Ambo Exports Limited vs Devi Resources Limited

The Court : All the applications are taken up together and disposed of by this common judgment and order. The plaintiff has filed a suit under Order 37

of the Code of Civil Procedure for a summary judgment. The cause of action in the plaint is the dishonour of few bills of exchange all dated 22nd

February, 2013. The plaintiff alleged that the defendant duly accepted the said bills of exchange, but in spite of such acceptance the defendant has not

paid the same although the bills of exchange being presented for payment on the due dates. The plaintiff refers to a contract dated 26th March, 2012

by which the parties alleged to have entered into a contract for sale and purchase of 50,000 WMT of iron ore lumps (±10%) of FE 46.00%

basis/46.00 minimum at a price of US$ 35 per DMT. The goods of the total quantity of 49,500 WMT were shipped on board in vessel M.V. Xin Hong

Bao Shi under the said contract on 8th July, 2012. After the shipment of the said cargo the plaintiff duly raised and submitted its invoice dated 26th

July, 2012 on the defendant for the value of the goods being a sum of US$ 1427840.81.

The plaintiff also issued a bill of exchange dated 27th July 2012 for the said goods through the defendant’s banker Bank of Baroda and required

the defendant to pay to the plaintiff 90 days from the date of the bill of exchange. The defendant thereafter raised a claim of a sum of US$

12,70,127.15 against the plaintiff for alleging demurrage charges, dead freight and local port charges incurred in respect of the vessel M.V. Xin Hong

Bao Shi. It is alleged that the said claim of the defendant was wrongful and denied by the plaintiff. The plaintiff alleged that thereafter notwithstanding

the claim and the counter-claim raised by the parties in between, the parties had mutually settled their disputes and agreed to make payment of US$

10,00,000 to the plaintiff in full settlement of its claim. It was in this context the plaintiff has referred to five bills of exchange all dated 22nd February,

2013 issued by the defendant in discharge of its debt.

The plaintiff alleged that in spite of acceptance of the bills of exchange, the defendant has not paid the same though presented for payment.

Subsequently, on 20th and 21st April, 2013 the representatives of the defendant had visited the plaintiff and assured that payment would be made

under the said five bills of exchange and requested that as and when payment is made, corresponding bill of exchange would be discharged for

payment and would be returned by the plaintiff to the defendant. The plaintiff claims that the defendant, in acknowledgement of its dues, made part

payment thereof being a sum of US$ 200,000 in two instalments of US$ 100,000 each received on 26th April, 2013 and 10th May, 2013. In view of

such prayer, the first bill of exchange dated 22nd February, 2013 stood discharged. The said bill of exchange was retired and the original bill of

exchange was sent to the defendant on 8th May, 2013. Thereafter a further payment of US$ 75,000 was paid in two instalments of US$ 50,000 on

22nd February, 2013 and also US$ 25,000 on 21st December, 2013. The defendant had sued the plaintiff on the remaining bills of exchange that were

returned unpaid on presentation.

The defendant upon being served with a copy of the plaint, filed an application being GA No.513 of 2015 in the nature of an application under Section

45 of the Arbitration and Conciliation Act, 1996 with a prayer for referring the dispute between the parties to arbitration in terms of Clause 14 of the

agreement dated 29th February, 2012 and its four several addendums. In the application, the defendant had alleged that the plaintiff has intentionally

not annexed copy of the contract between the parties which forms the basis of the transaction. The transaction referred to in the plaint was actually

executed between the parties on 29th February, 2012 and subsequently modified by four several addendums dated 6th March, 2012, 20th March, 2012,

4th June, 2012 and 8th June, 2012. The defendant in paragraph 4 of the petition has referred to the arbitration clause which reads:

“14. Arbitration This contract shall be governed by and construed in accordance with English Law and any dispute arising out of or in connection

with this contract shall be referred to Arbitration in London in accordance with the Arbitration Act, 1996 or any statutory modification or re-enactment

thereof save to the extent necessary to give effect to the provisions of this clause. The Arbitration shall be conducted in accordance with the London

Maritime Arbitrators Association (LMAA) terms current at the time when the Arbitration proceedings are commenced.

