TMI Blog2014 (1) TMI 735X X X X Extracts X X X X X X X X Extracts X X X X ..... t change the rights and responsibilities of the parties under the agreement dated 12th January, 2002 - agreement dated 12th January, 2002 remains the principal agreement while agreement dated 8th March 2002 remains a supplementary agreement which was meant for restructuring of HPL on urgency - clauses of the subsequent Agreements dated 8th March, 2002 and 30th July, 2004 go to show that there has been no alteration in the nature of rights and responsibilities of the parties involved in the contract. Consequently, there has been no novation of the contract - The phrase ‘this agreement’ means the Agreement dated 8th March, 2002 which is essentially a supplementary Agreement and does not, by any mean, make the Principal Agreement dated 12th January, 2002 subject to the jurisdiction of the Court. Agreements dated 8th March 2002 and 30th July, 2004, read with section 5 of the A&C Act, we are inclined to observe that the Arbitration clause in the Principal Agreement continued to be valid in view of clause no. 6 of the Agreement dated 30th July, 2004 and also by virtue of its mention in different parts of both the supplementary agreements dated 8th March, 2002 and 30th July, 2004. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause WBIDC to transfer existing shareholding to CPMC to ensure that CPMC holds 51% of the total paid up capital of HPL. Clause 15 of the Agreement provides for reference of all disputes, in any way relating to the said Agreement or to the business of or affair of HPL to the Rules of the ICC, Paris. 2. The respondent HPL on the other hand, claims that the Arbitration Agreement contained in clause 15 of the Agreement dated 12th January, 2002 is void and/ or unenforceable and/or has become inoperative and/or incapable of being performed. 3. A dispute arose between the parties regarding the allotment of shares and the appellant filed Company Petition No. 58 of 2009 before the Company Law Board (in short CLB )on the grounds of oppression and mismanagement. The appellant also sought transfer of 155 million shares in favour of Chatterjee Petrochem (India) Pvt. Ltd. (in short the CPIL ), the Indian counterpart of CPMC as was decided in the Agreement. 4. The Company Petition was disposed of by the CLB by upholding the decision of the Company to allot 155 million shares by Indian Oil Corporation (in short IOC ). The transfer of 155 million shares to CPIL by WBIDC was also confirme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al pleas to defeat the beneficial provisions of the Section, and that in certain situations the Court is not powerless to do substantial justice between the parties, the facts of this case do not merit such a course of action to be taken. Such an argument is not available to the Chatterjee Group, since the alleged breach of the agreements referred to hereinabove, was really in the nature of a breach between two members of the Company and not the Company itself. It is not on account of any act on the part of the Company that the shares transferred to CP(I)PL were not registered in the name of the Chatterjee Group. There was, therefore, no occasion for the CLB to make any order either under Sectio n 39 7 o r 40 2 of the aforesaid Act. If, as was observed in M.S.D.C. Radharamanan's case (supra), the CLB had given a finding that the acts of oppression had not been established, it would still be in a position to pass appropriate orders under Sectio n 40 2 of th e Act. That, however, is not the case in the instant appeals. (emphasis laid by this Court) 7. On this decision given by this Court, the appellant sought to invoke the arbitration clause contained in the agreement dated 12th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o contend that the suit instituted by the respondent No. 1 against the request of arbitration by the appellant is not maintainable in law. He further argued that the suit instituted by the respondent No. 1 to restrain a foreign arbitration for resolution of the disputes between the parties was in violation of Section 5 of the A C Act which limits judicial authority s intervention in arbitration and therefore the impugned order of injunction passed by the High Court of Judicature at Calcutta was contrary to law and therefore, the same is liable to be set aside. In this regard, the learned senior counsel relied upon the three Judge Bench decision of this Court in Bhatia International v. Bulk Trading S.A. and Anr. (2002) 4 SCC 105 to contend that section 5 of the A C Act provides that no judicial authority shall intervene except where it is provided. The relevant paragraph will be extracted in the reasoning portion of the judgment. 11. Mr. Sudipto Sarkar, learned senior counsel also appearing on behalf of the appellant further contended that the maintainability of the arbitration of the disputes between the parties can be established by relying on the decision of this Court in V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and between the non- parties to the arbitration agreement. The new agreement also provided for a different dispute resolution mechanism among the parties, that is, the courts in Calcutta. The relevant clause will be extracted in the reasoning portion of the judgment. 15. The learned senior counsel, Mr. K.K. Venugopal, appearing on behalf of Respondent no. 2, Govt. of West Bengal, contended that the Arbitration and Conciliation Act, 1996 does not apply to the present case. According to the learned senior counsel, a party may purport to appoint an arbitrator who may enter upon the arbitration even when there is serious dispute as to whether the arbitration clause exists. In spite of the fact that no arbitration clause exists, if a party resorts to arbitration, then neither section 8 nor section 45 of the A C Act in case of international arbitration would provide for adjudication of the issue as to whether the arbitration clause exists. It is only where a suit has first been filed, in point of time, on the substantive agreement or the underlying agreement, either by way of specific performance or for compensation for breach of contract, that section 8 or section 45 of the A C A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he arbitration clause in the principal agreement dated 12th January, 2002 only. Hence, this contention does not require to be addressed in this appeal. 