Holding

No binding contract or arbitration agreement existed between the parties, as the essential terms were not agreed, rendering the arbitration clause void.

Summary

The appellant, a shipowner, and the respondent, Indian Oil Corporation, negotiated a charter party for shipping pipes but never signed the agreement because they could not agree on the format of a standby letter of credit and a performance guarantee, which were treated as conditions precedent. The appellant later invoked the arbitration clause in the unsigned draft charter party, prompting the respondent to seek a declaration under Section 33 of the Arbitration Act, 1940 that no arbitration agreement existed. The Delhi High Court held that no enforceable contract had been concluded and restrained arbitration. On appeal, the Supreme Court affirmed that correspondence alone did not demonstrate a meeting of minds on the essential terms, that the standby letter of credit and performance guarantee were indeed conditions precedent, and therefore no binding contract or arbitration clause existed. The appeal was dismissed, leaving the respondent free from arbitration.

Issues considered

Whether a valid and subsisting contract existed between the parties despite the charter party being unsigned and essential terms pending.
Whether the arbitration clause in the unsigned draft charter party was enforceable.
Whether correspondence can be used to infer a binding agreement in the absence of a signed document.
Whether the standby letter of credit and performance guarantee constituted conditions precedent to contract formation.

Legislation cited

Arbitration Act, 1940s. 33

Subjects

arbitrationcontract formationunsigned agreementcondition precedentcharter partycorrespondencemeeting of mindsIndian Arbitration ActSection 33maritime shipping

Judgment

A MIS RICKMERS VERWALTUNG GMB H
v.
THE INDIAN OIL CORPORATION LTD.

NOVEMBER 19, 1998

B [DR. A.S. ANAND, CJ. AND K. VENKATASWAMI, J.)

Arbitration Act, 1940 : Section 33

Arbitration-Charter party agreement for shipping of pipes between
C appellant ad respondent-Agreement not signed by parties-Conditions for
agreement-Execution of letter of credit and performance guarantee-
Contents of these two documents to be mutually agreed between the parties-
No agreement between parties as to contents of documents-Consequently
cargo arrangements not made by appellant-Alternative arrangements by
D respondent-Invocation of arbitration clause contained in the agreement by
ap;,ellant-Claim that though no formal agreement was signed by parties yet
a binding agreement had come into existence through correspondence-
Held entire correspondence indicated no enforceable contract came into
existence·-Consequently clause relating to arbitration had no existence.

E Contract-Though not signed by parties-Can be spelled out from
correspondence exchanged between the parties-But it must clearly emerge
from correspondence that parties were ad idem to the terms.

The respondent-Corporation entered into an agreement with a Mexico
Company for purchase of pipes which were to be delivered at Tempico port
p in Mexico. For the purpose of shipping of pipes negotiations were conducted
with the appellant-vessel owners for entering into an agreement. Before
execution of agreement the respondent-Corporation was to establish a
stand-by letter of credit while the appellant was to furnish a performance
bond. The format and contents of these two documents were to be mutually
agreed upon by both the parties. A charter party agreement was drawn up
G on November 11,1993 but it was not signed by the parties. However, no
agreement was reached between the parties with regard to th~ contents of
the s"tand-by letter of credit and performance guarantee. Therefore, the
appellant did not make any shipping arrangements and the respondent-
corporation had to make alternative arrangements. Thereafter, appellant
H tiled an ap(•lication before Indian Council of Arbitration invoking clause 53
42
RICKMERS VER WAL TUNG GMB H v. 1.0.C. LTD. 43
• of the Agreement of Affreightment relating to arbitration. This clause A
provided that all disputes under the charter party were to be settled in India
in accordance with the provisions of the Indian Arbitration Act, 1940 read
with Maritimes Arbitration Rules of Indian Council of Arbitration. The
respondent-Corporation contested the application on the ground that the
agreement between the parties had not been signed since no agreement could B
be reached at with regard to the contents of standby letter of credit and
performance guarantee. Consequently reference of the dispute in question
to Arbitration was unwarranted. However, the Indian Council of Arbitration
appointed arbitrators and directed the respondent-Corporation to deposit
expenses of arbitration.

