Supreme Court of India
CHATTERJEE PETROCHEM CO. & ANRversusHALDIA PETROCHEMICALS LTD. & ORS.
- Citation
- 2013 INSC 817
- Decided
- 10 December 2013
- Disposal
- Appeal(s) allowed
- Bench
- G S SINGHVI
Holding
The arbitration clause in the principal agreement dated 12 January 2002 is valid and enforceable, and the injunction suit is unsustainable; the parties must resolve their dispute through ICC arbitration.
Summary
Chatterjee Petrochem (Mauritius) Co. invoked the arbitration clause in a restructuring agreement dated 12 January 2002, seeking ICC arbitration over a dispute with Haldia Petrochemicals Ltd. Haldia contended that a later agreement dated 8 March 2002, which granted exclusive jurisdiction to the Calcutta courts, nullified the earlier arbitration clause and sought a permanent injunction against arbitration. The Supreme Court examined whether the later agreements effected a novation of the original contract and whether Section 5 of the Arbitration and Conciliation Act, 1996 barred judicial interference. It held that the subsequent agreements were merely supplementary and did not extinguish the principal agreement or its arbitration clause, which remained valid and enforceable. Consequently, the suit for injunction was deemed unsustainable and dismissed, and the parties were directed to proceed with arbitration under the ICC Rules.
Issues considered
- Whether the arbitration clause in Clause 15 of the January 12, 2002 agreement remains enforceable notwithstanding Clause 7.5 of the March 8, 2002 agreement granting exclusive jurisdiction to Calcutta courts.
- Whether the suit filed by the respondent seeking a permanent injunction against arbitration is maintainable under the Arbitration and Conciliation Act, 1996.
Legislation cited
- Arbitration and Conciliation Act, 1996s. 16, s. 45, s. 5
- Code of Civil Procedure, 1908s. 9
Subjects
Arbitration clause validityNovation of contractInjunction against arbitrationInternational Chamber of Commerce (ICC)Section 5 Arbitration and Conciliation ActJurisdiction of courtsSupplementary agreement
Judgment
[2013] 11 S.C.R. 1101
CHATTERJEE PETROCHEM CO. & ANR A
v.
HALDIA PETROCHEMICALS LTD~ & ORS.
(Civil Appeal No. 10932 of 2013)
DECEMBER 10, 2013
B
[G.S. SINGHVI AND V. GOPALA GOWDA, JJ.]
Arbitration - Arbitration clause - Validity - Suit seeking
injunction against arbitration of disputes - Maintainability -
Appellant filed request for arbitration in the International C
Chamber of Commerce (ICC), Paris in relation to an
agreement of restructuring dated 12th January, 2002 by
invoking arbitration clause contained in Clause 15 of the
agreement dated 12th January, 2002 - Dispute as whether
Clause 7.5 of the subsequent Agreement dated 8th March, D
2002 invoking the exclusive jurisdiction of the courts of
Calcutta nullified the scope of arbitration as mentioned in the
agreement dated 12th January, 2002 - Suit filed by
respondents, seeking injunction against arbitration of disputes
between the parties - Maintainability - Held: In view of the E
clauses of the Principal Agreement dated 12th January 2002
and subsequent Agreements dated 8th March 2002 and 30th
July, 2004, read with section 5 of the A&C Act, it is clear that
the Arbitration clause in the Principal Agreement continued
to be valid in view of clause no. 6 of the Agreement dated 30th F
July, 2004 and also by virtue of its mention in different parts
of both the supplementary agreements dated 8th March, 2002
and 30th July, 2004 - Appellant thus entitled to invoke the
arbitration cfause. for settling their disputes - Since, the
arbitration clause was valid, suit filed by respondent no. 1 for
declaration and permanent injunction against arbitration of G
disputes between the parties unsustainable and liable to be
dismissed - Parties directed to resolve their disputes through
arbitration as mentioned in clause 15 of the letter of
1101 H
1102 SUPREME COURT REPORTS [2013] 11 S.C.R.
A Agreement dated 12th January, 2002 in accordance with the
Rules of ICC - Rules of Arbitration of the International
Chamber of Commerce - Arbitration and Conciliation Act,
1996 - ss. 5, 16 and 45.
On 21st March, 2012, the appellant- CPMC filed a
8
request for arbitration in the International Chamber of
Commerce (ICC), Paris in relation to an agreement of
restructuring entered into between CPMC, Government
of West Bengal, West Bengal Industrial Development
Corporation (WBIDC) and Haldia Petrochemical Limited
C (HPL) on 12th January, 2002. As per the agreement, the
Government of West Bengal was to cause WBIDC to
transfer existing shareholding to CPMC to ensure that
CPMC holds 51% of the total paid up capital of HPL.
D Clause 15 of the agreement dated 12th January, 2002
provided for reference of all disputes, in any way relating
to the said Agreement or to the business of or affair of
HPL to the Rules of the ICC, Paris. The appellant sought
to invoke the said arbitration clause contained in the
E agreement dated 12th January, 2002 and made a request
for arbitration ..
The respondent HPL, however, claimed that the
Arbitration Agreement contained in clause 15 of the
Agreement dated 12th January, 2002 was void and/ or
F unenforceable and/or had become inoperative and/or
incapable of being performed; and filed a suit before the
High Court of judicature at Calcutta praying that the
arbitration clause in the agreement be declared as void.
