9911796707
TMI Blog2012 (3) TMI 660X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent No. 1 and the Respondent No. 2 are the Original Defendant Nos. 1 and 2 in the said Suit. 3. The issue therefore which arises for consideration in the above Petition is as to whether in terms of Clause-16 of the Agreement in question, the parties are to be referred to arbitration. FACTUAL MATRIX 4. The Petitioner herein is a Partnership Firm carrying on the business of manufacture of pharmaceutical and nutritional products formulated into the soft gelatin formulation at its manufacturing unit situated at Daman, Gujarat. The Respondent No. 1 herein is a Delaware Corporation and is also involved in the business of manufacturing generic pharmaceutical products for sale. The Respondent No. 2 herein is a company incorporated under the Companies Act, 1956 and carries on business as a Courier. In so far as the present Petition is concerned, shorn of unnecessary details the facts material to be cited are that on 13 April 2006 the Petitioner and the Respondent entered into an Agreement under which Agreement, the Petitioner agreed to supply to the Respondent No. 1 the pharmaceutical products more especially mentioned in Appendix "A" to the Agreement. The said supply was on the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al there from other than for bias, fraud or misconduct, judgment upon any decision or award may be entered in any court of competent jurisdiction. The parties agree that the existence of this arbitration provision shall not in any way limit the right or ability of the parties to obtain, interim relief, including without limitation a temporary restraining order, preliminary injunction or decree, as may be necessary, to protect either party against, or on account of any breach or violation of this Agreement, in any court of law having jurisdiction thereof. 18.5 Governing law; Jurisdiction; Waiver of Jury Trail. This Agreement and the legal relations among the parties hereto shall be governed by an construed in accordance with the laws of the Commonwealth of Pennsylvania, notwithstanding any conflict of law provisions to the contrary. The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement. Any action which in any way involves the rights, duties and obligations of either party hereto under this Agreement shall be brought in the state courts sitting in the Federal District Court in the Eastern District of Pennsylvania and the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on clause before the American Arbitration Association ("AAA" for short) and filed its claim before it. The Notice of Arbitration was also issued on 25 January 2010. On 19 February 2010, the Petitioner filed its answer to the claim of the Respondent No. 1. The Petitioner also filed its Counter Claim. It was the case of the Petitioner that it had not breached any provisions of the Agreement, and that it had produced and supplied a product which fully satisfied the contractual requirements. It was further the case of the Petitioner that its manufacturing facilities were also in compliance with USFDA norms, and in fact it was the case of the Petitioner that it undertook an upgrade and renovation of its facilities, at a cost of US $ 2.4 Million to comply with these requirements, and this upgrade and renovation was undertaken solely on the premise that the Respondent No. 1 would provide the Petitioner with business and additional opportunities from which it could recoup and/or recover this expense. It was the case of the Petitioner that the Respondent No. 1 nominated DHL for the purposes of transportation of the products and DHL was entrusted with and/or responsible for all product handl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its Arbitrator within the said time, the American Arbitration Association would make the said appointment. The Petitioner thereafter, it seems, had sought and obtained a total of seven extensions for appointing its Arbitrator. 7. The Petitioner thereafter on 20 November 2010, has filed Special Civil Suit No. 58 of 2010 in the Court of Civil Judge, Senior Division, at Nani Daman. The reliefs claimed in the said Suit are reproduced herein under:- (a) for an order, decree and declaration against the Defendant for payment of ₹ 30.5 crores for compensatory damages, consequential damages, the Plaintiff's advocate's fees, costs along with interest at the rate of 18% per annum from 25 January 2010 till payment and/or realization thereof as per the particulars of claim being Exhibit "L" hereto. (b) for an order, decree and declaration against the Defendant for payment of ₹ 30.5 crores for upgrading and renovation of the Plaintiff's facilities, loss of business while undertaking the upgrading and renovation of its facilities, additional lost business, unspecified but substantial losses from the Profit Sharing and loss of the 5 year exclusive manufacturing provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Defendant No. 2 is joined in this suit as a necessary party in as much as the Plaintiff has an alternative claim against Defendant No. 2 in respect of part of the suit transaction which claim, is joint and several against both the Defendants, as mentioned hereinafter. 