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       REPORTABLE

           IN THE SUPREME COURT OF INDIA

           CIVIL ORIGINAL/APPELLATE JURISDICTION

            ARBITRATION PETITION (CIVIL) NO. 15/2020   

Balasore Alloys Limited            .…  Petitioner(s)

Versus

Medima LLC                         …. Respondent(s)

WITH

SPECIAL LEAVE PETITION (CIVIL) NO. 10264 OF 2020

J U D G M E N T

1.The Applicant ­ Balasore Alloys Limited is before this

Court in this petition filed under Section 11(6) read with

Seciton 11(12)(a) of the Arbitration and Conciliation Act,

1996 (‘Act, 1996’ for short) praying that a sole arbitrator be

appointed to adjudicate upon all disputes that have arisen

between the parties in connection with the 37 purchase

orders referred to in the application.   Alternatively, it is

prayed that the second arbitrator be appointed on account

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of the failure of the respondent – Medima LLC to nominate

an arbitrator in terms of the contracts.

2.The applicant is a manufacturer of High Carbon Ferro

Chrome.   The applicant and the respondent accordingly,

entered into transactions whereby the applicant agreed to

supply the High Carbon Ferro Chrome manufactured by

them to the respondent for sale of the same in the territory

of   USA   and   Canada.     Initially   an   Agreement   dated

19.06.2017 limited to the sale of 2000 MT was entered into.

Pursuant   to   such   transaction   37   purchase   orders   were

placed   by   the   respondent   in   favour   of   the   applicant

specifying details of the supply to be made under each of the

purchase orders.   The parties had also entered into an

Agreement   dated   31.03.2018   relating   to   the   same

transaction   whereunder   certain   terms   as   enumerated

therein   were   agreed   upon.     In   respect   of   the   said

transactions   certain   disputes   have   arisen   between   the

parties which is required to be resolved through arbitration. 

3.The applicant, therefore, while seeking for appointment

of an arbitrator to resolve such disputes has sought to rely

on Clause­7 in the said 37 purchase orders providing for

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resolution of disputes through arbitration by the Arbitral

Tribunal   to   be   constituted   as   provided   therein.     Since

according to the applicant, the respondent had failed to

appoint   their   arbitrator,   despite   the   petitioner   having

nominated Mr. Justice Amitava Lala, Retired High Court

Judge,   the   applicant   is   before   this   Court   seeking   the

appointment of an arbitrator.

4.The respondent, on being notified in this petition has

entered appearance and filed its detailed counter affidavit.

The nature of transaction entered into between the parties

is not disputed.   The fact that certain arbitrable disputes

have arisen between the parties is also not controverted.

However, it is the case of the respondent that the entire

transaction   is   governed   under   the   Agreement   dated

31.03.2018 which is referred to by the respondent as an

“Umbrella Agreement”.  It is their further case that the said

agreement   dated   31.03.2018   vide   Clause­23   thereof

provides for resolution of disputes through arbitration in the

manner as indicated therein and as such the respondent

had already invoked the same by issue of notice.  Further,

as   per   the   procedure   contemplated   in   Clause­23   the

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respondent   had   filed   a   petition   before   the   International

Chamber of Commerce (‘ICC’ for short) and the Arbitral

Tribunal   has   been   duly   constituted.     The   respondent,

therefore, contends that the instant application filed by the

applicant seeking appointment of the Arbitral Tribunal in

terms of Clause­7 of the purchase order is not bonafide; the

application is liable to be dismissed.  The applicant has filed

the rejoinder to the counter affidavit filed on behalf of the

respondent   whereby   the   contentions   put   forth   by   the

respondent is sought to be disputed and the averments in

the application are reiterated.  

5.In   the   above   background,   we   have   heard   Shri

Maninder Singh, learned senior counsel for the applicant,

Shri S.N. Mookherjee and Shri Ritin Rai, learned senior

counsel   for   the   respondent   and   perused   the   application

papers.

