Micoperi S. P. A. v. Sansouci Pvt. Ltd. — 1981 DIGILAW 122 (CAL)

Judgment It is not in dispute in these proceedings that a formal agreement was entered into by and between the Miscoperi S.P.A., the petitioner, a company incorporated in Italy and Sansouci Private Ltd., the respondent, an Indian Company, on the 7th July, 1980, whereby the petitioner appointed the respondent as its representative and consultant for the following works :- (a) To assist and advise the petitioner in connection with proposals or bids to the Oil & Natural Gas Commission of India and Mazagaon Dock Ltd. both statutory Corporation's in respect of designs, engineering, procurement of materials, fabrications, transportation and installations including structures, pipelines and other facilities proposed to be fabricated and/or installed by the said Corporations on the off shore continental shelf of India for winning petroleum products. (b) To advise the petitioner on law, rules, regulations and revenue in the preparation of such proposals and bids. (c) To assist and advise the petitioner in the negotiations with the said statutory Corporations concerning the aforesaid as also in respect of contracts relating thereto. (d) To assist and advise the petitioner in matters of permits, licences and other Government approvals required for operating in the territorial waters of India and bringing constructions, equipments and spare parts into India. (e) To assist and advise the petitioner in negotiations with the Government authorities relating to performance of the obligations of the petitioner under any contract including import and export clearance for vessels, construction equipments and spare parts as also visas, work permits, exchange guarantee, radio and other licences required for construction and operation. (f) To assist the personnel of the petitioner through customs and provide them transportation. (g) To provide the petitioner suitable office space and arrange for telephone, telex and duplicating facilities therein and also arrange for free storage for spare parts and materials required for performance of contracts. (h) Arrange for medical services for the personnel of the petitioner. (i) Render liason service with the said statutory Corporations. (j) Assist and advise the petitioner in these selection of and negotiations with sub-contractors, vendors and suppliers in connection with the performance of contracts. (k) Assist and advise the petitioner in obtaining local labour, negotiating labour contracts and handling labour claims and also in maintaining good labour relationship. (i) Render liason service with the said statutory Corporations. (j) Assist and advise the petitioner in these selection of and negotiations with sub-contractors, vendors and suppliers in connection with the performance of contracts. (k) Assist and advise the petitioner in obtaining local labour, negotiating labour contracts and handling labour claims and also in maintaining good labour relationship. (l) Assist and advice the petitioner in its dealings with the said statutory Corporations and in respect of fulfilling all contracts and on claims thereunder including negotiations for additional and extra work. 2. It was further agreed that during the currency of the agreement the respondent would represent the petitioner and exclusively act in the sole interest of the petitioner exercising reasonable skill, care and diligence in discharge of its duties under the agreement. 3. It was agreed that the petitioner would pay to the respondent a fee being 4% of all payments excluding those for cost of reimbursible items actually received by the petitioner under any contract for installation of S.I. and S.E. platform, pipelines and raisers and between 5% and 6% in respect of any other contract which may be entered into between the petitioner and the said statutory Corporations payable pro rata on payments actually received from the said Corporations within 15 working days from the date of receipt of such payments. 4. It was further agreed that except expenses for supply of office facilities the respondent would incur all other expenses in performance of its services. 5. The agreement would be valid for two years from the date thereof subject to future extension by mutual agreement and either party to the agreement retained the right to terminate the agreement on 5 days written notice in the following events ;- (a) Material breach of any of the provisions of the agreement where such breach was not remedied within a reasonable time after receipt of written notice. (b) Liquidation, insolvency or bankruptcy of a party. (c) Failure of the party to perform its obligations under the agreement by reason of force majeure for a period of over 30 days. In the event of expiration or termination of the agreement the respondent would continue to receive the stipulated fee in respect of work performed prior to such expiration or termination. It was agreed that the agreement would take effect, be construed and enforced in accordance with the laws of England. 6. In the event of expiration or termination of the agreement the respondent would continue to receive the stipulated fee in respect of work performed prior to such expiration or termination. It was agreed that the agreement would take effect, be construed and enforced in accordance with the laws of England. 