2015 (8) TMI 1453 - HC - Indian Laws

Personal Jurisdiction - whether this Court has personal jurisdiction over the Defendant is a question of fact which cannot be determined purely on the basis of whether the Defendant is residing outside the jurisdiction? - revocation of leave already granted. Held that - In the present case the dispute is between the two Indian parties viz. the Plaintiff and the Second Defendant and therefore this Court can exercise the jurisdiction. The Defendants are trying to confuse the issue while considering the Application under Clause 12 of the Letters Patent by raising points under Section 45 of the Mediation and Conciliation Act. Both are to be considered in a different perspective at different stage and not to be confused as one having the controlling power over the other. In other words foreign laws issues involved in this case is to be decided as questions of fact initiating a trial - Since the determination of the validity of the Arbitration Agreement involves number of questions of law which has to be proved as questions of fact the Plaintiff cannot be non-suited at this juncture. Revocation of leave is a drastic remedy which can be granted only in exceptional circumstances. The crux of the issue in the main Suit is as to whether the Settlement Agreement dated 30.03.2013 in effect stipulates for resolving disputes between the parties to such Agreement through Arbitration proceedings and whether the recitals of such Agreement in an unequivocal terms and without any ambiguity make the parties for such reference with certainty. Certainly consideration of such issue is possible only after conducting the trial as it involves not only the interpretation of several clauses relating to the present dispute in all the three Agreements and also the appreciation of the actual intention of the parties while entering into those Agreements through their oral testimonies. Therefore it requires a trial and consequently the merits and contentions raised by both parties in respect of the disputed reference to the Arbitration under the Settlement Agreement dated 30.03.2013 cannot be gone into at this juncture. A clear or specific indication regarding the Arbitration Agreement between the parties must be made available in an Agreement itself. On the other hand if such an Arbitration Agreement is to be inferred by reference from the earlier Agreements such inference cannot be made as a matter of course automatically as the burden is on the party who seeks for such inference which he has to discharge and establish the same before the Court by adducing evidence in support of such claim. This Court finds that the Defendants have not made out a case for revoking the leave already granted - application dismissed.

Summary

Issues Involved:
1. Revocation of leave granted to file the suit.
2. Jurisdiction of the Court to entertain the suit.
3. Existence and applicability of the Arbitration Clause in the Settlement Agreement.
4. Personal jurisdiction over the Defendants.
5. Anti-suit/anti-arbitration injunction.

Issue-wise Detailed Analysis:

1. Revocation of leave granted to file the suit:
The Defendants filed an application to revoke the leave granted by the Court, arguing that the suit is not maintainable due to the existence of a valid and binding Arbitration Agreement in the Settlement Agreement dated 30.03.2013. They contended that the Arbitration process had already been initiated and was pending with the ICDR, USA. The Court, however, emphasized that the leave was granted based on the Plaintiff's contention that a substantial part of the cause of action arose in Chennai. The Agreements were executed in Chennai, and payments were made to the Plaintiff's bank in Chennai. The Court found that the Plaintiff had made a prima facie case for the leave to be granted based on the facts presented.

2. Jurisdiction of the Court to entertain the suit:
The Defendants argued that the Court lacked jurisdiction as the Settlement Agreement stipulated arbitration in Massachusetts, USA, and that the Defendants did not reside within the jurisdiction of the Court. The Court, however, noted that the Plaintiff had performed substantial parts of the contract in Chennai, and payments were made to the Plaintiff's bank in Chennai. The Court held that the substantial part of the cause of action arose within its jurisdiction, thus justifying the leave granted under Clause 12 of the Letters Patent.

3. Existence and applicability of the Arbitration Clause in the Settlement Agreement:
The Plaintiff contended that the Settlement Agreement did not contain a specific Arbitration Clause and that the Arbitration Clause from the previous Agreements did not automatically get incorporated into the Settlement Agreement. The Court emphasized that the issue of whether the Settlement Agreement stipulated arbitration required a trial to interpret the clauses and understand the parties' intentions. Thus, the Court could not decide on this matter at the stage of considering the application for revocation of leave.

4. Personal jurisdiction over the Defendants:
The Defendants argued that they were not amenable to the personal jurisdiction of the Court as they resided outside its jurisdiction. The Court rejected this argument, stating that the leave under Clause 12 was sought precisely because the Defendants were not located within the jurisdiction. The Court noted that the phrase "determine Suits of every description" in Clause 12 indicated that its jurisdiction could not be restricted to certain types of suits alone. The Defendants' business activities relevant to the case had taken place within the jurisdiction of the Court, making them amenable to its jurisdiction.

5. Anti-suit/anti-arbitration injunction:
The Defendants contended that the relief sought by the Plaintiff was in the nature of an anti-arbitration/anti-suit injunction, which should only be granted if the Defendant was amenable to the personal jurisdiction of the Court. The Court held that the issue of personal jurisdiction involved various facts and circumstances that required a trial. The Court also noted that the Plaintiff's challenge to the Arbitration Notice and the applicability of the Arbitration Clause in the Settlement Agreement required a detailed examination, which could not be done at the stage of considering the application for revocation of leave.

Conclusion:
The Court dismissed the application for revocation of leave, holding that the substantial part of the cause of action arose within its jurisdiction and that the issues raised by the Defendants required a trial. The Court emphasized that the leave granted did not prejudice the rights of the parties on merits and was only a preliminary order allowing the Plaintiff to file the suit.