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Judgment
P. Sathasivam, J.—By consent of both the parties, the main appeal itself is taken up for disposal.
The above original side appeal has been filed against the order of the learned single Judge dated 11.03.2005 made in O.A. No. 931 of 2004 in
C.S. No. 904 of 2004, in and by which the learned Judge, after finding that the applicant / plaintiff has not made out a case for interim order,
dismissed the said application.
The plaintiff in C.S. No. 904 of 2004 is the applicant. He filed the said suit against the defendant/ first respondent in this appeal for declaration
that the termination notice dated 21.07.2004 is null and void and for permanent injuncti ing the defendant from invoking the Arbitration Clause
7.5.4 of the contract agreement dated 26.09.2002 / 15.11.2002 as well as for mandatory injunction for fulfilling the contractual obligation as per
the contract agreement dated 26.09.2002 / 15.11.2002. Pending suit, the plaintiff / applicant filed O.A. No. 931 of 2004, praying for interim
injunction restraining the first respondent from proceeding with the arbitration proceedings as contemplated under Article 7 of the Contract
Agreement dated 26.0 9.2002 / 15.11.2002. The said application was resisted by the first respondent by filing counter statement. The learned
Judge, by the impugned order, after finding that there is a valid agreement between the parties, which contains arbitration clause, and hence, no
injunction as claimed can be granted, dismissed the said application. Questioning the same, present appeal has been filed.
Heard Mr. R. Muthukumarasamy, learned senior counsel for the appellant and Mr. Arvind P. Datar, learned senior counsel for the contesting
first respondent.
The case of the appellant/petitioner is that the Contract Agreement dated 26.09.2002 / 15.11.2002 was signed by the petitioner at Chennai and
it was forwarded to the first respondent together with the addendum which, inter alia, contains the clauses regarding the law applicable and the
place of jurisdiction for arbitration. The first respondent though not signed the addendum, expressed that the matters covered by the addendum will
be discussed later. Therefore, there is no consensus with regard to arbitration proceedings, such as venue of arbitration and the law applicable to
arbitration proceedings. In the absence of such consensus, it is the case of the petitioner that there is no concluded Agreement regarding arbitration
such as, the venue and the law governing arbitration proceedings. Or in the alternative, since the first respondent did not strike off Article 13 of the
Contract at the time of signing, it has to be presumed that the first respondent has agreed to the contents of addendum.
The first respondent has terminated the contract by issuing notice dated 21.07.2004 without any valid reason and without complying with the
pre-requisites of the contract dated 26.09.2002 / 15.11.2002. In reply to the notice of termination, the applicant has conveyed its refusal to accept
the termination and also informed the first respondent by letters dated 24.07.2004 and 27.07.2004 that the applicant would always be ready and
willing to perform its part as per the terms of the Contract dated 26.09.2002/15.11.2002. Though originally an order of ad-interim injunction was
granted in O.A. No. 931 of 2004 restraining the first respondent from proceeding with arbitration proceedings, the said order was vacated and the
application was dismissed on 1 1.03.2005 on the ground that the interim prayer is beyond the scope of the suit. The case of the petitioner is that
the reasoning of the learned Judge and the ultimate order dismissing the injunction application cannot be sustained, as there is no valid agreement
between the parties regarding arbitration.
Mr. R. Muthukumarasamy, learned senior counsel appearing for the appellant, after taking us through the Contract Agreement between the
plaintiff and defendant dated 26.09.2002/15.11.2002, addendum, various correspondences between the parties and the ultimate order of the
learned Judge, would contend that in view of Article 13 of the Agreement, the addendum should be read along with the main Agreement and the
same is binding on both the parties, including the first respondent. He also contended that if the addendum is not agreeable, the main contract will
become unenforceable.
On the other hand, Mr. Arvind P. Datar, learned senior counsel appearing for the contesting first respondent would submit that in view of the
fact that the addendum has not been signed and agreed to by the first respondent, in the absence of consensus ad-idem, the main agreement dated
26.09.2002 / 15.11.2002 would bind both the parties and so, the terms relating to the law and place of jurisdiction for arbitration referred to
therein would govern the parties.
In order to appreciate the rival contentions, it is useful to refer certain Articles of the Contract. Article 1.3 reads as under:-
1.3: After the signing of the CONTRACT, no other text, document or data except as herein specified, shall have any force or effect whatsoever,
or may, in any way whatsoever, be taken into consideration in the interpretation of the terms and conditions of the CONTRACT.
Article 7.2 speaks about termination of the contract. Article 7.5 speaks about disputes. Articles 7.5.1, 7.5.4 and 13 which are relevant for the
purpose of this case read as under:-
7.5.1: This CONTRACT shall be governed, exclusively by the Swiss Law. Any disputes and differences which may arise in connection with the
execution of the contract during its lifetime should be settled in an amicable way.
7.5.4: In case the above disputes and differences could not be settled in an amicable way by intervention of the management of companies
involved, they shall be finally settled in accordance with the rules of Conciliation and Arbitration of the International Chamber of Commerce. Three
arbitrators appointed in accordance with said rules shall carry their mission in accordance with the said Rules and shall on their behalf, make a final
decision which shall be binding for both Purchaser and Subcontractor.
