The respondent HPL on the other hand, claims that the Arbitration Agreement contained in clause 15 of the Agreement dated 12th January, 2002 is void and/ or unenforceable and/or has become inoperative and/or incapable ...
No Acts & Articles mentioned in this case
Page 1 1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.10932 OF 2013
(Arising out of S.L.P.(C) No. 19951 OF 2013)
CHATTERJEE PETROCHEM CO. & ANR ………APPELLANTS
Vs.
HALDIA PETROCHEMICALS LTD.& ORS. ……… RESPONDENTS
J U D G M E N T
V. Gopala Gowda J.
On 21
st
March, 2012, the appellant Chatterjee
Petrochem (Mauritius) Company (hereinafter referred to
as ‘CPMC’) filed a request for arbitration in
International Chamber of Commerce (ICC), Paris in
relation to an agreement of restructuring which was
Page 2 C.A.@ slp(c)No.19951 of 2013
entered into between CPMC, Government of West Bengal,
West Bengal Industrial Development Corporation (in
short ‘WBIDC’) and Haldia Petrochemical Limited (in
short ‘HPL’) on 12
th
January, 2002. As per the
Agreement, the Government of West Bengal was to cause
WBIDC to transfer existing shareholding to CPMC to
ensure that CPMC holds 51% of the total paid up capital
of HPL. Clause 15 of the Agreement provides for
reference of all disputes, in any way relating to the
said Agreement or to the business of or affair of HPL
to the Rules of the ICC, Paris.
2.The respondent HPL on the other hand, claims that
the Arbitration Agreement contained in clause 15 of the
Agreement dated 12
th
January, 2002 is void and/ or
unenforceable and/or has become inoperative and/or
incapable of being performed.
3.A dispute arose between the parties regarding the
allotment of shares and the appellant filed Company
Petition No. 58 of 2009 before the Company Law Board
2
Page 3 C.A.@ slp(c)No.19951 of 2013
(in short ‘CLB’)on the grounds of oppression and
mismanagement. The appellant also sought transfer of
155 million shares in favour of Chatterjee Petrochem
(India) Pvt. Ltd. (in short “the CPIL”), the Indian
counterpart of CPMC as was decided in the Agreement.
4.The Company Petition was disposed of by the CLB by
upholding the decision of the Company to allot 155
million shares by Indian Oil Corporation (in short
‘IOC’). The transfer of 155 million shares to CPIL by
WBIDC was also confirmed. The CLB further directed the
Government of West Bengal and WBIDC to transfer 520
million shares held by them in HPL to Chatterjee
Groups.
5. The Government of West Bengal preferred an appeal
against the said Order before the High Court of
Judicature at Calcutta under the provisions of Section
10F of the Company’s Act, 1956. The High Court set
aside the Order of the CLB on the ground that CPIL was
not a member of HPL and the CLB could not have enforced
3
Page 4 C.A.@ slp(c)No.19951 of 2013
its right under private contract entered into between
CPIL and WBIDC for transfer of shares as the same could
not be the subject matter of a petition under Section
397 of the Companies Act.
6.Aggrieved by the same, the appellant preferred
appeal Nos. 5416-5419, 5420, 5437 and 5440 of 2008
before this Court. Vide judgment dated 30.09.2011,
this Court held that the claim of the appellant
transferring shares to IOC has changed the private
character of the Company and was not an act of
oppression on the part of the Company. According to
this Court, the transfer of shares to IOC was a result
of failure on the part of the appellant to infuse
adequate funds into the Company by way of equity as
promised and to participate in its rights issues. The
Company was therefore, constraint to induct IOC as a
member and the 155 million shares which was to be
transferred to the appellant was instead transferred to
4
Page 5 C.A.@ slp(c)No.19951 of 2013
the IOC. The relevant paragraph of the judgment reads
as under:
“103. The failure of WBIDC and GoWB to register
the 155 million shares transferred to CP(I)PL
could not, strictly speaking, be taken to be
failure on the part of the Company, but it was
the failure of one of the parties to a private
arrangement to abide by its commitments. The
remedy in such a case was not under
Section 397 of the Companies Act. It has been
submitted by both Mr. Nariman and Mr. Sarkar
that even if no acts of oppression had been
made out against the Company, it would still be
open to the learned Company Judge to grant
suitable relief under Section 402 of the Act to
iron out the differences that might appear from
time to time in the running of the affairs of
the Company. No doubt, in the Needle Industries
case, this Court had observed that the
behaviour and conduct complained of must be
held to be harsh and wrongful and in arriving
at such a finding, the Court ought not to
confine itself to a narrow legalistic view and
allow technical pleas to defeat the beneficial
provisions of the Section, and that in certain
situations the Court is not powerless to do
substantial justice between the parties, the
facts of this case do not merit such a course
of action to be taken. Such an argument is not
available to the Chatterjee Group, since the
alleged breach of the agreements referred to
hereinabove, was really in the nature of a
breach between two members of the Company and
not the Company itself. It is not on account of
any act on the part of the Company that the
shares transferred to CP(I)PL were not
registered in the name of the Chatterjee
5
Page 6 C.A.@ slp(c)No.19951 of 2013
Group. There was, therefore, no occasion for
the CLB to make any order either under
Section 397 or 402 of the aforesaid Act. If, as
was observed in M.S.D.C. Radharamanan's case
(supra), the CLB had given a finding that the
acts of oppression had not been established, it
would still be in a position to pass
appropriate orders under Section 402 of the
Act. That, however, is not the case in the
instant appeals.”
