Madras High Court
Agco International Gmbh vs Tractors Nd Farm Equipment Limited on 8 August, 2024
Author: D.Bharatha Chakravarthy
Bench: D.Bharatha Chakravarthy
C.R.P.(PD)(MD).Nos.1830 to 1833 of 2024
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
Orders reserved on : 02.08.2024
Orders pronounced on : 08.08.2024
CORAM :
THE HON'BLE MR.JUSTICE D.BHARATHA CHAKRAVARTHY
C.R.P.(PD)(MD).Nos.1830 to 1833 of 2024
and
C.M.P.(MD).Nos.10294, 10296, 10299 and 10301 of 2024
1. AGCO INTERNATIONAL GMBH
Victor-von-Bruns-Strasse 17,
CH 8212 Neuhausen,
Switzerland,
Represented by its Authorised Signatory
2. AGCO CORPORATION
4205, River Green Parkway,
Duluth, 30096, USA
Represented by its Authorized Signatory .. Petitioners
(in all the cases)
Versus
1. TRACTORS ND FARM EQUIPMENT LIMITED
77, Nungambakkam High Road,
Chennai - 600 034
represented by its Company Secretry &
Authorized Signatory, Mr.C.P.Sounderarajan
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2. TAFE INTERNATIONAL LLC
SANAYI VE TICARET LIMITED SIRKETI
MOSB 4, Kisim
Ahmet Nazif Zorlu Bulvari No.24,
45030 - MANISA/TURKIYE
Represented by its Authorised Signatory, .. Respondents
(in all the cases)
Prayer in C.R.P.(PD(MD).No.1830 of 2024 : Civil Revision Petition filed
under Article 227 of the Constitution of India to set aside/quash the
impugned common order passed in I.A.No.2 of 2024 in C.O.S.No.2 of 2024
on the file of the Court of Principal District Judge, Dindigul, stay all further
proceedings in C.O.S.No.2 of 2024 and refer the parties to the ongoing ICC
Arbitration.
Prayer in C.R.P.(PD(MD).No.1831 of 2024 : Civil Revision Petition filed
under Article 227 of the Constitution of India to set aside/quash the
impugned common order passed in I.A.No.3 of 2024 in C.O.S.No.2 of 2024
on the file of the Court of Principal District Judge, Dindigul, stay all further
proceedings in C.O.S.No.2 of 2024 and refer the parties to the ongoing ICC
Arbitration.
Prayer in C.R.P.(PD(MD).No.1832 of 2024 : Civil Revision Petition filed
under Article 227 of the Constitution of India to set aside/quash the
impugned common order passed in I.A.No.4 of 2024 in C.O.S.No.2 of 2024
on the file of the Court of Principal District Judge, Dindigul, stay all further
proceedings in C.O.S.No.2 of 2024 and refer the parties to the ongoing ICC
Arbitration.
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C.R.P.(PD)(MD).Nos.1830 to 1833 of 2024
Prayer in C.R.P.(PD(MD).No.1833 of 2024 : Civil Revision Petition filed
under Article 227 of the Constitution of India to set aside/quash the
impugned common order passed in I.A.No.5 of 2024 in C.O.S.No.2 of 2024
on the file of the Court of Principal District Judge, Dindigul, stay all further
proceedings in C.O.S.No.2 of 2024 and refer the parties to the ongoing ICC
Arbitration.
In C.R.P.(PD)(MD).Nos.1830 and 1831 of 2024:-
For Petitioners : Mr.Darius Khambata,
Senior Counsel,
for M/s.Shreya Gupta
For Respondents : Dr.Abishek Manu Singhvi,
Senior Counsel &
Mr.Krishna Srinivasan,
Senior Counsel &
for M/s.S.Ramasubramaniam and
Associates
In C.R.P.(PD)(MD).Nos.1832 and 1833 of 2024:-
For Petitioners: Mr.R.Parthasarathy,
Senior Counsel,
for Mr.Allwin Godwinakhila
For Respondents: Dr.Abishek Manu Singhvi,
Senior Counsel &
Mr.Krishna Srinivasan,
Senior Counsel
for M/s.S.Ramasubramaniam and
Associates
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C.R.P.(PD)(MD).Nos.1830 to 1833 of 2024
COMMON ORDER
These Civil Revision Petitions arise out of the common order, dated
28.06.2024 passed by the learned Principal District Judge, Dindigul made in
I.A.Nos.2, 3, 4 and 5 of 2024 in C.O.S.No.2 of 2024. By the said order,
while posting the Interlocutory Applications for filing detailed counter by
the respondents therein, an ad interim order of status quo ante the
termination letter by the respondents, dated 26.04.2024, is granted.
Aggrieved by the same, the present Civil Revision Petitions are filed.
2. For convenience, the parties are referred to as per their array in the
suit.
3. It can be seen that Tractors and Farm Equipment Limited
(hereinafter referred to also as 'TAFE') incorporated under the Companies
Act is the first plaintiff. The second plaintiff is TAFE International LLC
(hereinafter referred to also as 'TAFE Turkey') an entity owned, controlled
and established by the first plaintiff in Turkey that carries its operations in
Turkey. The suit is filed by the plaintiffs against one AGCO International
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GMBH, which is a Company registered in Switzerland and AGCO
Corporation, which is a Company incorporated in the United States of
America.
4. The case of the plaintiffs is that the first plaintiff is a leading
manufacturer of tractors. The second defendant is in the business of
marketing, and selling tractors and as such, has a long-term relationship
with the plaintiffs for over 50 years. In the course of their business
relationship, in order to sell tractors, spare parts etc., in Turkey, the first
plaintiff and the defendants entered into an agreement. The second plaintiff
was incorporated and a facility was set up at Manisa, Turkey. The first
plaintiff's state-of-the-art manufacturing facility exports several models of
tractors and farm equipment in completely knocked down or partly knocked
down conditions and is exported to the second plaintiff's unit in Turkey,
from where the parties are selling the same in the said jurisdiction.
5. It is the further case of the plaintiff that in order to stabilise the
relationship, the first plaintiff had invested INR 3452 crores in the second
defendant Company and the shareholding of the first plaintiff's parties
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reached around 10% in the second defendant. As between 2014-2024, the
shareholding of the first plaintiff in the second defendant had risen to 16.3%
and since the first plaintiff had become the single largest shareholder, the
same had made the second defendant uncomfortable. Therefore, to force the
plaintiff to a Standstill agreement and to reduce its stake in the second
defendant, without any justification whatsoever, the defendants issued a
letter, dated 26.04.2024 unilaterally terminating the agreement between the
parties concerning Turkey. The same would cause a huge loss to the
plaintiffs.