6. The agreement contained the following arbitration clause :- Clause 8. O 1. This Agreement shall take effect, and be construed and enforced, in accordance with the laws of England. Clause 8. O 2. Any dispute, controversy or claim with respect to any of the terms or conditions of, or the performance of the parties under this Agreement which cannot be settled amicably by the parties, shall be finally settled by arbitration under the Rules of Conciliation and Arbitration of the International Chamber of Commerce before a board of the three (3) Arbitrators appointed in accordance with said Rules. Clause 8. O 3. The award of a majority of the arbitrators shall be final and binding upon the parties and judgment upon such award may be entered in any Court having jurisdiction or application may be made to such a Court for a judicial acceptance of such award and judgment or order or enforcement, as the case may be. Clause 8. O 4. The arbitration proceedings shall be held at such place or places as may be determined by a majority of arbitrators and, in the event that a majority of the arbitrators is unable to agree upon or a place for the arbitration proceedings within ten (10) days after demand by either party, the arbitration proceedings shall be held in London, England. 7. It is the common case that by its letter dated the 22nd January, 1981, the petitioner gave to the respondent notice to terminate the said agreement on and from the 27th January, 1981 and immediately withdrew the appointment of the respondent as its representative in India. 8. The petitioner in the letter, inter alia, alleged that:- (a) the respondent had been found to be a total failure in respect of rendering services and assistance as stipulated. (b) The respondent had no knowledge of the organisation and the local agencies involved in the operation. (c) The respondent had no experience in handling marine matters. 8. The petitioner in the letter, inter alia, alleged that:- (a) the respondent had been found to be a total failure in respect of rendering services and assistance as stipulated. (b) The respondent had no knowledge of the organisation and the local agencies involved in the operation. (c) The respondent had no experience in handling marine matters. (d) The headquarters of the respondent in Calcutta failed to communicate urgent instructions and that the instructions of the petitioner had not been followed. (e) The respondent failed to advise the petitioner correctly and timely on the procedure to be followed and had failed to provide any commercial assistance and advice. 9. In particular it was alleged that the respondent had failed to render timely and adequate services for clearance of the petitioner's first marine spread, failed to deposit timely the Port dues and to secure early pilotage and tug for towing the barges. It is alleged that by reason of the aforesaid the spread of the petitioner was kept idling outside the Port incurring expense of 12,000 U.S. dollars per day and the petitioner incurred extra expenses for double handling of the barges. 10. On the 26th February, 1981 the respondent filed a suit in this Court against the petitioner, being Suit No. 151 of 1981 with leave under Clause 12 of the Letters Patent claiming several money decrees aggregating over Rs.2 crores, alternatively, an enquiry into the damages suffered by the respondent and a decree for the sum ascertained thereon, accounts and other reliefs. 11. The case of the respondent in the plaint is shortly as follows:- "The respondent contends that it had duly performed its duties under the said agreement and rendered satisfactory service as required. Particulars of the services rendered and duties performed have been set out. It is alleged that for installation of a R-12 platform in the off shore a global tender was floated by the Oil & Natural Gas Commission. The respondent rendered services in preparation of the said tender and processed and completed the documentation in respect of this work. When the work was about to be awarded to the petitioner it terminated the agreement wrongfully and in breach of the terms of the agreement. The petitioner appointed another agent at Bombay, even before the termination of the agency of the respondent. When the work was about to be awarded to the petitioner it terminated the agreement wrongfully and in breach of the terms of the agreement. The petitioner appointed another agent at Bombay, even before the termination of the agency of the respondent. No opportunity was given to the respondent to rectify the alleged breaches of the agreement as stipulated. It is further alleged that the petitioner from time to time has obtained pro rata payments from the Oil & Natural Gas Commission aggregating over Rs.84 lakhs for which the agreed fee was not paid to the respondent. The respondent alleges further that it had incurred expenses for additional services rendered aggregating over Rs.1,11,000/- and has suffered loss of future profits." 12. By a notice taken out on behalf of the petitioner on the 10th March, 1981 this application was moved praying, inter alia, for the following orders :- (a) This suit and all proceedings thereunder be stayed; (b) An injunction restraining the respondent whether by itself or its servants or agents or otherwise from proceeding with this suit or any proceeding thereunder. 