Salil K. Roy Chowdhury, J.
1. This is an application under Section 33 of the Arbitration Act, 1940, inter alia for determination of the existence, validity and scope of the arbitration agreement and a declaration that noarbitration agreement has been entered into between the parties and injunction restraining the respondent and his agents and servants from proceeding with the arbitration proceedings before Indo-Ger-man Chamber of Commerce on the basis of the claim contained in the letter dated the 29th of November, 1979, and for other incidental reliefs.
2. The petitioner moved the application on the 22nd of April, 1980, and obtained an interim injunction restraining the respondent and his agents, servants and assigns from proceeding with the arbitration proceedings before the Indo German Chamber of Commerce on the basis of the claim contained in the letter dated the 29th of November, 1979. being annexure 'D' to the petition. Returnable date was fixed on the 16th day of April, 1930. On the returnable date directions were given for filing affidavit-in-opposition by 3rd day of May, 1980 and affida-vit-in-reply by 13th day of May, 1980, and the matter was adjourned till 14th of May, 1980. Then again on the 14th of May, 1980, extension of time to file affidavits was asked for and time was granted for filing affidavit-in-opposition by 2nd of June, 1980, and affidavit-in-reply by 9th of June, 1980, and it was adjourned till 10th June, 1980. Thereafter, the matter was heard.
3. The relevant facts for the purpose of this application which are not disputed are that there were negotiations and discussions between one Mr. Warner Bock of the respondent and one Mr. M.L. Deora of the petitioner (sic). Mr. Bock visited India held at Calcutta at the office of petitioner. In or about April, 1979, when the said petitioner (sic) and art agreement was arrived at by which the Respondent offered to purchase 1,20,000 pairs of cow hide spilt leather working gloves at the rate of D.M. 1.17 per pair of gloves of the aggregate C.I.F. value of D.M. 1,40,000. Pursuant to the said agreement a pro forma invoice of the petitioner dated 19th of April, 1979, confirmed the said business transaction and a copy of which is annexed to the petition being annexure 'A' at page 10, The said pro-forma invoice contained the terms of the said contract regarding shipment, payment by irrevocable letter of credit. Thereafter, the Respondent by his letter dated 7th of May, 1979, two orders both dated 7th of May, 1979, being J.E. 2556 and 2557 for 60,000 pairs of gloves eachwere sent to the petitioner, A copy of the said covering letter and a copy of one of the contracts/orders for 60,000 pairs of gloves is set out hereunder:--
TELEX : 021 4369WERNER A. BOOK K. G.CABLES : BOOK WERNERTELEPHONE : 36 58 13IMPORT. EXPORTCODES : BENTLEY'SBANKERS :2000 HAMBURG 1 GR,2ND AND COMPL.DEUTSCH--BAOKERSTR, 11ACME AND SUPPL.SUDAMERIKANISOHE ABO 6TH ED.BANK AG/. BUENTING'S 2NDDEUTSOH-ASIATISCHE BANK ED., RUDOLF MOSE. Hamburg, 7th of May, 1979, bkjr/L.Messrs. Arvind Exports Pvt. Ltd. 750, Park Street, 4/F. Calcutta-700 016 INDIA.
Dear Sirs, Referring to the visit of our Mr. Book in Calcutta. We have the pleasure to enclose you herewith our contracts JE 2556/2557 for worker gloves.
Please be kind enough and let us have by return of airmail one copy each duly signed. We wish to point out once again that our contracts are final.
Yours faithfully, Werner A Book K. G.
WERNER A. BOOK K. G.Importaction -- Exportaction2000 HAMBURG 1. GR. BACKEBSTR-11P. O. Box 1000707
TELEX No. 0214369 36 58 13 CABLES : BOOK WERNER CODIGOS : BENTLEY'S 2NDTELEFON NOS. : 36 58 14 AND COMPL., ACME AND SUPPL. Hamburg, 7th of May, 1979, bkjr/L. JE 2558CONTRATOCONTRACTVendedores
Sellers:Messrs. Arvind Exports Pvt. Ltd., 750 Park St., 4/F, Calcutta-706016/India.Compradores
Buyers:Messrs. Werner A. Book KG., P.O. Box No. 100707 2000 Hamburg 1.Cantidad
Quantity:500 Cartons-60.000 pairs (5% more or less).Artioulo Article:COWHIDE SPLIT LEATHER WORKING GLOVES, natural grey colour, five fingerwing thumb type, cotton drilling back, a leather knuckle finger tips, elasticbank cotton peace palm lined, with pasted 2.5' cuff and cotton binding, size, 10/10.5'
Precis:DM 1.17 perpair, packing Included.Price............................................................................................