6. It is further averred in the plaint that even in the first plaintiff
Company, one of the Group Companies of the first defendant namely,
AGCO Holdings BV Netherlands holds 20.7%, and Simpson and Company
Limited, a subsidiary of Amalgamations Private Limited and certain
individuals and the group Companies hold the balance of 79.3%. When the
plaintiff has been discharging its obligation and the business has been
running smoothly especially when the plaintiffs have set up a huge and
exclusive facility to cater to the needs in Turkey by making huge
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investments and employing 100's of persons when Turkey agreement was
entered into in the year 2015 and after the expiry of the initial five year
period, without any fresh written agreement, the parties had extended the
contract by mutual consent and the plaintiffs continued the uninterrupted
supply of MF Brand Tractors to the defendants on the basis of the explicit
conduct and understanding between the parties and the defendants also
continued to place orders and providing yearly forecasts for commercial
planning and business operations, including assembly line, trading, shipping
and other related activities, only to force the plaintiffs to come for certain
agreements, otherwise the plaintiffs are not obliged to, the impugned letter,
dated 26.04.2024 issued by the defendants. The very many details of the
transactions between the parties are given in the plaint running up to 68
pages and 122 paragraphs. With the said detailed averments, the suit is filed
for the following reliefs:-
"(I) A Decree of Declaration in favour of the Plaintiffs
declaring that the rights of the parties in the contract arising out
of the Letter Agreement for Turkey dated October 26, 2015 are
subsisting, continuing and enforceable.
(II) A Decree of Declaration in favour of the Plaintiffs
that the Defendant No1's Letter dated April 26, 2024 arising out
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of the Letter Agreement for Turkey dated October 26, 2015 is
illegal, mala fide, unjust and invalid and inoperative.
(III) A Decree of Permanent injunction restraining the
Defendants, its servants, agents, partners, subsidiaries or assigns
in business, its dealers, stockists, distributors from in any manner
interfering with the Plaintiffs' right to carry on its business under
the Letter Agreement for Turkey dated October 26, 2015,
(IV) A Decree of Permanent Injunction prohibiting and
restraining the Defendants, their agents and representatives, from
taking any action(s) relating to the alleged termination of the
Letter Agreement for Turkey dated October 26, 2015 including
circulating, issuing, disseminating any information, to their
dealers / distributors / channel partners and any consequence
flowing therefrom.
(V) A Decree for Mandatory Injunction commanding and
directing the Defendants to continue to abide by the long-
standing agreements entered into between the Plaintiffs and the
Defendants to procure tractors, spare parts and other farm
equipment exclusively from the Plaintiffs including their
obligations under the Letter Agreement dated October 26, 2015;
(VI) Cost of the suit be awarded in favour of the Plaintiffs;
and
(VII) Any other further order(s) as this Hon'ble Court may
deem fit and proper in the facts and circumstances of the case."
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7. In the above suit, again detailed averments are made by way of a
common affidavit and I.A.No.2 of 2024 is made with a prayer to stay the
operation and effect of the letter, dated 26.04.2024 purporting the
unilaterally declaring the Turkey agreement, dated 26.10.2015 (extended
further from time to time) as terminated pending disposal of the suit.
I.A.No.3 of 2024 is filed for an ad interim injunction prohibiting and
restraining the respondents therein, its servants, agents, partners,
subsidiaries or assigns in business from taking any action relating to the
alleged termination of the Letter Agreement for Turkey, dated 26.10.2015
including circulating, issuing, disseminating any information, to their
dealers/distributors/channel partners and any consequence flowing
therefrom pending disposal of the suit. I.A.No.4 of 2024 is filed for an ad
interim injunction restraining the respondents therein, its servants, agents,
partners, subsidiaries or assigns in business, its dealers, stockists, and
distributors from breaching the commitment made to the applicants in April
2024 to source not less than 4,400 tractors for the year 2024 as well as
sourcing tractors in future during the operation of the year 2015 Turkey
agreement forming the subject matter of the suit. I.A.No.5 of 2024 is filed
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again for an ad interim injunction restraining the respondents therein, its
servants, agents, partners, subsidiaries or assigns in business, its dealers,
stockists, distributors from supplying on its own and/or procuring tractors,
its components, spare parts and any other farm equipment from any other
manufacturer/supplier/competitors more particularly MF heritage (including
MF 2600 series) tractors in 35-85 HP range, which has to be exclusively
procured from the applicants as per the agreement, dated 26.10.2015
(extended from time to time) pending disposal of the suit.
8. When the suit was filed on 15.05.2024, it was returned by the
Court with an endorsement for the plaintiffs to explain how the suit is
entertainable in view of the fact that the notice of termination is issued for
Letter of Agreement for Turkey, dated 26.10.2015, in which, it is mentioned
that the terms and conditions agreement, dated 29.10.2009 is to be followed,
whereunder, in clause No.14, there is an arbitration clause. The plaintiffs
complied with the return by making detailed endorsements by relying upon
a definition of Arbitration Agreement under Section 7, more specifically,
with reference to Section 7(5) of the Arbitration and Conciliation Act, 1996
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(hereinafter referred to as 'the Act') and it is submitted that the requirements
as per Section 7(5) are not satisfied. Further reliance was made on the
judgment of the Hon'ble Supreme Court of India in M.R. Engineers and
Contractors Private Limited Vs. Som Datt Builders Limited1 by pointing
out the seven tests. By further relying upon the judgment of the Hon'ble
Supreme Court of India in NBCC (India) Limited Vs. Zillion Infraprojects
Pvt. Ltd.,2 it was contended on behalf of the plaintiffs that neither the 2009
terms and conditions agreement nor the arbitration clause contained therein
in clause-14.2 is applicable or relevant to the 2015 Turkey agreement and
the suit was represented.
9. On such representation subject to the question of maintainability,
the suit was ordered to be taken on file and initial notice was ordered to the
defendants. Upon receipt of the notice, while reserving their right to file a
detailed counter, an interim reply was filed by the defendants. In the reply,
it was, interalia, pleaded that the terms and conditions agreement were
entered into between the plaintiffs and the defendants on 29.10.2009.
Clause 2 of the said agreement complements the separate territorial
1 (2009) 7 SCC 696
2 2024 SCC Online SC 323
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agreement. Even though there is no separate dispute resolution clause in the
Territorial Letter Agreement concerning Turkey, given the dispute
resolution Clause-14 contained in the terms and conditions agreement, dated
29.10.2009, the disputes have to be resolved through arbitration under the
aegis of the International Chambers of Commerce. It is further averred that
the respondents have already commenced arbitration proceedings in London
against the applicants before the International Court of Arbitration of the
International Chambers of Commerce for the said disputes. It is further
pleaded that on 26.04.2024, a request for arbitration was made by the first
defendant. On 13.05.2024, the Secretary of the International Chambers of
Commerce notified the plaintiffs herein of ICC arbitration and provided
them with a copy of the first defendant's request for arbitration. It is only
thereafter on 15.05.2024, the present suit was filed before the Commercial
Court. On 31.05.2024, the Commercial Court issued notice returnable by
23.07.2024. In the meanwhile, on 11.06.2024, the Solicitors of the
plaintiffs in London and India issued an e-mail to the Secretary of the
International Chambers of Commerce informing them that they represent
the plaintiffs in ICC arbitration. They also have given the applicant’s
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nominee Arbitrator and sought time till 12.07.2024 to file their response to
the notice of arbitration. On 12.06.2024, an advance hearing application
was filed which was not considered by the Trial Court and again on
20.06.2024, the second advance hearing application was filed. In paragraph
No.10, it is specifically pleaded that the Commercial Court ought to refer
the parties' dispute to ICC arbitration. It is further pleaded in the interim
reply that the status quo is in the form of an injunction and the same cannot
be granted as it would amount to ordering specific performance of the
contract which is otherwise determinable in nature.
