TMI Blog1994 (2) TMI 301X X X X Extracts X X X X X X X X Extracts X X X X ..... ing and Air India, a body corporate constituted under the Air Corporation Act, 1953. RMI claimed commission from Boeing on the said transaction but Boeing refused to pay the same and thereupon in April 1990, RMI filed a suit (Suit No. 363 of 1990) on the original side of the Calcutta High Court against Boeing for the recovery of U.S. $ 17.5 million equivalent to ₹ 10,07,12,500,00 (sic) by way of compensation and remuneration on the basis of the terms of Consultant Services Agreement along with other incidental reliefs. The Consultant Services Agreement contains (in paragraph 10) an arbitration clause which provides that any controversy or claim arising out of or relating to this agreement, or any breach thereof, which the parties have not been able with due diligence to settle amicably, shall be settled by arbitration conducted in accordance with the Commercial Arbitration Rules of the American Arbitration Association . In the said suit RMI filed an application for injunction and an interim order was passed by a learned Single Judge of the High Court on 17-7-1992, whereby it was directed that if any payment is made by Air India to Boeing, Boeing shall retain a sum of U.S. $ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be stayed under Section 3 unless the Court is satisfied that the parties to the arbitration agreement stand in such legal relationship to each other which can be considered as commercial . The learned Judges have construed the word commercial in the light of the decisions of this Court in Atiabari Tea Co. Ltd. v. State of Assam' and Fatehchand Himmatlal v. State of Maharashtra (1977)2 SCC 670:(1977)2 SCR 828 and the Model Law prepared by UNCITRAL and have held that the transaction between RMI and Boeing is commercial and they do stand in commercial relationship and, on that view, it has been held that the suit is liable to be stayed under Section 3 of the Act since the conditions required to be fulfilled for the application of Section 3 as indicated by this Court in Renusagar Power Co. Ltd. v. General Electric Co. (1984) 4 SCC 679 : (1985) 1 SCR 432 are fulfilled in the case. 6. Shri Shanti Bhushan has urged that the learned Judges of the High Court have erred in holding that the Consultant Services Agreement between RMI and Boeing is in the nature of a commercial contract. According to Shri Shanti Bhushan a commercial contract is mercantile in nature involving sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emphasis supplied) 9. In paragraph 3 relating to 'Representations and Obligations of Consultant' it is stated: 3.2 Consultant shall assume for its own account and shall pay all costs, expenses and charges necessary or incidental to Consultant's operations hereunder. Among the 'Obligations of Boeing' as mentioned in paragraph 4 is the obligation- (a) to furnish Consultant from time to time with such promotional data and other information as Boeing deems necessary for the performance of Consultant's obligations under this Agreement; and (b)to pay Consultant compensation for Consultant's performance of this Agreement in the amount and under the circumstances described in paragraphs 5 and 8 herein; provided, however, if any customer or any relevant Government prohibits or limits in any manner the amount of compensation which may be paid to Consultant pursuant to this Agreement, then notwithstanding any other provision in this Agreement to the contrary, Boeing shall not be obligated to pay Consultant any compensation in excess of such prohibition or limitation. In no event shall Boeing be obligated to pay Consultant any more compensatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that RMI and Boeing do stand in commercial relationship with each other. While construing the expression commercial in Section 2 of the Act it has to be borne in mind that the Act is calculated and designed to subserve the cause of facilitating international trade and promotion thereof by providing for speedy settlement of disputes arising in such trade through arbitration and any expression or phrase occurring therein should receive, consistent with its literal and grammatical sense, a liberal construction. [See :Renusagar Power Co. Ltd. v. General Electric Co.3 (SCC at p. 723-24 : SCR at p. 492) and Koch Navigation Inc. v. Hindustan Petroleum Corpn. Ltd.6 (SCC at p. 262: SCR at p. 75).] The expression commercial should, therefore, be construed broadly having regard to the manifold activities which are integral part of international trade today. 13.In the context of Article 301 which assures freedom of trade,commerce and intercourse, it has been held: Trade and commerce do not mean merely traffic in goods, i.e., exchange of commodities for money or other commodities. In the complexities of modern conditions, in their wide sweep are included carriage of persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh the plaint of the suit and we are unable to hold that the claim in the suit is dehors the Consultant Services Agreement and is not a claim arising under the said agreement. 19.Shri Shanti Bhushan has also contended that the suit has been filed against Boeing as well as Air India and that even if the suit is liable to be stayed under Section 3 of the Act it could only be stayed as against Boeing and it should have been allowed to proceed against Air India. We, however, find that Air India was not originally impleaded as a defendant in the suit and was impleaded as a party only after the filing of the application of stay under Section 3 by Boeing. Even after impleadment of Air India as a defendant the main relief in the suit is claimed against Boeing and Air India has been impleaded as a defendant only to obtain discovery and production of certain documents. If the suit against Boeing has to be stayed under Section 3 of the Act it is difficult to appreciate how it could proceed against Air India alone. 20.In the circumstances, we find no merit in SLP (Civil) No. 20139 of 1993 and the same is liable to be dismissed. 21.Coming to SLP (Civil) Nos. 121-22 of 1994 which are d ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
