Super Smelters Ltd. Vs. Visa Resources Pte Ltd. And Anr. – Calcutta High Court

I. Case Reference

Case Citation : (2021) ibclaw.in 261 HC
Case Name : Super Smelters Ltd. Vs. Visa Resources Pte Ltd. And Anr.
Appeal No. : IA No. GA 1 of 2020 (Old No. GA 841 of 2020) With IA No. GA 2 of 2020 (Old No. GA 859 of 2020) With IA No. GA 3 of 2020 In CS 56 of 2020
Judgment Date : 05-Jan-21
Court/Bench : High Court of Calcutta
Present for Petitioner(s) : Mr. Abhrajit Mitra, Sr. Advocate Mr. Jishnu Chowdhury, Advocate Mr. Shaunak Mitra, Advocate Mr. Nikunj Berlia, Advocate Mr. Aritra Basu, Advocate
Present for Respondent(s) : Mr. S.N. Mookherjee, Sr. Advocate Mr. Sabyasachi Chowdhury, Advocate Ms. Nikita Jhunjhunwala, Advocate Ms. Shivika Tiwari, Advocate
Coram : Mr. Justice Debangsu Basak
Original Judgment : Download

II. Full text of the judgment

DEBANGSU BASAK, J. :-

1. The parties have filed three applications in the suit. In the order of point of time, the plaintiff has filed the first application being IA No. 1 of 2020 seeking an order of injunction on an arbitration proceeding. The defendant has filed the second application being IA No. 2 of 2020 seeking an order referring the parties to the suit to arbitration in terms of the arbitration agreement contained in clause 21 of the contract dated February 26, 2020. The plaintiff has filed the third application being IA No. 3 of 2020 seeking an order of injunction on the arbitration proceedings subsequent to the order of the Supreme Court. The hearings of all the three applications have been concluded on December 15, 2020. The three applications are being decided by this common judgement and order as the issues in the three applications overlap each other.

2. Learned senior advocate appearing for the plaintiff has submitted that, the parties never entered into a contract for arbitration. In fact, according to him, although the parties wer negotiating to enter into a contract for supply of coral, the parties never entered into a formal contract. According to him, under the Arbitration and Conciliation Act, 1996, there needs to be a valid contract for arbitration as laid down under the Act of 1996 for an arbitration reference to commence. In the facts of the present case, he submits that, although the parties exchanged correspondence, the parties never reached any consensus ad item with regard to any contract far less an arbitration agreement. He has submitted that, the plaintiff has been purchasing coal from the first defendant for some time now. The plaintiff had negotiated with the first defendant for the purpose of purchasing coal of South African origin. The first defendant by an email dated February 29, 2020 forwarded to the plaintiff a draft contract for supply of steam (non-coking) coal of South African origin for the acceptance and signature of the plaintiff. The plaintiff was not satisfied with the terms contained in the contract. Negotiations took place over telephone. On March 3, 2020, the plaintiff had forwarded to the first defendant a draft contract with the few issues highlighted and requested the first defendant to execute the same. The first defendant did not accept the offer of the plaintiff contained in the writing dated March 3, 2020. The first defendant revised the same and forwarded the revised contract to the plaintiff on March 4, 2020. Further negotiations took place between the parties. By an email dated March 6, 2020, the first defendant forwarded its final version of the draft contract. The plaintiff signed the contract and send it over to the first defendant. According to the plaintiff, it had executed the document on the basis of good faith and trust even though the negotiations were not concluded. According to the plaintiff, it was led to believe that the document would be appropriated altered or cancelled, once the parties agree to the final terms. In fact, negotiations continued even after signing of the document. Therefore, the parties could enter into a concluded contract. The arbitration agreement is contained in the so called contract. The parties not concluding the contract, the question of the parties agreeing to arbitration on the basis of non concluded contract does not arise.

3. Learned Advocate appearing for the plaintiff has submitted that, unless a contract is entered into between the parties, the question of an arbitration clause which is said to be contained in such contract becoming enforceable does not arise. In support of his contentions he has relied upon 2010 (2) Calcutta Law Times page 293 (Orissa Stevedores Limited v. The Orissa Minerals Development Company Ltd. & Ors.), 2020 (2) SCC 455 (Uttarakhand Purv Sainik Kalyan Nigam Limited v. Northern Coalfield Ltd.), 2017 (13) SCC 243 (Vedanta Ltd. v. Emirates Trading Agency LLC), 2011(3) Arbitration Law Reporter 227 (Devinder Kumar Gupta & Ors. v. Realogy Corporation & Ors.) and 2006 (1) SCC 751 (Dresser Rand S.A. v. Bindal Agro Chem Ltd. & Ors.).

