M/S. Shivnath Rai Har Narain vs M/S. Italgrani Spa
2001 Latest Caselaw 991 Del

ORDER

J.D. Kapoor J.

1. This is an application under Order 7 Rule 11 CPC and Section 45 of the Arbitration and Conciliation Act. 1996 assailing the maintainability of the suit.

2. Indisputably, provisions of Order 7 Rule 11 CPC bar the maintainability of the suit; firstly where it does not disclose a cause of action; secondly where the relief claimed is undervalued, and the plaintiff, on being required by the Court to correct the valuation within a time to be fixed by the Court, fails to do so; thirdly where the relief claimed is properly valued but eh plaint is written upon paper insufficiently stamped and fourthly where the suit appears from the statement in the plaint to be barred by any law.

3. Section 45 of the Arbitration and Conciliation Act, 1996 (in short 'Act') is of mandatory nature and casts/obligation upon the judicial authority when seized of an action in a matter in respect of which an arbitration agreement subsists to refer parties to arbitration. It provides as under:-

"45. Power of judicial authority to refer parties to arbitration:- Notwithstanding anything contained in Part I or in the Code of Civil Procedure, 1908 (5 of 1908), a judicial authority, which seized of an action in a matter in respect of which the parties have made an agreement referred to in section 44, shall, at the request of one of the parties or any person claiming through or under him, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed."

4. As it is apparent from the aforesaid provision, it is only in three eventualities that the judicial authority can entertain the petition. These are; firstly the agreement is null and void; secondly it is incapable of being performed and thirdly if it is inoperative.

5. The main premise of the contention of the learned counsel for the defendant is the fax message sent by the plaintiff to the defendant which is as under:-

italgrani s.p.a.

SHIVNATH RAI HARNARAIN

(INDIA) CO.

A-8 BHAGWAN DASS NAGAR,

NEW DELHI-110026-INDIA

ADDENDUM DATED SEPTEMBER 29, 1994

TO CONFIRMATION OF CONTRACT DATED

SEPTEMBER 09, 1994

SELLERS SHIVNATH RAI NARNARAIN (INDIA)CO;

A-8, BHAGWAN DASS NAGAR, NEW DELHI-110026 INDIA

BUYERS ITALGRANI SPA, 40VI MEDINA-80133 NAPLES ITALY IT IS FURTHER AGREED THE FOLLOWING TERM:

OTHER CONDITIONS:                             ALL OTHER TERMS AND CONDITIONS NOT IN
                                                                      CONTRADICTION WITH THE ORDER CONTRACT
                                                                      TERMS TO BE AS PER G.A.F.T.A. RULES
                                                                      64/125 AND ITS SUCCESSIVE AMENDMENTS
                                                                      IN FORCE AT TIME AND PLACE OF CONTRACT
                                                                      DATE WHICH THE PARTIES ADMIT THAT THEY
                                                                      HAVE KNOWLDGE AND NOTICE.
SELLERS                                                                                                                   BUYERS
Partner                                                                                                        ITALGRANI S.p.a.
                                                                                                                     MAURO AMBROSTO
                                                                                                                               CONSIGLIERE

 

5. This copy has been duly certified by Indian Consulate. However on prime facie and naked eye view, signatures of the partner on this fax message and the signatures appearing on the plaint appear to be different. Even if it is assumed that the aforesaid fax was dispatched by the plaintiff but the fact remains that plaintiff has disputed not only the fax emphatically but also its signatures thereon.

6. Now the question arises whether Part II Chapter I of Section 45 pertaining to Enforcement of Certain Foreign Awards New York Convention Awards, bar the suit filed by the plaintiff or not. Section 44 of Part II provides as under:-

44. Definition:- In this Chapter, unless the context otherwise requires, "foreign award" means an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India, made on or after the 11th day of October, 1960-

(a) in pursuance of an agreement in writing for arbitration to which the Convention set forth in the First Schedule applies, and

(b) in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made may, by notification in the Official Gazette, declare to be territories to which the said Convention applied."

7. Though no corresponding provisions in the form of Section 7 as contained in part I of the Act figure in part II yet Article II of First Schedule under Section 44 relating to Convention on the Recognition and Enforcement of Foreign Arbitral Awards defines the "agreement" as under.

"The term "agreement in writing" shall include an arbitral clause in a contract or an arbitration agreement, signed by the parties or contained in an exchange of letters or telegrams."

8. As it is apparent from the conjoint reading of Section 44 and the aforesaid Article II of first Schedule that until and unless there is an undisputed agreement that too in writing between the parties for arbitration, the provisions of Section 45 cannot be invoked.

9. It is contended by the learned counsel that general principle of law enshrined in Section 16 of the Indian Arbitration Act which though pertains to part I and empowers the arbitral tribunal to rule on its own jurisdiction, including ruling an any objections with respect to the existence or validity of the arbitration agreement and for that purpose an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contact, is applicable to the proceedings under Section 45 of the Act. I am afraid this contentionin holds no water as it is applicable only where place of arbitration is in India and to make it applicable in respect of foreign awards which would be upsetting the statute itself.

10. However, in the instant case, neither of the aforesaid ingredients or elements has been pleaded by the plaintiff. The defense of the plaintiff is simpliciter that there exists no agreement of arbitration and the fax message relied upon by the defendant was false and was never sent by him nor does it bear its signature.

11. First and foremost condition rather onemost, condition for invoking section 45 is existence of "agreement in writing" between the parties. However, if any of the parties feels or deems that such an agreement is null and void or inoperative or, incapable of being performed that party has right of approach the judicial authority which may entertain the matter.

12. Since the factum of existence of the agreement and that too in writing has been disputed by the plaintiff, this would be one of the issues, may be a preliminary issue, to be decided by this court as under Part II, the arbitrator has not been bestowed with the power of ruling on its own jurisdiction or ruling on objections with respect to existence or validity of the arbitration agreement. Under Part II, such power vests in the court and not with the arbitrator.

13. However, the contention of the learned counsel that under the GAFTA Rules which govern the contract, the arbitrator appointed under the said rules has specifically been conferred the power to determine its own jurisdiction is highly untenable as these rules have no statutory force. These have not been framed under Part II of the Act. The rules which a re applicable are those which a re contained in First Schedule under Section 44, if any, Since the plaintiff is not a party to the GAFTA Rules, the rules framed by the Association cannot be rammed down the throat of the plaintiff.

14. In view of the aforesaid reasons, I do not find any merit in the application and dismiss the same.

15. However, the pleas raised by the defendant in the application shall be treated as preliminary objection as to the maintainability of the suit and accordingly an issue will be framed in this regard.

16. Similarly the contention of learned counsel for the defendant that plea raised by the plaintiff in para (A) of the reply to application namely that the defendant company is being wound up requires the plaintiff to obtain permission from the proper court in italy to proceed further with the suit and therfore, till such time this permission is obtained, the suit continues to be barred by law shall also be taken into consideration when the parties are called upon to complete their pleadings for the purpose of framing of issues in this regard.