Article 13: The addendum to this agreement shall form part of the Contract.
The appellant / subcontractor has signed the said agreement on 26.09.2002 and the first respondent / purchaser has signed the same on
15.11.2002. Addendum to the Contract Agreement between LITOSTROJ and M/s. GEA Energy System (India) Ltd., dated 26.09.2002
contains 7 Clauses, out of which, Clauses 5 and 6 are relevant.
This contract is subject to the laws of India. 6. The place of jurisdiction for Arbitration shall be Chennai.
Though the appellant/subcontractor signed the addendum on 26.09 .2002 itself, admittedly, the same was not signed by the 1st respondent
herein/purchaser. Mr.R.Muthukumarasamy, learned senior counsel for the appellant by drawing our attention to Article 13 would submit that the
addendum though not signed by the purchaser / first respondent herein, is a part of the Contract; accordingly, as per Clauses 5 and 6 of the
addendum, the Contract is subject to the laws of India and the jurisdiction for arbitration proceedings, if any, shall be at Chennai and in such a
circumstance, the arbitration proceedings at Slovenia cannot be proceeded with and the learned Judge ought to have granted injunction. In support
of his claim, he very much relied on the decisions of the Supreme Court in the cases of Ramji Dayawala and Sons (P) Ltd. Vs. Invest Import, and
U.P. Rajkiya Nirman Nigam Ltd. Vs. Indure Pvt. Ltd. and others, . In Ramji Dayawala and Sons (P) Ltd. Vs. Invest Import, , it is pointed out that
where the contract is in a number of parts, it is essential to the validity of the contract that the contracting party should either have assented to or
should be taken to have assented to the same thing in the same sense or as it is sometimes put, there should be consensus ad idem. It is further held
that apart from this, a party may be taken to have assented, if he has so conducted himself as to be estopped from denying that he has so assented.
Their Lordships also held that, even apart from this, it would still be open to the party contending negation to prove that he had not accepted a part
of the original agreement. In the latter case, i.e., in JT 1996 (2) SCC 322, their Lordships have held that in the absence of consensus ad idem on
the material terms of the contract to be entered into between the parties, there emerged no concluded contract.
The learned senior counsel submitted that since Article 13 has not been complied with, there is no consensus ad idem on the material terms of
the Contract, which contains several clauses. Pointing out the principles laid down therein, it is argued that in the absence of consensus ad idem to
the contract to be entered into between the parties, there is no concluded contract; hence, the claim that Swiss law alone is applicable and the
arbitration is to take place in Slovenia cannot be sustained.
In this regard, Mr. Arvind P. Datar, learned senior counsel appearing for the contesting first respondent rightly pointed out that first of all the
addendum was not accepted by the purchaser; hence, the purchaser did not sign the addendum and consequently, it sent an E-Mail stating that
regarding addendum to the Contract Agreement, they will discuss it later. As pointed out by Mr. Arvind P. Datar, though Article 13 refers that
addendum is a part of the Contract, the fact remains that since the addendum was not acceptable, the purchaser / one of the party did not sign the
same. As a matter of fact, it is brought to our notice that though the purchaser informed the subcontractor that the addendum will be discussed
later, the subcontractor has not taken further action to discuss the altered conditions mentioned in the addendum. In such a circumstance, though
there is no dispute with regard to proposition of law as enunciated in those decisions, the same are not applicable to the case on hand.
Though it was seriously argued that in view of Article 13 of the Contract, the addendum shall form part of the Contract, as discussed earlier,
not only the purchaser, the first respondent herein has not accepted the terms in the addendum, particularly Clauses 5 and 6 by signing the same,
but also conveyed that the terms in addendum to the Contract will be discussed later. In such a circumstance, as rightly contended by Mr. Arvind
P. Datar, and accepted by the learned single Judge that there is a valid agreement dated 26.09.2002 and 15.11.20 02 and the addendum cannot
be enforced. Apart from this, as rightly observed by the learned Judge, the plaintiff is not challenging the very validity of the contract, but is
questioning the act of defendant in terminating the said contract. To put it clear, unless the plaintiff seeks declaration that there is no concluded
contract dated 26.0 9.2002 / 15.11.2002 between the parties, as rightly observed by the learned Judge, the injunction cannot be granted in
respect of arbitration and legal proceedings in Slovenia. Inasmuch as we have already concluded that the Contract Agreement dated 26.09.2002 /
15.11.2002 is valid and it provides arbitration clause, the arbitration proceedings cannot be restrained by way of injunction by this Court. Had the
first respondent / defendant accepted the addendum, undoubtedly, the plaintiff could have pursued its suit and also prayed for injunction from
initiating legal steps as well as arbitration proceedings at Slovenia. For the reasons stated above, addendum cannot be enforced by the appellant.
All these aspects have been considered and rightly rejected by the learned Judge. In view of the above discussion by us and on perusal of the
relevant clauses of the agreement, addendum, plaint averments etc., we concur with the conclusion of the learned Judge and we are unable to
appreciate the contentions raised by the learned senior counsel for the appellant. Accordingly, the original side appeal fails and the same is
dismissed. No costs. Consequently, connected CMP., is also dismissed. It is made clear that the conclusion of the learned Judge and the
confirmation order by us are only prima facie for the disposal of the injunction application.