2009 (12) TMI 1011 - HC - Indian Laws

Summary

Issues Involved:
1. Validity of the injunction restraining defendant No. 1 from continuing with the arbitral proceedings.
2. Validity of the plaintiff's claim regarding the cancellation of the contract and the quality of goods.
3. Applicability of the decision in Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya and Anr.
4. Jurisdiction and appropriateness of granting anti-suit injunctions.

Detailed Analysis:

1. Validity of the injunction restraining defendant No. 1 from continuing with the arbitral proceedings:
The plaintiff sought an injunction to restrain defendant No. 1 from proceeding with arbitration at the International Chamber of Commerce, International Court of Arbitration, in London. The learned single Judge rejected this prayer, holding that such anti-suit injunctions can only be granted in exceptional cases. The judgment emphasized that the arbitration clause was valid, and the dispute was arbitrable. The court noted that the plaintiff had not raised any grievance about the quality of goods at the time of shipment and that defendant No. 1 had informed the plaintiff well in advance of invoking the arbitration clause.

2. Validity of the plaintiff's claim regarding the cancellation of the contract and the quality of goods:
The plaintiff claimed that it had validly canceled the contract and was not bound to accept the final shipment. The plaintiff also alleged that the certificates issued by defendant No. 2 regarding the quality of the goods were fraudulent and issued in connivance with defendant No. 1. However, the court found that the plaintiff had utilized the goods from the previous shipments and had only raised issues about the final shipment after defendant No. 1 had invoked the arbitration clause. The court observed that the plaintiff's actions seemed to be aimed at stalling the arbitration proceedings rather than addressing genuine grievances.

3. Applicability of the decision in Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya and Anr.:
The plaintiff argued that the arbitration proceedings should not proceed due to the potential for multiplicity of proceedings, citing the Supreme Court's decision in Sukanya Holdings. However, the court distinguished the present case from Sukanya Holdings, noting that the latter dealt with Section 8 of the Arbitration and Conciliation Act, 1996, which was not applicable in this context. The court emphasized that the arbitration clause was valid, and the dispute was arbitrable, making the plaintiff's reliance on Sukanya Holdings misplaced.

4. Jurisdiction and appropriateness of granting anti-suit injunctions:
The court referred to the principles laid down by the Supreme Court in Modi Entertainment Network and Anr. v. W.S.G. Cricket Pte. Ltd., which outline the conditions under which anti-suit injunctions can be granted. The court noted that the plaintiff had not demonstrated any exceptional circumstances that would justify such an injunction. The judgment emphasized that the arbitration proceedings in London were independent and that the plaintiff's suit appeared to be an attempt to delay these proceedings. The court also referenced the Andhra Pradesh High Court's decision in Srivenkateswara Constructions and Ors. v. The Union of India, which held that adding unnecessary parties to a suit to circumvent an arbitration clause is not permissible.

Conclusion:
The appeal was dismissed with costs, affirming the learned single Judge's decision to reject the plaintiff's prayer for an injunction. The court concluded that the plaintiff's application was not genuine and was intended to delay the arbitration proceedings. The plaintiff was advised to file its reply in the arbitration proceedings and cooperate with the process. The costs were quantified at Rs. 25,000, to be paid to respondent No. 1.