10. The defendants prayed further time to file a detailed counter.
Based on the advance hearing application, the hearing was advanced and the
Trial Court took up the matter for enquiry and however, passed an ad
interim order even while adjourning the matter further to 11.07.2024. The
operative portion of the order of the Trial Court in the paragraph No.10 is
extracted hereunder:-
"10. The respondents side strongly opposed to grant any
interim relief. Anyhow, considering the above facts of the case,
circumstances elicited before this Court by way of documents
and the objections raised by the respondents with regard to the
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jurisdiction itself, this Court is of the view that reasonable time
to be granted to the respondents to file a detailed counter as
prayed by them and till then the statusquo has to be maintained
by the parties before the issuance of termination letter by the
respondents i.e. as on 25.4.2024. After the filing of detailed
counter by the respondents with documents and after hearing
the both sides in respect of the same, the reliefs sought in these
interlocutory petitions will be decided.
Hence, detailed counter of R1 and R2 by 11.7.2024 and
till then Statusquo is ordered to be maintained by the parties as
on 25.4.2024."
Aggrieved by the same, the present Civil Revision Petitions are filed.
11. Heard Mr Darvis Khambatta and Mr R.Parthasarathy, learned
Senior Counsels for the petitioners/defendants and Dr Abishek Manu
Singhvi and Mr Krishna Srinivasan, learned Senior Counsels for the
respondents/plaintiffs.
12. Mr Darvis Khambatta, learned Senior Counsel for the
petitioners/defendants would first take this Court through the terms and
conditions agreement, dated 29.10.2009. Placing reliance on Clause 2 of
the said agreement, he would submit that the agreement complements the
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separate Territorial Letter Agreement signed by TAFE and AGCO. If only
there is any conflict between the provisions of the Umbrella agreement and
the individual agreements, the individual agreements will prevail. As far as
the umbrella agreement is concerned, it specifically provides arbitration in
case of disputes. There is nothing contrary in the separate agreement
concerning Turkey. Therefore, the respondents/plaintiffs cannot maintain
the suit. He would further submit that when the suit itself is without
jurisdiction and when such a plea has been specifically raised in the interim
counter, the Trial Court ought not to have granted an interim order. It is
incumbent on the Trial Court to first decide on the question of referring the
parties to arbitration. The Trial Court ought to have decided the same at the
outset because it goes to the very root of the maintainability of the suit and
the jurisdiction of the Court itself. Therefore, he would submit that this is a
case for interference under Article 227 of the Constitution of India as the
Trial Court has exceeded its jurisdiction. He would further submit that the
interim order, actually granted by the Trial Court, is not just status quo ante,
but, is a mandatory direction that would amount to ordering specific
performance of the contract. When the contract itself is determinable in
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nature, such an interim relief can never be granted.
13. He would further submit that as opposed to Section 8 of the Act
which would apply in the case of domestic arbitration, in the case of an
international arbitration, Section 45 of the Act requires only a request to be
made by the parties and upon the request being made, the Court concerned
has to mandatorily refer the parties to arbitration. He would submit that
even though there are different entities under TAFE as well as AGCO, all
are subsidiaries and group companies and by the mutual intent of the
parties, considering the relationship between them and considering the
commonality of the subject matter and composite nature of the transactions
and performance of the contract, it can be seen that the parties can be
subject to arbitration as per the Group of Companies doctrine and therefore,
he would plead that this Court should set aside the interim order of status
quo granted by the Trial Court and direct the Trial Court to first decide the
question of referring the parties to arbitration. He would also contend that
this is not a case of termination of the contract at all. When the original
contract, for five years, expired in the year 2019 and it was extendable for
another period of five years, the petitioners/defendants did not terminate the
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contract at all and the letter impugned in the suit is only informing them that
they are not willing for any further renewal of the contract alone. Therefore,
he would submit that the entire suit filed by the respondents/plaintiffs itself
is a misrepresentation as if the petitioners/defendants have terminated the
contract.
14. Complimenting the arguments of Mr Darvis Khambatta, learned
Senior Counsel, Mr R.Parthasarathy, learned Senior Counsel also for the
petitioners/defendants, would make a prayer that this Court, in the present
Civil Revision Petitions itself, should refer the parties to arbitration.
Further, by placing reliance on Section 14 of the Specific Relief Act, the
learned Senior Counsel would submit that the interim order granted by the
Trial Court is an ex facie incorrect in law and as such, this makes out a case
for interference by this Court under Article 227 of the Constitution of India.
15. On the side of the petitioners/defendants, the judgment of the
Hon'ble Supreme Court in Asma Lateef and Anr. Vs. Shabbir Ahmad and
Ors.3 Are relied upon for the proposition that an enquiry concerning the
3 (2024) 4 SCC 696
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questions as to the jurisdiction of the Court has to be determined at the
commencement and not at the conclusion of the enquiry. Specific reference
is made to paragraph No.49 of the said judgment. The judgment of the
Hon'ble Supreme Court in World Sport Group (Mauritius) Limited Vs.
MSM Satellite (Singapore) PTE. Limited4 is relied upon for the proposition
that any Civil Court in India, which entertains suit, has to follow the
mandate of Sections 44 and 45 of the Act and a pleading in the counter-
affidavit with reference to commencement of arbitration itself would
amount to a request to refer the parties to arbitration. Specific reference is
made to paragraph Nos.24 and 25 of the said judgment.
16. Reliance is made to the judgment of the Constitution Bench of the
Hon'ble Supreme Court of India in Cox and Kings Limited Vs. SAP India
Private Limited and Anr.5, more specifically, to paragraphs Nos.116, 117
and 127 to contend that in the instant case, prima facie, the parties are to be
referred to arbitration based on the Group of Companies doctrine and even
the respondents/plaintiffs want to contend that if any subject is outside the
scope of arbitration, then, the same has to be contended only before the
4 (2014) 11 SCC 639
5 (2024) 4 SCC 1
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Arbitrators on the basis of the competence-competence principle and it is
not for the referring Court to go into in detail about the said disputes. The
judgment of the Hon'ble Supreme Court of India in Shakti Bhog Foods
Limited Vs. Kola Shipping Limited6 is also relied upon for the proposition
that the Trial Court is duty-bound to stay all further proceedings in the suit
and refer the parties to arbitration because of the mandate under Section 45
of the Act. Specific reliance is made on paragraph No.16 of the said
judgment.
16. Per contra, Dr Abishek Manu Singhvi, learned Senior Counsel for
the respondents/plaintiffs, would submit that this Court should first consider
the background of litigation. The litigation arises out of a long-term
relationship of around 50 years between the parties. Both the
respondents/plaintiffs and the petitioners/defendants hold shares in each
other and the cross-holding of shares is the underlying interest that has
driven the parties to the present litigation. By taking this Court through the
list of dates starting from 31.10.1960, it is specifically represented by him
that AGCO Holdings BV Netherlands holds 20.7% in the first
6 (2009) 2 SCC 134
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respondent/plaintiff. There is also a trademark user agreement between
AGCO and TAFE concerning various trademarks as of 17.03.1978. A
document was entered into between the parties in December 2006 as
Safeguards for Effective Alliance between TAFE and AGCO Corporation.