13. It is, inter alia, alleged in this application that the respondent is disputing that it had committed material breach of the said contract and is claiming payment purporting to be due to it under the said contract and arising therefrom on the allegation that it had carried out works under the contract. The petitioner, it is alleged, is denying and disputing the allegations in the plaint and the claims of the respondent thereunder. 14. It is contended that, in the premises a dispute, controversy or claim with respect to the terms and conditions of and performance of the parties under the said contract has arisen and the same has been agreed to be referred to the arbitration under the contract. It is alleged that this suit is in respect of the said dispute, controversy or claim. 15. It is further contended that, under the agreement the laws of England would be the law under which the said agreement would take effect and would be construed and enforced and the proper law of the contract is the English law. It is contended that under the English Arbitration Act, 1975, which is applicable in this case, the petitioner is entitled to a stay of the suit. It is contended that under the English Arbitration Act, 1975, which is applicable in this case, the petitioner is entitled to a stay of the suit. It is alleged that the petitioner has not delivered any pleadings nor taken any other steps in the suit. 16. It is further contended that, in the event, it is found that the English law is not the proper law of contract then under section 3 of the Foreign Awards (Recognition and Enforcement) Act. 1961 this suit and the proceeding thereunder should be stayed. It is alleged that both Italy and United Kingdom are notified countries under the said Act. 17. This application is opposed. One Krishna Nath Banerjee, one of the Directors of the respondent, ha, affirmed two affidavits respectively on the 13th and the 16th March, 1981 which have been filed in opposition to this application. It is inter alia, alleged in the said affidavits that the respondent's claim in the suit for general damages for breach of the fundamental terms of the contract is beyond the scope of the arbitration clause. It is further contended that the petitioner has taken steps in the suit by entering appearance and praying for vacation of interim order. It is alleged that the entire evidence for adjudication of the disputes involved is located in India and available with the said statutory corporations and the same cannot be produced outside India conveniently and without incurring huge costs. The foreign arbitration as stipulated is not a convenient forum and if the respondent is compelled to resort to such arbitration it will amount to a denial of justice. The particulars of the material evidence are set out in the said affidavits. 18. One Franco G. Usai, the Project Manager of the petitioner, has affirmed an affidavit on the 20th March, 1981 in reply to the affidavits filed on behalf of the respondent disputing the contentions therein. 19. At the hearing Mr. J.C. Bhatt, learned Advocate for the petitioner, contended that it was an express term of the agreement that the contract between the parties would take effect and be construed and enforced in accordance with the laws of England. The English Arbitration Act of 1975 provided, inter alia, as follows:- "1(1). 19. At the hearing Mr. J.C. Bhatt, learned Advocate for the petitioner, contended that it was an express term of the agreement that the contract between the parties would take effect and be construed and enforced in accordance with the laws of England. The English Arbitration Act of 1975 provided, inter alia, as follows:- "1(1). If any party to an arbitration agreement to which this section applies, or any person claiming through or under him, commences any legal proceedings in any Court against any other party to the agreement. or any person claiming through or under him, in respect of any matter agreed to be referred, any party to the proceedings may at any time after appearance, and before delivering any pleadings or taking any other steps in the proceedings, apply to the Court to stay the proceedings; and the Court, unless satisfied that the arbitration agreement is null and void, inoperative or incapable of being performed or that there is not in fact any dispute between the parties with regard to the matter agreed to be referred, shall make an order staying the proceedings. (2) This section applies to any arbitral ion agreement which is not a domestic arbitration agreement; and neither section 4(1) of the Arbitration Act, 1950 nor section 4 of the Arbitration Act (Northern Ireland), 1937, shall apply to an arbitration agreement to which this section applies." 20. Mr. Bhatt contended that all the requirements of the said section of the English Act have been satisfied in the instant case and as such it is mandatory that the suit filed by the respondent should be stayed. 21. In the alternative, he submitted that the suit should be stayed under the Foreign Awards (Recognition and Enforcement) Act of 1961. Mr. Bhatt contended that all the requirements of the said section of the English Act have been satisfied in the instant case and as such it is mandatory that the suit filed by the respondent should be stayed. 