CHATTERJEE PETROCHEM CO. vs. HALDIA PETROCHEMICALS LTD.

Full Judgment Text

1 REPORTABLE IN THE SUPREME COURT OF INDIA

CHATTERJEE PETROCHEM CO. & ANR ………APPELLANTS Vs. HALDIA PETROCHEMICALS LTD.& ORS. ……… RESPONDENTS J U D G M E N T JUDGMENT V. Gopala Gowda J. st On 21 March, 2012, the appellant Chatterjee Petrochem (Mauritius) Company (hereinafter referred to as ‘CPMC’) filed a request for arbitration in International Chamber of Commerce (ICC), Paris in relation to an agreement of restructuring which was Page 1 C.A.@ slp(c)No.19951 of 2013 2 entered into between CPMC, Government of West Bengal, West Bengal Industrial Development Corporation (in

Haldia<br>th	Petroc

Agreement, the Government of West Bengal was to cause WBIDC to transfer existing shareholding to CPMC to ensure that CPMC holds 51% of the total paid up capital of HPL. Clause 15 of the Agreement provides for reference of all disputes, in any way relating to the said Agreement or to the business of or affair of HPL to the Rules of the ICC, Paris. 2. The respondent HPL on the other hand, claims that the Arbitration Agreement contained in clause 15 of the JUDGMENT th Agreement dated 12 January, 2002 is void and/ or unenforceable and/or has become inoperative and/or incapable of being performed. 3. A dispute arose between the parties regarding the allotment of shares and the appellant filed Company Petition No. 58 of 2009 before the Company Law Board Page 2 C.A.@ slp(c)No.19951 of 2013 3 (in short ‘CLB’)on the grounds of oppression and mismanagement. The appellant also sought transfer of

n favou	r of

counterpart of CPMC as was decided in the Agreement. 4. The Company Petition was disposed of by the CLB by upholding the decision of the Company to allot 155 million shares by Indian Oil Corporation (in short ‘IOC’). The transfer of 155 million shares to CPIL by WBIDC was also confirmed. The CLB further directed the Government of West Bengal and WBIDC to transfer 520 million shares held by them in HPL to Chatterjee Groups. JUDGMENT 5. The Government of West Bengal preferred an appeal against the said Order before the High Court of Judicature at Calcutta under the provisions of Section 10F of the Company’s Act, 1956. The High Court set aside the Order of the CLB on the ground that CPIL was not a member of HPL and the CLB could not have enforced Page 3 C.A.@ slp(c)No.19951 of 2013 4 its right under private contract entered into between CPIL and WBIDC for transfer of shares as the same could

matter	of a pe

6. Aggrieved by the same, the appellant preferred appeal Nos. 5416-5419, 5420, 5437 and 5440 of 2008 before this Court. Vide judgment dated 30.09.2011, this Court held that the claim of the appellant transferring shares to IOC has changed the private character of the Company and was not an act of oppression on the part of the Company. According to this Court, the transfer of shares to IOC was a result of failure on the part of the appellant to infuse JUDGMENT adequate funds into the Company by way of equity as promised and to participate in its rights issues. The Company was therefore, constraint to induct IOC as a member and the 155 million shares which was to be transferred to the appellant was instead transferred to Page 4 C.A.@ slp(c)No.19951 of 2013 5 the IOC. The relevant paragraph of the judgment reads as under:

