Delhi High Court
Sarr Freights Corporation & Anr vs Argo Coral Maritime Ltd on 13 March, 2026
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 29th January, 2026
Pronounced on: 13th March, 2026
+ CS(OS) 868/2025 & I.A. 30141/2025
SARR FREIGHTS CORPORATION & ANR. .....Plaintiffs
Through: Mr. Dayan Krishnan, Sr. Adv. with
Mr. Saurabh Seth, Mr. Sumer Dev
Seth, Ms. Neelampreet Kaur, Mr.
Abhiroop Rathore, Mr. Kabir Dev,
Mr. Sukhvir Singh and Mr. Sukrit
Seth, Advocates (M:9811393402)
versus
ARGO CORAL MARITIME LTD. .....Defendant
Through: Mr. Sandeep Sethi, Sr. Adv. with Mr.
Amitava Majumdar, Mr. Arvind
Kumar Gupta, Ms. Tripti Sharma, Mr.
Dushyant Kishan Kaul, Mr.
Abhiesumat Gupta, Mr. Kishna
Gambhir, Ms. Shreya Sethi, Ms. Riya
Kumar, Mr. Ishan Prashar, Advocates
(M:9811088800)
CORAM:
HON'BLE MS. JUSTICE MINI PUSHKARNA
JUDGMENT
I.A. 30141/2025 (Under Order XXXIX Rules 1 and 2 read with Section
151 of the Code of Civil Procedure, 1908)
INDEX TO THE JUDGMENT
1. Introduction ………………………………………………………Paras 1-3
2. Factual Matrix ………………………………………………. ………Para 4
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2.1 Parties…………………………………………….Paras 4.1-4.2
2.2 Booking Note………………………………………Paras 4.3-4.7
2.3 Subsequent Events……………………………….Paras 4.8-4.12
2.4 First Arbitration/Reference……………………..Paras 4.13-4.15
2.5 Second Arbitration/Reference………………….Paras 4.15-4.23
3. Plaintiffs‟ Submissions………………………………………..Paras 5-5.22
4. Defendant‟s Submissions……………………………………..Paras 6-6.19
5. Findings and Analysis……………………………………………Paras 7-99
5.1 Whether this Court has the jurisdiction to entertain the present
suit?……………………………………………………………Paras 12-33
5.2 Whether there is a binding contract between the
parties?……………………………………………………….Paras 34-46
5.3 Whether there exists a valid Arbitration Clause between the
parties?……………………………………………………….Paras 47-75
5.4 Whether the impugned arbitration proceedings are oppressive,
vexatious or unconscionable?……………………………….Paras 76-99
6. Conclusion………………………………………………….Paras 100-104
INTRODUCTION:
1. The present suit has been filed seeking a declaration and
consequential permanent and mandatory injunction restraining the
defendant, from continuing with two parallel arbitration proceedings
initiated before the London Maritime Arbitrators Association
(“LMAA/Tribunal”), titled as ‗Argo Coral Maritime Ltd. Versus SARR
Freights Ltd.’ and ‗Argo Coral Maritime Ltd. Versus SARR Freights
Corporation’ (“impugned arbitrations/arbitration proceedings”), arisingSignature Not Verified
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out of the Booking Note dated 04th April 2023 (“Booking Note”). There is a
further prayer seeking declaration of the Partial Final Award dated 18 th
October, 2025 (“Partial Award”) passed by the majority of the LMAA as
null, void and of no legal effect.
2. The present application has been filed seeking an interim injunction,
restraining the defendant from continuing, pursuing or taking any steps in
the impugned arbitration proceedings before the LMAA.
3. At the outset, this Court notes the submission of the plaintiffs that the
plaintiffs do not seek interference in relation to the merits of the underlying
commercial dispute between the parties, and only seek to address the
grievance in relation to the impugned arbitration proceedings. Thus, the
present application is being dealt with only in relation to the continuation of
the impugned arbitration proceedings.
FACTUAL MATRIX:
4. The factual matrix in brief is as follows:
Parties
4.1. The plaintiffs, i.e., SARR Freights Corporation and SARR Freights
Limited, are Indian companies, headquartered in New Delhi and are engaged
in the business of multimodal logistics, freight forwarding and chartering
operations.
4.2. The defendant, i.e., Argo Coral Maritime Ltd., is the owner of the
vessel – MV Panthera J, who has initiated the impugned arbitration
proceedings against the plaintiffs in London before the LMAA.
Booking Note
4.3. The plaintiffs (SARR Freights) entered into a Charterparty Agreement
as charterers with Ocean7 Projects ApS, Denmark, who were acting asSignature Not Verified
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agents to the owners of the performing vessel, by way of the Fixture Recap
and the Booking Note, both dated 04th April, 2023.
4.4. The Booking Note was executed for a voyage charter relating to
shipment of military cargo for the United Nations Peacekeeping Force in
Sudan, i.e., United Nations Interim Security Force for Abyei (“UNISFA”),
for transport from Nhava Sheva Port, Mumbai to Port Sudan. Further, the
voyage of the vessel was scheduled to commence on 15th April, 2023 and to
reach its destination on 28th April, 2023, which was postponed respectively
from 20th April, 2023 to 03rd May, 2023.
4.5. The cargo consisted of 159 military equipments, of which, some
equipments were designated under International Maritime Organization
(“IMO”) as Class 1, i.e., explosives/dangerous goods.
4.6. The Booking Note contains 43 clauses in its entirety, out of which,
Clauses 20 to 43 are additional rider clauses and Page 2 of the Booking Note
incorporates the full terms of the Carrier‟s Bill of Lading Form. The parties
before this Court have made reference to the following clauses of the
Booking Note:
i. Clause 4 – Law and Jurisdiction
ii. Clause 6 – Substitution of Vessel
iii. Clause 20 – Vessel
iv. Clause 43 – Law and Arbitration
4.7. Clauses 6 and 20 of the Booking Note provided for a right to
substitute the vessel, and in that regard, the erstwhile vessel, i.e., MV
Pelagica with a total cargo capacity of 4,319 sq.m., was substituted by MV
Panthera J, which had the cargo capacity of 2,916 sq.m., of which 1,038
sq.m. was the under-deck capacity.
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Subsequent Events
4.8. On 18th April, 2023, the United Nations released an official advisory
declaring all port and cargo movements through Sudan unsafe, which was
also communicated by the Indian Army‟s representative.
4.9. On account of the war in Sudan, the Managing Director of plaintiff
no. 2 addressed a communication to the common broker, i.e., Pirama
National Shipping Services LLC, which was to be sent to the defendant,
informing that the Booking Note shall be treated as cancelled due to force
majeure events. Further, on 19th April, 2023, the plaintiff no. 2 had also
informed the carriers/owners of the vessel, i.e., defendant, that the United
Nations had not approved the vessel, i.e., MV Panthera J, for carriage of
goods on account of the under-deck cargo capacity, and sought for
considering a possibility of stowing the cargo in containers and over-
stowing in order to avoid any rolling stock being stowed on deck. The said
communication was replied to by the defendant on the same day, stating that
their technical team had advised that it would still be necessary to stow 12
trucks on deck.
4.10. On 20th April, 2023, the United Nations formally terminated the
Purchase Order with the plaintiffs, citing force majeure reasons and directed
the plaintiffs to retain the cargo at Mumbai, pending further instructions.
Consequently, the defendant through its agent tendered a Note of Readiness
(“NOR”) on 20th April, 2023 at the load port. Further, on the same date, the
defendant claimed damages from the plaintiffs to the tune of USD
584,741.10/- for ‗dead freight’.
4.11. The parties exchanged a number of emails from 20 th to 27th April,
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2023, wherein, the plaintiff no. 2 reiterated the cancellation of the Booking
Note along with non-acceptance of vessel substitution, whereas, the
defendant claimed its damages for ‗dead freight’.
4.12. A Demand Notice dated 27th June, 2023 was sent by the defendant in
the capacity as the owner of the vessel – „MV Panthera J‟, claiming wrongful
termination of the Booking Note, and making a demand for damages. The
said Notice was replied by the plaintiff no. 2 on 12 th July, 2023, denying the
claims of the defendant, and asserting that the Booking Note had been
lawfully cancelled.
First Arbitration/Reference
4.13. Subsequently, the defendant issued a Notice dated 27 th July, 2023,
invoking arbitration under the Arbitration Clause, i.e., Clause 43 of the
Booking Note. The parties then appointed their arbitrators and the defendant
filed their Claim Submissions on 28th September, 2023 and a Statement of
Defense was filed by plaintiff no. 2 on 26th October, 2023. Further,
Reply/Rejoinder Submissions were filed by the defendant on 09th
November, 2023, which were refuted by the plaintiff no. 2 on 04th
December, 2023 in its rejoinder.
4.14. Thereafter, on 06th June, 2024, the defendant informed the plaintiffs
that they intended to amend their submissions before the LMAA. The
defendant then applied with the LMAA in October, 2024, for determination
of preliminary issues and on 08th October, 2024, sought for directions on the
defendant‟s request for amendment. During this course, the parties had
exchanged various communications amongst themselves and with the
LMAA.
4.15. The LMAA issued a communication on 22nd November, 2024, stating
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that before making any decision on the preliminary issues, it was necessary
to examine certain other issues, and therefore, the LMAA observed that the
decision on the preliminary issues in the first arbitration reference would
only be binding on plaintiff no. 2, i.e., SARR Freights Limited, and in this
regard, the defendant was required to review its position.
Second Arbitration/Reference
4.16. The defendant by Email dated 06th December, 2024, served a Notice
of commencement of a second arbitration in relation to the Booking Note
against plaintiff no. 1. The same was replied to by plaintiff no. 2 by Email
dated 19th December, 2024, denying the claims of the defendant, with notice
of appointment of its arbitrator, without prejudice to their objections.
4.17. The defendant filed its Claim Submissions on 15th January, 2025 and
the plaintiff no. 1 filed their Defense Submissions on 13th February, 2025.
Further, the rejoinder was filed by the defendant on 28th February, 2025.
4.18. The LMAA in the Second Arbitration/Reference by way of Order
dated 26th March, 2025 decided to rule on certain preliminary issues and
allowed for the two arbitration proceedings to be heard concurrently. The
preliminary issues for determination, as framed by the LMAA, are as
follows:
―(1) Was any arbitration agreement agreed between the parties, in
either or both of the fixture recap dated 4 April 2023 or the booking
note dated 4 April 2023, such that this Tribunal has jurisdiction to
hear the disputes in this reference, and if so, in what terms?
(2) Should the booking note be rectified by substituting the words
―clause 20-43‖ for ―clause 20-41‖?
(3) Is the ―Merchant‖ (Charterers), being a party to the fixture recap
and/or the booking note, SARR Freights Corporation or SARR
Freights Limited?
(4) Is the ―Carrier‖ (Owners), being a party to the booking note
and/or fixture recap, the owner of MV PELAGICA or the owner of MVSignature Not Verified
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PANTHERA J, the Claimant in these references?‖
4.19. Further, the parties filed their evidence and written submissions and
thereafter, the defendant, by Email dated 21st August, 2025, informed the
LMAA that no oral hearing was required for the preliminary issues.
4.20. Pursuant to the same, on 21st August, 2025, a third arbitrator was
appointed by the two existing arbitrators in consonance with paragraph 8
(b)(ii) of the LMAA Terms, 2021.
4.21. Subsequently, on 18th October, 2025, the Partial Award was passed by
the majority Tribunal, dismissing the plaintiffs‟ objections on all four
preliminary issues. Further, one of the co-arbitrators issued a Dissenting
Award, wherein, he concurred with the findings of the majority in respect of
Issue Nos. 1 to 3, however, dissented on Issue No. 4, holding that the
reference to arbitration by the defendant is not maintainable.
4.22. Thereafter, the defendant by way of Email dated 20th November,
2025, while referring to the Tribunal‟s determination, proposed for a
timetable up to the Final Award.
4.23. Thus, the plaintiffs have approached this Court and have filed the
present suit and application, being aggrieved by the arbitration proceedings
commenced by the defendant in London before the LMAA.
PLAINTIFFS‟ SUBMISSIONS:
5. The plaintiffs have made the following submissions, for the purposes
of the present application:
5.1. The present suit is maintainable and the submissions of the defendant
that the designation of a foreign seat of arbitration ipso facto ousts the
jurisdiction of Indian Civil Courts and all questions relating to the existence,
validity, interpretation, and jurisdiction of the Arbitral Tribunal fall withinSignature Not Verified
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the exclusive supervisory jurisdiction of the Courts at the seat, is erroneous.
5.2. Section 9 of the Code of Civil Procedure, 1908 (“CPC“) confers
jurisdiction on Civil Courts to try all suits of civil nature, unless their
cognizance is expressly or impliedly barred, and neither the Arbitration and
Conciliation Act, 1996 (“Arbitration Act“) nor the mere choice of foreign
seat constitutes such a bar. Further, under Section 151 of the CPC, the Court
of equity possesses inherent powers to prevent injustice, is competent and
can exercise power to restrain foreign seated arbitration and grant anti-
arbitration injunctions when the exceptional circumstances show that the
arbitral proceedings would be vexatious, oppressive or against the public
policy of India.
5.3. This Court has jurisdiction for the present matter as part cause of
action arose in New Delhi, as the shipment of goods originated from New
Delhi, negotiations and even payments were made at New Delhi. Further,
the Booking Note was part of the same transaction, and even bears the stamp
which mentions the word, “Delhi”. Moreover, the List of Equipment, Pre-
Dispatch Inspection Reports, Packing Lists contained in the Fixture Recap
and the Booking Note, all mention that the voyage was between New Delhi
and Sudan. Thus, the contract was partially performed in New Delhi and in
terms of Section 20(c) of CPC, this Court has jurisdiction as substantial part
of cause of action took place in New Delhi.
5.4. The plaintiffs are amenable to the personal jurisdiction of the Courts
of New Delhi, as they carry on their business at their registered office in
New Delhi and in matters seeking anti-arbitration injunctions, jurisdiction
lies with Courts, to which the plaintiffs are personally amenable. Further,
any enforcement proceedings in relation to arbitration would be filed in New
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Delhi, as all assets of the plaintiffs are in New Delhi.
5.5. The mere participation of the plaintiffs in the arbitration proceedings
till the Partial Award was passed on jurisdictional objections, does not mean
that the Civil Court is powerless to grant injunctive relief to prevent
vexatious or oppressive conduct of the defendant, using the inherent powers
under Section 151 read with Section 9 of the CPC.
5.6. There is no bar on a Civil Court‟s intervention due to the principle of
Kompetenz-Kompetenz, as the doctrine does not create any presumption in
favour of the Tribunal on which the parties have not conferred jurisdiction,
and a party cannot be compelled to submit to arbitral process, which are
alleged to be fundamentally unfair or structurally compromised.
5.7. The present is a case which squarely falls within the narrow class of
exceptional circumstances warranting judicial intervention as the plaintiffs
have been compelled to arbitrate despite there being no arbitration clause
between the parties. Further, the defendant has pursued parallel arbitral
proceedings on the same cause of action and sought to substitute parties
after one year of the commencement of the arbitration despite absence of
privity, dragged the arbitration along for another whole year to complete
pleadings in the Second Reference, thereafter, procured a Partial Award by
effectively rewriting the underlying contract, and at last, abandoned the First
Reference after the plaintiffs filed the present anti-arbitration injunction suit.
Thus, each of these acts on part of the defendant constitutes procedural
oppression, and reveals an abuse of the arbitral process.
5.8. The defendant was never party to the Booking Note, rather it was only
the owner of MV Pelagica, with whom the plaintiff no. 2 had a contract.
Therefore, there is no privity of contract with the defendant.
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5.9. The rectification of the Booking Note by the LMAA creates an
arbitration agreement between the parties, which is completely opposed to
the public policy of India. Further, the mandate of the Specific Relief Act,
1963 is clear that rectification of contract or any instrument can only be
done by the Court and that too, if the parties specifically claim such relief in
their pleadings. Therefore, the rectification of the contract by the Tribunal
when no arbitration agreement existed between the parties usurps the
jurisdiction of the Courts as expressed in Clause 4 of the Booking Note, and
thus, in effect, is untenable. Moreover, Clause 4 of the Booking Note was
only in connection to the Bill of Lading, which never came into existence.
5.10. Section 28(3) of the Arbitration Act categorically provides that a
Tribunal shall consider the terms of the contract while deciding and making
an Award. Therefore, despite there being an express and unambiguous
reference to ―Additional Rider Clauses 20-41‖ in the Booking Note, which
was consciously chosen by the parties, the Tribunal by importing an
arbitration clause under the guise of „typographical error‟, disregarded the
intention of the parties and the same is against the tenor of Section 28(3) of
the Arbitration Act.
5.11. The Booking Note further records that it shall be performed subject to
the terms contained on pages 1 and 2 thereof, and that those terms shall
prevail over any prior negotiations or understandings. The said aspect is in
the nature of an entire agreement clause, which disregards all prior
negotiations/arrangements. Therefore, Clause 4 of the „Standard Terms‟
which confers jurisdiction on Courts situated in the Carrier‟s principal place
of business, i.e., Denmark, cannot be rewritten or rectified. Further, the
contractual intent of the parties is manifest from the Booking Note itself,
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wherein, the parties expressly incorporated only the Additional Rider
Clauses 20-41 under the „Special Terms‟, and Clauses 42 and 43 were
expressly excluded.
5.12. The contention of the defendant that the plaintiffs have waived their
right to challenge the Partial Award by not challenging the said Award in
England and approaching this Court, is untenable, as the Courts in England
under the Arbitration and Conciliation Act, 1996 of the United Kingdom
(“UK Arbitration Act”), could not have granted the relief sought by the
plaintiffs for stay on the impugned arbitration proceedings on account of it
being vexatious and oppressive.
5.13. The Courts of London would not have jurisdiction as the plaintiff has
challenged the very existence of a valid and binding arbitration agreement.
Therefore, even if the „seat‟ as per Arbitration Clause is „London‟, the same
would not apply in view of an invalid arbitration agreement. Further, no
cause of action had taken place in London for the Courts therein to assume
jurisdiction, and reliance on the Fixture Recap cannot be construed to
include an intentionally excluded Arbitration Clause, particularly, when the
Booking Note expressly supersedes the Fixture Recap.
5.14. Even if London is treated to be the seat of arbitration, still LMAA
procedure will not automatically be applicable.
5.15. The substitution of a party during the course of arbitral proceedings is
unknown to the arbitration law and strikes at the root of procedural fairness,
and the attempt of the defendant to reframe its case by invoking arbitration
for the second time, is procedural abuse. Further, while the First Reference
was pending, the defendant, without withdrawing or abandoning the same,
commenced the Second Reference arising out of the same Booking Note, for
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the same voyage and the same alleged breach, with the same cause of action.
Therefore, the invocation of parallel proceedings constitutes procedural
oppression by the defendant.
5.16. Any mistakes with regard to the Booking Note will be attributable to
the draftsmen, and the Booking Note was admittedly a standard form
contract. Further, there can be no rectification in case of a unilateral mistake,
which is not attributable to the plaintiffs and the doctrine of contra
preferentum states that if a document is capable of two interpretations, the
one favoring the non-draftsmen would prevail. Therefore, any error in the
standard form contract cannot be read against the plaintiffs as it was not
drafted by the plaintiffs.
5.17. The LMAA qua Issue No. 1 has held that there was an arbitration
agreement between the parties with the reasoning that the non-addition of
the Arbitration Clause was a „typographical error‟, and the plaintiffs had
signed on all the pages of the Booking Note. Therefore, it was inferred that
Arbitration Clause was not included because of a „typographical error‟.
However, the Tribunal overlooked that Clause 41, which was included in the
terms of the Booking Note, is on the same page as Clauses 42 and 43, and
therefore, the plaintiffs had signed the said page.
5.18. The Tribunal‟s finding on Issue No. 4 is perverse and is opposed to
the public policy of India, as the contract was entered with the agents, i.e.,
Ocean7 Projects ApS acting on behalf of the owners of MV Pelagica as the
Carrier. Therefore, the findings of the Tribunal have compelled the plaintiffs
to arbitrate against a party with whom there is no contractual privity.
