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High Court Of Delhi
ALIMENTA S.A. - Appellant
Versus
NATIONAL AGRICULTURAL COOP.MARKETINGFEDEATION OF INDIA LIMITED - Respondent
Interim Application 2562 of 1996
Decided On : 01/28/2000
The petitioner, a cooperative society, entered into a contract with the respondent, a Swiss corporation, for the supply of Groundnuts. The contract incorporated the terms of FOSFA 20, which contained an arbitration clause. Disputes arose between the parties, and the respondent initiated arbitration proceedings in London. The petitioner filed a petition under Section 33 of the Arbitration Act, 1940, seeking to restrain the arbitration proceedings. The Delhi High Court allowed the petition in part, holding that the arbitration clause was incorporated into the first contract but not the second. Both parties appealed to the Supreme Court.
Fact of the Case:
The petitioner, a cooperative society, entered into a contract with the respondent, a Swiss corporation, for the supply of Groundnuts. The contract incorporated the terms of FOSFA 20, which contained an arbitration clause. Disputes arose between the parties, and the respondent initiated arbitration proceedings in London. The petitioner filed a petition under Section 33 of the Arbitration Act, 1940, seeking to restrain the arbitration proceedings. The Delhi High Court allowed the petition in part, holding that the arbitration clause was incorporated into the first contract but not the second. Both parties appealed to the Supreme Court.
Finding of the Court:
The Supreme Court held that the arbitration clause in FOSFA 20 was incorporated into the first contract by virtue of the incorporation clause. The Court found that the Manager of NAFED, who had signed the first contract, was aware of the terms of the FOSFA 20 contract including the arbitration clause contained therein. It was, therefore, manifestly clear that by the incorporation of Clause 11 in the first contract, the appellant intended to incorporate into it the arbitration clause of FOSFA 20 contract. The Court also held that the arbitration clause was not incorporated into the second contract because Clause 9 of the second contract specifically referred to the terms and conditions of supply of the first contract and not the arbitration clause.
Issues: 1. Whether the arbitration clause in FOSFA 20 was incorporated into the first contract? 2. Whether the arbitration clause was incorporated into the second contract?
Ratio Decidendi: 1. Yes, the arbitration clause in FOSFA 20 was incorporated into the first contract by virtue of the incorporation clause. The Court found that the Manager of NAFED, who had signed the first contract, was aware of the terms of the FOSFA 20 contract including the arbitration clause contained therein. It was, therefore, manifestly clear that by the incorporation of Clause 11 in the first contract, the appellant intended to incorporate into it the arbitration clause of FOSFA 20 contract. 2. No, the arbitration clause was not incorporated into the second contract because Clause 9 of the second contract specifically referred to the terms and conditions of supply of the first contract and not the arbitration clause.
Final Decision: The Supreme Court dismissed both appeals, affirming the judgment of the Delhi High Court.
( 52 ) ALLAHABAD High Court in AIR 1928 Allahabad 355 (supra) held that in orderto prove Notification by a Government, Government Gazette should be produced.
( 53 ) THE Nagpur High Court in AIR 1951 Nagpur 465 (supra) held that undersection 78 (1) of the Evidence Act, 1872 the only way of proving a Notification is byproducing a copy of the Notification. And that has been done by the petitioner.
( 54 ) IN AIR 1954 Nag 296 (supra) the Nagpur High Court laid down thesame proposition.
( 55 ) IN AIR 1960 Pat 213 (supra) the Patna High Court held that theproduction of secondary evidence may be accepted if it is done in accordance withsection 65 of the Evidence Act, 1872, if it is certified by the Head of the Department.
( 56 ) THE learned Senior Counsel submitted that authentication could be by aperson who had the custody of the original. The Notary cannot be said to have thecustody of the originals. Therefore, there is no proper authentication as requiredu/sec. 8 (1) (a) and, therefore, the plaintiff is entitled to enforce the Award. For thisproposition, the learned Senior Counsel relied upon the judgment of the Bombayhigh Court reported in Maharaj Bhanudas Narayanboa Gosavi v. Krishnabaichintaman Deshpande, AIR 1927 Bombay 11. It is not necessary to deal with the factsof that case.
( 57 ) ON the materials produced in the instant case, there can be no doubt thatthe plaintiff has complied with the provisions of Section 8 of the Act, 1961. It iswholly unnecessary to deal with the submissions made by the learned Seniorcounsel referring to the averments in the reply. I have no hesitation in rejecting thesubmission made by learned Senior Counsel on behalf of the respondent. The issueis answered against the respondent.
( 58 ) ISSUE No. 3--What is the law applicable to the proceedings, whether Englishor Indian Law?
( 59 ) AS noticed above, there is a specific provision in the agreement in thisbehalf. Therefore/it is not open to the respondent to contend that English Lawwould not apply.
( 60 ) IN view of this clear position on facts, I think it not necessary to burden thejudgment by referring the various rulings on this point. The principles are wellsettled. The Arbitrators had decided the issues on the basis of English Law, as agreedto between the parties. Therefore, this issue is answered in favour of the petitionerand against the respondent.
.
( 61 ) ISSUE No. 4--Whether the Award could be said to be not enforceable asbeing opposed to public policy in India within the meaning of Section 7 (1) (iv) of theact and whether the Award becomes enforceable in view of the ban imposed by thegovernment of India as projected before the Arbitrators and as stated in the replyto the petition?
( 62 ) FOR considering this issue, it is necessary to notice the provisions of Section7 of the Foreign Awards (Recognition and Enforcement) Act, 1961 :"7. Conditions for enforcement of foreign Awards.- (1) A foreign Award may notbe enforced under this Act - (a) if the party against whom it is sought to enforce the Award proves tothe Court dealing with the case that - (i) the parties to the agreement were under the law applicable tothem, under some incapacity, or the said agreement is not validunder the law to which the parties have subjected it, or failing anyindication thereon, under the law of the country where theaward was made; or (ii) the party was not given proper notice of the appointment of thearbitrator or of the arbitratio
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