C.I.F. HamburgEmpaque Packing:Strong seaworthy export cartons, each containing 10 doz. pairs (each one doz. pairs pecked in a polybag)
Embarque Shipment:July, 1979, from origin to Hamburg by direct quick conference steamer.Pago Payment:By Irrsvoc. L/C to be established in your favour early May through INDIAN OVERSEAS BANK Free School Street Branch, 14, Park Mansion, Calcutta-700016 (with allowance of partshipment).
Arbitrajs Arbitration:Any dispute or deference or claim arising out of or in relation to this contractincluding the construction, validity, performance or breach thereof,shall be referred to the Indo-Garman Chamber of Commerce, Bombay, for settlement under the Arbitration Rulesthen in force, and the Award of theArbitration Court of the Chambershall be final and binding on the parties thereto.Anotaciones
Special remarks:Shipping marksW A B Hamburg JE 2556No. 1/500Certificate of Origin, form ' A' requestedWERNER A. BOOK K. G.BANOOS : DEUTSOHE UEBERSEEISCHE BANK (DEUTSCHE BANK AG).HAMBURG, EUROPEAN ASIAN BANK AG, HAMBURGHAMBURG-AFRIKA AG., HAMBURG.
4. Thereafter, the petitioner acknowledged the receipts of the said two orders and the covering letter dated the 7th of May, 1979, from the Respondent and by their letter dated the 31st of May, 3979, suggested certain modifications particularly as to the price and specifically affirmed the arbitration clause. The said letter is annexed to the petition and is at page 15 and the confirmation of the arbitration clause is in Clause 5, Sub-clause (d) in the following terms:--
'Specially in view of the arbitration clause stated in your contracts, we feel that the inspection certificate by any third party is not necessary.
Now in view of all above factors we wish to suggest as under for your kind perusal and acceptance;
(i) Price: Although according to the present raw materials prices are lowest possible price works out to D.M. 1.33 per pair C.I.F. However, after giving due consideration to keep the business relation on sound basis, we request you to kindly bear with all our difficulties and raise the price to D.M. 1.25 per pair C.I.F....... ..................
We are confident that our above requests shall be given due consideration and look forward for your confirmation with amended contract sheets on receipt of which needful shall be done.'
5. Pursuant to the said request for modification of the price the Respondent by its letter dated 5th of June, 1979, agreed to increase the price to D.M. 1.25 C.I.F. Humburg for contract JE 2556 and September shipment and intimated that the letter of credit will be amended accordingly after receiving the shipping advice from the petitioner and by the said letter the Respondent also cancelled the other contracts dated 7th of May, 1979, being Contract No. JE 2557 which was specifically mentioned in the letter that the cargo will be inspected by the Respondent carefully and in case of discrepancy, the shipment under the Contract No. JE 2556 will not be insisted and it was further pointed out in the said letter of the Respondent dated 5th of June, 1979, to the petitioner that in case the petitioner failed to fulfil the contractual obligation, the matter will be immediately proceeded with before the Indo-Ger-man Chamber of Commerce to black list the petitioner. The said letter is annexed to the petition and is at page 17.
6. It also appears that the Respondent duly opened the letter of credit in terms of the contract with the Indian Overseas Bank, Calcutta, in favour of the petitioner being dated 10th of May, 1979, and by another letter dated 29th of May, 1979, the said letter of credit was amended by deleting the inspection certificate as was provided in the original letter of credit. It also appears that by a letter dated the 13th of June, 1979, the petitioner expressed some astonishment after receiving the Respondent's letter dated the 5th of June, 1979, and inter alia stated as follows:--
'As regards your present order Nos. JE 2556 and 2557 we had put forward our difficulties before you in our letter dated 31st, we never refused to supply these orders nor requested for any cancellation, we just request you for your kind co-operation to increase the price.