“
the 155 million shares transferred to CP(I)PL
could not, strictly speaking, be taken to be
failure on the part of the Company, but it was
the failure of one of the parties to a private
arrangement to abide by its commitments. The
remedy in such a case was not under
Section	397	of the Companies Act. It has been
submitted by both Mr. Nariman and Mr. Sarkar
that even if no acts of oppression had been
made out against the Company, it would still be<br>open to the learned Company Judge to grant
suitable relief under Se<br>iron out the differences			ction 402 of the Act to<br>that might appear from
time to time in the run			ning of the affairs of
the Company. No doubt, i			n the Needle Industries
case, this Court ha			d observed that the
behaviour and conduct			complained of must be
held to be harsh and wrongful and in arriving
at such a finding, the Court ought not to
confine itself to a narrow legalistic view and
allow technical pleas to defeat the beneficial
JUDGMENT<br>provisions of the Section, and that in certain
situations the Court is not powerless to do
substantial justice between the parties, the
facts of this case do not merit such a course
of action to be taken. Such an argument is not
available to the Chatterjee				Group, since the
alleged breach of the agreements referred to
hereinabove, was really in the nature of a
breach between two members of the Company and
not the Company itself.			It is not on account of
any act on the part of the Company that the
shares transferred to CP(I)PL were not
registered in the name of the Chatterjee

Page 5 C.A.@ slp(c)No.19951 of 2013 6

Group. There was, therefore, no occasion for
the CLB to make any order either under
Sectio n	39 7	o r	40 2	of the aforesaid Act. If, as
was observed in M.S.D.C. Radharamanan's case
(supra), the CLB had given a finding that the
acts of oppression had not been established, it
would still be in a position to pass
appropriate orders under Sectio n					40 2	of th e
Act. That, however, is not the case in the
instant appeals.”

(emphasis laid by this Court) 7. On this decision given by this Court, the appellant sought to invoke the arbitration clause contained in th the agreement dated 12 January, 2002 and made a request for arbitration. The respondent no.1 on the other hand, filed a suit before the High Court of judicature at Calcutta praying that the arbitration clause in the agreement be declared as void. JUDGMENT 8. Learned senior counsel on behalf of the appellant Dr. Abhishek Manu Singhvi relied upon Clause 15 of the th letter of agreement dated 12 January, 2002 to contend that any dispute, difference or claims arising between the parties relating to this letter of agreement dated th 12 January, 2002, or any construction or Page 6 C.A.@ slp(c)No.19951 of 2013 7 interpretation relating to the working of or the business of the respondent no.1, shall first make an

their di	sputes,

International Chamber of Commerce. Therefore, the learned senior counsel contended that the validity or existence of the arbitration agreement is to be decided by the Arbitration Tribunal in terms of Article 6 of the ICC Rules, 1998 which is pari-materia to Section 16 of the Arbitration and Conciliation Act, 1996 (in short ‘A & C Act’)and the Civil Court has no jurisdiction to decide on such issues. In support of this legal contention, the learned senior counsel relied upon the JUDGMENT decision of this Court in Yograj Infrastructure Ltd. v. 1 Ssang Yong Engineering and Construction Co. Ltd . wherein it was held that the arbitration shall be held as is mentioned in the agreement which in the present case, is at Paris. 1 (2011) 9 SCC 735 Page 7 C.A.@ slp(c)No.19951 of 2013 8 9. It is the further case of the appellant that the th agreement dated 12 January, 2002 between the parties

by th	e sub

January, 2002 is the principal agreement, which was th later followed by the supplemental agreements dated 8 th March, 2002 and 30 July, 2004. The letter of agreement th dated 8 March, 2002 did not create any independent legal right but was a mere direction from CPMC to transfer 155 million shares to its nominee CPIL to avoid delay. Therefore, according to the appellant, the th letter of agreement dated 8 March 2002 provided that th the terms and conditions of 12 January, 2002 agreement JUDGMENT would continue to remain valid and subsisting between the parties. The relevant clauses will be mentioned in the reasoning portion of the judgment. 10. The learned senior counsel relied upon Section 45 of the A & C Act to contend that the suit instituted by the respondent No. 1 against the request of arbitration Page 8 C.A.@ slp(c)No.19951 of 2013 9 by the appellant is not maintainable in law. He further argued that the suit instituted by the respondent