3 The present suit is filed for recover of damages from the Defendant No. 1 for breach of contract and to restrain the Defendant No. 1 from proceeding with the arbitration proceedings initiated before the American Arbitration Association and other reliefs as more particularly set out herein. As stated hereinafter, the Plaintiff entrusted goods to be delivered to Defendant No. 1 at the Plaintiff's factory at Daman, to Defendant No. 2 who acted as a transporter. While acting as a transporter, Defendant No. 2 failed and neglected to take care of the goods entrusted to Defendant No. 2 and as such resulted in the said goods becoming defective as claimed by Defendant No. 1 It is the Plaintiff's contention that Defendant No. 2 acted as the agent of Defendant No. 1 in receiving the goods from the Plaintiff. However, in the event of it being held that Defendant No. 2 acted in a contract between the Plaintiff and De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiff states that during the month of April and May 2008 when the said goods were to be transported from Daman, the normal average temperature was always above 30 degree Celsius. Defendant No. 2 transported the said goods from Daman by road to Mumbai without ensuring that the vehicles used for transport had the required temperatures between 15 degree Celsius and 30 degree Celsius. Further, the said goods were moved to Custom Warehouse by Defendant No. 1, in which, the warehouse temperature was not controlled. The Plaintiff states that during the entire shipment, right from Daman to Mumbai en route U.S.A Controlled temperature was not maintained. Further the shipments from Mumbai to U.S.A Were not direct but the goods were transported via Lahore, Pakistan and other trans shipment locations. There was a time lag of 3 to 4 days on an average at the transshipment points. The said delay further resulted in deterioration of the said goods as claimed by Defendant No. 1. The Plaintiff states that Defendant No. 2 had a contractual and/or statutory obligation to take care of the said goods, particularly, in view of the fact that Defendant No. 2 was aware that the said goods were required to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , loss of business while undertaking the upgrading and renovation of its facilities, additional lost business, unspecified but substantial losses from the Profit Sharing and loss of the 5 year exclusive manufacturing provisions in the agreement at issue and other damages suffered by the Plaintiff as set out above, alongwith interest at the rate of 18% per annum from 25 January 2010 till payment and/or realization thereof as per the Particulars of Claim being Exhibit "Q" hereto. 90 The Plaintiff submits that interim and ad interim reliefs be granted by this Hon'ble Court failing which grave irreparable loss, harm and injury will be caused to the Plaintiff. The balance of convenience is in favour of the Plaintiff. The Plaintiff submits that the claim made by Defendant No. 1 against the Plaintiff is in the sum of US $1.4 MN plus costs and damages, being the value of the goods supplied by the Plaintiff to Defendant No. 1 for which the Plaintiff has received payment under the said Agreement but that the said goods were defective and that the said goods were returned by Defendant No. 1's customers. The Plaintiff repeats reiterates and confirms what is stated hereinabove and sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in controlled temperature during transport. The Plaintiff states that Defendant No. 2 committed breach of its statutory and/or contractual obligations in not taking care of the said goods and not arranging for vehicles and/or storage facilities where temperature could be controlled. By exposing the said goods to higher temperature as aforesaid and further delaying the delivery by transshipping the said goods at different transshipment points, the said goods got further damaged and thereby the goods became defective. The Plaintiff states that Defendant No. 2 is guilty of nonfeasance misfeasance and negligence, the Plaintiff submits that Defendant No. 1 has contended that the said goods rejected by Defendant No.'1 customers without in any manner admitting the said contention but in the vent of it being held that the goods were rejected and in the event of it being held that the Plaintiff is