21. In the alternative, he submitted that the suit should be stayed under the Foreign Awards (Recognition and Enforcement) Act of 1961. Section 3 of the said Act provides as follows :- "Notwithstanding anything contained in the Arbitration Act, 1940, or in the Civil Procedure Code, 1908, if any party to an agreement to which Article II of the Convention set forth in the Schedule applies, or any person claiming through or under him commences any legal proceedings in any Court against any other party to the agreement or any person claiming through or under him in respect of any matter agreed to be referred to arbitration in such agreement, any party to such legal proceedings may, at any time after appearance and before filing a written statement or taking any other step in the proceedings, apply to the Court to stay the proceedings and the Court, unless satisfied that the agreement is null and void, inoperative or incapable of being performed or that there is not, in fact, any dispute between the parties with regard to the matter agreed to be referred, shall make an order staying the proceedings." 22. In support of his contentions, Mr. Bhatt cited (1) W. Wood and Sons Limited v. Bengal Corporation, reported in AIR 1959 Calcutta 80. In this case a Division Bench of this Court considered and construed the Arbitration (Protocol and Convention) Act, 1937 which was the precursor to the Foreign Awards (Recognition and Enforcement) Act, 1961. Section 3 of the earlier Act of 1937 is in pari materia with section 3 of the subsequent Act. It was held that the provisions of section 3 of the said Act were not discretionary but mandatory. 23. He also cited a decision of another single Bench of this Court in (2) Probity Shipping Corporation & Anr. v. State Trading Corporation of India, reported in 85 CWN 268 : 1980 (2) CLJ 551 for the same proposition. 24. Another decision of this Court in (3) Arjun Agarwalla v. Baidya Nath Roy & Ors., reported in AIR 1980 Cal 354 was cited by Mr. v. State Trading Corporation of India, reported in 85 CWN 268 : 1980 (2) CLJ 551 for the same proposition. 24. Another decision of this Court in (3) Arjun Agarwalla v. Baidya Nath Roy & Ors., reported in AIR 1980 Cal 354 was cited by Mr. Bhatt in support of his proposition that contesting supplemental proceedings in a suit e.g. for appointment of a Receiver, or injunction will not amount to taking steps in the suit for the purpose of section 34 of the Arbitration Act, 1940 unless the party taking part in such supplemental proceedings showed his clear intention to submit to the jurisdiction of the Court for the adjudication of the lis on merits. 25. Mr. Bhatt cited last another English decision viz., in (4) International Tank and Pipe S.A.K. v. Kuwait Aviation Fuelling Co. K.S.C., reported in 1975(1) All ER 242. In this case the Kuwait Aviation Fuelling Co. employed the International Tank & Pipe S.A.K. as contractors to construct a new fuelling Depot at the Kuwait International Airport. Both the parties were companies registered in Kuwait. The contract provided that it would be construed and operated and in conformity with the laws of England and that the respective rights and liabilities of the parties shall be in accordance with such laws for the time being in force. The said contract was also subject to the general conditions prepared by the International Federation of Engineers which further provided that disputes would be settled by first referring the same to the Engineer concerned who would notify his decision thereon to the parties in writing within 90 days. Any party dissatisfied with such decision could refer the matter to arbitration by claiming arbitration by a communication to the Engineer within 90 days of the receipt of the notice of his decision, which would otherwise be final and binding. Any dispute submitted to arbitration would be settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce under which the arbitration procedure was to be the law of procedure choosen by the parties or failing such choice, by that of the country in which the arbitrators would hold the proceedings. 26. In this case a dispute arose between the parties in respect of some items of work which the contractors contended to be de hors the contract and claimed additional payment therefor. 26. In this case a dispute arose between the parties in respect of some items of work which the contractors contended to be de hors the contract and claimed additional payment therefor. The dispute was referred to the Engineer who decided against the contractor. Thereafter negotiations for settlement were attempted. Six days before the time to claim arbitration was to expire the contractors wrote to the Engineer stating that should no settlement be reached they reserved their right to have the matters in dispute settled by Arbitration. The employer did not accept this to be a communication of claim to arbitration. The contractors thereupon applied to the High Court in London under section 27 of the English Arbitration Act, 1950 for an extension of time for commencement of Arbitration, and obtained an extension. There was an appeal from this order by the employer who contended that the Court had no jurisdiction to grant such extension as it was possible that the arbitration would ultimately be conducted in accordance with the rules of procedure of the law of a country other than England. 