TMI Blog2015 (8) TMI 1453X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be non-suited at this juncture. Revocation of leave is a drastic remedy, which can be granted only in exceptional circumstances. The crux of the issue in the main Suit is as to whether the Settlement Agreement dated 30.03.2013, in effect stipulates for resolving disputes between the parties to such Agreement through Arbitration proceedings and whether the recitals of such Agreement in an unequivocal terms and without any ambiguity make the parties for such reference with certainty. Certainly, consideration of such issue is possible only after conducting the trial, as it involves not only the interpretation of several clauses relating to the present dispute in all the three Agreements and also the appreciation of the actual intention of the parties while entering into those Agreements through their oral testimonies. Therefore, it requires a trial and consequently, the merits and contentions raised by both parties in respect of the disputed reference to the Arbitration under the Settlement Agreement dated 30.03.2013, cannot be gone into at this juncture. A clear or specific indication regarding the Arbitration Agreement between the parties must be made available in an Agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k place in Chennai, where the products of the Defendants were distributed to 12 Hospitals in Chennai. It is, thus, contended that only in Chennai, the Plaintiff-Company issued instructions to their Bank(s) to stop RTGS transfer to the Second Defendant-Company, which was the trigger for Arbitration, and therefore, substantial part of cause of action arose in Chennai and hence, this Court has jurisdiction to entertain the Suit. 4. Based on the above said contentions, this Court, by Order dated 28.04.2015 allowed A. No. 3075 of 2015, granting leave for the Plaintiff to sue against the Defendants. On notice and Interim Injunction having been granted in O.A. No. 495 of 2015, the Defendants have filed this Application seeking for revocation of the above said leave granted by this Court. 5. It is the contention of the Defendants in revocation of Leave Application that the present Suit is not maintainable, as there is valid and binding Arbitration Agreement between the parties to the Suit, namely the Settlement Agreement, dated 30.03.2013. The Defendants have already initiated Arbitration process, which is pending on the file of the ICDR (International Centre for Dispute Resolution), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r's affiliated Companies for any breach of warranties or failure to comply with any material provisions of these Agreements. The parties agreed that the governing law to be Laws of Massachusetts, USA and International Arbitration Rules of the International Centre for Dispute Resolution ( ICDR ) and that the seat of Arbitration was agreed to be Boston, Massachusetts. Both the Agreements contained an identical Arbitration Clauses. Pursuant to these Agreements, the Plaintiff had transacted business over a period of three years. The aforesaid relationship between the parties came to an end on signing a Settlement Deed dated 30.03.2013 by the Plaintiff, the First Defendant as well as the Second Defendant. As per the Settlement Agreement, the Dealer Agreement and the Distributor Agreement would be treated as terminated with effect from 31.12.2012 by specifically providing that certain clauses of those Agreements would survive such termination. One such clause was Article 5 which stipulated that the Plaintiff and the First Defendant would indemnify each other's Affiliated Companies for any breach of warranties, etc. Another provision that was specifically incorporated in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nction only if the Defendant is amenable to the personal jurisdiction of this Court; the cause of action as pleaded in the Plaint fails to elucidate any part of the material cause of action arose within the jurisdiction of this Court; mere signing of the Agreement by the Plaintiff and deposit of funds at the Plaintiff's place of residence cannot be considered as material cause of action for invoking the jurisdiction of this Court. 8. In support of the above contentions, the learned Counsel for the Applicants relied on the following decisions: (i) Modi Entertainment Network v. W.S.G. Cricket PTE. Ltd., 2003 (1) CTC 429 (SC): 2003 (4) SCC 341; (ii) Man Roland Druckimachinen AG v. Multicolour Offset Ltd., 2004 (7) SCC 447; (iii) Duro Flex Pvt. Limited v. Duroflex Sittings System and another, 2014 (6) CTC 577; (iv) Martin Cashin v. Peter J. Cashin, AIR 1938 PC 103; (v) Hansraj Nayyar Medical India v. Smith Medical International Limited, and (vi) Enercon (India) Limited v. Enercon Gmbh, 2014 (5) SCC 1; 9. Per contra, the learned Counsel Mr. Anirudh Krishnan appearing for the Respondent/Plaintiff made his submissions and also filed Written Arguments. The su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction over the Defendant is a question of fact which cannot be determined purely on the basis of whether the Defendant is residing outside the jurisdiction. Thus, it is a matter for trial. The Defendants ought to have sufficient activities in the foreign state viz., India and the present cause of action arises out of one such activity. Moreover, in the present case the dispute is between the two Indian parties viz., the Plaintiff and the Second Defendant and therefore, this Court can exercise the jurisdiction. The Defendants are trying to confuse the issue, while considering the Application