The reference shall be to three arbitrators. A party wishing to refer a dispute to Arbitration shall appoint its Arbitrator and send notice of such

appointment in writing to the other party requiring the other party to appoint its own Arbitrator within 14 calendar days of that notice and stating that it

will appoint its Arbitrator as Sole Arbitrator unless the other party appoints its own Arbitrator and gives notice that it has done so within the 14 days

specified. If the other party does not appoints its own Arbitrator and give notice that it has done so within the 14 days specified, the party referring a

dispute to arbitration may, without the requirement of any further prior notice to the other party, appoint its Arbitrator as Sole Arbitrator and shall

advice the other party accordingly. The Award of the Sole arbitrator shall be binding on both parties as if he had been appointed by agreement.

Nothing herein shall prevent the parties agreeing in writing to vary these provisions to provide for the appointment of a Sole Arbitrator. In cases where

neither the claim nor any counter-claim exceeds the sum of USD 50,000 (or such other sum as the parties may agree) the Arbitration shall be

conducted in accordance with the LMAA small claims procedure current at the time when the arbitration proceedings are commenced.â€​

The defendant alleged that with regard to the transactions which formed the subject-matter of the disputes in the plaint are arising out of the said

contract in which the plaintiff has made out a false case of monies due and payable by the defendant to the plaintiff on account of delivery of goods

whereas it is a case of the defendant that the goods have not been supplied in terms of the contract and the defendant has a counter-claim against the

plaintiff. It was further alleged that the plaintiff suppressed that there is an existing dispute between the parties and has deliberately suppressed the

letter dated 9th December, 2013 written by the defendant to the Advocate-on-record of the plaintiff raising a commercial dispute under a cross border

trade contract which is to be resolved through arbitration proceedings in London under English Law and in accordance with London Maritime

Arbitration Association (LMAA). The defendant further alleged that although the plaintiff in the plaint in paragraph 12 has referred to the letter dated

9th December, 2013 but the said plaint does not disclose the letter in which the defendant had demanded remittance of a sum of US$ 410979.74 to its

designated account in Hongkong within next 14 days; failing which the defendant would recover the said sum through arbitration in accordance with

the contract. It was on such basis the defendant has prayed for stay of the suit and referring the dispute to arbitration. The defendant’s

application, GA No.513 of 2015, was moved on 25th March, 2015 when an order was passed directing the parties to file affidavits and the parties

were restrained till 30th June, 2015 or until further orders, whichever is earlier, not to take any further steps in the suit.

Thereafter the plaintiff has filed an application being GA No.67 of 2016 praying, inter alia, for an order of injunction restraining the respondents and

the learned Arbitrator Mr. Alan Oakley from proceeding with the arbitration proceedings in London. The basis of the application appears to be that the

suit does not arise from any alleged contract between the parties. The clam of the plaintiff is based on the full and final settlement and/or compromise

mutually arrived at between the parties with regard to the claim and counter-claim arising from all the three contract entered into between the parties

on 6th February 2013. The said settlement was duly recorded in the letter dated 24th April, 2013 issued by the respondent to the petitioner. Five

several bills of exchange were also issued by the defendant all dated 27th February, 2013 in acknowledgement of such settlement or compromise

thereby giving a complete go-by to all the contracts entered into between the parties with regard to claims and counter-claims arising therefrom.

During the pendency of the suit, the defendant had illegally, unlawfully and arbitrarily invoked the arbitration clause contained in the alleged contract

by its letter dated 29th June, 2015 before the sole arbitrator Mr. Alan Oakley of LMAA. The petitioner replied to the said letter by its letter dated 7th

July, 2015. However, despite such objection raised by the petitioner, the defendant unilaterally referred the matter to LMAA on 31st July, 2015

without any notice to the petitioner intimating the appointment of Mr. Alan Oakley as the sole arbitrator. The respondent has acted illegally and

unlawfully and in abuse of the process of law. The plaintiff/petitioner by its e-mail dated 24th September, 2015 has again objected to the alleged

arbitration proceedings and requested the learned Arbitrator not to proceed with the arbitration reference as the same is not maintainable and is bad in

law.