foreign	arbitr

Section 5 of the A & C Act which limits judicial authority’s intervention in arbitration and therefore the impugned order of injunction passed by the High Court of Judicature at Calcutta was contrary to law and therefore, the same is liable to be set aside. In this regard, the learned senior counsel relied upon the three Judge Bench decision of this Court in Bhatia 2 International v. Bulk Trading S.A. and Anr. to contend that section 5 of the A & C Act provides that no JUDGMENT judicial authority shall intervene except where it is provided. The relevant paragraph will be extracted in the reasoning portion of the judgment. 11. Mr. Sudipto Sarkar, learned senior counsel also appearing on behalf of the appellant further contended that the maintainability of the arbitration of the 2 (2002) 4 SCC 105 Page 9 C.A.@ slp(c)No.19951 of 2013 10 disputes between the parties can be established by relying on the decision of this Court in Venture Global

m Compu	ter Ser

be applicable to international arbitrations as well. Therefore, Mr. Sarkar contended that the Arbitration clause will be a bar for judicial intervention in the present case in spite of the fact that it is an international arbitration as per the principal agreement which will be continued in force as per the terms of the supplemental agreements. 12. On the other hand, it is the case of the respondent th HPL that the arbitration agreement dated 12 January, JUDGMENT 2002 is rendered void in respect of the claim for transfer of 155 million shares in favour of CPIL inasmuch as the parties had contracted out of their earlier agreement and the legal liability in respect th thereof was redefined in the subsequent 8 March, 2002 Agreement which provided for an exclusive jurisdiction 3 (2008) 4 SCC 190 Page 10 C.A.@ slp(c)No.19951 of 2013 11 to courts in Calcutta to decide dispute arising out of the said agreement. Therefore, it was pleaded by

e learn	ed seni

to an arbitration agreement seeks to adjudicate dispute before another forum and such forum arrives at a conclusive findings of fact in relation to the dispute then, the subsequent effort on the part of the same party to refer dispute for arbitration under ICC Rules would be vexatious and abuse of law and it shall be construed that the arbitration clause in the principal agreement has been rendered inoperative by the conduct of the party itself. JUDGMENT 13. The learned senior counsel for the respondent no. 1 further claimed that Section 5 of the A & C Act can come into play only when existence of a valid arbitration agreement is established. Institution of such a suit by the respondent no.1 would constitute an “action pending before the judicial authority” Page 11 C.A.@ slp(c)No.19951 of 2013 12 necessitating the invocation of Section 45 of the A & C Act, if one of the parties makes a request to refer the

on. In	such c

operative and capable of being performed, before referring the parties to arbitration. 14. It is the further case of respondent no.1 that the th subsequent agreement through letter dated 8 March 2002, in respect of transfer of 155 million shares of HPL, new rights and liabilities were created by and between the non- parties to the arbitration agreement. The new agreement also provided for a different dispute resolution mechanism among the parties, that is, the JUDGMENT courts in Calcutta. The relevant clause will be extracted in the reasoning portion of the judgment. 15. The learned senior counsel, Mr. K.K. Venugopal, appearing on behalf of Respondent no. 2, Govt. of West Bengal, contended that the Arbitration and Conciliation Act, 1996 does not apply to the present case. According Page 12 C.A.@ slp(c)No.19951 of 2013 13 to the learned senior counsel, a party may purport to appoint an arbitrator who may enter upon the

n there	is se

fact that no arbitration clause exists, if a party resorts to arbitration, then neither section 8 nor section 45 of the A & C Act in case of international arbitration would provide for adjudication of the issue as to whether the arbitration clause exists. It is only where a suit has first been filed, in point of time, on the substantive agreement or the underlying agreement, either by way of specific performance or for compensation for breach of contract, that section 8 or JUDGMENT section 45 of the A & C Act would come into play. However, we are not inclined to comment on this contention since it is not pertinent to the case. 16. The learned senior counsel for Respondent no. 2 also contended that when no arbitration clause exists in the agreement, the matter cannot be adjudicated Page 13 C.A.@ slp(c)No.19951 of 2013 14 either under Part I or Part II of the A & C Act rather, the matter can be adjudicated only by an independent