under Clause 12 of the Letters Patent by raising points under Section 45 of the Mediation and Conciliation Act. Both are to be considered in a different perspective at different stage and not to be confused as one having the controlling power over the other. In other words, foreign laws issues involved in this case is to be decided as questions of fact initiating a trial. Since the determination of the validity of the Arbitration Agreement involves number of questions of law, which has to be proved as questions of fact, the Plaintiff cannot be non-suited at this juncture. Revocation of leave is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the products of the First Defendant were distributed to 12 Hospitals in Chennai. It was further contended therein that all the oral negotiations took place in Chennai, more particularly, the discussions on fifth and sixth November 2014 had taken place at Chennai. It is further contended that a sum of ` 8.5 crores was deposited by the Defendants into the Plaintiff's Bank account at Chennai and that the Plaintiff issued an instruction to its Bank to stop the RTGS transfer of such amount to the Second Defendant which was the triggering factor for the issuance of impugned Arbitration Notice. 16. This Court by Order dated 28.04.2015 granted leave to the Plaintiff by considering the above stated facts and circumstances. Now, the Defendants filed the present Application to revoke the leave mainly by contending that the Settlement Agreement specifically stipulates that all the disputes are to be decided by the Arbitration in Massachusetts, U.S.A., that the Defendants are not amenable to the personal jurisdiction of this Court; that the cause of action for the Suit has arisen outside the jurisdiction of this Court; that the Ordinary Original Civil jurisdiction of this Court is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess or otherwise of the facts pleaded by the Plaintiff. At this juncture, it is useful to refer to the decision of the Division Bench of this Court reported in U.P. Cricket Association v. B.C.C.I., 2012 (5) MLJ 276, wherein at Paragraph No. 16, it is observed as follows: 16. In order to consider whether High Court Original Side has jurisdiction to entertain the Suit, the Plaint has to be read as a whole. Whether any part of action has accrued within the jurisdiction of this Court would depend upon the facts and circumstances of a given case.......The Court was not required to make an elaborate enquiry as to the correctness or otherwise of the facts pleaded by the Plaintiff. Going by the Plaint averments, when part of cause of action is said to have arisen at Chennai, the learned Judge was not right in saying that only a fraction of cause of action has arisen at Chennai and the learned Judge was not justified in revoking the leave to sue. 20. In Indian Mineral Chemicals Co. v. Deutsche Bank, 2004 (12) SCC 376, the Hon'ble Supreme Court has observed that the assertions in a Plaint must be true for the purpose of determining whether leave is liable to be revoked. Paragra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jurisdiction or carrying on business outside the jurisdiction for this Court to exercise its Ordinary Original Civil jurisdiction as against those Defendants. Therefore, the material consideration for this Court, while deciding the Application under Clause 12, is the Plaint averments and the averments made in the Affidavit filed in support of such Application seeking leave to sue. It is not necessary for this Court to conduct an elaborate enquiry on the contentions raised in respect of the merits of the matter raised by both parties at this stage. On the other hand, it is like considering the Application under Order 7, Rule 11, CPC, seeking rejection of the Plaint on the ground that the same does not disclose cause of action. It is well settled that while deciding such Application under Order 7, Rule 11, C.P.C., only the Plaint averments are to be taken up for consideration to decide as to whether the cause of action has been disclosed therein or not. In other words, the cause of action as stated in the Plaint is the relevant consideration to find out as to whether the Plaint discloses cause of action and not the rival contentions pleaded by the Defendant on merits, who seeks for r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e distribution pursuant to the above said Agreements was carried out in India including many hospitals in Chennai. Admittedly, both the Agreements were executed in Chennai and the payments under those Agreements were made into the Plaintiff's bank account in Chennai. During the course of performance of these Agreements, some dispute arose between the parties resulting in termination of the Agreements on 07.06.2012 followed by entering into a Settlement Agreement on 30.03.2013. The said Settlement Agreement was entered into between the Plaintiff, the First Defendant and the Second Defendant. According to the Plaintiff, there was no separate Arbitration Clause in the said Settlement Agreement. Thus, it is contended by the Plaintiff that the governing law clause originally available in the Dealership Agreement and the Distributorship Agreement, did not automatically get incorporated into the Settlement Agreement. Further, it is the contention of the Plaintiff that the parties to the Agreements are the Plaintiff and its Affiliates on one hand and only the First Defendant on the other hand. Therefore, it is contended that Affiliates of the First Defendant have not been included as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to such Agreement through Arbitration proceedings and whether the recitals of such Agreement in an unequivocal terms and without any ambiguity make the parties for such reference with certainty. Certainly, consideration of such issue is possible only after conducting the trial, as it involves not only the interpretation of several clauses relating to the present dispute in all the three Agreements and also the appreciation of the actual intention of the parties while entering into those Agreements through their oral testimonies. Therefore, it requires a trial and consequently, the merits and contentions raised by both parties in respect of the disputed reference to the Arbitration under the Settlement Agreement dated 30.03.2013, cannot be gone into at this juncture. 