19. The learned senior counsel for respondent No. 3 Mr. C.A. Sundaram contends that jurisdictional issue in the present case, shall be decided as the threshold issue in the present case. In relation to this, he placed reliance upon the three Judge Bench decision of this Court in Chloro Controls India Pvt. Ltd. v. Severn Trent Water Purification Inc. and Ors. (2013) 1 SCC 641. 20. In the light of the facts and circumstances presented before us on the basis of admitted documents on record, and also based on the legal contentions urged by the learned senior counsel on behalf of both the parties, the following issues would arise for consideration of this Court in these proceedings: 1.Can the Arbitration clause under clause 15 of the letter of Agreement dated 12th January, 2002 be invoked by the appellants and whether Clause 7.5 of the subsequent Agreement dated 8th March, 2002 invoking the exclusive jurisdiction of the courts of Calcutta nullify the scope of arbitration as mentioned in the previous agreement dated 12th January, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which does not provide for Arbitration but states that courts at Calcutta alone shall have jurisdiction. d.) Agreement of March 8, 2002 is not an ancillary to agreement of January 12, 2002 but materially alters the same. The principle laid down in Chloro Controls Case (supra) does not apply. Real intention of the parties in the instant case was to substitute one agreement with another. 26. Clause 1 of the supplementary agreement dated 30th July, 2004 reads as under: Pursuant to the said Principal Agreement GoWB has caused WBIDC to transfer to Chatterjee Petrochem (India) Private Limited (CPIL), an affiliate of CPMC Rs. 155 crores of shares from the shareholding of WBIDC existing on the date of principal agreement (emphasis laid by this Court) The abovementioned clause goes to show that CPIL is an affiliate of CPMC. This is to say, that by means of the letter dated 8th March,2002 CPMC becomes a guarantor whereas CPIL becomes the borrower. Therefore, the same does not change the rights and responsibilities of the parties under the agreement dated 12th January, 2002. 27. Further, the letter written by CPMC to WBIDC along with the agreement dated 8th March, 2002 reads a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set aside the same. Section 5 of the Act makes it clear that in matters governed by Part I, no judicial authority shall intervene except where so provided. Section 5 which falls in Part I, specifies that no judicial authority shall intervene except where so provided. The Scheme of the Act is such that the general provisions of Part I, including Sectio n 5 , will apply t o all Chapters or Parts of the Act. (emphasis laid by this Court) 30. Further, it is pertinent to read Clause 7.5 of the Agreement dated 8th March, 2002 carefully. Clause 7.5 reads thus: Jurisdiction: Courts at Calcutta alone shall have jurisdiction in all matters relating to this Agreement. The phrase this agreement means the Agreement dated 8th March, 2002 which is essentially a supplementary Agreement and does not, by any mean, make the Principal Agreement dated 12th January, 2002 subject to the jurisdiction of the Court. 31. Therefore, we are of the opinion that both the learned single Judge and the Division Bench erred in arriving at the conclusion mentioned above and their findings are liable to be set aside. In the light of the case mentioned above and also on the basis of the clauses of the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubt in the mind as has been held in Ganga Bai s case (supra) that: 15. There is an inherent right in every person to bring suit of a civil nature and unless the suit is barred by statute one may, at ones peril, bring a suit of one's choice (emphasis laid by this Court) 34. The learned senior counsel for respondent no. 3 further places reliance upon the Constitution Bench decision of seven Judges in SBP Co. v. Patel Engineering Ltd. Anr. (2005) 8 SCC 618 wherein it was held that: 19 ..When the defendant to an action before a judicial authority raises the plea that there is an arbitration agreement and the subject matter of the claim is covered by the agreement and the plaintiff or the person who has approached the judicial authority for relief, disputes the same, the judicial authority, in the absence of any restriction in the Act, has necessarily to decide whether, in fact, there is in existence a valid arbitration agreement and whether the dispute that is sought to be raised before it, is covered by the arbitration clause . (emphasis laid by this Court) 35. We have already held that the Principal Agreement dated 12th January, 2002 continues to be in force wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 582/ARP pursuant to the Impugned Arbitration Agreement contained in clause 15 of the Agreement dated January 12, 2002 and the Request for Arbitration dated March 21, 2012 and the communication dated April 02, 2012 issued by defendant no. 8 in the Arbitration proceedings connected therewith and incidental thereto. Since, we have already held that the arbitration clause is valid, suit filed by the respondent no.1 for declaration and permanent injunction is unsustainable in law and the suit is liable to be dismissed. 38. In view of the above, we direct the parties to resolve their disputes through arbitration as mentioned in clause 15 of the letter of Agreement dated 12th January, 2002 in accordance with the Rules of ICC. We have also seen from the written submission of the appellants counsel that the appellants have already initiated an arbitration proceeding. In such case, the parties shall continue with the arbitration proceeding since the suit filed for permanent injunction against the arbitration proceeding is dismissed by setting aside the impugned judgment and final order in A.P.O. No. 13 of 2013 passed by the High Court of judicature at Calcutta on 04.06.2013. Accordingly, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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