5.19. The LMAA, despite recognizing that the two impugned arbitration
proceedings involve the same dispute and arise from the same contract and
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cause of action, nevertheless, permitted both arbitral proceedings to continue
simultaneously, instead of terminating the First Reference. Thus, the
plaintiffs have been compelled to defend two parallel proceedings, which is
plainly oppressive, vexatious, and travels beyond the permissible limits of
arbitral jurisdiction, and falls within circumstances for grant of injunction in
favour of the plaintiffs.
5.20. The prosecution of two parallel arbitration proceedings, on the same
cause of action, arising out of the same Booking Note, and claiming the
same relief, is opposed to the public policy of India. Further, the defendant
in its Reply to I.A. No 30141/2025 filed before this Court, has expressly
admitted that it has dropped the First Reference and that it is now pursuing
arbitration only against plaintiff no. 1, which supports the position of the
plaintiffs that parallel proceedings are untenable and abusive. Abandonment
of First Reference, which was pursued for a year and a half, does not cure
the prejudice already caused to the plaintiffs, and continuation of the
surviving arbitration in itself is oppressive and unconscionable.
5.21. The contract between the parties substantively only provided an
option for substitution of the vessel and not for substitution of parties,
meaning thereby, that the owner of MV Pelagica, or its agent, could have
substituted the vessel with another compliant vessel (of equivalent capacity
and capability) owned or operated by them. It was never contemplated that
the plaintiff no. 2 (the Charterer) would be dealing with an unknown vessel
owner/charteree/contracting party.
5.22. The balance of convenience is in favour of the plaintiffs as no harm
will be caused to the defendant. However, if the arbitration before LMAA
continues, the plaintiffs will be compelled to submit to a process that may
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ultimately be held to be without jurisdiction, and therefore, irreparable harm
will also be caused to the plaintiffs.
DEFENDANT‟S SUBMISSIONS:
6. The defendant has made the following submissions, for the purposes
of the present application:
6.1. The plaintiffs had raised the same arguments before the Tribunal that
have been made in the present suit. The Tribunal has held that there exists a
valid arbitration agreement between the parties. Further, the plaintiffs seek
to challenge the Partial Final Award under the guise of the present suit.
Moreover, the defendant is only pursuing arbitration proceedings against
plaintiff no. 1, and any relief seeking injunction against arbitration
proceedings with plaintiff no. 2 is infructuous.
6.2. This Court lacks territorial jurisdiction as the plaint does not disclose
any material that substantial or integral part of cause of action had arisen
within the territorial jurisdiction of this Court. Therefore, the grounds taken
by the plaintiffs fail to establish the territorial jurisdiction of this Court.
6.3. Section 20 of the CPC can only be invoked where the defendant
resides or carries on the business. The residence or carrying of business of
the plaintiffs does not vest territorial jurisdiction in this Court. Further, the
Booking Note has been signed by the agents residing in Denmark and the
same was exchanged over Email, therefore, it cannot be said that the
Booking Note was executed in India.
6.4. The case of the plaintiffs that the personal amenability of the plaintiffs
to the jurisdiction of the Courts in New Delhi would inure this Court with
jurisdiction is incorrect, as the same can only be effected if both the parties
make such reference, and thus, the same is against the tenor of Section 20 of
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CPC.
6.5. No performance of the contract or part thereof has given rise to a
cause of action before this Court. The cause of action arises at the place
where the contract was made, or where it is performed or breached. Further,
the dispute occurs from a foreign seated agreement, negotiated through
brokers and agents outside of Delhi, with a foreign owned vessel for a
foreign voyage, and the alleged breach of cancellation of foreign shipment.
Thus, the plaintiffs have failed to establish any cause of action that has
arisen before this Court.
6.6. The contention of the plaintiffs that part cause of action arose in New
Delhi is incorrect, as the document relied upon by the plaintiffs to
substantiate the same was executed between the plaintiffs and the United
Nations, and therefore, the defendant was not privy to that contract. Further,
the other documents such as the List of Equipment, Pre-dispatch Inspection
Report and Packing Lists, cannot be relied upon as the same pre-date the
Booking Note and Fixture Recap, and the defendant was not a party to those
documents.
6.7. The plaint does not plead that any meetings were conducted between
plaintiff no. 2 and the defendant at New Delhi for execution of the Booking
Note. The record reflects that negotiations were through the common broker
and the agent, neither of whom are based out of New Delhi, and moreover,
the Booking Note has not been signed in New Delhi. Therefore, the
plaintiffs cannot travel beyond their pleadings.
6.8. Even assuming that the correct law and jurisdiction is as per Clause 4
of the Booking Note, the jurisdiction of this Court stood ousted as the said
Clause provides for jurisdiction of Courts at the principal place of business
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of the Carrier. Therefore, as the parties have agreed for arbitration as per
English Law, the Courts of England would have jurisdiction. Thus, the
plaintiffs cannot be allowed to approbate and reprobate on the clauses of the
Booking Note.
6.9. The juridical seat of arbitration in the present case is London and
therefore, it is only the English Courts which are vested with supervisory
jurisdiction over the arbitral proceedings and the Partial Final Award. Any
reliefs sought by the plaintiffs can only be before the English Courts. Thus,
this Court does not possess concurrent or residual supervisory jurisdiction
over a foreign seated arbitration. Moreover, even if the plaintiffs were to
deny the existence of the arbitration agreement between the parties, they
cannot seek a foreign award to be declared null and void in an anti-
arbitration suit.
6.10. The parties had entered into the Fixture Recap on 04 th April, 2023,
which included an Arbitration Clause, and the plaintiffs had no objections
towards the same. Further, the Fixture Recap incorporates a binding and
separable arbitration agreement which survives termination and provides for
the designated seat of arbitration as „London‟.
6.11. The determination of validity of the arbitration clause falls squarely
within the exclusive domain of the Arbitral Tribunal under the doctrine of
Kompetenz-Kompetenz, and the said issue has already been adjudicated by
the LMAA.
6.12. The Booking Note does not override the Fixture Recap and the
expression ―prevail over‖ indicates an intention to override only
inconsistent arrangements, and Clause 43 of the Booking Note is consistent
with the Arbitration Clause in the Fixture Recap. Therefore, the parties
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intended the arbitration agreement to subsist and to operate in tandem across
both the documents.
6.13. The interpretation of the plaintiffs in relation to the „mutual typing
mistake‟ does not amount to abuse, as both the Fixture Recap and Booking
Note are of the same date. The page which contained both Clauses 42 & 43
was signed by both the parties.
6.14. The invocation of two references to arbitration was due to the conduct
of the plaintiffs, and the conduct of the defendant was bona fide, without any
intent to harass. Further, the Tribunal has unanimously held plaintiff no. 1 to
be the ―Merchant‖ under the Booking Note. Therefore, the defendant seeks
to continue the arbitration proceedings only against plaintiff no. 1.
6.15. The plaintiffs are barred by waiver, acquiescence, and estoppel from
seeking any anti-arbitration relief as the plaintiffs participated in the arbitral
proceedings before the Tribunal for over a period of two years, and now that
the Partial Award has attained finality, the plaintiffs now seek to invoke the
jurisdiction of this Court. However, the plaintiffs cannot approbate and
reprobate to stall the arbitration proceedings.
6.16. The argument of the plaintiffs in relation to Section 67 of the UK
Arbitration Act is incorrect, as the English Courts have the jurisdiction to set
aside the Award if they arrive at a finding that the Tribunal does not have
substantive jurisdiction. Further, the challenge to the Partial Final Award
before this Court is legally untenable in the absence of challenge to the same
in the supervisory Court within the prescribed limitation period as per the
UK Arbitration Act.
6.17. The plaintiffs had accepted the vessel of the defendant without any
objection, and the Fixture Recap expressly contemplated that the performing
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vessel would be ―MV Pelagica / MV Panthera J or sub in Carriers’ option‖.
Moreover, Clauses 6 and 20 of the Booking Note permitted substitution of
the performing vessel without notice. Therefore, having accepted
performance without protest, and thereafter, having themselves terminated
the contract, the plaintiffs cannot now allege that the defendant is a stranger,
or that the arbitration is oppressive.
6.18. The plaintiffs have failed to establish exceptional circumstances in the
present case that an anti-arbitration injunction can be granted, as the
proceedings before LMAA are not vexatious or oppressive. Further, even if
a challenge has to be made on the said ground, it has to be made before the
„Appropriate Court‟, which in this case would be the Courts of London.
Moreover, even in domestic Courts, any challenge to an Award of the
Arbitral Tribunal would be by way of an appropriate petition and not by way
of a suit.
6.19. The ingredients of an interim injunction under the principles of Order
XXXIX Rules 1 & 2 of CPC have not been satisfied by the plaintiffs.
Further, the arbitration proceedings between the parties are neither
‗inoperative’ nor ‗incapable of being performed’, the ingredients, which a
party has to showcase, for seeking any interim measure.
FINDINGS AND ANALYSIS:
7. I have heard learned counsels for the parties and perused the record.
8. At the outset, it is clarified that this Court is not sitting in appeal
against the Partial Final Award dated 18th October, 2025 passed in the
arbitral proceedings by the LMAA in London, and is not adjudicating on the
merits of the said Partial Final Award.
9. The scope of adjudication before this Court in the present proceedings
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is with regard to the plea of the plaintiffs to pass injunction orders in order to
restrain the defendant from continuing with the arbitral proceedings initiated
by the defendant against the plaintiffs in London. The principal objection of
the plaintiffs is that the defendant is not party to the contract, i.e., the
Booking Note dated 04th April, 2023 and further, that the said Booking Note,
on the basis of which arbitration proceedings have been initiated by the
defendant, does not contain any Arbitration Clause. Further, it is the case of
the plaintiffs that the defendant cannot rely on the Fixture Recap to create an
Arbitration Clause between the parties or to read an Arbitration Clause into
the Booking Note. Injunction of arbitral proceedings in London is sought by
plaintiffs on the ground that the said proceedings are oppressive, vexatious
and unconscionable.
10. It is further clarified that in the present proceedings, the Court is only
concerned with the issue regarding the commencement and continuance of
arbitral proceedings at the behest of defendant in London, and not the merits
of the case regarding the claims of the respective parties.
11. In the first instance, the Court would deal with the issue regarding the
jurisdiction of this Court, as raised by the defendant. In case, the Court
comes to a conclusion at the present interim stage that this Court has
territorial jurisdiction to entertain the present suit, this Court shall consider
the pleas raised by the plaintiffs regarding the privity of contract with
defendant, existence of a valid Arbitration Clause and whether the plaintiffs
have established any prima facie case for interim injunction in their favour
for injuncting the arbitration proceedings commenced at the behest of the
defendant in London.
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Whether this Court has the jurisdiction to entertain the present suit?
12. On the aspect of jurisdiction as to subject-matter, it is to be noted
foremost that it is settled principle that there exists an inherent right in every
person to institute a suit of civil nature, and such a suit requires no specific
statutory authorization, so long as it is not barred by any existing law, either
impliedly or expressly. Section 9 of the CPC indicates that Civil Courts have
the jurisdiction to try all Civil Suits except those which are expressly or
impliedly barred and thus, the ouster of jurisdiction of a Civil Court would
be based on an expressed or implied bar. Section 9 of CPC reads as under:
“9. Courts to try all civil suits unless barred.–The Courts shall
(subject to the provisions herein contained) have jurisdiction to try all
suits of a civil nature excepting suits of which their cognizance is
either expressly or impliedly barred.
[Explanation I].–A suit in which the right to property or to an office
is contested is a suit of a civil nature, notwithstanding that such right
may depend entirely on the decision of questions as to religious rites
or ceremonies.
[Explanation II].–For the purposes of this section, it is immaterial
whether or not any fees are attached to the office referred to in
Explanation I or whether or not such office is attached to a particular
place.]‖
13. Reference in this respect as to jurisdiction of Civil Courts and Section
9 of CPC may be made to the judgment of five-judge bench of the Supreme
Court in the case of Dhulabhai Versus State of Madhya Pradesh and
Another1, wherein, it has been held as follows:
―xxx xxx xxx
The next question which was considered was whether the jurisdiction
conferred on the taxing authorities included the jurisdiction to
determine the nature of the transaction, or was the decision about the
character of the transaction, a decision on a collateral fact? This
Court held that it was the former and not the latter. Therefore the1
1968 SCC OnLine SC 40.
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decision was held to be merely an error in assessment which was
capable of correction by the usual procedure of appeals, etc. The bar
of section 20 was therefore, held to apply. During the course of the
arguments the Special Bench considered Basappa’s case(2) and
distinguished it from the Firm of Illuri Subbayya Chetty’s case(3), on
the ground that the former was not barred by section 18-A as it did
not exist. The Special Bench, however, made an observation to the
following effect:
―In cases where the exclusion of the civil courts‟ jurisdiction is,
expressly provided for, the consideration as to the scheme of the
statute in question and the adequacy or the sufficiency of the
remedies provided for by it may be relevant but cannot be decisive.
But where exclusion is pleaded as a matter of necessary implication,
such considerations would be very important, and in conceivable
circumstances, might even become decisive. If it appears that a
statute creates a special right or a liability and provides for the
determination of the right and liability to be dealt with by tribunals
specially constituted in that behalf, and it further lays down that all
questions about the said right and liability shall be determined by
the tribunals so constituted, it becomes pertinent to enquire whether
remedies normally associated with actions in civil courts are
prescribed by the said statute or not.”
The Special Bench refrained from either accepting the dictum of Mask
and Co.’s case (4) or rejecting it, to the effect that even if jurisdiction
(1) (1947) 74 I.A. 50; 15 I.T.R. 332 .(3) (1964) 1 S.C.R. 752; 14 S.T.C.
680. (2) (1964) 5 S.C.R. 517; 15 S.T.C. 144 .(4) (1940) 67 I.A. 222. is
excluded by a provision making the decision of the authorities final,
the civil courts have jurisdiction to examine into cases where the
provisions of the particular Act are not complied with.
Neither of the two cases of Firm of Illuri Subbayya(1) or Kamala
Mills (2) can be said to run counter to the series of cases earlier
noticed. The result of this inquiry into the diverse views expressed in
this Court may be stated as follows:
(1) Where the statute gives a finality to the orders of the special
tribunals the civil courts‟ jurisdiction must be held to be excluded if
there is adequate remedy to do what the civil courts would normally
do in a suit. Such provision, however, does not exclude those cases
where the provisions of the particular Act have not been complied
with or the statutory tribunal has not acted in conformity with the
fundamental principles of judicial procedure.
(2) Where there is an express bar of the jurisdiction of the court, an
examination of the scheme of the particular Act to find the adequacySignature Not Verified
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or the sufficiency of the remedies provided may be relevant but is not
decisive to sustain the jurisdiction of the civil court.
Where there is no express exclusion the examination of the remedies
and the scheme of the particular Act to find out the intendment
becomes necessary and the result of the inquiry may be decisive. In
the latter case it is necessary to see if the statute creates a special
right or a liability and provides for the determination of the right or
liability and further lays down that all questions about the said right
and liability shall be determined by the tribunals so constituted, and
whether remedies normally associated with actions in civil courts
are prescribed by the said statute or not.
(3) Challenge to the provisions of the particular Act as ultra vires
cannot be brought before tribunals constituted under that Act. Even
the High Court cannot go into that question on a revision or reference
from the decision of the tribunals.
(4) When a provision is already declared unconstitutional or the
constitutionality of any provision is to be challenged, a suit is open. A
writ of certiorari may include a direction for refund if the claim is
clearly within the time prescribed by the Limitation Act but it is not a
compulsory remedy to replace a suit.
(5) Where the particular Act contains no machinery for refund of tax
collected in excess of constitutional limits or illegally collected a suit
lies.
(6) Questions of the correctness of the assessment apart from its
constitutionality are for the decision of the authorities and a civil suit
does not lie if the orders of the authorities are declared to be final or
there is an express prohibition in the particular Act. In either case the
scheme of the particular Act must be examined because it is a relevant
enquiry.
(7) An exclusion of the jurisdiction of the civil court is not readily to
be inferred unless the conditions above set down apply.
xxx xxx xxx‖
(Emphasis Supplied)
14. Delving on the aspect of jurisdiction of the Civil Courts to entertain
suits, including, suits wherein the relief of anti-arbitration injunction is
prayed for, this Court in the case of Engineering Projects (India) Limited
Versus MSA Global LLC (Oman)2, held as follows:
2
2025 SCC OnLine Del 5072.
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―xxx xxx xxx
45. Reference can also be made to the decision of the Supreme Court
in the case of S. Vanathan Muthuraja v. Ramalingam @
Krishnamurthy Gurukkal, wherein, the Court while considering
Section 9 of the CPC and the question of exclusion of Civil Court’s
jurisdiction, has held that when a legal right is infringed, a suit
would lie unless there is a bar against entertainment of such civil
suit and the Civil Courts would take cognizance of it. It is further
observed in the said decision that the normal rule of law is that Civil
Courts have jurisdiction to try all suits of civil nature except those of
which cognizance is either expressly or by necessary implication
excluded. The rule of construction being that every presumption
would be made in favour of the existence of a right and remedy in a
democratic set up governed by the rule of law and jurisdiction of the
Civil Courts is assumed. The exclusion would, therefore, normally
be an exception. The relevant extract of the said decision reads as
under:–
―Under Section 9, CPC, the courts shall, subject to the provisions
contained therein, have jurisdiction to try all suits of civil nature
excepting suits cognizance of which is either expressly or
impliedly barred. When a legal right is infringed, a suit would lie
unless there is a bar against entertainment of such civil suit and
the civil courts would tame cognizance of it. Therefore, the
normal rule of law is that civil courts gave jurisdiction to try all
suits of civil nature expect those of which cognizance is either
expressly or by necessary implication excluded. The Rule of
construction being that every presumption would be made in
favour of the existence of a right and remedy in a democratic set
up governed by rule of law and jurisdiction of the civil courts is
assumed. The exclusion would, therefore, normally be an
exception. Courts generally construe the provisions strictly when
jurisdiction of the civil courts is claimed to be excluded. However,
in the development of civil adjudication and abnormal delay at
hierarchical stages, statutes intervene and provide alternative mode
of resolution of civil disputes with less expensive but expeditious
disposal. It is settled legal position that if a Tribunal with limited
jurisdiction cannot assume exclusive jurisdiction and decide for
itself the dispute conclusively, in such a situation, it is the court that
is required to decide whether the Tribunal with limited jurisdiction
has correctly assumed jurisdiction and decided the dispute within
its limits. it is settled law that when jurisdiction has is conferred on
a Tribunal, the court examine whether the essential principles of
jurisdiction have been followed and decided by the Tribunals
leaving the decision on merits to the Tribunal. It is also equallySignature Not Verified
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settled legal position that where a statute gives finality to the
orders of the special Tribunal, the civil court‟s jurisdiction must
be held to be excluded, if there is adequate remedy to do what the
civil court would normally do in a suit. Such a provision, however
does not exclude those cases where the provision, of the particular
Act have not been complied with or the statutory Tribunal has not
acted in conformity with the fundamental principles of judicial
procedure. Where there is an express bar of jurisdiction of the
Court, an examination of the scheme of the particular Act to find
the adequacy or the sufficiency of the remedies provided may be
relevant but is not decisive to sustain the jurisdiction of the civil
Court. Where there is no express exclusion, the examination of
the remedies and the scheme of the particular Act to find out the
intendment becomes necessary and the result of the inquiry may
be decisive. In the latter case, it is necessary that the statute
creates a special right or liability and provides remedy for the
determination of the right or liability and further lays down that
all questions about the said right or liability shall be determined
by the Tribunal so constituted and the question whether remedies
are normally associated with the action in civil courts or
prescribed by the statutes or not require examination. Therefore,
each case requires examination whether the statute provides right
and remedy and whether the scheme of the Act is that the procedure
provided will be conclusive and thereby excludes the jurisdiction of
the civil court in respect thereof.‖
46. In view of the aforesaid, it is crystal clear that there exists a
strong and statutorily entrenched presumption in favour of the
jurisdiction of Civil Courts, as enshrined under Section 9 of
the CPC. This provision confers upon Civil Courts the authority to
adjudicate all suits of a civil nature unless such jurisdiction is
expressly or by necessary implication barred by statute. The
jurisprudential foundation of Section 9 of CPC affirms that
exclusion of the Civil Courts‟ jurisdiction is not to be readily
inferred; it must be clearly provided for in the concerned enactment
or be deducible by compelling implication. While conducting this
inferential exercise, the Courts usually take into account various
factors and circumstances, such as availability of complete remedy
before the Tribunal, adherence of the Tribunal to settled judicial
procedures, functioning of the Tribunal in tune with the special
enactment, finality of the orders of the Tribunal, nature of oversight
of Civil Courts over the functioning of the Tribunal etc. There could
be other factors too, in the specific context of the case at hand, and
such relevant factors could not be pigeonholed. Accordingly, it couldSignature Not Verified
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be seen that in the absence of a clear legislative intent to the
contrary, Civil Courts retain plenary jurisdiction in all civil matters.
xxx xxx xxx
61. Considering the desirability of maintaining consistency in the
practices and procedures of international arbitration across
jurisdictions, it is of utmost relevance to note that the concept of
anti-arbitration injunction is not alien to other prominent
jurisdictions. Of course, the power is to be exercised sparingly, but
the existence of power, especially in cases of vexatious and
oppressive conduct, is not denied. In J. Jarvis & Sons Ltd. v. Blue
Circle Dartford Estates Ltd., the English Court held that the grant of
anti-arbitration injunction on the ground of vexatiousness,
oppression and abuse of process is permissible, however, the power
is to be exercised sparingly. Further, in Minister of Finance (Inc) and
Malaysian Development Berhad v. International Petroleum
Investment Coy, the English Court of Appeal granted an anti-
arbitration injunction on the ground of vexatious conduct of the
respondent therein. Interestingly, it was granted on the premise that
the act of the respondent in trying to curtail the supervisory
jurisdiction of the regular Court was ‗vexatious’ as the respondent
tried to deflect the challenge to the arbitral award by initiating fresh
arbitration during the pendency of the challenge before the regular
Court. The case is relevant to understand that it is against public
interest to enforce an arbitration agreement/award if the foundation
of the arbitral tribunal is in question, unless the serious
apprehension against the Arbitral Tribunal is decided first. For, the
Courts must prevent the perpetuation of a wrong, and not advance it
by turning a blind eye. Of course, the Courts must be slow in
intervening, but wherever there are demonstrable and undeniable
facts, the Courts are duty bound to act on equitable considerations.
xxx xxx xxx
63. The judicial authority of the Civil Courts under Section 9 of
the CPC and its inherent powers under Section 151 CPC remain
preserved to safeguard against the misuse of the arbitral process,
unless expressly barred by the statute which is not the case herein.
