Judgment KRISHNA IYER, J. - Commercial causes, we may observe prolegomenary fashion should, as far as possible, be adjusted by non-litigative mechanisms of dispute-resolution since forensic processes, dilatory and contentious, hamper the flow of trade and harm bothsides, whoever wins or loses the lis. That is why arbitration is often prudently resorted to when controversies erupt in the course of business dealings. But when basic differences spring up as to which is the arbitration clause that governs, in a plurality of contracts or several steps in evolving a final contract but containing divergent arbitral provisions, the Court comes into the picture, willy nilly. Even so, having regard to the larger interests of justice, and exercise in pre-trial settlement, consistent with judicial non-alignment, is desirable, and so we had suggested to counsel, at an earlier hearing, to bring the parties together on the limited question of the arbitral locus and law, but, notwithstanding genuine efforts by counsel, and perhaps due to substantial factors wighing with the parties, the effort proved fruitless. A legal adjudication may be flawless but heartless but a negotiated settlement will be satisfying, even if it departs from strict law. The respondents counsel stated that his client -m a foreign State trading Organization was rather keen - and this may well be true on getrting the law declared by his court for future guidance and so we proceed to narrate the litigative story and cut the legal knot for the benfit of both sides. Since the subject-matter relates to the sensitive area of foreign trade we still hope the dispute, even after our pronouncement, will be dissolved and goodwill andbusiness dealings revived between the parties to their mutual benefit. 2. The drmatis personae or legal actyors in this action are an engineering firm in India (the appellant) and a Hugarian state undertaking doing export-import trade with other countries in machinery ( the respondent) and the contest relates to the competency of the appellant to refer a dispute regarding purchase of two Hungarian Counterblows (machinery). The Indian went to Buidapest to try and buy Hungarian machinery and the negotiations fructified as the minutes of April 2, 1970, drawn up of the broadarrangement between the parties, disclose. Having been followed up by formal deeds, these minutes mark the beginning of and serve as setting tobut not in themselves constitutive of complete cntracts. The Indian went to Buidapest to try and buy Hungarian machinery and the negotiations fructified as the minutes of April 2, 1970, drawn up of the broadarrangement between the parties, disclose. Having been followed up by formal deeds, these minutes mark the beginning of and serve as setting tobut not in themselves constitutive of complete cntracts. A significant dichotomy which characterises these minutes cannot be missed, though resisted by counselfor the respondent. The first part relates to the appellant, being exclusively chosen to represent the respondent in the sales of their manufactures in certain specifiedates in India. The second part is devoted to purchase of two specific items of machinery plus provsion for a third to be concretised later. This duality analysis may be driven home byreading the text of the minutes here: MINUTES "Drawn in Budapest on the 2nd April, 1970, Present......... 1. Technoimpex grants the right of exclusive representation to the Agarwal Engineering Co. to act as its sole agent in the territories of West Bengal, Bihar and Orissa. It will be decided at a later date whether the representation agreement will be extended to the State of Assam. 2. The detailed text of the agreement will be air-mailed until the 7th April 1970. 3. A letter in duplicate addressed to STC with the request to issue a stock and tale licence in a avalue of 2 Million rupees will be sent to the Hungarian Trade Commissioner in Calcutta who hands over t to M/s Agarwal Engineering Co., after signing the agency agreement. 4. Detailed pro forma invoices in six copies will be sent with the agreement and catalogus at least siz copies. 5. It has been agreed that Techno impex supplies and the Agarwal Engineering companu immediately places the order for the following machines: One counterblow Hammer Type EK gross C & F Price Rs. 1,000.000 One counterblow Hammer Type EK-13A Rs. 522.596 Other machines in a value of Rs. 300.000 6. Technoimpex grants a special introduction discount of 10% in the free Hungarian border prices i.e., on EK --- 25 Rs. 915.550 EK --- 13A Rs. 466.200 and of 5 % in the free Hungarian border prices of the other machine as per price list handed over to the Agarwal Engineering Company. 7. 300.000 6. Technoimpex grants a special introduction discount of 10% in the free Hungarian border prices i.e., on EK --- 25 Rs. 915.550 EK --- 13A Rs. 466.200 and of 5 % in the free Hungarian border prices of the other machine as per price list handed over to the Agarwal Engineering Company. 7. Payment conditions of counter-blow hammer type EK 25 would be: 25" throgh irrevocable L/C sto be opened 30 days before the date of despatch. 