4. Learned Senior Advocate appearing for the first defendant has submitted that, the parties entered into a contract which contains an arbitration agreement. He has referred to the correspondence exchanged between the parties. He has submitted that, the arbitration agreement is separable from the main contract. In the facts of the present case, a contract was entered into which contains an arbitration clause. The Court, under Section 45 of the Act of 1956, is to required return a prima facie finding as to whether, the arbitration agreement is null and void, inoperative or incapable of being performed. He has submitted that, none of such conditions exist in the facts of the present case. The contract cannot be said to be null and void, inoperative or incapable of being performed.

5. Learned Senior Advocate appearing for the first defendant has submitted that, the parties exchanged electronic mail between March 3, 2020 and March 5, 2020. He has submitted that, the last query raised by the plaintiff was on March 5, 2020. Thereafter, the first defendant had prepared the contract document and send it over for acceptance and signature of the plaintiff. He has submitted that, the first defendant took steps in accordance with the contract entered into. The plaintiff had been trying to resile from the contract. The first defendant had issued a final notice on April 20, 2020 referring to the contract and putting the plaintiff on notice that, in case the plaintiff failed to open their fully workable letter of credit within the deadline mentioned in the final notice, the first defendant shall terminate the contract without any further notice to the plaintiff and shall claim all damages, costs and expenses arising out of the non performance of the contract by the plaintiff. The plaintiff had received such final notice. The plaintiff had failed to respond thereto. Consequently, by an electronic mail dated April 22, 2020, the first defendant had terminated the contract. Such electronic mail had been received by the plaintiff. The plaintiff had replied thereto by an electronic mail dated April 22, 2020. He has drawn the attention of the Court to the contents of the electronic mail dated April 22, 2020 of the plaintiff. He has submitted that, the plaintiff in such electronic mail referred to the contract between the parties. He has submitted that, the plaintiff had accepted that, there was a contract between the parties as will appear from the contents of the response to the notice of termination dated April 22, 2020.

6. Referring to the arbitration clause, Learned Senior Advocate appearing for the first defendant has submitted that, there is no dispute that such arbitration clause was agreed to between the parties. At best, the plaintiff had been disputing some of the terms and conditions of the contract. Such disputes cannot be construed to affect the arbitration agreements. Such disputes are arbitrable under the arbitration agreement. The parties should be referred to the chosen forum.

7. In support of his contentions, learned Senior Advocate appearing for the first defendant has relied upon 2014 Volume 5 SCC page 1 (Enercon (India) Limited & Ors. v. Enercon GMBH & Anr.), 2016 Volume 10 SCC page 813 (Sasan Power Limited v. North American Coal Corporation (India) Pvt. Ltd.) and 2014 Volume 11 SCC page 639 (World Sport Group (Mauritius) Ltd. v. MSM Satellite (Singapore) PTE. Ltd.).

8. The plaintiff has filed the instant suit seeking inter alia, an order of injunction restraining the defendants from proceeding wit arbitration between the plaintiff and the first defendant. The plaintiff has alleged in the plant that, the plaintiff is engaged in the business of manufacture and sale of Iron ore and Steel. The plaintiff has a requirement for coal from South Africa for its manufacturing process. The plaintiff has been purchasing coal from the first defendant over a considerable period of time. The plaintiff had negotiated with the first defendant for the purchase of Coal of South African origin. According to the plaintiff, the first defendant had by an electronic mail dated February 29, 2020 forwarded to the plaintiff a draft contract for supply of coal of South African origin for the signature of the plaintiff. The plaintiff had expressed reservations with regard to some of the terms and conditions contained in such contract. According to the plaintiff, negotiations had taken place between the parties. By an electronic mail dated March 3, 2020, the plaintiff had forwarded to the first defendant a draft contract with the request for acceptance. According to the plaintiff, the first defendant had however revised the contract and forwarded the same to the plaintiff on March 4, 2020 by an electronic mail. According to the plaintiff, further negotiations had taken place between the parties. On March 6, 2020, the first defendant had by an electronic mail forwarded its final version of the draft contract. The plaintiff had received an electronic mail on March 6, 2020 from the first defendant with a request to execute the contract in order to facilitate the first defendant to hedge AP I 4. The plaintiff had executed such contract on the basis of faith and trust, even though negotiations had not been completed.

9. In paragraphs 10 and 14 of the plaint, the plaintiff has pleaded that, it executed a document forwarded by the first defendant on the basis of faith and trust even though negotiations were incomplete. The plaintiff has relied upon various electronic mails exchanged between the parties prior to the execution of the contract as also subsequent thereto to contend that, negotiations were incomplete.

