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High Court Of Delhi
METAL FORGINGS PRIVATE LIMITED.,NEW DELHI - Appellant
Versus
CENTRALA HANDLU ZARANIZZNEGO, POLAND - Respondent
Suit 619A of 1976
Decided On : 01/11/1979
ARBITRATION - JURISDICTION - AGREEMENT TO ARBITRATE IN POLAND - INDIAN PARTY INITIATING LITIGATION - DUTY TO APPROACH APPROPRIATE COURT IN POLAND - COURT IN INDIA LACKS JURISDICTION.
Fact of the Case:
Metal Forgings Private Limited, an Indian company, filed a petition under Section 20 of the Arbitration Act against Central a Handlu Zaranizznego, a Polish company, seeking to enforce an arbitration clause contained in five contracts for the supply of forgings.
Finding of the Court:
The court held that the arbitration clause in the contracts was valid and enforceable, and that the Indian party was duty-bound to approach the appropriate court in Poland for the settlement of its claim.
Issues: 1. Whether the court in India has jurisdiction to entertain the petition for arbitration. 2. Whether the Indian party is duty-bound to approach the appropriate court in Poland for the settlement of its claim.
Ratio Decidendi: 1. The parties agreed that if the Indian party to the contract is sued, the arbitration shall take place at the Tribunal of Arbitration of the Federation of Indian Chambers of Commerce and Industry in New Delhi or upon application by both the parties in Bombay, Calcutta, or Madras in India in accordance with the Rules of the Tribunal of Arbitration of the Federation of Indian Chambers of Commerce and Industry. 2. The Indian party initiated litigation, and it is duty-bound under the agreement to approach the appropriate Court in Poland for the settlement of its claim.
Final Decision: The court dismissed the petition with costs, holding that it lacked jurisdiction to entertain the petition.
( 1 ) THIS petition, under S. 20 of the Arbitration Act was filed by Messrs Metal Forgings Private Limited, New Delhi, against Messrs Central a Handlu Zaranizznego, Poland. It was alleged by the petitioner that the parties entered into five contracts for supply of forgings to the respondent, worth Rs. 9,94,750; Rs. 25,75,000; Rs. 27,60,009; Rs. 5,72,800 and Rs. 13,27,910 respectively. It was provided by the five separate agreements that the respondent would furnish to the petitioner drawings of the components and the petitioner would thereon submit samples for the approval of the other party and on obtaining the said approval the goods in question would be fabricated. Ten per cent of the price of the goods, amounting to Rs. 8,23,044, was paid to the petitioner in advance and letters of credit were opened in its favour in respect of four contracts. According to the petitioner there was delay on the part of the respondent in sending the drawings, approving the samples, etc. and in consequence the contracts could not be performed within the contemplated time. Prices of the necessary materials, like steel, furnace oil, went up considerably in the meantime, and that resulted in a loss of about Rs. 25 lacs to the petitioner. Because the respondent rescinded the contracts unreasonably, the petitioner was also deprived of profits to the tune of Rs. 28 lacs. According to the petitioner goods worth Rs. 6,77,753. 40 had already been supplied to the respondent and after calculations a sum of Rs. 48 lacs was claimed to be due to it
( 2 ) THE agreements provided that any disputes arising between the parties in relation to the aforesaid contracts would be got settled through arbitration. The present petition was, therefore, made with a prayer that the agreements containing the arbitration clause in question in possession of the respondent be got filed and the disputes between the parties referred to arbitration.
( 3 ) AS per the averments in the petition, the cause of action for filing the petition arose at Delhi where the contracts were accepted, wherefrom the goods were to be despatched. where the remittances were to be made where the respondent committed breach of the contract and put pressure on the petitioner through the Punjab National Bank to force litigation.
( 4 ) THE respondent opposed the application and raised, inter alia, a preliminary objection as to the jurisdiction of this Court. It was contended that according to the arbitration clause, in case the Polish party is sued the arbitration shall take place in Poland at the Arbitration Court of the Polish Chamber of Foreign Trade in Warszawa or, in application of the rules of the said Arbitration Court, in another town in Poland always in accordance with the rules of the said Court, the competence of ordinary Courts of the countries of both the parties, being excluded.
( 5 ) IN view of the pleadings of the parties, the following issues have been framed:
"1. Whether this Court has jurisdiction to entertain this petition? 2. Relief. "
( 6 ) THE parties are agreed that the decision of the crucial issue framed in the case would depend upon the agreement between them. It is provided by the said agreement as follows:
"in case the Polish party is sued the arbitration shall take place in Poland at the Arbitration Court of the Polish Chamber of Foreign Trade in Warszawa or in application of the Rules of the said Arbitration Court in another town in Poland always in accordance with the said Court. In case the Indian party to the contract is sued, the arbitration shall take place at the Tribunal of Arbitration of the Federation of Indian Chambers of Commerce and Industry in New Delhi or upon application by both the parties in Bombay. Calcutta or Madras in India in accordance with the Rules of the Tribunal of Arbitration of the Federation of Indian Chambers of Commerce and Industry. "
( 7 ) NOW the alleged grievance being on the side of Messrs. Metal Forgings Private Limited, the Indian
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