liable for the claim of Defendant No. 1 a sum of US $ 1.4 MN as made by Defendant No. 1 as aforesaid, the Plaintiff submits that the Plaintiff is entitled to recover the same from Defendant No. 2. The Plaintiff states that Defendant No. 2 ought to have taken care of the said goods. The Plaint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said Application discloses that no defence of waiver i.e the Respondent No. 1 had waived its rights of arbitration, by reason of having filed and withdrawn the complaint before the United States District Court for the Eastern District of Pennsylvania was taken. The said Application was sought to be opposed on the ground that since the Respondent No. 2 was not a party to the OS Agreement, and since the claim made in the Suit is inextricably linked with each other, the parties could not be referred to arbitration. 10. The said Application filed by Respondent No. 1 invoking section 45 of the arbitration & conciliation act, 1996 was heard by the learned Civil Judge, Senior Division, Nani Daman. Judgments were cited on either side in support of their respective contentions. In so far as the Petitioner is concerned, reliance was placed by the counsel appearing on behalf of the Petitioner on the Judgment of the Apex Court in the case of Sukanya Holdings (P) Ltd. v. Jayesh H Pandya, reported in (2003) 5 SCC 531, to buttress the submission that if a suit involves a party who is not a party to the arbitration clause, then parties cannot be referred to arbitration. On behalf of the Respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this Court (R Y Ganoo, J) in the case of IND Synergy Ltd v. Clearwater Capital Partners Singapore Fund III Pvt. Ltd. to contend that the said clause 16 of the Agreement was not a mandatory clause for arbitration. D] That the parties could not be referred to arbitration inasmuch as the Respondent No. 2 herein i.e DHL is not a party to the said Agreement, and therefore, relying upon the Judgment of the Apex Court in the case Sukanya Holdings (P) Ltd, the learned Senior Counsel for the Petitioner would contend that the causes of action could not be split up, so as to refer the Petitioner and Respondent No. 1 to arbitration. E] The learned senior counsel would contend that the Suit as filed was a composite Suit against both the Respondents and the liability of both the Respondents was joint and several, and that the Petitioner's case against the Respondent No. 1 could not be severed from the Petitioner's case against DHL. F] That since the Respondent No. 1 had itself invoked the jurisdiction of a Civil Court by filing a complaint before the United States District Court for the Eastern District of Pennsylvania, the Respondent No. 1 had thereby waived its right to arbit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter alia under Section 8 by the Court, Section 16 cannot empower the Arbitral Tribunal to ignore the decision of the judicial authority. It was contended by the learned Senior Counsel that the expression "inter alia" used by the learned Single Judge meant that the Court had in mind Sections 8, 9, 11 and 45 of the Arbitration and Conciliation Act, 1996. The said Judgment was relied upon by the learned Senior Counsel in support of his contention that for the Applications under Section 45, a determination by the judicial authority was final. K] That the said unreported judgment dated 29 March 2011 in the case of IND Synergy Ltd (Supra), was binding on this Court as it is a judgment rendered by a co-ordinate bench of this Court. L] That since the law of the United States and particularly the meaning of the word "decree" has not been proved as a matter of fact, this Court would assume that the word "decree" carries the same meaning as in the Indian Law and therefore under Clause 16 of the Agreement a party would apply for final substantive reliefs to a Civil Court. The learned Senior Counsel relied upon the Judgment of a learned Single Judge of this Court reported in (2006) 3 BCR 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such clauses are not in derogation of provisions for arbitration. The reliance is placed by the learned Senior Counsel on the judgment of the United States District Court for the Eastern District of Pennsylvania in the case of Speciality Bakeries, Inc v. Robhal, Inc. reported in 961 F. Supp. 822. (vi) That the present Suit as framed by making the DHL as Defendant No. 2 therein was to defeat the arbitration provision. As in the Counter Claim filed by the Petitioner in the arbitration proceedings, the said proceedings was on the basis that the DHL was an agent of the Respondent No. 1 and/or had been nominated and/or chosen by the Respondent No. 1 and have therefore, the consequences of any omissions and/or negligence of DHL could not be