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2015 DIGILAW 180 (CAL)

Nuova Elettromeccanica Sud S. P. A. v. Modern Malleables Limited

2015-02-26

ASHIM KUMAR BANERJEE, SAMAPTI CHATTERJEE

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Judgment Samapti Chatterjee, J. 1. Assailing the interim Order dated 11th December, 2014 passed by the Hon’ble Single Bench of this Hon’ble Court in A.P No.855 of 2013, G.A. No.3851 of 2014 & G.A No.3778 of 2014 thus prima facie holding that … “In my opinion if a dispute if arbitrated upon, it can never be called settlement of a dispute in the sense used in these clauses. The arbitration might end in mutual settlement or compromise. But the reference of arbitration cannot be called “settlement of disputes” in terms of this clause. Therefore, in my view the Courts of Rome would only be utilized for “settlement process”. But the above view is prima facie and will be tested upon filing of affidavits and inviting further legal arguments.”, the appellant Nuova Elettromeccanica Sud S.P.A filed the instant appeal. 2. Backdrop of the present case is that the Modern Malleables Ltd. (being the Indian Company) executed an agreement on 3rd March 2009 with the appellant in Italy which contained an Arbitration Clause as follows :- “9. Arbitration-Applicable law 9.1. Any dispute arising from or in connection with this agreement shall be settled by mutual agreement between the parties, failing which it will be referred to Arbitration by English speaking personnel. 9.2. In case the parties do not settle the dispute by mutual agreement, then it will be settled under the competence of the Law Court of Rome, Italy.” The Modern Malleables Ltd. (being an Indian Company) moved a Section 9 application in this Court (A.P. No. 6 of 2012). In spite of repeated notice the appellant (the Italian Company) failed to appear before the Hon’ble Single Bench, as a result several Orders were passed in that Section 9 application. Ultimately on 27th January, 2012, the Section 9 application was disposed of in terms of the Prayer ‘E’ thereof which is quoted below: “Prayer E-An order of injunction restraining the respondent and its servants, men and agents from manufacturing or selling directly or indirectly any of the aforesaid products, viz. The spacer dampers which is the subject matter of the agreement of 3rd March 2009 in Indian in any manner whatsoever.” In the said order the respondent/plaintiff was also given liberty to deposit 22,000/- Euro with Registrar (Original Side) on 31st January, 2012. The spacer dampers which is the subject matter of the agreement of 3rd March 2009 in Indian in any manner whatsoever.” In the said order the respondent/plaintiff was also given liberty to deposit 22,000/- Euro with Registrar (Original Side) on 31st January, 2012. Liberty was also given to the respondent/plaintiff to directly pay the said amount to the defendant/appellant and the interim order passed earlier on 11th January, 2012 restraining the appellant (Italian Company) from taking any step in respect of termination letter was thus confirmed. On 7th August, 2013, the respondent/plaintiff filed an application for an Order restraining the appellant from taking any step in the proceedings. Thereafter on 3rd December, 2014 the appellant company filed an application (G.A. No. 3778 of 2014) praying inter alia for stay of all proceedings in application (A.P No.855 of 2013). On 9th December, 2014 the appellant also took out another application (G.A. No. 3851 of 2014) praying inter alia for vacation of all the orders passed in the Section 9 application (A.P. No.6 of 2012). 3. In this scenario Mr. Tilok Bose, learned senior Counsel appearing for the appellant company contended that there was no Arbitration Clause in the agreement dated 3rd March, 2009. Mr. Bose also contended that the Clause 9 had no legal force as the said Clause 9.1 did not suggest that the disputes between the parties would be referred to the Arbitration proceedings. On the other hand Clause 9 provides that any dispute arising from or in connection with this agreement shall be settled by mutual agreement between the parties failing which it will be referred to arbitration by English Speaking Personnel. Mr. Bose further contended that Clause 9.2 clearly indicates that Section 9 application should be filed in a Court at Rome. Therefore, the Court of Rome, (Italy), has the jurisdiction to entertain any dispute arising out of the said agreement dated 3rd March, 2009. Mr. Bose further urged that already on 23rd November, 2012 the appellant/company initiated a civil suit in the Learned Court at Rome and the said suit has been proceeded ex parte against the respondent/plaintiff. Therefore, in his contention the Court in Rome has jurisdiction as per the agreement. In support of his contention Mr. Mr. Bose further urged that already on 23rd November, 