Delhi High Court
Accord Alloys Ltd. vs Asia Minerals Ltd. on 5 May, 2010
Author: Vikramajit Sen
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ FAO(OS) No.292/2010 & CM Nos.7873-74/2010
Accord Alloys Ltd. .....Appellant through
Mr. Neeraj Kishan Kaul, Sr.
Adv. with Ms. Geetika
Panwar, Adv.
versus
Asia Minerals Ltd. .....Respondent through
Mr. Vikas Singh, Sr.
Adv. with Mr. Kumar Mihir,
Adv.
% Date of Hearing: April 29, 2010
Date of Decision: May 05, 2010
CORAM:
* HON'BLE MR. JUSTICE VIKRAMAJIT SEN
HON'BLE MR. JUSTICE A.K. PATHAK
1. Whether reporters of local papers may be
allowed to see the Judgment? No
2. To be referred to the Reporter or not? No
3. Whether the Judgment should be reported
in the Digest? No
VIKRAMAJIT SEN, J.
1. This Appeal assails the Order of the learned Single
Judge pronounced on 21.4.2010. The learned Single Judge
had vacated the ex parte ad interim injunction restraining
Defendant No.1/Respondent No.1 from proceeding any
further with the arbitration initiated at its instance in London,
being Arbitration Case No.7972 titled Asia Minerals Ltd. -vs-
Accord Alloys Ltd. On the hearing held on 30.5.2008, it had
specifically been recorded that the Plaintiff was not claiming
any relief against the Arbitrator (Defendant No.2) approached
by Defendant No.1 for deciding the dispute and, therefore, no
summons need be issued to him. Summons were, therefore,
only issued to Respondent No.1. We mention this fact
because the Appellant has ventilated a grievance that the
Arbitrator ought not have proceeded any further in the
matter even if he had not been injuncted from doing so. We
find no substance, whatsoever, in this submission,
particularly because it was the Plaintiff/Appellant who had
itself stated that Summons be not issued to Defendant No.2.
In the event, it appears that even Defendant No.1 has not
appeared before the Arbitrator who appears to have passed a
Preliminary Award.
2. In the impugned Order, the learned Single Judge has
delved deep into the dispute and delivered a detailed Order,
holding that the contract between the parties had not been
novated by them and hence the compact to arbitrate upon the
dispute was fully binding on the adversaries. Mr. Vikas Singh,
learned Senior Counsel appearing for the Respondent, has
sought to rely on Wander Ltd. -vs- Antox India P. Ltd.,
(1990) Supp SCC 727 but we cannot appreciate the
relevance. Wander Ltd. enunciates that the discretion
employed by a Court can only be altered by the Appellate
Court only if it manifests perversity. In other words, the
Appellate Court would not substitute the discretion of the
lower Court with its own. The question before us is whether
the contract between the parties had been changed or
novated. There is no discretion which has been exercised by
the learned Single Judge in returning a verdict on this point
and the refusal to extend the interim Order or preserve the
injunction already granted is not a discretionary exercise.
Having said that, we must also record at the threshold a
statement made by learned counsel for the Defendant that
since the impugned Order partakes of the nature of a prima
facie view, the Defendant would be quite prepared to allow
the Arbitrator a clean slate for finally and ultimately deciding
whether the arbitration agreement subsists between the
parties. We put this proposition to Mr. Neeraj Kishan Kaul,
learned Senior Counsel for the Appellant with the logical
appendix that the Appellant should agree to withdraw the
Suit. On both counts, learned Senior Counsel for the
Appellant, on instructions, has declined the offer.
3. At the stage where the learned Single Judge had found
himself, he was bound to return an answer on the three
cardinal principles relating to the grant of ad interim
injunction, that is, the existence of a prima facie case, and the
appreciation of the factual matrix indicating whether the
balance of convenience as well as the likelihood of
irreparable injury being caused to the Applicant would
warrant the grant of the ad interim injunction. So far as the
first question is concerned, that is, existence of a prima facie
case, the learned Single Judge has opined that there were
only two aspects of the contract between the parties which
had been changed. Firstly, that in place of the requirement of
the supply conforming to SiMn 65 per cent managanese, the
Plaintiff could make supplies conforming to SiMn 60 per cent.
Secondly, in place of the earlier price of US $ 760 per MT,
Defendant No.1 had agreed to pay US$ 790 per MT. The
correspondence between the parties is replete with opening
statements made by Defendant No.1 to the effect that the
communication was without prejudice to their rights under
the existing Contract. Furthermore, the letter dated
24.4.2007, as also other correspondence, explicitly refers to
the Contract dated 27.2.2007 between the parties. All
through the negotiations reference was made to the Letter of
Credit as mentioned in the said Contract. We are entirely in
agreement with the conclusion of the learned Single Judge
that there was no novation of the contract and, therefore, the
Arbitration Agreement had not been superseded. So far as
the factors of balance of convenience and irreparable injury
are concerned, neither will be undermined or adversely
affected by the insistence that the parties should adjudicate
their disputes through arbitration.
4. Learned Senior Counsel for the Appellant has laid
emphasis on Andheri Bridge View Coop. Hsg. Society Ltd. -
vs- Krishnakant Anandrao Deo, AIR 1991 Bombay 129 in
which a learned Single Judge has held that where there are
material or substantial changes which go to the root of the
agreement, then the assumption of law is that a new
agreement has emerged. The learned Single Judge has
correctly analysed this Judgment not to be ubiquitously
applicable to all situations. It appears to us that in the context
of the present case the Plaintiff was finding it difficult in
shipping Manganeses having a minimum content of 65 per
cent and it was on this subject that negotiations were
confined, along of course with the price. Prima facie, all other
Terms and Conditions had not been cast adrift.
5. We may clarify that IA No.6904/2008, in respect of
which the Appeal is stated to have been filed, has been
disposed of by the composite impugned Order. Accordingly,
the present Appeal shall be deemed to have been dismissed in
respect of the challenge to the decision in IA Nos.9521/2008,
8121/2008, 8152/2008, each of which has been dismissed.
There shall be no order as to costs.
6. The decision in Spentex Industries Ltd. -vs- Dunvant
S.A., 2009(X) AD(D) 162 is of relevance. The Bench observed
that if a party is desirous of challenging an Award, whether
domestic or international, it should file
Objections/Applications as contemplated by the Arbitration
and Conciliation Act, 1996 ('A&C' Act). The Plaintiff's
contention was that it had not agreed to the Arbitration
Clause. It had been opined that once a valid arbitration
agreement was shown between the parties, then the Suit was
not maintainable since the proper remedy was to first raise
the dispute regarding jurisdiction of the arbitrator before the
arbitration itself under the mandates of Section 16 of the
A&C Act and thereafter filing of Objections under Section 34
of the A&C Act or showing cause in terms of Section 48 of the
A&C Act as to why an Award ought not be enforced in India.
7. We may briefly reflect on any aspect of the case; briefly
because it appears not to have been raised before the learned
Single Judge. The parties have agreed that the venue or seat
of Arbitration in the present case is London. The Defendant is
not resident in India but in Hong Kong. Therefore, before
assuming jurisdiction in a matter such as this, the Court
should be fully satisfied that it possesses territorial
jurisdiction and that it would be expedient to exercise it.
8. Appeal is without merit and is dismissed. Pending
applications are also dismissed.
( VIKRAMAJIT SEN )
JUDGE
( A.K. PATHAK )
May 05, 2010 JUDGE
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