9911796707
TMI Blog1999 (7) TMI 691X X X X Extracts X X X X X X X X Extracts X X X X ..... efendant no.1 failed to supply the technical know-how for manufacturing adhesive powder and denture cleansing tablets. The government also did not give requisite approval to the agreement. On 25.4.1996 the agreement was terminated by defendant no.1 on grounds that the plaintiff did not commence commercial production nor did it use its best efforts to promote the sales and use of the products in India. The plaintiff has alleged this termination of the agreement to be false and frivolous and according to the plaintiff the fact was that it was defendant no.1 who had committed breach of the agreement inasmuch as it had failed to provide required technical know-how for commencement of commercial production. On account of the alleged illegal termination of the agreement the plaintiff is alleged to have suffered losses and it is stated in the plaint that it contemplates to take legal action to recover a sum of ₹ 1 crore Along with interest from defendant no.1. 2. In the meantime, it appears that defendant no.1 had initiated proceedings for arbitration before the International Court of Arbitration of I.C.C. Paris raising a demand of US $ 1,75,000 plus 8% interest thereon towards l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of being performed. The arbitration agreement as contained in clause 18.4 of the agreement dated 20.5.1994 between the parties was as under: 18.4 Arbitration - All disputes and differences of any kind arising under this agreement, or arising between the parties including the existence of continued existence of this Agreement and the arbitrarily of a particular issue which cannot be settled amicably by the parties shall be submitted to arbitration. The arbitration shall be conducted in Vienna, Austria and shall finally be settled in accordance with the Rules of Arbitration of the International Chamber of Commerce in Vienna by one or more arbitrators appointed in accordance with the above mentioned rules. The decision of the arbitration tribunal shall be final and binding upon the parties and may be enforced in any court of competent jurisdiction, and no party shall seek redress against the other in any court or tribunal except solely for the purpose of obtaining execution of the arbitral award or of obtaining a judgment consistent with the award. It is, Therefore, not disputed between the parties that in case this Court holds that the parties are governed by the agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme Court reported as [1963]3SCR209 held that if the contract itself was void, the question of submitted to the jurisdiction of arbitrator was of no avail and that the arbitration clause cannot be enforced when the agreement of which it forms an integral part is held to be illegal. Mr. Chaudhary, Therefore, contends that even assuming that the plaintiff has submitted to the jurisdiction of the arbitrator as contended by the defendant, the same would be of no avail and this Court, Therefore, should stay the proceedings before the International Court of Arbitration. 8. Before I deal with the contentions raised by Mr. Chaudhary it will be useful to give herein below the grounds on which the plaintiff has challenged the existence of the arbitration agreement. 9. In paragraph 18 of the plaint it is stated that the proceedings before the ICC, Paris is a nullity and not maintainable for the following reasons: (a) That there exists no valid Arbitration Agreement between the parties as the proposed License Agreement of May 20, 1994 had never come into existence. (b) That the request for arbitration by the Defendant No.1 is based on the license Agreement of May 20, 1994. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aintiff has deliberately suppressed the other records and correspondence during intervening period. It is denied that the license Agreement between the parties is not valid and/or enforceable without the approval of Reserve Bank of India and/or Central Government as alleged. The plaintiff cannot be permitted to benefit from their own wrong. They had acted under the Agreement and taken all the benefits under the license Agreement and when the question of payment under the said Agreement comes, the plaintiff cannot urge that the Agreement was void because of non-approval by the Central Government, which approval was the obligation of the plaintiff only. In any event, it is stated that the license Agreement is valid and enforceable and did not require any approval from the Central Government. Further, in any event, section 47 of the Foreign Exchange Regulation Act, makes it clear that proceedings for recovery of any amount which is due whether as debt or damages shall not be barred and/or prevented, even if the permission, if any, required under the said Act by the Central Government or Reserve Bank of India is not granted. Such a permission, if any, may be required and/or granted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicable to the facts of this case inasmuch as the judgment in that case was passed by interpreting the provisions of the Arbitration Act, 1940. 11. Moreover, a sea-change has been made in the law of arbitration after the passing of the Arbitration Conciliation Act, 1996. Under Section 5 of the Arbitration Conciliation Act no judicial authority shall intervene in the proceedings except where so provided in the Act. Moreover, while under the old Arbitration Act, a question relating to the jurisdiction of the Arbitrator could not be decided by him except when it was referred to him as a specific question of law, under Section 16 of the new Arbitration Act, the arbitral tribunal has the power to rule on its own jurisdiction including ruling on any objection with respect to the existence or validity of the arbitration agreement, and for that purpose an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. It is, Therefore, clear that even assuming for the sake ..... X X X X Extracts X X X X X X X X Extracts X X X X
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