(emphasis laid by this Court)
7.On this decision given by this Court, the appellant
sought to invoke the arbitration clause contained in
the agreement dated 12
th
January, 2002 and made a
request for arbitration. The respondent no.1 on the
other hand, filed a suit before the High Court of
judicature at Calcutta praying that the arbitration
clause in the agreement be declared as void.
8. Learned senior counsel on behalf of the appellant
Dr. Abhishek Manu Singhvi relied upon Clause 15 of the
letter of agreement dated 12
th
January, 2002 to contend
that any dispute, difference or claims arising between
the parties relating to this letter of agreement dated
12
th
January, 2002, or any construction or
6
Page 7 C.A.@ slp(c)No.19951 of 2013
interpretation relating to the working of or the
business of the respondent no.1, shall first make an
endeavour to settle their disputes, differences etc. in
accordance with the Rules of Arbitration of the
International Chamber of Commerce. Therefore, the
learned senior counsel contended that the validity or
existence of the arbitration agreement is to be decided
by the Arbitration Tribunal in terms of Article 6 of
the ICC Rules, 1998 which is pari-materia to Section 16
of the Arbitration and Conciliation Act, 1996 (in short
‘A & C Act’)and the Civil Court has no jurisdiction to
decide on such issues. In support of this legal
contention, the learned senior counsel relied upon the
decision of this Court in Yograj Infrastructure Ltd. v.
Ssang Yong Engineering and Construction Co. Ltd .
1
wherein it was held that the arbitration shall be held
as is mentioned in the agreement which in the present
case, is at Paris.
1
(2011) 9 SCC 735
7
Page 8 C.A.@ slp(c)No.19951 of 2013
9.It is the further case of the appellant that the
agreement dated 12
th
January, 2002 between the parties
was not novated by the subsequent agreements.
According to the appellant, the agreement dated 12
th
January, 2002 is the principal agreement, which was
later followed by the supplemental agreements dated 8
th
March, 2002 and 30
th
July, 2004. The letter of agreement
dated 8
th
March, 2002 did not create any independent
legal right but was a mere direction from CPMC to
transfer 155 million shares to its nominee CPIL to
avoid delay. Therefore, according to the appellant, the
letter of agreement dated 8
th
March 2002 provided that
the terms and conditions of 12
th
January, 2002 agreement
would continue to remain valid and subsisting between
the parties. The relevant clauses will be mentioned in
the reasoning portion of the judgment.
10. The learned senior counsel relied upon Section 45
of the A & C Act to contend that the suit instituted by
the respondent No. 1 against the request of arbitration
8
Page 9 C.A.@ slp(c)No.19951 of 2013
by the appellant is not maintainable in law. He further
argued that the suit instituted by the respondent
No. 1 to restrain a foreign arbitration for resolution
of the disputes between the parties was in violation of
Section 5 of the A & C Act which limits judicial
authority’s intervention in arbitration and therefore
the impugned order of injunction passed by the High
Court of Judicature at Calcutta was contrary to law and
therefore, the same is liable to be set aside. In this
regard, the learned senior counsel relied upon the
three Judge Bench decision of this Court in Bhatia
International v. Bulk Trading S.A. and Anr.