6.Having taken note of the averments contained in the

pleading and the contentions urged by the learned senior

counsel for the respective parties, it is evident that the

parties having entered into a business transaction; certain

disputes have arisen between them which is to be resolved

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through arbitration. To that extent the parties are also in

agreement.  The  issue   for   consideration  however,   is   with

regard to the appropriate clause that will operate providing

for arbitration and will be applicable in the factual matrix

herein.  Since the applicant is before this Court invoking the

arbitration   clause   in   the   purchase   order   (37   separate

purchase   orders),   it   is   necessary   to   take   note   of   the

arbitration clause relied upon, which reads as hereunder:

“7.ARBITRATION:   Disputes   and   differences

arising out of or in connection with or relating to

the   interpretation   or   implementation   of   this

contract/order shall be referred to the Arbitral

Tribunal   consisting   of   3   Arbitrators   of   which

each party shall appoint one Arbitrator, and the

two appointed Arbitrators shall appoint the third

Arbitrator   who   shall   act   as   the   Presiding

Arbitrator   as   per   the   provisions   of   the

Arbitration and Conciliation Act, 1996 and any

modification or re­enactment thereto.  The venue

of the arbitration proceedings shall be at Kolkata

and language of the arbitration shall be English.

The arbitration award shall be final and binding

upon the parties  and the  parties  agree to be

bound thereby and to act accordingly.   When

any   dispute   has   been   referred   to   arbitration,

except for the matters in dispute, the parties

shall   continue   to   exercise   their   remaining

respective   rights   and   fulfil   their   remaining

respective obligations.”  

7.Since the transaction entered into between the parties

and the dispute having arisen not being in dispute; further

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the above extracted arbitration clause being explicit; in a

normal  circumstance  no  other  consideration  would  have

been necessary in the limited scope for consideration in an

application under Section 11 of the Act, 1996.  However, in

the case on hand the fact remains that undisputedly an

Agreement dated 31.03.2018 is also entered into between

the parties relating to the very same transaction which is

referred to as the “Umbrella Agreement” by the respondent

and as “Pricing Agreement” by the applicant.   The said

agreement also makes provision for resolution of disputes

through arbitration in the manner as indicated therein.  It

would be appropriate to take note of the arbitration clause

which reads as hereunder:  

“23. GOVERNING LAW; DISPUTES

This   Agreement   shall   be   governed   by   and

construed in accordance with the laws of the

United   Kingdom.     Any   claim,   controversy   or

dispute arising out of or in connection with this

Agreement   or   the   performance   hereof,   after   a

thirty calendar day period to enable the parties

to resolve such dispute in good faith, shall be

submitted   to   arbitration   conducted   in   the

English   language   in   the   United   Kingdom   in

accordance with the Rules of Arbitration of the

International Chamber of Commerce by 3 (Three)

arbitrators   appointed   in   accordance   with   the

said   Rules,   to   be   conducted   in   the   English

language in London in accordance with British

Law.   Judgment on the award may be entered

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and enforced  in any court having jurisdiction

over   the   party   against   whom   enforcement   is

sought.”

8.At this stage, it is necessary for us to refer to the

decision rendered in the case of Olympus Superstructures

Pvt. Ltd. vs. Meena Vijay Khetan & Ors.   (1999) 5 SCC

651 wherein this Court was confronted with the issue of

there being two different arbitration clauses in two related

agreements   between   the   same   parties.   This   Court   while

dealing with the same had harmonised both the clauses and

had on reconciliation held that the parties should get the

disputes resolved under the main agreement. In that context

it was held as hereunder: ­

“30.If   there   is   a   situation   where   there   are

disputes and differences  in connection with the

main agreement and also disputes in regard to

“other   matters”   “connected”   with   the   subject­

matter  of  the  main agreement then in such  a

situation, in our view, we are governed by the

general   arbitration   clause   39   of   the   main

agreement under which disputes under the main

agreement and disputes connected therewith can

be  referred  to the  same  arbitral tribunal.  This

clause 39 no doubt does not refer to any named

arbitrators.   So   far   as   clause   5   of   the   Interior

Design   Agreement   is   concerned,   it   refers   to

disputes   and   differences   arising   from   that

agreement   which   can   be   referred   to   named

arbitrators and the said clause 5, in our opinion,

comes into play only in a situation where there

are no disputes and differences in relation to the

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main agreement and the disputes and differences

are   solely   confined   to   the   Interior   Design

Agreement.   That,   in   our   view,   is   the   true

intention of the parties and that is the only way

by   which   the   general   arbitration   provision   in

clause   39   of   the   main   agreement   and   the

arbitration   provision   for   a   named   arbitrator

contained   in   clause   5   of   the   Interior   Design

Agreement   can   be   harmonised   or   reconciled.