A Letter of Agreement is entered into between the AGCO Corporation and
TAFE on 03.08.2007 with reference to the event that a competitor of TAFE
acquires a minimum 15% stake or control in AGCO or becomes the single
largest holder of shareholder in AGCO or if AGCO merges with competitor,
then, the shareholders of TAFE shall have the right to purchase AGCO's
entire shareholding in TAFE and TAFE shall also have the right to purchase
the Massey Ferguson marks in India, Nepal and Bhutan and AGCO would
also to grant free-of-charge three-year license to TAFE to use the said marks
and at TAFE's option to extend all the distribution agreements between the
parties. He would submit that the TAFE entered the Turkey market in the
year 2006 by establishing a partial knocked-down line and sold over 2400
tractors by 2008. It developed 42 dealers in Turkey.
17. While so, on 25.06.2009, the Letter Agreement for Turkey was
entered into between the first respondent/plaintiff and the first and second
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petitioners/defendants for supply of MF Heritage Tractors in 45 to 85 HP
range exclusive to AGCO. The nature of the arrangement which is made in
Clause-3 is exclusive in nature. Clause-11(a) of the agreement makes the
contract terminable only after the first three years with a two-year notice.
The agreement was conditional upon TAFE establishing a fully operational
assembly facility in Turkey within 18 months from the date of the
agreement. Pursuant thereto, in the year 2010, TAFE established events in
Manisa, Turkey by investing about USD 20 million.
18. On 29.10.2009, the Terms and Conditions Agreement was also
executed between TAFE and AGCO Corporation for Heritage Tractors and
in Clause-2.2 of the said agreement, it is specifically mentioned that in the
event of any conflict between any provisions of the agreement, the territorial
agreement would supersede the terms and conditions agreement. Clause-14
of the said terms and conditions agreement only contains arbitration through
ICC by a three Arbitrator panel and the place of arbitration is mentioned as
London. Between the years 2012 and 2013, owing to the long-standing
relationship, AGCO also encouraged TAFE to acquire cross-shareholdings
and at present, TAFE and its only Subsidiaries jointly hold around 16.7% in
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the common stock of AGCO Corporation making them as single largest
shareholders of AGCO Corporation. On 29.08.2014, an original Standstill
Agreement, known as Letter Agreement, was also extended with reference
to the shares.
19. He would submit that it is the specific case of the
respondents/plaintiffs that it signed the original Standstill agreement in the
year 2014 and extended it from time to time in consideration of the
reasonable continuation and extension of the commercial agreement. On
26.10.2015, the Letter Agreement for Turkey was entered into between the
first petitioner/defendant and the first respondent/plaintiff for the supply of
MF Heritage Tractors from 35 to 85 HP range exclusively to the first
petitioner/defendant or any of its subsidiaries for resale in Turkey solely
through the AGCO distribution network. He would specifically point out
Clause-3(a) concerning the exclusive arrangement and clause-10(a),
whereby, the agreement was made valid for five years unless terminated by
either party giving one year prior written notice of termination. By placing
specific reliance on the agreement, Dr Singhvi, learned Senior Counsel
would submit there is no reference in this agreement to the terms and
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conditions agreement of 2009 which contains the arbitration clause.
20. He would specifically contend that with reference to certain other
jurisdictions, the arbitration clause was specifically included. In the year
2019, an amended and restated letter agreement was entered into between
the parties, by which, the original Standstill agreement was extended for a
further period of five years. As of 15.04.2024, the said amended and
restated letter agreement was extended by a further period of one year until
April 2025. Upon signing the said agreement on 15.04.2024, on
25.04.2024, the second petitioner/defendant scheduled a board meeting and
even the amended Standstill agreement was taken on record by the board of
the second petitioner/defendant. The agenda did not include any discussion
with reference to the TAFE and AGCO Corporation partnership or
termination of the commercial agreement. Soon after the conclusion of the
board meeting, in April 2024 itself, the management of the second
petitioner/defendant proposed two draft notes to TAFE titling AGCO
Announces Strategic Supplier Changes for public release which turned the
agreement of TAFE and compelled the TAFE to end the contemplated
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termination of various agreements between TAFE and AGCO group. Only
in these circumstances, the impugned notice of termination is issued on
26.04.2024.
21. Further making submissions in respect of the hearings of the suit,
Dr Singhvi, learned Senior Counsel would specifically point out that on
27.06.2024, detailed arguments were heard in I.A.Nos.2 to 5 of 2024
concerning the interim reliefs after filing of the counter-affidavit by the
respondents/plaintiffs on 24.06.2024 and the order impugned in the Civil
Revision Petitions was passed on 28.06.2024. Further, when the matter was
posted for hearing on 11.07.2024, in view of the strike by the local lawyers,
memos were filed seeking an extension of the status quo order and on
23.07.2024, the petitioners/defendants appeared in the main suit and the
matter now stands posted to 08.08.2024 for conduct of further enquiry in the
Interlocutory Applications. He would submit that the order, which is
passed, is only ad interim in nature. Therefore, he would submit that this
Court need not interfere or interject at this stage. The Civil Revision
Petitions under Article 227 of the Constitution of India itself are not
maintainable.
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22. Concerning the arguments on the merits of the interim orders,
pointing out to the e-mails and correspondence between the parties from the
year 2003 until 22.04.2024, it can be seen that the contract between the
parties is subsisting and is being extended not by any express agreement,
but, by the express conduct of the parties. While so, when it takes 305 days
to receive and process the order regarding the tractors and manufacturing
their parts, when everything is underway, even while placing orders as
recently just before the impugned letter of termination, suddenly, when the
contract is terminated, unless the interim order of status quo which was
prevailing as on the date of termination, the respondents/plaintiffs would be
put to huge prejudice and hardship. In any event, whether the contract is
determinable in nature or whether such a relief can be granted is writ large
before the Trial Court. Therefore, this Court need not interject. He would
further submit that the parties have already extended the 2015 Turkey
agreement beyond the alleged date of expiry i.e., with reference to
30.06.2024. The extension was based on the annual produce forecast share
between the parties.
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23. Even the e-mail exchanges between the parties, just a few days
before the impugned letter of termination would prove that the parties have
extended the contract beyond 30.06.2024 by their conduct. He would
submit that the Turkey agreement cannot be terminated unilaterally and can
be terminated only by mutual consent. Therefore, when the termination of
the agreement will have a severe and cascading effect on the very
relationship between TAFE and AGCO, the balance of convenience is in
favour of passing interim orders and the Trial Court has only passed an
interim order. Though the impugned notice states that AGCO is not
interested in extending the contract, it is a colourable notice which virtually
terminates and exits the contract otherwise than by proper notice that too
when the contract cannot be terminated at all.
24. Coming to the question as to the arbitration, he would submit that
the 2015 Turkey Agreement neither contains an arbitration clause not it
does make any reference to the terms and conditions agreement. Therefore,
there is no question of incorporation by reference or otherwise of the
arbitration clause into the 2015 Turkey Agreement. Even otherwise, what is
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mentioned to be referred for arbitration under Clause-4.2 is with reference
to the disputes that arise concerning the validity meaning of the said
agreement or any rights and liabilities that arise under the said agreement.