visited upon the Petitioner. (vii) That in the Suit a plea is now sought to be raised that the cause of action against the Defendant No. 1 and Defendant No. 2 is joint and several and the case of the Plaintiff against both the Defendants is inextricably linked and that splitting up one single action into two parts is impermissible in view of the judgment of the Apex Court in the case of Sukanya Holdings (P) Ltd. (supra). The judgment in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ldings (P) Ltd. (supra) therefore cannot be used as a proposition in so far as Section 45 is concerned, as the schemes of the said two provisions that is Sections 8 and 45 are different. (xi) That the judgment in the case of Sukanya Holdings (P) Ltd. (supra) is also not applicable on the ground that in the present case the Petitioner had gone to arbitration, made a Counter Claim before the Arbitral Tribunal and thereafter with a view to defeat the arbitration filed a Suit by adding one more party who was not concerned at all while formulating the case before the Arbitral Tribunal. The present case is therefore clearly one where a party is seeking to avoid arbitration by filing a dishonest action where an additional party who is not necessary or proper has been joined so as to fit within the ratio of the judgment in the case of Sukanya Holdings (P) Ltd. (supra). (xii) That the judgment in the case of Sukanya Holdings (P) Ltd. (supra) cannot be relied upon to frustrate the Arbitration Agreement. In support of the said submission, the learned senior counsel relied upon a judgment of a learned Single Judge of this Court reported in 2010 (2) Bom.C R 712 in the matter of Severn Trent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is responsible for the acts of the agent which is Defendant No. 2. That the said case is borne out by the averments made in Paras 45 and 83 of the Plaint. (c) That by a process of clever drafting a case is sought to be made out that the cause of action against the Defendants is joint and that the cause of action against both the Defendants is inextricably linked and therefore the matter could not be referred to arbitration as the Defendant No. 2 is not a party to the Arbitration Agreement. (d) That the judgment in the case of Svenska Handelsbanken (supra) settles it beyond the pale of doubt that Clause 16 is mandatory in nature. (e) That having filed the Counter Claim in the arbitration proceedings it is not open for the Petitioner to filed the instant Suit. Reliance is placed on the judgment of a learned Single Judge of the Andhra Pradesh High Court reported in 1991 (Vol. 70) 303 in the matter of Nalam Satya Prasad Rao v. Vinupamula Lakshmi Narasimha Sastry. CONSIDERATION:- 14. Heard the learned counsel for the parties and perused the Written Submissions filed on behalf of the Respondent No. 1. 15. Since the issue of maintainability of the Petition has been raised by Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort of the submission that the judgment in the case of Shin-etsu (supra) has been over ruled by the Constitution Bench in so far as it holds that in an order passed on an Application filed under Section 45 of the Act, the view expressed by the judicial authority is prima facie. In the said context it would be necessary to see the scheme of Part-I and Part-II of the said Act. Part-I as can be seen deals with arbitrations in India whilst Part-II deals with a special type of arbitrations out side India. The situs where the arbitration is to take place attracts certain consequences. An arbitration in a foreign country such as this where the substantive and remedial law is that of the foreign country cannot be per-se equated with and/or treated as Indian arbitration. It would therefore be inappropriate to superimpose provisions of Part-I so as to override specific provisions contained in Part-II. That reading of subsection (2) of Section 2 of the Act is also a clear pointer to the fact that the provisions of Part I can have no application in so far as section 45 is concerned. The provisions of Sections 8, 9 or 11 and the judicial decisions interpreting these three sections therefore ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 45, the court is required to take only a prima facie view for making the reference, leaving the parties to a full trial either before the arbitral tribunal or before the court at the post-award stage. 