORE:
The Hon'ble JUSTICE PATHERYA Date : 27th January, 2009.
The Court : In a suit for mandatory injunction directing the respondent to issue a fresh revised contract in respect of 4000 MT of steel scrap and perpetual injunction restraining the respondent from proceeding before the London Court of International Arbitration an interim application has been filed for interim relief.
The case of the petitioner is that four agreements have been entered into between the plaintiff and the defendant for supply of goods. For the said purpose two letters of credit were opened by the bankers of the petitioner. Disputes arose between the parties and a meeting was held on 17th October, 2008. As agreed in the said meeting sales contracts were to be revised and the same were revised with a clause which was not acceptable to the petitioner. The said was intimated by facsimile message to the respondent. Thereafter steps were taken for invoking the letters of credit and due to discrepancies found by the bankers of the petitioner, payments under the letters of credit could not be made. Upon rejection of the payments under the letters of credit, the arbitration clause contained in the agreement between the parties was invoked and proceedings filed before the London Court of International Arbitration. The 2 Statement of claim along with the reference was received by the petitioner on 30th December, 2008 and as the fourteen days reply clause has been waived it is now incumbent upon the petitioner to nominate an arbitrator within 30 days from receipt i.e. 30th January, 2009.
Counsel for the petitioner submits that the letters of credit is an independent contract between the parties. The arbitration clause contained in the agreement between the parties does not form a part of the letters of credit. The grievance, if any, that the respondent may have, is in respect of the letters of credit and refusal of the petitioner's bankers to make payment. The said grievance cannot constitute a dispute under the agreement between the parties. Hence, the substratum of the arbitration proceedings is non-existent and the proceedings filed be stayed.
No notice of this application has been served on the respondent as the petitioner apprehends that upon receipt of notice steps adverse to its interest may be taken.
Having considered the facts of the case and after considering the terms of the letters of credit it is evident that the letters of credit do not envisage resolving of disputes by arbitration.
The agreement between the parties contained an arbitration clause. The rejection by the bankers of the petitioner is not a dispute arising out of the agreement. Accordingly, proceedings filed, prima facie, is not as per the agreement. The claim in the arbitration proceedings is based on the letters of credit which is an independent contract between the bankers.
In view of the aforesaid, there will be an order in terms of prayer (c) of the Notice of Motion till 6th February, 2009.
Matter to appear in the list on 5th February, 2009. 3 The petitioner is directed to communicate this order to the respondent both at its Bombay office and Dubai Office.
All parties concerned are to act on a xerox signed copy of this order on the usual undertakings.
( PATHERYA, J.) S.Bhattacharyya Assistant Registrar(C.R.)