Therefore, in a case like the present where the

disputes   and   differences   cover   the   main

agreement   as   well   as   the   Interior   Design

Agreement,   ­   (that   there   are   disputes   arising

under   the   main   agreement   and   the   Interior

Design Agreement is not in dispute) – it is the

general   arbitration   clause   39   in   the   main

agreement   that   governs   because   the   questions

arise also in regard to disputes relating to the

overlapping items in the schedule to the main

agreement and the Interior Design Agreement, as

detailed   earlier.   There   cannot   be   conflicting

awards in regard to items which overlap in the

two   agreements.   Such   a   situation   was   never

contemplated by the parties. The intention of the

parties when they incorporated clause 39 in the

main   agreement   and   clause   5   in   the   Interior

Design Agreement was that the former clause was

to apply to situations when there were disputes

arising under both agreements and the latter was

to   apply   to   a   situation   where   there   were   no

disputes  or differences arising under the  main

contract but the disputes and differences were

confined only to the Interior Design Agreement. A

case containing two agreements with arbitration

clauses arose before this Court in Agarwal  Engg.

Co.   v.   Technoimpex   Hungarian   Machine

Industries   Foreign   Trade   Co.   There   were

arbitration clauses in two contracts, one for sale

of two machines to the appellant and the other

appointing the appellant as sales representative.

On the facts of the case, it was held that both the

clauses operated separately and this conclusion

was   based   on   the   specific   clause   in   the   sale

contract that it was the “sole repository” of the

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sale   transaction   of   the   two   machines.   Krishna

Iyer, J. held that if that were so, then there was

no   jurisdiction   for   travelling   beyond   the   sale

contract.   The  language   of   the  other  agreement

appointing the appellant as sales representative

was prospective and related to a sales agency and

“later purchases”, other than the purchases of

these   two   machines.   There   was   therefore   no

overlapping. The case before us and the above

case exemplify contrary situations. In one case

the disputes are connected and in the other they

are   distinct   and   not   connected.   Thus,   in   the

present case, clause 39 of the main agreement

applies. Points 1 and 2 are decided accordingly in

favour of the respondents.”    

9.Having taken note of the arbitration clause existing in

two different set of documents between the same parties

relating to the same transaction; in order to harmonise or

reconcile and arrive at a conclusion as to which of the

clauses would be relevant in the instant facts;  it would be

necessary   for   us   to   refer   to   the   manner   in   which   the

arbitration clause was invoked and the nature of the dispute

that   was   sought   by   the   parties   to   be   resolved   through

arbitration.  In that regard a perusal of the documents will

reveal   that   in   the   case   on   hand   the   applicant   had   not

initiated the process of invoking the arbitration clause. On

the other hand a notice dated 13.03.2020 (Annexure A­41)

was issued on behalf of the respondent by its attorney to the

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applicant referring to the breach of the agreement dated

31.03.2018 (Umbrella agreement/Pricing agreement) and as

per the procedure provided under Clause­23 of the said

agreement an opportunity was provided to amicably resolve

the   matter;   failing   which   it   was   indicated   that   the

respondent would approach the International Chamber of

Commerce (ICC) in 30 days.   It is in reply to the said notice

dated 13.03.2020 issued by the Respondent on 13.04.2020,

the applicant herein disputed the claim put forth by the

respondent under the Agreement dated 31.03.2018 referring

to   it   as   the   Pricing   Agreement.   Further,   the   applicant

thereafter referred to the nature of their claim and thereon

proceeded to indicate that the constitution of the Arbitral

Tribunal and conduct of arbitration proceeding shall be in

accordance with Clause­7 of the contract terms forming part

of and governing all individual contracts.  

10.In the above backdrop, when both, the purchase order

as also the Pricing Agreement subsists and both the said

documents contain the arbitration clauses which are not

similar to one another, in order to determine the nature of

the arbitral proceedings the said two documents will have to

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be read in harmony or reconciled so as to take note of the

nature of the dispute that had arisen between the parties

which   would   require   resolution   through   arbitration   and

thereafter arrive at the conclusion as to whether the instant

application filed under Section 11 of the Act, 1996 would be

sustainable   so   as   to   appoint   an   arbitrator   by   invoking

Clause­7   of   the   purchase   order;   more   particularly   in   a

situation   where   the   Arbitral   Tribunal   has   already   been

constituted in terms of Clause­23 of the agreement dated

31.03.2018.  

