Monday, 29 October 2012
Thursday, 25 October 2012
Anti Suit Injunction in International Arbitration
SESA International Limited Vs. STEMCOR U.K. Limited & Ors.
relief by way of order of anti-arbitration injunction against respondent no. 1. In the second mentioned application, apart from praying anti-arbitration injunction, restrain order is sought for against the defendant no. 1 to proceed with the arbitration arising out of the contract Nos. RMS 0098, RMS 0099, RMS 0105, RMS 0110 and RMS 0125. The above suit has been filed by the plaintiff/petitioner claiming relief as against the respondent.
Here is the Judgment.
Sesa International Limited vs Stemcor U.K. Limited & Ors on 5 May, 2011
G.A. 696 of 2009
G.A. 1324 of 2009
C.S. 54 of 2009
IN THE HIGH COURT AT
Ordinary Original Civil Jurisdiction
THE HON'BLE JUSTICE KALYAN JYOTI SENGUPTA
SESA International Limited
STEMCOR U.K. Limited & Ors.
Judgment On: 5.5.2011.
K. J. Sengupta, J. :
Both the aforesaid applications have been made by the plaintiff above- named in connection with the aforesaid suit. In the first mentioned application the plaintiff/petitioner has prayed for interlocutory relief by way of order of anti- arbitration injunction against respondent no. 1. In the second mentioned application, apart from praying anti-arbitration injunction, restrain order is sought for against the defendant no. 1 to proceed with the arbitration arising out of the contract Nos. RMS 0098, RMS 0099, RMS 0105, RMS 0110 and RMS 0125. The above suit has been filed by the plaintiff/petitioner claiming relief as against the respondent No. 1, for a decree for Rs.81,67,096/-; perpetual injunction restraining the first respondent from making any demand or receiving any money under letters of credit as pleaded in paragraph ' 6' of the plaint; decree for anti-arbitration injunction has been prayed for against the respondent No. 1 in relation to the said dispute mentioned in the plaint; decree for Rs.3,86,00,000/- has been claimed as against the respondent no. 2, while perpetual injunction as against respondent No. 3 has been asked for restraining it and/or its servants, agents or assigns from remitting any money under or pursuant to the letters of credit pleaded in paragraph '6' of the plaint; perpetual injunction has been sought for against the respondent no. 3 from accepting or negotiating or acting upon the shipping documents presented for negotiation by and/or on behalf of the respondent No. 1 to the respondent no. 3. The facts and circumstances for which the suit was filed is summarized as follows :
Under five several contracts the plaintiff/petitioner agreed to purchase a large quantity of non-alloy steel melting scrap and the defendant no. 1 agreed to sell and deliver the same at an agreed price. The said first defendant has Indian group of company viz. Stemcor India Private Limited whose office is at amongst others in the city of
as well as in
Kolkata. The defendant no. 2 agreed to act as Import Facilitator of the
petitioner on payment of agreed amount of service charges and on consideration
and upon deposit of agreed amount of security in cash. The plaintiff/petitioner
had and still has to keep with the defendant no. 2, MSTC, a sum of Rs.
3,86,00,000/- as by way of security and/or the margin money and the said sum of
money is still lying with MSTC. Mumbai
All the five Letters of credit were duly forwarded to the advising bank nominated by the defendant no. 1 and/or their agents in that regard immediately on the date of opening of the letters of credit. Subsequently, there has been amendment to the letters of credit and the same was also intimated to the defendant no. 1 through its nominated Bank by appropriate communication. The plaintiff has discharged his obligation of payment under the said five several contracts by causing five several letters of credit to be opened covering the price of goods and all the letters of credit as amended have been accepted by the defendant no. 1 and its nominated Banker as due discharge of payment of the said five several contracts. Each of the five several letters of credit specified the documents to be presented for the due operation thereof and receiving payment thereunder. The first defendant and its advising bank have all along been aware that unless the documents, as specified in the letters of credit are presented to the issuing bank in strict compliance of the terms of the letters of credit, it would become non-compliant and invalid presentation of shipping documents. The original negotiable shipping documents were to be presented by the defendant no. 1 and its advising bank to IOB, the issuing bank. IOB, upon being satisfied that the documents were in conformity with the letters of credit, was to release payments and forward all documents including the shipping documents to the petitioner and/or its agent, MSTC. The property in the goods would have passed to the petitioner and/or its agent, MSTC and the petitioner would have been in a position to receive delivery of the goods and clear the same at the port for landing in
upon receipt of negotiable set of shipping documents. The petitioner and/or its
agent, MSTC did not receive any of the original negotiable shipping documents
from IOB or from Stemcor, first defendant. Later on, the petitioner came to
learn that IOB had found all the documents presented by the defendant No.1,
Stemcor and its advising bank in respect of 24 consignments were not in
conformity with the terms of letters of credit and, IOB had duly rejected the
documents as non-complaint as and when received between October, 2008 and
December, 2008. Accordingly, IOB did not make over and/or even present any of
the shipping documents to the petitioner or MSTC and title to the said 24
consignments did not pass on to the petitioner and/or were not transferred to
the petitioner and/or its agent, MSTC. IOB has not furnished to the petitioner
details of the discrepancies of the documents as purportedly presented under
the letters of credit as found by the IOB. However, from the copies of the
non-negotiable documents furnished to the petitioner by defendant no. 1 and its
advising bank, as mentioned before, the petitioner had found out that, in fact,
the documents in respect of each of the 24 consignments were discrepant and
were not in conformity with the terms of the letters of credit. India
The defendant No.1 and/or its agents with full knowledge of rejection of the documents submitted the same to the issuing bank under the letters of credit. It was also within the knowledge of the first defendant of the fact that the petitioner and/or its agent, MSTC had not received any of the shipping documents in respect of the 24 consignments, claimed to have been despatched by Stemcore and further that the property in the said goods have not at all been passed to the petitioner or its agent, MSTC, purported to issue letters of demand upon the petitioner for price of the goods and for return of the original bills of lading knowing fully well that the original bills of lading have never been received by the petitioner. Hence, the petitioner has neither received the said goods nor has any obligation to make any payment under the said letters of credit. Therefore, the security deposit of Rs.3.86 crore with the MSTC is required to be refunded to the plaintiff as the purpose of keeping the same has been wholly failed and/or frustrated by reason of the non-supply of the goods.