10. According to the first defendant, the plaintiff and the first defendant had, through exchange of electronic mails dated March 6, 2020 and March 16, 2020, executed the contract. The contract signed by the parties contains an arbitration clause. The arbitration clause remains undisputed.

11. The plaintiff has raised the issue that the plaintiff and the first defendant did not enter into a concluded contract for an arbitration agreement to come into being. The first defendant on the other hand has contended that there has been a concluded contract. In any event, the plaintiff has not denied the existence of the arbitration agreement between them. The arbitration agreement has not been challenged by the plaintiff contemporaneously. The arbitration agreement is such that, the disputes that the plaintiff have sought to raise in the present suit are arbitrable. According to the first defendant, by virtue of Section 45 of the Arbitration and Conciliation Act, 1996, the disputes have to be referred to arbitration in terms of the arbitration agreement.

12. The document which the plaintiff has contended not to fructify in a contract and which the first defendant has contended to be a concluded contract, contains the following arbitration clause :-

“21. Arbitration

Any dispute arising between the parties in connection with this Contract including any question regarding its existence, validity or termination, shall be referred to and finally resolved by Arbitration in Singapore in accordance with the arbitration rules of the Singapore International Arbitration Centre (“SIAC Rules”), for the time being in force, which rules are deemed to be incorporated by reference in this Clause. The tribunal shall consist of one (sole) arbitrator to be appointed by the chairman of the SIAC. The place of arbitration shall be Singapore.

The language of arbitration shall be English. If there is any document, in any foreign language, such document shall be translated in English, with a proper proof of authenticity. The arbitration tribunal shall state its award in detail and facts of the case, and reasons for its decision. The decision of such arbitration shall be final and binding upon the parties hereto, and may be entered in any court having jurisdiction. The English Law shall apply.

13. Enercon GMBH & Anr. (supra) and World Sport Group (Mauritius) Ltd. (supra) have recognised and applied the principle of separability of the arbitration agreement from the main contract. On the concept of separability of the arbitration clause/agreement from the underlying contract, the Supreme Court in Enercon GMBH & Anr. (supra) has held as follows :-

“83. The concept of separability of the arbitration clause/agreement from the underlying contract is a necessity to ensure that the intention of the parties to resolve the disputes by arbitration does not evaporate into thin air with every challenge to the legality, validity, finality or breach of the underlying contract. The Indian Arbitration Act, 1996, as noticed above, under Section 16 accepts the concept that the main contract and the arbitration agreement form two independent contracts. Commercial rights and obligations are contained in the underlying, substantive, or the main contract. It is followed by a second contract, which expresses the agreement and the intention of the parties to resolve the disputes relating to the underlying contract through arbitration. A remedy is elected by parties outside the normal civil court remedy. It is true that support of the national courts would be required to ensure the success of arbitration, but this would not detract from the legitimacy or independence of the collateral arbitration agreement, even if it is contained in a contract, which is claimed to be void or voidable or unconcluded by one of the parties.

84. The scope and ambit of the provision contained in Section 16 of the Indian Contract Act has been clearly explained in Reva Electric Car [Reva Electric Car Co. (P) Ltd. v. Green Mobil, (2012) 2 SCC 93 : (2012) 1 SCC (Civ) 541] , wherein it was inter alia observed as follows: (SCC p. 107, para 54)

“54. Under Section 16(1), the legislature makes it clear that while considering any objection with respect to the existence or validity of the arbitration agreement, the arbitration clause which formed part of the contract, has to be treated as an agreement independent of the other terms of the contract. To ensure that there is no misunderstanding, Section 16(1)(b) further provides that even if the Arbitral Tribunal concludes that the contract is null and void, it should not result, as a matter of law, in an automatic invalidation of the arbitration clause. Section 16(1)(a) presumes the existence of a valid arbitration clause and mandates the same to be treated as an agreement independent of the other terms of the contract. By virtue of Section 16(1)(b), it continues to be enforceable notwithstanding a declaration of the contract being null and void. In view of the provisions contained in Section 16(1) of the Arbitration and Conciliation Act, 1996, it would not be possible to accept the submission of Ms Ahmadi that with the termination of the MoU on 31-12-2007, the arbitration clause would also cease to exist.”