2
to contend
that section 5 of the A & C Act provides that no
judicial authority shall intervene except where it is
provided. The relevant paragraph will be extracted in
the reasoning portion of the judgment.
11.Mr. Sudipto Sarkar, learned senior counsel also
appearing on behalf of the appellant further contended
that the maintainability of the arbitration of the
2
(2002) 4 SCC 105
9
Page 10 C.A.@ slp(c)No.19951 of 2013
disputes between the parties can be established by
relying on the decision of this Court in Venture Global
Engineering v. Satyam Computer Services Ltd. and Anr .
3
wherein it was held that Part I of the A & C Act will
be applicable to international arbitrations as well.
Therefore, Mr. Sarkar contended that the Arbitration
clause will be a bar for judicial intervention in the
present case in spite of the fact that it is an
international arbitration as per the principal
agreement which will be continued in force as per the
terms of the supplemental agreements.
12. On the other hand, it is the case of the respondent
HPL that the arbitration agreement dated 12
th
January,
2002 is rendered void in respect of the claim for
transfer of 155 million shares in favour of CPIL
inasmuch as the parties had contracted out of their
earlier agreement and the legal liability in respect
thereof was redefined in the subsequent 8
th
March, 2002
Agreement which provided for an exclusive jurisdiction
3
(2008) 4 SCC 190
10
Page 11 C.A.@ slp(c)No.19951 of 2013
to courts in Calcutta to decide dispute arising out of
the said agreement. Therefore, it was pleaded by
Mr. Ashok Desai, the learned senior counsel appearing
on behalf of the respondent no. 1-HPL that once a party
to an arbitration agreement seeks to adjudicate dispute
before another forum and such forum arrives at a
conclusive findings of fact in relation to the dispute
then, the subsequent effort on the part of the same
party to refer dispute for arbitration under ICC Rules
would be vexatious and abuse of law and it shall be
construed that the arbitration clause in the principal
agreement has been rendered inoperative by the conduct
of the party itself.
13. The learned senior counsel for the respondent no. 1
further claimed that Section 5 of the A & C Act can
come into play only when existence of a valid
arbitration agreement is established. Institution of
such a suit by the respondent no.1 would constitute an
“action pending before the judicial authority”
11
Page 12 C.A.@ slp(c)No.19951 of 2013
necessitating the invocation of Section 45 of the A & C
Act, if one of the parties makes a request to refer the
matter for arbitration. In such cases, the court must
see whether the arbitration agreement is valid,
operative and capable of being performed, before
referring the parties to arbitration.
14.It is the further case of respondent no.1 that the
subsequent agreement through letter dated 8
th
March
2002, in respect of transfer of 155 million shares of
HPL, new rights and liabilities were created by and
between the non- parties to the arbitration agreement.
The new agreement also provided for a different dispute
resolution mechanism among the parties, that is, the
courts in Calcutta. The relevant clause will be
extracted in the reasoning portion of the judgment.
15.The learned senior counsel, Mr. K.K. Venugopal,
appearing on behalf of Respondent no. 2, Govt. of West
Bengal, contended that the Arbitration and Conciliation
Act, 1996 does not apply to the present case. According
12
Page 13 C.A.@ slp(c)No.19951 of 2013
to the learned senior counsel, a party may purport to
appoint an arbitrator who may enter upon the
arbitration even when there is serious dispute as to
whether the arbitration clause exists. In spite of the
fact that no arbitration clause exists, if a party
resorts to arbitration, then neither section 8 nor
section 45 of the A & C Act in case of international
arbitration would provide for adjudication of the issue
as to whether the arbitration clause exists. It is only
where a suit has first been filed, in point of time, on
the substantive agreement or the underlying agreement,
either by way of specific performance or for
compensation for breach of contract, that section 8 or
section 45 of the A & C Act would come into play.
However, we are not inclined to comment on this
contention since it is not pertinent to the case.
16.The learned senior counsel for Respondent no. 2
also contended that when no arbitration clause exists
in the agreement, the matter cannot be adjudicated
13
Page 14 C.A.@ slp(c)No.19951 of 2013
either under Part I or Part II of the A & C Act rather,
the matter can be adjudicated only by an independent
suit seeking injunction against the party who had
initiated arbitration, from proceeding with the
arbitration.