Accordingly, the plaintiff is entitled to claim refund of all the said amount of 3.86 crore from the MSTC. Over and above, the petitioner has suffered loss and damages by way of interest at the rate of 15 % p.a. on the said amount. Apart from the aforesaid monetary loss, the petitioner has suffered loss and damages on various ways because of non-supply of the goods and such claim has been quantified by the plaintiff of Rs.81,67,096/- and the said damages have been claimed as against the first defendant.
After committing breach first defendant is now indulging in multiplicity of proceedings and in multifariousness in abuse of process of law by taking the action as stated hereinafter.
The petitioner has been informed by letter dated 30th January, 2009 of the solicitors of the first defendant that the first defendant and its advising and confirming bank have jointly filed a suit before the High Court at London against IOB, claiming inter alia, a sum of US $ 3,033,037.20 and US $ 5,024,041.80 respectively for the amounts covered by the aforesaid five letters of credit. Surprisingly, in the said
suit the petitioner is not a party. At the same time, another letter dated 3rd
February, 2009 has been received by the petitioner sent by the advocate of the
defendant no. 1 wherefrom the petitioner came to know that the defendant no. 1
has appointed an Arbitrator to commence arbitration under auspices of London
Maritime Arbitrators Association London (LMAA). By the said letter the
petitioner has been asked to appoint its Arbitrator within 14 days. In the said
letter it has been stated that there has been dispute having been arisen
between the plaintiff/petitioner and defendant no. 1 in respect of all five
contracts as the IOB declined to honour its undertaking to make payment of the
contract price to the defendant no. 1 on the premise that the shipping
documents presented by defendant no. 1 were non-compliant with the letters of
credit. It appears thereafter on or about 20th March, 2009 the petitioner got
information that judicial action has been taken by the defendant no. 1 before
the District Court, Southern District of New York, USA for maritime attachment
against the petitioner. It appears that the said action covers in respect of
the shipment of 372 containers shipment of scrap steel including aforesaid five
The dispute in terms of the bill of lading are subject to the
jurisdiction and has to be resolved by the arbitration. London
In spite of the arbitration clause the said action has been taken before the
US Court and thereby the defendant no. 1
has given go-bye the said arbitration agreement.
Even in the said action defendant no. 1 has obtained an ex parte order of attachment of the assets of the petitioner in
and pursuant thereto actually got attached an amount of 2,78,500 US Dollar,
which is lying with the American Express Bank. It further appears that payment
has been made pursuant to the said order of attachment, by the petitioner,
through Bank of Commerce, Overseas Branch, Kolkata to another foreign seller by
way of advance payment and was credited to the American Express Bank of New York . The defendant
no. 1 has filed another complaint in the District Court in New York against the Indian Overseas Branch
separately. In that action the plaintiff/petitioner was not a party. The said
action also relates to the said cargo covered by 372 shipping containers
including the aforesaid materials covered by the said five agreements. New York
Thus, it will appear that the said Arbitrator has no jurisdiction to adjudicate upon or override the various provisions of law in
Keeping the aforesaid multiple proceedings pending, the first defendant at the
same time is trying to proceed with the arbitration with unseemingly haste. The
first defendant has written letters to their nominated Arbitrator claiming that
their nominated Arbitrator has become sole Arbitrator and has urged him to
proceed with the matter. India
Thus, a grave urgency has arisen and further facts have come to light as such that unless interim order is issued restraining the first defendant from proceeding with the arbitration proceedings of Mr. Michael Collett, their nominated Arbitrator, the petitioner would suffer irreparable loss and prejudice. The arbitration proceeding initiated by the Stemcor (first defendant) is vexatious, harassive, oppressive and malafide. Stemcor, knowing well that there is no arbitrable dispute with the petitioner herein has commenced, the arbitration proceeding only with the object of harassing the petitioner. The arbitration agreements relied upon by Stemcor for commencing the arbitration are/is inoperative and inapplicable.
Holding arbitration at LMAA is prohibitively expensive. The fees of the arbitrators for conducting an arbitral proceeding in LMAA is exorbitantly high as will be self-evident from the table of fees under Rules of LMAA. In addition thereto, expenses for stay at
high and not less than 400 pound per person per day, besides the costs of
travelling. This apart, the petitioner's legal costs i.e. legal fees of the
senior counsel, junior counsel, solicitor, representative per arbitration
sitting will be extremely high. Travelling expenses, boarding and lodging at London are very
expensive. In such circumstances, the petitioner estimated that for each
arbitration sitting the petitioner would be burdened with an expense of
approximately Rs.2 lakh in addition to the arbitrator's fees, which is $500 per
Arbitrator. It is not possible or feasible for the petitioner to conduct such
arbitration. Stemcor has initiated the arbitration proceeding before LMAA for
specific reason and knowing that the petitioner will not be in a financial
position to participate thereat. Balance of convenience warrants adjudication
of disputes, if any, between the parties in London . Both the petitioner and
Stemcor have their respective places of business in India (Kolkata and Mumbai). Stemcor
India U.K. and Stemcor have
office in Mumbai and Kolkata and have all possible infrastructure with adequate
number of staffs, offices etc. Indeed Stemcor India U.K.
through Stemcor India has
regular business dealings, negotiations, transactions in both from
Mumbai as well as from Kolkata. The Stemcor has dealings and connection with
the lawyers also in India .
Dealings and transactions between the parties took place partly at Kolkata at
the office of the petitioner and partly at the offices of the Stemcor in
Kolkata and Mumbai. India
If at all English Law is applicable, this
is more than well efficient to decide the matter by applying English Laws.