106 Undoubtedly, an international commercial arbitration involves huge expenses, particularly where the parties have subjected the contract to a foreign law. But, that cannot be a deterrent to this Court from pronouncing on the correct approach to be adopted under Section 45 of the Act. In fact, as I have pointed out, adopting a final and determinative approach under Section 45 may not only prolong proceedings at the initial stage but also correspondingly increase costs and uncertainty for all the parties concerned. Finally, having regard to the structure of the Act, consequences arising from particular interpretations, judgments in other jurisdictions, as well as the opinion of learned authors on the subject, I am of the view that, the correct approach to be adopted under section 45 at the pre-reference stage, is one of a prima facie finding by the trial court as to the validity or otherwise of the arbitration agreement." 19. The judgment in the case of Shin-etsu (supra) the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rative power. It is a judicial power. ii) The power under Section 11(6) of the Act, in its entirety, could be delegated, by the Chief Justice of the High Court only to another judge of that court and by the Chief Justice of India to another judge of the Supreme Court. (iii) In case of designation of a judge of the High Court or of the Supreme Court, the power that is exercised by the designated, judge would be that of the Chief Justice as conferred by the statute. (iv) The Chief Justice or the designated judge will have the right to decide the preliminary aspects as indicated in the earlier part of this judgment. These will be, his own jurisdiction, to entertain the request, the existence of a valid arbitration agreement, the existence or otherwise of a live claim, the existence of the condition for the exercise of his power and on the qualifications of the arbitrator or arbitrators. The Chief Justice or the judge designated would be entitled to seek the opinion of an institution in the matter of nominating an arbitrator qualified in terms of Section 11(8) of the Act if the need arises but the order appointing the arbitrator could only be that of the Chief Justice or the judg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention of over-ruling of Shin-etsu. The submission of the learned Senior Counsel appearing for the Petitioner that the said Constitution Bench Judgment over rules the judgment in the case of Shin-etsu cannot be accepted for more than one reason, if Shin-etsu was to be over-ruled, the Constitution Bench would have surely made a reference to the ratio of Shin-etsu being reconsidered or reviewed. Nowhere in the case of SBP & Co (supra) is there any observation which can even be remotely considered as disagreeing with the ratio in Shin-etsu. Save and except for one paragraph where Shine-etsu has been merely referred to that too for another proposition. The Constitution Bench as can be seen had no occasion to and did not consider the different scheme of Part I and Part II nor the non obstante provision of Section 45 of the said Act. In any event it is well settled that a judgment is only an authority for what it lays down and not for what logically flows from it. The fact that judgment in Shin-etsu has not been over ruled or diluted is also clear from the subsequent judicial pronouncements which have been referred to by the learned Senior Counsel for the Respondent No. 1. The judgment i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition that even for applications under section 45, a determination by the judicial authority was final. The learned Senior Counsel for the Petitioner would contend that the said judgment being a judgment of a co-ordinate bench of this Court, was binding on the another Single Judge by relying upon the judgment of the Division Bench of this Court reported in AIR 1975 Bom 120 in the matter of Panjumal Hassomal Advani v. Harpal Singh Abnashi Singh*. It is required to be noted that the question in the said case no way concerned Part II of the said Act. Therefore to interpret the word "inter alia" so as to include Sections 9, 11 and 45 of the Act would in my view not be proper as one cannot merely on a presumption that the learned Judge whilst using the phrase "inter alia" had in mind the other provisions of the said Act viz. Sections 9, 11 and 45. This especially in the context of the fact that Section 45 is a part of Part-II and the scheme of Section 45 as enumerated above is different than the scheme as contained in Section 8 of the said Act. In my view, though there can be no dispute about the proposition that a judgment of a learned Single Judge of this Court is binding on another l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature of a limited provision enabling the parties to apply to a Court for interlocutory relief. The concluding part of the said Clause 16 therefore can be said to reserve the right of a party to apply to a Court of law having jurisdiction for the purposes of interim relief. The part of Clause 16 which follows the words "interim relief" namely the words "including without limitation" merely enumerate the different types of applications for interim relief that can be made to a Court. The said words enumerate what type of applications for interim relief which could be made viz. temporary restraining order, preliminary injunction or decree. The concluding part of Clause 16 therefore cannot be said to be a provision which detracts from the mandatory provision as contained in the arbitration clause. 