Manmohan Singh, J.

1. The present suit was filed by the plaintiff for declaration that no arbitration agreement exists between the plaintiff and the defendants and for damages worth Rs. 25,08,365/-. The plaintiff is a duly incorporated company carrying on its business of manufacturing, selling importing, exporting and sourcing commodities, textiles etc. and is also involved in infrastructure development and sea ports.

2. Defendant No. 2, a duly incorporated company with its office at Mumbai introduced the plaintiff to defendant No. 1 in its capacity as a commodity broker. Defendant No. 1 is a company incorporated in Indonesia and engaged in the business of crude palm oil, i.e. in refining, trading and exporting the same.

3. Defendant No. 2 made certain representations to the plaintiff, including issuing a seller confirmation note dated 17.07.2008 for trading oil between the plaintiff and an identified buyer 'Jayesh Oil Trade Pvt. Ltd.', on the basis of which a Sales Contract was executed between the parties on 24.07.2008.

4. As per the contract, defendant No. 1 was to sell 500 MT Crude Palm oil to the plaintiff at a unit price of US$ 1040 per MT for which a marine insurance policy covering all risks was obtained by the plaintiff for a sum of Rs. 2,57,00,000/-. Payment was to be made through a Letter of Credit through the Issuing bank to the defendant's nominated bank, i.e. the Negotiating bank.

5. After loading the consignment, defendant No. 1 was to obtain a bill of lading from the carrier and forward the same to the Negotiating bank, which would send the same to the Issuing bank from which the plaintiff would obtain it. After producing the bill of lading with other documents, the plaintiff was to get possession of the consignment.

6. The consignment was supposed to reach its destination on 07.09.2008. An irrevocable letter of credit was procured by the plaintiff as per the contract and in order to honour to same by the Issuing bank, certain conditions were to be complied with by defendant No. 1. Without compliance of these conditions, the plaintiff would not be able to get possession of the consignment. As it turned out, defendant No. 1 did not comply with some of the requirements and the plaintiff was consequently unable to obtain the consignment.

7. In the meantime, prices of crude palm oil fell thereby leading to cancelling of orders by buyers, causing loss to the plaintiff. The Negotiating bank itself pointed out errors in the documents due to which the same were never sent to the Issuing bank and hence, not received by the plaintiff. Though the vessel of consignment reached the port on time, as the plaintiff did not have the bill of lading he could not take delivery of the consignment without the original documents and absence of authorization from defendant No. 1.

8. Instead of rectifying the defects in the documents, defendant No. 1 asked the plaintiff to provide a letter of indemnity to the vessel owner to take delivery of the consignment. The needful was not done till the expiry of the letter of credit when the plaintiff conveyed to its banker on 08.12.2008 that it would not raise any dispute under the letter of credit.

9. The plaintiff received a notice on 21.01.2009 from the advocates of defendant No. 1 stating that arbitration proceedings had been initiated in PORAM. The plaintiff has stated that there is no arbitration agreement between the parties and the invocation of arbitration is void. Hence the present suit.

10. Along with the suit, the plaintiff filed the application for interim injunction wherein an ex-parte interim order was passed directing the defendant No. 1 to get adjournment before the Arbitral Tribunal.

11. It is pertinent to mention that after the conclusion of the argument in the application, it was pointed out by the plaintiff that the goods in question which were lying at Kandla Port have been received by the defendant No. 1 and the same have been sold to a third party. In this regard, an affidavit dated