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Showing contexts for: MOU Contract in Ksl & Industries Ltd vs National Textiles Corporation Ltd on 14 August, 2012Matching Fragments
20. The respondent filed an additional affidavit in support of its reply. The respondent once again claimed that the MOU dated 14.11.2008, executed between the parties, is not a contract. It would have fructified into a contract, only if and when each one of the three contracts, referred to as the definitive agreements, specified in clause 1.4 of the MOU had been executed by the parties. Since the definitive agreements have not been executed, the MOU remains only an agreement to agree, and is not a binding contract. The respondent submits that the MOU is a "if" contract, namely, the contract will come into being if the terms and conditions set out therein, i.e., the execution of the definitive agreements in clause 1.4, are fulfilled. The respondent submits that clause 11.4 of the MOU provides that any amendment thereto has to be in writing and signed by each party. No amendment in relation to clause 11.4, regarding the term of the MOU, was ever signed. It is also argued that by virtue of clause 11.6 of the MOU, no case of waiver can be advanced by the petitioner.
21. The respondent further submits that the MOU is not a specifically enforceable contract because money is an adequate relief and compensation for its non-performance, assuming that there is non- performance of the MOU on the part of the respondent. The respondent invokes Section 41(e) and Section 14 of the Specific Relief Act, 1963, to submit that the MOU is incapable of being specifically performed.
Petitioner's submissions
22. Mr. Krishnan Venugopal, Learned Senior counsel for the petitioner submits that upon the acceptance of KSL‟s bid and the execution of the MOU, a concluded contract came into existence. The fact that the Definitive agreements remained to be signed, on performance by the parties of their respective obligations under the MOU, does not mean that that the MOU was a mere "agreement to agree". The exact content of the Definitive Agreements was known in advance to the parties, because the forms of agreements were already annexed to the MOU. There was nothing material left to be agreed between the parties. Further, the consideration that was to flow from one party to the other parties was specified in the MOU itself and this consideration was to be exchanged before the execution of the Definitive Agreements.
26. Petitioner submits that from the conduct of the parties it is established that the MOU was a concluded contract when entered into, and cannot be taken as an „if‟ contract. Considerations have flown from the petitioner under the MOU, and the mutual obligations are certain, and binding on the parties. He further submits that, where the parties have agreed upon the essential terms, the dealing between them is treated as a concluded contract, even if some insignificant terms remain to be agreed, and a formal contract is yet to be executed. He submits that clauses 4.1 (ii) and clause 11.1 make it clear that parties understood the MOU to be a binding agreement and a concluded contract. Consideration of Rs. 8.40 crores had flown under the three MOUs from the three petitioners to the respondent. Reliance is placed on Trimex International FZE Ltd. v. Vedanta Aluminium Ltd., (2010) 3 SCC 1. It is argued that the MOU is, therefore, enforceable.
Discussion
62. The scope of enquiry in these proceedings is limited to the examination of the issues raised by the parties only at a prima facie stage. The court while exercising its jurisdiction under Section 9 of the Act does not finally determine any issue of fact or of law, which fall within the jurisdiction of the Arbitral Tribunal to determine. The interpretation of the terms of the Contract/MOU, as also the determination of the scope of the Contract/MOU would eventually, and finally, fall for determination of the Arbitral Tribunal. The court while dealing with a petition under Section 9 of the Act applies the same principle as are applicable to the determination of an application under Order 39 Rules 1 & 2 of the CPC in a pending suit. Thus, the examination of the submission of the parties, as well as the terms of the MOU, would be made only to assess the strength of the petitioner‟s case on a prima facie basis, and any observation made during the course of such evaluation would, obviously, not be binding either on the parties or the Arbitral Tribunal, which has the jurisdiction to determine all such issues of fact and law independently, without, in any manner being influenced by any observation that may be made in the present order.