75% in 3 years in6 equal instalments for which 6% interest will be charged extra. The EK 13A counter blow hammer will be paid 25% through irrevocable L/C tobe opened 30 days before tre date of despatch. 75% 12 months credit to be paid in two equal instalments for which 6% interest will be charged extra. Other machine types will be supplied at 6 months credit and 65 interest will be charged p.a. The gurantee of a first class bank should be sent with the order to cover the credits granted. The cridit is reckoned from the date f B/L. In case of cash payment no interest will be charged. 8. The machines mentioned in these minutes canbe sold only in the territories enumerated under S.I. by M/s Agarwal Delivery terms: Counterblow Hammer Type EK-25 16th October 1970 Counterblow Hammer Type EK-13-A 15th October 1970 Budapest, 2nd April 1970 On behalf of Agarwal Co. On behalf of Technoimpex." 3. The first four clauses focus on the exclusive representation rights while the last four specificate the agreed terms for purchase of two items of machinery, such as the price, introduction discount, conditions of payment and the like. The former speek of what is proposed to be done, to be set down in an agreement to be despatched on or before April 6, 1970. The letter, now and here, spell out the essential contents of two contracts of purchase of two Counterblows Hammer Type - one EK-25 and the other EK-13A. In keeping with this legal dialysis we find on the same date, i.e., April 2, 1970, two formal contracts relating to the sale of the Counterblows. These run virtually on the same lines and set out the terms of the two sales, one of the common terms whereof engrafts an arbitration clause (Clause 8) which reads: "8. In keeping with this legal dialysis we find on the same date, i.e., April 2, 1970, two formal contracts relating to the sale of the Counterblows. These run virtually on the same lines and set out the terms of the two sales, one of the common terms whereof engrafts an arbitration clause (Clause 8) which reads: "8. All matters, questions, disputes, differences and/or claims arising out of and/or concering and/or in connection with and/or in consequence of or relating to the contract whether or not the obligations of eithr or both parties under this contract be subsisting at the time of such dispute and whether or not this contract has been terminated or purported to be terminated or completed shall be subject ot the jurisdiction of Calcutta High Court only and shall be referred to the jurisdiction of Calcutta High Court only and shall be referred to the arbitration of the Bharat Chamber of Commerce under the rules of its Tribunal of Arbitration for the time being in force and according to such rules the arbitration shall be conducted." 4. We have stated at the outset the minutes (Annexure A) envisioned the appointmentof the appellant firm as sales representatives of the respondent exporters and this project isgiven concrete form in the shape of an agreement dated april 6, 1970 (Annexure C, p. 86). It is not in dispute that this by acceptance, ripened nto a contract with detailed terms and conditions one of which is an arbitration clase (C1. 14). It is substantially different from the earlier one. We may set it out without comment since it is patent and uncontested hat the two arbitral provisions diverge on the fori of decision, the composition of the arbitrators as well as the substantive and precessual laws to be applied. Briefly, the bone of contention between the parties is the bare question of which the two incompatible arbitration projects governs the dispute about the sale of the two machines mentioned in annexures B1 and B2. For these were forwarded by sea, one to Calcutta and the other to Bombay, but according to to the appellants the goods delivered did not accord with the bargain and the contract had been breached by the sellers. 5. For these were forwarded by sea, one to Calcutta and the other to Bombay, but according to to the appellants the goods delivered did not accord with the bargain and the contract had been breached by the sellers. 5. This controversy erupted in two poceedings, one at the instance of the appellant under S. 41 of the Arbitration Act and the other, instituted by the respondent, under section 33 of that Act. The former failed and the latter succeeded and from this adverse order the appellant has arrived, under special leave, to challenge its correctness. 