The respondent-Corporation filled a petition under Section 33 of the
c
Arbitration Act, 1940 seeking a declaration to the effect that reference of
dispute to the Arbitrator was not maintainable as there existed no concluded
agreement between the parties. A single Judge of the Delhi High Court held
that no concluded, enforceable and binding contract came into existence
between the parties and as such clause 53 of the charter party agreement D
relating to arbitration had no existence in the eye of law. Accordingly the
Single Judge restrained the appellant from proceeding with the arbitration.
In appeal to this Court it was contended on behalf of the appellant that
(1) a binding agreement had come into existence through correspondence
and therefore non-signing of the charter party agreement was of no E
consequence; and (2) even in the absence of an agreement about the format
of letter of credit and of the performance guarantee, clause 48 of the
agreement was attracted and recourse to arbitration was justified.

Dismissing the appeal, the Court
F
HELD : I. The Single Judge of the High Court was perfectly justified
in holding that clause 53 of the Charter party relating to arbitration had no
existence in the eye of law, because no concluded and binding contract ever
came into existence between the parties. The finding recorded by him is
based on a proper appreciation of evidence on the record and a correct
application of the legal principles. [48-C) G
2. Clause 48 of the Charter Party 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 enough material on the record to show that they were
meant to be condition precedent. The correspondence between the parties H
44 SUPREME COURT REPORTS [1998] SUPP. 3 S.C.R.

A unmistakably shows that at no point of time, till the Charter Party agreement
was drafted did the parties agree to proceed further without agreeing upon
the format of the letter of credit and performance guarantee. From the
record it is evident that the stand of the appellant was categorical that
without any agreement on the terms of the letter of credit, it was not ready
to nominate the vessel to carry the cargo. The appellant was, thus, for all
B intent and purposes treating the furnishing of the letter of credit as a
condition precedent for carrying the cargo. At no point of time did the
appellant accept the terms of the letter of credit furnished by the respondent.
[50-B; 52-A; D-EJ

C 3. An agreement, even if not signed by the parties, can be spelt out
from correspondence exchanged between the parties. However, in this
connection the cardinal principle to remember is that it is the duty of the
court to construe correspondence with a view to arrive at a conclusion
whether there was any meeting of mind between the parties, which could
create a binding contract between them but the Court is not empowered to
D create :a contract for the parties by going outside the clear language used
in the correspondence, except insofar as their 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 ca!lnot be said that an agreement had come into existence between them
E through correspondence. The Court is required to review 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 had
F they had actually reached an agreement, upon all material terms then alone
can it be said that a binding contract was capable of being spelt out from the
correspondence. [52-F; G-H; 53-A-BI

4. From a careful perusal of the entire correspondence on the record
G it is evident that no concluded bargain had been reached between the parties
as the terms of the standby letter of credit and performance guarantee were
not accepted by the respective parties. In the absence of acceptance of the
standby letter of credit and performance guarantee by the parties, no
enforceable agreement could be said to have come into existence. The
correspondence exchanged between the parties shows that there is nothing
H expressly agreed between them and no concluded enforceable and binding
RICKMERSVERWALTUNGGMBH v.1.0.C. LTD. [DR.A.S. ANAND, CJ.] 45
• agreement came into existence between them. Apart form the correspondence, A
the fax messages exchanged between the parties go to show that the parties
were only 11egotiating and had not arrived at any agreement. There is a vast
difference between negotiating a bargain and entering into a binding contract.
After negotiation of bargain in the present case, th~ stage never reached
when the negotiations were completed giving rise to a binding contract. B
(53-C-E)

CIVIL APPELLA rE JURISDICTION : Civil Appeal No. 5810 of 1998.