Therefore, when the letter is issued specifically with reference to the Turkey
Agreement, the arbitration clause does not cover the same within its scope.
The suit itself is taken on file after considering the relevant judgments of the
Hon'ble Supreme Court of India and the same will be considered in the
presence of petitioners/defendants once again when the matter is taken up
for enquiry on 08.08.2024. As a matter of fact, the respondents/plaintiffs
are also contesting the jurisdiction of the Arbitral Tribunal by filing a reply,
dated 12.07.2024. They would also contest the maintainability, or
otherwise, of the Civil Suit is as per Section 9 of the Code of Civil
Procedure and when the dispute is civil in nature, prima facie, the Civil Suit
is maintainable.
25. Mr Krishna Srinivasan, learned Senior Counsel also appearing for
the respondents/plaintiffs, would first take this Court through the original
return endorsement made by the Trial Court on 17.05.2024 and the
endorsements made on behalf of the respondents/plaintiffs on 29.05.2024.
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He would submit that only after considering the matter in detail, the suit
itself was numbered. He would further submit that a unit was set up within
the jurisdiction of the learned Principal District Judge, Dindigul pursuant to
the Turkey Agreement which is an exclusive facility for making huge
investments. Therefore, the Trial Court had jurisdiction to entertain the suit.
When the ad interim orders are passed and the matters are being contested
before the Trial Court, the Civil Revision Petitions, under Article 227 of the
Constitution of India, are not maintainable. He would submit that the
respondents are yet to file their detailed counter-affidavit as well as the
written statement before the Trial Court. In spite of the time granted by the
Trial Court, only an interim reply alone is filed. He would also submit that
the Turkey Agreement does not contain any arbitration clause. The learned
Senior Counsel would place strong reliance on Section 8 of the Commercial
Courts Act which places an embargo to file revision as against the interim
orders of the Commercial Court.
26. On behalf of the respondents/plaintiffs, the judgment of the
Hon'ble Supreme Court in M.R. Engineers and Contractors Private
Limited's case (cited supra) is relied upon for the proposition that when
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there is a main contract and supplementary contract unless the arbitration
clause is referred to or incorporated in the supplementary contract and
unless and otherwise it is shown that there is an intention to incorporate
arbitration clause in the supplementary contract, such arbitration clause
cannot be read as part of the contract between the parties. When the terms
and conditions of the contract are another document that is sought to be
incorporated by reference, Court has to still see whether the reference to the
document is with the intention of incorporating the contents of the
document in entirety. Specific reference is made to paragraphs Nos.14 to 22
of the said judgment.
27. The law laid down in the above judgment in M.R. Engineers and
Contractors Private Limited's case (cited supra) is restated with reference
to wherever the parties have two contracts by the later judgment of the
Hon'ble Supreme Court of India in NBCC (India) Limited's case (cited
supra). The Hon'ble Supreme Court of India held that if the case is one of
reference, but, not of incorporation, then, the general reference would not
have the effect of incorporating the arbitration clause. Specific reliance is
made to paragraphs Nos.15, 21 to 23 of the said judgment. The judgment of
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the Hon'ble Supreme Court of India in Shah Babulal Khimji Vs. Jayaben
D.Kania and Anr.7,is relied upon for the proposition that the Trial Court
should be trusted to pass discretionary and interlocutory orders and such
orders passed by exercise of discretion, should not be interfered with by
higher forum nor the jurisdiction be exercised by higher forum when the
Trial Court is seized of the matter. Specific reliance is made on paragraph
No.119 of the said judgment.
28. The judgment of the Hon'ble Supreme Court of India in
Virudhunagar Hindu Nadargal Dharma Paribalana Sabai and Ors. Vs.
Tuticorin Educational Society and Ors.8, is relied upon for the proposition
that the bar for this Court to exercise jurisdiction under Article 227 of the
Constitution of India is almost near total if the parties have an alternate
remedy under the Code of Civil Procedure and even with reference to the
other cases, the power should be used sparingly and if there is an alternate
remedy to the parties, the same should not be exercised. Specific reliance is
made to paragraphs Nos.11 to 13 of the said judgment, where under, a
reference is also made to the earlier judgment of the Hon'ble Supreme Court
7 (1981) 4 SCC 8
8 (2019) 9 SCC 538
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of India in A.Venkatasubbiah Naidu Vs. S.Chellappan9.
29. I have considered the rival submissions made on either side and
perused the material records of the case.
30. Upon consideration thereof, the following three questions arise
for consideration in the instant case:-
(i) Whether this Court should exercise the powers under Article 227
of the Constitution of India by entertaining the Civil Revision Petitions as
against an ad interim order when the matter is posted for further enquiry on
08.08.2024.
(ii) Whether the interim order of status quo ante granted by the Trial
Court is illegal and unsustainable.
(iii) Whether the parties should be referred for arbitration.
31. Since the answers to the above questions are intrinsically
connected, I proceed to answer them together. Firstly, with reference to the
submissions made on behalf of the defendants that the Court lacks
9 (2000) 7 SCC 695
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jurisdiction, especially, with reference to the arguments made by Mr Darvis
Khambatta, learned Senior Counsel, I am not in agreement with the same.
The dispute is civil in nature. As per Section 9 of the Code of Civil
Procedure, the Civil Court has jurisdiction. It is trite that the suit will
always be maintainable and arbitration is an alternative. Useful reference,
in this regard, can be made to the judgment of the Hon'ble Supreme Court of
India in M.D. Frozen Foods Exports Pvt. Ltd -Vs- Hero Fincorp Limited 10
more specifically paragraphs 30 and 31.
32. So long as the parties fail to file an application under Section 8 of
the Act, in case of a domestic arbitration and fail to make a request under
Section 45 of the Act in case of an international arbitration, the proceedings
shall continue and therefore, I do not find any inherent lack of jurisdiction
in the Commercial Court entertaining the suit as such.
33. As far as the question relating to the entertaining of the Civil
Revision Petition as against an ad interim order is concerned, it is true that
alternative remedy available to the parties under the Code of Civil
10 (2017) 16 SCC 741
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Procedure itself to move the very Court which granted the ad interim order
to vacate the order, normally, this Court would not entertain the Civil
Revision Petition arising of out an ad-interim order. There is no quarrel
over the proposition that the power of this Court under Article 227 of the
Constitution of India, in such cases, has to be exercised sparingly only if it
finds that even continuation of the proceedings before the Trial Court would
amount to injustice or no further time can be lost in terminating such
proceedings. Useful reference, in this regard, can be made to the judgment
of the Hon'ble Supreme Court of India in Virudhunagar Hindu Nadargal
Dharma Paribalana Sabai's case (cited supra).
34. However, in the instant case, before the Trial Court as well as
before this Court, a request is made by the defendants that the parties should
be referred to arbitration. It can be seen that the Court is mandated to refer
the parties to arbitration if there is an arbitration clause which is based on
the mandate of the Arbitration and Conciliation Act and on the primordial
principle of enforcing party autonomy which is part of public policy.