tion a	gainst

arbitration. 17. It is further the case of the learned senior counsel, Mr. K.K. Venugopal that the facts of the present case are extraordinary and that the matter has been extensively litigated in the previous round both, before the Company Law Board and the appellate proceedings thereof. At no point in time did the Chatterjee Group or any of its constituent affiliate, saved or reserved their right to seek arbitration under JUDGMENT the alleged Arbitration Agreement which they now seek to enforce. This Court has already declined the reliefs on merit as well as on the point of jurisdiction. Therefore, he submits that at this juncture, invoking the arbitration clause from the principal agreement by the Chatterjee Group disregarding the Agreement dated Page 14 C.A.@ slp(c)No.19951 of 2013 15 th 8 March, 2002, is clearly vexatious and abuse of the process of law. Therefore, the suit filed by respondent

nction	relief

maintainable in law. 18. It is further the case of the learned senior counsel on behalf of Respondent no.2 that the matter has been elaborately argued before this Court on complicated issues of law which arise for determination in the case. It is therefore, submitted by him that in such an event this Court would not render findings on questions of law while disposing an appeal against the interlocutory order so as to give finality in such findings. This approach of the Court is adopted in many JUDGMENT cases arising under the Intellectual Property law, 4 namely Bajaj Auto Ltd. v. TVS Motor Company Ltd. , Shree Vardhman Rice & General Mills v. Amar Singh 5 Chawalwala , Milmet Oftho Industries & Ors. v. 6 Allergan Inc. and Dhariwal Industries Ltd. & Anr. v. 4 (2009) 9 SCC 797 (para 5) 5 (2009) 10 SCC 257 (para 2) 6 (2004) 12 SCC 624 (paras 9 to 11) Page 15 C.A.@ slp(c)No.19951 of 2013 16 7 M.S.S. Food Products . We are inclined to mention at this stage that in this appeal we are confined to

lidity o	f the<br>th

Hence, this contention does not require to be addressed in this appeal. 19. The learned senior counsel for respondent No. 3 Mr. C.A. Sundaram contends that jurisdictional issue in the present case, shall be decided as the threshold issue in the present case. In relation to this, he placed reliance upon the three Judge Bench decision of this Court in Chloro Controls India Pvt. Ltd. v. Severn 8 Trent Water Purification Inc. and Ors . JUDGMENT 20. In the light of the facts and circumstances presented before us on the basis of admitted documents on record, and also based on the legal contentions urged by the learned senior counsel on behalf of both 7 (2005) 3 SCC 63 (para 20) 8 (2013) 1 SCC 641 Page 16 C.A.@ slp(c)No.19951 of 2013 17 the parties, the following issues would arise for consideration of this Court in these proceedings:

ation c	lause

2.Is the suit, filed by the respondents, seeking injunction against arbitration of disputes between the parties sought for by the appellants as per Clause 15 of the principal agreement referred to supra maintainable in law? 3.What Order? Answer to Point no.1 JUDGMENT 21. We are inclined to reject the submission made by the learned senior counsel on behalf of the respondents that the transfer of shares to CPIL instead of CPMC substantially changes the legal rights and responsibilities of the parties as per agreement Page 17 C.A.@ slp(c)No.19951 of 2013 18 referred to supra thereby, resulting in novation of contract.