17.It is further the case of the learned senior
counsel, Mr. K.K. Venugopal that the facts of the
present case are extraordinary and that the matter has
been extensively litigated in the previous round both,
before the Company Law Board and the appellate
proceedings thereof. At no point in time did the
Chatterjee Group or any of its constituent affiliate,
saved or reserved their right to seek arbitration under
the alleged Arbitration Agreement which they now seek
to enforce. This Court has already declined the reliefs
on merit as well as on the point of jurisdiction.
Therefore, he submits that at this juncture, invoking
the arbitration clause from the principal agreement by
the Chatterjee Group disregarding the Agreement dated
14
Page 15 C.A.@ slp(c)No.19951 of 2013
8
th
March, 2002, is clearly vexatious and abuse of the
process of law. Therefore, the suit filed by respondent
no. 1 seeking injunction relief on arbitration is
maintainable in law.
18.It is further the case of the learned senior
counsel on behalf of Respondent no.2 that the matter
has been elaborately argued before this Court on
complicated issues of law which arise for determination
in the case. It is therefore, submitted by him that in
such an event this Court would not render findings on
questions of law while disposing an appeal against the
interlocutory order so as to give finality in such
findings. This approach of the Court is adopted in many
cases arising under the Intellectual Property law,
namely Bajaj Auto Ltd. v. TVS Motor Company Ltd.
4
,
Shree Vardhman Rice & General Mills v. Amar Singh
Chawalwala
5
, Milmet Oftho Industries & Ors. v.
Allergan Inc.
6
and Dhariwal Industries Ltd. & Anr. v.
4
(2009) 9 SCC 797 (para 5)
5
(2009) 10 SCC 257 (para 2)
6
(2004) 12 SCC 624 (paras 9 to 11)
15
Page 16 C.A.@ slp(c)No.19951 of 2013
M.S.S. Food Products
7
. We are inclined to mention at
this stage that in this appeal we are confined to
deciding upon the validity of the arbitration clause in
the principal agreement dated 12
th
January, 2002 only.
Hence, this contention does not require to be addressed
in this appeal.
19.The learned senior counsel for respondent No. 3
Mr. C.A. Sundaram contends that jurisdictional issue in
the present case, shall be decided as the threshold
issue in the present case. In relation to this, he
placed reliance upon the three Judge Bench decision of
this Court in Chloro Controls India Pvt. Ltd. v. Severn
Trent Water Purification Inc. and Ors .
8
20.In the light of the facts and circumstances
presented before us on the basis of admitted documents
on record, and also based on the legal contentions
urged by the learned senior counsel on behalf of both
7
(2005) 3 SCC 63 (para 20)
8
(2013) 1 SCC 641
16
Page 17 C.A.@ slp(c)No.19951 of 2013
the parties, the following issues would arise for
consideration of this Court in these proceedings:
1.Can the Arbitration clause under clause 15
of the letter of Agreement dated 12
th
January, 2002 be invoked by the appellants
and whether Clause 7.5 of the subsequent
Agreement dated 8
th
March, 2002 invoking the
exclusive jurisdiction of the courts of
Calcutta nullify the scope of arbitration
as mentioned in the previous agreement
dated 12
th
January, 2002?
2.Is the suit, filed by the respondents,
seeking injunction against arbitration of
disputes between the parties sought for by
the appellants as per Clause 15 of the
principal agreement referred to supra
maintainable in law?
3.What Order?
Answer to Point no.1
21.We are inclined to reject the submission made by
the learned senior counsel on behalf of the respondents
that the transfer of shares to CPIL instead of CPMC
substantially changes the legal rights and
responsibilities of the parties as per agreement
17
Page 18 C.A.@ slp(c)No.19951 of 2013
referred to supra thereby, resulting in novation of
contract.
22.It is nowhere mentioned in the letter dated 8
th
March, 2002 that transfer of shares to CPIL instead of
CPMC extinguishes the old agreement dated 12
th
January,
2002 to nullity. In fact, in the letter dated 8
th
March,
2002, CPMC has been constantly mentioned as a
guarantor. It is only to this extent the nature of
agreement has changed.
23.It is argued by the learned senior counsel Mr.
C.A. Sundaram, appearing on behalf of Respondent no.3
that the concurrent findings of facts on the prima
facie case by the learned single Judge and the
Division Bench of the High Court of Calcutta have held
that there has been a novation of agreement between
the parties to the principal agreement dated 12
th
January,2002 by the subsequent agreements dated 8
th
March, 2002 and 30
th
July, 2004.