85. The aforesaid reasoning in Reva case [Reva Electric Car Co. (P) Ltd. v. Green Mobil, (2012) 2 SCC 93 : (2012) 1 SCC (Civ) 541] has also been approved by a two-Judge Bench of this Court in Today Homes and Infrastructure (P) Ltd. v. Ludhiana Improvement Trust [(2014) 5 SCC 68 : (2013) 7 Scale 327] wherein it was inter alia held as under: (SCC p. 73, para 14)

“14. The same reasoning was adopted by a member of this Bench (S.S. Nijjar, J.), while deciding Reva Electric Car Co. (P) Ltd. v. Green Mobil [Reva Electric Car Co. (P) Ltd. v. Green Mobil, (2012) 2 SCC 93 : (2012) 1 SCC (Civ) 541] , wherein the provisions of Section 16(1) in the backdrop of the doctrine of kompetenz kompetenz were considered and it was inter alia held that under Section 16(1), the legislature makes it clear that while considering any objection with regard to the existence or validity of the arbitration agreement, the arbitration clause, which formed part of the contract, had to be treated as an agreement independent of the other terms of the contract. Reference was made in the said judgment to the provisions of Section 16(1)(b) of the 1996 Act, which provides that even if the Arbitral Tribunal concludes that the contract is null and void, it should not result, as a matter of law, in an automatic invalidation of the arbitration clause. It was also held that Section 16(1)(a) of the 1996 Act presumes the existence of a valid arbitration clause and mandates the same to be treated as an agreement independent of the other terms of the contract. By virtue of Section 16(1)(b) of the 1996 Act, the arbitration clause continues to be enforceable, notwithstanding a declaration that the contract was null and void.”

This extract is taken from Enercon (India) Ltd. v. Enercon Gmbh, (2014) 5 SCC 1 : (2014) 3 SCC (Civ) 59 : 2014 SCC OnLine SC 129 at page 39

86. In view of the aforesaid, we are not inclined to accept the submission of Mr Nariman that arbitration agreement will perish as the IPLA has not been finalised.”

14. In Enercon GMBH & Anr. (supra), the parties therein had raised the issue that, since the underlying contract was yet to be finalized, the arbitration agreement will perish. Such contention has not been accepted as will appear from paragraph 86 of the report.

15. The principle of separability has been applied in World Sport Group (Mauritius) Ltd. (supra). It has held as follows :-

“30. The House of Lords has explained this principle of separability in Fili Shipping Co. Ltd. v. Premium Nafta Products Ltd. [2007 Bus LR 1719 : 2007 UKHL 40 (HL)] thus: “17. The principle of separability enacted in Section 7 means that the invalidity or rescission of the main contract does not necessarily entail the invalidity or rescission of the arbitration agreement. The arbitration agreement must be treated as a ‘distinct agreement’ and can be void or voidable only on grounds which relate directly to the arbitration agreement. Of course there may be cases in which the ground upon which the main agreement is invalid is identical with the ground upon which the arbitration agreement is invalid. For example, if the main agreement and the arbitration agreement are contained in the same document and one of the parties claims that he never agreed to anything in the document and that his signature was forged, that will be an attack on the validity of the arbitration agreement. But the ground of attack is not that the main agreement was invalid. It is that the signature to the arbitration agreement, as a ‘distinct agreement’, was forged. Similarly, if a party alleges that someone who purported to sign as agent on his behalf had no authority whatever to conclude any agreement on his behalf, that is an attack on both the main agreement and the arbitration agreement.

18. On the other hand, if (as in this case) the allegation is that the agent exceeded his authority by entering into a main agreement in terms which were not authorised or for improper reasons, that is not necessarily an attack on the arbitration agreement. It would have to be shown that whatever the terms of the main agreement or the reasons for which the agent concluded it, he would have had no authority to enter into an arbitration agreement. Even if the allegation is that there was no concluded agreement (for example, that terms of the main agreement remained to be agreed) that is not necessarily an attack on the arbitration agreement. If the arbitration clause has been agreed, the parties will be presumed to have intended the question of whether there was a concluded main agreement to be decided by arbitration.

16. The parties have relied upon Sections 44 and 45 of the Arbitration and Conciliation Act, 1996 which are as follows :-

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 applies.

45. Power of judicial authority to refer parties to arbitration – Notwithstanding anything contained in Part I or in the Code of Civil Procedure, 1908 (V of 1908), a judicial authority, when 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 prima facie finds that the said agreement is null and void, inoperative or incapable of being performed.”

17. Enercon GMBH & Anr. (supra), World Sport Group (Mauritius) Ltd. (supra) and Sasan Power Limited (supra) have considered Section 45 of the Arbitration and Conciliation Act, 1996. In Enercon GMBH & Anr. (supra), the Supreme Court has held that a Court can decline to make a reference to arbitration in case it finds that the arbitration agreement is null and void, inoperative or incapable of being performed. In the facts of that case, the Supreme Court has held that, there were no pleadings to such effect in the plaint.