11.To determine this aspect, apart from the fact that the

respondent was the first to invoke the arbitration clause

with reference to the Agreement dated 31.03.2018, it is

noticed that in the reply dated 13.04.2020 issued by the

applicant it is in the nature of invocation of the arbitration

clause by the applicant. It would be appropriate to take note

of the contents in paras 6, 7, 8 and 9 thereof which is the

crux of the dispute that would require resolution through

arbitration and reads as hereunder: 

“6.     Under   the   Pricing   Agreement,   which

contains   the   price   and   terms   of   payment

governing individual contracts, the Products are

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purchased by Medima at the Provisional Sales

Price   arrived   at   by   applying   a   discount   on

CRU/Ryan’s notes.  Where the Final Sales Price

to the customer after deduction of expenses and

fees   as   specified   in   the   Pricing   Agreement   is

higher   than   the   Provisional   Price,   Medima   is

liable to remit the difference between the two.

However,   the   Pricing   Agreement   unequivocally

stipulates that all risks for sale to customers

shall be borne by Medima and as such, confers

no right upon Medima to recover losses from

Balasore.

7.   Balasore is, on the other hand, entitled to

recovery of 100% of the Provisional Price and

any amount recovered by Medima in addition

thereto.

8.     In   this   context,   Balasore   has   repeatedly

pointed   out   to   Medima   that   the   statements

issued by Medima are incomplete and do not

contain necessary details customer­wise for the

purposes of reconciliation.

9.   Even on  the basis of the incomplete and

inaccurate statements provided by Medima from

time to time, it is clear that Medima has been

making much high deductions than permissible

under   the   Pricing   Agreement   and   thereby

depriving Balasore of amounts lawfully owing to

it under the individual contracts.   Some of the

issues repeatedly raised by Balasore are:

1. The allegedly actual secondary costs are

nearly   twice   as   high   as   the   budgets   and

estimates projected by Medima at the time of

booking the contracts;

2.   The   quantity   and   quality   of   Products

invoiced   by   Medima   to   the   customers   are

different from the contracts signed by Medima

and Balasore;

3.   Interest   for   availing   credit   for   delay   in

recovery beyond 60 days cannot be deducted as

an expense;

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4. Commission has to be charged on the net

sales price and not the Final Sales Price.”

12.A close perusal of the extracted portion would indicate

that the reference made by the applicant with regard to the

price and the terms of the payment governing individual

contracts is with reference to the Pricing Agreement which

in fact is the Agreement dated 31.03.2018.  In that context,

the terms 5, 8, 9 and 10 of the Pricing Agreement would

indicate   that   it   provides   for   the   mechanism   relating

purchases and  sales; final price, payment of provisional

price and adjustment of advance, determination of the final

sale price and monthly accounting and payment.  On taking

note of the same, a perusal of the contract terms in the

purchase   order   relied   upon   by   the   applicant   does   not

provide   for   such   determination   of   pricing   except   the

purchase order referring to the price of the quantity ordered

for and the special terms relating to provisional price etc.

Therefore, in that circumstance the nature of dispute raised

by   the   applicant   themselves   in   the   reply   notice   dated

13.04.2020   will   indicate   that   those   aspects   are   to   be

determined   in   terms   of   the   provisions   contained   in   the

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Agreement   dated   31.03.2018   which   resultantly   will   be

relevant for payment to be made under each of the purchase

order. Therefore, even if disputes are raised relating to the

contract terms, the pricing, deductions etc. will relate to the

main   agreement   and   the   Arbitral   Tribunal   constituted

thereunder can go into other issues if any arises under the

contract terms of the individual purchase order as well. 