mentione	d in

March, 2002 that transfer of shares to CPIL instead of th CPMC extinguishes the old agreement dated 12 January, th 2002 to nullity. In fact, in the letter dated 8 March, 2002, CPMC has been constantly mentioned as a guarantor. It is only to this extent the nature of agreement has changed. 23. It is argued by the learned senior counsel Mr. C.A. Sundaram, appearing on behalf of Respondent no.3 that the concurrent findings of facts on the prima JUDGMENT facie case by the learned single Judge and the Division Bench of the High Court of Calcutta have held that there has been a novation of agreement between th the parties to the principal agreement dated 12 th January,2002 by the subsequent agreements dated 8 th March, 2002 and 30 July, 2004. Page 18 C.A.@ slp(c)No.19951 of 2013 19 24. It has been held by the learned single Judge of the Calcutta High Court that:

e, wher<br>ered the	e by e<br>ir obli

25. Further, the Division Bench of Calcutta High Court th vide impugned judgment dated 12 January 2012, made the following observations: th a.) Agreement of 12 January 2002 was substituted by agreements of March 8, 2002 and July 30, 2004. b.) Such a subsequent agreement completely JUDGMENT extinguished the rights existing under the January 12, 2002 agreement and also destroyed the arbitration clause. c.) Remedy is under Agreement of March 8, 2002 which does not provide for Arbitration but states that courts at Calcutta alone shall have jurisdiction. d.) Agreement of March 8, 2002 is not an ancillary to agreement of January 12, 2002 but materially alters the same. The principle laid Page 19 C.A.@ slp(c)No.19951 of 2013 20


supple	mentary

26. Clause 1 of the supplementary agreement dated 30<br>July, 2004 reads as under:<br>“Pursuant to the said Principal Agreement GoWB<br>has caused WBIDC to transfer to Chatterjee<br>Petrochem (India) Private Limited (CPIL), an<br>affiliate of CPMC Rs. 155 crores of shares from<br>the shareholding of WBIDC existing on the date<br>of principal agreement…”<br>(emphasis laid by this Court)
The abovementioned clause goes to show that CPIL is an<br>affiliate of CPMC. This is to say, that by means of the<br>letter dated 8th March,2002 CPMC becomes a guarantor<br>whereas CPIL becomes the borrower. Therefore, the same<br>JUDGMENT<br>does not change the rights and responsibilities of the<br>parties under the agreement dated 12th January, 2002.

27. Further, the letter written by CPMC to WBIDC along<br>with the agreement dated 8th March, 2002 reads as<br>follows:
	“…It is clarified that the aforesaid shall not<br>prejudice any of our rights under the said

Page 20 C.A.@ slp(c)No.19951 of 2013 21

Agreement dt. January 12, 2002 and all terms<br>and conditions thereof shall continue to remain<br>valid, binding and subsisting between the<br>parties to be acted upon sequentially”.<br>(emphasis laid by this Court)		Agreement dt. January 12, 2002 and all terms<br>and conditions thereof shall continue to remain
		valid, binding and subsisting between the<br>parties to be acted upon sequentially”.
			(emphasis laid by this Court)


The content of this letter goes to show that the<br>agreement dated 12th January, 2002 remains the principal<br>agreement while agreement dated 8th March 2002 remains a<br>supplementary agreement which was meant for<br>restructuring of HPL on urgency.

28. Further, and most importantly, the agreement<br>entered into between the parties dated 30th July, 2004<br>states as follows:<br>“WHEREAS the Parties hereto had entered into an<br>agreement dateJd UJaDnuaGryM 1E2,N 20T02 (hereinafter<br>referred to as the principal agreement….”<br>Also, the Agreement dated 30th July, 2004 which is based<br>on shareholding issues, also notes through clause 6<br>that:<br>“6. The Parties hereby agree, record and<br>confirm that all other terms and conditions as<br>contained in the said Principal Agreement shall	28. Further, and most importantly, the agreement<br>entered into between the parties dated 30th July, 2004<br>states as follows:
	Also, the Agreement dated 30th July, 2004 which is based<br>on shareholding issues, also notes through clause 6<br>that:
		“6. The Parties hereby agree, record and<br>confirm that all other terms and conditions as<br>contained in the said Principal Agreement shall

Page 21 C.A.@ slp(c)No.19951 of 2013 22

remain binding, subsisting, effective,<br>enforceable and in force between the parties.”<br>(emphasis laid by this Court)
The abovementioned clauses of the subsequent Agreements<br>dated 8th March, 2002 and 30th July, 2004 go to show that<br>there has been no alteration in the nature of rights<br>and responsibilities of the parties involved in the<br>contract. Consequently, there has been no novation of<br>the contract.