Lawyers practicing in this Hon'ble
Court, are well conversant in English Laws and
there are several lawyers in Kolkata who have studied and are trained in and are proficient
in English Laws. On the other hand, there are very few lawyers in London who have command
over Indian Laws. Indian Law has close nexus and connection with the contracts
between the parties and it is the proper law. None of the defendants, except
first, has filed any affidavit either to support or to oppose the present
application. In the affidavit, the first defendant has taken preliminary point
of jurisdiction of this Court contending that this Court has no territorial
jurisdiction as no part of the cause of action could and can be said to have
arisen within the territorial limit of this London Hon'ble Court. It is alleged that the
first defendant, at no point of time, had and still has any place of business.
It is also alleged that first defendant has no branch office at any place in far less
in Kolkata nor there has been any agent for business to negotiate with the
plaintiff/petitioner. Hence, this Court cannot pass any order. It is alleged
that the petitioner/respondent no. 1 freely negotiated and then entered into
the five contracts mentioned in the petition and each of them agreed that any
controversy or claim arising out or relating to this contract, or breach
thereof shall be settled by arbitration and this contract shall be governed by
the laws of India .
There has not been any protest with regard to the arbitration agreement till
the respondent no. 1 referred its disputes to arbitration by its letter dated
February 3, 2009. It is, therefore, obvious that the prayers for passing
restraint orders as against the respondent no. 1 and the grounds in support
thereof are by way of an afterthought and to delay the arbitration. The action
of the petitioner is, rather, oppressive and vexatious and for such reason the
instant application is liable to be dismissed. By a letter dated 14th May, 2009
the petitioner has challenged the jurisdiction of the arbitrator and has
thereby chose the Arbitral Tribunal as the forum for adjudication of its
jurisdiction. For such reason, the petitioner is estopped from calling upon
this England Hon'ble Court
to decide on the validity of the agreement or the jurisdiction of the Arbitral
Tribunal. The Arbitration and Conciliation Act, 1996 does not provide for any
injunction order being passed restraining any parties from continuing in
arbitration. The respondent no. 1 is also not within the jurisdiction and has
also not submitted to the jurisdiction of this Hon'ble Court. In such circumstances, the
present application is liable to be dismissed.
The petitioner has not made out a case why the Calcutta High Court would be a more appropriate forum for the hearing of its application against respondent no. 1 than the arbitration in
which is agreed to
be the forum in which all claims arising out of or relating to the contracts
would be settled. Even if a decree is passed in terms of prayer (e), the same
would not render the arbitration or any award to be passed therein bad. Any
award which may be obtained by the respondent no. 1 would be enforceable in all
other countries which are signatories under the New York Convention (unless the
Award is found to be bad under the provisions of the New York Convention in the
country where it is being sought to be enforced). In restraining the respondent
no. 1 from continuing in arbitration, this London Hon'ble Court would encroach upon the
jurisdiction of other international courts which would have the jurisdiction to
decide whether the award/agreement is bad. The Court would also make itself a
party to the breach of the arbitration agreement which is being breached by the
Hon'ble Court does not have any jurisdiction
to pass orders as prayed for in the interim application. The reliefs sought in
the interim application are barred under the provisions of law and in
particular, the provisions contained in the Arbitration and Conciliation Act,
1996. Since there is a valid arbitration agreement it is necessary that the
arbitration be allowed to continue. I find from the pleadings and records with
regard to the subject matter of the dealings and transaction it is alleged that
respondent No. 1 has not delivered the goods to the petitioner in accordance
with the contracts. Goods were unloaded at
and remained there. In the affidavit in reply with regard to the factum of
progress of arbitration it is alleged as follows: The petitioner had filed
submission on the question of jurisdiction of the Arbitral Tribunal. The
learned Arbitrator has passed its award on jurisdiction on 9th February 2009
against petitioner. There are several other claims which have been enumerated
in the statement of claim before the learned Arbitrator. However, by necessary
implication it is not denied that payment has been made. Learned counsel for
both the parties had advanced argument both on fact and in law. I have
considered all. Mr. Anindya Mitra, learned Senior Counsel for the petitioner
submits that the arbitration proceedings has been initiated. It will appear
from the pleadings and documents filed subsequent to filing of the present
applications that there has been no subsisting dispute between the parties in
real sense. The arbitration proceedings without any live dispute with the first
defendant would not only be more oppressive, but absolutely punitive, vexatious
and unconscionable. Haldia Port
He submits to clarify the phrases "without any live dispute", that all claims made in the arbitration by first defendant have been satisfied and discharged. It will appear from the claims submission filed before the learned Arbitrator that first defendant at paragraphs 48 and 49 therein has recorded that no claim is made for five letters of credit. Only claim made in the arbitration is for a sum of US $ 1,594,104 which is a part of amount receivable under Letters of Credit No. 105 which also stand paid. Even the said claim in relation to said Letter of Credit has also been paid to first defendant by Indian Overseas Bank on 16th October, 2009 and 17th February, 2010 pursuant to the order of this Court. Therefore, all claims in relation to five Letters of Credit stand paid. The entire amount of the price of the goods under five letter of credits thus have been received by first defendant. Even the interest and cost have also been paid off as per order of this Court.
The remaining claims made in paragraphs 52 and 53 of the claim submission of the first defendant is on account of demurrage, storage, and other ancillary port charges and terminal handling cost, import duties or charges at discharge port. No specific amount of monetary claim has been made by first defendant, because first defendant had not paid any of those aforesaid items. In fact, first defendant made only a claim for indemnity in the last sentence of paragraph 52. The first defendant has not filed any Bill of Entry for clearance of the goods nor has owned up any liability after shipment. All the Bills of Lading were handed over to Indian Overseas Bank from whom they received payment of price of goods. Even the claim of indemnity on account of the demurrage, storage etc. have fully taken care of by the order of sale of the said goods dated 30th July, 2010 passed by this Court in G.A. No.1931 of 2010.
The first defendant has not incurred any liability on account of this demurrage, port charges etc. hence its apprehension is baseless and imaginary. It is the liability of the purchaser to make all payment for clearance of the goods not the first defendant nor of the plaintiff in terms of the said order dated 30th of July 2010.