26. However, for the purpose of considering this Application under Clause (12), it is seen that following are the admitted facts and circumstances: (a) All the three Agreements viz., International Distributorship Agreement dated 01.12.2010, Dealership Agreement dated 01.12.2010 and Settlement Agreement dated 30.03.2013 were entered into at Chennai between the parties; (b) The crucial Agreement viz., Settleme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid Agreement, the above contention raised by the Defendants cannot be gone into at this stage, that too, while considering the Application under Clause 12 of the Letters Patent. (ii) The next contention of the Defendants is that both the Defendants are not amenable to the Personal jurisdiction of this Court. I am not able to accept the above said contention, since the leave under Clause 12 is sought only because both the Defendants are not located within the jurisdiction of this Court. In fact, the phrase used under Clause 12 of the Letters Patent viz., determine Suits of every description would indicate that exercise of power of Original jurisdiction of this Court cannot be restricted only in respect of certain types or categories of Suits alone. In other words, in my considered view, the Defendants are not justified in their contention that the anti-injunction Suits cannot be entertained by this Court, if the Defendants are located outside the jurisdiction. If such contention is accepted, the purpose of Clause 12 of Letters Patent and the power conferred on this Court thereunder would be defeated. Once the leave is granted, those Defendants are automatically brought within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and when a question arises as to the nature of jurisdiction agreed to between the parties the Court has to decide the same on a true interpretation of the contract on the facts and in the circumstances of each case. (4) A Court of natural jurisdiction will not normally grant Anti-Suit Injunction against a Defendant before it where parties have agreed to submit to the exclusive jurisdiction of a Court including a Foreign Court, a forum of their choice in regard to the commencement or continuance of proceedings in the Court of choice, save in an exceptional case for good and sufficient reasons, with a view to prevent injustice in circumstances such as which permit a contracting party to be relieved of the burden of the contract; or since the date of the contract the circumstances or subsequent events have made it impossible for the party seeking injunction to prosecute the case in the Court of choice because the essence of the jurisdiction of the Court does not exist or because of a vis major or force majeure and the like. (5) Where parties have agreed, under a non-exclusive jurisdiction clause, to approach a neutral foreign forum and be governed by the law applicable to it for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Court has to first decide, in the main Suit, as to whether the terms of the Settlement Agreement is to be construed of having an Arbitration Clause, by appreciation of evidence. When that being the position, I do not think that the above decision of the Apex Court is helping the Defendants in any manner. 32. Martin Cashin v. Peter J. Cashin, AIR 1938 PC 103 and Man Roland Druckimachinen AG v. Multicolour Offset Ltd., 2004 (7) SCC 447, are relied on by the Defendants for the proposition that when a party agreed to a particular forum, he is bound by it and the Court should enforce such Agreement. There is no quarrel about the said proposition. But, here in this case, the Plaintiff is not agreeing that it has submitted to the jurisdiction of Arbitration at Massachusetts, U.S.A., as the Settlement Agreement does not contain an Arbitration Clause to that effect. Therefore, till such issue is finally decided, the above said decision is not helping the Defendants in any manner, at present. 33. M/s. Duro Flex Pvt. Limited v. M/s. Duroflex Sittings System and another, 2014 (6) CTC 577, a Full Bench decision of this Court is relied on by the Defendants to contend that existence of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned proceeding were sought to be served on the Plaintiff seeking an Anti-Suit Injunction. Therefore, the Bombay High Court rejected such contention by observing that no principle authority was cited for the said proposition. In this case, the contention of the Plaintiff is not as contended before the Bombay High Court. The facts and circumstances of the present case are totally different and therefore, the above said decision is also factually distinguishable. 