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IN THE HIGH COURT OF BOMBAY
CHAGLA C. J. AND S. T. DESAI J.
East India Trading Co., New York, Appellants
Versus.
Badat and Co., Bombay, Respondents.
Appeal No. 13 of 1958, D/- 12-9-1958.
JURISDICTION - FOREIGN JUDGMENT - AWARD - EVIDENCE ACT - ARBITRATION - CONTRACT - MERITS OF THE CASE - INTEREST - COSTS - APPEAL - UNDERTAKING - LIBERTY TO WITHDRAW DEPOSIT.
Fact of the Case:
Plaintiffs, a company incorporated in New York, sued defendants, a company carrying on business in Bombay, for breach of two contracts entered into pursuant to terms of business agreed upon by exchange of letters. The terms included a letter of credit to the extent of 95% to be opened by plaintiffs. Plaintiffs opened the letter of credit but defendants failed to supply the goods and committed a breach of contract. Plaintiffs required that the dispute be referred to arbitration as per the American Spice Trade Association contract. An award was made and a decree was obtained on this award from the Supreme Court of the State of New York. Plaintiffs came to this Court to enforce that foreign judgment and in the alternative asked for relief on the basis of the award itself.
Finding of the Court:
1. The Court has jurisdiction to entertain and try the suit as the terms of business were accepted by the defendants in Bombay and the proposal or acceptance of the said contracts by the defendants took place in Bombay. 2. The arbitrators and umpire had jurisdiction to make the said awards as the arbitration agreement was independent of the contracts and applied to every business done between the parties. 3. The Supreme Court of New York had jurisdiction to pass the judgment and order as there is a presumption under section 14 of the Civil Procedure Code that the Court shall presume, upon the production of any document purporting to be a certified copy of a foreign judgment, that such judgment was pronounced by a Court of competent jurisdiction, unless the contrary appears on the record. 4. The said judgment and order of the said Supreme Court were given on the merits of the case as the tribunal giving the award considered the merits of the matter and came to a decision. 5. The said awards were given on the merits of the case as there is no evidence that the award was not given on the merits and on the evidence it is clear that it was given on the merits. 6. Defendants entered into a contract with the plaintiffs as alleged in para 2 of the plaint as the correspondence dealing with the contract has been admitted by the defendants and the only submission made by the defendants is a submission of law that this correspondence does not amount to a contract in law. 7. The said awards are binding upon the defendants as the awards have been made enforceable by the law of the country in which it was passed.
Issues: 1. Whether this Hon'ble Court has jurisdiction to entertain and try this suit? 2. Whether the arbitrators and umpire had jurisdiction to make the said awards? 3. Whether the Supreme Court of New York had jurisdiction to pass the judgment and order? 4. Whether the said judgment and order of the said Supreme Court were given on the merits of the case? 5. Whether the said awards were given on the merits of the case? 6. Whether defendants entered into any contract with the plaintiffs as alleged in para 2 of the plaint? 7. Whether the said awards are binding upon the defendants?
Ratio Decidendi: 1. The Court has jurisdiction to entertain and try the suit as the terms of business were accepted by the defendants in Bombay and the proposal or acceptance of the said contracts by the defendants took place in Bombay. 2. The arbitrators and umpire had jurisdiction to make the said awards as the arbitration agreement was independent of the contracts and applied to every business done between the parties. 3. The Supreme Court of New York had jurisdiction to pass the judgment and order as there is a presumption under section 14 of the Civil Procedure Code that the Court shall presume, upon the production of any document purporting to be a certified copy of a foreign judgment, that such judgment was pronounced by a Court of competent jurisdiction, unless the contrary appears on the record. 4. The said judgment and order of the said Supreme Court were given on the merits of the case as the tribunal giving the award considered the merits of the matter and came to a decision. 5. The said awards were given on the merits of the case as there is no evidence that the award was not given on the merits and on the evidence it is clear that it was given on the merits. 6. Defendants entered into a contract with the plaintiffs as alleged in para 2 of the plaint as the correspondence dealing with the contract has been admitted by the defendants and the only submission made by the defendants is a submission of law that this correspondence does not amount to a contract in law. 7. The said awards are binding upon the defendants as the awards have been made enforceable by the law of the country in which it was passed.
Final Decision: Appeal allowed and the decree passed by the trial Court set aside. The appellants will be entitled to the costs of the appeal.
This is an appeal against a judgment of Mr. Justice Mody and the learned Judge begins his judgment by stating: "This is a normal case wherein abnormal developments have taken place". We wholly subscribed to that proposition. We might add that this is not only a normal case but a very simple case where every conceivable technical defence has been taken in order to put off the evil day when judgment will be passed against the respondents, who are the defendants in the suit. Mr. Thakore, who has done his best for his client, realising how dishonest the defence was and arguing before what he might have felt a very hostile Bench, did not omit to put before us every possible circumstance which could help his clients. But the. more he argued the more we felt that the attempt was, as Mr. Thakore frankly conceded, to see that the judgment was delayed as far as possible, and Mr. Thakore also told us that as his clients were not in a position to pay any amount at all it did not matter to them whether heavy costs were incurred and the litigation became as protracted as possible. According to Mr. Thakore, his clients might as well be adjudicated insolvent for a larger amount as for smaller amount and perhaps they prefer to be adjudicated later for a larger amount than for a smaller amount at present.
(2) Now, the suit out of which this appeal arises is substantially based on a foreign judgment and in the alternative on an award given by a domestic tribunal functioning in New York and the judgment and the award came to be given under the following circumstances. The plaintiff company was incorporated in the State of New York and the defendant company, it is alleged, was at the relevant time carrying on business in Bombay, and the case of the plaintiffs was that by two letters dated 7-9-1948 and 13-9-1948, the first written by the plaintiffs and the second by the defendants, the terms of business were agreed upon between the parties. The terms with which we are concerned were that the business was to be done on the terms of the American Spice Trade Association contract with a letter of credit to the extent of 95 per cent to be opened by the plaintiffs. Pursuant to these terms of business, according to the plaintiffs, two contracts were entered into. By these contracts it is alleged by the plaintiffs that the defendants agreed to sell certain number of tons of spices to the plaintiffs. The plaintiffs opened the letter of credit as required by the terms of business, but ultimately the defendants failed to supply the goods and committed a breach of the contract. Thereupon, pursuant to the American Spice Trade Association contract the plaintiffs required that the dispute between the parties should be referred to arbitration. It was so referred, although the defendants did not nominate their own arbitrator or appear before the arbitrators who ultimately entered upon the arbitration. An award was made and a decree was obtained on this award from the Supreme Court of the State of New York. The plaintiffs then came to this Court to enforce that foreign judgment and in the alternative they asked for relief on the basis of the award itself. The learned Judge raised various issues and ultimately dismissed the plaintiffs suit.
(3) The first issue that we have to consider is the issue of jurisdiction. Now, it is normal to look to the jurisdiction clause in the plaint in order to ascertain what are the various facts on which the plaintiff is reiving as conferring jurisdiction upon the Court, and when we turn to para 10 of the plaint it is averred:
"The defendants used to carry on business and reside in Bombay. Their present whereabouts are not known. But the terms of business were accepted by the defendants in Bombay and the proposal of acceptance of the said contracts by the defendants took place in Bombay. The defendants refusal to pay the said sum also took place in Bombay. A material part of the cause of action took place in Bom
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