2012 the appellant/company initiated a civil suit in the Learned Court at Rome and the said suit has been proceeded ex parte against the respondent/plaintiff. Therefore, in his contention the Court in Rome has jurisdiction as per the agreement. In support of his contention Mr. Bose relied on Supreme Court decisions reported in (I) 2004 (4) SCC Page-671 Paras-3, 5, 7, 8 & 9 (Hanil Era Textiles Ltd vs. Puromatic Filters (P) Ltd), (II) 2013 (9) Supreme Court Cases Page-32, Para-7 (Swastik Gases Private Limited vs. Indian Oil Corporation Limited), (III) 2009 (3) Supreme Court Cases Page-107 Paras- 6, 7, 12, 14 & 36 (Rajasthan State Electricity Board vs. Universal Petrol Chemicals Limited), (IV) (2009) 17 Supreme Court Cases Page-338, Paras-4,7 & 10 (HBM Print Limited vs. Scantrans India Private Limited) & (V) (2015) 1 Supreme Court Cases Page-32, Paras-22 & 23 (State of West Bengal And Others vs. Associated Contractors). 4. Mr. S.N. Mukherjee, learned senior Counsel appearing for the respondent vehemently contended that upon giving notice to the appellant/company (Indian Company) moved the abovementioned A.P. No.6 of 2012 praying inter alia for not to give any effect or further effect to the termination letter dated 23rd December, 2011. Prayer ‘A’ and Prayer ‘E’ of the said A.P. No.6 of 2012 are quoted below:- “Prayer ‘A’- An order of injunction restraining the respondent and its men, servants and agents from giving any effect or further effect to the letter dated 23rd December, 2011 being Annexure “O” hereto and exercise any right or deriving any benefit therefrom.” “Prayer ‘E’- An order of injunction restraining the respondent and it servants, men and agents from manufacturing or selling directly or indirectly any of the aforesaid products, viz. The spacer dampers which is the subject matter of the agreement of 3rd March, 2009 in India in any manner whatsoever”. On 11th January, 2012 the Hon’ble Single Judge being prima facie satisfied was pleased to pass an interim Order in terms of Prayer ‘A’ till 18th January, 2012. Thereafter as no one appeared for the respondent/appellant on 16th January, 2012 the said Order was extended till 31st January, 2012. Ultimately on 27th January, 2012 the interim Order was confirmed as indicated above. 5. Mr. Thereafter as no one appeared for the respondent/appellant on 16th January, 2012 the said Order was extended till 31st January, 2012. Ultimately on 27th January, 2012 the interim Order was confirmed as indicated above. 5. Mr. Mukherjee further vehemently contended that Section-9 application was filed on 6th January, 2012 and pursuant to the Order of the Hon’ble Single Bench the said application along with the Order was communicated to the appellant/petitioner through courier service which would be evident from Page-106 C (P.B). Therefore, it is crystal clear that the appellant/respondent being fully aware of the Order passed from time to time in Section-9 application by this Hon'ble Court and also accepting 20,000 Euro as deposited by the respondent/plaintiff (through telegraphic transfer to Bank Account of the appellant in Italy), then the (appellant) ex parte filed a suit against the respondent on 23rd November, 2012 before the Court in Rome. 6. Mr. Mukherjee further contended that filing of suit in Italian Court is wholly violation of the injunction Order passed by the Hon’ble Single Bench. 7. Mr. Mukherjee also urged that Section 41(b) of the Specific Relief Act is not a bar to file an application under Section 9 of the Arbitration and Conciliation Proceedings when admittedly Arbitration Clause very much exists in the agreement dated 3rd March, 2009 executed between the parties. In support of his contention Mr. Mukherjee relied on a Supreme Court decision reported in (1987) 1 Supreme Court Cases Page-496, Para-18 (Oil And Natural Gas Commission Vs. Western Company Of North America). Extract of a passage of Para-18 is quoted below :- “….As we have pointed out earlier, it would be unfair to refuse the restraint order in a case like the present one for the action in the foreign court would be a situation the courts have undoubted jurisdiction to grant such a restraint order whenever the circumstances of the case make it necessary or expedient to do so or the ends of justice so require.” 8. Mr. Mukherjee further contended that despite existence of Arbitration Clause no effort was taken for invoking Arbitral Clause by the appellant company. 9. Mr. Mr. Mukherjee further contended that despite existence of Arbitration Clause no effort was taken for invoking Arbitral Clause by the appellant company. 