Where the arbitral proceedings are shown to have been vexatious
and oppressive in a manner calculated to harass the opposite party,
the Civil Courts are not only empowered but also under a solemn
duty to intervene. It would be wholly unjust to compel a party to
submit to arbitration when the process itself is a vehicle of abuse,
serving no legitimate adjudicatory purpose.
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64. The Civil Courts are essentially the custodian of all civil rights
and in such situations, to summarily relegate a party to the arbitral
forum, particularly when the very institution of arbitration is being
used to perpetuate unfairness, would amount to a mechanical
application of statutory principles, contrary to both equity and the
broader constitutional mandate of access to justice. It is in these
exceptional cases that the Civil Court must act as a sentinel on the
qui vive i.e., watchful guardian, ensuring that the party alleging
vexation and oppression is not left remediless. The Court must, in
the exercise of its judicial conscience and upon a satisfaction of
procedural abuse, extend its protective jurisdiction and prevent the
continuation of proceedings that are clearly unjust, thereby
upholding the rule of law and preserving the sanctity of
adjudication.
xxx xxx xxx‖
(Emphasis Supplied)
15. The position is, thus, clear that Section 9 of CPC confers jurisdiction
on all Civil Courts to try all suits of a civil nature unless their cognizance is
expressly or impliedly barred. Considering the desirability of maintaining
consistency in the practices and procedures of international arbitration
across jurisdictions, the concept of anti-arbitration injunction is not alien to
other prominent jurisdictions. The jurisdiction of Indian Civil Courts is not
excluded merely because arbitration is seated abroad, and Courts retain
residual equitable powers to prevent abuse of arbitral process. Thus, in the
case of World Sport Group (Mauritius) Limited Versus MSM Satellite
(Singapore) PTE. Limited3, the Supreme Court held as follows:
―xxx xxx xxx
21. The question that we have to decide is whether the Division
Bench of the Bombay High Court could have passed the order of
injunction restraining the arbitration at Singapore between the
parties. As various contentions have been raised by Mr Venugopal,
learned counsel for the appellant, in support of the case of the3
2014 SCC OnLine SC 58.
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appellant that the Division Bench of the Bombay High Court could
not have passed the order of injunction restraining the arbitration at
Singapore, we may deal with each of these contentions separately and
record our findings. While recording our findings, we will also deal
with the submissions made by Mr Gopal Subramanium on behalf of
respondent in reply to the contentions of Mr Venugopal. We will also
consider the correctness of the findings of the Division Bench of the
Bombay High Court separately.
22. We are unable to accept the first contention of Mr Venugopal
that as Clause 9 of the Facilitation Deed provides that any party
may seek equitable relief in a court of competent jurisdiction in
Singapore, or such other court that may have jurisdiction over the
parties, the Bombay High Court had no jurisdiction to entertain the
suit and restrain the arbitration proceedings at Singapore because
of the principle of comity of courts. In Black’s Law Dictionary, 5th
Edn., Judicial Comity, has been explained in the following words:
―Judicial comity.–The principle in accordance with which the
courts of one State or jurisdiction will give effect to the laws
and judicial decisions of another, not as a matter of obligation,
but out of deference and respect.‖
Thus, what is meant by the principle of ―comity‖ is that courts of one
State or jurisdiction will give effect to the laws and judicial decisions
of another State or jurisdiction, not as a matter of obligation but out
of deference and mutual respect.
23. In the present case no decision of a court of foreign country or
no law of a foreign country has been cited on behalf of the
appellant to contend that the courts in India out of deference to
such decision of the foreign court or foreign law must not assume
jurisdiction to restrain arbitration proceedings at Singapore. On the
other hand, as has been rightly submitted by Mr Subramanium,
under Section 9 CPC, the courts in India have jurisdiction to try all
suits of a civil nature excepting suits of which cognizance is either
expressly or impliedly barred. Thus, the appropriate civil court in
India has jurisdiction to entertain the suit and pass appropriate
orders in the suit by virtue of Section 9 CPC and Clause 9 of the
Facilitation Deed providing that the courts in Singapore or any
other court having jurisdiction over the parties can be approached
for equitable relief could not oust the jurisdiction of the appropriate
civil court conferred by Section 9 CPC. We find that in Para 64 of
the plaint in Suit No. 1828 of 2010 filed before the Bombay High
Court by the respondent, it is stated that the Facilitation Deed in
which the arbitration clause is incorporated came to be executed by
the defendant at Mumbai and the fraudulent inducement on the
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part of the defendant resulting in the plaintiff entering into the
Facilitation Deed took place in Mumbai and the rescission of the
Facilitation Deed on the ground that it was induced by fraud of the
defendant has also been issued from Mumbai. Thus, the cause of
action for filing the suit arose within the jurisdiction of the Bombay
High Court and the Bombay High Court had territorial jurisdiction
to entertain the suit under Section 20 CPC.
xxx xxx xxx‖
(Emphasis Supplied)
16. As regards territorial jurisdiction of this Court, Section 20(c) of CPC
delineates on the said aspect, to include jurisdiction of a Court within the
local limits of which cause of action, wholly or in part, arises. Section 20(c)
of CPC reads as under:
―20. Other suits to be instituted where defendants reside or cause of
action arises. – Subject to the limitations aforesaid, every suit shall
be instituted in a Court within the local limits of whose jurisdiction –
xxx xxx xxx
(c) the cause of action, wholly or in part, arises.
[Explanation].–A corporation shall be deemed to carry on business
at its sole or principal office in India or, in respect of any cause of
action arising at any place where it has also a subordinate office, at
such place.‖
(Emphasis Supplied)
17. In the facts of the present case, plaintiffs are Indian companies based
out of Delhi and their registered office is located in New Delhi. The
Booking Note dated 04th April, 2023, which forms the basis of the arbitral
proceedings in London, contains the stamp of plaintiff no. 2, which indicates
the place as Delhi.
18. The Pre-Dispatch Inspection Report dated 07th March, 2023, issued by
IAR Insurance Surveyor & Loss Assessors Private Limited in respect of the
cargo to be transported, was prepared after inspection was carried out in
Army Camp, Gate No. 4, Khanpur, New Delhi. The Report mentions that the
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voyage was to take place from New Delhi to Port Sudan. Thus, even though
the actual voyage was to take place from Port Nhava Sheva, Mumbai to Port
Sudan, the cargo to be transported was to be taken from Army Camp in New
Delhi to Port Nhava Sheva in the first instance. It is also relevant to note that
though the defendant was not a party to this Inspection Report, however, the
Inspection Report was shared with the defendant, and the same was received
by it on 03rd April, 2023. Receipt of the same is also admitted by the
defendant in its „Claim Submissions‟ before the LMAA in the First
Arbitration/Reference.
19. As per the pleadings and documents on record, the Fixture Recap and
the Booking Note contain List of Equipment, Packing Lists and Pre-dispatch
Inspection Reports, which all mention that the voyage was between New
Delhi and Sudan. The contractual obligations, being the shipment of 159
items of military equipment to the UNISFA originated from New Delhi. The
entire negotiations, meetings and correspondence in relation to the aforesaid
shipment was received and/or sent by the plaintiff no. 2 from New Delhi.
20. Further, the arbitral proceedings against which the plaintiffs seek
injunctive and declaratory reliefs, were also commenced by the defendant by
way of notice of arbitration dated 27th July, 2023 and subsequent notice of
arbitration dated 06th December, 2024, both of which were received by the
plaintiffs in New Delhi.
21. The payments in relation to the shipment/cargo were received by
plaintiff no. 1 from the United Nations in New Delhi. In this regard, the
plaintiffs had handed over a Tax Invoice relating to detention charges paid
by the United Nations to the plaintiffs during the Court proceedings on 22nd
January, 2026. It mentions the Delhi office of plaintiffs and bears the name
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of plaintiff no. 1.
22. Thus, it is apparent that part of cause of action has arisen at New
Delhi, i.e., within the territorial jurisdiction of this Court.
23. In the case of A.B.C. Laminart (P) Ltd. and Another Versus A.P.
Agencies, Salem4, the Court discussed the connecting factors based upon
which jurisdiction is said to arise under Section 20(c) of CPC. In the
instance of breach of contract, the Court noted that cause of action consisted
of making of the contract, and of its breach, so that the suit may be filed
either at the place where the contract was made or at the place where it
should have been performed, and the breach occurred. The making of the
contract is part of the cause of action. A suit qua a contract, therefore, can be
filed at the place where it was made. Thus, it was held as follows:
―xxx xxx xxx
13. Under Section 20(c) of the Code of Civil Procedure subject to the
limitation stated theretofore, every suit shall be instituted in a court
within the local limits of whose jurisdiction the cause of action, wholly
or in part arises. It may be remembered that earlier Section 7 of Act
7 of 1888 added Explanation III as under:
―Explanation III.–In suits arising out of contract the cause
of action arises within the meaning of this section at any of the
following places, namely:
(1) the place where the contract was made;
(2) the place where the contract was to be performed or
performance thereof completed;
(3) the place where in performance of the contract any money to
which the suit relates was expressly or impliedly payable.‖
14. The above Explanation III has now been omitted but
nevertheless it may serve as a guide. There must be a connecting
factor.
15. In the matter of a contract there may arise causes of action of
various kinds. In a suit for damages for breach of contract the cause4
(1989) 2 SCC 163.
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of action consists of the making of the contract, and of its breach, so
that the suit may be filed either at the place where the contract was
made or at the place where it should have been performed and the
breach occurred. The making of the contract is part of the cause of
action. A suit on a contract, therefore, can be filed at the place
where it was made. The determination of the place where the
contract was made is part of the law of contract. But making of an
offer on a particular place does not form cause of action in a suit for
damages for breach of contract. Ordinarily, acceptance of an offer
and its intimation result in a contract and hence a suit can be filed
in a court within whose jurisdiction the acceptance was
communicated. The performance of a contract is part of cause of
action and a suit in respect of the breach can always be filed at the
place where the contract should have been performed or its
performance completed. If the contract is to be performed at the place
where it is made, the suit on the contract is to be filed there and
nowhere else. In suits for agency actions the cause of action arises at
the place where the contract of agency was made or the place where
actions are to be rendered and payment is to be made by the agent.
Part of cause of action arises where money is expressly or impliedly
payable under a contract. In cases of repudiation of a contract, 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.
xxx xxx xxx‖
(Emphasis Supplied)
24. Likewise, in the case of Dqs Certification India Private Limited
Versus Isaca Inc. and Others5, the Court held that cause of action is devoid
of a precise definition and encompasses all material facts which require
proof to substantiate the reliefs sought by the plaintiff. Thus, under Section
20(c) of CPC, determination of cause of action would include consideration
of factum of execution of contract, place of execution, place of business,
scope of operation of contract and effect of its breach/determination. These
would be some examples of the fundamental aspects of cause of action,
5
2025 SCC OnLine Del 1892.
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which would show the nexus with the territorial jurisdiction of a Court.
Thus, it was held as follows:
―xxx xxx xxx
22. It is the trite law that a cause of action, although devoid of a
precise definition, encompasses all the material facts that are
mandatorily required to be proved by the plaintiff in order to prove
his entitlement to the relief claimed from the court of competent
jurisdiction. Admittedly, in the present case, Defendant 1 does not
reside in Delhi. However, looking at the nature of the licence
agreement, the plaintiff can issue certification to companies all
around the world, thus, the effect of the licence agreement is felt
within the territorial jurisdiction of this Court. Furthermore, the
plaintiff resides in Delhi and the licence agreement was signed and
executed in Delhi. Moreover, the effect of the impugned termination
notice was also felt in Delhi as the plaintiff resides and works from
the Delhi office. Therefore, the factum of the execution of the
contract, the place of execution, the place of business, the scope of
the operation of the contract and the resultant effect of the breach or
invocation of the contract are illustratively some of the few
fundamental aspects of the cause of the action and they have a
nexus with respect to the jurisdiction of this Court.
23. Therefore, by looking at the averments in the plaint and as per
Section 20(c) CPC, a part of the cause of action arises within the
territorial jurisdiction of this Court, thus, this Court has jurisdiction
to entertain the suit. (See Kusum Ingots & Alloys Ltd. v. Union of
India; Alchemist Ltd. v. State Bank of Sikkim and Nawal Kishore
Sharma v. Union of India).
xxx xxx xxx‖
(Emphasis Supplied)
25. With regard to territorial jurisdiction of this Court, another factor to
be taken into consideration is that plaintiffs are amenable to the personal
jurisdiction of the Courts at New Delhi. As noted hereinabove, the plaintiffs
carry on their business at their registered office at New Delhi and the bank
accounts and assets of the plaintiffs are also located in New Delhi.
26. In this regard, the case of Himachal Sorang Power Private Limited
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and Another Versus NCC Infrastructure Holdings Limited6 may be
referred to, wherein, this Court has held that in suits seeking anti-arbitration
injunctions, jurisdiction lies with Courts to whose jurisdiction the plaintiff is
personally amenable. Thus, it has been held as follows:
―xxx xxx xxx
127. Thus, if I were to attempt an encapsulation of the broad
parameters governing anti-arbitration injunctions, they would be the
following:
i) The principles governing anti-suit injunction are not identical to
those that govern an anti-arbitration injunction.
ii) Courts are slow in granting an anti-arbitration injunction unless it
comes to the conclusion that the proceeding initiated is vexatious
and/or oppressive.
iii) The Court which has supervisory jurisdiction or even personal
jurisdiction over parties has the power to disallow commencement of
fresh proceedings on the ground of res judicata or constructive res
judicata. If persuaded to do so the Court could hold such proceeding
to be vexatious and/or oppressive. This bar could obtain in respect of
an issue of law or fact or even a mixed question of law and fact.
iv) The fact that in the assessment of the Court a trial would be
required would be a factor which would weigh against grant of anti-
arbitration injunction.
v) The aggrieved should be encouraged to approach either the
Arbitral Tribunal or the Court which has the supervisory jurisdiction
in the matter. An endeavour should be made to support and aid
arbitration rather than allow parties to move away from the chosen
adjudicatory process.
vi) The arbitral tribunal could adopt a procedure to deal with ―re-
arbitration complaint‖ (depending on the rules or procedure which
govern the proceeding) as a preliminary issue.
xxx xxx xxx‖
(Emphasis Supplied)
27. Another important factor to be considered by this Court is that any
enforcement proceeding in relation to the impugned arbitration proceedings
would ultimately have to be filed against the plaintiffs in New Delhi. It is to
6
2019 SCC OnLine Del 7575.
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be noted that during the course of arguments, the defendant has also clearly
admitted that any potential enforcement proceedings emanating from a
future award, would be filed at New Delhi.
28. Both the plaintiffs are headquartered in New Delhi, with assets
located within the territorial bounds of this Court. Therefore, enforcement, if
any, would necessarily be pursued in New Delhi, thus, giving this Court
territorial jurisdiction. Dealing with a similar case of anti-arbitration
injunction, holding that amenability of the foreign party to the jurisdiction of
such Court may also be seen in the context of the foreign party coming on a
later date to enforce the foreign decree or foreign award in this country, in
the case of Devi Resources Limited Versus Ambo Exports Limited7, it was
held as follows:
―xxx xxx xxx
65. Equally, merely because an injunction is sought against a
foreign court or a foreign forum and not in personam against a
party amenable to the court in seisin of the prayer for such
injunction, it would not make the prayer for injunction infructuous
if the applicant meets the high test otherwise required. The court may
mould the relief and issue an injunction in personam. There is a line
in some of the judgments, including in Noy Vallesina, that an anti-suit
and anti-arbitration injunction may issue in personam only against a
party amenable to the jurisdiction of the court issuing the injunction.
Such amenability need not be seen or tested at the time of issuance of
the injunction, but may also be seen from a different perspective. If
such an injunction is sought against a foreign party by a party
amenable to the jurisdiction of the court, the amenability of the
foreign party to the jurisdiction of such court may also be seen in
the context of the foreign party coming on a later date to enforce the
foreign decree or foreign award in this country.
xxx xxx xxx‖
(Emphasis Supplied)
29. The defendant, to assert its submission that this Court lacks the
7
2019 SCC OnLine Cal 7774.
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territorial jurisdiction to entertain the present suit, has relied upon the
following judgments:
(a) Golden Peakock Overseas Limited Versus Ranjit Industries & Ors.8
(“Golden Peakock”),
(b) EX. RECT./GD, Vinod Kumar Versus Union of India and Ors.9
(“Vinod Kumar”), and
(c) Capital Fire Engineers Versus State Bank of Patiala10 (“Capital
Fire Engineers”).
30. It is pertinent to note that the Court in the case of Golden Peakock
was deciding an application under Order VII Rule 10 of the CPC, seeking
return of the plaint on the ground that no cause of action had arisen in the
territory of the Court. The Court therein allowed the application by holding
that the entire facts pleaded and not mere happening of an inconsequential
event would determine cause of action. It further held that there were no
specific averments made in the plaint which could show that any transaction
between the parties had been completed or even happened within the
territory of the Court. However, the ratio in the case of Golden Peakock
would not aid the defendant as the entire facts pleaded and specific
averments made in the present case, as has been noted in the preceding
paragraphs in detail, disclose that substantial and integral part of cause of
action has arisen within the jurisdiction of this Court.