From the Judgment and Order dated 17.10.96 of the Delhi High Court
in O.M.P. No. 18 of 1995.
c
R.F. Nariman, Mahesh Agrawal, Ms. Rina Barua, Dr. Jose Verghese and
E.C. Agrawala for the Appellant.

V.N. Koura and Manoj Wad for the Respondent.

The Judgment of the Court was delivered by D
DR. A.S. ANAND, C.J. Leave granted.

This appeal by special leave calls in question the judgment and order
of the Delhi High Court dated Oct. 17, 1996 and arises in the following
circumstances. E
The respondent, Indian Oil Corporation Ltd., entered into an agreement
with Mis Tubacero of Mexico for purchase of pipes for its Kandla-Bhatinda
Pipeline project on September 16, 1993. According to the terms of the
agreement, Mis Tubacero were to deliver the pipes to the respondent at
Tampico Port in Mexico. In order to bring the pipes to India, the respondent, F
a Government Corporation, was required to go through Mis Transchart, a
department of the Ministry of Surface Transport, which brokers charter party
arrangements with various vessel owners, for the purposes of shipping of
pipes from Tampico Port. Mis. Transchart invited offers from various ship
owners and the appellant was one of the ship owners who made an offer. In G
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. I 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 H
46 SUPREME COURT REPORTS (1998) SUPP. 3 S.C.R.

A 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 ban'k.ers 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
B formats of standby letter of credit and performance guarantee were not settled
betwef:n the parties. The first respondent was, therefore, compelled to arrange
for the carriage of first consignment of pipes received from Mis Tubacero at
Mexico. Transchart by it telex dated December 24, 1993 apprised the appellant
about the failure to carry out its obligation, despit.e repeated requests which
C had resulted in the Charterers to finalise alternative shipping arrangements.
While the matter stood thus, the appellant filed a request for arbitration with
the Indian Council of Arbitration on 11.6.1994. On June 28, 1994 the first
respondent received a notice from the Indian Council of Arbitration intimating
it that the appellant had filed an application dated June 16, 1994 invoking
Clause .53 of the Agreement of Affreightment (AOA) relating to arbitration
D and that it had laid a claim of 1,031 ;668.77 US dollars. The first respondent
was dirf:cted to deposit a sum of Rs. 83,200 towards costs of the arbitration
on or before Iuly 28, 1994. On receipt of the communication from the Indian
Council of Arbitration, the first respondent informed the Indian Council of
Arbitration (second respondent) that there did not exist any binding contract
E between the first respondent and the appellant, much less any binding
agreement of refer any dispute between the parties to arbitration according
to the Rules of the Arbitration of the Indian Council of Arbitration. It was
asserted that the agreement dated Nov. 11, 1993 relied upon by the appellant
in its statement of claim, as constituting the contract between the parties had
not been signed by the first respondent and the document was nothing more
F than a mi::re proposal made by the appellant, which was subject to the parties
agreeing on the format and language of the standby letter of credit to be
provided by the first respondent for the benefit of the appellant and was
subject to the parties also agreeing to the format and language of performance
guarantee to be established by the appellant in favour of the first respondent.
G It was maintained that since no agreement could be reached with regard to
the contents of the aforesaid two documents, which were fundamental to
arrive at a working relationship between the parties, the claim of the appellant
regarding !he conclusion of the contract between them was not maintainable.
The first respondent also questioned the jurisdiction of the Indian Council of
Arbitration to decide whether or not an arbitration agreement exists between
H the parties and asserted that in case the appellant considered that they had
RICKMERS VERWALTUNGGMBH v.1.0.C.LTD. [DR.A.S.ANAND,C.J.] 47
entered into a binding agreement between the parties, they could take steps A
to obtain a reference through a competent court. Notwithstanding the stand
of the first respondent, the Indian Council of Arbitration on January 3, 1995,
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 B
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 Rs. 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 C
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
subsisting agreement between the parties had come into existence and that
the claim of the appellant was required to be adjudicated by the arbitrators D
in terms of Clause 53 of the "agreement". On the pleadings of the parties, a
learned single Judge of the Delhi High Court framed the following issues :

"I.Whether there is a valid and subsisting agreement between the
parties ?
E
2. Relief."