Therefore, whenever a question is raised/request is made to refer the parties
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to the arbitration, the said request cannot be put on the back burner to be
decided at a later stage. The policy of the law in India is for the Civil
Courts to refer as and when it is pleaded and it is found that there is an
arbitration agreement and not to cling on to the suit in one pretext or the
other. When a request is made in the course of the proceedings to refer the
parties to the arbitration, the Trial Court or the higher fora that are
considering the dispute between the parties are expected to consider the
issue as to whether the parties are to be referred to arbitration or not
immediately without relegating the issue. Therefore, even before
considering the question as to the correctness of the impugned order and
interference of this Court with reference to the ad interim order under
Article 227 of the Constitution of India, I am inclined to consider whether
the parties should be referred to arbitration or not. A careful consideration
of the jurisdiction vested in this Court under Article 227 of the Constitution
would certainly mandate such consideration at the first instance.
35. The scope of enquiry for a Court under Section 8 or 11 was
specifically dealt with by the Hon'ble Supreme Court of India in Vidya
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Drolia Vs. Durga Trading Corporation11. More specifically with reference
to Section 45 of the Act, the Constitution Bench had considered the issue in
Cox and Kings Limited's case (cited supra). The question was specifically
framed as to the standards of determination at the referral stage and it is
essential to reproduce paragraph Nos.164 to 166 which reads as hereunder:-
"164. In Vidya Drolia [Vidya Drolia v. Durga Trading
Corpn., (2021) 2 SCC 1 : (2021) 1 SCC (Civ) 549] , N.V.
Ramana, J. (as the learned Chief Justice then was) held that the
amendment to Section 8 rectified the shortcomings pointed out
in Chloro Controls [Chloro Controls India (P) Ltd. v. Severn
Trent Water Purification Inc., (2013) 1 SCC 641 : (2013) 1
SCC (Civ) 689] with respect to domestic arbitration. He further
observed that the issue of determination of parties to an
arbitration agreement is a complicated exercise, and should
best be left to the Arbitral Tribunals : (Vidya Drolia case
[Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1 :
(2021) 1 SCC (Civ) 549] , SCC p. 161, para 239)
“239. … Jurisdictional issues concerning whether
certain parties are bound by a particular arbitration,
under group-company doctrine or good faith, etc. in a
multi-party arbitration raises complicated factual
questions, which are best left for the tribunal to handle.
The amendment to Section 8 on this front also indicates
the legislative intention to further reduce the judicial
11 (2021) 2 SCC 1
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interference at the stage of reference.”
165. In Pravin Electricals (P) Ltd. v. Galaxy Infra &
Engg. (P) Ltd. [Pravin Electricals (P) Ltd. v. Galaxy Infra &
Engg. (P) Ltd., (2021) 5 SCC 671 : (2021) 3 SCC (Civ) 307] , a
Bench of three Judges of this Court was called upon to decide
an appeal arising out of a petition filed under Section 11(6) of
the Arbitration Act for appointment of sole arbitrator. The issue
before the Court was the determination of existence of an
arbitration agreement on the basis of the documentary evidence
produced by the parties. This Court prima facie opined that
there was no conclusive evidence to infer the existence of a valid
arbitration agreement between the parties. Therefore, the issue
of existence of a valid arbitration agreement was referred to be
decided by the Arbitral Tribunal after conducting a detailed
examination of documentary evidence and cross-examination of
witnesses.
166. The above position of law leads us to the inevitable
conclusion that at the referral stage, the Court only has to
determine the prima facie existence of an arbitration agreement.
If the referral court cannot decide the issue, it should leave it to
be decided by the Arbitral Tribunal. The referral court should
not unnecessarily interfere with arbitration proceedings, and
rather allow the Arbitral Tribunal to exercise its primary
jurisdiction. In Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre
Ltd. [Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd.,
(2005) 7 SCC 234] , this Court observed that there are distinct
advantages to leaving the final determination on matters
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pertaining to the validity of an arbitration agreement to the
Tribunal : (Shin-Etsu Chemical Co. case [Shin-Etsu Chemical
Co. Ltd. v. Aksh Optifibre Ltd., (2005) 7 SCC 234] , SCC p.
267, para 74)
“74. … Even if the Court takes the view that the arbitral
agreement is not vitiated or that it is not valid, inoperative
or unenforceable, based upon purely a prima facie view,
nothing prevents the arbitrator from trying the issue fully
and rendering a final decision thereupon. If the arbitrator
finds the agreement valid, there is no problem as the
arbitration will proceed and the award will be made.
However, if the arbitrator finds the agreement invalid,
inoperative or void, this means that the party who wanted
to proceed for arbitration was given an opportunity of
proceeding to arbitration, and the arbitrator after fully
trying the issue has found that there is no scope for
arbitration.”"
Therefore, this Court should only attempt to find out prima facie if there is
an arbitration agreement and the issues as to the arbitrability of all the
disputes, whether the disputes are severable in nature and even detailed
contentions regarding the arbitration clauses should be left to the Arbitral
Tribunal by following the competence-competence principle. Therefore, I
proceed to consider whether prima facie their exists an arbitration
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agreement to refer the parties to arbitration.
36. In this regard, it can be seen that originally, on 29.10.2009, TAFE
and AGCO entered into the terms and conditions agreement. The
applicability of the agreement is contained in Clause 2 which is extracted
hereunder:-
"2. APPLICABILITY
2.1 This Agreement shall be applicable only to the purchase
by AGCO of the Products from TAFE.
2.2 This Agreement complements separate territorial letter
agreements signed by TAFE and AGCO. If for any reason, there is
a conflict between any of the provision of this Agreement and the
territorial letter Agreements in force / or such territorial
agreements that may be entered in to between the Parties, the
provision of the territorial Agreement shall prevail."
37. Clause 3 of the said agreement deals with the purchase procedure
and price. Clause 4 relates to the conditions of sale. Clause 5 relates to the
specification and standards of quality. Clause 6 relates to the lists and
literature, supplying a copy of the Operator's Instruction Manual,
Catalogues etc. Clause 7 deals with pricing, payment terms, quality, supply
of spare parts and warranty of spare parts, the provisions relating to reject
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materials, customer service standards ordering packaging, imaging,
labelling, new product introduction and design change etc. Clause 8 relates
to the trademarks and imaging of AGCO. Clause 9 relates to the mutual
warranties of TAFE and AGCO. Clause 10 deals with intellectual property
rights between the parties. Clause 11 relates to the terms and termination of
the agreement. Clause 12 is the force majeure clause. Clause 13 prohibits
the assignment of contracts to third parties. Clause 14 deals with the
applicable law and arbitration which is extracted hereunder:-
"14.APPLICABLE LAW AND ARBITRATION
14.1 The construction, validity and performance of this
Agreement shall be governed by the laws of England and
Wales.
14.2 Any and every dispute or difference between the
Parties concerning the validity meaning or effect of this
Agreement or the rights or liabilities of the Parties hereunder
shall be settled under the Rules of Arbitration of the
International Chamber of Commerce by three arbitrators
appointed in accordance with the said Rules.
14.3 The place of arbitration shall be London and the
language of the arbitration proceedings shall be English.
14.4 The arbitration award shall be final and binding
on the Parties and shall deal with the question of the costs of
the arbitration and all matters relating thereto.
14.5 Nothing contained in the foregoing provisions of
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this clause 14 shall prevent either Party from applying to any
appropriate Court for an injunction or other like remedy to
restrain the other party from committing any breach or
anticipated breach of this Agreement and for consequential
relief."