31. Further, even the judgment in the case of Vinod Kumar would not be
applicable in the facts of the present case as the Court therein was deciding
8
2005 SCC OnLine Del 1035.
9
2006 SCC OnLine Del 1401.
10
2005 SCC OnLine Del 1041.
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the question of maintainability and cause of action while adjudicating writ
petitions. In the facts of the said case, the Court had come to the conclusion
that no cause of action or part thereof had arisen within the territorial
jurisdiction of the Court. However, the same is not the position in the
present case, in view of the discussion hereinabove.
32. The judgment in Capital Fire Engineers is also clearly
distinguishable as the Court therein was dealing with the issue of
maintainability of an arbitration petition under Section 11 of the Arbitration
Act. The Court noted that the agreement between the parties was executed at
Patiala, Punjab, the work was required to be performed at Patiala and
payments were also made at Patiala, whereas, only a document was
addressed to the petitioner‟s office in New Delhi and thus, the Court at New
Delhi was held not to have jurisdiction. Per contra, in the case at hand, in
view of the plaintiffs being amenable to personal jurisdiction of this Court in
an anti-arbitration suit, the arbitration award, if any, being enforceable in
this Court and other facts and circumstances discussed hereinabove, it is
clear that this Court has territorial jurisdiction in the present case.
33. In the light of the aforenoted facts and the position of law, it cannot be
said that this Court does not have territorial jurisdiction to entertain the
present case. It is apparent that fundamental as well as substantial aspects of
cause of action have arisen within the territorial jurisdiction of this Court,
and thus, this Court shall have the jurisdiction to entertain and adjudicate the
present suit under Section 20(c) of CPC.
Whether there is a binding contract between the parties?
34. This brings us to the next issue as to whether there is valid contract
between the plaintiffs and the defendant.
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35. The plaintiffs have raised the contention that there is no privity of
contract between the defendant and the plaintiffs and that the defendant is a
complete stranger to the Booking Note dated 04th April, 2023.
36. This Court notes that the present case pertains to a shipping contract,
wherein, parties enter into contracts through agents and brokers. In the
present case, Pirama National Shipping Services LLC was the common
broker to the plaintiffs and the defendant, while Ocean7 Projects ApS was
the agent of the owners of various vessels. It is the agent who decides which
vessel of which owner is available to undertake the journey of shipment of
cargo. In contracts related to shipping, the contracts are discussed and
finalized through the broker, who is common to the parties and the agent of
the vessels belonging to various carriers, which the agent represents. Thus, it
is the agents who represent and contract on behalf of the owners of the
vessels, which they represent.
37. The Booking Note dated 04th April, 2023 clearly records that the
“carrier” was Ocean7 Projects ApS – as agents to the owners. This means
that the Ocean7 Projects ApS signed the contract, i.e., the Booking Note, not
on their behalf, but as agent of the owner of the vessel. Clause 20 of the
Booking Note clearly stipulates that the vessel, as named in the Booking
Note can be substituted. Clause 20 of the Booking Note, which contains the
contracting terms, reads as under:
―Clause 20: VESSEL
MV Pelagica or Sub
The Carrier shall at any time prior to the expiration of
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construed as imposing on the Carrier an obligation to make such
substitution.‖
(Emphasis Supplied)
38. The Booking Note refers to the vessel as MV Pelagica or Sub,
meaning thereby, that the vessel could be either MV Pelagica or its
substitute, in terms of the contractual terms as encapsulated in the Booking
Note.
39. In the present case, the common broker of the plaintiffs and
defendant, i.e., Pirama National Shipping Services LLC, sent an Email dated
04th April, 2023 to the agent, Ocean7 Projects ApS, who were acting as
agents for the owners of the vessel „MV Pelagica or Sub‟, informing them
that the charterer/SARR Freights had agreed to Fixture Recap set out in that
Email, with very minor changes. The said Email/Fixture Recap dated 04th
April, 2023, reads as under:
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40. Perusal of the aforesaid Email clearly shows that the parties were
cognizant about the identification of the vessel MV Panthera J during the
course of discussion of the terms of the contract. However, since the name
of the vessel MV Pelagica had been given to the United Nations already, it
was decided that the Booking Note would refer to the name MV Pelagica or
Substitute.
41. Thereafter, on the same day, i.e., 04th April, 2023, the agent replied to
the broker vide Email, confirming that they will reflect „MV Pelagica or
Sub‟ in the Booking Note.
42. Subsequent to the aforesaid Fixture Recap, the Booking Note dated
04th April, 2023 was issued evidencing the voyage charterparty as agreed
under the Fixture Note between the owners of „MV Pelagica or Sub‟ and
SARR Freights/plaintiffs. The Booking Note describes the various
contracting parties as follows:
i. Vessel: MV Pelagica or Sub
ii. Carrier: Ocean7 Projects ApS – as Agents to Owners
iii. Merchant: SARR Freights
43. The defendant, as owner, provided the vessel MV Panthera J as
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substitute to MV Pelagica to perform the voyage agreed under the Booking
Note. As is evident from the Fixture Recap, the parties knew and understood
beforehand that MV Panthera J would be the performing vessel under the
Booking Note, and not MV Pelagica. Pertinently, while it was agreed in the
Fixture Recap that the Booking Note will mention „MV Pelagica or Sub‟,
the pre-stowage plan of MV Panthera J was provided to SARR
Freights/plaintiffs.
44. Thereafter, under the Fixture Recap and in accordance with the
Booking Note, the defendant, through the agents, provided daily updates of
MV Panthera J‟s location and estimated time of arrival at Nhava Sheva,
Mumbai. The various Emails sent by the defendant to the agents informing
about MV Panthera J‟s estimated time of arrival, have been placed before
this Court.
45. Accordingly, considering the aforesaid facts and circumstances, this
Court is of the considered prima facie view that there existed a valid
contract between the plaintiffs and the defendant. Therefore, the contention
of the plaintiffs that there is no privity of contract between the defendant and
the plaintiffs, and that the defendant is a complete stranger to the Booking
Note, cannot be accepted. The terms of the contract in the Booking Note
intended that the “Carrier” would be the owner of the performing vessel,
which is the defendant in the present case.
46. The contention of the plaintiffs that the vessel could be substituted
only with another compliant vessel of equivalent capacity and capability,
would be subject matter of disputes on merits, which shall be considered in
proceedings dealing with the merits of the dispute between the parties.
However, for the purposes of adjudicating the issues as raised in the present
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proceedings, this Court is of the prima facie opinion that there exists a valid
contract between the plaintiffs and the defendant.
Whether there exists a valid Arbitration Clause between the parties?
47. Accordingly, having noted that firstly, this Court has jurisdiction to
entertain the present suit and secondly, that prima facie there exists a valid
contract between the parties, the next issue to be considered by this Court is
whether the contract between the parties contains an arbitration clause.
48. As per the case put forth by the plaintiffs, the parties never contracted
to London as the seat of arbitration. The parties had only agreed to pages 1
and 2 of the Booking Note and Additional Rider Clauses 20-41 of the
Booking Note, which did not contain any arbitration clause.
49. As per the plaintiffs, the Booking Note, which was entered between
the parties on 04th April, 2023, contained the Special Terms agreed upon by
the parties on the first page itself, wherein, the words ―As per additional
rider clause 20-41 in attached‖ is mentioned. Since the same did not
mention Clause 43, i.e., the Law and Arbitration Clause, objection has been
raised by the plaintiffs that the Booking Note did not contain any arbitration
clause.
50. In this regard, at the first instance, this Court would look at the
intention of the parties to decide the question regarding existence of an
arbitration clause. For gathering said intention of the parties, the Court shall
not only look at the Booking Note, but also consider the prior
communications between the parties, including, the Fixture Recap.
51. In this regard, reference is made to the judgment in the case of Govind
Rubber Limited Versus Louis Dreyfus Commodities Asia Private
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Limited11, wherein, the Supreme Court has held that an agreement, even if
not signed by the parties, can be spelt out from correspondence exchanged
between the parties. While construing an arbitration agreement or arbitration
clause, the Courts have to adopt a pragmatic and not a technical approach.
An arbitration agreement can be culled out from an exchange of letters,
telegrams or other means of communication, which provide a record of the
agreement. If it can be prima facie shown that the parties are ad idem, then
the mere fact that one party disputes the same, cannot absolve such party
from the liability under the agreement. Thus, in the aforesaid case, Supreme
Court held as follows:
―xxx xxx xxx
12. There may not be any dispute with regard to the settled
proposition of law that an agreement even if not signed by the
parties can be spelt out from correspondence exchanged between the
parties. However, it is the duty of the court to construe
correspondence with a view to arrive at the conclusion whether there
was any meeting of mind between the parties which could create a
binding contract between them. It is necessary for the court to find
out from the correspondence as to whether the parties were ad idem
to the terms of contract.
13. It is equally well settled that while construing an arbitration
agreement or arbitration clause, the courts have to adopt a
pragmatic and not a technical approach. In Rukmanibai
Gupta v. Collector [(1980) 4 SCC 556], this Court held that: (SCC p.
560, para 6)
―6. Arbitration agreement is not required to be in any
particular form. What is required to be ascertained is whether
the parties have agreed that if disputes arise between them in
respect of the subject-matter of contract such dispute shall be
referred to arbitration, then such an arrangement would spell
out an arbitration agreement.‖
14. So far as the first contention made by the learned counsel for the
appellant that since the appellant did not sign the agreement, it cannot
11
(2015) 13 SCC 477.
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be said to be a party to the agreement, we would like to refer Section 7
of the Arbitration and Conciliation Act, which reads as under:
―7. Arbitration agreement.–(1) In this Part, ‗arbitration
agreement’ means an agreement by the parties to submit to
arbitration all or certain disputes which have arisen or which
may arise between them in respect of a defined legal
relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of an
arbitration clause in a contract or in the form of a separate
agreement.
(3) An arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing if it is contained
in–
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other means
of telecommunication which provide a record of the
agreement; or
(c) an exchange of statements of claim and defence in which
the existence of the agreement is alleged by one party and
not denied by the other.
(5) The reference in a contract to a document containing an
arbitration clause constitutes an arbitration agreement if the
contract is in writing and the reference is such as to make that
arbitration clause part of the contract.‖
15. A perusal of the aforesaid provisions would show that in order to
constitute an arbitration agreement, it need not be signed by all the
parties. Section 7(3) of the Act provides that the arbitration agreement
shall be in writing, which is a mandatory requirement. Section 7(4)
states that the arbitration agreement shall be in writing, if it is a
document signed by all the parties. But a perusal of clauses (b) and
(c) of Section 7(4) would show that a written document which may not
be signed by the parties even then it can be arbitration agreement.
Section 7(4)(b) provides that an arbitration agreement can be culled
out from an exchange of letters, telex, telegrams or other means of
telecommunication which provide a record of the agreement.
16. On reading the provisions it can safely be concluded that an
arbitration agreement even though in writing need not be signed by
the parties if the record of agreement is provided by exchange of
letters, telex, telegrams or other means of telecommunication.
Section 7(4)(c) provides that there can be an arbitration agreement in
the exchange of statements of claims and defence in which the
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existence of the agreement is alleged by one party and not denied by
the other. If it can be prima facie shown that the parties are at ad
idem, then the mere fact of one party not signing the agreement
cannot absolve him from the liability under the agreement. In the
present day of e-commerce, in cases of internet purchases, tele
purchases, ticket booking on internet and in standard forms of
contract, terms and conditions are agreed upon. In such agreements,
if the identity of the parties is established, and there is a record of
agreement it becomes an arbitration agreement if there is an
arbitration clause showing ad idem between the parties. Therefore,
signature is not a formal requirement under Section 7(4)(b) or 7(4)(c)
or under Section 7(5) of the Act.
xxx xxx xxx
23. It is clear that for construing an arbitration agreement, the
intention of the parties must be looked into. The materials on record
which have been discussed hereinabove make it very clear that the
appellant was prima facie acting pursuant to the sale contract issued
by the respondent. So, it is not very material whether it was signed by
the second respondent or not.
xxx xxx xxx‖
(Emphasis Supplied)
52. In the case at hand, by way of the Email dated 04th April, 2023, the
broker of the plaintiffs communicated the Fixture Recap with their relevant
changes, the terms of which were to be incorporated in the Booking Note.
The changes made were accepted by an Email of the same date by the agents
of the Carrier (defendant), confirming the changes and providing
confirmation for incorporation of the same in the Booking Note.
53. In the said Email sent by the broker of the plaintiffs, as reproduced
hereinabove, the changes to the Fixture Recap were made in “Yellow”
highlight, and there was no change/suggestion/alteration with respect to the
clause dealing with Arbitration, i.e., Clause 23 of the Fixture Recap, which
states that the Arbitration shall be conducted as per ―English law and
London arbitration‖. It is to be noted that the plaintiffs indicated several
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other changes in the terms of the Fixture Recap, however, despite having the
opportunity to change or even oust the said Arbitration Clause, the plaintiffs
did not put forth any comment or request for its alteration/removal. Thus,
the aforesaid conduct is a clear pointer to the intention of the parties
regarding inclusion of the Arbitration Clause.
54. Furthermore, in the Email dated 04th April, 2023 sent at 12:35:31 PM,
wherein changes to Fixture Recap were made, there is a specific line added
by the broker of the plaintiffs, which reads as follows:
―Charterer agree for following Fixture Recap with very minor
changes as highlighted in yellow, other seems in order and send us
the booking note for Charter‟s signing.‖
(Emphasis Supplied)
55. Thus, as the document (Fixture Recap) is a summary of negotiations
and the final agreed upon essential terms between the parties, the intent of
the parties is evidently discernable therefrom, i.e., to be governed by the
Arbitration Clause between the parties, which prescribes English Law and
arbitration in London. It is apparent that the Fixture Recap between the
parties contains an arbitration agreement, which is binding upon the parties.
56. Post mutual agreement and finalization of the terms of Fixture Recap,
the Booking Note dated 04th April, 2023 was entered into by the parties,
which, based upon the aforesaid undisputed Clause 23 in the Fixture Recap,
incorporates an Arbitration Clause as Clause 43, in the following manner:
―CLAUSE 43: LAW AND ARBITRATION
Bimco Dispute Resolution Clause latest edition to apply, subject to
English Law and LMAA Terms and Procedures.‖
57. In the case of Trimex International FZE Limited, Dubai Versus
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Vedanta Aluminium Limited, India12, the Supreme Court considered the
correspondence exchanged between the parties containing the conditions
prescribed and held that it was clear that the intention of the parties was to
arbitrate any dispute which arose. On the basis of the correspondence
between the parties, the Supreme Court considered the intention of the
parties to conclude that the parties in the said case were ad idem as far as
adopting arbitration as a method of dispute resolution was concerned. The
Supreme Court also took note of the fact that charter party agreements are
governed as per international shipping practices, wherein, the normal
procedure is that the brokers from both sides first agree on the vital terms
through correspondence. Thus, the Supreme Court in the aforesaid case held
as follows:
―xxx xxx xxx
44. From the materials placed, it has to be ascertained whether there
exists a valid contract with the arbitration clause. It is relevant to note
that on 15-10-2007 at 4.26 p.m. the petitioner submitted a commercial
offer wherein Clause 6 contains the arbitration clause i.e. ―this
contract is governed by Indian law and arbitration in Mumbai
courts‖. At 5.34 p.m. though the respondents offered their
comments, as rightly pointed out by Mr K.K. Venugopal, no
comments were made in respect of the “arbitration clause”. It is
further seen that at 6.04 p.m., the petitioner sent a reply to the
comments made by the respondent. Again, on 16-10-2007 at 11.28
a.m., though the respondents suggested certain additional information
on the offer note, here again no suggestion was made with regard to
the arbitration clause.
xxx xxx xxx
46. Apart from the above minute to minute correspondences
exchanged between the parties regarding the offer and acceptance,
as rightly pointed out by Mr Venugopal the offer of 15-10-2007
contains all essential ingredients for a valid acceptance by the
respondents, namely, (1) offer validity period, (2) product description,12
2010 SCC OnLine SC 214.
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(3) quantity, (4) price per tonne, (5) delivery terms (CIF), (6) payment
terms (irrevocable letter of credit), (7) shipment lots, (8) discharge
port, (9) discharge rate with international shipping acronyms, (10)
demurrage rate, (11) period of shipment, (12) vessel details, (13) draft
(port/berth capacity corresponding to height of cargo), (14)
stipulations as to survey by independent surveyors, (15) quality
benchmark, (16) bonus/penalty rates, and (17) applicable laws
(Indian law) and arbitration.
47. The minute to minute correspondence exchanged between the
parties, all the conditions prescribed which had been laid down,
awareness of urgency of accepting the offer without any further delay
to avoid variation in the freight or other factors, coupled with the e-
mail sent on 16-10-2007 at 3.06 p.m. under the subject ―re : offer for
imported bauxite‖ stated in unequivocal terms i.e. ―we confirm the
deal for five shipments‖, would clearly go to show that after
understanding all the details and the confirmation by the respondent,
the petitioner sent a reply stating that ―thanks for the confirmation,
just in time to go to the shipowners‖. All the above details clearly
establish that both the parties were aware of various conditions and
understood the terms and finally the charter party was entered into a
contract by the parties on 17-10-2007.
xxx xxx xxx
49. In the light of the details which have been extracted in the
earlier paragraphs, I am unable to accept the stand of the
respondent. It is clear that if the intention of the parties was to
arbitrate any dispute which arose in relation to the offer of 15-10-
2007 and the acceptance of 16-10-2007, the dispute is to be settled
through arbitration. Once the contract is concluded orally or in
writing, the mere fact that a formal contract has to be prepared and
initialled by the parties would not affect either the acceptance of the
contract so entered into or implementation thereof, even if the formal
contract has never been initialled.
xxx xxx xxx
56. Mr Venugopal pointed out that the charter party agreements are
governed as per international shipping practices. The normal
procedure is that the brokers from both sides first agree on the vital
terms over phone/telex [these terms relate to freight, type of ship, lay
can (period of shipping), demurrage rate, cranes, etc.] At this stage,
no agreement is formally signed but the terms are binding on both
the parties, as per the contract of affreightment (CoA), which in the
present case was entered into on the next day i.e. 17-10-2007.
Certain minor modifications could go on from either side on mutual
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agreement but in the absence of any further modification, the
originally agreed terms of CoA are binding on both the parties. Till
the agreement is actually signed by both the parties, the term “draft”
is used. This does not mean that the terms are not binding as
between the petitioner and the shipowners. Further, according to
him, the existence of the charter party, various international
shipping practices, etc. which are to be pleaded in detail before the
Arbitral Tribunal once it is constituted and not before this Court
since this means extensive quoting of shipping laws and decided
cases which cannot be done in the present arbitration petition. The
above submissions cannot be underestimated.
57. Both in the counter-affidavit as well as at the time of arguments
Mr C.A. Sundaram, learned Senior Counsel for the respondent has
pointed out various differences between the version of the respondent
and the petitioner. However, a close scrutiny of the same shows that
there were only minor differences that would not affect the intention
of the parties. It is essential that the intention of the parties be
considered in order to conclude whether the parties were ad idem as
far as adopting arbitration as a method of dispute resolution was
concerned. In those circumstances, the stand of the respondent that
in the absence of signed contract, the arbitration clause cannot be
relied upon is liable to be rejected.
xxx xxx xxx
60. It is clear that in the absence of signed agreement between the
parties, it would be possible to infer from various documents duly
approved and signed by the parties in the form of exchange of e-
mails, letter, telex, telegrams and other means of
telecommunication.
xxx xxx xxx‖
(Emphasis Supplied)
58. Likewise, holding that conduct of the parties clearly manifested
acceptance of the terms and conditions of the contract, including, the
arbitration clause, Supreme Court in the case of Glencore International AG
Versus Shree Ganesh Metals and Another13, held as follows:
―xxx xxx xxx
19. We are of the considered opinion that it was not necessary for the
appellant to fall back upon the contract of 2012 in the light of the13
2025 SCC OnLine SC 1815.
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admitted facts that demonstrated, in no uncertain terms, that the
parties duly accepted and acted upon Contract No. 061-16-12115-S
dated 11.03.2016. There is no denying the legal proposition that an
arbitration agreement can be inferred even from an exchange of
letters, including communication through electronic means, which
provide a record of the agreement. The mere fact that Contract No.