29. It has been further argued by the learned senior<br>counsel for the respondents that Section 5 of the A & C<br>Act, which bars intervention by judicial authority in<br>Arbitration Agreement will not be applicable to<br>JUDGMENT<br>International Agreements such as the present case. We<br>are inclined to reject this contention by placing<br>reliance upon the legal principle laid down by this<br>Court in Venture Global Engineering case (supra), the<br>relevant paragraph of which reads as under:
	“25. …… In order to find out an answer to the
			In order to find out an answer to the
	first and prime issue and whether the decision
	in	Bhatia International		(supra) is an answer to

the same, let us go into the details regarding<br>the suit filed by the appellant as well as the<br>relevant provisions of the Act. The appellant<br>-VGE filed O.S. No. 80 of 2006 on the file of<br>the Ist Additional District Court,<br>Secunderabad, for a declaration that the Award<br>dated 3.4.2006 is invalid, unenforceable and to<br>set aside the same. Section 5 of the Act makes<br>it clear that in matters governed by Part I, no<br>judicial authority shall intervene except where<br>so provided. Section 5 which falls in Part I,<br>specifies that no judicial authority shall<br>intervene except where so provided. The Scheme<br>of the Act is such that the general provisions<br>of Part I, including Sectio n 5 , will apply t o<br>all Chapters or Parts of the Act.”<br>(emphasis laid by this Court)
30. Further, it is pertinent to read Clause 7.5 of the<br>Agreement dated 8th March, 2002 carefully. Clause 7.5<br>reads thus:
	“Jurisdiction:J CUourDtsG aMt ECalNcuTtta alone shall<br>have jurisdiction in all matters relating to<br>this Agreement.”


The phrase ‘this agreement’ means the Agreement dated<br>8th March, 2002 which is essentially a supplementary<br>Agreement and does not, by any mean, make the Principal<br>Agreement dated 12th January, 2002 subject to the<br>jurisdiction of the Court.

the same, let us go into the details regarding
the suit filed by the appellant as well as the
relevant provisions of the Act. The appellant
-VGE filed O.S. No. 80 of 2006 on the file of
the Ist Additional District Court,
Secunderabad, for a declaration that the Award
dated 3.4.2006 is invalid, unenforceable and to
set aside the same. Section		5	of the Act makes
it clear that in matters governed by Part I, no
judicial authority shall intervene except where
so provided. Section 5	which falls in Part I,
specifies that no judicial authority shall
intervene except where so provided.				The Scheme
of the Act is such that the general provisions
of Part I, including Sectio n 5 , will apply t o<br>all Chapters or Parts of the Act.”

Page 23 C.A.@ slp(c)No.19951 of 2013 24 31. Therefore, we are of the opinion that both the learned single Judge and the Division Bench erred in arriving at the conclusion mentioned above and their findings are liable to be set aside. In the light of the case mentioned above and also on the basis of the th clauses of the Principal Agreement dated 12 January th 2002 and subsequent Agreements dated 8 March 2002 and th 30 July, 2004, read with section 5 of the A&C Act, we are inclined to observe that the Arbitration clause in the Principal Agreement continued to be valid in view th of clause no. 6 of the Agreement dated 30 July, 2004 and also by virtue of its mention in different parts of th both the supplementary agreements dated 8 March, 2002 JUDGMENT th and 30 July, 2004. Therefore, the arbitration clause mentioned in Clause 15 of the Arbitration agreement dated January 12, 2002 is valid and the appellant is entitled to invoke the arbitration clause for settling their disputes. We, therefore, answer the point no.1 in favour of the appellant. Page 24 C.A.@ slp(c)No.19951 of 2013 25


