The applicability of Section 3 of the Foreign Awards (Recognition and Enforcement) Act, 1961, depends on whether the dispute between the parties is covered by an arbitration agreement and whether the relationship between the parties is a commercial relationship as contemplated by the Act.

( 1 ) THIS is an application under the provisions of Foreign Awards (Recognition and Enforcement) Act 1961 for stay of the present suit, being Suit No. 93 of 1984 (Kanoria Chemicals and Industries Ltd. v. Josef Meisaner GMBH and Co. and another ). The facts relating to the present application may be briefly noted.

( 2 ) THE plaintiff Kanoria Chemicals and Industries Ltd. , (hereinafter referred to as Kanoria) is, inter alia, engaged in the manufacture of heavy chemicals, Pentasrithrytol (hereinafter referred to as Penta) is a vital organic chemical and is used, inter alia, in the manufacture of detonator and explosive, surface coating resins, adhesives, printing inks etc. It can be of various grades.

( 3 ) KANORIA was desirous of a setting up of a plant for manufacturing of Penta. With that objective in view Kanoria made an application to the Ministry of Industries, Department of Industrial Development, Government of India for the grant of industrial licence under the Industries (Development and Regulation) Act, 1951. The authorities duly issued a letter of intent.

( 4 ) AFTER the receipt of letter of intent, Kanoria initiated enquiries with various international parties for obtaining suitable technology for the project. Ultimately, Kanoria entered into a Technical Collaboration Agreement with the applicant Josef Meissner GMBH and Co. (hereinafter referred to as Meissner ). The agreement dated the 7th January, 1981 recited that Meissner owns technical know-how and information regarding the manufacture of Penta and its by-products Sodium Formate and was willing to transmit it to Kanoria for Kanoria's use. The agreement which is annexed to the petition provided, inter alia, that Meissner will provide Kanoria with know-how and basic engineering which is necessary for Kanoria to own, engineer, construct, operate and maintain the plant. The agreement provided in considerable detail the know-how, information and the basic engineering which has to be provided by Meissner to Kanoria.

( 5 ) EXT. III to the agreement provided, inter alia, that the plant will be capable of achieving a minimum production rate of 4 tonnes per day of Penta along with the by-product Sodium Formate at a minimum production rate of 55% of Penta.

( 6 ) ARTICLE 13 of the Agreement contains an Arbitration Clause which is in the following terms. "all disputes or differences or claims whatsoever which arise in relation to or in connection with or pertaining to the contract between the parties hereto shall be referred to International Chamber of Commerce, Paris and the award made in pursuance thereof shall be binding on the parties. "

( 7 ) ON or about the 2nd September, 1981 an agreement was entered into between the Kanoria and Humphreys and Glasgow Consultants Pvt. Ltd. , (hereinafter referred as Humphrey) which is the defendant No. 2 in the suit. This agreement which is known as Engineering Services Agreement generally provides that Humphrey will provide consultancy and supervision of the various items of civil engineering, mechanical engineering, electrical engineering and other services which are necessary for the setting up of the plant. The agreement also provides for consultation with and approval of Meissner with regard to several items of consultancy and supervision which Humphreys would have to undertake. This agreement contains an arbitration clause for arbitration of disputes under the Indian Arbitration Act, 1940. We are not really concerned with this arbitration clause in this application.

( 8 ) ON or about the 11th November, 1981 another agreement was entered into between Kanoria and Meissner which was described as Equipment Purchase Agreement. Under this agreement, Meissner was to supply what has been described as the Critical Equipment for the setting up of the plant.

( 9 ) PURSUANT to the above agreements, the work on the construction of the plant commenced and the plant was commissioned, according to the plaint, on or about t