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HIGH COURT OF JUDICATURE AT CALCUTTA
ASHIM KUMAR BANERJEE, SHUKLA KABIR (SINHA), JJ.
Gujarat NRE Coke Ltd. & Another
Versus
Gregarious Estates Incorporated & Others
A.P.O. No. 381 of 2012 & E.O.S. No. 6 of 2011
Decided on : 22-01-2013
CHARTER PARTY AGREEMENT - ARBITRATION IN LONDON - ENGLISH LAW - JURISDICTION OF INDIAN COURT OVER FOREIGNER - FOREIGN ARBITRATION - PARALLEL PROCEEDINGS - SECTION 45 OF ARBITRATION AND CONCILIATION ACT, 1996 - SECTION 12 OF LETTERS PATENT - SECTION 41(B) OF SPECIFIC RELIEF ACT - FOREIGN EXCHANGE REGULATION ACT (FERA) - FOREIGN EXCHANGE MANAGEMENT ACT (FEMA) - ARBITRATION ACT, 1940 - ARBITRATION ACT, 1961 - INDIAN OXYGEN LTD. VS. NATIONAL OXYGEN LTD. & ANR. - MIKUNI CORPORATION -VS- UCAL FUEL SYSTEMS LIMITED, CARBURETTORS LIMITED & SIEMENS VDO AUTOMOTIVE - BHARAT ALUMINIUM CO. LTD. VS. BALCO EMPLOYEES UNION - YOGARAJ INFRASTRUCTURE LIMITED VS. SSANGYONG ENGINEERING AND CONSTRUCTION COMPANY LIMITED - LMJ INTERNATIONAL LIMITED VS. SLEEP WELL INDUSTRIES COMPANY LIMITED AND ANR. - MODI ENTERTAINMENT NETWORK AND ANR. VS. W.S.G. CRICKET PTE. LTD. - COMPANIES EUROPEAN DE CEREALS S.A. -VS- TRADAX EXPORT S.A. - M/S. V/O. TRACTOROEXPORT -VS- M/S. TARAPORE & CO. MADRAS & ANR. - OIL & NATURAL GAS COMMISSION - VS- WESTERN COMPANY OF NORTH AMERICA - GANESHI LAL -VS- JOTI PERSHAD - THE OWNERS & PARTNERS OF THE FIRM NAMED SHAH KANTILAL -VS- DOMINION OF INDIA OWNING EAST INDIA RAILWAY - DIAPAK BANERJEE -VS- SUDIPTA BANERJEE - STATE OF PUNJAB - VS- A.K. RAHA [ENGINEERS] LTD. - BHAWAN SHANKAR -VS- RAJARAM - CHUNNILAL KASTURCHAND -VS- DUNDAPPA DAMAPPA - ALBON -VS- NAZA MOTOR TRADING SDN BHD - TRACOMIN S.A. -VS- SUDAN OIL SEEDS CO. LTD. - PUNJAB STATE ELECTRICITY BOARD -VS- VEE KAY GENERAL INDUSTRIES - ROSHAN LAL GUPTA -VS- PARASRAM HOLDINGS PVT. LTD. & ORS. - MAHESHKUMAR -VS- RAJASTHAN STATE ROAD TRANSPORT CORPORATION, JODHPUR - SOUTH CITY PROJECTS (KOLKATA) LIMITED - VS- JUGAL KISHORE SADANI & ORS. - BHAGWANDAS AUTO FINANCE LTD. & ORS. - VS- CITICORP FINANCE [INDIA] LTD. - NICCO CORPORATION LIMITED -VS- PRYSMIAN CAVI E SISTERI ENERGIA SRL & ANR. - AIRBUS INDUSTRIES GIE VS PATEL AND ORS. - SMITH KLINE & FRENCH LABORATORIES LTD. & ORS. -VS- BLOCH - ALL INDIA REPORTER 2006 RAJASTHAN PAGE-56 - 2009 VOLUME-I ARBITRATION LAW REPORTER PAGE-304 (DELHI) - 2007 [SUPPLEMENTARY] ARBITRATION LAW REPORTER PAGE-179 [DELHI] - 1986 VOLUME-II LLOYD’S LAW REPORTS PAGE-301 - 2010 VOLUME-IV CALCUTTA LAW TRIBUNAL (HC) [SOUTH CITY PROJECTS (KOLKATA) LIMITED - VS- JUGAL KISHORE SADANI & ORS.] - ALL INDIA REPORTER 2009 CALCUTTA PAGE-231 - 2010 VOLUME-XI SUPREME COURT CASES PAGE-744 - 2008 VOLUME-I LLOYD’S LAW REPORTS PAGE-1 - 1983 VOLUME-II LLOYD’S LAW REPORTS PAGE-384 - ALL INDIA REPORTER (38) 1951 BOMBAY PAGE-190 - ALL INDIA REPORTER (38) 1951 BOMBAY PAGE-125 - ALL INDIA REPORTER 1987 SUPREME COURT PAGE-674 - ALL INDIA REPORTER 1971 SUPREME COURT PAGE-1 - 1987 VOLUME-I CALCUTTA LAW TRIBUNAL PAGE-491 - ALL INDIA REPORTER 1954 CALCUTTA PAGE-67 - 1983 VOLUME-I WEEKLY LAW REPORTER PAGE-730 - ALL INDIA REPORTER 1964 CALCUTTA PAGE-418 - ALL INDIA REPORTER 1953 SUPREME COURT PAGE-1 - VOLUME-XXIII CALCUTTA WEEKLY NOTES PAGE-258 - 1937 AC PAGE-587 - 2009 VOLUME-II ARBITRATION LAW REPORTER PAGE-198 [GUJARAT] - MARWADI SHARES & FINANCE PVT. LTD. -VS- KISHORKUMAR NAGJIBHAI MAVANI
Fact of the Case:
A dispute arose between the parties to a Charter Party Agreement when the vessel was not delivered within the stipulated period. The appellant, who had hired the vessel, declined to accept it on the ground that the ownership had changed without any notice to them. The respondent, who had offered the vessel, approached the Calcutta High Court seeking a declaration that the Arbitration Agreement was illegal, null and void, and prayed for consequential injunction restraining the respondent from taking any step in terms thereof. The appellant filed a second suit before the City Civil Court, seeking an order of restraint against the respondent from proceeding with the English suit on the ground that there would be conflict of decision in case parallel proceedings were allowed to continue. The City Civil Court initially did not pass any interim order, but subsequently on an appeal, the appellant got a time-bound order of restraint that spent its force by efflux of time.
Finding of the Court:
The learned Single Judge dismissed the application principally on the following counts: i) Plaintiff filed the suit, as they felt aggrieved on their failure to achieve “super profit” to the extent of Rs.56.25 crores which they had expected to achieve during 7 years of existence of the Charter Party. ii) The defendants were obliged to give 30 days’ notice of change of management, which they had failed. The agreement thus became voidable and the plaintiff was entitled to be relieved. iii) The cause of action in the second suit arose when the English Court granted an anti-suit injunction where the respondent threatened to proceed with the Arbitration. The appellant prayed for order of restraint on the respondents from proceeding with the Arbitration as well as the Civil Suit.
Issues: 1. Whether an Indian court has jurisdiction over a foreigner who is not amenable to its jurisdiction? 2. Whether the pendency of arbitration proceedings bars a civil court from exercising its jurisdiction? 3. Whether the venue of arbitration as specified in the agreement is determinative of the jurisdiction of the court? 4. Whether parallel proceedings can be maintained in different jurisdictions? 5. Whether a court can restrain foreign arbitration proceedings?