27. It was held by the Court of Appeal that as English law was the proper law of contract, it governed the interpretation and effect of the contract between the parties and in particular would govern the arbitration clause though ultimately the law governing the procedure in an arbitration arising from the contract might be some other law. Lord Denning MR. observed as follows :- "I look on section 27 as being, in effect, an additional statutory term written into the arbitration clause. As such, its interpretation, its application and effect are to be governed by English law. It may be that some other taw will govern the procedure in the arbitration itself. It may be Kuwait law, or some other law. But that procedural law does not take effect until the arbitration has actually started, that is to say, not until the arbitrator has been properly appointed and is able to rule on the procedure to be adopted in the arbitration." On the authority of this decision Mr. Bhatt contended that the defendants Wire entitled to a stay of this suit under the English law. 28. Mr. Bhatt contended that the defendants Wire entitled to a stay of this suit under the English law. 28. Mr. R.C. Deb, learned Counsel appearing for the respondent, drew my attention to section 2 of the Foreign Awards (Recognition and Enforcement) Act, 1961 which reads as follows :- "In this Act, unless the context otherwise requires, "foreign award" means an award on differences between persona 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 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." 29. He contended that the legal relationship between the parties, in the instant case, could not be considered as commercial under the law in force in India and therefore the defendant was not entitled to a stay of this suit under the said Act. He submitted that under the agreement between the parties, the respondent was obliged only to render certain professional services to the petitioner. Such services were partly technical and partly legal. No commerce was involved in such services and the same did not come within the dictionary meaning of the expression 'commerce', which meant any act or transaction relating to commerce or trade. 30. Next he drew my attention to Rule 1 of Chapter XII of the Rules of the Original Side of this Court which provides as follows :- "Commercial 8uits include suits arising out of the ordinary transactions of merchants, bankers and traders; amongst others, those relating to the construction of mercantile documents, export or import of merchandise, affrightment, carriage of goods by land, insurance, banking and mercantile agency, and mercantile usages, and debts arising out of such transactions." 31. On the application of this Rule to suits filed in the Original Side of this Court Mr. Deb cited (5) Bissumbhar Sikdar v. Jadab Chandra Sikdar, reported in 6 CWN 308, where it was held that a suit for dissolution of partnership between two traders was not a commercial suits. 32. Mr. On the application of this Rule to suits filed in the Original Side of this Court Mr. Deb cited (5) Bissumbhar Sikdar v. Jadab Chandra Sikdar, reported in 6 CWN 308, where it was held that a suit for dissolution of partnership between two traders was not a commercial suits. 32. Mr. Deb also cited the two following decisions of the Bombay High Court- (a) In (6) Kamani Engineering Corporation Ltd. & Ors. v. Societe De Traction Et. D' Elatricites Societies Anonyme, reported in AIR 1965 Bom 114 . In this case a single Bench of the Bombay High Court considered section 2 of the Arbitration (Protocol and Convention) Act, 1937 which is in pari materia with section 2 of the successor Act, namely the Foreign Awards (Recognition and Enforcement) Act of 1961 and held that the same would not apply in the contract in that case where the subject-matter was only provision of technical assistance in electrification of Railways and the dispute arose in respect of fees payable for such assistance. In his judgment the learned Judge observed as follows :- "It is difficult to find the exact meaning of the phrase "matters considered as commercial under the law in force in India". Neither side has been able to point out to me any particular law wherein the phrases "commercial" or "matters commercial" have been defined. I apprehend that the intent of the Legislature while using the above phrase was that in matters of commercial contracts foreign arbitrations and awards should be recognised and enforced. Having regard to the purpose of the Act, I have no doubt that widest meaning must be given to the word "Commercial" as contained in section 2. It is also important to bear in mind that though in the preamble the word "contracts" is used, in the section the phrase is "relating to matters considered as commercial". * * * * * * * The contract is on the face of it only a contract for technical assistance. The contract does not involve the defendants into any business of the plaintiffs. It is not in any sense participation in profits between the parties. The remuneration of the defendants is for that reason described as "fees" and is only on percentage basis. By this contract, the defendants refused to be involved into any business of the plaintiffs and/or any contracts of the plaintiffs. It is not in any sense participation in profits between the parties. The remuneration of the defendants is for that reason described as "fees" and is only on percentage basis. By this contract, the defendants refused to be involved into any business of the plaintiffs and/or any contracts of the plaintiffs. They have scrupulously kept themselves out of any commercial relations with the plaintiffs. In my view the contract is more like a retainer