G The following issues arose for consideration of this
Court in these proceedings:
1. Can the Arbitration clause under clause 15 of
the letter of Agreement dated 12th January,
2002 be invoked by the appellants and
H
CHATIERJEE PETROCHEM CO. v. HALDIA 1103
PETROCHEMICALS LTD.
whether Clause 7.5 of the subsequent A
Agreement dated 8th March, 2002 invoking the
exclusive jurisdiction of the courts of Calcutta
nullify the scope of arbitration as mentioned in
the previous agreement dated 12th January,
2002? B
2. Is the suit, filed by the respondents, seeking
injunction against arbitration of disputes
between the parties sought for by the
appellants as per Clause 15 of the agreement C
dated 12th January, 2002 maintainable in law?
Allowing the appeal, the Court
HELD: 1.1. The submission made on behalf of the
respondents that the transfer of shares to CPIL (the o
Indian counterpart of CPMC) instead of CPMC
substantially changed the legal rights and responsibilities
of the parties as per agreement, resulting in novation of
contract, is liable to be rejected. It is nowhere mentioned
in the letter dated 8th March, 2002 that transfer of shares E
to CPIL instead of CPMC extinguished the old agreement
dated 12th January, 2002 to nullity. In fact, in the letter
dated 8th March, 2002, CPMC has been constantly
mentioned as a guarantor. It is only to this extent the
nature of agreement has changed. Clause 1 of the
supplementary agreeme·nt dated 30th July, 2004 goes to
F
show that CPIL Is an affiliate of CPMC. This is to say, that
by means of the letter dated 8th March,2002 CPMC
becomes a guarantor whereas CPIL becomes the
borrower. Therefore, the same does not change the rights
and responsibilities of the parties under the agreement G
dated 12th January, 2002. Further, the contents of the
letter written by CPMC to WBIDC goes to show that the
agreement dated 12th January; 2002 remains the
principal agreement while agreement dated 8th March
2002 remains a supplementary agreement which was H
1104 SUPREME COURT REPORTS [2013) 11 S.C.R.
A meant for restructuring of HPL on urgency. Further, and
most importantly, an agreement was entered into
between the parties dated 30th July, 2004. The
subsequent Agreements dated 8th March, 2002 and 30th
July, 2004 go to show that there was no alteration in the
B nature of rights and responsibilities of the parties
involved in the contract. Consequently, there was no
novation of the contract. [Paras 21, 22, 26, 27 and 28]
[1115-F-G; 1116-A; 1117-C, E-F, H; 1118-A-B, E-F]
1.2. It cannot be said that Section 5 of the Arbitration
C & Conciliation Act, 1996 which bars intervention by
judicial authority in Arbitration Agreement will not be
applicable to lnternatiol)al Agreements such as the
present case. [Para 29) [111.8-F-G]
D 1.3. Further, it is pertinent to read Clause 7 .5 of the
Agreement dated 8th March, 2002 carefully. The phrase
'this agreement' in Clause 7.5 means that the Agreement
dated 8th March, 2002 is essentially a supplementary
Agreement and does not, by any means, make the
E Principal Agreement dated 12th January, 2002 subject to
the jurisdiction of the Court. [Para 30) [1119-D, F]
1.4. In view of the clauses of the Principal Agreement
dated 12th January 2002 and subsequent Agreements
dated 8th' March 2002 and 30th July, 2004, read with
F section 5 of the Arbitration & Conciliation Act, 1996, it is
clear that the Arbitration clause in the Principal
Agreement continued to be valid in view of clause no. 6
of the Agreement dated 30th July, 2004 and also by virtue
of its mention in different parts of both the supplementary
G agreements dated 8th March, 2002 and 30th July, 2004.
Therefore, the arbitration clause mentioned in Clause 15
of the Arbitration agreement dated January 12, 2002 is
valid and the appellant is entitled to invoke the arbitration
clause for settling their disputes. [Para 31) [1119-G-H;
H 1120-A-B]
CHATTERJEE PETROCHEM CO. v. HALDIA 1105
PETROCHEMICALS LTD.
Venture Global Engineering v. Satyam Computer A
Services Ltd. and Anr. (2008) 4 SCC 190: 2008 (1) SCR 501
- relied on.
Yograj Infrastructure Ltd. v. Ssang Yong Engineering and
Construction Co. Ltd. (2011) 9 SCC 735: 2011 (14) SCR B
301; Bhatia International v. Bulk Trading S.A. and Anr. (2002)
4 SCC 105: 2002 (2) SCR 411; Bajaj Auto Ltd. v. TVS Motor
Company Ltd. (2009) 9 SCC 797: 2009 (14) SCR 548;
Shree Vardhman Rice & General Mills v. Amar Singh
Chawalwala (2009) 10 SCC 257;· Mi/met Oftho Industries & C
Ors. v. Allergan Inc. (2004) 12 SCC 624: 2004 (2) Suppl.
SCR 586 and Dhariwal Industries Ltd. & Anr. v. M.S.S. Food
Products (2005) 3 SCC 63 - cited.