18
Page 19 C.A.@ slp(c)No.19951 of 2013
24. It has been held by the learned single Judge of the
Calcutta High Court that:
“……This is a case, where by express words the
parties have altered their obligations by a new
agreement on 8
th
March, 2002 with a term that
the Courts in Kolkata ‘alone’ would have
jurisdictions. This was affirmed by the 30
th
July, 2004 agreement. This put an end to the
arbitration, once and for all. Therefore, the
arbitration clause in the 12
th
January, 2002
agreement was abrogated by the 8
th
March
agreement. Abrogation of an arbitration
agreement could not be made in clearer terms…”.
25.Further, the Division Bench of Calcutta High Court
vide impugned judgment dated 12
th
January 2012, made the
following observations:
a.) Agreement of 12
th
January 2002 was
substituted by agreements of March 8, 2002 and
July 30, 2004.
b.) Such a subsequent agreement completely
extinguished the rights existing under the
January 12, 2002 agreement and also destroyed
the arbitration clause.
c.) Remedy is under Agreement of March 8, 2002
which does not provide for Arbitration but
states that courts at Calcutta alone shall
have jurisdiction.
d.) Agreement of March 8, 2002 is not an
ancillary to agreement of January 12, 2002 but
materially alters the same. The principle laid
19
Page 20 C.A.@ slp(c)No.19951 of 2013
down in Chloro Controls Case (supra) does not
apply. Real intention of the parties in the
instant case was to substitute one agreement
with another.
26.Clause 1 of the supplementary agreement dated 30
th
July, 2004 reads as under:
“Pursuant to the said Principal Agreement GoWB
has caused WBIDC to transfer to Chatterjee
Petrochem (India) Private Limited (CPIL), an
affiliate of CPMC Rs. 155 crores of shares from
the shareholding of WBIDC existing on the date
of principal agreement…”
(emphasis laid by this Court)
The abovementioned clause goes to show that CPIL is an
affiliate of CPMC. This is to say, that by means of the
letter dated 8
th
March,2002 CPMC becomes a guarantor
whereas CPIL becomes the borrower. Therefore, the same
does not change the rights and responsibilities of the
parties under the agreement dated 12
th
January, 2002.
27. Further, the letter written by CPMC to WBIDC along
with the agreement dated 8
th
March, 2002 reads as
follows:
“…It is clarified that the aforesaid shall not
prejudice any of our rights under the said
20
Page 21 C.A.@ slp(c)No.19951 of 2013
Agreement dt. January 12, 2002 and all terms
and conditions thereof shall continue to remain
valid, binding and subsisting between the
parties to be acted upon sequentially”.
(emphasis laid by this Court)
The content of this letter goes to show that the
agreement dated 12
th
January, 2002 remains the principal
agreement while agreement dated 8
th
March 2002 remains a
supplementary agreement which was meant for
restructuring of HPL on urgency.
28.Further, and most importantly, the agreement
entered into between the parties dated 30
th
July, 2004
states as follows:
“WHEREAS the Parties hereto had entered into an
agreement dated January 12, 2002 (hereinafter
referred to as the principal agreement….”
Also, the Agreement dated 30
th
July, 2004 which is based
on shareholding issues, also notes through clause 6
that:
“6. The Parties hereby agree, record and
confirm that all other terms and conditions as
contained in the said Principal Agreement shall
21
Page 22 C.A.@ slp(c)No.19951 of 2013
remain binding, subsisting, effective,
enforceable and in force between the parties.”
(emphasis laid by this Court)
The abovementioned clauses of the subsequent Agreements
dated 8
th
March, 2002 and 30
th
July, 2004 go to show that
there has been no alteration in the nature of rights
and responsibilities of the parties involved in the
contract. Consequently, there has been no novation of
the contract.