We have noted your comments with great pains as it seems that you have misunderstood our frank approach to you which in business sometime situation compels us to keep the full facts before the buyer in order to seek the co-operation, in business one has to give and take. Today's situation has landed us in trouble which is beyond control. Anyway on receipt of our shipment advice for balance quantity of JE 2507 you will kindly amend the letter of credit relating to JE 2556 which is for 60,000 pairs at D.M. 1.25 per pair C.I.F. for September shipment for which we shall try our utmost to execute full quantity within the validity of the said L/C.
As regards JE 2557 we have noted the comments after receiving shipment advice for JE 2556, if you want to revive this order, we will be glad to give you fresh quotation prevailing at that time in the meantime. We are treating the order as cancelled according to your wishes.
We regret any inconvenience which may have caused to you and remain with best regards with sincere assurance that we will definitely honour our commitment without fail'
7. It also appears from another letter of the petitioner dated 20th of April, 1979, addressed to the Respondent a copy of which is annexed to the affidavit-in-opposition filed on behalf of the Responded affirmed by one Dinesh Chandra Kalra on the 2nd of June, 1980, being annexure 'C' that the visit of Mr. Bock and placing of fresh order has barred the negotiation and agreement? which resulted in the agreement was asked for by the petitioner from the Respondent, The said letter dated the 20th of April, 1979, is set out hereunder:--
75C, Park Street, P.O. Box No.
9122. Calcutta 700016 (INDIA),
April 20th, 1979.
M/s. Werner A. Bock K.G .
P. O. Box 01 07 07
GR BACKERSTR 11
Further to our letter dated 17th instant we are pleased to confirm that Mr. W. Bock visited our office yesterday and we had an opportunity to exchange our views and sort out all difficulties of each other.
As regards your order No. JE 2507--he has informed us that we will be get-ling the extension of the respective L/C till 15th May for shipment and we areconfident that you have already done the needful. We now await the advice through bankers. In the meantime kindly let us have a photostatic copy of your amendment at your earliest to enable us to expedite the matter.
During his personal visit Mr. Bock has kindly placed with us a fresh order for 1,20,000 pairs gloves as per copy of our pro forma invoice No. PRO 127/79 of 19th instant enclosed herewith for your ready reference.
We shall appreciate if you will be kind enough to expedite and let us have your order sheet against the order as well as arrange a letter of credit for the same as per terms at your earliest and oblige. We now await for your early information.
For ARVIND EXPORTS PVT. LTD.
U T SAUT ANT
8. Therefore, from the above correspondence between the parties it appears that the contract was concluded between the parties and the work order which was placed by the Respondent on the petitioner for the supply of the goods under the contract No, JE 2556 contains the arbitration clause which was accepted by the petitioner and in fact, the petitioner repeatedly relied on the said arbitration clause as would appear from their letter dated the 31st of May, 1979, which has been quoted above.
8-A. It appears that by a letter dated th 29th of November, 1979, when the Respondent by its letter raised a claim for breach of contract against the petitioner for non-supply of the goods under the contract and intimated that the matter being referred to arbitration in terms of the arbitration clause in the contract, The petitioner by their letter dated the 13th of December, 1979, denied that it has committed any breach of the contract by non-supply and there was no arbitration clause in the terms and conditions of the Contract between the parties and, therefore, the decision of the Arbitrator will not be binding on the petitioner. Thereafter, the Tribunal of Arbitration, Indo-German Chamber of Commerce by their letter dated the 18th of March, 1980, informed the petitioner that the Respondent has made a claim against the petitioner and filed an arbitration case before the Tribunal alongwith the documents relating to the claim and thereafter, by another letter dated 25th of March, 1980, the said Tribunal of Arbitration forwarded the panel of Arbitrators from Bombay and requested the petitioner to nominate their Arbitrator in terms of the arbitration clause, All the said correspondence are annexed to the petition and respectively marked as annexures 'F' and 'E' at pages 30, 28 and 25. Immediately after receiving the last letter from the Tribunal of Arbitration, The Indo-German Chamber of Commerce, dated the 25th of March, 1980, the petitioner filed this present application on the 2nd of April, 1980, and obtained an interim order restraining the Respondent from proceeding with the arbitration proceeding before the said Tribunal of Arbitration.