or contract that is made between a Solicitor, a Counsel and an Advocate on the one hand and a client on the other. It is difficult to describe such a contract as commercial". The learned Judge also observed that section 3 of the said Act of 1937 which is again in pari materia with section 3 of the Act of 1961 was not mandatory and the expression "shall" in the said section should be construed as "may" and in appropriate cases the Court would be entitled to refuse stay of a suit though the other conditions of the section might be satisfied. (b) In (7) Indian Organic Chemicals Ltd. v. Chemtex Fibres Incorporation & Ors., reported in AIR 1978 Bom 106. In this case a single Bench of the Bombay High Court construed sections 2 and 3 of the Foreign Awards (Recognition and Enforcement) Act, 1961 and held that for the application of section 3 of the said Act the agreement involved must be a commercial agreement not as understood in its ordinary sense but by virtue of provisions of law in force in India. The relevant observations in the judgment are as follows :- "The expression occurring in section 2 is 'legal relationships, whether contractual or not, considered as commercial under the law in force in India'. It, therefore, follows that not only should the relationship be commercial but such a relationship should be 'considered as commercial under the law in force in India.' The use of the word 'under', in my opinion, is deliberate and predicates coverage. It posits a cloak enveloping an act. In legal parlance the word 'under' connotes 'by virtue of'. It is sometimes also translated as 'pursuant to'. The expression 'under the law', therefore, must mean 'by virtue of a law for the time being in force'. It posits a cloak enveloping an act. In legal parlance the word 'under' connotes 'by virtue of'. It is sometimes also translated as 'pursuant to'. The expression 'under the law', therefore, must mean 'by virtue of a law for the time being in force'. In other words, before provisions of section 3 can be invoked, the agreement must be an agreement embodying a relationship considered commercial under a provision of law. In my opinion, in order to invoke the provisions of section 3 it is not enough to establish that an agreement is commercial. It must also be established that it is commercial by virtue of a provision of law or an operative legal principle in force in India." "The question is not as to the import of the word 'commercial.' The question is what effect should be given to the expression 'considered commercial under the law in force in India'. There is no running away from the fact that the commercial relationship under section 2 must be a relationship considered commercial under the provisions of a law in force in India. The interpretation sought to be given by the learned Counsel, if accepted, will render the words 'under the law in force in India' otiose. Such an interpretation will have to be eschewed." 33. Mr. Deb next submitted that Italy was not a party to the convention referred to in the Foreign Awards (Recognition and Enforcement) Act, 1961 and as such the defendant which was a company registered in Italy was not entitled to claim any benefit whatsoever under the said Act. On the authority of Kamani Engineering Corporation Ltd. (supra) Mr. Deb also contended that section 3 of the Foreign Awards (Recognition and Enforcement) Act, 1961 was not mandatory and the Court retained its discretion to grant stay of a suit or refuse a stay. He submitted that in the instant case the balance of convenience was entirely in favour of the respondent and against the stay of this suit. The disputes between the parties having arisen in India and all the evidence being available here, the Court should exercise its discretion and allow the suit to proceed. 34. Mr. Deb next sought to distinguish between matters of substantive law and matters of procedure. The disputes between the parties having arisen in India and all the evidence being available here, the Court should exercise its discretion and allow the suit to proceed. 34. Mr. Deb next sought to distinguish between matters of substantive law and matters of procedure. He submitted that even if the contract in the instant case be held to be governed by English law that would be a matter of substantive law. Whether the present suit would be stayed or not was a matter of procedure. In this context Mr. Deb cited Dicey's Conflict of Laws, 10th Edition pp.747 to 753 where the law is stated as follows :- "The term "proper law of a contract" means the system of law by which the parties intended the contract to be governed, or, where their intention is neither expressed nor to be inferred from the circumstances, the system of law with which the transaction has its closest and most real connection. Sub-rule (1): When the intention of the parties to a contract, as to the law governing the contract, is expressed in words, this expressed intention, in general, determines the proper law of the contract." 