2. It is the claim of the respondent no.3 that the suit
was filed by Respondent no. 1 under section 9 of CPC D
and not section 45 of the Arbitration & Conciliation .Act,
1996. Respondent no. 3 contended that the Calcutta High
Court (exercising its ordinary original jurisdiction) has the
jurisdiction (territorial as well as pecuniar}t) to entertain
the present suit under section 9 of CPC and grant of such E
interim injunctive relief as it deems fit under Order 39
Rules 1 and 2 of the CPC is permissible in law. This
contention is liable to be rejected. It is already held that
the Principal Agreement dated 12th January, 2002
continues to be in force with its arbitration clause in F
place. Also, section 5 of the A&C act will be applicable to
Part II of the Act as well. The Agreement dated 12th
January, 2002 remains valid and the arbitration clause,
with all fours, will be applicable to the parties concerned
to get their disputes arbitrated and resolved in the G
Arbitration as per the Rules of ICC. The fact that CPIL,
which initially was a non-signatory to the Agreement
does not jeopardize the arbitration clause in any manner.
Since, the arbitration clause is valid, suit filed by the
respondent no.1 for declaration and permanent
H
1106 SUPREME COURT REPORTS [2013] 11 S.C.R.
A injunction against arbitration of disputes between the
parties is unsustainable in law and the suit is liable to be
dismissed. [Paras 32, 33, 35, 36, 37) [1120-D, H; 1121-A-
B, H; 1122-A-B, C; 1123-D)
Chloro Controls India Pvt. Ltd. v. Severn Trent Water
B Purification Inc. and Ors. (2013) 1 SCC 641; Ganga Bai v.
Vijay Kumar & Ors. (1974) 2 SCC 393: 1974 (3) SCR 882
and SBP & Co. v. Pafel Engineering Ltd. & Anr. (2005) 8 SCC
618: 2005 (4) Suppl. SCR 688 - referred to.
C 3. The parties are directed to resolve their disputes
through arbitration as mentioned in clause 15 of the letter
of Agreement dated 12th January, 2002 in accordance
with the Rules of ICC. It is seen from the written
submission of the appellants that they have already
o initiated an arbitration proceeding. In such case, the
parties shall continue with the arbitration proceeding
since the suit filed for permanent injunction against the
arbitration proceeding is dismissed by setting aside the
impugned judgment and final order passed by the High
E Court of judicature at Calcutta. [Para 38) [1123-E-G]
Case Law Reference:
2011 (14) SCR 301 cited Para 8
2002 (2) SCR 411 cited Para 10
F
2008 (1) SCR 501 relied on Para 11
2009 (14) SCR 548 cited Para 18
(2009) 1o sec 251 cited Para 18
2004 (2) Suppl. SCR 586 cited Para 18
G
(2005) 3 sec 63 cited Para 18
(2013) 1 sec 641 referred to Para 19
1974 (3) SCR 882 referred to Para 32
H 2005 (4) Suppl. SCR 688 referred to Para 34
CHATTERJEE PETROCHEM CO. v. HALDIA 1107
PETROCHEMICALS LTD.
CIVIL APPELLATE JURISDICTION : Civil Appeal No. A
10932 of 2013.
From the Judgment & Order dated 04.06.2013 of the High
Court of Calcutta in APO No. 13 of 2013.
Dr. Abhishek Manu Singhvi, Sudipto Sarkar, Ashok Desai, 8
R.S. Suri, K.K. Venugopal, C.A. Sundaram, Maushumi
Bhattacharya, Amit Bhandari, Purnima Bhat Kak, Suruchi Suri,
Pallavi Tayal, Anu Bindra, Amar Gupta, Ananya Kumar, Mayank
Mishra, Sidharth Nair, Sidharth Sethi, Dheeraj Nair for the
Appearing parties. · C
The Judgment of the Court was delivered by
V. GOPALA GOWDA J. 1. On 21st March, 2012, the
appellant Chatterjee Petrochem (Mauritius) Company D
(hereinafter referred to as 'CPMC') filed a request for
arbitration in International Chamber of Commerce (ICC), Paris
in relation to an agreement of restructuring which was entered
into between CPMC, Government of West Bengal, West
Bengal Industrial Development Corporation (in short 'WBIDC')
and Haldia Petrochemical Limited (in short 'HPL') on 12th E
January, 2002. As per the Agreement, the Government of West
. Bengal was to cause WBIDC to transfer existing shareholding
to CPMC to ensure that CPMC holds 51% of the total paid up
capital of HPL. Clause 15 of the Agreement provides for
reference of all disputes, in any way relating to the said F
Agreement or to the business of or affair of HPL to the Rules
of the ICC, Paris.
2. The respondent HPL on the other hand, claims that the
Arbitration Agreement contained in clause 15 of the Agreement G
dated 12th January, 2002 is void and/ or unenforceable and/
or has become inoperative and/or incapable of being
performed.
3. A dispute arose between the parties regarding the
allotment of shares and the appellant filed Company i:>etition H
1108 SUPREME COURT REPORTS (2013] 11 S.C.R.
A No. 58 of 2009 before the Company Law Board (in short
'CLB')on the grounds of oppression and mismanagement. The
appellant also sought transfer of 155 million shares in favour
of Chatterjee Petrochem (India) Pvt. Ltd. (in short "the CPIL"),
the Indian counterpart of CPMC as was decided in the
B Agreement.
4. The Company Petition was disposed of by the CLB by
upholding the decision of the Company to allot 155 million
shares by Indian Oil Corporation (in short 'IOC'). The transfer
C of 155 million shares to CPIL by WBIDC was also confirmed.
The CLB further directed the Government of West Bengal and
WBIDC to transfer 520 million shares held by thern in HPL to
Chatterjee Groups.
5. The Government of West Bengal preferred an appeal
0 against the said Order before the High Court of Judicature at
Calcutta under the provisions of Section 1OF of the Company's
Act, 1956. The High Court set aside the Order of the CLB on
the ground that CPIL was not a member of HPL and the CLB
could not have enforced its right under private contract entered
E into between CPIL and WBIDC for transfer of shares as the
same could not be the subject matter of a petition under
Section 397 of the Companies Act.
