1983 Supreme(Bom) 303
IN THE HIGH COURT OF BOMBAY
Smt. Sujata V. Manohar, J.
Indian Oil Corporation Ltd. .... Plaintiffs.
Versus
Indian Carbon Ltd. .... Defendants.
Notice of Motion No. 940 of 1983 to in Suit No. 2187 of 1982, decided on 20-10-83.
Advocates appeared :
A.M. Setalvad with S.H. Doctor, for defendants in support.
G.A.Thakkar with M.G. Thakkar, to show cause.
If the subsequent agreement creates new rights and liabilities which can be considered as a new agreement between the parties then the arbitration clause under the old agreement will not apply to such new rights and liabilities.
Headnote:
ARBITRATION - STAY OF SUIT - ARBITRATION CLAUSE - APPLICABILITY - MODIFICATION OF ORIGINAL AGREEMENT - CREATION OF NEW RIGHTS AND LIABILITIES - ARBITRATION CLAUSE IN ORIGINAL AGREEMENT NOT APPLICABLE TO NEW RIGHTS AND LIABILITIES - SECTION 34 OF THE ARBITRATION ACT, 1940.
Fact of the Case:
The plaintiffs and defendants entered into an agreement in 1961 for the supply of raw petroleum coke. The agreement contained an arbitration clause. Over the years, the parties made several modifications to the original agreement, including changes to the price, delivery terms, and payment terms. In 1982, the plaintiffs filed a suit against the defendants for recovery of money due under the agreement. The defendants filed a notice of motion for a stay of the suit under section 34 of the Arbitration Act, 1940, arguing that the arbitration clause in the original agreement applied to the disputes between the parties.
Finding of the Court:
The court held that the arbitration clause in the original agreement did not apply to the disputes between the parties in the present suit. The court found that the modifications to the original agreement were substantial and created new rights and liabilities between the parties. As a result, the court held that the arbitration clause in the original agreement could not be applied to the new rights and liabilities.
Issues: Whether the arbitration clause in the original agreement applied to the disputes between the parties in the present suit.
Ratio Decidendi: The court held that the arbitration clause in the original agreement did not apply to the disputes between the parties in the present suit because the modifications to the original agreement were substantial and created new rights and liabilities between the parties.
Final Decision: The court dismissed the defendants' notice of motion for a stay of the suit.
"10. If any dispute or difference arises between the parties to these present regarding any of the matters arising out of or connected with the same or regarding the interpretation of those presents or otherwise, the matter in dispute or difference shall be referred to the arbitration of the Indian Chamber of Commerce, under the rule of the Tribunal of arbitration at the said Chamber, provided that at the option of the Company, the arbitration proceedings shall be held at Bombay".
2. Under a writing dated 22nd April, 1970, an agreement finalised at the meeting of both the parties held on 25th May, 1969 was recorded. Under this agreement it was agreed that the agreement of 23rd June, 1961 was renewed for a period of 5 years as provided under Clause 2 of the agreement of 23rd June 1961. The price however, was increased to Rs. 165/- per metric tonne and certain additional clauses were inserted in the original agreement of 23rd June, 1961. These clauses relate to (1) payment of penalty, (2) carnage charges, (3) haulage charges and (4) a force major clause. Under these new clauses it was provided that the purchaser was to uplift all available coke produced at Gauhati Refinery on a regular basis every week so as to avoid accumulation and congestion in the Refinery's coke yard. It was inter alia provided that the accumulated quantity of coke in the Refinery's coke yard should not fall below 2500 metric tonnes and should not exceed 4500 metric tonnes. There were other provisions relating to lifting of coke in excess of 4500 metric tonnes in the manner provided in the said clauses. The defendants were also given the facility of using the said plaintiffs crane for removing the raw petroleum coke from the plaintiffs coke yard on payment of certain charges. Under the terms relating to haulage charges, the defendants were required to arrange their own shunter for loading the coke wagons. There was also a force major clause as set out in the said agreement. The original agreement as altered at the meeting of 25th May, 1969 remained in force till 1974. Thereafter, the parties recorded a memorandum of understanding arrived at between them at meetings held on 11th, 12th and 13th of March, 1974. This memorandum relates to the supply of raw petroleum coke at Barauni refinery under an agreement d