061-16-12115-S was not signed by respondent No. 1 would not
obviate from this principle when the conduct of the parties in
furtherance of the said contract, clearly manifested respondent No.
1’s acceptance of the terms and conditions contained therein, which
would include the arbitration agreement in clause 32.2 thereof.
xxx xxx xxx‖
(Emphasis Supplied)
59. Apart from Clause 43, i.e., the Arbitration Clause, there is only one
dispute resolution clause, i.e., Clause 4 – Law and Jurisdiction, contained in
the Booking Note. However, the same is only for disputes in relation to the
„Bill of Lading‟. Further, the Booking Note states that pages 1 and 2 thereto
shall prevail over any previous arrangements, and that the Booking Note
shall in turn be superseded by the terms of Bill of Lading. However, in the
present case, the Bill of Lading never came into effect, as the goods were
never loaded on the carrier, and the Bill of Lading would have come into
effect only thereafter.
60. In the present case, there is a clear indication that the parties intended
for arbitration to be the dispute resolution mechanism. There is an indication
of exclusivity shown by the words used in Clause 43, i.e., the Arbitration
Clause, wherein, BIMCO (Baltic and International Maritime Council)
Dispute Resolution Clause has been specifically added. The BIMCO
Dispute Resolution Clause, with stipulation that the same was subject to
English Law and LMAA Terms and Procedures, along with the plain
language of the Arbitration Clause as per Fixture Recap, manifests that the
parties specifically intended to have their disputes resolved by way of
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arbitration in London, under the aegis of LMAA.
61. In view of the aforesaid discussion, this Court is of the prima facie
view that the reference to ―As per additional rider clause 20-41 in
attached‖ in the Booking Note is an inadvertent error and an oversight. It is
to be noted that this oversight persisted even in the blank standard
form/booking note of the agent as well. The said blank standard
form/booking note of the agent, i.e., Ocean7 Projects ApS, is extracted
hereunder:
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62. It is also to be noted that the page of the Booking Note containing
Clauses 42 and 43 was duly signed and stamped by both the parties. The
omission to mention and incorporate Clauses 42 and 43 in the Special
Terms, which governed the parties under the Booking Note, is clearly a
lapse, though said Clauses 42 and 43 containing the Arbitration Clause
clearly form part of the Booking Note and as noted, the pages containing the
said clauses, have been duly signed by both the parties. For convenience of
reference, the said page of the Booking Note is reproduced as under:
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63. Further, the use of the phrase ―prevail over‖ in the Booking Note
indicates an intention that the Booking Note terms should override any
inconsistent prior arrangement. However, the Arbitration Clause contained
in the Fixture Recap, cannot be said to be inconsistent with Clause 43 of the
Booking Note. On the contrary, the Arbitration Clause in the Fixture Recap
is consistent with the terms of the Booking Note.
64. In the second instance, the aspect of commercial sense of entering into
a contract has to be looked at. In other words, it would be of material
consideration whether parties would enter into a commercial contract
without there being any dispute resolution mechanism.
65. If the contention of the plaintiffs that Clause 43 had been deliberately
excluded from the Booking Note is accepted by this Court, it would give rise
to a situation wherein an international commercial contract, such as the
Booking Note in the present case, would be operating without any dispute
resolution clause. The same fails to withstand scrutiny, especially, when
such a contract governs and obligates multiple stages and steps of execution
of the terms therein. In the considered view of this Court, it does not make
commercial sense that in a commercial contract, parties would not envisage
any dispute resolution mechanism.
66. The Clause 23 of Fixture Recap expressly provides for English Law
and London Arbitration. Further, it is to be noted that Clause 43 of the
Booking Note elaborates the Arbitration Agreement already reflected in the
Fixture Recap. It is pertinent to note that negotiations had taken place
between the parties on 04th April, 2023 through a recap exchange and both
the Fixture Recap and Booking Note were executed on 04th April, 2023.
Fixture Recap is a document which in terms of shipping is a concise written
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summary of the agreed upon terms between the ship owner (defendant) and
the charterer (plaintiffs). The same comes from the word „recapitulation‟,
which means a summary of the main points of a discussion.
67. In the present case, the parties discussed the terms on 04 th April, 2023
and on the same date materialized the Fixture Recap, and communicated the
same over Email between the broker of the plaintiffs, i.e., Pirama National
Shipping Service LLC and the agent of the ship owner, i.e., Ocean7 Projects
ApS. Thus, both documents are of the same date, rendering it commercially
implausible that the parties intended to abandon arbitration without any
discussion, and not include Clause 43 in the terms governing the provisions
of the Booking Note, which contained the Arbitration Clause.
68. Further, there is no document before this Court to evidence that the
parties intended to change what had been agreed in the Fixture Recap or that
the parties intended to dispense with the agreement to arbitrate.
69. Therefore, considering the documents before this Court, this Court is
of the prima facie view that there exists a valid, enforceable and operative
Arbitration Agreement between the parties, and the disputes between the
parties ought to be resolved through the arbitration process, in terms of the
agreement between the parties.
70. Delving on the aspects of interpretation of commercial contract inter
se the parties, and holding that the Courts imply a term in a contract in order
to give business efficacy to the transaction, when it is obvious that both
parties must have intended it, the Supreme Court in the case of Nabha
Power Limited (NPL) Versus Punjab State Power Corporation Limited
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(PSPCL) and Another14, held as follows:
―xxx xxx xxx
39. In Liverpool City Council v. Irwin [Liverpool City
Council v. Irwin, 1976 QB 319: (1975) 3 WLR 663 (CA)], Lord
Denning M.R., observed as under: (QB pp. 329-30)
―It is often said that the courts only imply a term in a contract
when it is reasonable and necessary to do so in order to give
business efficacy to the transaction (see The Moorcock [The
Moorcock, (1889) LR 14 PD 64 (CA)], LR p. 68). [Emphasis is
put on the word ―necessary‖: Reigate v. Union Mfg. Co.
(Ramsbottom) Ltd. [Reigate v. Union Mfg. Co. (Ramsbottom)
Ltd., (1918) 1 KB 592 (CA)], KB p. 605.] Or when it is obvious
that both parties must have intended it: so obvious indeed that
if an officious bystander had asked them whether there was to
be such a term, both would have suppressed it testily: “Yes, of
course” [see Shirlaw v. Southern Foundries (1926)
Ltd. [Shirlaw v. Southern Foundries (1926) Ltd., (1939) 2 KB
206: (1939) 2 All ER 113 (CA)], KB p. 227]. ………….
40. …………..
I have respectfully to say that I prefer the views of the majority in the
Court of Appeal. Bowen, L.J. said in the well-known passage in The
Moorcock [The Moorcock, (1889) LR 14 PD 64 (CA)] : (PD p. 68)
„… In business transactions such as this, what the law desires
to effect by the implication is to give such business efficacy to
the transaction as must have been intended at all events by
both parties who are business men … to make each party
promise in law as much, at all events, as it must have been in
the contemplation of both parties that he should be responsible
for….‟
That is not to say, of course, that consideration of what is reasonable
plays no part in determining whether or not a term should be implied.
Thus, in Hamlyn & Co. v. Wood & Co. [Hamlyn & Co. v. Wood &
Co., (1891) 2 QB 488 (CA)], decided only two years after The
Moorcock [The Moorcock, (1889) LR 14 PD 64 (CA)] (to which he
had been a party), Lord Esher, M.R. said, at QB p. 491:
‗… the court has no right to imply in a written contract any
such stipulation, unless, on considering the terms of the
contract in a reasonable and business manner, an implication
necessarily arises that the parties must have intended that the14
(2018) 11 SCC 508.
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suggested stipulation should exist. It is not enough to say that
it would be a reasonable thing to make such an implication. It
must be a necessary implication in the sense that I have
mentioned.‟
…………..
xxx xxx xxx
43. A parallel development in Australia arose out of a judgment of the
Lords of the Judicial Committee of the Privy Council in the appeal
preferred from the Full Court of the Supreme Court of Victoria in B.P.
Refinery (Westernport) Proprietary Ltd. v. Shire of Hastings [B.P.
Refinery (Westernport) Proprietary Ltd. v. Shire of Hastings, 1977
UKPC 13: (1977) 180 CLR 266 (Aus)]. On the implication of the
terms of contraction five conditions were laid down and a reference
was, once again, made to The Moorcock [The Moorcock, (1889) LR
14 PD 64 (CA)] , Reigate v. Union Mfg. Co. (Ramsbottom) Ltd.
[Reigate v. Union Mfg. Co. (Ramsbottom) Ltd., (1918) 1 KB 592
(CA)] and Shirlaw v. Southern Foundries (1926) Ltd. [Shirlaw v.
Southern Foundries (1926) Ltd., (1939) 2 KB 206 : (1939) 2 All ER
113 (CA)] in the following terms:
―40. Their Lordships do not think it necessary to review
exhaustively the authorities on the implication of a term in a
contract which the parties have not thought fit to express. In
their view, for a term to be implied, the following conditions
(which may overlap) must be satisfied: (1) it must be
reasonable and equitable; (2) it must be necessary to give
business efficacy to the contract, so that no term will be
implied if the contract is effective without it; (3) it must be so
obvious that “it goes without saying”; (4) it must be capable of
clear expression; (5) it must not contradict any express term of
the contract.
41. Their Lordships venture to cite only three passages — albeit
they are familiar to every student of this branch of the law. In
The Moorcock [The Moorcock, (1889) LR 14 PD 64 (CA)]
Bowen, L.J. said: (PD p. 68)
‗… I believe if one were to take all the cases, and they are many,
of implied warranties or covenants in law, it will be found that
in all of them the law is raising an implication from the
presumed intention of the parties with the object of giving to
the transaction such efficacy as both parties must have
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as must have been intended at all events by both parties who
are business men….’
It is because the implication of a term rests on the presumed intention
of the parties that the primary condition must be satisfied that the term
sought to be implied must be reasonable and equitable. It is not to be
imputed to a party that he is assenting to an unexpressed term which
will operate unreasonably and inequitably against himself.
In Reigate v. Union Mfg. Co. (Ramsbottom) Ltd. [Reigate v. Union
Mfg. Co. (Ramsbottom) Ltd., (1918) 1 KB 592 (CA)], Scrutton, L.J.
said: (KB p. 605)
‗… A term can only be implied if it is necessary in the business
sense to give efficacy to the contract i.e. if it is such a term that
it can confidently be said that if at the time the contract was
being negotiated someone had said to the parties, “What will
happen in such a case?”, they would both have replied: “Of
course, so and so will happen; we did not trouble to say that; it
is too clear”.‟
In Shirlaw v. Southern Foundries (1926) Ltd. [Shirlaw v. Southern
Foundries (1926) Ltd., (1939) 2 KB 206: (1939) 2 All ER 113 (CA)],
MacKinnon, L.J. said: (KB p. 227)
―… ‗Prima facie that which in any contract is left to be implied
and need not be expressed is something so obvious that it goes
without saying; so that, if, while the parties were making their
bargain, an officious bystander were to suggest some express
provision for it in their agreement, they would testily suppress
him with a common, “Oh, of course!‖ ‘ ‖
(emphasis supplied)
44. The next development was in Investors Compensation Scheme Ltd.
v. West Bromwich Building Society [Investors Compensation Scheme
Ltd. v. West Bromwich Building Society, (1998) 1 WLR 896 : (1998) 1
All ER 98 (HL)] . Lord Hoffmann, in his majority opinion, prefaced
his explanation of reasons with some general remarks about the
principles which contractual documents are nowadays construed–
common sense principles by which any serious utterance would be
interpreted in ordinary life. Almost all the old intellectual baggage of
―legal‖ interpretation was observed to have been discarded, and the
principles summarised as follows: (WLR pp. 912 H-913 F)
―(1) Interpretation is the ascertainment of the meaning which
the document would convey to a reasonable person having all
the background knowledge which would reasonably have been
available to the parties in the situation in which they were at the
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time of the contract.
(2) The background was famously referred to by Lord
Wilberforce as the ―matrix of fact‖, but this phrase is, if
anything, an understated description of what the background
may include. Subject to the requirement that it should have been
reasonably available to the parties and to the exception to be
mentioned next, it includes absolutely anything which would
have affected the way in which the language of the document
would have been understood by a reasonable man.
(3) The law excludes from the admissible background the
previous negotiations of the parties and their declarations of
subjective intent. They are admissible only in an action for
rectification. The law makes this distinction for reasons of
practical policy and, in this respect only, legal interpretation
differs from the way we would interpret utterances in ordinary
life. The boundaries of this exception are in some respects
unclear. But this is not the occasion on which to explore them.
(4) The meaning which a document (or any other utterance)
would convey to a reasonable man is not the same thing as the
meaning of its words. The meaning of words is a matter of
dictionaries and grammars; the meaning of the document is
what the parties using those words against the relevant
background would reasonably have been understood to mean.
The background may not merely enable the reasonable man to
choose between the possible meanings of words which are
ambiguous but even (as occasionally happens in ordinary life)
to conclude that the parties must, for whatever reason, have
used the wrong words or syntax: see Mannai Investments Co.
Ltd. v. Eagle Star Life Assurance Co. Ltd. [Mannai Investments
Co. Ltd. v. Eagle Star Life Assurance Co. Ltd., 1997 AC 749 :
(1997) 2 WLR 945 (HL)]
(5) The ―rule‖ that words should be given their ―natural and
ordinary meaning‖ reflects the common sense proposition that
we do not easily accept that people have made linguistic
mistakes, particularly in formal documents. On the other hand,
if one would nevertheless conclude from the background that
something must have gone wrong with the language, the law
does not require Judges to attribute to the parties an intention
which they plainly could not have had. Lord Diplock made this
point more vigorously when he said in Antaios Compania
Naviera S.A. v. Salen Rederierna A.B. [Antaios Compania
Naviera S.A. v. Salen Rederierna A.B., 1985 AC 191 : (1984) 3
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‗… if detailed semantic and syntactical analysis of words in a
commercial contract is going to lead to a conclusion that flouts
business commonsense, it must be made to yield to business
commonsense.’ ‖
45. Once again, Lord Hoffmann, now sitting on the Privy Council, in
Attorney General of Belize v. Belize Telecom Ltd. [Attorney General
of Belize v. Belize Telecom Ltd., (2009) 1 WLR 1988 (PC)] , dealt with
the implied terms of the contract in the context of the articles of
association of a company. It has been observed as under: (WLR pp.
1993-95, paras 16-27)
―….. …. …..
17. The question of implication arises when the instrument does
not expressly provide for what is to happen when some event
occurs. The most usual inference in such a case is that nothing
is to happen. If the parties had intended something to happen,
the instrument would have said so. Otherwise, the express
provisions of the instrument are to continue to operate
undisturbed. If the event has caused loss to one or other of the
parties, the loss lies where it falls.
18. In some cases, however, the reasonable addressee would
understand the instrument to mean something else. He would
consider that the only meaning consistent with the other
provisions of the instrument, read against the relevant
background, is that something is to happen. The event in
question is to affect the rights of the parties. The instrument
may not have expressly said so, but this is what it must mean.
In such a case, it is said that the court implies a term as to
what will happen if the event in question occurs. But the
implication of the term is not an addition to the instrument. It
only spells out what the instrument means.
19. The proposition that the implication of a term is an exercise
in the construction of the instrument as a whole is not only a
matter of logic (since a court has no power to alter what the
instrument means) but also well supported by authority. In
Trollope and Colls Ltd. v. North West Metropolitan Regl.
Hospital Board [Trollope and Colls Ltd. v. North West
Metropolitan Regl. Hospital Board, (1973) 1 WLR 601 : (1973)
2 All ER 260 (HL)] , Lord Pearson, with whom Lord Guest and
Lord Diplock agreed, said: (WLR p. 609 B-D)
‗… the court does not make a contract for the parties. The
court will not even improve the contract which the parties have
made for themselves, however desirable the improvement
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might be. The court’s function is to interpret and apply the
contract which the parties have made for themselves. If the
express terms are perfectly clear and free from ambiguity,
there is no choice to be made between different possible
meanings: the clear terms must be applied even if the court
thinks some other terms would have been more suitable. An
unexpressed term can be implied if and only if the court finds
that the parties must have intended that term to form part of
their contract: it is not enough for the court to find that such a
term would have been adopted by the parties as reasonable
men if it had been suggested to them: it must have been a term
that went without saying, a term necessary to give business
efficacy to the contract, a term which, though tacit, formed
part of the contract which the parties made for themselves.’
(emphasis in original)
……. …. …
22. There are dangers in treating these alternative formulations
of the question as if they had a life of their own. Take, for
example, the question of whether the implied term is ―necessary
to give business efficacy‖ to the contract. That formulation
serves to underline two important points. The first, conveyed by
the use of the word ―business‖, is that in considering what the
instrument would have meant to a reasonable person who had
knowledge of the relevant background, one assumes the notional
reader will take into account the practical consequences of
deciding that it means one thing or the other. In the case of an
instrument such as a commercial contract, he will consider
whether a different construction would frustrate the apparent
business purpose of the parties. That was the basis upon which
Equitable Life Assurance Society v. Hyman [Equitable Life
Assurance Society v. Hyman, (2002) 1 AC 408 : (2000) 3 WLR
529 (HL)] was decided. The second, conveyed by the use of the
word “necessary”, is that it is not enough for a court to
consider that the implied term expresses what it would have
been reasonable for the parties to agree to. It must be satisfied
that it is what the contract actually means.
……………..
46. There were, once again, parallel developments in India during this
period in various High Courts but the views of this Court can be found
expression in Dhanrajamal Gobindram v. Shamji Kalidas and Co.
[Dhanrajamal Gobindram v. Shamji Kalidas and Co., (1961) 3 SCR
1020 : AIR 1961 SC 1285] : (AIR pp. 1291-92, para 19)
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―19. … Commercial documents are sometimes expressed in
language which does not, on its face, bear a clear meaning.
The effort of courts is to give a meaning, if possible. This was
laid down by the House of Lords in Hillas & Co. v. Arcos Ltd.
[Hillas & Co. v. Arcos Ltd., 1932 All ER Rep 494 (HL)], and the
observations of Lord Wright have become classic, and have
been quoted with approval both by the Judicial Committee and
the House of Lords ever since. The latest case of the House of
Lords is Adamastos Shipping Co. Ltd. v. Anglo-Saxon Petroleum
Co. Ltd. [Adamastos Shipping Co. Ltd. v. Anglo-Saxon
Petroleum Co. Ltd., 1959 AC 133 : (1958) 2 WLR 688 (HL)]
There, the clause was ―This bill of lading‖, whereas the
document to which it referred was a charter-party. Viscount
Simonds summarised at AC p. 158 all the rules applicable to
construction of commercial documents, and laid down that
effort should always be made to construe commercial
agreements broadly and one must not be astute to find defects
in them, or reject them as meaningless.‖
47. In Union of India v. D.N. Revri & Co. [Union of India v. D.N.
Revri & Co., (1976) 4 SCC 147], P.N. Bhagwati, J. (as he then was),
speaking for the Bench of two Judges said in para 7 as under: (SCC p.
151)
―7. It must be remembered that a contract is a commercial
document between the parties and it must be interpreted in
such a manner as to give efficacy to the contract rather than to
invalidate it. It would not be right while interpreting a
contract, entered into between two lay parties, to apply strict
rules of construction which are ordinarily applicable to a
conveyance and other formal documents. The meaning of such
a contract must be gathered by adopting a common sense
approach and it must not be allowed to be thwarted by a
narrow, pedantic and legalistic interpretation. …‖
48. Lastly, in Satya Jain v. Anis Ahmed Rushdie [Satya Jain v. Anis
Ahmed Rushdie, (2013) 8 SCC 131: (2013) 3 SCC (Civ) 738], Ranjan
Gogoi, J., elucidated the well-established principles of the classic test
of business efficacy to achieve the result of consequences intended
by the parties acting as prudent businessmen. It was opined as
under: (SCC pp. 143-44, paras 33-35)
―33. The principle of business efficacy is normally invoked to
read a term in an agreement or contract so as to achieve the
result or the consequence intended by the parties acting as
prudent businessmen. Business efficacy means the power to
produce intended results. The classic test of business efficacy
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was proposed by Bowen, L.J. in The Moorcock [The
Moorcock, (1889) LR 14 PD 64 (CA)]. This test requires that a
term can only be implied if it is necessary to give business
efficacy to the contract to avoid such a failure of consideration
that the parties cannot as reasonable businessmen have
intended. But only the most limited term should then be
implied–the bare minimum to achieve this goal. If the
contract makes business sense without the term, the courts will
not imply the same. The following passage from the opinion of
Bowen, L.J. in The Moorcock [The Moorcock, (1889) LR 14 PD
64 (CA)] sums up the position: (PD p. 68)
‗… In business transactions such as this, what the law
desires to effect by the implication is to give such
business efficacy to the transaction as must have been
intended at all events by both parties who are
businessmen; not to impose on one side all the perils
of the transaction, or to emancipate one side from all
the chances of failure, but to make each party promise
in law as much, at all events, as it must have been in
the contemplation of both parties that he should be
responsible for in respect of those perils or chances.’