The defendant in the meantime has filed two separate statements of claim against the plaintiff in respect of two several agreements being contract

no.DRL/Ambo/030/S/2012 dated 27th February, 2012 and contract no.DRL/Ambo/049/S/2012 dated 15th March, 2012 respectively same being the

subject-matter of the suit. The petitioner was surprised to receive an e-mail dated 9th November, 2015 from the learned Arbitrator Mr. Alan Oakley

whereby the leaned Arbitrator ordered the petitioner to serve defence submissions (and counter claim submission, if any) on or before 30th November,

2015. The petitioner again received another e-mail dated 18th December, 2015 from the learned Arbitrator from the Learned Arbitrator wherein

prompt directions were given to serve the defence submission together with the counter-claim submission on or before 4th January, 2016. The plaintiff

in its e-mail dated 18th December, 2015 has reiterated that the purported reference sought to be proceeded by the defendant is not maintainable as

also informed the learned Arbitrator pendency of the application under Section 45 of the Arbitration and Conciliation Act, 1996. Despite receipt of the

said e-mail dated 21st December, 2015 the Arbitrator has confirmed the peremptory order and is in all likelihood to proceed with the arbitration

proceedings and in the event the arbitrator is allowed to proceed, it would cause prejudice to the plaintiff.

The proceeding before the Arbitrator is vexatious and is being pursued by the defendant so as to non-suit the plaintiff. The two principal grounds as it

appears from the said petition for the reliefs claimed in the said petition are the pendency of an application under Section 45 of the Arbitration and

Conciliation Act and the settlement arrived at between the parties post the three contracts. In the said proceeding an order was passed by Justice

Arijit Banerjee on 14th January, 2016 restraining the defendant from proceeding with the arbitration proceeding in view of the pendency of the

application under Section 45 of the Arbitration and Conciliation Act, 1996. The observations of His Lordship in this regard is as follows:

“Having considered the rival contentions of the parties, I am prima facie of the view that the defendant having approached this Court by way of an

application under Section 45 of the Arbitration and Conciliation Act, 1996, it should not have initiated arbitration proceeding in London until disposal of

the said application. This in my opinion amounts to overreaching this Court. In my view, it will be unconscionable and vexatious on the plaintiff if the

arbitration proceeding is allowed to continue on London.

Accordingly, there will be an order of stay of the arbitration proceedings in London till 10th February, 2016 or until further order whichever is earlier.

The defendant is restrained from proceeding with the arbitration proceeding in London till 10th February, 2016.â€​

The said interim order was extended from time to time and was subsisting with the award was passed. In the meantime, disregarding the said order

passed an award, the enforceability of which was declined by the Court by an order dated 2nd August, 2017, in view of the fact that the said award

was passed disregarding such interim order.

Thereafter, the defendant filed an application being GA No.595 of 2016 praying, inter alia, for recalling of the order dated 14th January, 2016 and for

dismissal of GA No.67 of 2016. In the said application the defendant has claimed that the subject matter of the arbitration proceeding in London is

with respect to adjudication of disputes/claims of the petitioner arising out of a cross border contract being No.DRL/AMBO/030/S/2012, having an

arbitration agreement in the nature of a clause in accordance with the Rules of the London Maritime Arbitrator’s Association. The said dispute

does not form a part of the present suit. The claim of the petitioner before the Arbitral Tribunal is an independent claim arising out of a distinct and

separate cause of action. The petitioner had filed an application under Section 45 of the Arbitration and Conciliation Act, 1996 for referring the claims

of the plaintiff arising out of the Contract being No.DRL/AMBO/030/S/2012 to the Chamber of London Maritime Arbitrator’s Association, as the

said contract is governed by Arbitration.

The agreement is otherwise not void, inoperative or incapable of being performed. Since the arbitration being held at London is an independent

proceeding and has nothing to do with the plaintiff’s claim, the application filed by the plaintiff being GA No.67 of 2016 is required to be dismissed.

In view thereof, the order dated 14th January, 2016 was passed suppressing the entire facts and on misrepresenting the fact. At the time when the ad

interim order dated 14th January, 2016 was passed, the petitioner’ claim arising out of a contract, aggregating to Rs.125,914,026.97(US$1,838,820)

for monetary loss and Rs.68475450 (US$1,000,000) for damages in regard to loss of reputation was in the process of being adjudicated. In view of the

ad interim order, the petitioner could not continue to participate and/or proceed with the reference, which has caused immense prejudice to the

petitioner.

Thereafter, another application was filed on 18th May, 2016 being GA No.1736 of 2016 praying, inter alia, for recalling of the order dated 29th April,

2016 by which the ad interim order passed by Justice Banerjee was extended until further orders. All these four applications have now come up for

final hearing.