Hence it is evident that continuation of arbitration proceeding by first defendant will be vexatious, harassing and oppressive. Therefore, strong case has been made out for granting order of injunction on the aforesaid ground. According to the learned counsel in order to continue the arbitration proceeding there must be live and subsisting dispute and this proposition of law has been settled in the decision of the Supreme Court reported in 2005 (8) SCC 618, (para 32). Moreover he submits drawing my attention to the Supreme Court decision reported in 2003 (4) SCC 341 that in case of discretion being not exercised granting injunction restraining the parties from arbitration proceeding, the ends of justice would be defeated and injustice would be perpetuated. Learned counsel for the first defendant submits placing the factual aspect in the affidavit, that this Court has no jurisdiction to entertain this suit as no part of the cause of action has arisen within the territorial limit of this Court. Admittedly, the first defendant does not have any place of business within the territorial limit of this
It is also contended that the alleged ground made out in the petition, does not constitute any case for stalling the arbitration proceeding. Proceeding in arbitration would not amount to multiplicity of proceedings. The arbitration is concerned with the dispute arising out of the Contracts between the plaintiff on the one hand and the respondent No.1 on the other. In the suit, filed in the London High Court, the cause of action is against Indian Overseas Bank in respect of the Letters of Credit.
Learned counsel submits that the issues as to whether the claims under the Letters of Credit and the Contracts are arbitrable before the Arbitral Tribunal, is a question which shall be decided by the Arbitral Tribunal exclusively. The arbitration agreement between the parties specifically stipulates that the said Contracts should be governed by the Laws of England. The Arbitration Act of 1996 of
empowers the Arbitral Tribunal to rule on its own jurisdiction by and under
Section 30 of the English Arbitration Act, and Section 31 thereof expressly
authorises the respondent in the arbitration to question the lack of
substantive jurisdiction of the Arbitral Tribunal at the outset of the
proceeding which has been done. In fact, in this case plaintiff has already
submitted the jurisdiction to the learned Arbitrator who ruled against it with
regard to the jurisdiction and as such this issue cannot be raised. After
having submitted to the jurisdiction of the learned Arbitrator the
plaintiff-petitioner is estopped from asking any relief restraining any of the
parties to the arbitration agreement from proceeding with the arbitration. England
Whether the claim of the first defendant has been paid off and/or satisfied or not can also be decided by the learned Arbitrator. Learned counsel has relied on decision of the Supreme Court rendered in case of Aurohill Global Commodities Ltd. vs. Maharashtra STC Limited reported in (2007) 7 SCC 120 to contend that the Arbitrator is having power to decide all disputes. It is submitted further the plaintiff has discharged its liability to make payment by opening letters of credit to the first defendant, is incorrect and fallacious in the eye of law. This proposition has been settled by the Court of Appeal in England in case of W J Alan & Co. Ltd. vs. EL Nasr Export & Import Company reported in (1972) 2 All E R 127 that the Letters of Credit is conditional payment of the price and not absolute. It may mean that the buyer, will have to pay twice over. Thus, opening of Letters of Credit by Indian Overseas Bank cannot be said to be payment under the said Contracts to the respondent No.1 as seller of the goods.
Learned counsel for the respondent on the question of inconvenience submits that it has been settled by the Hon'ble Supreme Court in the case ofModi Entertainment Network vs. W.S.G. Cricket Pte Ltd. reported in (2003) 4 SCC 341. In this case Supreme Court has held that a party to the contract, containing jurisdiction clause, cannot normally be prevented from approaching the Court of choice of the parties as it would amount to aiding of breach of the contract, and the proceeding in that Court cannot per se be treated as vexatious or oppressive nor can the Court be said to be a forum non convenient. Relying on another Supreme Court decision in case of Man Roland vs. Multi Colour Offset Ltd., reported in (2004) 7 SCC 447, learned counsel argues that when the parties have agreed on a particular forum, the Court will enforce such agreement. This is not because of a lack or ouster of its own jurisdiction but because the Court will not be a party to a breach of agreement.
It is submitted that the respondent No.1 has got other claim also which has arisen out of the breach of Contracts for not accepting the goods. The parties to the arbitration agreement keeping their eyes open have chosen its forum and at the time of choice all situation and possibilities have been foreseen and thought of. After having agreed to choose this forum the parties cannot be allowed to resile on the ground of so-called oppression and inconvenience. It is also contended that petitioner shall not be allowed to rely on any materials which are not forming the part of the pleadings. In any view of the matter subsequent event as sought to be submitted by producing document, can be decided by the learned Arbitrator.
After careful consideration of all the submissions made on behalf of the learned counsel for the parties now it appears to us the following are admitted position:
(i) The first defendant has filed the suit in
wherein decree has been passed against the Indian Overseas Bank and thereby
obligation under five Letters of Credit have been enforced, and payment have
been received. It is however contended that the said decision has been under
(ii) The goods which were discharged at the
in terms of the
order of this Court has been sold by public auction and the third party has
taken delivery of the same. In terms of the Court's order it is the obligation
of this purchaser to clear the goods from port authority upon payment of all
the duties which include demurrage and other port charges and customs duties. port
(iii) The first defendant has also got an order attachment from
Court for securing the claim as against the
plaintiff/petitioner. (iv) The first defendant has also approached the learned
Arbitrator to raise question of jurisdiction of the learned Arbitrator having
regard to the facts and circumstances of this case and objection. Objection to
jurisdiction has been overruled by the learned Arbitrator by passing an award
which is remaining unchallenged.
In view of the aforesaid factual aspect now it has become necessary for the Court to decide the following questions in this matter:-
(i) Whether this Court has jurisdiction to decide the matter namely whether any part of the cause of action has arisen within the jurisdiction of this Court or not?
(ii) Under the law whether this Court can pass an order of injunction restraining the parties from proceeding with the arbitration or not? (iii) Whether on the subsequent facts and development it would be prudent for this Court to allow the parties to go to arbitration or not? On the question of jurisdiction I am of the prima facie view that it is a mixed question of fact and law as in the plaint and petition it has been clearly stated part of the cause of action has arisen within the territorial limit of this Court, of course, this statement and averment has been denied in the affidavit in opposition. Hence to resolve this dispute require evidence and that can be decided at the time of the trial of the suit. At present statements and averments in the plaint is the decisive factor, until issue is decided finally in the suit. It appears that no action has been taken by the first defendant for rejection of the plaint on that ground and besides another interlocutory application was made an order was passed and this plea at the interlocutory stage could have been raised but was not raised. When the Court at interlocutory stage has passed order and same having been accepted, at least for decision of the interlocutory application it cannot be said this Court has no jurisdiction. Hence the plea of jurisdiction is overruled at this stage. However, it is kept open for final decision at the time of trial.