Answer to Point nos.2 and 3
32. We answer point nos. 2 and 3 together since they<br>are interrelated.
It is the claim of the respondent no.3 that the<br>suit was filed by Respondent no. 1 under section 9 of<br>CPC and not section 45 of the A&C Act. Respondent no.3<br>further placed reliance upon the decision of this Court<br>in Ganga Bai v. Vijay Kumar & Ors.9 to hold that:
“15. … There is an inherent right in every<br>person to bring suit of a civil nature and<br>unless the suit is barred by statute one may,<br>at ones peril, bring a suit of one's choice. It<br>is no answer to a suit, howsoever frivolous the<br>claim, that the law confers no such right to<br>sue. A suit for its maintainability requires no<br>authority of law and it is enough that no<br>statute bars JthUe DsuGit.M BEutN tThe position in<br>regard to appeals is quite the opposite. The<br>right of appeal inheres in no one and therefore<br>an appeal for its maintainability must have the<br>clear authority of law. That explains why the<br>right of appeal is described as a creature of<br>statute.”<br>(emphasis supplied by this Court)	“15. … There is an in		herent right in every
	person to bring suit		of a civil nature and
	unless the suit is barr<br>at ones peril, bring a s		ed by statute one may,<br>uit of one's choice. It
	is no answer to a suit,		howsoever frivolous the
	claim, that the law confers no such right to
	sue. A suit for its maintainability requires no
	authority of law and it is enough that no
	statute bars the suit. But the position in
	JUDGMENT<br>regard to appeals is quite the opposite. The
	right of appeal inheres in no one and therefore
	an appeal for its maintainability must have the
	clear authority of law. That explains why the
	right of appeal is described as a creature of
	statute.”
		(emphasis supplied by this Court)


Therefore, the learned senior counsel appearing on

behalf of respondent no. 3 places reliance upon this

9 (1974) 2 SCC 393 Page 25 C.A.@ slp(c)No.19951 of 2013 26

decision to contend that the Calcutta High Court

(exercising its ordinary original jurisdiction) has

the jurisdiction (territorial as well as pecuniary) to

entertain the present suit under section 9 of CPC and

grant of such interim injunctive relief as it deems

fit under Order 39 Rules 1 and 2 of the CPC is
permissible in law.
permissible in law.
33. We are inclined to reject this contention raised
by the learned senior counsel appearing on behalf of<br>Respondent no. 3. A careful reading of the decision<br>leaves no doubt in the mind as has been held in<br>Ganga Bai’s case (supra) that:
“15. … TheJreU iDs GanM iEnheNreTnt right in<br>every person to bring suit of a civil<br>nature and unless the suit is barred<br>by statute one may, at ones peril,<br>bring a suit of one's choice……”<br>(emphasis laid by this Court)


34. The learned senior counsel for respondent no. 3

further places reliance upon the Constitution Bench

“15. … There is an inherent right in
	There is an inherent right in
JUDGMENT<br>every person to bring suit of a civil
nature and unless the suit is barred
by statute one may, at ones peril,
bring a suit of one's choice……”
		(emphasis laid by this Court)

decision of seven Judges in
Engineering Ltd. & Anr.10 wherein it was held that:
Engineering Ltd. & Anr.

	“	19…..When the defendant to an action
	before a judicial authority raises the
	plea that there is an arbitration
	agreement and the subject matter of
	the claim is covered by the agreement
	and the plaintiff or the person who
	has approached the judicial authority
	for relief, disputes the same, the
	judicial authority,			in the absence of
	any restriction in the Act				, has
	necessarily to decide whether, in<br>fact, there is in existence a valid
	arbitration agreeme<br>dispute that is so			nt and whether the<br>ught to be raised
	before it, is			covered by the
	arbitration clause…			.”
			(emphasis	laid by this Court)