18. World Sport Group (Mauritius) Ltd. (supra) has held as follows :-

“33. Mr Gopal Subramanium’s contention, however, is alsothat the arbitration agreement was inoperative or incapable of being performed as allegations of fraud could be enquired into by the court and not by the arbitrator. The authorities on the meaning of the words “inoperative or incapable of being performed” do not support this contention of Mr Subramanium. The words “inoperative or incapable of being performed” in Section 45 of the Act have been taken from Article II(3) of the New York Convention as set out in para 27 of this judgment. Redfern and Hunter on International Arbitration (5th Edn.) published by the Oxford University Press has explained the meaning of these words “inoperative or incapable of being performed” used in the New York Convention at p. 148, thus:

“At first sight it is difficult to see a distinction between the terms ‘inoperative’ and ‘incapable of being performed’. However, an arbitration clause is inoperative where it has ceased to have effect as a result, for example, of a failure by the parties to comply with a time-limit, or where the parties have by their conduct impliedly revoked the arbitration agreement. By contrast, the expression ‘incapable of being performed’ appears to refer to more practical aspects of the prospective arbitration proceedings. It applies, for example, if for some reason it is impossible to establish the arbitral tribunal.

34. Albert Jan Van Den Berg in an article titled “The New York Convention, 1958 — An Overview” published in the website of ICCA (www.arbitrationicca.org/media/0/12125884227980/new_york_convention_ of-1958_overview.pdf), referring to Article II(3) of the New York Convention, states:

“The words ‘null and void’ may be interpreted as referring to those cases where the arbitration agreement is affected by some invalidity right from the beginning, such as lack of consent due to misrepresentation, duress, fraud or undue influence.

The word ‘inoperative’ can be said to cover those cases where the arbitration agreement has ceased to have effect, such as revocation by the parties.

The words ‘incapable of being performed’ would seem to apply to those cases where the arbitration cannot be effectively set into motion. This may happen where the arbitration clause is too vaguely worded, or other terms of the contract contradict the parties’ intention to arbitrate, as in the case of the so-called co-equal forum selection clauses. Even in these cases, the courts interpret the contract provisions in favour of arbitration.”

35. The book Recognition and Conferment of Foreign Arbitral Awards: A Global Commentary on the New York Convention by Kronke, Nacimiento, et al.(ed.) (2010) at p. 82 says:

“Most authorities hold that the same schools of thought and approaches regarding the term null and void also apply to the terms inoperative and incapable of being performed. Consequently, the majority of authorities do not interpret these terms uniformly, resulting in an unfortunate lack of uniformity. With that caveat, we shall give an overview of typical examples where arbitration agreements were held to be (or not to be) inoperative or incapable of being performed. The terms inoperative refers to cases where the arbitration agreement has ceased to have effect by the time the court is asked to refer the parties to arbitration. For example, the arbitration agreement ceases to have effect if there has already been an arbitral award or a court decision with res judicata effect concerning the same subject-matter and parties. However, the mere existence of multiple proceedings is not sufficient to render the arbitration agreement inoperative. Additionally, the arbitration agreement can cease to have effect if the time-limit for initiating the arbitration or rendering the award has expired, provided that it was the parties’ intent no longer to be bound by the arbitration agreement due to the expiration of this time-limit.

Finally, several authorities have held that the arbitration agreement ceases to have effect if the parties waive arbitration. There are many possible ways of waiving a right to arbitrate. Most commonly, a party will waive the right to arbitrate if, in a court proceeding, it fails to properly invoke the arbitration agreement or if it actively pursues claims covered by the arbitration agreement.”

19. In World Sport Group (Mauritius) Ltd. (supra), the Supreme Court has held that, in view of the provisions of Section 45 of the Act of 1996, the Court is required to consider whether the arbitration agreement was null and void, inoperative or incapable of being performed.

20. The Supreme Court has also considered the scope and extent of Section 45 of the Act of 1996 in Sasan Power Limited (supra) and held as follows :-

“49. In our opinion, the scope of enquiry (even) under Section 45 is confined only to the question whether the arbitration agreement is “null and void, inoperative or incapable of being performed” but not the legality and validity of the substantive contract.

………..

81. Mere reading of Section 45 would go to show that the use of the words “shall” and “refer the parties to arbitration” in the section makes it legally obligatory on the court to refer the parties to the arbitration once it finds that the agreement in question is neither null and void nor inoperative and nor incapable of being performed. In other words, once it is found that the agreement in question is a legal and valid agreement, which is capable of being performed by the parties to the suit, the court has no discretion but to pass an order by referring the parties to the arbitration in terms of the agreement.