Next contention has been raised whether this Court in view of the arbitration agreement between the parties has any jurisdiction or not. This issue has been decided by the Division Bench of this Court in G.A. No.678 of 2009, C.S. No.69 of 2009 in case of NICCO Corporation Limited vs. Prysmian Cavi e Systemi Energia s.r.l. and another. At pages 17 and 18 of the said unreported decision the Division Bench of this Court ruled as follows:- "From minute reading of the said section it emerges that if no application is made at the stage mentioned in Section 8 judicial authority including the Court may proceed with the trial of the suit and at the same time the party concerned applying for stay should also be free by necessary implication to proceed with the arbitration at his/its risk unless interdicted by the Court by anti-arbitration injunction for which there is no prohibition in the Act, and such measure taken by the Court being an equitable one. If at early stage any action is taken by the adversary under Section 8 and also under Section 45 of 1996 Act then civil Court has limited jurisdiction to examine whether disputes in the suit are referable or not. On the other hand if no step is taken by the defendants either under Section 8 or Section 45 there is no bar in the 1996 Act to proceed with, particularly when the defendant(s) submit to jurisdiction of
giving rise to abandonment of arbitration agreement. Hence Section 5 of the
1996 is to be read and applied harmoniously with Sections 8 and 45 as the case
may be. Therefore, it cannot be said that the Court has no jurisdiction as
rightly argued by Mr. Mitra, however the jurisdiction will cease, the moment
Court decides to refer the dispute to arbitration under the said Section. In
this context three Bench decision of the Supreme Court in cases of Svenska
Handels banker etc & others vs. Indian Charge Chrome Ltd & others
reported in (1994) 2 SCC 155 cited by Mr. Deb is meaningfully helpful. In
paragraphs 51 and 53 it is observed as follows:- "When parties agree to
have their disputes settled by Arbitration it does not mean that both have
bound themselves not to go to Court to have the dispute settled. At page 163 of
Russel on Arbitration, twentieth End. it is stated that a party to a contract
to refer disputes to arbitration has a perfect right to bring an action in
respect of those disputes, and the Court has jurisdiction to try such disputes.
Any provision to the contrary would be an ouster of the jurisdiction of the
"53. It may be that even after entering into an arbitration clause any party may institute legal proceedings. It is for the other party to seek stay of the suit by showing arbitration clause and satisfying the terms of the provision of law empowering the Court to stay the suit...."
This judgment of Supreme Court was rendered when the present Act was not in existence, but in Patel Engineering Case [2005 (8) SCC 618] the
Apex Court considered in this context,
the implication of the present Act. In paragraphs 19 and 25 as appropriately
pointed out by Mr. Mitra, above principle has substantially been approved.
Consequently it follows the suit is entertainable and maintainable so long the
Court does not pass order referring dispute upon examination of arbitration
agreement as discussed earlier." In this case admittedly no action has
been taken under Section 45 of the Arbitration and Conciliation Act 1996 for
stay of hearing of the suit or for referring the matter to the arbitration.
Subsequently, one of the parties viz. the first defendant referred the matter
unilaterally to the learned Arbitrator and plaintiff admittedly has gone to
learned Arbitrator to contend that the learned Arbitrator has no jurisdiction
to decide the matter on merit. On question of referability the learned
Arbitrator has viewed against the plaintiff-petitioner. As such dispute
concerning referability no longer subsists. I am of the view that though the
said award with regard to the question of jurisdiction has been passed but the
court does not cease its jurisdiction unless it decides not to proceed with the
subject matter of the controversy to arbitration or accept the said arbitral
award. As the learned Arbitrator has not decided anything on merit of the case
and the Court is yet to refer the matter under Section 45 all disputes to
arbitration, it has jurisdiction not only to proceed with hearing of the suit,
and in appropriate case the Court pass an order of anti- arbitration
injunction. It would be appropriate to set out Section 45 of the Arbitration
and Conciliation Act 1996.
"Section 45. Power of judicial authority to refer parties to arbitration.- Notwithstanding anything contained in Part I or in the Code of Civil Procedure, 1908 (5 of 1908), a judicial authority, when seized of an action in a matter in respect of which the parties have made an agreement referred to in section 44, shall, at the request of one of the parties or any person claiming through or under him, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed." It is argued that the subsequent document which was not filed in the pleading should not be looked into by the Court. I find the documents filed before me are admitted ones and correctness of the content thereof has not been denied and disputed nor the same has been challenged. Moreover, documents are mostly orders of the Court and Court can take note of the same even without any pleading.
As I notice considering submission of Mr. A.K.Mitra that the substantial claim of the first defendant has already been paid off and/or secured, prima facie there is hardly any substantial claim left, for adjudication, for the price of the goods, has been paid off, and even interest and costs arising out of price of the goods have also been paid. Other claims namely port charges and custom duties are not required to be paid by the first defendant and the same has to be paid by the third party buyer in
facts are not disputed at all. In view of the undisputed fact what relief can
be granted by this Court on these two application is the precise task. In my
view whatever left over dispute raised by the first defendant can be resolved
both by this Court and the learned Arbitrator. I think that having regard to
extent and nature of this left over dispute as raised by first defendant
adjudication thereof in the arbitration in London would undoubtedly be
harassive and excessive for the plaintiff/petitioner as far as cost factor is concerned
and on weighing balance of convenience and inconvenience. Hence order of
injunction as prayed for by the plaintiff/petitioner would have been passed.
But when the plaintiff has already gone to participate arbitration proceeding
even on limited point I think I should not pass any order of injunction
restraining the parties from participating in the arbitration proceeding for
the rest of the dispute including whether the claim has been satisfied or not.
