The key legal principle established in the judgment is that written agreements, such as the Settlement Agreement, are binding, and non-payment can have implications on the validity of the agreement. The court also emphasized the importance of upholding arbitration clauses and the jurisdiction conferred through participation in arbitration proceedings.

1. The appellant, Adam & Coal Resources Pvt. Ltd., Chennai entered into a Sale and Purchase of Coal Agreement with the respondent, Interbulk Trading SA, Switzerland for supply of steam coal in terms of an Agreement dated 16.9.2010. The Agreement contained various Articles (clauses), inter alia, specifying the quantity, quality, specification, price and payment for the coal. Article 13 is the arbitration clause, which reads as under :-

“Article 13 – Dispute Resolution

13.1. Any dispute, controversy or claims arising between the Parties out of or in relation to this Agreement, or breach hereof, including without limitation any question relative to its interpretation, performance, validity, effectiveness and the termination of the rights or obligations of any party, shall be settled amicably by the Parties wherever practicable. If such dispute cannot be resolved amicably by the Parties, then such dispute shall be settled exclusively and finally by arbitration.

13.2. The Arbitration shall take place in Singapore in accordance with the Arbitration Rules of the Singapore International Arbitration Centre (“SIAC Rules”) for the time being in force, which rules are deemed to be incorporated by reference to this clause, in which case the language of the arbitration shall be in English. Therefore, no Party shall be entitled to commence or maintain any action in a court of law upon any matter in dispute arising from and in relation to this Agreement.

13.3. The arbitral award rendered shall be final, binding and incontestable and may be used as a basis for judgment thereon in India or Singapore for the Parties and for all purposes.”

Another important clause is Article 15, which provides for amendments as under :-

“Article 15 – Amendments

The terms of this Agreement may be waived, altered or amended only by an instrument in writing duly executed by each of the Parties thereafter form and become an integral part of this Agreement.“

2. It appears that disputes arose inter se the parties from the Sale Agreement, and the respondent invoked the arbitration clause alleging breach of the Agreement dated 16.9.2010. However, during the pendency of Arbitration Case No.075 of 2011, a Settlement Agreement dated 21.9.2011 was executed inter se the parties, in terms whereof, on payment of a sum of US$ 3,37,500 on or before 30.9.2011 through a Swift Transfer to a designated account, the dues of the respondent were to stand settled. On receipt of this amount, the respondent was to apply to the Singapore International Arbitration Centre to discontinue the arbitration proceedings within three days, but in the eventuality of the amount not being paid on or before the cut-off date of 30.9.2011, the Settlement Agreement was to automatically become null, void and of no effect whatsoever. This Settlement Agreement was to be governed in accordance with the laws of Singapore. The relevant clauses are as under :-

“7. Should the agreed settlement sum of USD 337,500.00 not be paid by Adcoal and received by Interbulk on or before 30th September, 2011, then this Settlement Agreement shall automatically become null, void and of no effect whatsoever.

8. This Settlement Agreement shall be governed by and construed in accordance with the laws of Singapore.”

3. Unfortunately, the matter did not even rest at this, as another issue cropped up thereafter, i.e., applicable tax deduction at source on the remittance. The appellant sent an e-mail on 23.9.2011 raising this issue and reported that on checking from their auditor, they were not sure on the applicability, but if this was the requirement, the amount would be remitted less the tax deducted. It appears that on advice received, the appellant, vide email dated 27.9.2011, informed that tax should have to be deducted at 20% for such payment for non-residents and thus, the amount remitted was US$ 2,70,000 less the TDS of US$ 67,500.

4. The aforesaid was not found acceptable by the respondent, which decided to press