During the pendency of the application the learned single Judge stayed
further proceedings before the Arbitrator appointed by the Indian Council of
Arbitration. Parties were directed to file evidence by way of affidavits in the
court. Documentary evidence and affidavit were consequently filed in the F
court.

The case put up before the learned single Judge on behalf of tJ:ie
appellant was that though no agreement (as drawn up on 11.11.1993) was
formally signed between the parties, yet the contemporaneous correspondence G
exchanged between them went to show that a binding contract did come into
existence between the parties and since Clause 53 of the "agreement" dated
11.11.1993 provided that all disputes under the Charter Party were to be
settled in India in accordance with the provisions of the Indian Arbitration
Act, 1940 read with the Maritime Arbitration Rules of the Indian Council of
Arbitratio_n, their plea to get the dispute settled by arbitration was well H
48 SUPREME COURT REPORTS [1998) SUPP. 3 S.C.R.

A found1~d. According to respondent No. I, Indian Oil corporation Ltd., on the
other hand, no arbitration agreement had been executed between the parties
and that the contemporaneous correspondence exchanged between the parties
had also not brought about any enforceable contract between them because
the fundamental conditions of the terms of the bargain were neither agreed
B upon nor fulfilled by the parties.

After referring to various documents and correspondence exchanged
between the parties, the learned single Judge on October 17,1996, vide the
order impugned herein, held that no concluded, enforceable and binding
contra1;t came into existence between the parties and as such Clause 53 of
C the Charter Party "agreement" relating to arbitration had no existence in the
eye oflaw. Issue No. I was, accordingly, decided in favour of respondent No.
I and the petition filed under Section 33 of the Arbitration Act by respondent
No.I was allowed on October 17,1996. The learned single Judge restrained the
appelfa1nt from proceeding with the arbitration. Hence this appeal.

D We have heard learned counsel for the parties and perused the record.

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
E 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
perfom1ance guarantee, because the appellant had after receipt of the letter
F of credit 'rrom respondent No. I 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
perfonnance bank guarantee received by it from respondent No. I had beea
forwarded to the bankers for their acceptance. Learned counsel pointed out
G that on December 16,1993, Transchart had fixed a fresh draft of standby letter
of credit to the appellant and in the communication attached thereto, it was
indicated that the draft letter of credit would be acted upon by respondent
No. I. On this basis, Mr. Nariman submitted that a binding agreement had
come into existence, through correspondence, and the non-signing of the
charter party agreement dated November 11, 1993 by respondent No. I was of
H no consequence. Mr. Nariman asserted that Clause 48 of the agreement did
RlCKMERSVERWALTUNGGMBHv.1.0.C.LTD.[DR.A.S.ANAND,C.J.] 49
not speak of any agreement regarding the terms of letter of credit to be A
forwarded by State Bank of India or regarding the format and language of the
performance guarantee to be established by the appellant in favour of the fi:st
respondent, and therefore, even in the absence of an agreement about the
format of the letter of credit and of the performance guarantee, Clause 48 of
the agreement was attracted and recourse to arbitration was justified.
B
Learned counsel for the respondent in reply submitted that perusal of
the correspondence exchanged between the parties established that there was
no meeting of mind between the parties and no agreement could also be spelt
out from the correspondence exchanged between the parties. Learned counsel
submitted, by reference to the documents on the record, that the C
correspondence exchanged between the parties, including various fax
messages, exposed that the appellant was not ready to nominate the vessel
to carry the cargo, without agreeing on the terms of the letter of credit and
the performance guarantee and that there was no letter or fax exchanged
between the parties which could in any manner indicate that any agreement
had been arrived at between the parties with regard to the terms of the D
standby letter of credit and the performance guarantee. Since, the appellant
itself attached primary importance to the furnishing of letter of credit by the
first respondent before it could carry the cargo, submitted the learned counsel,
the "draft" Charter Party agreement dated November 11,1993 even if it had in
fact been executed between the parties, could not become enforceable because E
the terms of letter of credit and performance guarantee had not been agreed
to between the parties.