22. On behalf of the Petitioner, the learned Senior Counsel sought to lay emphasis on the word "decree" appearing in the concluding part so as to contend that a party can even apply for final reliefs. The word "decree" as can be seen appears in conjunction with the words "preliminary injunction" or "preliminary decree". The word "preliminary" qualifies both injunction and decree. The word " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Judge of this Court in the case of Malaysian International Trading Corporation v. Megasafe Deposits Valut, reported in (2006) 6 Bom. C R 109. In my view, it is not necessary to go into the said aspect as the existence and/or validity of the Arbitration Agreement will be finally decided by Arbitral Tribunal. Since the view expressed by the civil court can be said to be a prima facie view, therefore, it is the Arbitral Tribunal who will decide the issue of existence and/or validity of the Agreement, necessarily with regard to the substantive law applicable to the contract. 26. Now coming to the judgments cited on behalf of the Petitioner in support of the contention that Clause 16 of the Agreement is not mandatory, in my view, the same do not aid the Petitioner. In so far as the first judgment reported in AIR 2004 Madras 127 in the matter of Sankar Sealing Systems Pvt. Ltd. v. Jain Motor Trading Co. is concerned, the arbitration clause was in two parts which were clauses 23A and 23B. Clause 23A read thus:- "Any dispute arising in relation to this Agreement will be settled by the arbitration of a neutral person agreed to by both" The learned Single Judge of the Madras High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s contained in this Agreement. These injuctive remedies are cumulative and are in addition to any other rights and remedies the parties may have at law or in equity, including without limitation a right for recovery of the amounts due under this Agreement and related costs and a right for damages" As can be seen from the above, the said Clause 16.11 expressly contemplated that a party could file a suit for specific performance or other equitable relief including to enforce performance of covenants, obligations and representations contained in the Agreement. It is in the said context where the parties had expressly contemplated applications to a Court in various situations including by filing a suit for specific performance or enforcing performance of contractual covenants, obligations and representations, that the learned Single Judge concluded that there was no binding agreement to arbitrate. The facts of the present case are that apart from the word "shall" used in the opening of the said Clause 16, the said arbitration clause is clear, unambiguous and mandatory and can only be said to provide for applications being made to a civil Court for interlocutory reliefs. 28. On the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re there are disputes, it would be the exercise of a legal right and both parties have agreed that the borrower will submit to the jurisdiction of the court. In such an eventuality defendant 4 would have elected to exercise the right under clause 18.03, which is in addition to and not in derogation of the arbitration clause in clause 18.02 As the arbitration clause remains untouched by clause 18.03, if defendant 4 was to sue the plaintiff under clause 18.03 for recovery of its loan, it may be open to the plaintiff (borrower) to apply under Section 3 and seek stay of the suit. The stay of the suit could be granted notwithstanding clause 18.03 for the simple reason that the agreement to submit to the jurisdiction to the court under clause 18.03 relates to the maintainability of the suit in a court agreed to by both parties, but does not affect the question whether the proceedings should be stayed in view of the arbitration clause. The Plaintiff may well elect to have the dispute decided in court or it may apply under Section 3 of the Foreign Awards Act or a similar provision in Sweden, England or United States, depending on where defendant 4 files the suit. Such clauses like clause 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d arbitration petition on the ground that apart from the relief of dissolution and accounts, the plaintiff in the said suit has also prayed for other reliefs and that all the Defendants to the suit were not the parties to the Arbitration