35. We have already held that the Principal Agreement<br>dated 12th January,J 20U02D cGontMinEuesN tTo be in force with<br>its arbitration clause in place. We have also<br>mentioned, while answering point no. 1, that section 5<br>of the A&C act will be applicable to Part II of the<br>Act as well. The Agreement dated 12th January, 2002<br>remains valid and the arbitration clause, with all<br>fours, will be applicable to the parties concerned to

10 (2005) 8 SCC 618 Page 27 C.A.@ slp(c)No.19951 of 2013 28

get their disputes arbitrated and resolved in the<br>Arbitration as per the Rules of ICC. The contention<br>raised by the learned senior counsel for Respondent<br>no.2, Mr. K.K. Venugopal regarding the maintainability<br>of the suit while examining the interlocutory order in<br>the appeals, is therefore, untenable in law.

36. The fact that CPIL, which initially was a non-<br>signatory to the Agreement does not jeopardize the<br>arbitration clause in any manner. In this connection,<br>we are inclined to record an observation made in the<br>three Judge Bench decision of this Court in Chloro<br>Controls India Pvt. Ltd. (supra), wherein it was held<br>as under:
	JUDGMENT<br>“107. If one analyses the above cases
		107. If one analyses the above cases
	and the authors' views,				it becomes
	abundantly clear that reference of
	even non-signatory parties to
	arbitration agreem			en t can be made. I t
	may be the result of implied or
	specific consent or judicial
	determination. Normally, the parties
	to th e		arbitration agreemen t			callin g
	for arbitral reference should be the
	same as those to the an action. But
	this general concept is subject to

	exceptions which are that when a
	third party, i.e. non-signatory
	party, is claiming or issued as being
	directly affected through a party to
	th e		arbitration agreemen t							and ther e
	ar e	principa l						and subsidiar y
	agreement s				, and such third party is
	signatory to a
	subsidiar y					agreeme		n t and not to th e
	mother o r			principal agreement							whic h
	contains th e						arbitratio n		clause, the n
	depending upon the facts and
	circumstances of the given case, it
	may be possible to say that even such
	third party can be referred<br>t o arbitratio n . ”
	(Emphasis							laid by this Court)

37. The respondent no.1 has								filed a suit seeking two

remedies against the appel								lants: firstly, that the

Arbitration Agreement contained in Clause 15 of the

Agreement dated January 12, 2002 is void and/or
JUDGMENT
unenforceable and/or has become inoperative and/or

incapable of being performed, and secondly, the

respondent no.1 sought permanent injunction

restraining the appellant herein from initiating and/

or continuing with the impugned Arbitration

proceedings bearing case no. 18582/ARP pursuant to the

Impugned Arbitration Agreement contained in clause 15

of the Agreement dated January 12, 2002 and the

Request for Arbitration dated March 21, 2012 and the

communication dated April 02, 2012 issued by defendant

no. 8 in the Arbitration proceedings connected
therewith and incidental thereto.
therewith and incidental thereto.

Since, we have already held that the arbitration<br>clause is valid, suit filed by the respondent no.1 for	Since, we have already held that the arbitration
declaration and permanent i		njunction is unsustainable
		e to be dismissed.
in law and the suit is liabl

38. In view of the above, we direct the parties to<br>resolve their disputes through arbitration as<br>JUDGMENT<br>mentioned in clause 15 of the letter of Agreement<br>dated 12th January, 2002 in accordance with the Rules<br>of ICC. We have also seen from the written submission<br>of the appellants counsel that the appellants have<br>already initiated an arbitration proceeding. In such<br>case, the parties shall continue with the arbitration<br>proceeding since the suit filed for permanent

injunction against the arbitration proceeding is<br>dismissed by setting aside the impugned judgment and<br>final order in A.P.O. No. 13 of 2013 passed by the<br>High Court of judicature at Calcutta on 04.06.2013.<br>Accordingly, the appeal is allowed, but no costs.
…………………………………………………J<br>[G.S. SINGHVI]<br>……………………………………………………<br>[V. GOPALA GOWDA]
New Delhi,
December 10, 2013

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