SUPER SMELTERS LIMITED Vs. VISA RESOURCES PTE LIMITED

JUDGEMENT

(1.) The parties have filed three applications in the suit. In the order of point of time, the plaintiff has filed the first application being IA No. 1 of 2020 seeking an order of injunction on an arbitration proceeding. The defendant has filed the second application being IA No. 2 of 2020 seeking an order referring the parties to the suit to arbitration in terms of the arbitration agreement contained in clause 21 of the contract dated February 26, 2020. The plaintiff has filed the third application being IA No. 3 of 2020 seeking an order of injunction on the arbitration proceedings subsequent to the order of the Supreme Court. The hearings of all the three applications have been concluded on December 15, 2020. The three applications are being decided by this common judgement and order as the issues in the three applications overlap each other.

(2.) Learned senior advocate appearing for the plaintiff has submitted that, the parties never entered into a contract for arbitration. In fact, according to him, although the parties were negotiating to enter into a contract for supply of coral, the parties never entered into a formal contract. According to him, under the Arbitration and Conciliation Act, 1996, there needs to be a valid contract for arbitration as laid down under the Act of 1996 for an arbitration reference to commence. In the facts of the present case, he submits that, although the parties exchanged correspondence, the parties never reached any consensus ad item with regard to any contract far less an arbitration agreement. He has submitted that, the plaintiff has been purchasing coal from the first defendant for some time now. The plaintiff had negotiated with the first defendant for the purpose of purchasing coal of South African origin. The first defendant by an email dated February 29, 2020 forwarded to the plaintiff a draft contract for supply of steam (non-coking) coal of South African origin for the acceptance and signature of the plaintiff. The plaintiff was not satisfied with the terms contained in the contract. Negotiations took place over telephone. On March 3, 2020, the plaintiff had forwarded to the first defendant a draft contract with the few issues highlighted and requested the first defendant to execute the same. The first defendant did not accept the offer of the plaintiff contained in the writing dated March 3, 2020. The first defendant revised the same and forwarded the revised contract to the plaintiff on March 4, 2020. Further negotiations took place between the parties. By an email dated March 6, 2020, the first defendant forwarded its final version of the draft contract. The plaintiff signed the contract and send it over to the first defendant. According to the plaintiff, it had executed the document on the basis of good faith and trust even though the negotiations were not concluded. According to the plaintiff, it was led to believe that the document would be appropriated altered or cancelled, once the parties agree to the final terms. In fact, negotiations continued even after signing of the document. Therefore, the parties could enter into a concluded contract. The arbitration agreement is contained in the so called contract. The parties not concluding the contract, the question of the parties agreeing to arbitration on the basis of non concluded contract does not arise.

(3.) Learned Advocate appearing for the plaintiff has submitted that, unless a contract is entered into between the parties, the question of an arbitration clause which is said to be contained in such contract becoming enforceable does not arise. In support of his contentions he has relied upon ( Orissa Stevedores Limited v. The Orissa Minerals Development Company Ltd. and Ors. , 2010 2 CalLT 293), ( Uttarakhand Purv Sainik Kalyan Nigam Limited v. Northern Coalfield Ltd. , 2020 2 SCC 455), ( Vedanta Ltd. v. Emirates Trading Agency LLC , 2017 13 SCC 243), ( Devinder Kumar Gupta and Ors. v. Realogy Corporation and Ors. , 2011 3 ArbLR 227) and ( Dresser Rand S.A. v. Bindal Agro Chem Ltd. and Ors. , 2006 1 SCC 751).