13.However, in an attempt to dispel such understanding,

Mr.   Maninder   Singh,   learned   senior   counsel   sought   to

contend   that   while   the   respondent   relies   on  the   Pricing

Agreement dated 31.03.2018, the transaction in fact had

commenced as far back as on 08.08.2017 and 21 purchase

orders   were   placed   up   to   30.03.2018   i.e.   prior   to

31.03.2018, the date on which the Pricing Agreement was

executed and as such the same cannot be deemed to have

applied   to   the   earlier   purchase   orders.     Though   such

contention is put forth we are unable to accept the same

since   Clause­20(a)   of   the   Agreement   dated   31.03.2018

provides that the Agreement shall commence on 31.03.2017

and end on 31.03.2021 which clearly indicates that it was

the intention of the parties that the terms contained in the

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Agreement would govern all transactions, including those

which   had   commenced   from   08.08.2017.     Further   it   is

noticed   that   the   parties   were   earlier   governed   by   an

Agreement dated 19.06.2017 which was for a fixed quantity

of 2000 MT of the produce while the present agreement,

according to the parties was on a long term basis fixing the

time   period   for   which   it   was   valid   and   the   individual

purchase orders will have to be taken note for the specific

quantity ordered for under each of the transactions, the

price of which was to be ultimately determined as provided

under the Pricing Agreement.  

14.In that view of the matter, when admittedly the parties

had entered into the agreement dated 31.03.2018 and there

was   consensus  ad­idem  to   the   terms   and   conditions

contained   therein   which   is   comprehensive   and

encompassing   all   terms   of   the   transaction   and   such

agreement   also   contains   an   arbitration   clause   which   is

different   from   the   arbitration   clause   provided   in   the

purchase order which is for the limited purpose of supply of

the produce with more specific details which arises out of

Agreement   dated   31.03.2018;   the   arbitration   clause

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contained   in   Clause­23   in   the   main   agreement   dated

31.03.2018 would govern the parties insofar as the present

nature of dispute that has been raised by them with regard

to the price and the terms of payment including recovery

etc.   In   that   view,   it   would   not   be   appropriate   for   the

applicant to invoke Clause­7 of the purchase orders more

particularly when the arbitration clause contained in the

Agreement   dated   31.03.2018   has   been   invoked   and   the

Arbitral Tribunal comprising of Mr. Jonathan Jacob Gass,

Mr. Gourab Banerji and Ms. Lucy Greenwood has already

been appointed on 22.06.2020.

SLP(C) No.10264/2020

15.The   instant   Special   Leave   Petition   is   filed   by   the

petitioner   who   is   the   plaintiff   in   the   Commercial   Suit

No.59/2020 pending before the High Court of Calcutta.  The

petitioner herein is the petitioner in Arbitration Application

No.15/2020 which is dealt with hereinabove.   The facts

noticed above while dealing with Arbitration application also

discloses   that   the   Arbitral   Tribunal   comprising   of   three

arbitrators   has   been   appointed   by   the   ICC   through   the

communication dated 22.06.2020.  The Tribunal has been

17

constituted based on the clause providing for arbitration

under   the   Agreement   dated   13.03.2018.     The   petitioner

claiming to be aggrieved by the constitution of the Arbitral

Tribunal has filed the suit seeking a decree of declaration

that   the   arbitration   clause­23   of   the   Pricing   Agreement

dated 31.03.2018 is null and void and in that context has

sought for the ancillary relief in the suit.  In the said suit

the petitioner has moved the ‘Notice of Motion’ seeking for

an   interlocutory   order   of   injunction   against   the   Arbitral

Tribunal constituted by the ICC.  The learned Single Judge

through a detailed judgment dated 12.08.2020 has rejected

the prayer for interim order and the ‘Notice of Motion’ has

been dismissed.  The petitioner claiming to be aggrieved by

the   said   order   had   preferred   an   appeal   to   the   Division

Bench, which on consideration has declined grant of interim

order   though   the   appeal   has   been   admitted   for

consideration.

16.Having heard the learned senior counsel and having

perused the orders impugned we see no reason to interfere

with   the   same,   more   particularly   keeping   in   view   our

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conclusion on the same subject matter while addressing the

rival contentions in the Arbitration Application No.15/2020.

17.In the result, the Arbitration Application No.15/2020

and SLP No.10264/2020 stand dismissed with no order as

to costs.     

..…………....................CJI.

      (S. A. Bobde)

…..…………....................J.

      (A. S. Bopanna)

..…..………......................J.

      (V. Ramasubramanian)

September 16, 2020

New Delhi