6. Aggrieved by the same, the appellant preferred appeal
Nos. 5416-5419, 5420, 5437 and 5440 of 2008 before this
F Court. Vide judgment dated 30.09.2011, this Court held that the
claim of the appellant transferring shares to IOC has changed
the private character of the Company and was not an act of
oppression on the part of the Company. According to this Court,
the transfer of shares to IOC was a result of failure on the part
G of the. appellant to infuse adequate funds into the Company by
way of equity as promised and to participate in its rights issues.
The Company was therefore, constraint to induct IOC as a
member and the 155 million shares which was to be transferred
to the appellant was instead transferred to the IOC. The relevant
H paragraph of the judgment reads as under:
CHATTERJEE PETROCHEM CO. v. HALDIA 1109
PETROCHEMICALS LTD. [V. GOPALA GOWDA, J.]
"103. The failure ofWBIDC and GoWB to register the 155 A
million shares transferred to CP(l)PL could not, strictly
speaking, be taken to be failure on the part of the
Company, but it was the failure of one of the parties to a
private arrangement to abide by its commitments. The
remedy in such a case was not under Section 397 of the B
Companies Act. It has been submitted by both Mr.
Nariman and Mr. Sarkar thateven if no acts of oppression
had been made outagainst the Company, it would still be
open to the learned Company Judge to grant suitable relief
under Section 402 of the Act to iron out the differences that c
might appear from time to time in the running of the affairs
of the Company. No doubt, in the Needle Industries case,
this Court had observed that the behaviour and conduct
complained of must be held to be harsh and wrongful and
in arriving at such a finding, the Court ought not to confine D
itself to a narrow legalistic view and allow technical pleas
to defeat the beneficial provisions of the Section, and that
in certain situations the Court is not powerless to do
substantial justice between the parties, the facts of this
case do not merit such a course of action to be taken.
Such an argument is not available to the Chatterjee Group, E
since the alleged breach of the agreements referred to
hereinabove, was really in the nature of a breach between
two members of the Company and not the Company itself.
It is not on account of any act on the part of the Company
that the shares transferred to CP(l)PL were not registered F
in the name of the Chatterjee Group. There was. therefore.
no occasion for the CLB to· make any order either under
Section 397 or 402 of the aforesaid Act. If. as was
observed in M.S.D.C. Radharamanan's case (supra). the
CLB had given a finding that the acts of oppression had G
not been established. it would still be in a position to pass
appropriate orders under Section 402 of the Act. That.
however. is not the case in the instant appeals."
(emphasis laid by this Court) -H
1110 SUPREME COURT REPORTS [2013] 11 S.C.R.
A 7. On this decision given by this Court, the appellant sought
to invoke the arbitration clause contained in the agreement
dated 12th January, 2002 and made a request for arbitration.
The respondent no.1 on the other hand, filed a suit before the
High Court of judicature at Calcutta praying that the arbitration
B clause in the agreement be declared as void.
8. Learned senior counsel on behalf of the appe.llant Dr.
Abhishek Manu Singhvi relied upon Clause 15 of the letter of
agreement dated 12th January, 2002 to contend that any
C dispute, difference or claims arising between the parties
relating to this letter of agreement dated 12th January, 2002,
or any construction or interpretation relating to the working of
or the business of the respondent no.1, shall first make an
endeavour to settle their disputes, differences etc. in
accordance with the Rules of Arbitration of the International
D Chamber of Commerce. Therefore, the learned senior counsel
contended that the validity or existence of the arbitration
agreement is to be decided by the Arbitration Tribunal in terms
of Article 6 of the ICC Rules, 1998 which is pari-materia to
Section 16 of the Arbitration and Conciliation Act, 1996 (in short
E 'A & C Act')and the Civil Court has no jurisdiction to decide
on such issues. In support of this legal contention, the learned
senior counsel relied upon the decision of this Court in Yograj
Infrastructure Ltd. v. Ssang Yong Engineering and
Construction Co. Ltd. 1 wherein it was held that the arbitration
F shall be held as is mentioned in the agreement which in the
present case, is at Paris.
9. It is the further case of the appellant that the agreement
dated 12th January, 2002 between the parties was not novated
G by the subsequent agreements. According to the appellant, the
agreement dated 12th January, 2002 is the principal
agreement, which was later followed by the supplemental
agreements dated 8th March, 2002 and 30th July, 2004. The
letter of agreement dated 8th March, 2002 did not create any
H 1. (2011)9SCC735.
CHATIERJEE PETROCHEM CO. v. HALDIA 1111
PETROCHEMICALS LTD. [V. GOPALA GOWDA, J.]
independent legal right but was a mere direction from CPMC A
to transfer 155 million shares to its nominee CPIL to avoid
delay. Therefore, according to the appellant, the letter of
agreement dated 8th March 2002 provided that the terms and
conditions of 12th January, 2002 agreement would continue to
remain valid and subsisting between the parties. The relevant B
clauses will be mentioned in the reasoning portion of the
judgment.