38. Clause 15 contains miscellaneous proceedings. Therefore, on
cursory glance at the said agreement, it is clear that it relates to the sale of
products of TAFE to AGCO and it contemplates separate territorial
agreement with reference to each country and it states that the terms and
conditions agreement would be complementing the separate agreements and
in case of any conflict between the terms and conditions agreement and the
specific agreement, the specific agreements will override. Thus, it can be
seen that the terms and conditions agreement, dated 29.10.2009 is in the
nature of an umbrella agreement. It contemplates entering into individual
agreements in respect of the separate jurisdictions containing specific
clauses. Therefore, Umbrella Agreement provides for arbitration clause and
the same would complement the individual agreement. If only anything
contrary is mentioned in the individual agreement with reference to dispute
resolution, then, the arbitration clause would not apply.
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39. A perusal of the Letter Agreement for Turkey, dated 26.10.2015,
it can be seen that nothing contrary to Clause 14 of the terms and conditions
contract is found. The letter agreement is also with reference to the supply
of TAFE and AGCO regarding the same subject matter. Therefore, prima
facie, at a glance, this Court finds that there is an arbitration agreement in
writing between the parties. The contention on behalf of the plaintiffs is
that this is a case of two contracts unless and otherwise the Letter
Agreement for Turkey specifically refers to and incorporates the arbitration
clause also, the Court cannot presume the existence of the arbitration clause.
In this regard, it can be seen that as far as the judgment in M.R. Engineers
and Contractors Private Limited's case (cited supra) is concerned, while
the main contract between the P.W.D and the supplier contained the
arbitration clause, by placing reliance upon the printed forms of invoices
with the sub-contractor, it was pleaded that there was also arbitration
agreement which was rejected by the Hon'ble Supreme Court of India and it
was relevant to extract paragraph No.22 which is as hereunder:-
"22. A general reference to another contract will not be
sufficient to incorporate the arbitration clause from the referred
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contract into the contract under consideration. There should be
a special reference indicating a mutual intention to incorporate
the arbitration clause from another document into the contract.
The exception to the requirement of special reference is where
the referred document is not another contract, but a standard
form of terms and conditions of trade associations or regulatory
institutions which publish or circulate such standard terms and
conditions for the benefit of the members or others who want to
adopt the same."
40. The matter has been considered in detail in NBCC(India) Limited
(cited supra) and it has been held that it should be considered with the
matter is of a single contract or two contract basis and whenever it is of two
contracts, then the mere reference is not enough and incorporation would be
necessary. Relevant paragraphs 15, 22 and 23 are extracted hereunder:
“15. No doubt that this Court in the case of Inox Wind Limited
v.Thermocables Limited4 has distinguished the law laid down in the case
of M.R. Engineers and Contractors Private Limited (supra). In the said
case (i.e.Inox Wind Limited), this Court has held that though general
reference to an earlier contract is not sufficient for incorporation of an
arbitration clause in the later contract, a general reference to a standard
form would be enough for incorporation of the arbitration clause. Though
this Court in the case of Inox Wind Limited (supra) agrees with the
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judgment in the case of M.R. Engineers and Contractors Private
Limited(supra), it holds that general reference to a standard form of
contract of one party along with those of trade associations and
professional bodies will be sufficient to incorporate the arbitration
clause. In the said case (i.e. Inox Wind Limited), this Court found that the
purchase order was issued by the appellant therein in which it was
categorically mentioned that the supply would be as per the terms
mentioned therein and in the attached standard terms and conditions. The
respondent therein by his letter had confirmed its acceptance. This Court
found that the case before it was a case of a single-contract and not two-
contract case and, therefore, held that the arbitration clause as mentioned
in the terms and conditions would be applicable.
22. As already discussed herein above, when there is a reference in the
second contract to the terms and conditions of the first contract, the
arbitration clause would not ipso facto be applicable to the second
contract unless there is a specific mention/reference thereto.
23. We are of the considered view that the present case is not a
case of ‘incorporation’ but a case of ‘reference’. As such, a general
reference would not have the effect of incorporating the arbitration
clause. In any case, Clause 7.0 of the L.O.I., which is also a part of the
agreement, makes it amply clear that the redressal of the dispute between
the NBCC and the respondent has to be only through civil courts having
jurisdiction of Delhi alone.”
41. Further, in the said case, it was found that in the later contract,
contains specific reference to the redressal of the disputes, especially by
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filing Civil Suits having Delhi alone. Therefore, on a careful reading of the
said judgment, I am of the view that the parties intended to refer the
disputes arising out of the Letter of Agreement for Turkey also by way of
arbitration as per Clause 14 contained in the original terms and conditions
of the contract. The above findings are made prima facie to refer the parties
to the arbitration and this Court refrains from considering the same in
greater detail. There are also further factors such as the subject matter of the
issue with reference to the cross holdings of the parties and if so, the same
would also be referable, the meaning of the arbitration clause-14.2 i.e.,
when it relates to the rights and liabilities of the “parties hereunder" whether
the rights and liabilities arising outside the scope of the contract are also
referable. Further, whether the very many details/issues between the parties
would come within the scope of reference under Section 14(2) are all should
be not commented upon by this Court in view of the pronouncement of the
Constitution Bench of the Hon'ble Supreme Court of India in Cox and
Kings Limited's case (cited supra). It is for the Arbitral Tribunal to decide
upon the same.
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42. In this case, it can be seen that after issuing the notice impugned
in the suit, strangely, the defendants themselves have invoked arbitration to
declare that the notice of expiration is valid and that the Turkey Letter
Agreement was expired on 30.06.2024. Of course, the consequential reliefs
are also prayed. The respondents herein have also filed their detailed
response objecting that the subject matter will not come with the purview of
the Arbitral Tribunal and also risen objections as to the severebility/
clubbing of the claims. Therefore, these questions have to be normally
decided by the Arbitral Tribunal.
43. Yet another issue with reference to the parties also arises. It is not
the case of the plaintiffs that the second plaintiff is totally a third party. In
the plaint itself, it is pleaded that it is the subsidiary of the plaintiffs and
therefore, would come within the meaning of the Group of Companies
doctrine. Then, with reference to the defendants also, it is not pleaded that
they are different entities and they would also come within the meaning of
Group of Companies doctrine. The question as to the imposition of the
arbitration agreement on such parties was specifically considered by the
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Constitution Bench of the Hon'ble Supreme Court of India paragraphs Nos.
121 and 122 read as follows:-
"121. In case of a composite transaction involving
multiple agreements, it would be incumbent for the Courts and
tribunals to assess whether the agreements are consequential or
in the nature of a follow-up to the principal agreement. This
Court in Canara Bank [MTNL v. Canara Bank, (2020) 12
SCC 767] observed that a composite transaction refers to a
situation where the transaction is interlinked in nature or where
the performance of the principal agreement may not be feasible
without the aid, execution, and performance of the
supplementary or ancillary agreements.
122. The general position of law is that parties will be
referred to arbitration under the principal agreement if there is
a situation where there are disputes and differences “in
connection with” the main agreement and also disputes
“connected with” the subject-matter of the principal agreement.