29. It has been further argued by the learned senior
counsel for the respondents that Section 5 of the A & C
Act, which bars intervention by judicial authority in
Arbitration Agreement will not be applicable to
International Agreements such as the present case. We
are inclined to reject this contention by placing
reliance upon the legal principle laid down by this
Court in Venture Global Engineering case (supra), the
relevant paragraph of which reads as under:
“25. …… In order to find out an answer to the
first and prime issue and whether the decision
in Bhatia International (supra) is an answer to
22
Page 23 C.A.@ slp(c)No.19951 of 2013
the same, let us go into the details regarding
the suit filed by the appellant as well as the
relevant provisions of the Act. The appellant
-VGE filed O.S. No. 80 of 2006 on the file of
the Ist Additional District Court,
Secunderabad, for a declaration that the Award
dated 3.4.2006 is invalid, unenforceable and to
set aside the same. Section 5 of the Act makes
it clear that in matters governed by Part I, no
judicial authority shall intervene except where
so provided. Section 5 which falls in Part I,
specifies that no judicial authority shall
intervene except where so provided. The Scheme
of the Act is such that the general provisions
of Part I, including Section 5 , will apply to
all Chapters or Parts of the Act. ”
(emphasis laid by this Court)
30. Further, it is pertinent to read Clause 7.5 of the
Agreement dated 8
th
March, 2002 carefully. Clause 7.5
reads thus:
“Jurisdiction: Courts at Calcutta alone shall
have jurisdiction in all matters relating to
this Agreement.”
The phrase ‘this agreement’ means the Agreement dated
8
th
March, 2002 which is essentially a supplementary
Agreement and does not, by any mean, make the Principal
Agreement dated 12
th
January, 2002 subject to the
jurisdiction of the Court.
23
Page 24 C.A.@ slp(c)No.19951 of 2013
31. Therefore, we are of the opinion that both the
learned single Judge and the Division Bench erred in
arriving at the conclusion mentioned above and their
findings are liable to be set aside. In the light of
the case mentioned above and also on the basis of the
clauses of the Principal Agreement dated 12
th
January
2002 and subsequent Agreements dated 8
th
March 2002 and
30
th
July, 2004, read with section 5 of the A&C Act, we
are inclined to observe that the Arbitration clause in
the Principal Agreement continued to be valid in view
of clause no. 6 of the Agreement dated 30
th
July, 2004
and also by virtue of its mention in different parts of
both the supplementary agreements dated 8
th
March, 2002
and 30
th
July, 2004. Therefore, the arbitration clause
mentioned in Clause 15 of the Arbitration agreement
dated January 12, 2002 is valid and the appellant is
entitled to invoke the arbitration clause for settling
their disputes. We, therefore, answer the point no.1 in
favour of the appellant.
24
Page 25 C.A.@ slp(c)No.19951 of 2013
Answer to Point nos.2 and 3
32. We answer point nos. 2 and 3 together since they
are interrelated.
It is the claim of the respondent no.3 that the
suit was filed by Respondent no. 1 under section 9 of
CPC and not section 45 of the A&C Act. Respondent no.3
further placed reliance upon the decision of this Court
in Ganga Bai v. Vijay Kumar & Ors.
9
to hold that:
“15. … There is an inherent right in every
person to bring suit of a civil nature and
unless the suit is barred by statute one may,
at ones peril, bring a suit of one's choice. It
is no answer to a suit, howsoever frivolous the
claim, that the law confers no such right to
sue. A suit for its maintainability requires no
authority of law and it is enough that no
statute bars the suit. But the position in
regard to appeals is quite the opposite. The
right of appeal inheres in no one and therefore
an appeal for its maintainability must have the
clear authority of law. That explains why the
right of appeal is described as a creature of
statute.”
(emphasis supplied by this Court)
Therefore, the learned senior counsel appearing on
behalf of respondent no. 3 places reliance upon this
9
(1974) 2 SCC 393
25
Page 26 C.A.@ slp(c)No.19951 of 2013
decision to contend that the Calcutta High Court
(exercising its ordinary original jurisdiction) has
the jurisdiction (territorial as well as pecuniary) to
entertain the present suit under section 9 of CPC and
grant of such interim injunctive relief as it deems
fit under Order 39 Rules 1 and 2 of the CPC is
permissible in law.
33.We are inclined to reject this contention raised
by the learned senior counsel appearing on behalf of
Respondent no. 3. A careful reading of the decision
leaves no doubt in the mind as has been held in
Ganga Bai’s case (supra) that:
“15. … There is an inherent right in
every person to bring suit of a civil
nature and unless the suit is barred
by statute one may, at ones peril,
bring a suit of one's choice……”
(emphasis laid by this Court)
34. The learned senior counsel for respondent no. 3
further places reliance upon the Constitution Bench
26
Page 27 C.A.@ slp(c)No.19951 of 2013
decision of seven Judges in SBP & Co. v. Patel
Engineering Ltd. & Anr.
