Hindalco Industries Ltd vs Office At Plot No. 124-133
2009 Latest Caselaw 72 Bom

    Arbp620.09                           1
    ssm/-



                   IN THE HIGH COURT OF JUDICATURE AT BOMBAY




                                                                             
                     ORDINARY ORIGINAL CIVIL JURISDICTION




                                                     
                      ARBITRATION PETITION NO. 620 OF 2009


    Hindalco Industries Ltd.




                                                    
    a company registered under the
    provisions of the Companies Act,
    1956, having its Registered Office




                                            
    at Century Bhavan, 3rd Floor,
    Dr. Annie Besant Road,   
    Mumbai-400 030.                                           ...Petitioner.
                            
             Vs.


    Ess Dee Aluminium Limited,
          


    A company having its registered
       



    Office at Plot No. 124-133,
    Panchal Udyog Nagar, 
    Bhimpore,





    Daman-396 210.                                   ...Respondent.



    Mr. Virag Tulzapurkar, Sr. Counsel with Mr. Birendra Saraf with  Mr. Sachin 





    Chandrana, Ms. Sanaya Dadachanji and Ms. Sony Bhatt i/by M/s. Manilal 
    Kher Ambalal & Co. for the Petitioner.


    Dr. Virendra Tulzapurkar, Senior Counsel with Mr. J.J. Bhatt, Sr. Counsel 
    with Mr. Cyrus Ardesha i/by M/s. Kanga & Co. for the Respondent.
     
                               CORAM :- ANOOP V. MOHTA, J.

DATE OF RESERVING THE JUDGMENT :- 4TH DECEMBER, 2009. DATE OF PRONOUNCING THE JUDGMENT: 10th DECEMBER,2009

JUDGMENT :-

1 The Petitioner has invoked Section 9 of the Arbitration and

Conciliation Act, 1996 (for short, the Arbitration Act), for various interim

reliefs/ protective measures after invocation of Arbitration Clause and

pending the Petition under Section 11 of the Arbitration Act.

2 The basic events are:- In the month of September, 2008, negotiations

ensued between the Petitioner and the Respondent regarding a possible

arrangement for hedging/ for pricing supply of 1500 MT of Aluminium foil

stock.

3 On 5th September, 2008, the Petitioner sent an email to Mr. Sudip

Dutta, Managing Director and Chairman of Respondent Company giving

the best possible quotation/ Offer setting out the product specification and

other commercial terms of the offer.

4 On 29th September, 2008, a revised offer was made by the Petitioners

to the Respondent on the same product.

5 On 30th September, 2008, the Petitioner sent a mail to Respondent

agreeing to give volume discount of Rs.1,000/- per ton on booking 3000

tons between October 2008 and March 2009.

6 In the month of October, 2008, the Respondent requested the

Petitioner being manufacturers of aluminium foil to enter into a hedging

transaction to secure the price of the metal which is a raw material for

manufacturing aluminium foil.

7 On 1st October, 2008, the Petitioner as alleged, entered into a

hedging transaction for a supply of 1500 MT of aluminium foil to

Respondent.

8 On 2nd October, 2008, the Petitioner by an email recorded that the

Petitioner had hedged for the Respondent for the period October to

December, 2008.

9 On 7th October, 2008, the Respondents gave the details of the foil

stock widths required by them for the first 500 MT to be delivered in

October.

10 On 10th October, 2008, a Standard Hedging Contract (for short, "the

Contract") for hedging of metal was sent to the Respondent's Managing

Director and Chairman for their signature which contained an Arbitration

clause.

11 On 10th October, 2008, the Managing Director and Chairman of the

Respondent vide email dated 10th October, 2008, confirmed as alleged

transaction for 1500 MT of metal at a price of $2410 per ton.

12 On 16th, 18th and 22nd October, 2008 the Petitioners requested the

Respondents to comply with the various formalities including to return the

Standard Hedging Contract duly signed by the Respondents and to act in

furtherance to the contract.

13 On 25th October, 2008, the Respondents reassured the Petitioners

that they stand by their commitment.

14 On 1st November, 2008, the Respondents opened a letter of credit

dated 5th November, 2008 through the SBI Bandra Kurla Complex Branch,

Mumbai for the first 500 MT of foil stock valid upto 10th December, 2008.

15 On 7th November, 2008, a letter of credit was further amended to

extend the date of expiry to 21st December, 2008.

16 On 25th November, 2008, the Petitioner requested the Respondent to

inform the supply schedule for the balance 1011 MT and to extend the

Letter of Credit.

17 On 30th November, 2008, the Petitioner closed the transaction for

hedging of metal for the month of November, 2008.

18 On 13th December, 2008, the Respondent asserted that there is no

contract and have not placed any purchase orders nor signed any contract.

19 On 31st December, 2008, the Petitioner closed the transaction for

hedging of metal for the month of December, 2008.