As I have observed already having regard to area of left over dispute, it would
be extremely hardship as far as cost factor is concerned, order allowing to
participate Arbitration would not be unreserved. In case of Modi Entertainment
Network -vs.- W.S.G. Cricket PTE Ltd reported in (2003) 4 SCC 341 Supreme Court
in paragraph 27 stated on legal position "..........It cannot be laid down
as a general principle that once the parties have agreed to submit to the
jurisdiction of a foreign Court, the proceedings and the action brought either
in the Court of natural jurisdiction or in the Court of choice will per se be
oppressive or vexatious. It dependents on the facts of each case and the
question whether proceedings in a Court are vexatious or oppressive has to be
decided on the basis of the material brought before the Court............" India
While deferentially following above observation I am of the opinion when it is noticed prima facie area of dispute is much less and there is likelihood of claim of the claimant/defendant being dismissed the Court will not allow the party resisting anti arbitration injunction, to participate in arbitration proceedings without conditions even if the Court finds arbitration agreement being valid, operational mechanism between the parties, otherwise it would be oppressive or vexatious.
It appears from the statement in petition that the cost of arbitration would be around 2 lakhs per day apart from the fees of the learned Arbitrator. I direct the first defendant would be entitled to proceed with the arbitration in the event it secures before the hearing of the arbitration proceedings is started, the estimated costs @ 2 lakhs per day likely to be incurred by the plaintiff for participating in arbitration in London. Such securities shall be furnished by bank guarantee(s) in any Indian Nationalized Bank through its own banker or by itself in favour of the plaintiff/petitioner, and such bank guarantee(s) shall be kept valid upon renewal till final decision is taken by the learned Arbitrator. In the event venue of the Arbitration is shifted mutually by the parties, to any place in
above security will not be required to be furnished. It is made clear in the
event the claim of the defendant No.1 is rejected, in the Arbitration the
plaintiff will be entitled to encash the said bank guarantee(s) forthwith. If
award is passed allowing claim of the first defendant by the learned Arbitrator
the bank guarantee(s) so to be furnished shall be returned forthwith. Until the
bank guarantee is furnished or the venue of Arbitration is shifted as above,
the first defendant and/or its agents or assigns is restrained from proceeding
with the arbitration. All the disputes viz. whether there exists any live
dispute or not can be decided by the Arbitration. Obviously decision of the
Supreme Court reported in 2005 (8) SCC 618 (para 32) is of no relevance now,
nor the decision of Court of Appeal in England in case of WJ Alan & Co.
Ltd. -vs.- EL Nasr. Export & Import Company reported in (1972) 2 ALL ER 127
is of any help at this stage. Any observation of this Court on merit if any,
must be ignored. (K. J. Sengupta, J.) India
When Foreign Judgments not Conclusive.
Section 13 of Civil Procedure Code 1908,
A foreign judgment shall be conclusive as to any matter thereby directly adjudicated upon between the same parties or between parties under whom they or any of them claim litigating under the same title except-
(a) where it has not been pronounced by a Court of competent jurisdiction;
(b) where it has not been given on the merits of the case;
(c) where it appears on the face of the proceedings to be founded on an incorrect view of international law or a refusal to recognise the law of
] in cases in which such law
is applicable; India
(d) where the proceedings in which the judgment was obtained are opposed to natural justice;
(e) where it has been obtained by fraud;
(f) where it sustains a claim founded on a breach of any law in force in 1[
Anti Suit Injunction Meaning.
The Courts in India like the Courts in England are courts of both law and equity. The principles governing grant of injunction - an equitable relief - by a court will also govern grant of anti-suit injunction which is but a species of injunction. When a court restrains a party to a suit/proceeding before it from instituting or prosecuting a case in another court including a foreign court, it is called anti-suitinjunction. It is a common ground that the Courts in India have power to issue anti-suit injunctionto a party over whom it has personal jurisdiction, in an appropriate case. This is because courts of equity exercise jurisdiction in personam. However, having regard to the rule of comity, this power will be exercised sparingly because such aninjunction though directed against a person, in effect causes interference in the exercise of jurisdiction by another court
Principle of Grant of Anti Suit Injunction
The principle of comity respect for the court in which the commencement or continuance of action/proceeding is sought to be restrained must be borne in mind. (2) In a case where more forums than one are available, the court in exercise of its discretion to grant anti-suit injunction will examine as to which is the appropriate forum (forum conveniens) having regard to the convenience of the parties and may grant anti-suit injunction in regard to proceedings which are oppressive or vexatious or in a forum non-conveniens. ... (7) The burden of establishing that the forum of choice is a forum non-conveniens or the proceedings therein are oppressive or vexatious would be on the party so contending to aver and prove the same
Judgment Passed by Hon"ble High Court of Delhi.
IN THE HIGH COURT OF DELHI AT NEW DELHI
SUBJECT : DISPUTE REGARDING SUPPLY
CS (OS) No.1705 of 2002
Date of decision : 25.04.2007
M/S SWATI ALUMINIUM LTD & ORS ...PLAINTIFFS
Through: Mr.K.T.S.Tulsi, Sr. Adv with
Mr.Gaurav Bhargava, Advocate
- VERSUS -
M/S MULLINS STEERING GEARS & ORS ...DEFENDANTS
Through: Defendants have been
proceeded ex parte vide
Order dated 14.03.2007.
SANJAY KISHAN KAUL, J. (ORAL)
(1)Plaintiff no.1 is a public limited company engaged in business of supplying
steering boxes. Plaintiff no.2 is a director of plaintiff no.1 and is stated to have
represented plaintiff no.1 in the negotiations with defendants for supply of such
steering boxes. Plaintiff nos 3 & 4 are stated to the proprietor firms.
(2)The aforesaid negotiations are stated to have done on or about 20.01.1999 which
resulted in the plaintiff no.2 receiving a memorandum from one Mr. Bill Mullins of
defendant no.1/Company regarding steering boxes and blue prints along with
drawings and specifications for the steering boxes which the defendant no.1 wanted
to procure. The supply is stated to have started some time in July, 2000. The
invoices expressly state declaration of exclusive jurisdiction of Delhi Courts.