…………..
35. The business efficacy test, therefore, should be applied
only in cases where the term that is sought to be read as
implied is such which could have been clearly intended by
the parties at the time of making of the agreement. …‖
xxx xxx xxx‖
(Emphasis Supplied)
71. The position of law is also clear to the effect that it has always been
the intent of the Courts to validate an arbitration agreement, rather than to
invalidate it. In the present case, keeping in mind the communications
between the parties and the documents on record, it becomes apparent that
the Arbitration Clause, even as a general standard, was agreed upon by the
parties, and there exists a valid Arbitration Clause in the agreement between
the parties.
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72. In this regard, reference is made to the judgment in the case of Govind
Rubber Limited Versus Louis Dreyfus Commodities Asia Private
Limited15, wherein, Supreme Court held that a commercial document having
an arbitration clause has to be interpreted in such a manner as to give effect
to the agreement rather than invalidate it. The agreement has to be
interpreted in order to effectuate the immediate intention of the parties.
Thus, it was held as follows:
―xxx xxx xxx
17. We are also of the opinion that a commercial document having
an arbitration clause has to be interpreted in such a manner as to
give effect to the agreement rather than invalidate it. On the
principle of construction of a commercial agreement, Scrutton on
Charter Parties (17th Edn., Sweet & Maxwell, London, 1964)
explained that a commercial agreement has to be construed,
according to the sense and meaning as collected in the first place
from the terms used and understood in the plain, ordinary and
popular sense (see Article 6 at p. 16). The learned author also said
that the agreement has to be interpreted “in order to effectuate the
immediate intention of the parties”. Similarly, Russell on
Arbitration (21st Edn.) opined, relying on Astro Vencedor Compania
Naviera S.A. v. Mabanaft GmbH [(1970) 2 Lloyd’s Rep 267], that the
court should, if the circumstances allow, lean in favour of giving
effect to the arbitration clause to which the parties have agreed. The
learned author has also referred to another judgment in Paul Smith
Ltd. v. H and S International Holdings Inc. [(1991) 2 Lloyd’s Rep
127] in order to emphasise that in construing an arbitration
agreement the court should seek to “give effect to the intentions of
the parties”. (See p. 28 of the book.)
18. The Apex Court also in Union of India v. D.N. Revri and
Co. [(1976) 4 SCC 147: AIR 1976 SC 2257], held that a commercial
document between the parties must be interpreted in such a manner
as to give efficacy to the contract rather than to invalidate it. The
learned Judges clarified it by saying: (SCC p. 151, para 7)
―7. It must be remembered that a contract is a commercial
document between the parties and it must be interpreted in
such a manner as to give efficacy to the contract rather than to15
(2015) 13 SCC 477.
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invalidate it. It would not be right while interpreting a
contract, entered into between two lay parties, to apply strict
rules of construction which are ordinarily applicable to a
conveyance and other formal documents. The meaning of such
a contract must be gathered by adopting a common sense
approach and it must not be allowed to be thwarted by a
narrow, pedantic and legalistic interpretation.‖
xxx xxx xxx‖
(Emphasis Supplied)
73. Likewise, in the case of Glencore International AG Versus Shree
Ganesh Metals and Another16, holding that if the circumstances allow, the
Courts should lean in favour of giving effect to the arbitration clause to
which the parties have agreed, the Supreme Court has held as follows:
―xxx xxx xxx
27. More relevant is the decision of this Court in Govind Rubber
Limited v. Louis Dreyfus Commodities Asia Private Limited, wherein
this Court observed that a commercial document having an
arbitration clause has to be interpreted in such a manner as to give
effect to the agreement rather than invalidate it. Reference was
made to Scrutton on Charter Parties in the context of principles
relating to construction of a commercial agreement and it was
observed that it has to be construed according to the sense and
meaning as collected in the first place from the terms used and
understood in the plain, ordinary and popular sense. It was further
observed that the Court should, if the circumstances allow, lean in
favour of giving effect to the arbitration clause to which the parties
have agreed. As in the case on hand, one of the parties therein had not
signed the contract agreement. However, at its request, the other
party had changed the terms mentioned in the contract. Further, as is
the case presently, the parties acted upon the said contract agreement
and, in that factual scenario, this Court observed thus:
―16. On reading the provisions it can safely be concluded that
an arbitration agreement even though in writing need not be
signed by the parties if the record of agreement is provided by
exchange of letters, telex, telegrams or other means of
telecommunication. Section 7(4)(c) provides that there can be
an arbitration agreement in the exchange of statements of16
2025 SCC OnLine SC 1815.
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claims and defence in which the existence of the agreement is
alleged by one party and not denied by the other. If it can be
prima facie shown that the parties are at ad idem, then the
mere fact of one party not signing the agreement cannot
absolve him from the liability under the agreement. In the
present day of e-commerce, in cases of internet purchases, tele
purchases, ticket booking on internet and in standard forms of
contract, terms and conditions are agreed upon. In such
agreements, if the identity of the parties is established, and
there is a record of agreement it becomes an arbitration
agreement if there is an arbitration clause showing ad idem
between the parties. Therefore, signature is not a formal
requirement under Section 7(4)(b) or 7(4)(c) or under Section
7(5) of the Act.
………..
23. It is clear that for construing an arbitration agreement, the
intention of the parties must be looked into. The materials on
record which have been discussed hereinabove make it very
clear that the appellant was prima facie acting pursuant to the
sale contract issued by the respondent. So, it is not very material
whether it was signed by the second respondent or not.‖
xxx xxx xxx‖
(Emphasis Supplied)
74. Likewise, this Court also takes note of the judgment of the High Court
of Justice, Queen‟s Bench Division, Commercial Court in the case of NWA
and another Versus NVF and others17, wherein, the Court was dealing with
an appeal against an award under Section 67 of the UK Arbitration Act and
elaborated upon the need for consideration of the commercial rationale of
parties while constructing an arbitration clause between them. The relevant
portion of the said judgment reads as under:
―xxx xxx xxx
33. Additionally, when interpreting an arbitration clause, particularly
in the context of international commercial arbitration, Lord
Hoffmann’s observations in Premium Nafta Products Limited &
others v Fili Shipping Company Limited [2007] UKHL 40 at [5] to17
[2021] EWHC 2666 (Comm).
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[8], (the ‗Fiona Trust’ case) should be kept firmly in mind:
―…Arbitration is consensual. It depends upon the intention
of the parties as expressed in their agreement. Only the
agreement can tell you what kind of disputes they intended
to submit to arbitration. But the meaning which parties
intended to express by the words which they used will be
affected by the commercial background and the reader‟s
understanding of the purpose for which the agreement was
made. Businessmen in particular are assumed to have
entered into agreements to achieve some rational
commercial purpose and an understanding of this purpose
will influence the way in which one interprets their
language.
6. In approaching the question of construction, it is
therefore necessary to inquire into the purpose of the
arbitration clause. As to this, I think there can be no doubt.
The parties have entered into a relationship, an agreement
or what is alleged to be an agreement or what appears on its
face to be an agreement, which may give rise to disputes.
They want those disputes decided by a tribunal which they
have chosen, commonly on the grounds of such matters as
its neutrality, expertise and privacy, the availability of legal
services at the seat of the arbitration and the unobtrusive
efficiency of its supervisory law. Particularly in the case of
international contracts, they want a quick and efficient
adjudication and do not want to take the risks of delay and,
in too many cases, partiality, in proceedings before a
national jurisdiction.
7. If one accepts that this is the purpose of an arbitration
clause, its construction must be influenced by whether the
parties, as rational businessmen, were likely to have
intended that only some of the questions arising out of their
relationship were to be submitted to arbitration and others
were to be decided by national courts. …one would need to
find very clear language before deciding that they must
have had such an intention.
8. A proper approach to construction therefore requires the
court to give effect, so far as the language used by the
parties will permit, to the commercial purpose of the
arbitration clause. …‖
34. In the case of the Agreement, it is clear that what the parties as
rational businessmen consensually agreed and intended was that
any dispute arising out of or in connection with their agreement
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should be referred to arbitration. The wording of clause 10.2(b)
makes that clear; ―the dispute shall be referred to and finally resolved
by arbitration‖ (emphasis added). They agreed upon LCIA arbitration
in London. They did not intend that their disputes should be litigated,
in whole or in part. Indeed, by clause 10.2(g) they even waived ―any
right of recourse to national courts in order to challenge or appeal
against any arbitral award.‖
xxx xxx xxx‖
(Emphasis Supplied)
75. Considering the discussion hereinabove, this Court is of a prima facie
view that there is a valid Arbitration Clause/Agreement governing the
parties.
Whether the impugned arbitration proceedings are oppressive or vexatious
or unconscionable?
76. Thus, having held that there is a valid Arbitration Clause between the
parties, this brings the Court to the next question to be decided, i.e., whether
the plaintiffs have been able to establish that the impugned arbitration
proceedings commenced at the behest of the defendant are vexatious,
oppressive or unconscionable for this Court to injunct the said arbitration
proceedings being held in London.
77. It is pertinent to note that anti-arbitration injunctions are an
exceptional remedy, granted only in the rarest of circumstances, where the
arbitration is shown to be vexatious, oppressive and unconscionable. A
proceeding becomes vexatious if it is found to be without reasonable ground
to harass or subdue an adversary. Whereas, oppressive proceedings are those
that unjustly burden the other side to the point of being unconscionable.
78. On this aspect, it is to be noted that Section 45 of Part II of the
Arbitration Act provides that Courts shall not refer parties to arbitration,
when the arbitration agreement is null and void; or inoperative or incapable
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of being performed. An anti-arbitration injunction is an exceptional relief
and can be granted only if it is shown that the arbitration agreement is null
and void, inoperative or incapable of being performed, in line with the
principles underlying Section 45 of the Arbitration Act.
79. Thus, in the case of World Sport Group (Mauritius) Limited Versus
MSM Satellite (Singapore) PTE. Limited18, the Supreme Court upheld the
judgment of the Single Judge in rejecting the relief of injunction against a
foreign seated arbitral proceeding, on the ground that agreement between the
parties being void on account of fraud would be for the arbitrator to
consider. Further, while upholding the said judgment, the Supreme Court
emphasized upon the mandate of Section 45 of the Arbitration Act, and held
that unless an agreement is null and void, inoperative or incapable of being
performed, the Court shall not decline reference to arbitration. Thus, it held
as follows:
―xxx xxx xxx
24. Any civil court in India which entertains a suit, however, has
to follow the mandate of the legislature in Sections 44 and 45 in
Chapter I of Part II of the Act, which are quoted hereinbelow:
―Chapter I
NEW YORK CONVENTION AWARDS
44. Definition.–In this Chapter, unless the context otherwise
requires, ‗foreign award’ means an arbitral award on differences
between persons arising out of legal relationships, whether
contractual or not, considered as commercial under the law in
force in India, made on or after the 11th day of October, 1960–
(a) in pursuance of an agreement in writing for arbitration
to which the Convention set forth in the First Schedule applies,
and
18
2014 SCC OnLine SC 58.
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(b) in one of such territories as the Central Government,
being satisfied that reciprocal provisions have been made may, by
notification in the Official Gazette, declare to be territories to
which the said Convention applies.
45. Power of judicial authority to refer parties to
arbitration.–Notwithstanding anything contained in Part I or
in the Code of Civil Procedure, 1908 (5 of 1908), a judicial
authority, when seized of an action in a matter in respect of
which the parties have made an agreement referred to in
Section 44, shall, at the request of one of the parties or any
person claiming through or under him, refer the parties to
arbitration, unless it finds that the said agreement is null and
void, inoperative or incapable of being performed.‖
25. The language of Section 45 of the Act quoted above makes it
clear that notwithstanding anything contained in Part I or in the
Code of Civil Procedure, a judicial authority, when seized of an
action in a matter in respect of which the parties have made an
agreement referred to in Section 44, shall, at the request of one of
the parties or any person claiming through or under him, refer the
parties to arbitration, unless it finds that the said agreement is
null and void, inoperative or incapable of being performed. Thus,
even if, under Section 9 read with Section 20 CPC, the Bombay
High Court had the jurisdiction to entertain the suit, once a request
is made by one of the parties or any person claiming through or
under him to refer the parties to arbitration, the Bombay High
Court was obliged to refer the parties to arbitration unless it found
that the agreement referred to in Section 44 of the Act was null and
void, inoperative or incapable of being performed. In the present
case, the appellant may not have made an application to refer the
parties to arbitration, but Section 45 of the Act does not refer to
any application as such. Instead, it refers to the request of one of
the parties or any person claiming through or under him to refer
the parties to arbitration. In this case, the appellant may not have
made an application to refer the parties to arbitration at
Singapore but has filed an affidavit-in-reply to the notice of
motion and has stated in Paras 3, 4 and 5 of this affidavit that the
defendant had already invoked the arbitration agreement in the
Facilitation Deed and the arbitration proceedings have
commenced and that the suit was an abuse of process of court.
The appellant had thus made a request to refer the parties to
arbitration at Singapore which had already commenced.
26. Section 45 of the Act quoted above also makes it clear that
even where such request is made by a party, it will not refer the
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parties to arbitration, if it finds that the agreement is null and
void, inoperative or incapable of being performed. As the very
language of Section 45 of the Act clarifies the word ―agreement‖
would mean the agreement referred to in Section 44 of the Act.
Clause (a) of Section 44 of the Act refers to
―… an agreement in writing for arbitration to which the
Convention set forth in the First Schedule applies‖.
(emphasis supplied)
xxx xxx xxx
34. Albert Jan Van Den Berg in an article titled ―The New York
Convention, 1958 — An Overview‖ published in the website of
ICCA
(www.arbitration-
icca.org/media/0/12125884227980/new_york_convention_of-
1958_overview.pdf), referring to Article II(3) of the New York
Convention, states:
“The words „null and void‟ may be interpreted as referring to
those cases where the arbitration agreement is affected by some
invalidity right from the beginning, such as lack of consent due to
misrepresentation, duress, fraud or undue influence.
The word „inoperative‟ can be said to cover those cases where
the arbitration agreement has ceased to have effect, such as
revocation by the parties.
The words „incapable of being performed‟ would seem to
apply to those cases where the arbitration cannot be effectively set
into motion. This may happen where the arbitration clause is too
vaguely worded, or other terms of the contract contradict the
parties’ intention to arbitrate, as in the case of the so-called co-
equal forum selection clauses. Even in these cases, the courts
interpret the contract provisions in favour of arbitration.”
xxx xxx xxx
36. Thus, the arbitration agreement does not become “inoperative
or incapable of being performed” where allegations of fraud have
to be inquired into and the court cannot refuse to refer the parties
to arbitration as provided in Section 45 of the Act on the ground
that allegations of fraud have been made by the party which can
only be inquired into by the court and not by the arbitrator. N.
Radhakrishnan v. Maestro Engineers [(2010) 1 SCC 72 : (2010) 1
SCC (Civ) 12] and Abdul Kadir Shamsuddin Bubere v. Madhav
Prabhakar Oak [AIR 1962 SC 406] were decisions rendered in the
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context of domestic arbitration and not in the context of arbitrations
under the New York Convention to which Section 45 of the Act
applies. In the case of such arbitrations covered by the New York
Convention, the Court can decline to make a reference of a
dispute covered by the arbitration agreement only if it comes to
the conclusion that the arbitration agreement is null and void,
inoperative or incapable of being performed, and not on the
ground that allegations of fraud or misrepresentation have to be
inquired into while deciding the disputes between the parties.
xxx xxx xxx
39. The Division Bench of the High Court has also held that as
allegations of fraud and serious malpractices on the part of the
appellant are in issue, it is only the court which can decide these
issues through furtherance of judicial evidence by either party and
these issues cannot be properly gone into by the arbitrator. As we
have already held, Section 45 of the Act does not provide that the
court will not refer the parties to arbitration if the allegations of
fraud have to be inquired into. Section 45 provides that only if the
court finds that the arbitration agreement is null and void,
inoperative or incapable of being performed, it will decline to
refer the parties to arbitration.
xxx xxx xxx‖
(Emphasis Supplied)
80. Likewise, in the case of Balaji Steel Trade Versus Fludor Benin S.A.
and Others19, dealing with a suit seeking a decree of permanent injunction
restraining the defendant therein from continuing with the foreign seated
arbitral proceedings in Benin, West Africa, this Court has held as follows:
―xxx xxx xxx
46. The use of the terms “shall” and “refer the parties to
arbitration” in Section 45 of the Arbitration Act, as interpreted
unambiguously by the aforementioned statute, makes it essential for
the Court to refer the parties to arbitration if the agreement in
question is neither void nor inoperative nor incapable of being
performed. To put it another way, the Court has no discretion other
than sending the parties to arbitration once it is found that the
agreement in question is a legal and valid agreement that is capable
of being performed by the parties to the Suit.
19
2024 SCC OnLine Del 7750.
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47. Section 45 stipulates the requirements for a judicial authority
when seized of an action to refer the parties to arbitration. The section
stipulates that the action must be in a matter in respect of which the
parties have made an agreement referred to in section 44. Further, the
reference should be made at the request of one of the parties. This is
subject only to the agreement being found by the judicial authority to
be null and void, inoperative or incapable of being performed. It is not
the Plaintiff’s case that the agreements for arbitration are null and
void, inoperative or incapable of being performed.
xxx xxx xxx
49. In Sasan Power Ltd. v. North American Coal Corpn.
(India)(P)(Ltd.), (2016) 10 SCC 813, the apex court while highlighting
the essentials under section 45 of the A&C Act, inter-alia held as
under:
―50. The case of the appellant as disclosed from the plaint is
that Article X Section 10.2 is inconsistent with some provisions
of the Indian Contract Act, 1872, and hit by Section 23 of
the Indian Contract Act (as being contrary to public policy). It is
a submission regarding the legality of the substantive contract.
Even if the said submission is to be accepted, it does not
invalidate the arbitration agreement because the arbitration
agreement is independent and apart from the substantive
contract. All that we hold is that the scope of enquiry under
Section 45 does not extend to the examination of the legality of
the substantive contract. The language of the section is plain
and does not admit of any other construction. For the purpose
of deciding whether the suit filed by the appellant herein is
maintainable or impliedly barred by Section 45 of the 1996
Act, the Court is required to examine only the validity of the
arbitration agreement within the parameters set out in Section
45, but not the substantive contract of which the arbitration
agreement is a part.‖
50. In Superon Schweisstechnik India Ltd. v. Europaische Holding
Intercito, 2022 SCC OnLine Del 4756, wherein it was inter alia held
that:
―17. The only point which Mr. Kapoor has stressed is that the
scope of enquiry of under Section 45 is on a prima facie basis.
