PHIBRO GMBH v. CONSOLIDATED FIBERS AND CHEMICALS LTD.
1996-07-24
RANAJIT KUMAR MITRA, S.K.MUKHERJEE
body1996
DigiLaw.ai
S. K. MOOKHERJEE, J. ( 1 ) THIS is an appeal arising out of an interim order, granted by a learned single Judge of this court, whereby the present appellants, who were defendants in a suit instituted by the sole respondent, had been restrained from pursuing the cause filed by them in a foreign High Court until further orders. From the impugned order it appears that the learned trial Judge proceeded on the basis of uncontradicted averment's made by the plaintiff in its application before the trial court as because, on behalf of the appellants / defendants, no affidavit in-opposition, had been filed but merely a question to the absence of jurisdiction in the trial court to pass such order had been raised as a question of law. ( 2 ) FROM the copy of the application, made before the learned trial Judge, annexed, on behalf of the appellants to the application now preferred in connection with the present appeal, it appears admitted that all the parties to the litigation entered into a contract, the identity of which, however, was in dispute between the parties. The plaintiff contended that the concluded contract between it and the defendants did not contain any restrictive covenant as regards the jurisdiction of court or venue for legal proceedings as was contended by the defendants/appellants. Accordingly, it was contended on behalf of the plaintiff/respondent before the trial court that the jurisdiction of the court was to be determined by application of the statutory provisions, as in force in this country, and on such application the trial court cannot be said to have no jurisdiction. According to the defendants/appellants binding contract, by its clause No. 16, incorporated in full the terms and conditions, as set forth in the appellants general terms and conditions as set forth in the appellant general terms and conditions and one of the terms, included in the general terms and conditions, which related to jurisdiction of court, provided as follows:-each party expressly submits the jurisdiction of the High Court of England without recourse of arbitration. ( 3 ) IN contra-distinction to the above factual contention, on behalf of the plaintiff, reliance was placed on a clause, which stood as follows:"arbitration shall be performed under the Rules of conciliation and arbitration of the International Chamber of Commerce, Paris, by three (3) arbitrators in accordance with the said rules.
( 3 ) IN contra-distinction to the above factual contention, on behalf of the plaintiff, reliance was placed on a clause, which stood as follows:"arbitration shall be performed under the Rules of conciliation and arbitration of the International Chamber of Commerce, Paris, by three (3) arbitrators in accordance with the said rules. Both Buyer and Seller shall appoint one (1) arbitrator each and these two arbitrators shall appoint third arbitrator to act as an umpire ?. . . . . . . . . . . . Arbitration shall take place in Calcutta, India, unless any other location is mutually agreed. The arbitration award shall be final and binding on both parties. "this order shall be governed by and construed in accordance with the laws of India. ( 4 ) THE principles with regard to the grant of injunction, restraining proceedings in foreign court, after long controversy and divergence, have taken a shape. In India the criteria have been codified no section 41 of the Specific Relief Act. Section 41 embodies cases, where injunction should be refused. So far as the present case is concerned, clauses (a) and (b) of the said section appear to be relevant clause (a), in substance, lays down that a proceeding, pending at the institution of the suit, where injunction is prayed for, shall not be interfered with unless such interference is necessary to prevent a multiplicity of proceedings, whereas clause (b) disentitles a person to an injunction against another person when the proceeding, which is sought to be restrained, is not initiated in a Court subordinate to that from which injunction is sought. In the instant case, therefore, since the proceeding sought to be injuncted is pending in a foreign court ordinarily no injunction should be granted. But a careful consideration of the language of clauses (a) and (b), referred to above, unmistakably shows that an order of restraint in terms of the said clauses can be directed against a person though such order in effect interferes with the course of proceeding in another court and in this particular case a foreign court settled principles under the English law, which have been very frequently followed as precedents, require such an order to be issued on strict fulfillment of tests and with great caution.
It is to be remembered, however, that while issuing such order the court need not be concerned with the possibility of the order being disobeyed, but whether the party against whom the injunction is granted is properly before the court and whether such an injunction would be needed to avoid injustice and to avoid multiplicity of proceedings. It is needless to add that these are in addition to the tests, which courts of law apply in the matter of grant or refusal of injunction, both interim and permanent. ( 5 ) THE other criteria, which the court considers in granting this somewhat unusual form of injunction, are whether justice can be done at substantially less inconvenience and expense in such court than in foreign court and in so doing the parties may not be deprived of a legitimate personal or juridical advantage which would be available, if the foreign jurisdiction was invoked. The formula was accepted as it was apt to cover the normal case of 'lis alibi pendens' and of 'forum convenients' but the legal history or exercise of such jurisdiction shows that the proper presence of a party before a court was given predominance along with attempt to avoid injustice. (Dicey and Morris on the Conflict of Laws, 11th edition, page 396 ). It is also well settled that judicial discretion to give credit to the foreign courts for doing justice in their own jurisdiction was, however, not to be lightly interfered with. ( 6 ) IN the instant case we are sitting in appeal over an interlocutory order and, prima facie, there is controversy as to the identity of contract on the which one or the other party miles. Such a controversy cannot be resolved till the conclusion of the suit, either in this country or in the foreign country, secondly, the suit in the foreign court had been instituted earlier than the present suit. If the appellants are to be prevented by an injunction and are compelled to contest the proceeding in this court it cannot be said that the tests, well settled and well recognized and as summarized by us here in above, have been satisfied so as to sustain the order of injunction granted.
If the appellants are to be prevented by an injunction and are compelled to contest the proceeding in this court it cannot be said that the tests, well settled and well recognized and as summarized by us here in above, have been satisfied so as to sustain the order of injunction granted. Mere failure to traverse the allegations, made before this court, cannot be said to justify the sustenance of the order of injunction when even on such averments/ allegations the existence of a dispute as regards the identity of contract, which became final between the parties, cannot at once be ruled out. To maintain the order of injunction would be to subject the appellants to an irreparable loss by opening up a scope for dismissal of the proceeding in the foreign court at their instance because of existence of such injunction. In short, in our view, the factors for grant or refusal of an injunction considered ordinarily as also those needed to be applied with regard to a proceeding in foreign court, do not justify the order passed by the learned trial judge. ( 7 ) FOR the aforesaid reasons, we decline to sustain the order of injunction and, accordingly the same is set aside, the appeal is allowed to that extent. The parties will have liberty to expedite their respective proceedings if so advised. There will be no order as to costs. A prayer for stay of operation of this order is made on behalf of the respondents but in view of the reasons given in our order the same is refused. Parties may be given signed copy of the operative portion of the judgment of the usual undertakings. R. K. Mitra, J.- I agree. Appeal allowed in part