Plaintiff no.1 is also agreed to have invested $ 60,000 vide its letter dated
16.07.2001 to get the tooling of Vega Boxes ready but subject to the condition of
defendant no.1 procuring at least 150 boxes per month for the next five years.
(3)The dispute started between the parties on 24.04.2002 almost a year after supply
on account of the allegation of defendant no.1 that there were problems with the
consignments received. Defendant no.1 even initiated recall proceedings before the
National Highway Traffic and Safety Administration categorizing the consignment
as hazardous for use in USA. Thereafter the defendants on 09.08.2002 are stated to
have approached the District Courts in Arizona for grant of injunction in favour of
the said defendants against the plaintiffs to prevent the continued distribution of the
product being supplied by the plaintiffs as also for damages.
(4)The plaintiffs have thus filed the present suit in the nature of anti suit injunction in
view of the exclusive jurisdiction conferred on the Delhi Courts by reason of
agreement between the parties. Summons in the suit and notice in the application
were issued by the Court but no interim injunction orders were granted in favour of
the plaintiffs. This resulted in the plaintiffs filing an appeal before the Division
Bench which granted such an interim order on 18.11.2002 and confirmed the same
on 19.08.2003 in FAO (OS) No.382/2002. Defendants herein did not put in
appearance before the Division Bench. In the present suit also, the defendants have
also not put in appearance and have been proceeded ex parte.
(5)The plaintiffs have filed the affidavits of evidence of Mr. Vivek Lakhotia, plaintiff
no.2 who has proved the relevant resolutions authorizing institution of the suit on
behalf of plaintiff nos 1, 3 & 4 as ExPW1/A, ExPW1/B & ExPW1/C respectively.
The memorandum dated 20.01.1999 has been proved as ExPW1/D and the copy of
the initial invoice dated 11.07.2000 has been proved as ExPW1/E. Another set of
invoices has been proved as ExPW1/H. The affidavit affirms to what has been set
out in the plaint and it is not necessary to get into greater detailed discussion in this
behalf since the matter only relates to an anti suit injunction. The initial invoice
dated 11.07.2000 and other invoices contained the following declaration:
“We declare that this invoice shows the actual price of the goods described and that
all particulars are true and correct. All dealings are subject to Delhi Jurisdiction.”
(6)A reading of the afore-declaration shows that the parties have agreed to confer
exclusive jurisdiction on the Delhi Courts. It is trite to say that the parties are not
precluded from conferring exclusive jurisdiction on any Court which would be one of
the Courts having territorial jurisdiction to try and determine the suit. The bar
comes into play only on conferring the jurisdiction on a Court which has no
jurisdiction in respect of the subject matter. The exception to this is where parties
agree to confer jurisdiction on a foreign court in a neutral territory.
(7)Learned senior counsel for the plaintiff contends that the anti suit injunction
prayed for in the present suit is liable to be granted by this Court in view of the Delhi
Courts certainly being one of the Courts having jurisdiction, the plaintiffs being
based and the goods being supplied from Delhi. Thus the Delhi Courts alone would
have the jurisdiction in the matter.
(8)Learned counsel for the plaintiff has relied upon the judgment of the Modi
Entertainment Network v. WSG Cricket Pte. Ltd; (2003) 4 SCC 341 dealing with the
ambit and scope of an anti suit injunction to restrain proceedings in a foreign court.
It has been observed that Courts in India are both Courts of law and equity and the
principles governing grant of injunction – an equitable relief – by a Court will also
govern grant of anti suit injunction which is but a species of injunction. It has further
been observed that Courts in India have power to issue anti suit injunction to a party
over whom it has personal jurisdiction, in an appropriate case though the power
ought to be exercised sparingly. The relevant principles have been extracted in Para
24 as under:
“ From the above discussion the following principles emerge:
1) In exercising discretion to grant an anti suit injunction the Court must be satisfied
of the following aspects:
a) The defendant, against whom injunction is sought, is amenable to the personal
jurisdiction of the Court;
b) if the injunction is declined, the ends of justice will be defeated and injustice will
be perpetrated; and
c) the principle of comity – respect for the court in which the commencement or
continuance of action/proceeding is sought to be restrained – must be borne in mind.
2)In a case where more forums than one are available, the Court in exercise of its
discretion to grant anti-suit injunction will examine as to which is the appropriate
forum (forum conveniens) having regard to the convenience of the parties and may
grant anti suit injunction in regard to proceedings which are oppressive or vexatious
or in a forum non conveniens.
3)Where jurisdiction of a court is invoked on the basis of jurisdiction clause in a
contract, the recitals therein in regard to exclusive or non exclusive jurisdiction of
the court of choice of the parties are not determinative but are relevant factors and
when a question arises as to the nature of jurisdiction agreed to between the parties
the court has to decide the same on a true interpretation of the contract on the facts
and in the circumstances of each case.
4)A court of natural jurisdiction will not normally grant anti suit injunction against a
defendant before where parties have agreed to submit to the exclusive jurisdiction of
a court including a foreign court, a forum of their choice in regard to the
commencement or continuance of proceedings in the court of choice save in an
exceptional case for good and sufficient reasons, with a view to prevent injustice in
circumstances such as which permit a contracting part to be relieved of the burden of
the contract; or since the date of the contract the circumstances or subsequent events
have made it impossible for the party seeking injunction to prosecute the case in the
court of choice because the essence of the jurisdiction of the court does not exist or
because of a vis major or force majeure and the like.
5) Where parties have agreed, under a non exclusive jurisdiction clause, to approach
a neutral foreign forum and be governed by the law applicable to it for the resolution
of heir disputes arising under the contract, ordinarily no anti suit injunction will be
granted in regard to proceedings in such a forum conveniens and favoured forum as it
shall be presumed that the parties have thought over their convenience and all other
relevant factors before submitting to the non exclusive jurisdiction of the court of
their choice which cannot be treated just as an alternative forum.
6)A party to the contract containing jurisdiction clause cannot normally be prevented
from approaching the court of choice of the parties as it would amount to aiding
breach of the contract; yet when one of the parties to the jurisdiction clause
approaches the court of choice in which exclusive or non exclusive jurisdiction is
crated, the proceedings in that court cannot per se be treated as vexatious or
oppressive nor can the court be said to be forum non conveniens.