This indeed is the correct position, as is evident from the
language of the provision itself. At this stage, it must also be
noted that the words ―unless it prima facie finds‖ were
introduced in Section 45 by replacing the words ―unless it
finds‖ by way of Amending Act No. 33 of 2019, made effective
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can be seen under Section 8 of the Act, as applicable to domestic
arbitration. Therefore, at this stage, although the Court will
examine as to whether the Agreement sought to be enforced by
way of the instant suit is null and void, inoperative or
incapable of being performed, yet the test that would be
applied would be of a prima facie basis. This means that the
Court is not to conduct any detailed enquiry or minute trial at
this stage, in order to discern if such is the case. Hence, if the
Court ex facie finds that the Agreement is null and void,
inoperative or incapable of being performed, the Court would
decline a request on behalf of a party for reference to
arbitration.‖
xxx xxx xxx
59. Furthermore, the principle of minimal judicial interference is
enshrined in Article 5 of the UNCITRAL Model Law, which
provides:”In matters governed by this law, no court shall intervene
except as provided in this law.” This legal framework has been
adopted and implemented in the A&C Act in Section 5. When
arbitration proceedings are triggered by one of the parties because
of the existence of an arbitration agreement between them, Section 5
of the A&C Act, being a non-obstante clause, provides a clear
message that there should not be any judicial intervention at that
stage scuttling the arbitration proceedings. This provision prohibits
judicial oversight of procedural decisions made by the arbitral
tribunal in the course of an ongoing arbitration. However, it does
not envisage a complete bar to judicial intervention in arbitral
proceedings. Reliance is placed upon A. Ayyasamy v. A.
Paramasivam, (2016) 10 SCC 386.
xxx xxx xxx
61. In light of the preceding factual and legal analysis, the answers to
the issues framed in para 44 are as under:
Issue (i.) What are the requisites to be considered by the court
while deciding an application filed under section 45 of the A&C
Act?
Answer: At the time of considering an application under
Section 45 of the A&C Act, a judicial authority shall, at the
request of either of the parties, refer the parties to arbitration
unless it prima facie finds that the said agreement is „null‟ and
„void‟, „inoperative‟ or „incapable of being performed‟.
xxx xxx xxx‖
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81. Perusal of the aforesaid judgments brings to the fore that the factors
under Section 45 of the Arbitration Act must be satisfied while adjudicating
a suit seeking an anti-arbitration injunction. In the facts of the present case,
this Court has already held that there is a valid agreement between the
parties, and prima facie there exists a valid Arbitration Clause therein. Thus,
once it is found that the agreement in question is valid and capable of being
performed, the Court is required to relegate the parties to arbitration.
Further, the factor in relation to an agreement being inoperative would not
apply in the present case, as the parties themselves were operating under the
agreement and performing the conditions therein in relation to the voyage.
Moreover, in pursuance to the operation of the agreement, the parties had
invoked the force majeure and arbitration clauses. Thus, the factors
underscored under Section 45 of the Arbitration Act are not applicable to the
facts of the present case.
82. Likewise, declining to interfere and vacating the injunction granted
earlier in the absence of any finding that the arbitration agreement itself was
invalid or incapable of performance, and further stating that the factors
under Section 45 of the Arbitration Act were not met, whilst emphasizing
that cases with respect to specific trade require domain expertise in the form
of specialized arbitration institutions to effectively adjudicate disputes, the
Court in the case of ADM International Sarl Versus Sunraja Oil Industries
Private Limited20, held as follows:
―xxx xxx xxx
23. When the above clauses are examined cumulatively, the
undisputed position that emerges is that all disputes are required to be
referred to arbitration in accordance with the Rules of Arbitration and
20
2021 SCC OnLine Mad 16535.
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Appeal of FOSFA. As stated earlier, such arbitration would be
governed by the English Arbitration Act and the juridical seat of
arbitration is England. It is also evident that the contracts are
required to be construed in accordance with English law. Thus, there
is little doubt that the contract discloses the parties’ intention that the
governing and curial law is English law, and that the arbitration
would be governed by the FOSFA Rules of Arbitration and Appeal.
Consequently, the arbitral tribunal constituted as per the contracts
and not Indian courts should exercise jurisdiction, in the first
instance, and, thereafter, challenges, if any, would lie before the
English courts. The only exception that the contracts carve out, in this
regard, is as regards interim measures to secure the claim or counter
claim, as the case may be, which may be requested for before an
appropriate court; but it is certainly not the case of the respective
Plaintiff that these suits would qualify as actions for such interim
measures.
24. This leads to the question whether a case is made out to grant an
anti-arbitration injunction. The principles relating to the grant of
anti-suit injunctions were examined and formulated in paragraph 24
of Modi Entertainment, wherein the Supreme Court held, inter alia,
that an anti-suit injunction would not be granted to forbear the
exercise of jurisdiction by the forum chosen by the parties. Likewise,
the law on anti-arbitration injunctions was considered
in McDonalds India Pvt. Ltd. v. Vikram Bakshi, 2016 SCC OnLine
Del 3949 (McDonalds) by a Division Bench of the Delhi High Court,
wherein the Court underscored the fact that the threshold tests for
an anti-arbitration injunction are more exacting than that
applicable for an anti-suit injunction and concluded that the
principal considerations would be those underpinning Section 45 of
the Indian Arbitration Act, i.e. whether there is an arbitration
agreement; and whether such agreement is null and void,
inoperative or incapable of being performed. I respectfully concur
with the principles set out therein. Therefore, these tests should be
applied to the case at hand.
xxx xxx xxx
27. The respective Plaintiff also contended that the arbitral institution
is not neutral inasmuch as it is controlled by oil seed producers. In
effect, the respective Plaintiff appeared to contend that any arbitral
institution which is set up by a trade organisation is not neutral. On
this issue, reliance was placed on Laker Airways to contend that the
onus on the plaintiff is limited to establishing justifiable doubts of
bias, and that actual bias need not be established. While “justifiable
doubts of bias” may be a valid test when an arbitral tribunal is
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challenged either before such tribunal or before a jurisdictional
court; as stated earlier, a higher threshold should be satisfied for an
anti-arbitration injunction because the plaintiff should justify the
departure from the contractual dispute resolution mechanism. There
are several arbitral institutions spread across the world which are
established by organisations or entities that represent the interest of
the specific trade. This is particularly the case with regard to trade
in commodities such as cotton, oil, spices and the like. The rationale
for the establishment of such arbitral institutions is that domain
expertise is necessary to effectively adjudicate such disputes and
trade practice and the knowledge thereof is also significant. In the
present context unless it is ex facie evident that the contractual
remedy is unconscionable and illusory, either because there was no
genuine agreement to resolve disputes through arbitration or for
other comparable and compelling reasons, there is no basis to
interfere with the contractual dispute resolution process. The
material on record does not support a conclusion that the FOSFA
arbitral institution is ex facie not neutral and I see no reason to
draw such conclusion merely because FOSFA is an organisation
representing the interest of traders in oil seeds and fats.
28. The next contention that should be dealt with relates to the
alleged lack of neutrality on the part of the arbitrators. Although
such allegation is levelled by the respective Plaintiff, no actionable
material has been placed before this Court to substantiate the
contention that all the panel arbitrators of FOSFA or the specific
arbitrators in the present case are not neutral. Indeed, the facts on
record disclose that the respective Plaintiff proceeded to nominate its
arbitrator upon receiving a notice of arbitration from ADM. The
decision to abandon the arbitral process and institute proceedings
before this Court was taken subsequently. In any event, any grievance
on this score should be canvassed before the arbitral tribunal and/or
the courts in the UK in accordance with applicable law.
29. A contention was raised that the arbitral institution does not
permit a party to be represented by an advocate or practising lawyer,
but that ADM was permitted to avail such assistance. On perusal of
the English Arbitration Act, I find that there are mandatory provisions
that ensure equal opportunity (Section 33). Indeed, there are
provisions to challenge an arbitrator (Section 23 and 24) and
provisions that enable: jurisdictional challenges (Section 67);
challenges on the ground of serious irregularity (Section 68); and on
a point of law (Section 69). Although such provisions are hedged with
conditions, it is clear that the grounds of challenge raised here by the
respective Plaintiff could have been and may still be raised before the
arbitral tribunal or the English courts.
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30. Thus, the respective Plaintiff has failed to demonstrate that the
arbitration agreement is null and void, inoperative or incapable of
being performed. In light of the above discussion and analysis, I
find no reason to continue the anti-arbitration injunction.
Consequently, the order of injunction granted originally on
05.07.2019 and extended periodically stands vacated. I also conclude
that this Court does not have jurisdiction As a corollary, the
applications to revoke leave are allowed.
xxx xxx xxx‖
(Emphasis Supplied)
83. In the case of Jinneng Clean Energy Technology Ltd. Versus
SunEdison Energy Holding (Singapore) Pte Ltd. and Others21, the Court
held that the validity or invalidity of the arbitration agreement was under the
purview of the Arbitral Tribunal as per the principle of Komeptenz-
Komeptenz. It was held that if the arbitration agreement is prima facie found
to be valid, the Courts will not enter into the question of validity of
proceedings before the Arbitral Tribunal. Thus, it was held as follows:
―xxx xxx xxx
261. After the Courts in India recognized the existence of an
“agreement in writing” whether the agreement was valid or not for
the purpose of arbitration was to be considered by the Arbitral
Tribunal itself while exercising its power under Section 10(2) of the
Singapore International Arbitration Act, 1994. Section 10(2) of the
Singapore International Arbitration Act, 1994 is similar to
Section 16 of the Arbitration and Conciliation Act, 1996. Both are
based on the doctrine of Kompetenz-kompetenz which are
incorporated in Article 16 of the UNCITRAL Model Law which
implies it is for the Arbitral Tribunal to determine whether it has
jurisdiction to proceed with the case or not.
xxx xxx xxx
264. In Interplay Between Arbitration Agreements under A&C
Act, 1996 & Stamp Act, 1899, In re, (2024) 6 SCC 1 at page 69, the
Constitution Bench of the Hon’ble Supreme Court referred to Article
16 of the Model Law and observed that the Arbitral Tribunal’s21
2024 SCC OnLine Mad 7039.
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jurisdiction will be affected only when the defect causing invalidity
is directed at the arbitration agreement.
265. The Hon’ble Supreme Court further observed that the
invalidity of the underlying contract will not necessarily entail the
invalidity of an arbitration agreement contained in the contract.
Paragraph No. 110 and &112 of the said judgment reads as under:–
“110. Article 16 of the Model Law deals with the competence of an
Arbitral Tribunal to rule on its own jurisdiction. Article 16(1)
provides:
―16. Competence of arbitral tribunal to rule on its
jurisdiction.–The Arbitral Tribunal may rule on its own
jurisdiction, including any objections with respect to the existence
or validity of the arbitration agreement. For that purpose, an
arbitration clause which forms part of a contract shall be treated
as an agreement independent of the other terms of the contract. A
decision by the Arbitral Tribunal that the contract is null and void
shall not entail ipso jure the invalidity of the arbitration clause.‖
(emphasis supplied)
******
112. According to the UNCITRAL Working Group, the
separability presumption is incorporated under Article 16(1) to
complement the principle of competence-competence. The
separability presumption further ensures that the invalidity of the
underlying contract does not affect the jurisdiction of the Arbitral
Tribunal to decide on the nullity of the contract or any other
issues submitted to its jurisdiction by the parties “unless it finds
that the defect which causes the nullity of the contract affects also
the arbitration clause itself.” [―Analytical Commentary on Draft
Text of a Model Law on International Commercial Arbitration‖,
A/CN.9/264 (25-3-1985) 38.] The last sentence of Article 16(1)
(extracted above) states the general principle of contractual
validity of arbitration clauses. [Gary Born, International
Arbitration Law and Practice (3rd Edn., 2021) 403.] [Digest of
Case Law on the Model Law on International Commercial
Arbitration (2012) 76.]‖
xxx xxx xxx
268. Thus, the doctrine of competence-competence [doctrine of
kompetenz-kompetenz] has been given full recognition under
Singapore International Arbitration Act, 1994. Since the Arbitral
Tribunal gets the first priority to determine issues with respect to the
very existence of an “agreement in writing”, the jurisdiction of theSignature Not Verified
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Courts are limited to a prima facie determination under Section 8 or
45 of the Arbitration and Conciliation Act,1996 as the case may be.
xxx xxx xxx
272. Thus, question of arbitrability of a dispute could have been
raised and decided before the Court in Singapore if the respondent
had filed an anti-arbitration suit in Singapore instead of Chennai, in
India. Thereafter, the only option that was available for the
respondents was before the Arbitral Tribunal as per the doctrine of
Kompetenz – Kompetenz, which was raised by the respondent and
answered against them, which decision was not only affirmed by the
Singapore High Court, but also Court of Appeal of Singapore. Thus,
it is not open for the respondents to question either the Arbitrability
of the dispute at the stage of Recognition and Enforcement of the
International Award passed by the Arbitral Tribunal.
xxx xxx xxx
283. Secondly, the phrase ―fundamental policy of Indian Law‖ was
discussed in detail and interpreted as under in SsangyongEngg. &
Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131, which held as
under:–
34. What is clear, therefore, is that the expression ―public policy
of India‖, whether contained in Section 34 or in Section 48,
would now mean the ―fundamental policy of Indian law‖ as
explained in paras 18 and 27 of Associate Builders [Associate
Builders v. DDA, (2015) 3 SCC 49] i.e. the fundamental policy
of Indian law would be relegated to ―Renusagar‖ (Renusagar
Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC
644) understanding of this expression. This would necessarily
mean that Western Geco [ONGC v. Western GecoInternational
Ltd., (2014) 9 SCC 263] expansion has been done away with. In
short, Western Geco, as explained in paras 28 and 29
of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC
49], would no longer obtain, as under the guise of interfering
with an award on the ground that the arbitrator has not
adopted a judicial approach, the Court’s intervention would be
on the merits of the award, which cannot be permitted post
amendment. …
xxx xxx xxx‖
(Emphasis Supplied)
84. The principles of Kompetenz-Kompetenz, are enshrined in Section 16
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of the Arbitration Act, and it is settled law that Courts will not interfere with
the questions such as validity or invalidity of the arbitral proceedings, if the
Courts have prima facie come to the conclusion that there exists a valid
arbitration clause. Therefore, in the facts of the present case, wherein this
Court has already held there to be a prima facie valid Arbitration Clause
between the parties, thus, this Court cannot adjudicate and sit in appeal over
the contentions in relation to jurisdiction of the Tribunal/LMAA.
85. It is pertinent to note the case of Himachal Sorang Power Private
Limited and Another Versus NCC Infrastructure Holdings Limited22,
wherein this Court, while reiterating that Courts should be slow and cautious
in granting anti-arbitration injunctions, has carved out the parameters
governing grant of the same, as follows:
―xxx xxx xxx
82. This is, especially so, as what HSPL and TAQA, in effect, seek in
terms of relief, both in the interlocutory application and the suit, is an
anti-arbitration injunction. The Courts, ordinarily, have been very
slow in granting injunctions whereby arbitration proceedings are
brought to a standstill. The fundamental reason for this appears to
be that the parties by entering into a contract would have necessarily
agreed, as in this case, that all issues connected with or arising from
the agreement entered into between them, would be tried by an
Arbitral Tribunal duly constituted in terms of the agreement and,
therefore, any sort of injunction granted by the Court would
tantamount to aiding breach of the arbitration agreement.
xxx xxx xxx
101. Insofar as this Court is concerned, a decision cannot be taken
as to whether the second action would be barred on the ground of
constructive res judicata without a trial. To my mind, it is
undoubtedly a mixed question of fact and law. Thus, at this stage, to
say that the arbitration agreement is inoperative and/or incapable of
being performed would be, metaphorically speaking, putting the cart
before the horse.
22
2019 SCC OnLine Del 7575.
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xxx xxx xxx
127. Thus, if I were to attempt an encapsulation of the broad
parameters governing anti-arbitration injunctions, they would be the
following:
i) The principles governing anti-suit injunction are not identical
to those that govern an anti-arbitration injunction.
ii) Court‟s are slow in granting an anti-arbitration injunction
unless it comes to the conclusion that the proceeding initiated
is vexatious and/or oppressive.
iii) The Court which has supervisory jurisdiction or even
personal jurisdiction over parties has the power to disallow
commencement of fresh proceedings on the ground of res
judicata or constructive res judicata. If persuaded to do so the
Court could hold such proceeding to be vexatious and/or
oppressive. This bar could obtain in respect of an issue of law
or fact or even a mixed question of law and fact.
iv) The fact that in the assessment of the Court a trial would be
required would be a factor which would weigh against grant of
anti-arbitration injunction.
v) The aggrieved should be encouraged to approach either the
Arbitral Tribunal or the Court which has the supervisory
jurisdiction in the matter. An endeavour should be made to
support and aid arbitration rather than allow parties to move
away from the chosen adjudicatory process.
vi) The arbitral tribunal could adopt a procedure to deal with
―re-arbitration complaint‖ (depending on the rules or
procedure which govern the proceeding) as a preliminary issue.
xxx xxx xxx‖
(Emphasis Supplied)
86. Likewise, declining anti-arbitration injunction and delineating
principles with regard thereto, a Division Bench of this Court in the case of
McDonald‟s India Private Limited Versus Vikram Bakshi and Others23,
held as follows:
―xxx xxx xxx
40. It is important to note that the present case pertains to an anti-
23
2016 SCC OnLine Del 3949.
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arbitration injunction and the principles governing the present case
cannot be the same as one governing a case of an anti-suit
injunction. This is so because of the principles of autonomy of
arbitration and the competence-competence (Kompetenz-kompetenz)
principle. For the present, it is necessary to note point numbers 6 and
7 in the extract from the Supreme Court decision in Modi
Entertainment Network (supra). It has been observed that when one of
the parties to a contract containing a jurisdiction clause approaches
the court of choice in which exclusive or non-exclusive jurisdiction is
created, the proceedings in that court cannot per se be treated as
vexatious or oppressive. Furthermore, the burden of establishing
that the proceedings in the forum of choice are oppressive or
vexatious would be on the party so contending to aver and prove the
same.
41. The only principle on which the respondents’ case is based is that
the arbitration proceedings at London would be vexatious or
oppressive. But, as pointed out in Modi Entertainment
Network (supra), merely because an arbitration is proceeded with at
the place of choice (London), would not, per se amount to a
vexatious or oppressive proceeding. The onus would be on the
respondents to establish that the arbitration proceedings are
oppressive or vexatious. We may also note that the learned counsel
for the respondents had categorically stated that it is not the place of
arbitration or the expenses which would be incurred for the conduct
of arbitration proceedings at London, which is the objection on their
part. The objection is to the forum of arbitration itself being vexatious.
In other words, the grievance of the respondents is not with regard to
the place of arbitration, but to the arbitration proceedings itself !
xxx xxx xxx
60. Our focus is on the question whether an anti-arbitration
injunction could at all have been granted in the facts and
circumstances of the present case. We have already explained as to
how, if the arbitration agreement was taken to be one which was
covered under Section 44 of the 1996 Act, the arbitration
proceedings could not be injuncted because the same was neither
null or void, inoperative or incapable or being performed. Even if we
assume that Part I of the 1996 Act was to apply, then also, because
of the provisions of Section 8, the judicial authority would be obliged
to refer the parties to arbitration. We may point out that Section 8
and, in particular, sub-section (1) thereof has been recently amended
with retrospective effect from 23.10.2015 to read as under : –
―8. Power to refer parties to arbitration where there is an
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an action is brought in a matter which is the subject of an
arbitration agreement shall, if a party to the arbitration
agreement or any person claiming through or under him, so
applies not later than the date of submitting his first statement
on the substance of the dispute, then, notwithstanding any
judgment, decree or order of the Supreme Court or any Court,
refer the parties to arbitration unless it finds that prima facie no
valid arbitration agreement exists.
xxxx xxxx xxxx xxxx xxxx‖
61. Thus, there is now a mandate to refer the parties to arbitration
unless the court finds that prima facie (sic) no valid arbitration
agreement exists. This is clearly not the case here. Therefore, in any
eventuality, in the facts and circumstances of the case and applying
the principles, as indicated above, the learned single Judge could not
have restrained the appellant from pursuing the arbitration
proceedings before the arbitral tribunal.
62. There is a very interesting observation in paragraph 7.01
of Redfern and Hunter on International Arbitration: Sixth Edition:
Oxford University Press. The observation is as follows: –
―The relationship between national courts and arbitral
tribunals swings between forced cohabitation and true
partnership. Arbitration is dependent on the underlying support
of the courts, which alone have the power to rescue the system
when one party seeks to sabotage it. …‖
63. Courts need to remind themselves that the trend is to minimize
interference with arbitration process as that is the forum of choice.