It would at this ~tage be relevant to extract sub-clause (a) of Clause
48 to the Charter Party. It reads thus:-
F
"48(a) Freight 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 G
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 saft arrival of vessel at disport
and on presentation of owners invoice in triplicate and I 0 percent
within 30 days of completion of discharge and on presentation of
owners invoice in triplicate". H
so SUPREME COURT REPORTS [1998] SUPP. 3 S.C.R.

A A bare reading of Clause 48 (supra) shows that respondent No. I 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 is!:ued by the State Bank of India on the State Bank of Gennany. Indeed
this clause by itself does not show '.vhether the condition of establishing a
B standby irrevocable letter of credit or the furnishing of perfonnance guarantee
were conditions precedent to the conclusion of contract but there is enough
material on the record to show that they were meant to be condition precedent,.
In this connection a reference may be made to the fax communication dated
4.11.1993 from the appellant (much before the alleged agreement of November
11, 1993) which reads thus :-
c "frt-payment : I 00 pct secured by bank gtee in favour of Lina account
at hamburg under which 50 pct less 3.75 pct commission is payable
within seven working days against presentation of original bladings
and Linas invoice in triplicate. 40 pct within 35 days of date of bill of
lading I 0 pct within 60 days of date of bill of lading.
/
D
(in order to avoid any dispute and documents to be furnished we have
to relate to one finn document which is bill of lading and one finn date
which is date of bill of lading).

Lina to provide charters with perfonnance gtee equivalent to 5 pct of
E freight based on appr. I 0,000 mt per shipment equivalent to usd 50,000
finn valid till 40 pct payment is released.

Format of bank gtee and performance bond gtee to mutually agreed.
Specification of cargo noted however quantity now abt. 50,000 mt
only. In case of 7 shipments quantity per shipment 7,000 mt only.
p Kdly. advise as cargo quantity major factor for freight calculation. Pis
Advise urgently till office opening tom. Morning here. Will reply on
c/p-terms tom. Afternoon."

and the fax message sent by respondent No.I. on I0.11.1993:

"tradex new delhi I 0.11.1993 attn: mr wersich line pipes-tampico/kandla
G received following from chrts:

l. period - to be changed to dee 1993 to july 1994 (however everything
else reg qtty I lots remains same)

2. in place of bank gtee -"ioc will open a standby irrevocable lie for
H freight amount of one shipment for the cargo in transit. Standby l/c
RICKMERSVERWALTUNGGMBH v.1.0.C.LTD. [DR.A.S.ANAND,C.J.] 51
will be issued by sbi India on sbi germany. Freight payment will be A
made through bank transfer at hamburg germany under which 50%
less 3.75 pct commission is payable within 7 working days against
presentation of b/l and owners invoice in triplicate. 40 pct within 7
working days of safe arrival of vsl at disport and I 0 pct within 30 days
of completion of discharge.
B
3. the ship name/details should be intimated immediately. End plse
confirm your acceptance to above per return."

The return fax message from the appellant dated 10.11.1993 reads:

"ref yr msg of just now: c
I. accepted

2. ioc will open a standby irrevocable 1/c in regard to the freight
amount for the shipments. Funds under lie for each lot to be available
by latest 15th of each month before nomination of the vessel by Jina. D
Standby lie 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 Jina as per c/p and mentioned below, the
amount shall be released on first written demand under standby lie
freight payment will be made through bank transfer at hamburg
germany: E
a. 50% less 3.75% commission is payable within 7 days on prersaa,
29,90: 2 nos. copy bill of lading Lina's invoice in triplicate

b. 40% is payable within 7 days on presentation of: arrival notice
from master (telegram/telex/telefex) p
c. 10% is payable within 30 days on presentation of : discharge
notice from master (telegram/telex/telefex)

3. require urgently all detls of Ist lot (see Y' days telex) before, we
cannot nominate the vessel. Entd comments:
G
in case point 2 not clear, kdly 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." H
52 SUPREME COURT REPORTS [1998] SUPP. 3 S.C.R.