10
wherein it was held that:
“19…..When the defendant to an action
before a judicial authority raises the
plea that there is an arbitration
agreement and the subject matter of
the claim is covered by the agreement
and the plaintiff or the person who
has approached the judicial authority
for relief, disputes the same, the
judicial authority, in the absence of
any restriction in the Act , has
necessarily to decide whether, in
fact, there is in existence a valid
arbitration agreement and whether the
dispute that is sought to be raised
before it, is covered by the
arbitration clause….”
(emphasis laid by this Court)
35.We have already held that the Principal Agreement
dated 12
th
January, 2002 continues to be in force with
its arbitration clause in place. We have also
mentioned, while answering point no. 1, that section 5
of the A&C act will be applicable to Part II of the
Act as well. The Agreement dated 12
th
January, 2002
remains valid and the arbitration clause, with all
fours, will be applicable to the parties concerned to
10
(2005) 8 SCC 618
27
Page 28 C.A.@ slp(c)No.19951 of 2013
get their disputes arbitrated and resolved in the
Arbitration as per the Rules of ICC. The contention
raised by the learned senior counsel for Respondent
no.2, Mr. K.K. Venugopal regarding the maintainability
of the suit while examining the interlocutory order in
the appeals, is therefore, untenable in law.
36. The fact that CPIL, which initially was a non-
signatory to the Agreement does not jeopardize the
arbitration clause in any manner. In this connection,
we are inclined to record an observation made in the
three Judge Bench decision of this Court in Chloro
Controls India Pvt. Ltd. (supra), wherein it was held
as under:
“107. If one analyses the above cases
and the authors' views, it becomes
abundantly clear that reference of
even non-signatory parties to
arbitration agreement can be made. It
may be the result of implied or
specific consent or judicial
determination. Normally, the parties
to the arbitration agreement calling
for arbitral reference should be the
same as those to the an action. But
this general concept is subject to
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Page 29 C.A.@ slp(c)No.19951 of 2013
exceptions which are that when a
third party, i.e. non-signatory
party, is claiming or issued as being
directly affected through a party to
the arbitration agreement and there
are principal and subsidiary
agreements , and such third party is
signatory to a
subsidiary agreement and not to the
mother or principal agreement which
contains the arbitration clause, then
depending upon the facts and
circumstances of the given case, it
may be possible to say that even such
third party can be referred
to arbitration .”
(Emphasis laid by this Court)
37. The respondent no.1 has filed a suit seeking two
remedies against the appellants: firstly, that the
Arbitration Agreement contained in Clause 15 of the
Agreement dated January 12, 2002 is void and/or
unenforceable and/or has become inoperative and/or
incapable of being performed, and secondly, the
respondent no.1 sought permanent injunction
restraining the appellant herein from initiating and/
or continuing with the impugned Arbitration
proceedings bearing case no. 18582/ARP pursuant to the
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Page 30 C.A.@ slp(c)No.19951 of 2013
Impugned Arbitration Agreement contained in clause 15
of the Agreement dated January 12, 2002 and the
Request for Arbitration dated March 21, 2012 and the
communication dated April 02, 2012 issued by defendant
no. 8 in the Arbitration proceedings connected
therewith and incidental thereto.
Since, we have already held that the arbitration
clause is valid, suit filed by the respondent no.1 for
declaration and permanent injunction is unsustainable
in law and the suit is liable to be dismissed.
38. In view of the above, we direct the parties to
resolve their disputes through arbitration as
mentioned in clause 15 of the letter of Agreement
dated 12
th
January, 2002 in accordance with the Rules
of ICC. We have also seen from the written submission
of the appellants counsel that the appellants have
already initiated an arbitration proceeding. In such
case, the parties shall continue with the arbitration
proceeding since the suit filed for permanent
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injunction against the arbitration proceeding is
dismissed by setting aside the impugned judgment and
final order in A.P.O. No. 13 of 2013 passed by the
High Court of judicature at Calcutta on 04.06.2013.
Accordingly, the appeal is allowed, but no costs.
…………………………………………………J.
[G.S. SINGHVI]
…………………………………………………… J.
[V. GOPALA GOWDA]
New Delhi,
December 10, 2013
31
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