Ratio Decidendi: 1. A court can pass an order of injunction against a foreigner only if he is amenable to the court's jurisdiction, either by submitting to the jurisdiction or by having assets within the jurisdiction. 2. The mere existence of an arbitration clause does not bar a suit from being proceeded with, unless the arbitration agreement is held to be valid and enforceable. 3. The venue of arbitration as specified in the agreement is not determinative of the jurisdiction of the court. The court may consider factors such as the natural forum, the convenience of the parties, and the cost involved in determining whether to exercise its jurisdiction. 4. Parallel proceedings can be maintained in different jurisdictions, but the court may restrain one or both of the proceedings if it finds that such proceedings are vexatious or oppressive. 5. A court can restrain foreign arbitration proceedings only in exceptional circumstances, such as where there is a threat of injustice or harassment, or where the arbitration agreement is found to be invalid or unenforceable.
Final Decision: The appeal succeeds in part. Cross-objection succeeds. The order of the learned Single Judge is affirmed with the little modification as above. There would be no order as to costs.
Ashim Kumar Banerjee, J.
FACTS:-
Parties entered into a Charter Party Agreement on January 29, 2008 by which it was agreed that the respondent would offer a vessel to the appellant at Dalan Ship Yard said to be in China for 82 months with a maximum limit of 86 months. Vessel was to be delivered at Dalan Ship yard on or before December 31, 2011. Appellant would contend, the agreement was signed at Calcutta. We, however, find from the Charter Party Agreement appearing at page 40 onwards, the agreement was concluded in London. The appellant would contend, they hired the vessel for the purpose of bringing coal from abroad for consumption of its power plants at various places within the country, all outside jurisdiction of this Court.
The Charter Party agreement contained a clause for alternate dispute resolution. Clause 84 would inter-alia provide as follows: -
“Clause 84 – Arbitration
General Average/Arbitration in London and English Law to apply.
Latest BIMCO/LMAA Arbitration Clause to apply with US $100,000 for Small Claims Procedure.
Dispute Resolution Clause English Law, London Arbitration
a) This contract shall be governed by and construed in accordance with English Law and any dispute arising out of or in connection with this Contract shall be referred to arbitration in London in accordance with the Arbitration Act 1996 or any statutory modification or re-enactment thereof save to the extent necessary to give effect to the provisions of this Clause.
The Arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA). Terms current at the time when the arbitration proceedings are commenced.”
The dispute arose when despite notice of intention given by the respondent to deliver the vessel within the stipulated period the appellant declined to accept it on the ground, the ownership had changed without any notice to them in breach of the Charter Party Agreement. On June 23, 2011 the respondent gave notice tentatively fixing the date of delivery on July 23, 2011. The respondent approached this Court in its Original Side by filing a suit being CS No. 161 of 2011 on July 13, 2011 inter-alia praying for a declaration that the Arbitration Agreement was illegal null and void and prayed for consequential injunction restraining the respondent from taking any step in terms thereof. On August 01, 2011 filed an interim application to the said extent. On the same day the respondent approached the Queen’s Bench Division, London High Court of justice of England and obtained an anti-suit injunction directing the appellant to withdraw their suit and the application before this Court. There was correspondence with regard to appointment of arbitrator between the respective advocates. On August 4, 2011 appellant filed its second suit before the City Civil Court inter-alia asking for an order of restraint as against the respondent from proceeding with the English suit on the ground that there would be conflict of decision in case parallel proceedings were allowed to continue. The City Civil Court suit was subsequently transferred to this Court and renumbered as E.O. Suit No. 6 of 2011. The City Civil Court initially did not pass any interim order, subsequently on an appeal appellant got a time bound order of restraint that spent its force by efflux of time. The respondent subsequently appeared and contested the proceedings culminating in an order of dismissal of the application. The learned Judge observed, this Court is not competent to pass order of restraint or interfere with the Arbitration. Hence, this appeal. The Division Bench permitted the appellant to nominate their arbitrator without prejudice to their contentions in the appeal. We are told, the arbitrators possibly appointed their third arbitrator. However, the arbitration proceeding is not going on in view of pendency of the appeal.
JUDGEMENT AND ORDER IMPUGNED:-
The learned Single Judge by judgment and order dated on July 31, 2012 di
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