10 .. The learned senior counsel relied upon Section 45 of
the A & C ·Act to contend that the suit instituted. by the
respon"dent No. 1 against the request of arbitration by the C
appellant is not maintainable in law. He further argued that the
suit instituted by the respondent No. 1 to restrain a foreign
arbitration for resolution of the disputes between the parties
was in violation of Section 5 of the A & C Act which limits
judicial authority's intervention in arbitration and therefore the D
impugned order of injunction passed by the High Court of
Judicature at Calcutta was contrary to law and therefore, the
same is liable to be set aside. In this regard, the learned senior
counsel relied upon the three Judge Bench decision of this
Court in Bhatia International v. Bulk Trading S.A. and Anr. 2 E
to contend that section 5 of the A & C Act provides that no
. judicial authority shall intervene except where it is provided. The
relevant paragraph will be extracted in the reasoning portion
of the judgment.
F
11. Mr. Sudipto Sarkar, learned senior counsel also
appearing on behalf of the appellant further contended that the
maintainability of the arbitration of the disputes between the
parties can be established by relying on the decision of this
Court in Venture Global Engineering v. Satyam Computer
Services Ltd. and Anr. 3 wherein it was held that Part I of the A G
& C Act will be applicable to international arbitrations as well.
Therefore, Mr. Sarkar contended that the Arbitration clause will
2. c2002) 4 sec 105.
3. (2008) 4 sec 190. H
1112 SUPREME COURT REPORTS [2013] 11 S.C.R.
A be a bar for judicial intervention in the present case in spite of
the fact that it is an international arbitration as per the principal
agreement which will be continued in force as per the terms of
the supplemental agreements.
12. On the other hand, it is the case of the respondent HPL ·
8
that the arbitration agreement dated 12th January, 2002 is
rendered void in respect of the claim for transfer of 155 million
shares in favour of CPIL inasmuch as the parties had contracted
out of their earlier agreement and the legal liability in respect
thereof was redefined in the subsequent 8th March, 2002
C Agreement which provided for an exclusive jurisdiction to courts
in Calcutta to decide dispute arising out of the said agreement.
Therefore, it was pleaded by Mr. Ashok Desai, the learned
senior counsel appearing on behalf of the respondent no. 1-
HPL that once a party to an arbitration agreement seeks to
D adjudicate dispute before another forum and such forum arrives
at a conclusive findings of fact in relation to the dispute then,
the subsequent effort on the part of the same party to refer
dispute for arbitration under ICC Rules would be vexatious and
abuse of law and it shall be construed that the arbitration clause
E in the principal agreement has been rendered inoperative by
the conduct of the party itself.
13. The learned senior counsel for the respondent no. 1
further claimed that Section 5 of the A & C Act can come into
F play only when existence of a valid arbitration agreement is
established. Institution of such a suit by the respondent no.1
would constitute an "action pending before the judicial authority"
necessitating the invocation of Section 45 of the A & C Act, if
one of the parties makes a request to refer the matter for
G arbitration. In such cases, the court must see whether the
arbitration agreement is valid, operative and capable of being
performed, before ·referring the parties to arbitration.
14. It is the further case of respondent no.1 that the
subsequent agreement through letter dated 8th March 2002, in
H respect of transfer of 155 million shares of HPL, new rights and
CHATTERJEE PETROCHEM CO. v. HALDIA 1113
PETROCHEMICALS LTD. [V. GOPALA GOWDA, J.]
liabilities were created by and between the non- parties to the A
arbitration agreement. The new agreement also provided for
a different dispute resolution mechanism among the parties,
that is, the courts in Calcutta. The relevant clause will be
extracted in the reasoning portion of the judgment.
B
15. The learned senior counsel, Mr. K.K. Venugopal,
appearing on behalf of Respondent no. 2, Govt. of West
Bengal, contended that the Arbitration and Conciliation Act,
1996 does not apply to the present case. According to the
learned senior counsel, a party may purport to appoint an C
arbitrator who may enter upon the arbitration even when there
is serious dispute as to whether the arbitration clause exists.
In spite of the fact that no arbitration clause exists, if a party
resorts to arbitration, then neither section 8 nor section 45 of
the A & C Act in case of international arbitration would provide
for adjudication of the issue as to whether the arbitration clause D
exists. It is only where a suit has first been filed, in point of time,
on the substantive agreement or the underlying agreement,
either by way of specific performance or for compensation for
breach of contract, that section 8 or section 45 of the A & C
Act would come into play. However, we are not inclin.ed to E
comment on this contention since it is not pertinent to the case.
16. The learned senior counsel for Respondent no. 2 also
contended that when no arbitration clause exists in the
agreement, the matter cannot be adjudicated either under Part F
I or Part II of the A & C Act rather, the matter can be adjudicated
only by an independent suit seeking injunction against the party
who had initiated arbitration, from proceeding with the
arbitration.
17. It is further the case of the learned senior counsel, Mr. G
K.K. Venugopal that the facts of the present case are
extraordinary and that the matter has been extensively litigated
in the previous round both, before the Company Law Board and
the appellate proceedings thereof. At no point in time did the
Chatterjee Group or any of its constituent affiliate, saved or H
1114 SUPREME COURT REPORTS [2013] 11 S.C.R.
A reserved their right to seek arbitration under the alleged
Arbitration Agreement which they now seek to enforce. This
Court has already declined the reliefs on merit as well as on
the point of jurisdiction. Therefore, he submits that at this
juncture, invoking the arbitration clause from the principal
B agreement by the Chatterjee Group disregarding the
Agreement dated 8th March, 2002, is clearly vexatious and
abuse of the process of law. Therefore, the suit filed by
respondent no. 1 seeking injunction relief on arbitration is
maintainable in law.
c 18. It is further the case of the learned senior counsel on
behalf of Respondent no.2 that the matter has been elaborately
argued before this Court on complicated issues of law which
arise for determination in the case. It is therefore, submitted by
him that in such an event this Court would not render findings
D on questions of law while disposing an appeal against the
interlocutory order so as to give finality in such findings. This
approach of the Court is adopted in many cases arising under
the Intellectual Property law, namely Bajaj Auto Ltd. v. TVS
Motor Company Ltd. 4 , Shree Vardhman Rice & General Mills
E v. Amar Singh Chawalwala 5, Mi/met Oftho Industries & Ors.
v. Allergan Inc. 6 and Dhariwal Industries Ltd. & Anr. v. M. S.S.
