Judgment:
IN THE HIGH COURT AT CALCUTTA Ordinary Original Civil Jurisdiction Original Side Present: The Hon'ble Justice Soumen Sen GA No.2480 of 2013 CS No.173 of 2009 R.
PIYARELALL IMPORT & EXPORT LTD.Versus GLENCORE GRAIN B.V.For the Petitioner : Mr.S.K.Kapur, Sr.Adv., Ms.Mausumi Bhattacharya, Mr.Sounak Mitra, Mr.Tarun Aich For the Respondent : Mr.Mr.Mr.Mr.Heard On : 04.08.2014, 18.08.2014, 29.10.2014, 10.11.2014, 31.11.2014, 02.02.2015, 04.02.2015, 16.02.2015, 18.02.2015, 02.03.2015, 04.03.2015 Judgment On : 20th March, 2015 Ratnanko Banerjee, Sr.Adv., Kuldeep Mallick, Kausik Chatterjee, Asoke Bhoumik Soumen Sen, J.:- Glencore, the sole defendant in the suit, has filed this application essentially for dismissal of the suit.
The application has been made under Order 7 Rule 11 read with Section 151 of the CPC.
The plaintiff has filed a suit against the defendant praying, inter alia, for declarations that there was no contract either dated June 10, 2008 or June 17, 2008 between R.
Piyarelall Import & Export LTD.(hereinafter referred to as “RPI”) and Glencore and further declarations that no arbitration agreement exists between the parties and for perpetual injunction to restrain Glencore from proceeding further with arbitration before GAFTA and certain incidental reliefs.
The plaintiff is a dealer in peas and pulses.
The defendant is an exporter of French yellow peas.
The summaries of the facts made out in the plaint are: i) A contract dated 17th April, 2008 was entered between Glencore and State Trading Corporation of India LTD.(hereinafter referred to as “STC”) for sale by Glencore of a quantity of 21,500 metric tonnes of French yellow peas on agreed terms and conditions; ii) Subsequently, the plaintiff (hereinafter referred to as “RPI”) entered into an agreement dated 19th May, 2008 with STC for purchase of 21,500 metric tonnes of French yellow peas on high sea sale basis and any quality or quantity claim was to be lodged and pursued by STC at the cost of RPI but the claim proceeds would be reimbursed to RPI; and no claim would lie against STC by reason of any quality or quantity claim; iii) In performance of their contract STC opened a Letter of Credit through Vijaya Bank in favour of Glencore.
iv) In terms of the contract dated April 17, 2008, Glencore shipped 18,106.698 MT of goods in seven consignments from Rouen, France, to the Port of Navasheva, Mumbai; v) Glencore obtained payment for the entire quantity of goods shipped by invoking the letter of credit upon presentation of the required documents.
vi) Upon inspection at Navasheva, Mumbai, of all the seven consignments shipped by Glencore only one consignment covered by Bill of Lading No.MSCUFU510761 conformed to the specifications and the other contractual specifications.
vii) The quality of the goods were found to be substandard.
The plaintiff could only sell 19.920 metric tonnes and that too at a lower price of Rs.18,410 MT.
viii) The goods under the aforesaid six consignments were of un-merchantable quality and by reason thereof, the plaintiff had suffered loss and damages being the price paid for the entire balance quantity of 16084.982 M.Ts French Yellow Peas.
goods was The expenses incurred by the plaintiff for the said US$1156460.65 which is equivalent to Indian Rs.47,41,53,190/- at the prevailing exchange rate.
ix) By reason of the breach of the terms of the contract by the defendant, the plaintiff had suffered loss and damages for the sum of Rs.47,41,53,190/-.
x) The plaintiff on 16th June, 2009 received a notice from the defendant at its office at 12, Government Place (East).Kolkata to a claim for arbitration and in the said notice, there is reference to an alleged contract dated 10th June, 2008 allegedly replacing another alleged contract dated 17th April, 2008.
By the said notice, the defendant has informed the plaintiff that they were claiming arbitration in accordance with the Rule of Grain & Feed Association in respect of the alleged contract dated 10th June, 2008 for the same of 21,000 M.Ts, 5% more or less, of French Yellow Peas and one Mr.Libre has been appointed as Arbitrator by the defendant.
xi) There is no contract dated 10th June, 2008 between the plaintiff and the defendant and there is a contract dated 17th April, 2008 between STC and the defendant for the sale of 21,500 M.Ts, 5% more or less, of French Yellow Peas pursuant to which 18106.698 M.Ts of French Yellow Peas have been shipped and payment has been obtained under the said letter of credit for such quantities.
xii) There is no agreement dated 10th June, 2008 between the parties as alleged and no goods have been shipped into India pursuant to any contract between the plaintiff and the defendant and claim for arbitration in the notice dated 16th June, 2009 is illegal, null and void.
xiii) On the basis of the aforesaid notice dated 16th June, 2009, on 18th June, 2009 and 19th June, 2009, the defendant by various e-mails of the above mentioned dates sought to serve on the plaintiff a copy of an application for obtaining order of injunction along with other documents in connection with the arbitration proceedings.
Subsequent to serving such documents, an order of injunction has been obtained on 19th June, 2009 to restrain the plaintiff from proceeding with C.S.No.151 of 2009 except for the purpose of obtaining security for any claim.
xiv) The proceeding initiated by the defendant is an afterthought and has been filed with mala fide intention and is a counter-blast to the suit of the plaintiff.
The defendant has no cause to go to arbitration as there is no contract or contract of arbitration between the plaintiff and defendant in which any French Yellow Peas have been shipped to India.
The only subsisting contract is the contract dated 17th April, 2008 between the defendant and STC.
The defendant is threatening the plaintiff with malicious proceeding by way of arbitration.
Under such facts and circumstances the plaintiff has filed the above suit.
The undisputed facts emerging from the pleadings of the parties are that Glencore and RPI had entered into a contract on 17th April, 2008 being Contract No.624330 for sale on settled terms and conditions of an agreed quantity of peas to be dispatched to India.
The existing contract was replaced between the same parties on 10th June 2008 with certain fresh terms and conditions being incorporated but the contract continued to be numbered as Contract No.624330.
The original contract as well as the substituted contract contained an arbitration clause by virtue whereof all disputes are to be referred to arbitration at London in accordance with GAFTA Rules.
Glencore alleged to have performed its obligation and exported the goods to India and realized payment from the bankers in accordance with the Letters of Credit.
On 23rd December 2008, STC claiming to be the buyer in Contract No.624330 filed a suit being CS No.266 of 2008 praying, inter alia, for injunction restraining payments being made by the bankers under the L/Cs.
Initially, STC obtained an ex parte order of injunction but since payments had been released by Glencore prior thereto, the said suit has now become infructuous.
Subsequently, STC and RPI as joint plaintiffs filed an instant suit being C.S.No.173 of 2009 alleging, inter alia, that the goods exported were defective in quality and claimed a decree for Rs.48 crore and other incidental reliefs.
On 16th June 2009, Glencore filed arbitration proceedings against STC before GAFTA in London seeking declaration that STC was not the buyer under Contract No.624330 and that the disputes under that contract were covered by arbitration agreement.
The said proceeding was numbered as Arbitration Case No.13-944 in the records of GAFTA.
On the same day, Glencore also filed a separate proceeding before GAFTA against RPI in relation to the disputes arising out of Contract No.624330 at London and claimed various declaratory reliefs.
This second reference was numbered as Case No.14-207.
On 18th June 2009, Glencore instituted proceedings in the English High Court seeking orders inte