6. The High Court has set out the details of the two proceedings but the crux of the matter turns on one material x x x issue. Did the second contract (Annexure C) supersede the earlier contract (Annexures B1 and B2) so that by novation the first contract, and together with the arbitration clause persished and could not be availed of by the appellant? If Annexures B1 and B2 as well as Annexure C, related to independent subject-matters and could co-exist without the latter superseding the earlier, the appellant would succeed in the appeal. On the contrary, if Annexure C took in its wings the contract relating to the sale of the two items of machinery, the minutes (Annexure A) being the basis, the documents Annexures B1 and B2 steps towards the culmination of the contract which found expression in Annexure C - as argued by Shri Sachin Chaudhri on behalf of the respondent the, may be the terms for the purpose of reference to arbitration would have to be sought in Annexure C and not in the earlier contracts. Shri Sachin Choudharys position also is that no case of novation arises because there has been no contract arrived at under Annexures B1 and B2, the real and the only contract being Annexure C. 7. A study of the relevant clauses, taking a conspectus of the triple stages, may take us to a sound solution of the legal problem. The minutes, Annexure A has been scanned by us earlier. Even so, an insightful scrutiny may be helpful in unlocking the problem confronting us. Annexure A was drawn up in Budapest where both the parties were present. The minutes, Annexure A has been scanned by us earlier. Even so, an insightful scrutiny may be helpful in unlocking the problem confronting us. Annexure A was drawn up in Budapest where both the parties were present. Clause (1) grants a right of exclusive representation to the appellant by the representation to the appellant by the respondent to the appellant by the respondent to act as its sole gent in the territories of West Bengal, Bihar and Orissa. The very next clause state that the detailed text of the agreement will be air-mailed until the 7th April 1970. Clauses 3 and 4 are mainly in furtherance of the agency agreement. What is important to notice is that the agreement to be concluded as per Clause 2 related to the right of exclusive representation. 8. Then we start off with Cl.5 onwards. This fasciculus of clauses is devoted to the immediate purchase of Counterblow Hammer Type (EK 25 and EK-13A) machines. Contextually and discerningly read, Cl.5 deals with the appellant agreeing immediately to place an order for three machines two of which we have just referred and the the third was not to be bought right away but only later, although its price was indicated in Clause 5. Since the parties were beginning a busines relationship which was expected to be enduring, the respondent granted a special introduction discount of 10% on EK-25 and EK-13A and 5% on the other machine which was the third item in Clause 5. 9. Clause 7speaks of the payment conditions and gives detals. Clause 8 puts a condition on the area in which the machines purchased as per Clause 5 are to be sold. The terms of delivery, especially the time of delivery, are also set out in cl. 8 of the minutes. It follows that the contention of shri sachin Chaudhri that Annexure c is one integral document and to dichotomise it as shri Tarkunde, counsel for the appellant did, is to do injury to the consensus of the parties is unacceptable. Actually there was to be a principal to principal relatioship established between the parties and, to start with, there was to be an immediate purchase of two or three items, forthwith, the terms whereof were generally set down. Actually there was to be a principal to principal relatioship established between the parties and, to start with, there was to be an immediate purchase of two or three items, forthwith, the terms whereof were generally set down. It is apparent that two machines had been agreed to be sold and to give effect to this agreement referred to in Clauses 5 to 8 of annexure a, two orders, eachindependent, viz., Annexures B1 and B2 were executed between the parties on the same date, viz., April 2, 1970. The seller and the buyer had already settled the terms of the sale so it was though they could and did execute specific contracts in regard to the two machines. The terms and conditions of these two sales were identical and were printed on the back of the order/indent. Moreover, almost every detail of the manner of despactch, the manner of packing, the pre-payment of freight, the time for despatch and the manner of drawing up the invoice and many oher particulars including full literature, drawings, instructions covering the supply and insurance policy covering comprehensive risks was written into Annexures B1 and B2. It was also indicated that part delivery would not be accepted and that the destination was Calcutta/Indian port/ 10. The terms and conditions printed over leaf again ran into further details. But what is most significant is the very first condition which states: "This order shall be the sole repository of the transaction and the terms and conditions mentiond herein shall not apply" (empahsis added). Thus the nidus of the terms and conditions governing the contract regarding the purchase the two machines was annexures B1 and B2. If the exclusive repository of the terms of the transaction was Annexure B1 (and B2), we could sensibly infer that the purchase of the machinery EK25 and EK 13a was covered by this complete deed and there was no justification for travelling beyond it to ascertain the intention of the parties connected with the bargainrelating to the sale of the to machines. Prima facie, therefore, the parties were bound to abide by the arbitration clauses, contained in condition 8 of annexures B1-1 