9. Mr. Pratap Chatterjee, appearing for the petitioner, submitted after drawing my attention to the correspondence which I have set out before and the petition and the affidavit-in-reply that there was no arbitration clause between the parties at the time of entering into the contract It is only by the order dated the 7th of May, 1979, the Respondent tried to incorporate the arbitration clause to which the petitioner did not agree and therefore, Mr. Chatterjee submitted that the contract did not contain an arbitration clause and as such, there cannot be any reference to arbitration as sought to be initiated by the Respondent and the Court should determine accordingly as prayed for by the petitioner in this application,
10. Mr. Dipak Basu, appearing for the Respondent, also relied on the correspondence and submitted that there was a clear contract between the parties and the same was recorded in the, said order placed by the Respondent on the petitioner and in fact, the petitioner by their letters dated the 20th of April, 1979, 31st of May, 1979, 5th of June, 1979 and 13th of June, 1979, have clearly affirmed the arbitration clause and only suggested modification as to price of the goods which the Respondent accepted and also the petitioner raised certain difficulties as to the fulfilment of the contract but never questioned the concluded contract which contained the arbitration clause. Mr. Basu referred to a decision of this Court of Mallick, J., in Damodar Shah v. Union of India, : AIR1959Cal526 where it was held in an application under Section 33 of the Arbitration Act, 1940,when the existence of the arbitration agreement or its validity is challenged, the Court shall decide the question. The declaration the Court would make in the order would be only as to the existence of the arbitration agreement and where the existence of the contract is to be found from the correspondence, the rule is that the entire bunch of correspondence as passed between the parties has to be looked into for determination whether there was a concluded contract. Therefore, Mr. Basu submitted relying on the said principle that if the entire correspondence is looked into, there cannot be any doubt that there was an arbitration agreement which the petitioner himself affirmed in no uncertain terms and, therefore, there should be a declaration that there is a valid and binding arbitration agreement. Mr. Basu also relied on a Single Bench decision of the Allahabad High Court in Gaddarmal Hiralal v. Chanbhan Agarwal & Co., : AIR1968All292 where also it was held that arbitration agreement need not be signed when it can be shown that there was a concluded contract between the parties by an agreement and in my view, Mr. Basu rightly submitted that in this case the whole question is to be determined from the correspondence between the parties which are specific and clear as I have set out before.
11. Considering the correspondence in its proper perspective it is quite clear that there was a concluded contract between the parties which contained an arbitration clause in the said order dated the 7th of May, 1979, from the Respondent to the petitioner. In fact, the petitioner affirmed the said arbitration agreement in no uncertain terms by its letter dated the 31st of May, 1979, and also by its letter dated 20th of April, 1979, the petitioner affirmed the contract after sending the pro forma invoice dated 19th of April, 1979, to the Respondent. The order placed by the petitioner is really in pursuance to the said contract which contained an arbitration clause and subsequently affirmed by the petitioner and in this application under Section 33 of the Arbitration Act, 1940, the Court's jurisdiction is to be determined only whether there is an arbitration agreement or not It is not the Court's jurisdiction to deal with other terms of the contract but only to determine whether there is an arbitration agreement. The principle is well laid down by the two Supreme Court decisions being thatin Shiva Jute Baling Limited v. Hindlay & Company, : 1SCR569 and R.N. Ganeker & Company v. Hindusthan Wires Limited. : AIR1974SC303 . In the last Supreme Court decision, in my view, very similar situation as in this case arose as the petitioner in this case also has not challenged the arbitration agreement at any time, on the other hand affirmed it as would appear from the correspondence hereinbefore set out. Therefore, the present application under Section 33 of the Arbitration Act, 1940, is not maintainable. Therefore, the petitioner's contention cannot be accepted and the application must fail.
12. Further, it is really regrettable that the contract being in the nature of an International Commercial Contract where the question of business honesty and morality is involved, the petitioner should have acted in a business like manner and honour its commitment following the norm of foreign trade by an Indian Concern. The attitude of the petitioner is against all principles of commercial contract who is obviously trying to back out of solemn arbitration agreement, if possible, by raising absolute frivolous pleas which are directly contradictory to their own conduct as disclosed in the correspondence. The petitioner is also estopped from raising any dispute regarding the arbitration agreement by its conduct and the same has been arrived at between the parties in writing as would appear from the correspondence which I have referred to and set out in the part of the judgment where the facts have been stated.
13. In the result, the application is dismissed with costs and all interim orders are vacated.
14. The Tribunal of Arbitration and all parties to act on a signed copy of the minute.