TMI Blog1996 (4) TMI 511X X X X Extracts X X X X X X X X Extracts X X X X ..... Orissa not only filed two Special Leave Petitions against the common Order of the Orissa High Court in Civil Revision and Civil Miscellaneous Appeal but also preferred independent Special Leave Petition against the Order of Civil Judge, Bhubaneswar in Miscellaneous Case No. 426/93. Likewise, the Orissa Mining Corporation (appellant in C.A. Nos.7574-16/95 and third respondent before the High Court), has also filed three Special Leave Petitions against the common order of the High Court and of Civil Judge. After leave was granted, all these Special Leave Petitions were numbered as Civil Appeals as mentioned above. Brief facts, shorn of details, necessary for the disposal of these Appeals are as under :- The first respondent herein, namely, Klockner Company entered Company, entered into an agreement on 20.4.82 described as Marketing Agreement with Orissa Mining Corporation (hereinafter referred to as O.M.C. for short), a Government of Orissa Undertaking. We are not giving all the clauses in the agreement under consideration. The said agreement inter alia stipulated that O.M.C. will establish a plant at Bamnipal in the district of Keonjhar, Orissa, for production of charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicable shall be substantial Swiss Law or any other law mutually agreed upon.. Subsequent to the original agreement as mentioned above, another agreement was entered into on 16.2.87 between OMC and Orissa Mining Corporation (Alloys) Ltd. which is a wholly-owned subsidiary company of OMC to implement and establish 100% export oriented unit at Bamnipal for manufacturing inter alia charge chrome in which it was stipulated that OMC has already entered into a marketing arrangement with Klockner Co. of the Federal Republic of Germany under which OMC is to market the products of Alloys exclusively through Klockner Co. and that Alloys products would be handled through the agency and instrumentality of the OMC on the basis of OMC s agreement with Klockner Co. and the terms and conditions of the marketing agreement between OMC and Klockner Co. dated 20th April, 1982 will be treated as if OMC (Alloys) replaced OMC. It is not in dispute that the agreement was acted upon by the parties and pursuant to that 108,429 MT of charge chrome were delivered leaving a balance of 141,571 MT of Charge Chrome undelivered as per the agreement. In the meanwhile the Department of Company Affair ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anent injunction injunction Defendant No. 1 from prosecuting the arbitration proceeding (bearing reference No. 7878/HV of Defendant No.2) initiated before Defendant No. 2 by Defendant No.1. in its said request fol arbitration dated 21.4.93 and said statement of claim dated 21.4.93 appended thereto. (f) Such other relief/reliefs as this Hon ble court may deem fit and proper in the facts and circumstances of the case. The respondent herein on coming to know of the suit filed by the appellant moved the Miscellaneous Case No. 426/93 invoking Section 3 of Foreign Awards (Recognition Enforcement) Act. 1961 for stay of the suit. The appellant stoutly resisted the application for stay of the suit. However, the learned Civil Judge on the basis of the materials placed before him and also on the basis of the arguments advanced came to the conclusion that the suit should be stayed under Section 3 of the Foreign Awards Act. Aggrieved by the order of the learned Civil Judge, the appellant, State of Orissa preferred Miscellaneous Appeal as well as Revision Preferred before the Orissa High Court. The learned Single judge for the reason stated in the Order under Appeal observed as fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Senior counsel appearing both for the State of Orissa as well as for Orissa Mining Corporation, though the contentions of both parties are not identical and to a certain extent conflicting, strenuously contended that the Orders of the trial court and of the High Court, granting stay of the suit cannot be sustained in as much as the State which has filed the suit was neither a party to the agreement in question nor, he State claimed the right through or under the Orissa Mining Corporation Ltd. Further, the State being not a party to the agreement is not bound by the terms and, therefore, the suit cannot be stayed. He also put forward arguments relating to the merits of the claim put forward by the first respondent Klockner Co. in the arbitration proceedings. In support of his argument, learned senior counsel placed reliance on two decisions of this Court reported in Renusagr Power Co Ltd vs. general Electric Company Another. (1984) 4 SCC 679 ) and Svenska Handelsbanken Ors. vs. M/S. Indian Charge Chrome Ltd Ors. ( (1994) 2 SCC 155 ). Mr. C.S. Vaidyanathan learned senior counsel appearing for the first respondent. Klockner Co. answering the contentions of the learned sen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany vested under section 6 in any other company, by or against the other company. 