and B-2. Prima facie, therefore, the parties were bound to abide by the arbitration clauses, contained in condition 8 of annexures B1-1 and B-2. Indeed, Clause 9 made the supplier responsible for all consequences by virtue of fines etc." arising from wrong shipment of goods and it was also clearly stated that the prices mentioned in this order were firm and that they would not be altered even after any gold price variation unless otherwise specifically mentioned therein. In one sense, therefore, the totality of the terms concerning the sale of the two machines had been documented in annexures B-1 and B-2. Such a concluded contract could cease to be operative ordinarily only by performance or novation or in any other manner knowno the law of contract. In the present case the dispute was regardig whether there had been proper perfomance, and this dispute was sought to be referred to the Bharat Chamber of Commerce as envisaged in clause 8 of annexures B1 and B2. Such a proceeding would be valid, unless, as was conteded by shri sachin chaudhri, annexure c extinguished annexures B1 and B2 so that a substitutuion or novation took place. Of course, it is fair to state that Shri sachin Choudhry drew our attention certain details and minor differences between annexure B series and Annexure C, which, in our vies, are but frills and do not affect the core contention. 11. We may, in this view, have to examine the provisions in Annexure C and their effect upon annexures B1 and B2. The competing clauses - rather, the rival versons - from their relevance to the question posed above, may be looked into at this stage. Clause 9i0 significantly self-evident: "Sellers hereby appoint buyers as sole buyers of their machine tools of all kinds,...... on the terms and conditions here inafter mentioned and the buyers hereby accept such appointment on such terms and conditions." The whole clause clearly devotes itself to the appointment of the appellant as sole buyers from the respondent. The emphasis on hereby and hereinafter mentioned postulated that while the minutes Annexure a projected the proposal for appointing the appellants as exclusive agents it was only under annexure C, dated April 6, 1970,the actual scheme was to come into force on acceptance, and not from any anterior date. Clauses (2) and (3) do not relate to the sales representatives part of the contract. Clauses (2) and (3) do not relate to the sales representatives part of the contract. Clause (4) continues the same idea and spells out the terms of the sale. It is noteworthy that there is no special introduction discount provided for in annexure c in contrast to such a provision in Annexures B1 and B2 . The likely inference is not that the said discount is withdrawn but that annexure C does not deal with those two sales (covered by annexures B1 and B2). 12. Likewishe, the terms of payment mention in clause 5 are such as are to be arranged from time to time while Annexures B1 and B2 specify the terms of payment so far as the two machines covered by them were concerned. The subsequent clauses (6) to (11) deal with kindred matters of sales agency. Clause 12, captioned duration of agreement states that this agreement is valid from after the 7th of April 1970 till 31st December, 1970 ...... The two machines with which we are concerned in this appeal were agreed to be purchased, as it were, on April 2, 1970, under Annexures B1 and B2 but Annexure C became operative only in regard to transactions from after April 7, 1970. Indeed, these terms cannot be given retroactive effect since Clause 13 expressly states that this agreement enters into force when both parties have signed it. 13. Clauses 15, 16 and 17 are also not germane to the purchase of the two machines but, in the background we have traced, Cl.14 has to be decoded. That clause, as already mentioned, is a new arbitration clause, substantially different from the one contained in Annexures B1 and B2. The question is: Can the arbitration provision in Clause 14 have retroactive effect to bind sales effected on April 2, 1970 especially when such a contention runs in the teeth of Cl.13 which directs that Annexure C shall enter into force only when both parties have signed it, which event obviously took place only on or after April 6, 1970? 14. The analysis of Annexures A to C which we have made, leads only to one conclusion, viz., that Annexure B1 and B2 are self-contained and constitute a separate contract-set, and that they exclusively relate to the terms of purchase of EK 25 and EK 13A. Annexure C is futuristic and relates to sales agency and later purchases. 14. The analysis of Annexures A to C which we have made, leads only to one conclusion, viz., that Annexure B1 and B2 are self-contained and constitute a separate contract-set, and that they exclusively relate to the terms of purchase of EK 25 and EK 13A. Annexure C is futuristic and relates to sales agency and later purchases. The arbitration clause that governs the sales of the two items of machinery in these proceedings is Clause 8 in Annexures B1 and B2. This necessarily means that the dispute between the parties may be completely arbitrated by the Arbitration Tribunal of Bharat Chamber of Commerce. 