Agreement, and therefore, the said arbitration clause was not binding upon them. The prayer of the plaintiff for splitting up cause of action between the parties to the Arbitration Agreement, and the parties who are not, was also rejected by this Court as such a course of action was not contemplated under Section 8 of the said Act. On the matter being carried in Appeal, the Apex Court confirmed the view taken by this Court. The relevant paragraphs of the judgment in the case of Sukanya Holdings (P) Ltd. (supra) are Paragraphs 15, 16 and 17 which are reproduced herein under:- "15 The relevant language used in Section 8 is "in a matter which is the subject matter of an arbitration agreement", Court is required to refer the parties to arbitration. Therefore, the suit should be in respect of 'a matter' which the parties have agreed to refer and which comes within the ambit of arbitration agreement. Where, however, a suit is commenced -"as to a matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht months after the Respondent No. 1 filing its claim before the American Association of Arbitration and after the Petitioner has filed its Counter Claim and participated in the pre-trial formalities of the said arbitration. Though a stand has been taken by the Petitioner that it has participated in the said Arbitration proceedings to avoid an ex-parte judgment, it is pertinent to note that the only objection taken by the Petitioner in the answer filed to the claim by the Respondent No. 1 is to the situs of the Arbitration proceedings and the service of the Arbitration Demand. It is further pertinent to note that the Counter Claim was premised on the basis that Respondent No. 2-DHL was an agent of Respondent No. 1 and/or had been nominated and/or chosen by Respondent No. 1, and therefore the consequences of any omission and/or neglect of Respondent NO. 2-DHL could not be visited on the Petitioner. However, in so far as Respondent No. 1 is concerned, in the said Suit the claim against Respondent No. 1 is made as made in the Counter Claim. In so far as Respondent No. 2 is concerned, a reading of the averments in the plaint especially Paras 2, 3, 83 and 90 are concerned they make it c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore cannot be used as a proposition for Section 45. 33. It is also not unknown that attempts have been made by parties to frustrate the arbitration clause or provisions by filing a suit where in third parties are joined with an intention to defeat the arbitration clause. In such cases, the Courts have to be circumspect whilst considering an argument based on Sukanya Holdings (P) Ltd (Supra) as parties cannot be allowed to frustrate the argument by relying upon Sukanya Holdings (P) Ltd (Supra). A useful reference could be made to the judgment of a Division Bench of this Court reported in 2010 (2) Bom.C R 712 in the matter of Severn Trent Water Prification v. Chloro Controls India Pvt. Ltd, judgment of a Division Bench of this Court reported in 2010 (3) Mh. L.J in the matter of JSW Steel Ltd v. JFE Shoji Trade Corporation, wherein the Division Benches of this Court have expressed concern at the possible misuse of the ratio laid down in Sukanya Holdings (P) Ltd (Supra) and have held that the judgment of the Apex Court in the case of Sukanya Holdings cannot be relied upon to defeat the arbitration clause by merely filing an action and joining a party who was not necessary or proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Application under Section 45 of the said Act. Having not done so and also having not controverted the averment in the affidavit in reply to the present Petition, in my view, the said case of the Respondent No. 1 that the Suit filed by it in the the United States District Court for the Eastern District of Pennsylvania was withdrawn at the request of the counsel for the Petitioner so that the matter proceeds in arbitration has to be accepted. This Court therefore, prima facie, does not find any merit in the said plea of waiver as urged by the learned Senior Counsel for the Petitioner. Continuing with the aspect of the plea of waiver, it is required to be noted that it is not as if the Respondent No. 1 is pursuing any Suit before a civil court. The Respondent No. 1 in fact has withdrawn the litigation before the civil court and has elected to go to arbitration. The Petitioner having appeared in the said arbitration and having filed a Counter Claim and is still persisting with it, the doctrine of election if it has to apply to anybody it has to be to the Petitioner as rightly contended by the learned Senior Counsel for the Respondent No. 1, the Petitioner on the one hand whilst conti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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