That is also the policy discernible from the 1996 Act. Courts must be
extremely circumspect and, indeed, reluctant to thwart arbitration
proceedings. Thus, while courts in India may have the power to
injunct arbitration proceedings, they must exercise that power rarely
and only on principles analogous to those found in sections 8 and
45, as the case may be, of the 1996 Act. We have already indicated
that the circumstances of invalidity of the arbitration agreement or it
being inoperative or incapable of being performed do not exist in
this case.
xxx xxx xxx‖
(Emphasis Supplied)
87. In the present case, the plaintiffs have contended that the arbitration
proceedings are vexatious, as the plaintiffs neither agreed to contract with
the defendant, nor arbitrate with the defendant.
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88. As regards the contention of the plaintiffs that the arbitral proceedings
in London are vexatious, this Court has already given a prima facie finding
that there exists a valid contract between the parties and that the contractual
terms between the parties incorporate a valid Arbitration Clause. Therefore,
the contention of the plaintiffs in this regard is rejected.
89. It is further contended by the plaintiffs that the arbitration proceedings
are oppressive as after nine months of proceedings against plaintiff no. 2, in
December, 2024, the defendant invoked a Second Reference arising out of
the same Booking Note, same voyage and same cause of action against
plaintiff no. 1. Thus, as per the plaintiffs, this has made plaintiffs bear the
risk of double cost as well as inconsistent decisions.
90. Further, it is contended that the decision of the Arbitral Tribunal in
London in allowing both arbitral proceedings to “co-exist” is ex-facie
unconscionable.
91. As regards the aforesaid contention, this Court notes the submission
on behalf of the defendant that the defendant was constrained to invoke two
references against the respective plaintiffs, due to the conduct of the
plaintiffs. The Booking Note identifies the “Merchant” as “SARR Freights”
and bears the stamp of SARR Freights Corporation, i.e., plaintiff no. 1.
Upon invocation of arbitration in the first reference on 27th July, 2023,
plaintiff no. 2 responded and appointed an arbitrator on 09th August, 2023,
leading the defendant to believe that plaintiff no. 2 was the contracting
party.
92. As per the case put forth by the defendant, it was only subsequently
that it became apparent that the Charter Party/Booking Note did not name
plaintiff no. 2 and was executed and stamped by plaintiff no. 1. When
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clarification was sought by the defendant, the plaintiff no. 2 stated that the
plaintiff no. 2 was only acting as an agent of plaintiff no. 1. The defendant
even tried to revise the first reference itself for it to be against plaintiff no.1.
However, plaintiff no. 2 denied such revision. Since plaintiff no. 1 was
nowhere named in the Booking Note and plaintiff no. 2 had not represented
itself as an agent while signing, the defendant invoked arbitration against
plaintiff no. 1 in the Second Reference, in order to obtain an award against
the correct contractual party.
93. Before this Court, the defendant has stated in categorical terms that
since the LMAA has unanimously held that plaintiff no. 1 was the
―Merchant‖ and ―Charterer‖ under the Fixture Recap and Booking Note,
the defendant seeks to continue proceedings only against plaintiff no. 1.
94. Thus, this Court notes the submission of the defendant in this regard
in their Reply to the present application, relevant portions of which, are
reproduced as under:
―xxx xxx xxx
48. The Charterparty mentions the “Merchant” as “SARR
Freights”. The Charterparty is stamped by SARR Freights
Corporation (Plaintiff No. 1). There is no noting that the Plaintiff
No. 1 is signing as agents on behalf of the Plaintiff No. 2.
49. It is submitted that when the Defendant (through its insurers)
issued the notice invoking arbitration in First Reference, a response
was received by a lawyer representing Plaintiff No. 2. Therefore, the
Defendant proceeded against the Plaintiff No. 2 under the bona fide
belief that the Plaintiff No. 2 was its contractual counterparty.
50. However, while preparing for the proceedings in the First
Reference, the Defendant noticed that the Charterparty does not
specify the exact name of the Plaintiff No. 2. Contrarily, the
Charterparty was signed and stamped by Plaintiff No. 1. On
observing the same, the Defendant sought to amend its Claim
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instructed by Plaintiff No.1, which was denied by the advocate of
Plaintiff No. 2. Hence, by way of abundant caution, the Defendant
issued notice of arbitration to Plaintiff No. 1 in the Second
Reference.
51. The Ld. Arbitral Tribunal pursuant to a procedural order dated 26
March 2025, inter alia directed that both First Reference and Second
Reference would be conducted and heard concurrently. It was
directed that the documents disclosed evidence given by parties in one
arbitration shall be made available in the other, on such conditions as
the Ld. Arbitral Tribunal may determine.
52. One of the issues formed by the Ld. Arbitral Tribunal was to
determine whether the ―Merchant‖ (Charterers), i.e., the party to the
Fixture Recap and/or Booking Note, is Plaintiff No. 1 or Plaintiff No.
2. The Defendant had contended that the Plaintiff No. 1 is its
contractual counterparty. The Ld. Arbitral Tribunal unanimously
found that the preponderance of the evidence points to SARR
Freights Corporation (i.e., Plaintiff No. 1) being the
“Merchant”/Charterer in the Fixture Recap and Booking Note.
Such finding was made by the Ld. Arbitral Tribunal after evaluating
the evidence produced by both parties. Hence, the Plaintiff No. 2
failed to demonstrate that it was the contractual counterparty as
alleged by them in both First Reference and Second Reference.
xxx xxx xxx‖
(Emphasis Supplied)
95. This Court has already held that prima facie there exists a valid
Arbitration Clause between the parties and that the plaintiffs have failed to
prima facie establish that the present case falls within the contours of
Section 45 of the Arbitration Act, in order to impel this Court to exercise its
jurisdiction to injunct the arbitration proceedings in London. There is
nothing before this Court that the plaintiffs are not being given equal
opportunities to present their case before the learned Arbitral Tribunal, or
that the arbitral proceedings are otherwise vexatious or oppressive, in any
manner.
96. At this stage, it is apposite to refer to the case of Ms. Sancorp
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Confectionary Pvt. Ltd. and Another Versus M/s Gumlink A/S 24, wherein,
this Court while denying an anti-arbitration injunction on the ground that
prima facie there existed an arbitration agreement between the parties, has
held that in certain situations, granting an interim relief tantamounts to grant
of the final relief, whereas, denial of the same would translate to dismissal of
the main case itself and therefore, in such cases, the threshold for granting
the interim relief/injunction must be such that withholding of the same
would prick the conscience of the Court. Thus, it was held as follows:
―xxx xxx xxx
14. ……….
The interim relief sought by the plaintiffs before this Court is an
injunction restraining the defendant from continuing with the
arbitration proceedings before SIAC. If such an interim relief is
granted, it would amount to almost decreeing the suit since it will
not be possible for the defendant to continue with the arbitration
proceedings already initiated before SIAC. It would be unrealistic to
assume that this suit would be decided in a short span permitting
resumption of arbitration in the event of the suit being ultimately
decided on merits. On the other hand, it is also equally true that
refusal of injunction would amount to frustrating the relief sought
by the plaintiffs in the absence of injunction from this Court, the
Arbitrator may go ahead with the proceedings above the award,
thereby giving the full fait accompli to the plaintiffs.
Referring to such a situation, Supreme Court in the Deoraj v. State of
Maharashtra (2004) 4 SCC 697, inter alia, held as under : –
―12. Situations emerge where the granting of an interim relief
would tantamount to granting the final relief itself. And then there
may be converse cases where withholding of an interim relief would
tantamount to dismissal of main petition itself; for, by the time the
main matter comes up for hearing there would be nothing left to be
allowed as relief to the petitioner though all the findings may be in
his favour. In such cases the availability of a very strong prima facie
case — of a standard much higher than just prima facie case, the
considerations of balance of convenience and irreparable injury24
2012 SCC OnLine Del 5507.
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forcefully tilting the balance of case totally in favour of the
applicant may persuade the Court to grant an interim relief though
it amounts to granting the final relief itself. Of course, such would
be rare and exceptional cases. The Court would grant such an
interim relief only if satisfied that withholding of it would prick the
conscience of the Court and do violence to the sense of justice,
resulting in injustice being perpetuated throughout the hearing, and
at the end the Court would not be able to vindicate the cause of
justice. Obviously such would be rare cases accompanied by
compelling circumstances, where the injury complained of is
immediate and pressing and would cause extreme hardship. The
conduct of the parties shall also have to be seen and the Court may
put the parties on such terms as may be prudent.‖
In my view, the plaintiffs before this Court have not been able to
make out a strong prima facie case. The Board Committee of SIAC
has considered the objection of the plaintiffs with respect to the
scope of the arbitration agreement and has opined that an
arbitration agreement does exist between the parties. The opinion
formed by the Committee is in conformity with the prima facie view
formed by this Court.
In fact, prima facie it appears to me that the scope of the arbitration
agreement contained in the JVA extends to the current disputes
between the parties. No irreparable loss would be caused to the
plaintiffs in case the defendant is not restrained from continuing
with the arbitration to inasmuch they have an opportunity to
establish before the Arbitrator that the current disputes between the
parties are beyond the scope of the arbitration clause contained in
the JVA. In case their plea is not accepted by the Arbitrator, they
would be entitled to raise plea when execution of the award which
may be passed against them, is sought.
I, therefore, find no reasonable ground to restrain the defendant
from proceeding with the arbitration proceedings invoked by it. The
application is accordingly dismissed. The interim order dated
9.8.2012 is hereby vacated.
The observations made in this order being tentative and prima facie
would affect the decision of the suit on merits.
xxx xxx xxx‖
(Emphasis Supplied)
97. Having regard to the position of law as aforesaid, in view of the prima
facie validity of the agreement between the parties, the arbitration clause
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therein, and there being no exceptional circumstances being made out by the
plaintiffs, this Court is not inclined to grant an interim injunction.
98. At this juncture, this Court notes the judgment in the case of LMJ
International Limited Versus Sleepwell Industries Co. Ltd. & Anr.25,
wherein, while relying on the principles governing anti-suit injunctions and
respecting Comity of Courts, the Court held that in the absence of coercion
or demonstrable injustice, there was no justification to restrain the agreed
arbitral process. Thus, it was held as follows:
―xxx xxx xxx
62. The intention of the parties to have their disputes resolved by
arbitration cannot be doubted. The parties have entered into such
contract with their eyes wide open. They have decided that all
disputes are to be resolved, adjudicated and decided by arbitral
tribunal to be constituted under the GAFTA Rules. The principal
ground for avoiding the said Tribunal is of forum inconvenience.
The additional grounds appeared to be that there is no agreement
between the plaintiff and the defendant to refer any dispute arising
out the said contract to arbitration either as per GAFTA Rules, 125
in London or otherwise. In deciding the said issue, the reference is
required to be made to the contract containing such arbitration
clause. There cannot be any dispute that the obligation to make
payment or avoidance of any such payment is arising out of a
transaction covered by the contract which contains the arbitration
the arbitration clause. The principal ground of forum inconvenience
does not apply to civil suits in India which are governed by the Code
of Civil Procedure in view of the specific bar created by Section
41(b) of the Specific Relief Act. However, the doctrine of
anticipatory injunction which is very often now being applied in
resisting a proceeding before a foreign court or tribunal on the
ground that since the courts in India like the Courts in England are
courts of both law and equity and thus, all equitable principle the
Court in India may grant an order of injunction restraining a party
from proceeding before any foreign court or forum. However, this
doctrine has to be applied with care and caution as it involves the
issue of respect for corresponding another international forum.
Although in this case, it is a proceeding before an arbitral tribunal
25
2012 SCC OnLine Cal 10733.
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but the same principle is to be applied in which the tests are that the
Court in the domestic forum may grant an ad interim order of
injunction to avoid injustice or if the foreign proceedings are found
to be oppressive or vexatious or to put it simply “in the ends of
justice”.
63. In Modi Entertainment Network & Anr. v. W.S.G. Cricket Pte.
Ltd. reported in AIR 2003 SC 1177 it was held that 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 the resolution of their disputes arising under the contract,
ordinarily no anti-suit injunction will be granted in regard to
proceedings in such a forum convenience and favoured forum as it
shall be presumed that the parties have thought over their
convenience and all other relevant factors submitting to non-
exclusive jurisdiction of the court of their choice which cannot be
treated just an alternative forum.
64. The Hon’ble Supreme Court laid down principles governing anti-
suit injunction in Paragraph 23 of the said report which is reproduced
here in below:-
1 . In exercising discretion to grant an anti-suit injunction the
court must be satisfied of the following aspects:-
(a) the defendant, against whom injunction is sought, is
amenable to the personal jurisdiction of the court;
(b) if the injunction is declined the ends of justice will be
defeated and injustice will be perpetuated; and
(c) the principle of comity – respect for the court in which the
commencement or continuance of action/proceeding is sought
to be restrained – must be borne in mind;
2. In a case where more forums than one are available, the Court in
exercise of its discretion to grant anti-suit injunction will examine as
to which is the appropriate forum (Forum conveniens) having regard
to the convenience of the parties and may grant anti-suit injunction
in regard to proceedings which are oppressive or vexations or in a
forum non-conveniens;
3. Where a jurisdiction of a Court is invoked on the basis of
jurisdiction clause in a contract, the recitals therein in regard to
exclusive or nonexclusive jurisdiction of the court of choice of the
parties are not determinative but are relevant factors 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;
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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 for 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 the resolution of their disputes arising
under the contract, ordinarily no antisuit injunction will be
granted in regard to proceedings in such a forum conveniens and
favoured forum as it shall be presumed that the parties have
thought over their convenience and all other relevant factors
before submitting to non-exclusive jurisdiction of the court of their
choice which cannot be treated just an alternative forum;
6. A party to the contract containing jurisdiction clause cannot
normally be prevented from approaching the court of choice of the
parties as it would amount to aiding breach of the contract; yet when
one of the parties to the jurisdiction clause approaches the court of
choice in which exclusive or nonexclusive jurisdiction is created, the
proceedings in that court cannot per se be treated as vexatious or
oppressive nor can the court be said to be forum nonconveniens;
7. The burden of establishing that the forum of the choice is a
forum nonconveniens or the proceedings therein are oppressive or
vexatious would be on the party so contending to aver and prove
the same.
65. In an earlier judgment, the Hon’ble Supreme Court in Oil and
Natural Gas Commission v. Western Company of North America
reported in MANU/SC/0014/1987 : 1987 (1) SCC 496 which possibly
was the first case where the Hon’ble Supreme Court in exercising
jurisdiction under Section 151 of the Code of Civil Procedure granted
antisuit injunction.
66. In Albon v. Naza Motor Trading Sdn Bhd reported in 2008 (1)
Lloyd’s Law Reports, the court of appeal in considering a case of anti-
arbitration injunction observed that if it appears that the agreement to
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arbitrate has been forged in order to defeat proceedings properly
brought in Civil Court (England), the autonomy of the arbitrators can
be undermined. In paragraph 7 of the said report it was held that a
party will not be restrained from instituting or continuing foreign
proceedings unless the applicant can show that to do so would be
oppressive and vexatious or (as it sometimes said) unconscionable.
Paragraph 7 of the said report is reproduced here in below:-
7. These submissions derive from the well-known principle that a
party will not be restrained from instituting or continuing foreign
proceedings unless the applicant can show that to do so would be
oppressive and vexatious or (as it is sometimes said)
unconscionable. A recent enunciation of the principle is contained
in the judgment of Rix LJ in the Metro litigation. Glencore
International AG v. Exter Shipping Ltd (2003 (2) All ER Comm 1 at
paras 42 and 43 where he said that:
(i) the defendant must be amenable to English territorial and
personal jurisdiction;
(ii) jurisdiction to grant an injunction in cases in which it is “just
and convenient to do so” is then provided by Section 37 of the
Supreme Court Act, 1981.
(iii) It will not be just and convenient unless;
(a) the threatened conduct is “unconscionable” which primarily
means it must be conduct which is oppressive or vexatious or
which interferes with the due process of the court;
(b) the jurisdiction is necessary to protect the applicant’s
legitimate interest in proceedings in England which must be the
natural forum for the litigation.
Rix LJ then said that while these are conditions for the grant of an
anti-suit injunction (and in that sense may be said to go to
jurisdiction), these considerations are again relevant when the court
comes to exercise its discretion. I would, however, myself prefer to say
that the conditions set out in (iii) above do not, strictly speaking, go to
jurisdiction. They are requirements of the exercise of a jurisdiction
that the court already has. This is, however, purely a matter of
nomenclature and I have no doubt that, while Rix LJ confined his
permission to appeal in the present case to the question of jurisdiction
and refused permission to appeal against the judge’s discretion, he
intended there to be full argument as to the principles on which the
judge exercised his jurisdiction.
67. In the instant case, there is no dispute that the said contract
containing arbitration clause has been validly and duly executed by
the parties.
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68. In Kvaerner Cementation (supra) the Hon’ble Supreme Court
declined to stay the arbitration proceeding in view of Section 16 of
the Arbitration and Conciliation Act which permits the arbitral
tribunal to rule on its own jurisdiction. The Hon’ble Supreme Court
has also taken into consideration the object of the Arbitration and
Conciliation Act, 1996.
xxx xxx xxx
73. In view of the aforesaid, it cannot be said that the proceeding
under the GAFTA Rules would be oppressive or vexatious. The
ground to resist the said arbitration is that it involves prohibitive
costs. The appellant was not compelled to execute the said
agreement. The appellant precisely knew at the time of execution of
the contract that in the event of any dispute arising out of the said
contract, it would be governed by the GAFTA Arbitration Rules,
125. In absence of any demonstrable injustice or harassment being
caused by reason of initiation of the arbitral proceedings
participation in such proceeding and having regard to the fact that
the agreement is not in dispute, in our view, the plaintiff is not
entitled to an order of injunction. The learned judge, in our view,
was justified in vacating the interim order and dismissing the inter
locutory application filed by the plaintiff.
xxx xxx xxx‖
(Emphasis Supplied)
99. Thus, considering the aforesaid and also keeping in mind the judicial
principle of Comity of Courts (See: Modi Entertainment Network Versus
W.S.G. Cricket Pte. Ltd.26 and Devi Resources Versus Ambo Exports
Ltd.27), the principle of minimal judicial interference (See: Interplay
Between Arbitration Agreements under Arbitration and Conciliation Act,
1996 & Stamp Act, 1899, In re28), as well as the legislative intent of
enactment of the Arbitration Act, this Court finds no occasion whatsoever to
interfere in the LMAA arbitration proceedings in London, at this prima facie
stage.
26
(2003) 4 SCC 341 – Paras 10 and 20.
27
2019 SCC OnLine Cal 7774 – Para 55.
28
(2024) 6 SCC 1 – Paras 67, 74, 81.
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CONCLUSION:
100. Accordingly, in view of the overall conspectus of the present dispute
and the position of law noted hereinabove, it is held that the plaintiffs have
failed to prima facie establish the exceptional circumstances for grant of
anti-arbitration injunction in the present case. The plaintiffs have not been
able to prima facie establish that the arbitration proceedings in London are
vexatious or oppressive or unconscionable.
101. Further, the questions as to whether the arbitral proceedings in
London are vexatious, oppressive or unconscionable, are mixed questions of
fact and law, which would have to be established by the plaintiffs by leading
evidence.
102. Considering the detailed discussion hereinabove, no merit is found in
the present application.
103. It is clarified that nothing contained herein shall be construed as an
expression on the merits of the dispute between the plaintiffs and defendant.
Further, the Court has only expressed a prima facie opinion herein, and the
merits of the claims as raised by the plaintiffs in the present suit shall be the
subject matter of final adjudication, post the trial in the present suit.
104. Accordingly, in view of the aforesaid discussion, the present
application is dismissed.
CS(OS) 868/2025
105. List before the Joint Registrar (Judicial) for further proceedings on
01st April, 2026.
MINI PUSHKARNA
(JUDGE)
MARCH 13, 2026/ Kr/Ak
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