21. Powers to grant injunctions in a suit are governed by the provisions of Order XXXIX Rules 1 and 2 of the Code of Civil Procedure, 1908. Such provisions require the plaintiff to establish a prima facie case to go to trial, the balance of convenience to be in favour of the plaintiff in granting the interim order of injunction and that, irreparable injury will be suffered by the plaintiff in the event of non grant of the order of injunction. The plaintiff must establish all of the above three conditions for the Court to grant an order of injunction in favour of the plaintiff in a suit. By prima facie case, one understands a substantial question of law or fact raised by the plaintiff bona fide and which such substantial question requires investigation and a decision. Provisions of Order XXXIX Rules 1 and 2 of the Code of Civil Procedure, 1908 are not stand alone provisions and are to be read in conjunction with other laws applicable to the facts scenario of each case. For example, the Court may be required to consider the provisions of the Specific Relief Act, 1963 in a given case, so as to find out whether the plaintiff satisfies the three test for grant of an injunction or whether grant of injunction is prohibited by statute. Again as and by way of an example, under Section 41(c) of the Act of 1963 an injunction cannot be granted to restrain any person from applying to any legislative body. In a case where, the Court is considering grant of injunction against a bank guarantee, judicial authorities have held that, unless the plaintiff establishes fraud of egregious nature affecting the contract of bank guarantee, and the plaintiff establishing that it will suffer irretrievable injury in the event of non grant of an order of injunction, the Courts are not to grant an order of injunction on the invocation of a bank guarantee. The parameters for consideration of grant of interim injunction in a suit therefore, transmutes in accordance with the fact scenario and the laws attracted.

22. In the facts of the present case, there is no dispute that, Section 45 of the Act of 1996 stands attracted in the event, there is an arbitration agreement. According to the plaintiff, the parties did not enter into the underlying contract containing the arbitration agreement for a valid arbitration agreement to come into being. The plaintiff has not contended that, should the arbitration agreement be considered valid, then, also the provisions of Section 45 would not be attracted.

23. Section 45 of the Act of 1996, has stipulated that, the Court must have an agreement referred to in Section 44 of the Act of 1996 before it and there must be a request by one of the parties or a person claiming through one of the parties to such international commercial agreement referred to in Section 44 of the Act of 1996 to refer the disputes to arbitration. Once the Court has an arbitration agreement governed by Section 44 of the Act of 1996 and a party to such arbitration agreement or a person claiming under such party to the international commercial arbitration agreement applies, then the Court has to return a prima facie finding as to whether the arbitration agreement is null and void or inoperative or incapable of being performed.

24. The finding of the Court under Section 45 of the Act of 1956 so far as the issue as to whether an agreement referred to in Section 44 of the Act of 1996 has been placed before it or not is a prima facie finding. In other words, the Court has to return a prima facie finding as to whether the parties before it are governed by an agreement contemplated under Section 44 of the Act of 1996 or not. This prima facie finding is akin to one rendered under Section 11 of the Act of 1996. The Court exercising powers under Section 45 of the Act of 1996 while deciding the issue whether or not to refer the parties to arbitration, is not called upon to return a final finding as to the existence of an arbitration agreement within the meaning of Section 44 of the Act of 1996. Once arriving at the prima facie as to the existence of the arbitration agreement the Court will embark on the duty to return a prima facie finding as to whether the arbitration agreement is null and void, inoperative or incapable of being performed.

25. In an anti arbitration suit, that is to say, in a suit where the plaintiff has sought an injunction on institution or continuance of an arbitration governed by an arbitration agreement within the meaning of Section 44 of the Act of 1996, the plaintiff will succeed to make out a prima facie case for grant of interim injunction if the plaintiff has established, again prima facie, that, the arbitration agreement is null and void, inoperative or incapable of being performed. This requirement is enjoined by Section 45 of the Act of 1996 notwithstanding the defendant in the suit not applying under Section 45 of the Act of 1996 to refer the parties to arbitration. This requirement however will stand obviated on the parties to the arbitration agreement relinquishing the arbitration agreement.

26. The arbitration agreement contained in Clause 21 of the document which the first defendant has claimed to be an agreement for arbitration and which the plaintiff has denied to be so, is wide enough to encompass within its fold any question regarding the existence, validity or termination of the document in question. The parties had been transacting with each other for a considerable period of time. That is the plaint case of the plaintiff. The plaintiff has not disputed the arbitration agreement contemporaneously. The plaintiff has pleaded in paragraphs 10 and 14 of the plaint that, the plaintiff had executed a document forwarded by the first defendant on the basis of faith and trust even though negotiations were incomplete. The existence and validity of the contract, if there be any, is an arbitrable dispute between the parties, given the nature of the arbitration agreement between the parties.