35. Mr. Deb submitted last that Clause 8.04 of the contract provided that the arbitration proceeding would be held at such place or places as may be determined by majority of the Arbitrators and in the event the majority of the Arbitrators were unable to agree upon a venue within 10 days after demand by either party, the proceedings would be held in London. Mr. Deb contended that it was possible that the majority of the Arbitrators might determine the venue of the arbitration to be in India and in that event this application would not be maintainable inasmuch as the arbitration procedure will then be governed by Indian law. 36. In reply, Mr. Bhatt cited an unreported judgment of a Division Bench of the Bombay High Court in Appeal No. 151 of 1971 instituted in (8) Messrs. Agrimpex v. M/s. Jamnadas Madhavji & Co. & Ors. In this case the Division Bench guided by the decision of the Supreme Court in Kamani Engineering Corporation v. Societe De Traction Et. 36. In reply, Mr. Bhatt cited an unreported judgment of a Division Bench of the Bombay High Court in Appeal No. 151 of 1971 instituted in (8) Messrs. Agrimpex v. M/s. Jamnadas Madhavji & Co. & Ors. In this case the Division Bench guided by the decision of the Supreme Court in Kamani Engineering Corporation v. Societe De Traction Et. D' Electricites Societies Anonyme, reported in 66 Bom LR 39 held that if section 3 of the Foreign Awards (Recognition and Enforcement) Act, 1961 was found to be applicable then the Court had no option and was bound to stay the suit. 37. The Supreme Court observed in that case as follows :- "By this enactment an obligation in the conditions set out in section 3 was imposed upon the Court, unless it was satisfied that the agreement of arbitration had become inoperative or could not proceed, to direct that the suit filed in any Court in India against any other party to the submission shall be stayed." On the authority of this judgment Mr. Bhatt submitted that the decision of the single Bench of the Bombay High Court in Kamani Engineering Co. Ltd. was no longer good law. 38. Mr. Bhatt also contend end that under the agreement in the instant case the respondent was appointed as the sale agent and representative of the petitioner in India to do specified work including giving advice in various matters. This clearly indicated that the nature of the agreement and the relationship between the parties were commercial. Mr. Bhatt submitted in conclusion that, in the event, the venue of the arbitration was ultimately fixed in India, even then the petitioner would be entitled to a stay of this suit under section 34 of the Arbitration Act, 1940. 39. On the principle laid down by the Supreme Court in Societe De Traction Et. D' Electricites Anonyme (supra), it appears that if it is found that section 3 of the Foreign Awards (Recognition and Enforcement) Act, 1961 applies in the facts of a case, then the Court has no other alternative but to stay the proceedings. The exceptions on which the Court would refuse such stay are indicated in the section itself and it is not open to the Court to extend such exceptions. The exceptions on which the Court would refuse such stay are indicated in the section itself and it is not open to the Court to extend such exceptions. It also appears that the contentions raised on behalf of the respondent that the arbitration proceedings ultimately may be conducted in India and in that event the Act of 1961 would not apply is also not of much relevance as in such a contingency it would be open to the parties to ask for a stay of this suit under the Arbitration Act of this country. 40. Mr. Bhatt also produced copies of an official notification to show that Italy was one of the countries notified for the purpose of the Foreign Awards (Recognition and Enforcement) Act, 1961. 41. The only point to be considered is whether the agreement between the parties satisfies the test of section 2 of the Act of 1961 i.e., whether the award which will ultimately emerge in the arbitration is in respect of differences arising between the parties out of a legal relationship whether contractual or not, which would be considered as commercial under the law in force in India. The preamble of this Act sets out that the Act was promulgated to give effect to a convention held for the purpose of recognition and enforcement of foreign arbitral awards. The sections have to be considered and construed keeping in view the object of the Act. I respectfully agree with observations of the Bombay High Court in the decisions which I have considered earlier and hold that section 3 of the Act has to be read in the context of section 2 and not independently. 42. It further appears to me that in construing section 2 of the Act the question which necessarily has to be determined is whether the particular legal relationship involved in the dispute can be considered to be commercial under the law in force in India. No statute promulgated in India could be cited by the parties for a definition of the expression 'commercial'. The only statute I can think of in this connection is the Commercial Documents Evidence Act, where certain documents have been defined to be commercial documents and provisions have been made for admission of such documents in evidence in a summary fashion. No statute promulgated in India could be cited by the parties for a definition of the expression 'commercial'. The only statute I can think of in this connection is the Commercial Documents Evidence Act, where certain documents have been defined to be commercial documents and provisions have been made for admission of such documents in evidence in a summary fashion. The contract in the instant case ex facie does not involve or result in the execution of documents mentioned in the said Act. The expression "commercial" has also not been defined in the said