2010 Supreme(SC) 99

2010 (1) Supreme 302
SUPREME COURT OF INDIA
P. Sathasivam, J.
Trimex International FZE Ltd. Dubai — Appellant
versus
Vedanta Aluminium Ltd., India — Respondent
Arbitration Petition No. 10 of 2009
Decided on : 22-1-2010

IMPORTANT POINT
Once the contract is concluded orally or in writing, the mere fact that a formal contract has to be prepared and initiated by the parties would not affect either the acceptance of the contract so entered into or implementation thereof, even if the formal contract has never been initiated.
2. Unless an inference can be drawn from the facts that the parties intended to be bound only when a formal agreement had been executed, the validity of the agreement would not be affected by its lack of formality.

Headnote:Arbitration & Conciliation Act, 1996 – Section 11(6) – Appointment of arbitrator – Petitioner – Company registered in Dubai ,engaged in the business of trading in Minerals across world – Petitioner submitted a commercial offer through e-mail for the supply of Bauxite to respondent a Company registered in India using Aluminium Ore as one of the major inputs for their operations – After several exchanges of e-mails and after agreeing on the material terms of the contract,respondent conveyed their acceptance of the offer through e-mail confirming the supply of 5 shipments of Bauxite to be supplied from Australia to Vizag/Kakinada – On the basis of acceptance by respondent, petitioner concluded the deal with Bauxite supplier in Australia on the same day and entered into a binding Charter Party Agreement with the ship owner in Oslo – The acceptance of offer was acknowledged by respondent in these minutes – A formal contract containing a detailed arbitration clause was also sent by the respondent to petitioner which was accepted by petitioner with some changes – On dispute between parties petitioner filed petition for appointment of an Arbitrator – Respondent’s case that there was no concluded contract between the parties – Once the contract is concluded orally or in writing, the mere fact that a formal contract has to be prepared and initialed by the parties would not affect either the acceptance of the contract so entered into or implementation thereof, even if the formal contract has never been initiated – The acceptance conveyed by the respondent satisfied requirements of Section 4 of the Indian Contract Act 1872 – Apart from this, the mandate of Section 7 of the Indian Contract Act stipulated that an acceptance must be absolute and unconditional has also been fulfilled – It is true that in the first acceptance conveyed by the respondent contained a rider, namely,cancellation after 2 shipments which made acceptance conditional – However, taking note of the said condition, the petitioner requested the respondent to convey an unconditional acceptance which was readily done through his email sent at 3:06 PM with the words “we confirm the deal for 5 shipments”, which was unconditional and unqualified – Respondent was wholly aware of the fact that its agreement with the petitioner was interconnected with the ship owner – Once the offer of the petitioner was accepted following a very strict time schedule, the respondent could not escape from the obligations that flowed from such an action – Instantly where the Commercial Offer carries no clause making the conclusion of the contract incumbent upon the Purchase Order, it was clear that basic and essential terms had been accepted by respondent, without any option but to treat the same as a concluded contract – Hence held that petitioner had made out a case for appointment of an Arbitrator in accordance with Clause 6 of the Purchase Order and subsequent materials exchanged between parties. (Paras 9 to 22)

       Facts of the Case :

        Petitioner Company registered in Dubai ,engaged in the business of trading in Minerals across world herein in the instant case submitted a commercial offer through e-mail for the supply of Bauxite to respondent a Company registered in India using Aluminium Ore as one of the major inputs for their operations. After several exchanges of e-mails and after agreeing on the material terms of the contract,respondent conveyed their acceptance of the offer through e-mail confirming the supply of 5 shipments of Bauxite to be supplied from Australia to Vizag/Kakinada. On the basis of acceptance by respondent, petitioner concluded the deal with Bauxite supplier in Australia on the same day and entered into a binding Charter Party Agreement with the ship owner in Oslo.The acceptance of offer was acknowledged by respondent in these minutes.A formal contract containing a detailed arbitration clause was also sent by the respondent to petitioner which was accepted by petitioner with some changes.

        2. On dispute between parties. petitioner filed petition for appointment of an Arbitrator.

       Findings of the Court :

        Once the contract is concluded orally or in writing, the mere fact that a formal contract has to be prepared and initialed by the parties would not affect either the acceptance of the contract so entered into or implementation thereof, even if the formal contract has never been initialed. The acceptance conveyed by the respondent satisfied requirements of Section 4 of the Indian Contract Act 1872. Apart from this, the mandate of Section 7 of the Indian Contract Act stipulated that an acceptance must be absolute and unconditional had also been fulfilled. It is true that in the first acceptance conveyed by the respondent contained a rider, namely, cancellation after 2 shipments which made acceptance conditional. However, taking note of the said condition,the petitioner requested the respondent to convey an unconditional acceptance which was readily done through his email sent at 3:06 PM with the words “we confirm the deal for 5 shipments”, which was unconditional and unqualified. Respondent was wholly aware of the fact that its agreement with the petitioner was interconnected with the ship owner. Once the offer of the petitioner was accepted following a very strict time schedule, the respondent could not escape from the obligations that flowed from such an action.Instantly where the Commercial Offer carries no clause making the conclusion of the contract incumbent upon the Purchase Order, it was clear that basic and essential terms had been accepted by respondent, without any option but to treat the same as a concluded contract. Hence held that petitioner had made out a case for appointment of an Arbitrator in accordance with Clause 6 of the Purchase Order and subsequent materials exchanged between parties.

       Result : Petition allowed.