20 On 13th April, 2009, the Petitioners addressed a letter to the

Respondent holding the Respondents in default of the terms of the

agreement and demanding the damages/losses suffered aggregating to

Rs.3.83 crores including interest at the rate of 12% p.a.

21 On 4th May, and 11th May, 2009, the Respondent through its

Advocate's letter denied and disputed various factual aspect and

contention recorded by the Petitioners and that there was no concluded

contract.

22 On 11th May, 2009, the Petitioner addressed another notice to the

Advocates for Respondent and invoked the arbitration clause as provided

under clause 6 of the Standard Contract for Metal Hedging and nominated

an Arbitrator on behalf of the Petitioner.

23 On 27th May, 2009, the Respondent's Advocate rejected the

Petitioner's request for consultation and the Arbitration Notice respectively.

24 On 28th July, 2009 the Petitioner, therefore, filed the present Petition.

The Respondent resisted the contents by a reply dated 23rd September,

2009. The Petitioner has also filed rejoinder dated 6th October, 2009.

25 As agreed, heard finally by consent on 04/12/2009 as an urgency

was shown.

26 Admittedly, there is no signed and agreed written Arbitration

Agreement/clause. The document enclosed with letter dated 10/10/2008

was the contract, was forwarded. It was specifically mentioned that the

Respondent need to sign the same and thereafter the Petitioner would also

sign to complete the transaction. This standard format provide an

arbitration clause 6 which is reproduced as under:-

"6. ARBITRATION & LEGAL JURISDICTION

Any dispute or differences arising out of this Agreement which cannot be resolved within thirty (30) days after commencement

of discussions between the Parties, then such dispute shall be finally referred to arbitration under the provision of the Arbitration and Conciliation Act, 1996. The place of arbitration shall be Mumbai and the language of arbitration

shall be English and all arbitration cost to be borne equally."

Admittedly, this document was never finalized and signed by both

the parties.

28 This unsigned and un-executed Standard Agreement and the

Arbitration clause mentioned therein, has been invoked. The Respondent is

denying the execution, as well as, the maintainability of the present

petition under Section 9 for any interim measures / protections for want of

written agreement as contemplated under Section 7 of the Arbitration Act

which is reproduced as under:-

"7. Arbitration agreement.- (1) In this Part, "arbitration

agreement" means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. (2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.

(3) An arbitration agreement shall be in writing. (4) An arbitration agreement is in writing if it is contained

in-

                  (a)    a document signed by the parties;




                                                                                        
                  (b)    an   exchange   of   letters,   telex,   telegrams   or   other  
                         means   of   telecommunication   which   provide   a  
                         record of the agreement; or




                                                                
                  (c)    an exchange of statements of claim and defence in  

which the existence of the agreement is alleged by one party and not denied by the other.

(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part

of the contract."

The plain reading of Section 7 read with the correspondence/ letters

as referred above shows that there is no written Arbitration Agreement or

clause between the parties. Therefore, at this prima facie stage and as

contemplated under Section 9 of the Arbitration Act, there exists no

Arbitration clause and therefore, no Arbitrable disputes. In absence of any

Arbitration Clause/ Agreement, there is no question of passing any interim

order or measure or protection as sought in the present case.

30 The learned counsel appearing for the Petitioner, however, has

strongly relied on Shakti Bhog Foods Limited Vs. Kola Shipping Limited,

(2009) 2 S.C.C. 134, and Dr. S. Z. Zafrey Vs. M/s. Modern Industrial

Enterprises, Indore & Ors., AIR 2006 Madhya Pradesh, 56, and

submitted that the correspondence so referred above, read with the

Standard format/ Agreement constituted written agreement between the

parties, as contemplated under Section 7 of the Arbitration Act.

31 In the present case, without written or execution of the Standard

contract, based upon the oral, telephonic and/or e-mail quotations and

offers were exchanged. It was specifically observed in email dated 30th

September, 2008 that the parties need to complete all the contract

formalities to conclude the negotiations and to start the business. There

was no contract signed even on this date and or thereafter. However, 500

MT for October, 2008 - December, 2008 was hedged for Respondent and E-

mail for acceptance, was expected. It was informed that that specification

should be strictly followed and it should be D.C. Rutes only and again

requested to contact for further clarification by e-mail dated 7th October,

2008.

32 As referred above the Standard agreement was sent by E-mail dated

10/10/2008 for finalization of terms and conditions and signatures, was

never signed. However, by E-mail dated 10/10/2008, order for 500 MT

metals, at 2140 USD, was confirmed by the Respondent.

33 By e-mail dated 16/10/2008, the Petitioner again requested to

complete the formality of the format, so that material could be sent after

completion of the same. At this time also, the agreement was neither

processed further for finalization, nor signed. Apart from letter dated

22/10/2008, an e-mail was also addressed reminding the Respondent to

finalize the Contract, the Purchase Order and the L.C., so that they can

start with the business, as quoted and as offered.