Food Products? We are inclined to mention at this stage that
in this appeal we are confined to deciding upon the validity of
the arbitration clause in the principal agreement dated 12th
F January, 2002 only. Hence, this contention does not require to
be addressed in this appeal.
19. The learned senior counsel for respondent No. 3 Mr.
C.A. Sundaram contends that jurisdictional issue in the present
G case, shall be decided as the threshold issue in the present
case. In relation to this, he placed reliance upon the three Judge
4. (2009) 9 sec (para 5).
5. (2009) 10 sec 257 (para 2)
6. (2004) 12 sec 624 (paras 9 to 11)
H 7. (2005) 3 sec 63 (para 20).
CHATTERJEE PETROCHEM CO. v. HALDIA 1115
PETROCHEMICALS LTD. [V. GOPALA GOWDA, J.]
Bench decision of this Court in Chloro Controls India Pvt. Ltd. A
v. Severn Trent Water Purification Inc. and Ors. 8
20. In the light of the facts and circumstances presented
before us on the basis of admitted documents on record, and
also based on the legal contentions urged by the learned senior 8
tounsel on behalf of both the parties, the following issues would
arise for consideration of this Court in these proceedings:
1. Can the Arbitration clause under clause 15 of the letter
of Agreement dated 12th January, 2002 be invoked by the
appellants and whether Clause 7.5 of the subsequent C
Agreement dated 8th March, 2002 invoking the exclusive
jurisdiction of the courts of Calcutta nullify the scope of
arbitration as mentioned in the previous agreement dated
12th January, 2002?
D
2. Is the suit, filed by the respondents, seeking injunction
against arbitration of disputes between the parties sought
for by the appellants as per Clause 15 of the principal
agreement referred to supra maintainable in law?
3. What Order? E
Answer to Point no.1
21. We are inclined to reject the submission made by the
learned senior counsel on behalf of the respondents that the
F
transfer of shares to CPIL instead of CPMC substantially
changes the legal rights and responsibilities of the parties as
per agreement referred to supra thereby, resulting in novation
of contract.
22. It is nowhere mentioned in the letter d;:ited 8th March, G
2002 that transfer of shares to CPIL instead of CPMC
extinguishes the old agreement dated 12th January, 2002 to
nullity. In fact, in the letter dated 8th March, 2002, CPMC has
a. (2013) 1 sec 641. H
1116 SUPREME COURT REPORTS [2013] 11 S.C.R.
A been constantly mentioned as a guarantor. It is only to this
extent the nature of agreement has changed.
23. It is argued by the learned senior counsel Mr. C.A.
Sundaram, appearing on behalf of Respondent no.3 that the
B concurrent findings of facts on the prima facie case by the
learned single Judge and the Division Bench of the High Court
of Calcutta have held that there has been a novation of
agreement between the parties to the principal agreement
dated 12th January,2002 by the subsequent agreements dated
C 8th March, 2002 and 30th July, 2004.
24. It has been held by the learned single Judge of the
Calcutta High Court that:
" ...... This is a case, where by express words the parties
D have altered their obligations by a new agreement on 8th
March, 2002 with a term that the Courts in Kolkata 'alone'
would have jurisdictions. This was affirmed by the 30th July,
2004 agreement. This put an end to the arbitration, once
and for all. Therefore, the arbitration clause in the 12th
January, 2002 agreement was abrogated by the 8th March
E
agreement. Abrogation of an arbitration agreement could
not be made in clearer terms ... ".
25. Further, the Division Bench of Calcutta High Court vide
impugned judgment dated 12th January 2012, made the
F following observations:
(a.) Agreement of 12th January 2002 was substituted
by agreements of March 8, 2002 and July 30, 2004.
(b.) Such a subsequent agreement completely
G extinguished the rights existing under the January
12, 2002 agreement and also destroyed the
arbitration clause.
(c.) Remedy is under Agreement of March 8, 2002
H which does not provide for Arbitration but states
CHATTERJEE PETROCHEM CO. v. HALDIA 1117
PETROCHEMICALS LTD. [V. GOPALA GOWDA, J.]
that courts at Calcutta alone shall have jurisdiction. A
(d.) Agreement of March 8, 2002 is not an ancillary to
agreement of January 12, 2002 but materially alters
the same. The principle laid down in Chloro
Controls Case (supra) does not apply. Real 8
intention of the parties in the instant case was to
substitute one agreement with another.