27. The electronic mails exchanged between the parties contemporaneously suggest that, the plaintiff had grievances with regard to one or two clauses of the contract. The plaintiff had never denied the arbitration agreement nor questioned the same contemporaneously.

28. By an electronic mail dated February 29, 2020, the first defendant had forwarded to the plaintiff a draft contract for supply of coal of South African origin for the signature and acceptance of the first defendant. Apparently, the parties had negotiations over some of the terms of the contract as forwarded by the first defendant to the plaintiff on February 29, 2020. The plaintiff had forwarded to the first defendant a draft contract on March 3, 2020. The plaintiff had highlighted few issues and requested the first defendant to execute such contract. By an electronic mail dated March 6, 2020, the first defendant had forwarded the final version of the contract to the plaintiff. By a subsequent electronic mail dated March 6, 2020, the first defendant called upon the plaintiff to sign the contract in order to hedge AP 14. The plaintiff by an electronic mail dated March 6, 2020 forwarded a contract signed by it. It had incorporated certain clauses in the contract which were at variance to the one sent by the first defendant to the plaintiff on the same day earlier. The parties however had no dispute with regard to the arbitration clause. By an electronic mail dated March 19, 2020, the first defendant informed the plaintiff that the first defendant had considered the electronic mail of the plaintiff, noted the numbers on the freight and proceeded on the basis of the same. By an electronic mail dated March 12, 2020, the plaintiff had called upon the first defendant to send the counter signed contract. By an electronic mail dated March 16, 2020, the first defendant had forwarded the counter signed contract to the plaintiff. The contract signed by the plaintiff and sent for the signature of the first defendant under the electronic mail dated March 6, 2020 of the plaintiff contains the same arbitration clause as that of the contract counter signed by the first defendant and sent to the plaintiff under the cover of the electronic mail dated March 16, 2020.

29. The first defendant had issued an electronic mail dated April 20, 2020 which the first defendant had termed as a final notice. By such electronic mail, the defendant had put the plaintiff on notice that in the event the plaintiff failed to open a fully workable letter of credit in terms of the deadlines stipulated in such notice, the first defendant shall terminate the contract without any further notice to the plaintiff and shall claim all damages, costs and expenses arising out of the non performance of the contract by the plaintiff. Despite the plaintiff having had received such final notice, the plaintiff did not respond thereto. At least there is no material on record to suggest that the plaintiff had responded to the final notice dated April 20, 2020 before April 22, 2020.

30. By an electronic mail dated April 22, 2020, the first defendant had issued a notice of termination. The first defendant had referred to the contract arrived at. In terminating the contract, the first defendant had relied upon Clause 20 of the contract dealing with the termination of the contract. In response thereto, the plaintiff had, by an electronic mail dated April 22, 2020 referred to the final notice dated April 20, 2020 as also to the termination notice. The plaintiff as the buyer had denied the allegation of non performance of the contractual liability arising out of the subject contract. The plaintiff had gone on to claim damages, cost and expenses suffered and likely to be suffered by the plaintiff due to the actions of the first defendant arising out of the subject contract. Both in the pleadings as also in the contemporaneous correspondence including the electronic mail dated April 22, 2020 the plaintiff had referred to the contract as “the subject contract”. The plaintiff had contemporaneously accepted that the plaintiff entered into a contract with first defendant. At least the plaintiff had accepted the existence of a jural relationship between it and the first defendant. In fact, the materials placed on record permits the prima facie view that there was a contract between the plaintiff and the first defendant and that can be garnered out of the pleadings and the correspondence exchanged between the parties.

31. In Enercon GMBH & Anr. (supra) the Supreme Court did not accept the contention that the arbitration agreement will perish as the underlying contract was not finalised. Applying the ratio laid down therein to the facts of the present case therefore, the arbitration agreement cannot be said to have perished even though, the plaintiff has contended that, the underlying contract between the parties has not been finalised. The parties have admitted that, should the Court come to the finding that the parties had entered into the arbitration agreement quoted above, then, such arbitration agreement is an international commercial arbitration and fulfils the parameters of Section 44 of the Act of 1996.

32. In order to obtain an interim order of injunction restraining the international commercial arbitration, the plaintiff has to establish, inter alia, a prima facie case. In the facts of the present case, as discussed above, since the plaintiff has not established at least prima facie that, there was no arbitration agreement between the plaintiff and the first defendant, the plaintiff has failed to make out a prima facie case for grant of an interim order of injunction restraining the international commercial arbitration. Moreover, the plaintiff has not pleaded nor advanced any submissions on the ground that, the arbitration agreement is null and void, inoperative or incapable of being performed.