15. The High Court has taken a contrary view, ignoring the effect of Annexures B1 and B2 and over-emphasising, indeed misreading, the minutes of April 2, 1970 and the deed of April 6, 1970. These two formal contracts (B1 and B2) have been dismissed not by argument but by assertion: "In my view, the placing of the order by the Standard Printed indent/order form of the respondent with the petitioner for the supply of the said two machines can only be in pursuance of the said parent agency agreement which was arrived at between the parties in the meeting dated the 2nd of April, 1970 and the details were of which was formally recorded in the document dated 6th of April, 1976. The party never intended that the said order/indent placed by the respondent with the pertitioner would be an independent and separate agreement as now sought to be contended by Mr. Bhabra on behalf of the respondent." How the learned Judge reaches the conclusion that the arbitration clause in B1 and B2 is inoperative beats our comprehension. "Further, from the minutes of the meeting dated the 2nd of April, 1970 and the document dated the 6th of April, 1970, it is made quite clear that the parties intended to have transaction only on the basis of the forms which were fully set out in the document dated the 6th of April 1970. "Further, from the minutes of the meeting dated the 2nd of April, 1970 and the document dated the 6th of April, 1970, it is made quite clear that the parties intended to have transaction only on the basis of the forms which were fully set out in the document dated the 6th of April 1970. Therefore, the arbitration clause in the said document dated the 6th April, 1970, is the one which is operative and binding between the parties and the arbitration clause in the Standard Printed Indent/Order Form of the respondent has no effect as the said order was formally placed in pursuance to the agency agreement arrived at between the parties as recorded in the minutes of the meeting dated the 2nd of April, 1970." 16. Once we grasp the scenario of events and execution of documents and give full effect and intelligible co-ordination to the various documents it becomes clear that there is no sequitur in the High Courts reasoning. Nor are we able to persuade ourselves, as the High Court has done, that there may be ambiguity as to the interpretation of the series of documents and the terms of the contract concerned. 17. We agree that all the machinery purchased by the appellant or to be purchased by him from the respondent, except the two items convered by Annexures B1 and B2 are governed by Annexure C. The reference by the High Court to the principle that the last deed must govern the relationship between the parties superseding the earlier ones, when there is inconsistency between the two, assuming it to be ight, has no room for play here. Subsequent documents, such as the protocal of November 14, 1970, February 26, 1971 and the like, do not vary the jural relationship, vis-à-vis the sale of the two items of machinery we are concerned with. We are unable to agree with Shri Sachin Choudhry that the said protocol shows that Ex.C was taken to be the sole matrix of the contractual terms regarding the purchase of EK 25 and EK 13A. Neither the conduct of the parties nor the chain of correspondence deflects us from the conculsion already reached. 18. In this view, the inference is inevitable that the arbitral clause in B1 and B2 bind the parties, so far as the disputed machines are concerned. 19. Neither the conduct of the parties nor the chain of correspondence deflects us from the conculsion already reached. 18. In this view, the inference is inevitable that the arbitral clause in B1 and B2 bind the parties, so far as the disputed machines are concerned. 19. Shri Sachin Chaudhri stated at the bar that in regard to one of the items, some sort of settlement has been reached. Although Shri Tarkunde does not agree. We merely mention this and leave it at that. 20. We must further state that Shri Tarkunde did assure the Court that irrespective of the result of the appeal, the appellant was agreeable to the arbitral reference going before any Tribunal of Arbitration of any Chamber of Commerce in India. We hold the party to that assurance. 21. In conclusion we allow the appeal, but, in the circumstances, direct the parties to bear their respective costs. We further direct that if the respondent initmates the appellant in writing on or before the August 15, 1977 that he chooses any particular tribunal of Arbitration, set up by any Chamber of Commere in Bombay or Calcutta, the reference of the dispute will go to that body. If, however, no such intimation is made, the Tribunal of Arbitration of the Bharat Chamber of Commerce will have jurisdiction and will continue the proceedings. The arbitrators will decide, according to Clause 8 in Annexures B1 and B2, the rights and liabilities of the parties. The parties will bear their respective costs throughout. Appeal allowed. For Citation: AIR 1977 SC 2122 Vikas Info Solutions Pvt. Ltd.