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TMI Blog1998 (11) TMI 684X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant was one of the ship owners who made an offer. In order to execute a contract between the parties, respondent No. 1 was to establish a standby letter of credit as per the format to be mutually agreed upon by the parties while the appellant was to furnish a performance bond also in a format to be mutually agreed upon by both the parties. Respondent No. 1 conveyed to the appellant on Nov. 17, 1993 that loading of pipes at Tampico port should commence on December 14, 1993 and be completed by December 21, 1993. The appellant, however, did not proceed in the matter because the format and the language of the standby letter of credit in the form issued by its bankers was not approved by the first respondent. The draft letter of credit proposed by the first respondent was also not approved by the appellant and fresh proposals were exchanged between the parties. As a consequence, the appellant did not carry the pipes, as according to it, the formats of standby letter of credit and performance guarantee were not settled between the parties. The first respondent was, therefore, compelled to arrange for the carriage of first consignment of pipes received from M/s. Tubacero at Mexico. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement between the parties, they could take steps to obtain a reference through a competent court. Notwithstanding the stand of the first respondent, the Indian Council of Arbitration on January 3, 199S, intimated to the parties that it had appointed Mr. M.K. Chawla a retired Judge of the Delhi High Court as an Arbitrator. It was also stated in the communication that appellant had nominated Rear Admiral (Dr.) O.P. Sharma as their nominee as arbitrator. The first respondent was requested to file its statement of defence by January 15, 1995, which date was subsequently extended. The direction to deposit a sum of ₹ 83,000 towards cost of expenses of the arbitration was reiterated. The first respondent, aggrieved by the communication from the Indian Council of Arbitration dated January 3, 1995, filed a petition Under Section 33 of the Indian Arbitration Act, 1940, seeking a declaration from the court that there did not exist any concluded arbitration agreement between the parties and the reference of the dispute in question to the Arbitration by the appellant was unwarranted and not maintainable. The application was resisted by the appellant, who maintained that a valid and subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m proceeding with the arbitration. Hence this appeal. 7. We have heard learned counsel for the parties and perused the record. 8. It is an admitted case of the parties that a Charter Party Agreement was drawn up on November 11, 1993. It is, however, not disputed that the said agreement was not signed by the parties. Mr. R.F. Nariman, learned senior advocate appearing for the appellant submitted that even though the agreement dated November 11, 1993 had not been signed by the parties but the parties had acted upon it treating it to be a binding contract. Argued Mr. Nariman that the agreement was operative and binding even without the parties having agreed to the format and terms of the standby letter of credit and the performance guarantee, because the appellant had after receipt of the letter of credit from respondent No. 1 sent to him a communication dated December 6, 1993 intimating that the draft of letter of credit was basically acceptable except for some minor details. Similarly, it had been conveyed that the draft performance bank guarantee received by it from respondent No. 1 had been forwarded to the bankers for their acceptance. Learned counsel pointed out that on De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht is payable :- IOC will open a standby irrevocable Letter of Credit for freight amount of each shipment for the cargo in transit. Standby Letter of Credit will be issued by SBI India on SBI Germany. Freight payment will be made through Bank Transfer at Hamburg Germany under which 50 percent less 3.75 percent commission is payable within 7 working days against presentation of copy Bill of Lading and owners invoice in triplicate. 40 percent within 7 working days of sift arrival of vessel at disport and on presentation of owners invoice in triplicate and 10 percent within 30 days of completion of discharge and on presentation of owners invoice in triplicate 11. A bare reading of Clause 48 (supra) shows that respondent No. 1 Was to open a standby irrevocable letter of credit for freight amount of each shipment of the cargo in transit. The standby letter of credit was required to be issued by the State Bank of India on the State Bank of Germany. Indeed this clause by itself does not show whether the condition of establishing a standby irrevocable letter of credit or the furnishing of performance guarantee were conditions precedent to the conclusion of contract but there is enoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n regard to the freight amount for the shipments. Funds under 17c for each lot to be available by latest 15th of each month before nomination of the vessel by lina. Standby 1/c will be issued by sbi India on sbi germany, sbi Germany to be authorised to reimburse themselves. In case any freight amount is not being received by lina as per c/p and mentioned below, the amount shall be released on first written demand under standby 1/c freight payment will be made through bank transfer at hamburg germany: a. 50% less 3.75% commission is payable within 7 days on prersaa, 29,90: 2 nos. copy bill of lading Line's invoice in triplicate b. 40% is payable within 7 days on presentation of: arrival notice from master (telegram/telex/telefex) c. 10% is payable within 30 days on presentation of : discharge notice from master (telegram/telex/telefex) 3. require urgently all detls of 1st lot (see Y' days telex) before, we cannot nominate the vessel. End comments: in case point 2 not clear, kindly call in order to discuss the possibilities over phone. Tks. Lifting extended to 12.30 hrs german time tomorrow. Looking forward to hearing from you: 12. This correspondence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered to create a contract for the parties by going outside the clear language used in the correspondence, except insofar as there are some appropriate implications of law to be drawn. Unless from the correspondence it can unequivocally and clearly emerge that the parties were ad idem to the terms, it cannot be said that an agreement had come into existence between them through correspondence. The Court is required what the parties wrote and how they acted and from that material to infer whether the intention as expressed in the correspondence was to bring into existence a mutually binding contract. The intention of the parties is to be gathered only from the expressions used in the correspondence and the meaning it conveys and in case it shows that there had been meeting of mind between the parties and they had actually reached an agreement, upon all material terms, then and then alone can it be said that a binding contract was capable of being spelt out from the correspondence. 16. From a careful perusal of the entire correspondence on the record, we are of the opinion that no concluded bargain had been reached between the parties as the terms of the standby letter of credit an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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