26. Clause 1 of the supplementary agreement dated 30th
July, 2004 reads as under:
c
"Pursuant to the said Principal Agreement GoWB has
caused WBIDC to transfer to Chatterjee Petrochem (India)
Private Limited (CPIL), an affiliate of CPMC Rs. 155
crores of shares from the shareholding of WBIDC existing
on the date of principal agreement. .. " D
(emphasis laid by this Court)
The abovementioned clause goes to show that CPIL is an
affiliate of CPMC. This is to say, that by means of the letter
dated 8th March,2002 CPMC becomes a guarantor whereas E
CPIL becomes the borrower. Therefore, the same does not
change the rights and responsibilities of the parties under the
agreement dated 12th January, 2002.
27. Further, the letter written by CPMC to WBIDC along
F
with the agreement dated 8th March, 2002 reads as follows:
"... It is clarified that the aforesaid shall not prejudice any
of our rights under the said Agreement dt. January
12. 2002 and all terms and conditions thereof shall
continue to remain valid, binding and subsisting G
between the parties to be acted upon sequentially".
(emphasis laid by this Court)
The content of this letter goes to show that the agreement dated H
1118 SUPREME COURT REPORTS [2013] 11 S.C.R.
A 12th January, 2002 remains the principal agreement while
agreement dated 8th March 2002 remains a supplementary
agreement which was meant for restructuring of HPL on
urgency.
28. Further, and most importantly, the agreement entered
8
into between the parties dated 30th July, 2004 states as follows:
"WHEREAS the Parties hereto had entered into an
agreement dated January 12, 2002 (hereinafter referred
to as the principal agreement. ... "
c
Also, the Agreement dated 30th July, 2004 which is based on
shareholding issues, also notes through clause 6 that:
"6. The Parties hereby agree, record and confirm that all
other terms and conditions as contained in the said
D Principal Agreement shall remain binding.
subsisting, effective. enforceable and in force between
the parties."
(emphasis laid by this Court)
E
The abovementioned clauses of the subsequent Agreements
dated 8th March, 2002 and 30th July, 2004 go to show that
there has been no alteration in the nature of rights and
responsibilities of the parties involved in the contract.
F Consequently, there has been no novation of the contract.
29. It has been further argued by the learned senior counsel
for the respondents that Section 5 of the A & C Act, which bars
intervention by judicial authority in Arbitration Agreement will not
be applicable to International Agreements such as the present
G case. We are inclined Jo'~reject this contention by placing
reliance upon the legal principle laid down by this Court in
Venture Global Engineering case (supra), the relevant
paragraph of which reads as under: '
"25 ....... In order to find out an answer to the first and
H
CHATIERJEE PETROCHEM CO. v. HALDIA 1119
PETROCHEMICALS LTD. [V. GOPALA GOWDA, J.]
prime issue and whether the decision in Bhatia A
lntemational (supra) is an answer to the same, let us go
into the details regarding the suit filed by the appellant as
well as the re!evant provisions of the Act. The appellant -
VGE filed O.S. No. 80 of 2006 on the file of the 1st
Additional District Court, Secunderabad, for a declaration B
that the Award dated 3.4.2006 is invalid, unenforceable
and to set aside the same. Section 5 of the Act makes it
clear that in matters governed by Part I, no judicial authority
shall intervene except where so provided. Section 5 which
falls in Part I, specifies that no judicial authority shall c
intervene except where so provided. The Scheme of the
Act is such that the general provisions of Part I. including
Section 5. will apply to all Chapters or Parts of the Act."
(emphasis laid by this Court)
D
30. Further, it is pertinent to read Clause 7.5 of the
Agreement dated 8th March, 2002 carefully. Clause 7.5 reads
thus:
"Jurisdiction: Courts at Calcutta alone shall have E
jurisdiction in all matters relating to this Agreement."
The phrase 'this agreement' means the Agreement dated 8th
March, 2002 which is essentially a supplementary Agreement
and does not, by any mean, make the Principal Agreement
dated 12th January, 2002 subject to the jurisdiction of the Court. F
31. Therefore, we are of the opinion that both the learned
single Judge and the Division Bench erred in arriving at the
conclusion mentioned above and their findings are liable to be
set aside. In the light of the case mentioned above and also G
on the basis of the clauses of the Principal Agreement dated
12th January 2002 and subsequent Agreements dated 8th
March 2002 and 30th July, 2004, read with section 5 of the A&C
Act, we are inclined to observe that the Arbitration clause in
the Principal Agreement continued to be valid in view of clause
H
1120 SUPREME COURT REPORTS [2013] 11 S.C.R.
A no. 6 of the Agreement dated 30th July, 2004 and also by virtue
of its mention in different parts of both the supplementary
agreements dated 8th March, 2002 and 30th July, 2004.
Therefore, the arbitration clause mentioned in Clause 15 of the
Arbitration agreement dated January 12, 2002 is valid and the
B appellant is entitled to invoke the arbitration clause for settling
their disputes. We, therefore, answer the point no.1 in favour
of the appellant.
Answer to Point nos.2 and 3
C 32. We answer point nos. 2 and 3 together since they are
interrelated.
It is the claim of the respondent no.3 that the suit was filed
by Respondent no. 1 under section 9 of CPC and not section
0 45 of the A&C Act. Respondent no.3 further placed reliance
upon the decision of this Court in Ganga Bai v. Vijay Kumar
& Ors9 • to hold that:
"15 .... There is an inherent right in every person to bring
suit of a civil nature and unless the suit is barred by statute
E one may. at ones peril. bring a suit of one's choice. It is
no answer to a suit, howsoever frivolous the claim, that the
law confers no such right to sue. A suit for its maintainability
requires no authority of law and it is enough that no statute
bars the suit. But the position in regard to appeals is quite
F the opposite. The right of appeal inheres in no one and
'therefore an appeal for its maintainability must have the
clear authority of law. That explains why the right of appeal
is described as a creature of statute."