[Olympus Superstructures (P) Ltd. v. Meena Vijay Khetan,
(1999) 5 SCC 651] In Chloro Controls [Chloro Controls India
(P) Ltd. v. Severn Trent Water Purification Inc., (2013) 1 SCC
641 : (2013) 1 SCC (Civ) 689], this Court clarified that the
principle of “composite performance” would have to be
gathered from the conjoint reading of the principal and
supplementary agreements on the one hand, and the explicit
intention of the parties and attendant circumstances on the
other. The common participation in the commercial project by
the signatory and non-signatory parties for the purposes of
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achieving a common purpose could be an indicator of the fact
that all the parties intended the non-signatory party to be bound
by the arbitration agreement. Thus, the application of the
Group of Companies doctrine in case of composite transactions
ensures accountability of all parties who have materially
participated in the negotiation and performance of the
transaction and by doing so have evinced a mutual intent to be
bound by the agreement to arbitrate."
Therefore, prima facie, I am of the view that there are no third parties
involved in the present case and from the threshold standard required by this
Court, I am of the considered view that the parties have to be referred for
arbitration.
44. Given the aforesaid answer, once this Court is inclined to refer the
parties to arbitration, it would not be appropriate to comment on the validity
of the ad interim order and no further adjudication is also necessary as to
whether this Civil Revision Petitions, as against the ad interim order, are
entertainable or not. The plaintiffs have to now pray for interim orders
before appropriate forum and it is for the said forum to consider about the
same. However, it is stated on behalf of the plaintiffs that a huge facility is
established and is being run and is dedicated exclusively to the supply
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concerning Turkey. Even on behalf of the defendants, by placing reliance
on Clause 11.5 of the Terms and Conditions contract, it is represented that
as orders have been placed, the units are run and the supply is in process,
there will not be any imminent change in the status quo at least for three
months as the orders placed have to be completed and that everything will
not come into standstill immediately. Therefore, there is enough breathing
time for the plaintiffs to approach the appropriate forum for getting interim
relief(s) if any.
45. Before proceeding to the operative portion of the order, this Court
also notices that there is a long-standing commercial relationship between
the parties. Even though it can be said that to part ways is a matter of
commercial prudence, still, in this case, in view of the cross holdings
between the parties, the umbilical chord is not cut. In this case, the
defendants themselves, after issuing the letter, approached the Arbitral
Tribunal with the prayer to declare the validity of their own letter, which is
a novelty. It is pleaded on behalf of the plaintiffs that there are concerns of
the parties with reference to the cross holdings as to the apprehensions of
both sides concerning the cross holdings. Therefore, in my considered view,
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C.R.P.(PD)(MD).Nos.1830 to 1833 of 2024
a long standing relationship is at stake and there are large underlying
interests between the parties. Therefore, the present case is also a fit case
for mediation.
46. Both parties have a lot of stakes. An interest-based bargaining
with the able guidance and assistance of a Mediator would very much help
the parties in discussing all the issues both referable and not referred etc.,
and they can do so not only about the jurisdiction of Turkey but in respect
of other jurisdictions also. The same can lead to unique options which may
be suitable to both parties since the parties can indulge in collaborative
exercise and attempt to resolve the matter with an open mind. Given the
nature of dispute between the parties, the same would certainly save the
time, money and energy of the parties and the earlier resolution will result in
the parties to quickly refocus on their business. While referring the parties
to the arbitration, this Court can thus also refer the parties to mediation.
The parties have already invoked arbitration and the same is going to
continue. In the meanwhile, they can also make a genuine attempt to
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C.R.P.(PD)(MD).Nos.1830 to 1833 of 2024
mediate the dispute and if there is any agreement, it can be recorded before
the appropriate forum. Considering the lis between the parties, I deem it fit
to request the services of Hon'ble Mr Justice V. Ramasubramanian, Retired
Judge, Supreme Court of India, to be the Mediator in the present case and I
refer the parties to mediation. The Hon'ble Mediator is entitled to fix his
remuneration in consultation with the parties. The parties shall appear for
mediation on any other convenient date as may be fixed by the Mediator at
the earliest.
47. In view thereof, these Civil Revision Petitions are disposed of on
the following terms:-
(i) The parties in C.O.S.No.2 of 2024 are referred to arbitration as per
clause-14.2 of the Terms and Conditions Agreement, dated 29.10.2009
before the International Chambers of Commerce, before whom the parties
already are and the suit stands disposed of accordingly;
(ii) The submissions made on behalf of the learned Counsel for the
petitioners/defendants that there will not be any imminent change of status
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C.R.P.(PD)(MD).Nos.1830 to 1833 of 2024
quo and the orders which are already made will be processed and received
and the supplies will not be immediately stalled atleast for a period of three
months, is recorded;
(iii) The respondents/plaintiffs will be entitled to approach
appropriate forum for such interim reliefs in accordance with law;
(iv) The findings regarding the arbitration clause, its validity,
arbitrability of the issues etc., are prima facie made for the purpose of
exercise of power under Section 45 of the Act to refer the parties for
arbitration and it will be open for the respondents/plaintiffs to raise the said
issues before the Arbitral Tribunal in accordance with law;
(v) The parties are also referred to mediation and Hon'ble Mr.Justice
V. Ramasubramanian is kindly requested and appointed as Mediator and
the parties concerned namely TAFE and its subsidiaries and AGCO and its
subsidiaries/Group of Companies are referred to the mediator for the
conduct of mediation concerning all the issues between them and the
Mediated Settlement Agreement if any can be recorded before the
appropriate forum;
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C.R.P.(PD)(MD).Nos.1830 to 1833 of 2024
(vi) There shall be no order as to costs. Consequently, connected
miscellaneous petitions are closed.
08.08.2024
(½ )
Neutral Citation : yes/no
grs
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C.R.P.(PD)(MD).Nos.1830 to 1833 of 2024
D.BHARATHA CHAKRAVARTHY, J.
grs
C.R.P.(PD)(MD).Nos.1830 to 1834 of 2024
and C.M.P.(MD).Nos.10294, 10296, 10299 and 10301 of 2024
08.08.2024
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C.R.P.(PD)(MD).Nos.1830 to 1833 of 2024
CRP(PD)(MD)Nos.1830 to 1833 of 2024
and
C.M.P.(MD).Nos.10294, 10296, 10299 and 10301 of 2024
D.BHARATHA CHAKRAVARTHY, J.
After the pronouncement of the Judgment and after going through the
same, Mr.Krishna Srinivasan, the learned Senior Counsel would mention
the matter before the Court stating that he has to express certain things
about the order. He would also fairly submit that he would make the said
submissions in the presence of the other side and requested that the matter
be listed on 16.08.2024 under the caption 'for being mentioned'. He also
undertakes to inform this mentioning to the other side.
2.List the matter under the caption 'for being mentioned' on
16.08.2024.
08.08.2024
(2/2 )
sji
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C.R.P.(PD)(MD).Nos.1830 to 1833 of 2024
D.BHARATHA CHAKRAVARTHY,J.
sji
CRP(PD)(MD)Nos.1830 to 1833 of 2024
and
C.M.P.(MD).Nos.10294, 10296, 10299 and 10301 of 2024
08.08.2024
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C.R.P.(PD)(MD).Nos.1830 to 1833 of 2024
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