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2012 DIGILAW 575 (CAL)

Jessop & Co. Ltd. v. Tecpro Systems Ltd.

2012-07-02

I.P.MUKERJI

body2012
JUDGMENT I.P. Mukerji, J. 1. This is a section 8 application taken out by the first defendant in the suit [the defendant hereafter]. In this suit some interim orders have been passed, as a result of which the United Bank of India, the second defendant is holding the sum represented by the bank guarantee, in a separate no lien interest bearing account. Ms. Bhattacharyya for the defendant showed me the arbitration clause, which is clause 15 of the agreement between the parties at page 53 of this application. This clause is inserted below: 15.0 ARBITRATION i] Governing Law and Jurisdiction This Contract shall be construed, governed and enforced in accordance with the law of India. The parties hereby agree that jurisdiction over any dispute arising under this agreement shall be vested only in the Courts of India and the parties submit to the jurisdiction of the said Courts. ii] Dispute Resolution Any dispute of difference arising between the parties hereto in respect of any aspect of this agreement or the interpretation construction or effect of the terms and condition of the agreement shall be first settled mutually by negotiations between the parties. In case no settlement is reached, such dispute or difference shall be referred to a Sole Arbitrator if both the parties agree upon the same. Should the parties not agree to the appointment of a Sole Arbitrator, each party shall appoint its own Arbitrator and the two Arbitrators so appointed by the parties shall, before entering upon the reference, appoint the third Arbitrator who shall act as the presiding Arbitrator. The arbitration proceedings shall be conducted and governed by the Arbitration and Conciliation Act, 1996. The language of the arbitration shall be English and the place of arbitration shall be Kolkata. The award made by the Arbitral Tribunal shall become final and binding upon the parties and shall be enforced in accordance with applicable provisions of the Arbitration and Conciliation Act, 1996. 2. The disputes in the suit, admittedly arise out of the agreement of which the arbitration clause is a part. 3. But two points were raised on behalf of the plaintiff by Mr. Sinha and then by Mr. Sharma, learned advocates regarding the merits of this application. The first point was that there was allegation of fraud and the arbitrator could not go into it. Secondly, the bank had been impleaded. 3. But two points were raised on behalf of the plaintiff by Mr. Sinha and then by Mr. Sharma, learned advocates regarding the merits of this application. The first point was that there was allegation of fraud and the arbitrator could not go into it. Secondly, the bank had been impleaded. The bank had issued the subject bank guarantee. As fraud and special equity in its invocation were alleged and bank was a party, according to the plaintiff there was a party involved i.e. the bank, which was not a party to the arbitration agreement. Hence, the Court should not exercise jurisdiction. Both the points are bad. 4. First of all, if any fraud is alleged it is fraud in the performance of the agreement and not fraud in the execution of the agreement. If fraud was alleged in the execution of the agreement, i.e. by forging the signature of a party, fabricating the arbitration agreement and so on the Court and not the arbitrator should go into it, if raised before the Court, according to S.B.P. & Co. vs. Patel Engineering Ltd. reported in AIR 2006 SC 450 followed in G.E. Capital Transportation Financial Services Ltd. vs. Amritajit Mitra reported in 2009 (2) CHN 597 being a Division Bench judgment of our Court. When fraud is alleged in the performance of the agreement the arbitrator has the competence to go into it as he has competence to go into all other aspects of the contract. 5. As far as the second point is concerned, in this kind of a case the bank has no role to play at all. A bank guarantee is issued by the bank but the beneficiary is a party. If there is fraud there is fraud by a party. In this case, the alleged fraud is of the defendant. The bank has got nothing to do in the matter. So, if the second defendant bank has been unnecessarily impleaded, that would not defeat the arbitration clause. So, this point also fails. 6. Two technical points were taken. 7. The first is that section 8 of the Arbitration and Conciliation Act, 1996 requires the original of the award or a certified copy of it to be filed along with the section 8 application [See section 8[2] of the Arbitration and Conciliation Act, 1996]. So, this point also fails. 6. Two technical points were taken. 7. The first is that section 8 of the Arbitration and Conciliation Act, 1996 requires the original of the award or a certified copy of it to be filed along with the section 8 application [See section 8[2] of the Arbitration and Conciliation Act, 1996]. The copy of the arbitration agreement filed with the section 8 application is endorsed as a "true copy" by Mr. Swapan Roy, an officer of the defendant along with the seal of the company. It is said that this is not certification in terms of section 8[2] of the Act. 8. I do not agree. I have examined Black's Law Dictionary, 7th Edition for the meaning of the words "certified copy". It is in the following terms: certified copy. A duplicate of an original [usu. Official] document, certified as an exact reproduction usu. By the officer responsible for issuing or keeping the original.-Also termed attested copy; exemplified copy; verified copy; verification. 9. Therefore, a person having custody of the original document issues, a duplicate declaring that it is a true copy of the original. This is the plain and ordinary meaning of a "certified copy". No other qualification has been put to the expression by the legislature by adding that the certified copy should be attested by a public officer and so on. In the absence of such a qualification the certified copy of an arbitration agreement should be construed as a copy declared to be true by the officer responsible for its custody. In this case, it is an agreement between the two body corporates and no public officer is in custody of the original. The original is in the custody of both the parties. Therefore, the declaration "true copy" by an officer of the defendant with his signature and the stamp of the company complies, in my opinion, with the requirement of the section. So, this point is rejected. 10. The second objection is that the section 8 application is not verified by the proper person. Order 29 Rule 1 of the Code of Civil Procedure provides that a pleading by the Corporation can be signed and verified on its behalf by the Secretary or by any director or the principal officer. The application has been signed by Mr. Swapan Roy stated to be the authorised signatory of the defendant. Order 29 Rule 1 of the Code of Civil Procedure provides that a pleading by the Corporation can be signed and verified on its behalf by the Secretary or by any director or the principal officer. The application has been signed by Mr. Swapan Roy stated to be the authorised signatory of the defendant. It is true that Mr. Swapan Roy has not been described as a principal officer of the defendant. But, I have examined a copy of the resolution taken by the Directors authorising Mr. Swapan Roy. It is annexed to the application. It says that Mr. Swapan Roy, Senior Manager [Commercial of the Company] is authorised inter alia to sign the petition and affirm the affidavit. In my opinion, the Court should not be too technical. When the Board of Directors has authorised Mr. Swapan Roy, it is to be deemed that the petition has been signed and affirmed with the sanction of the Board. Secondly, there is no definition of "principal officer". The description of Mr. Swapan Roy as a "Senior Manager", in my opinion, complies with such requirement. 11. I am of the opinion that the disputes in the suit are squarely covered by the arbitration clause, as stated before. 12. But at the instance of the plaintiff I have also considered the decision in G.E. Capital Transportation Financial Services Ltd. vs. Amritajit Mitra reported in 2009 [2] CHN 597. The Court has the power to treat the suit as a section 9 application in some circumstances. Those circumstances exist in this case. 13. Therefore, I dispose of the application [GA No. 96 of 2012] by referring the parties to arbitration and I permanently stay the suit. The existing interim orders will continue for 15 months from date or until publication of the award, whichever is earlier. It is expected that the arbitrators will make and publish the award within the aforesaid time. If for some reason it is not possible to make and publish the award within the aforesaid time, continuance of the interim order has to be obtained by an appropriate application before the arbitrator or the Arbitration Court. 14. GA No. 1060 of 2012, GA No. 3423 of 2011 and GA No. 6 of 2012 are also disposed of by the above order. All parties concerned are to act on a signed photocopy of this order on the usual undertakings.