G (emphasis supplied by this Court)
Therefore, the learned senior counsel appearing on behalf of
respondent no. 3 places reliance upon this decision to contend
H 9. (1974) 2 sec 393.
CHATIERJEE PETROCHEM CO. v. HALDIA 1121
PETROCHEMICALS LTD. [V. GOPALA GOWDA, J.]
that the Calcutta High Court (exercising its ordinary original A
jurisdiction) has the jurisdiction (territorial as well as pecuniary)
to entertain the present suit under section 9 of CPC and grant
of such interim injunctive relief as it deems fit under Order 39
Rules 1 and 2 of the CPC is permissible in law.
B
33. We are inclined to reject this contention raised by the
learned senior counsel appearing on behalf of Respondent no.
3. A careful reading of the decision leaves no doubt in the mind
as has been held in Ganga Bai's case (supra) that:
"15 .... There is an inherent right in every person to bring C
suit of a civil nature and unless the suit is barred by statute
one may. at ones peril. bring a suit of one's choice ...... "
(emphasis laid by this Court)
34. The learned senior counsel for respondent no. 3 further D
places reliance upon the Constitution Bench decision of seven
Judges in SBP & Co. v. Patel Engineering Ltd. & Anr10•
wherein it was held that:
"19 ..... When the defendant to an action before a judicial E
authority raises the plea that there is an arbitration
agreement and the subject matter of the claim is covered
by the agreement and the plaintiff or the person who has
approached the judicial authority for relief, disputes the
same, the judicial authority, in the absence of any F
restriction in the Act, has necessarily to decide whether,
in fact, there is in existence a valid arbitration agreement
and whether the dispute that is sought to be raised before
it, is covered by the arbitration clause .... "
(emphasis laid by this Court) G
35. We have already held that the Principal Agreement
dated 12th January, 2002 continues ·to be in force with its
10. c2oos) a sec s1s. H
1122 SUPREME COURT REPORTS [2013) 11 S.C.R.
A arbitration clause in place. We have also mentioned, while
answering point no. 1, that section 5 of the A&C act will be
applicable to Part II of the Act as well. The Agreement dated
12th January, 2002 remains valid and the arbitration clause,
with all fours, will be applicable to the parties concerned to get
9 their disputes arbitrated and resolved in the Arbitration as per
the Rules of ICC. The contention raised by the learned senior
counsel for Respondent no.2, Mr. K.K. Venugopal regarding
the maintainability of the suit while examining the interlocutory
order in the appeals, is therefore, untenable in law.
c c
36. Tnefact that CPIL, which initially was a non-signatory
to the Agreement does not jeopardize the arbitration clause in
any manner. In this connection, we are inclined to record an
observation made in the three Judge Bench decision of this
Court in Chloro Controls India Pvt. Ltd. (supra), wherein it was
D held as under:
"107. If one analyses the above cases and the authors'
views, it becomes abundantly clear that reference of even
non-signatorv parties to arbitration agreement can be
E made. It may be the result of implied or specific consent
or judicial determination. Normally. the parties to
the arbitration agreement calling for arbitral reference
should be the same as those to the an action. But this
general concept is subject to exceptions which are that
F when a third partv. i.e. non-signatory party. is claiming or
issued as being directly affected through a party to
the arbitration agreement and there are principal and
subsidiary agreements. and such third party is signatory
to a subsidiary agreement and not to the mother_or
principal agreement which contains the arbitration clause.
G
then depending upon the facts and circumstances of the
given case. it may be possible to say that even such third
party can be referred to arbitration."
(Emphasis laid by this Court)
H
CHATTERJEE PETROCHEM CO. v. HALDIA 1123
PETROCHEMICALS LTD. [V. GOPALA GOWDA, J.]
37. The respondent no.1 has filed a suit seeking two A
remedies against the appellants: firstly, that the Arbitration
Agreement contained in Clause 15 of the Agreement dated
January 12, 2002 isvoid and/or unenforceable and/or has
become inoperative and/or incapable of being performed, and
secondly, the respondent no.1 sought permanent injunction B
restraining the appellant herein from initiating and/ or continuing
with the impugned Arbitration proceedings bearing case no.
18582/ARP pursuant to the Impugned Arbitration Agreement
contained in clause 15 of the Agreement dated January 12,
2002 and the Request for Arbitration dated March 21, 2012 c
and the communication dated April 02, 2012 issued by
defendant no. 8 in the Arbitration proceedings connected
therewith and incidental thereto.
Since, we have already held that the arbitration clause is
valid, suit filed by the respondent no.1 for declaration and D
permanent injunction is unsustainable in law and the suit is
liable to be dismissed.
38. In view of the above, we direct the parties to resolve
their disputes through arbitration as mentioned in clause 15 of E
the letter of Agreement dated 12th January, 2002 in accordance
with the Rules of ICC. We have also seen from the written
submission of the appellants counsel that the appellants have
already initiated an arbitration proceeding. In such case, the
parties shall continue with the arbitration proceeding since the F
suit filed for permanent injunction agaLnst the arbitration
proceeding is dismissed by setting aside the impugned
judgment and final order in A.P.O. No. 13 of 2013 passed by
the High Court of judicature at Calcutta on 04.06.2013.
Accordingly, the appeal is allowed, but no costs.
G
B.B.B. Appeal allowed.
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