It is fundamental that a relief can be claimed and/or allowed provided there is a foundational pleading. The suit as famed by the plaintiff is a summary

suit under Order 37 of the Code of Civil Procedure. The plaintiff has referred to in paragraph 12 of the plaint, the communication received from the

defendant where the defendant has threatened the plaintiff with arbitration proceeding in the event the claim of the defendant to the extent of

US$410,979.74 is not remitted to its designated account at Hongkong within next 14 days. The plaintiff was aware that the arbitration proceeding has

commenced and an Arbitrator was appointed. In spite of such communication the plaintiff did not feel it necessary to pray for injunction on the said

proceeding in the suit. The suit is essentially for recovery of the full value of the three Bills of Exchange in full and one bill of exchange in part.

The defendant has filed an application under Section 45 of the Arbitration and Conciliation Act in which the defendant has referred to the contract

which the plaintiff claims to have been given a go-by by reason of the settlement arrived at between the parties. However, the execution of the

contract and existence of the arbitration clause are not denied by either of the parties. The objection as to the invocation of the arbitration clause

apparently was having regard to the settlement alleged to have been arrived at between the parties post execution of the three contracts by reason

whereof there is no dispute which is required to be referred to arbitration. The original contracts have now become fully inoperative and substituted by

the settlement arrived at between the parties which may be inferred from the conduct as well as the correspondence exchanged by and between the

parties.

Significantly, the defendant has filed the application although the defendant in its several applications has contended that the claim of the plaintiff is

distinct and separate of the claim of the defendant in the arbitration proceeding. This Court is at a loss to understand the reason for filling of such an

application in this proceeding. It is very difficult for the defendant to execute the award having made a statement in one of its applications that by

reason of the ad interim order, the defendant could not continue to participate and/or proceed with the reference which has caused immense prejudice

to the petitioner.

It is settled law that the parties, entering into an agreement with their eyes wide open, cannot resile from the terms of the agreement and at their own

sweet-will allege a foreign arbitration proceeding as oppressive and/or vexatious. In the application seeking an order of injunction in respect of the

pending arbitration proceeding the petitioner is not even able to demonstrate that the proceeding before the arbitrator would be oppressive and/or

vexatious. The arbitration agreement is an independent contract. Whether there has been an accord and satisfaction or a subsequent conduct by

which the claim arising out of the contract is not recoverable, are matters to be decided in the arbitration proceeding. The arbitrator is the appropriate

authority to decide such issues.

The defendant having made an assertion in its pleadings that the claim before the Arbitrator is an independent claim unconnected with the claim made

in the suit, in my view, makes its application unmeritorious. It has invited an order which possibly was avoidable. The plaintiff precisely knew at the

time of execution of the contract that in the event any dispute is arising out of the said contract, it would be governed by LMAA. In absence of any

demonstrable injustice or harassment being caused by reason of initiation of the arbitral proceedings or participation in such proceeding and having

regard to the fact that the agreement is not in dispute, the plaintiff is not entitled to an order of injunction. This is apart from the fact that no challenge

is thrown in the plaint with regard to the initiation of the arbitration proceedings. Under such circumstances, the application being GA No.67 of 2016

stands dismissed.

There is another ground to dismiss the said application as in the plaint there is no averments that the arbitration proceeding which was impending and

has been initiated was vexatious or oppressive or unconscionable. Even the basis of the application for injunction does not proceed on such ground and

it is not even alleged that the institution of such proceeding would be oppressive or vexatious or unconscionable.

The grounds for restraining the arbitration proceeding and the arbitrator to proceed with the arbitration are similar to the grounds on which an

application for enforcement of an award could be resisted by an award debtor at the time of enforcement. Moreover, the plaintiff has failed to disclose

any reason for not participating in the arbitration proceeding. The plaintiff does not either dispute the execution of the contract or arbitration clause in

the contract. The contract is admitted. In view of the stand taken by the defendant in the petition that the claim before the Arbitral Tribunal is distinct

from its claim made in the suit the defendant could not have maintained the said application for referring the disputes forming the subject matter of the

suit to arbitration. Under such circumstances, GA No.513 of 2015 stands dismissed. GA No.595 of 2016 and GA No.1736 of 2016 are allowed.