35. Enercon (India) Limited v. Enercon Gmbh, 2014 (5) SCC 1, is also relied on by the learned Counsel for the Applicants to contend that even if there is an unworkable Arbitration Clause in the Arbitration Agreement, the Court while interpreting such an Agreement should make the same workable within permissible limits of law. The Apex Court in the above decision observed at Paragraph No. 88 as follows: 88. In our opinion, the courts have to adopt a pragmatic approach and not a pedantic or technical approach while interpreting or construing an Arbitration Agreement or Arbitration Clause. Therefore, when faced with a seemingly unworkable Arbitration Clause, it would be the duty of the Court to make the same workable wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one and any Affidavit filed in reply to the Company Petition or the contents of the Affidavit filed in support of Company Application No. 113 of 1995 filed by the Respondents seeking dismissal of the Company Petition cannot at all be looked into. I have already pointed out that the principle applicable to Order 7, Rule 11(a), CPC is to be applied while considering the Application under Clause 12 of the Letters Patent. In the above said decision, the Apex Court has categorically observed that the averments made in the Plaint has to be seen and they have to be assumed to be correct and it is not permissible to look into the pleas raised in the Written Statement. 39. In so far as the consideration of cause of action is concerned, the Hon'ble Supreme Court in A.B.C. Laminart Pvt. Ltd. Anr. v. A.P. Agencies, 1989 (2) SCC 163 observed at Paragraph Nos. 11, 12 15 as follows: 11. The jurisdiction of the Court in matter of a contract will depend on the situs of the contract and the cause of action arising through connecting factors. 12. A cause of action means every fact, which, if traversed, it would be necessary for the Plaintiff to prove in order to support his righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tract, the place where repudiation is received is the place where the Suit would lie. If a contract is pleaded as part of the cause of action giving jurisdiction to the Court where the Suit is filed and that contract is found to be invalid, such part of cause of the action disappears The above are some of the connecting factors. (emphasis supplied) 38. In (India TV) Independent News Service Pvt. Ltd. v. India Broadcast Live LLC and others, 2007 (2) ILR 1231 (Del.), Paragraph No. 59 reads as follows: 59. A perusal of the aforesaid shows that the legal position as regards forum non-conveniens is that a stay on the ground of forum non-conveniens would be granted where a Court is satisfied that there is another available forum having jurisdiction. Also the Plaintiff's choice of forum is usually not disturbed unless the balance of convenience is strongly in favour of the Defendant. In determining whether a more appropriate forum exists, connecting factors, such as those effecting the convenience of parties, expenses involved and the law governing the relevant transactions are to be looked into. The mere fact that a part of the cause of action has arisen within the jurisdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... propriate Civil Court conferred by Section 9 of the CPC. In the above decision, the Hon'ble Supreme Court has categorically found that Courts in India have jurisdiction to try all Suits of Civil nature under Section 9 of the Code of Civil Procedure excepting Suits which are either expressly or impliedly barred. Perusal of the facts of that case before the Apex Court would show that a similar Anti-Injunction Suit filed before Bombay High Court was opposed by contending that the Bombay High Court has no jurisdiction to entertain such Suit to restrain the Arbitration proceedings at Singapore. Such contention was negatived by the Apex Court by holding that cause of action for filing the Suit arose within the jurisdiction of Bombay High Court. 40. M.R. Engineers Contractors (P) Ltd. v. Som Datt Builders Ltd., In 2009 (7) SCC 696, it has been observed at Paragraph Nos. 22, 24 33 as follows: 22. A general reference to another contract will not be sufficient to incorporate the Arbitration Clause from the referred contract into the contract under consideration. There should be a special reference indicating a mutual intention to incorporate the Arbitration Clause from ano ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct may also say that the parties are familiar with those terms and conditions or that the parties have read and understood the said terms and conditions. (v) Where the contract between the parties stipulates that the conditions of contract of one of the parties to the contract shall form a part of their contract (as for example the general conditions of contract of the Government where the Government is a party), the Arbitration Clause forming part of such general conditions of contract will apply to the contract between the parties. 33. An Arbitration Clause though an integral part of the contract, is an Agreement within an Agreement. It is a collateral term of a contract, independent of and distinct from its substantive terms. It is not a term relating to carrying out of the contract. In the absence of a clear or specific indication that the main contract in entirety including the Arbitration Agreement was intended to be made applicable to the sub-contract between the parties, and as the wording of the sub-contract discloses only an intention to incorporate by reference the terms of the contract relating to execution of the work as contrasted from the dispute resolution, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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