9. Mr. Mukherjee further urged that the appellant being fully aware of the Orders passed from time to time by the Hon’ble Single Bench and also accepting the 20,000 Euro transferred to their Bank pursuant to Court Order, they filed two applications for vacating interim Order G.A. No. 3851 of 2014 (arising out of A.P No.6 of 2012) which was affirmed on 9th December, 2014 and another application G.A. No.3778 of 2014 (arising out of A.P. No.855 of 2013) affirmed on 2nd December, 2014, which fact clearly demonstrates the conduct of the appellant. In support of his contention Mr. Mukherjee relied on a decision reported in AIR 1995 (SC) Page-2370, Para-50 (M/s. Gujarat Bottling Co. Ltd. And others vs. Coca Cola Company and Others) which is quoted below :- “Para-50-In this context, it would be relevant to mention that in the instant case GBC had approached the High Court for the injunction order, granted earlier, to be vacated. Under Order 39 of the Code of Civil Procedure, jurisdiction of the Court to interfere with an order of interlocutory or temporary injunction is purely equitable and, therefore, the Court, on being approached, will, apart from other considerations, also look to the conduct of the party invoking the jurisdiction of the Court, and may refuse to interfere unless his conduct was free from blame. Since the relief is wholly equitable in nature, the party invoking the jurisdiction of the Court has to show that he himself was not at fault and that he himself was not responsible for bringing about the state of things complained of and that he was not unfair or inequitable in his dealings with the party against whom he was seeking relief. His conduct should be fair and honest. These considerations will arise not only in respect of the person who seeks an order of injunction under Order 39 Rule 1 or Rule 2 of the Code of Civil Procedure, but also in respect of the party approaching the Court for vacating the ad interim or temporary injunction order already granted in the pending suit or proceedings.” 10. Mr. Mukherjee further vehemently contended that Clause 9 of the agreement dated 3rd March 2009 clearly indicates the existence of the arbitration clause. Mr. Mukherjee further vehemently contended that Clause 9 of the agreement dated 3rd March 2009 clearly indicates the existence of the arbitration clause. Therefore, it is wholly incorrect to suggest that Clause 9 of the said agreement does not indicate that there is existence of an arbitration clause as has been submitted by Mr. Bose. In support of his contention Mr. Mukherjee relied on [1969] Vol.2] Lloyd’s Law Reports Page-549 (Hobbs Padgett & Co (Reinsurance), Ltd vs. J.C. Kirkland, Ltd And Kirkland) and also AIR 1959 Supreme Court Page 24, Para-13 (Radha Sundar Dutta vs. Mohd. Jahadur Rahim and Others). Some portion of Paragraph-13 is quoted below:- “Para-13-If, in fact, there is a conflict between the earlier clause and the later clauses and it is not possible to give effect to all of them, then the rule of construction is well-established that it is the earlier clause that must override the later clauses and not ‘vice versa’.” 11. Before parting with his contentions Mr. Mukherjee submitted that conduct of the appellant clearly shows that the appellant does not come with clean hand before this Hon’ble Court. He also submitted that it is wholly illegal on the part of the appellant to file a suit at the Court of Rome on 23rd November, 2012 knowing fully well that the termination letter dated 23rd December, 2011 of the agreement has been stayed by the Hon’ble Single Bench of this Court prior to filing of the suit at Rome. Therefore, the Hon’ble Court should not entertain the appeal and the appeal should be dismissed. 12. After considering the rival contentions advanced by the learned Counsels appearing for the parties we are of the view that since the appeal as well as the cross-objection arise out of the interim order, where the Hon’ble Single Bench prima facie held inter-alia that … “Therefore, in my view the Courts of Rome would only be utilized for “settlement process”. “But the above view is prima facie and will be tested upon filing of affidavits and inviting further legal arguments.” and the applications are pending for final adjudication after exchange of affidavit, it would be proper on our part to remand the matter before the Hon’ble Single Judge so that the matter could be finally disposed of on merit by His Lordship after exchange of affidavits. We hope and trust that the Hon’ble Judge would dispose of the matter as the merit demands as per law. We make it clear that we have not gone into the merit of the case and all points are kept open to the Hon’ble Single Judge to adjudicate the matter independently without being influenced by this Order. 13. The propositions of law are also not tested and we do not express our views on the decisions cited by the learned Counsels as we direct that the applications should be decided on merit by the Hon’ble Single Judge. 14. With this observations the appeal and the cross-objection are disposed of. There would be no order as to costs. Ashim Kumar Banerjee, J. : I agree.