Act. 43. Therefore, we have to fall back upon the general law as to the interpretation and construction of legal words and phrases as prevailing in the country to determine if the legal relationship between the parties in the instant case was commercial or not. In the absence of a statutory definition the settled principles of interpretation of words and expressions have to be followed. One of such principles accepted by the Courts in India is that words and expressions should be given their ordinary meaning and in that context the dictionary meaning of a word becomes relevant. The Courts in this country have taken the aid of a dictionary in interpreting words and phrases as a matter of course in inumerable cases. The meaning of the expression 'commercial' as in a dictionary has been noted earlier and to repeat the expression means something pertaining to or relating to commerce, the expression commerce in its turn is more or less synonymous with trade and intercourse. To determine if a commercial relationship exists between the parties the dictionary meaning of the expression is relevant and necessary. 44. In the Rules of the Original Side of this Court, it is indicated what are commercial suits. The Rules provide some guidance and it can be legitimately contended that when disputes between the parties, result in a suit, it can be determined under the Rule whether the suit will be marked as a commercial suit. The Rules provide specifically that suits arising out of (a) ordinary transactions of merchants, bankers and traders (b) relating to construction of mercantile documents, (c) export or import of merchandise affreightment, carriage of goods by land, insurance, banking and mercantile agency and mercantile usages would be commercial suits. 45. The Rules provide specifically that suits arising out of (a) ordinary transactions of merchants, bankers and traders (b) relating to construction of mercantile documents, (c) export or import of merchandise affreightment, carriage of goods by land, insurance, banking and mercantile agency and mercantile usages would be commercial suits. 45. Keeping the said Rule as also the dictionary meaning of the word 'commercial' in view, it is to be examined whether the agreement in the instant case has brought about a commercial relationship between the parties. The work for which the petitioner has come to India cannot be considered to be an ordinary commercial transaction. It has been engaged for setting up of special installations for winning off shore oil. Such work is more in the nature of a building contract. In the course of executing such works the petitioner may have to supply and/or import goods but nevertheless the transactions between the statutory corporations involved and the petitioner would not be an ordinary transaction between merchants and traders. The respondent had been engaged by the petitioner as its representative and adviser in connection with the work to be executed by the petitioner. The services required from the respondent were mainly to represent and advice the petitioner. The respondent is not called upon to supply any goods as a trader or a merchant. The services to be rendered by the plaintiff in connection with the setting up of the installations are more in the nature of professional and/or technical service to the petitioner. The relationship between the parties is not one arising in an ordinary transaction between merchants and traders nor does it involve construction of mercantile documents or export, import, carriage or insurance of goods. The agency between the parties is not a banking or ordinary mercantile agency. 46. Taking all these factors into consideration, it does not appear to me that the agreement between the parties has resulted in the establishment of any commercial relationship between the petitioner and the respondent as is ordinarily understood by the said expression. A suit arising out of such a relationship under the Rules of the Original Side of this Court would not be marked as a commercial suit. A suit arising out of such a relationship under the Rules of the Original Side of this Court would not be marked as a commercial suit. For the reasons as stated section 2 of the Act of 1961 does not apply in the facts of this case and as such the petitioner is not entitled to a stay of this suit under section 3 of the said Act. 47. I am unable to accept the contentions of Mr. Bhatt that the defendant is in any event entitled to ask for a stay of this suit under the particular English Statute Law. If a suit is filed in the Courts of this country, the only procedure by which such suit can be stayed is by the law and/or procedure which will be applicable in the Courts here i.e., either under the Arbitration Act, 1940 or under the Foreign Awards (Recognition and Enforcement) Act, 1961. Laws of our country do not provide for any other mechanism or procedure for stay of a suit which might be available in a foreign Court under a foreign law though the rights of parties may be substantively determined in the suit under a foreign law. 48. In any event, the special provisions of the Act of 1961 in my view should override the rights of the defendant, if any, to have this suit stayed by applying English statute law. For the reasons above, the defendant is not entitled to any order in this application. Costs will be costs in the suit. Operation of this order is stayed for a fortnight.