33. On the score of balance of convenience and inconvenience, as also irreparable injury, the facts scenario obtaining in the present case favours the first defendant. Under the provisions of the Act of 1996, Courts are required to be slow in interfering with the process of arbitration. Courts are required to allow the parties to an arbitration agreement to have recourse to such arbitration agreement, have their disputes settled through the chosen forum and be minimal in interfering with such process.

34. Orissa Stevedores Limited (supra) has considered a petition under Section 11 of the Act of 1996. In the facts of that case, the Court had arrived at the conclusion that the parties did not enter into a contract containing an arbitration agreement. The facts obtaining in the present case are different.

35. Uttarakhand Purv Sainik Kalyan Nigam Limited (supra) has discussed the doctrine of “kompetenz-kompetenz”. It has held as follows :-

7.11. The doctrine of “kompetenz-kompetenz”, also referred to as “compétence-compétence”, or “compétence de la recognized”, implies that the Arbitral Tribunal is empowered and has the competence to rule on its own jurisdiction, including determining all jurisdictional issues, and the existence or validity of the arbitration agreement. This doctrine is intended to minimise judicial intervention, so that the arbitral process is not thwarted at the threshold, when a preliminary objection is raised by one of the parties. The doctrine of kompetenz-kompetenz is, however, subject to the exception i.e. when the arbitration agreement itself is impeached as being procured by fraud or deception. This exception would also apply to cases where the parties in the process of negotiation, may have entered into a draft agreement as an antecedent step prior to executing the final contract. The draft agreement would be a mere proposal to arbitrate, and not an unequivocal acceptance of the terms of the agreement. Section 7 of the Contract Act, 1872 requires the acceptance of a contract to be absolute and unqualified [Dresser Rand S.A. v. Bindal Agro Chem Ltd., (2006) 1 SCC 751. See also BSNL v. Telephone Cables Ltd., (2010) 5 SCC 213 : (2010) 2 SCC (Civ) 352. Refer to PSA Mumbai Investments Pte. Ltd. v. Jawaharlal Nehru Port Trust, (2018) 10 SCC 525 : (2019) 1 SCC (Civ) 1] . If an arbitration agreement is not valid or non-existent, the Arbitral Tribunal cannot assume jurisdiction to adjudicate upon the disputes. Appointment of an arbitrator may be refused if the arbitration agreement is not in writing, or the disputes are beyond the scope of the arbitration agreement. Article V(1)(a) of the New York Convention states that recognition and enforcement of an award may be refused if the arbitration agreement “is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made”.

36. In the facts of the present case, since one can take a prima facie view that the parties entered into the arbitration agreement, and the exception to the doctrine of “kompetenz-kompetenz” is not attracted as the plaintiff has not made out a case of the arbitration being procured by fraud or deception, it would be appropriate not to interject the arbitration proceeding.

37. Vedanta Ltd. (supra) has considered a suit for breach of contract and damages. In the facts of that case, the Court had come to the finding that there was no concluded contract between the parties. Again the facts scenario obtaining in the present case are different.

38. In Devinder Kumar Gupta & Ors. (supra), an order of the learned Single Judge holding that the Court cannot enter into the controversy concerning the existence or validity of the arbitration clause invoked by one of the parties nor can it issue an injunction restraining that party from continuing with the arbitration proceedings had been under challenge. On consideration of the authorities then obtaining, the appeal had been dismissed thereby affirming the judgment and order of the learned Single Judge refusing to interfere with the arbitration.

39. In Dresser Rand S.A. (supra), the Supreme Court has considered a suit for declaration that no arbitration agreement existed between the parties and for consequential injunction restraining the arbitration proceedings. The Supreme Court had considered the suit in light of the provisions of Section 3 of the Foreign Awards (Recognition and Enforcement) Act, 1961. The Act of 1961 has been repealed under Section 85 of the Act of 1996. The parties herein are governed by the provisions of the Act of 1996.

40. In view of the discussions above, the applications filed on behalf of the plaintiff fails. IA No. GA 1 of 2020 and IA No. GA 3 of2020 are dismissed without any order as to costs. The application of the first defendant being IA No. GA 2 of 2020 is allowed. There will be an order in terms of prayer (a) of such petition of the first defendant. No order as to costs.

[DEBANGSU BASAK, J.]

Later :

Learned Advocate for the plaintiff has prayed for stay of operation of the judgment and order.

Such prayer has been considered and rejected.

[DEBANGSU BASAK, J.]