Judgment

KRISHNA IYER, J. - Commercial causes, we may observe prolegomenary fashion should, as far as possible, be adjusted by non-litigative mechanisms of dispute-resolution since forensic processes, dilatory and contentious, hamper the flow of trade and harm bothsides, whoever wins or loses the lis. That is why arbitration is often prudently resorted to when controversies erupt in the course of business dealings. But when basic differences spring up as to which is the arbitration clause that governs, in a plurality of contracts or several steps in evolving a final contract but containing divergent arbitral provisions, the Court comes into the picture, willy nilly. Even so, having regard to the larger interests of justice, and exercise in pre-trial settlement, consistent with judicial non-alignment, is desirable, and so we had suggested to counsel, at an earlier hearing, to bring the parties together on the limited question of the arbitral locus and law, but, notwithstanding genuine efforts by counsel, and perhaps due to substantial factors wighing with the parties, the effort proved fruitless. A legal adjudication may be flawless but heartless but a negotiated settlement will be satisfying, even if it departs from strict law. The respondents counsel stated that his client -m a foreign State trading Organization was rather keen - and this may well be true on getrting the law declared by his court for future guidance and so we proceed to narrate the litigative story and cut the legal knot for the benfit of both sides. Since the subject-matter relates to the sensitive area of foreign trade we still hope the dispute, even after our pronouncement, will be dissolved and goodwill andbusiness dealings revived between the parties to their mutual benefit.

2. The drmatis personae or legal actyors in this action are an engineering firm in India (the appellant) and a Hugarian state undertaking doing export-import trade with other countries in machinery ( the respondent) and the contest relates to the competency of the appellant to refer a dispute regarding purchase of two Hungarian Counterblows (machinery). The Indian went to Buidapest to try and buy Hungarian machinery and the negotiations fructified as the minutes of April 2, 1970, drawn up of the broadarrangement between the parties, disclose. Having been followed up by formal deeds, these minutes mark the beginning of and serve as setting tobut not in themselves constitutive of complete cntracts. A significant dichotomy which characterises these minutes cannot be missed, though resisted by counselfor the respondent. The first part relates to the appellant, being exclusively chosen to represent the respondent in the sales of their manufactures in certain specifiedates in India. The second part is devoted to purchase of two specific items of machinery plus provsion for a third to be concretised later. This duality analysis may be driven home byreading the text of the minutes here:

MINUTES

"Drawn in Budapest on the 2nd April, 1970, Present.........

1. Technoimpex grants the right of exclusive representation to the Agarwal Engineering Co. to act as its sole agent in the territories of West Bengal, Bihar and Orissa. It will be decided at a later date whether the representation agreement will be extended to the State of Assam.

2. The detailed text of the agreement will be air-mailed until the 7th April 1970.

3. A letter in duplicate addressed to STC with the request to issue a stock and tale licence in a avalue of 2 Million rupees will be sent to the Hungarian Trade Commissioner in Calcutta who hands over t to M/s Agarwal Engineering Co., after signing the agency agreement.

4. Detailed pro forma invoices in six copies will be sent with the agreement and catalogus at least siz copies.

5. It has been agreed that Techno impex supplies and the Agarwal Engineering companu immediately places the order for the following machines:

One counterblow Hammer Type EK gross C & F Price Rs. 1,000.000

One counterblo