34 On 25/10/2008, as there were various issues, which cannot be

finalized with regard to the supply of aluminium sheet, but the Respondent

to facilitate and to maintain relations, accepted October scheduled quantity

of 500 tones as agreed price of USD 2410T, and also requested to consider

the price of the months November, December at USD 1875T and again

requested for the confirmation of this also. The correspondence was also

exchanged by the Petitioner with the bank for L.C. Letter of credit details.

35 By letter dated 13th April, 2009, referring to email dated 2nd October,

2008 and 10th October, 2008, the Petitioner treated the same as agreed

contract. But, as Respondent failed to honour the alleged part agreed

contract and lifting of the balance quantity, called upon the Respondent to

pay a sum of Rs.3.69 crores along with 12% interest as on 10/04/2009

from the alleged dates of defaults. The same was resisted and replied by

the Respondent by letter dated 4th May/ 11th May, 2009 and denied

everything including liability, as well as, the existence of the contract by

mentioning various reasons, by observing that the commercial contract was

never fructified and it was only at the stage of negotiations. The petitioner,

thereafter, referring to the same have nominated/ proposed a sole

arbitrator. The Respondent resisted and denied the existence of agreement

of any kind and even denied the appointment of the arbitrator.

36 All these also show that there was no written contract or agreement

signed or executed between the parties and specially any arbitration clause

of any kind. Mere offer/quotation, itself is not sufficient, unless the

contract is signed and/or existence of the same is not denied by the other

parties or admitted by the other party through the correspondences/

communications.

37 In Shakti Bhog Foods Limited (supra), the Apex Court has

reiterated Section 7 of the Arbitration Act as under

"17....

We would want to reiterate that as far as the provision of Section 7 of the Act is concerned, an arbitration agreement

may be in the form of an arbitration clause in a contract or in the form of a separate agreement and furthermore an arbitration is considered to be in writing if it is contained in a

document signed by the parties or in an exchange of letters, telex telegrams or other means of telecommunication which provide a record of the agreement or an exchange of statement of claim and defnece in which the existence of an agreement is

alleged by one party and not denied by the other."

38 In Karam Chand Thapar & Bros. (CS) Ltd. & Ors. Vs. Akaljot

Singh Sekhon, 2005 (3) Mh.L.J. 797, the scheme of Section 7 has been

elaborated and on merit observed that there was no agreement signed

and/or arrived at by the parties.

39 Considering the scheme of Section 9 and facts of this case,

admittedly, there was no written communication of acceptance of such

Arbitration clause so made and or accepted. Admittedly, it was at the stage

of negotiations and finalization. The contract was never finalized and or

accepted by the Respondents. Expressly or by implication. The two emails

also nowhere referred the acceptance of the contract/agreement or

Arbitration agreement as relied. There is nothing on record to show that

there was any understanding which was agreed between the parties

without finalizing and or settlement of the terms and conditions. There are

no documents, correspondence or emails or any telecommunication and/or

any exchange of claims and/or defence in which the contract as alleged by

the Petitioner and which was not denied by the Respondent. There is a

clear denial at all the stages about the existence of any such agreement

and/or arbitration clauses.

40 The Court needs to consider the facts and circumstances of each case

including the agreement/ documents, contents and the intention besides

agreed, written and signed arbitration clause. In Shakti Bhog Foods

Limited (Supra), the agreement was a charter party agreement between

the parties read with the bill of landing of which first page was signed.

Both these documents itself govern by a particular statute. Here is no such

case. In that case, the concerned party did not deny the signature of the

first page of the charter party agreement. In the present case, therefore, it

is difficult to accept the case of the Petitioner that existence of the

agreement can be interfered from the documents referred by the parties

and/or exchange of letters, telex, telegrams or other means of

telecommunications. It no where provide any record of the signed contract.

In view of above facts, the reliance of Shakti Bhog Foods Limited (Supra),

the Supreme Court under Section 7, 2(1)(b) and 45 of the Arbitration Act

is also of no assistance. All these elements are missing in the present case.

41 The learned Senior Counsel appearing for the Petitioner has relied

upon the Judgment passed by this Court in Arbitration Petition No.

10/2009 Aditya Birla Retail Limited Vs. M/s. Ashapura Developers,

th dated 8 July, 2009, and submitted to pass interim order/protection as

prayed, in view of Section 9 read with Order 38 of the Code of Civil

Procedure, (CPC). In that case, the amount was crystallized. Here the

existence of Arbitration, itself is not proved. Therefore, there is no

question of granting any relief under Section 9 of the Arbitration Act in

absence of any Arbitration Agreement between the parties. Therefore, this

Judgment is also of no assistance to the Petitioner, for any relief as prayed.

42 However, I am not denying the right of the parties to raise

appropriate pleas before the appropriate forum on merits of the matter.

43 Resultantly, the Petition is dismissed with no order as to costs.

(ANOOP V. MOHTA, J.)