A This '~orrespondence unmistakably shows that at no point of time, till the
chartf:r party agreement was drafted on I Ith Nov. 1993 did the parties agree
~o proceed further without agreeing upon the format of the letter of credit and
performance guarantee.

Reference here may also be made to the fax message dated December
B 16, 1993, by which a fresh draft of standby letter of credit was sent by
Transchart to the appellant. In that fax message it was indicated that the draft
letter of credit would be acted upon by the appellant. The response of the
appellant's agent, Lina International of the same date, however, shows that
it was categorically asserted by it that the draft letter of credit was not
C workable and therefore, was not acceptable,. Lina International had faxed
draft of a fresh standby letter of credit. Subsequently, another draft of standby
letter of credit was also faxed by Lina International but since there was no
agreement regarding the acceptance of the draft, the appellant did not nominate
any vessel for carrying the cargo which was required to be loaded from
December 14, 1993 to December 21, 1993. Lina International had consistently
D maintained in their various fax messages, that the offer made by the appellant
was subject, inter alia, to the acceptance of the draft letter of credit. The stand
of the appellant was thus categorical that without any agreement on the terms
of the letter of credit, it was not ready to nominate the vessel to carry the
cargo. The appellant was, thus, for all intent and purposes treating the
E furnishing of the letter of credit as a condition precedent for carrying .the
cargo. At no point of time did the appellant accept the terms of the letter of
credit furnished by respondent No. I.

The submission of Mr. Nariman that an agreement, even if not signed
by the· parties, can be spelt out from correspondence exchanged between the
F parties admits of no doubt. In fact, various judgments cited by him at the bar
unmistakably support this assertion. The question, however, is can any
agreement be spelt out from the correspondence between the parties in the
instant case ?

G In this connection the cardinal principle to remember is that it is the
duty of the court to construe correspondence with a view to arrive at a -4.•
conclusion whether there was any meeting of mind between the parties, which
could create a binding contract between them but the Court is not empowered
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
H of law to be drawn. Unless from the correspondence it can unequivocally and
RICKMERS VERWALTUNGGMB H v. I.O.C. LTD. [DR. A.S.ANAND,C.J.] 53
clearly emerge that the parties were ad idem to the terms, it cannot be said A
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 B
the corresponde11ce 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.

From a careful perusal of the entire correspondence on the record, we
c
are of the opinion that no concluded bargain had been reached between the
parties as the terms of the standby letter of credit and performance guarantee
were not accepted by the respective parties. In the absence of acceptance of
the standby letter of credit and performance guarantee by the parties, no
enforceable agreement could be said to have come into existence. The D
correspondence exchanged between the parties shows that there is nothing
expressly agreed between the parties shows that there is nothing expressly
agreed between them and no concluded enforceable and binding agreement
come into existence between them. Apart from the correspondence relied
upon by the learned single Judge of the High Court, the tax messages E
exchanged between the parties, referred to above, go to show that the parties
were only negotiating and had not arrived at any agreement. There is a vast
difference between negotiating a bargain and entering into a binding contract.
After negoti~tion of bargain in the present case, the stage never reached
when the negotiations were completed giving rise to a binding contract. The
learned single Judge of the High Court was, therefore, perfectly justified in F
holding that Clause 53 of the Charter Party relating to Arbitration had no
existence in the eye of law, because no concluded and binding contract ever
came into existence between the parties. The finding rec~rded by the learned
single Judge is based on a proper appreciation of evidence on the record and
a correct application of the legal principles. We find no merit in this appeal. G
It fails and is dismissed with costs.

T.N.A. Appeal dismissed.