5. Every liability of the Charge Chrome Division of the Company including dues to foreign and Indian Banks shall be the liability of the State Government on which the properties of the Charge Chrome Division has vested and shall be enforceable against the State Government or, where the Charge Chrome Division of the Company is directed to vest in any other company, against the other company. 6(1) The State Government may, it is satisfied that any other company is willing to comply with such terms and conditions as the Government may think fit to impose, direct by notification that the Charge Chrome Division of the Company and the right, title and interest of the Charge Chrome Division of the Company which have vested with the State Government under section 3 shall, instead of continuing to vest in the State Government, from the date of publication of the notification of such vesting, vest in the other company. 6(2). Where the right, title and interest of the Charge Chrome Division of the Company is vested under sub-section (1) in any other company the other company shall, on and from the dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, the existence of agreement dated 20.4.82 cannot be disputed by OMC or by the appellant. The first respondent (Klockner Co.) one of the parties to the agreement has commenced arbitration proceedings against the other party is also an undisputed fact. In the light of the wide scope of Clause 15 of the agreement between the first respondent and OMC dated 20.4.82 (already extracted) relating to arbitration and in view of our finding that the State of Orissa is the successor to OMC, it is not open to the appellant to contend that the legal proceedings initiated was not in respect of any matter agreed to be referred to arbitration in the agreement. Except filing an application under Order 7 Rule 11 CPC for rejection of the plaint in the suit filed by OMC, the first respondent has not taken any step in the legal proceedings and that application for rejection of the plaint cannot he construed as any step in the legal proceedings to bar the invocation of Section 3 of the Foreign Awards Act by the first respondent vide General Electric Company vs. Renusagar Power Company ( (1987) 4 SCC 137 ). In the absence of any serious challenge to the commercial contract or to the arbitration ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal proceedings must be in respect of any matter agreed to be referred to arbitration in such agreement. (The question whether this condition is fulfilled here needs to be decided); (iv) the application for stay must be made before filing the written statement or taking any other step in the legal proceedings. (Admittedly this condition is fulfilled); (v) the Court has to be satisfied that the agreement is valid, operative and capable of being performed; this relates to the satisfaction about the existence and validity of the arbitration agreement. (In the instant case these questions do not arise); (vi) the Court has to be satisfied that there are disputes between the parties with regard to the matters agreed to be referred; this relates to effect (scope) of the arbitration agreement touching the issue of arbitrability of the claims. We have already found that on a conjoint reading of relevant clauses in the takeover Ordinance, the agreement between the State of Orissa and Tata Iron Steel Company and the marketing agreement dated 20.4.82, the requirements of Section 3 of Foreign Awards Act have been satisfied. We, therefore, find that the test laid down by this Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or ground is stated in the order in support of the finding that the plaint is to be rejected under Order 7, Rule 11(a). From the averments in the plaint, it is clear that the plaintiff has pleaded a cause of action for filing the suit seeking the reliefs stated in it. That is not to say that the plaintiff has cause of action to file the suit for the reliefs sought that question is to be determined on the basis of materials (other than the plaint) which may be produced by the parties at appropriate stage in the suit. For the limited purpose of determining the question whether the suit is to be wiped out under Order 7, Rule 11(1) or not the averments in the plaint are only to be looked into. The position noted above is also clear from the petition filed by defendant No. 1 under Order 7, Rule 11 in which the thrust of the case pleaded is that on the stipulations in the agreement of 20.4.82 the plaintiff is not entitled to file a suit seeking any of the reliefs stated in the plaint. 10. Coming to the question whether the plaint is to be rejected under clause (d) of rule 11 of order 7, the Supreme Court in the case of Orient Transport Co. (supra) has clearly laid down that there is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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