7)The burden of establishing that the forum of choice is a forum non conveniens or
the proceeding therein are oppressive or vexatious would be on the party so
contending to aver and prove the same. “
(9)A perusal of the aforesaid principles shows that while examining the question of
grant of anti suit injunction, the aspect of forum conveniens would have to be
considered. However, where jurisdiction of a court is invoked on the basis of a
jurisdiction clause in a contract, anti suit injunction would not normally be granted
to restrain proceedings before said exclusive jurisdiction of a Court including of a
(10)In the present case, if this principle is applied then it would equally mean that if
the courts in India have been granted exclusively jurisdiction in the matter, especially
where the Court is at least one such court of a competent jurisdiction, then an anti
suit injunction must necessarily follow. The exception to this would be where the
other party is still able to establish that the forum of choice is not forum conveniens,
the proceedings are oppressive and vexatious, but on the condition that the parties so
contending would have to prove the same. This would have required in the present
case the defendants to appear and establish such a plea. The defendants have,
however, chosen to absent themselves.
(11)In view of the aforesaid, a decree for permanent injunction is passed in favour of
the plaintiffs and against the defendants restraining the defendants from initiating or
continuing any legal proceedings against the plaintiffs in the courts of United Status
of America in respect of the business transaction and goods delivered in pursuance to
the invoices proved in the present suit.
(12)Plaintiffs shall also be entitled to costs.
(13)The decree sheet be drawn up accordingly.
SANJAY KISHAN KAUL, J.
Saturday, 20 October 2012
Suit Under Specific Relief Act,1963
Section 34 of Specific Relef Act
. Discretion of court as to declaration of status or right
Any person entitled to any legal character, or to any right as to any property, may institute a suit against any person denying, or interested to deny, his title to such character or right, and the court may in its discretion make therein a declaration that he is so entitled, and the plaintiff need not in such suit ask for any further relief:
PROVIDED that no court shall make any such declaration where the plaintiff, being able to seek further relief than a mere declaration of title, omits to do so.
Explanation: A trustee of property is a "person interested to deny "a title adverse to the title of someone who is not in existence, and for whom, if in existence, he would be a trustee
Legal Notice in Civil Cases against Govt. is Necessary.
Section 80 of Civil Procedure Code,1908.
Section 80 of Civil Procedure Code,1908.
Legal Notice in Civil Cases against Govt.
[(1)] 2[Save as otherwise provided in sub-section (2), no suits 3[shall be instituted] against the Government (including the Government of the State of Jammu & Kashmir)] or against a public officer in respect of any act purporting to be done by such officer in his official capacity, until the expiration of two months next after notice in writing has been 4[delivered to, or left at the office of]-
(a) in the case of a suit against the Central Government, 5[except where it relates to a railway], a Secretary to that Government;
6[7[(b)] in the case of a suit against the Central Government where it relates to railway, the General Manager of that railway];
8[(bb) in the case of a suit against the Government of the State of Jammu and Kashmir the Chief Secretary to that Government or any other officer authorised by that Government in this behalf;]
(c) in the case of a suit against 9[any other State Government], a Secretary to that Government or the Collector of the district; 10[***]
and, in the case of a public officer, delivered to him or left at this office, stating the cause of action, the name, description and place of residence of the plaintiff and the relief which he claims; and the plaint shall contain a statement that such notice has been so delivered or left.
12[(2) A suit to obtain an urgent or immediate relief against the Government (including the Government of the State of Jammu & Kashmir) or any public officer in respect of any act purporting to be done by such public officer in his official capacity, may be instituted, with the leave of the Court, without serving any notice as required by sub-section (1); but the Court shall not grant relief in the suit, whether interim or otherwise, except after giving to the Government or public officer, as the case may be, a reasonable opportunity of showing cause in respect of the relief prayed for in the suit:
Provided that the Court shall, if it is satisfied, after hearing the parties, that no urgent or immediate relief need be granted in the suit, return the plaint for presentation to it after complying with the requirements of sub-section (1).
(3) No suit instituted against the Government or against a public officer in respect of any act purporting to be done by such public officer in his official capacity shall be dismissed merely by reason of any error or defect in the notice referred to in sub-section (1), if in such notice-
(a) the name, description and the residence of the plaintiff had been so given as to enable the appropriate authority or the public officer to identify the person serving the notice and such notice had been delivered or left at the office of the appropriate authority specified in sub-section (1), and
(b) the cause of action and the relief claimed by the plaintiff had been substantially indicated.
Section 39 of Civil procedure Code,1908.
Transfer of Decree :
(1) The Court which passed a decree may, on the application of the decree-holder, send it for execution to another Court 1[of competent jurisdiction],-
(a) if the person against whom the decree is passed actually and voluntarily resides or carries on business, or personally works for gain, within the local limits of the jurisdiction of such other Court, or
(b) if such person has not property within the local limits of the jurisdiction of the Court which passed the decree sufficient to satisfy such decree and has property within the local limits of the jurisdiction of such other Court, or
(c) if the decree directs the sale or delivery of immovable property situate outside the local limits of the jurisdiction of the Court which passed it, or
(d) if the Court which passed the decree considers for any other reason, which it shall record in writing, that the decree should be executed by such other Court.
(2) The Court which passed the decree may of its own motion send it for execution to any subordinate Court of competent jurisdiction.
1[(3) For the purposes of this section, a Court shall be deemed to be a Court of competent jurisdiction if, at the time of making the application for the transfer of decree to it, such Court would have jurisdiction to try the suit in which such decree was passed.]
2[(4) Nothing in this section shall be deemed to authorise the Court which passed a decree to execute such decree against any person or property outside the local limits of its jurisdiction.]
Section 40 of Cpc,
Transfer of Decree to Court in another State.
Where a decree is sent for execution in another State, it shall be sent to such Court and executed in such manner as may be prescribed by rules in force in that State
Procedure of Service of Foreign Summons in Civil cases in India.
Section 29 of Civil Procedure Code,1908,
Service of foreign summonses.
Summons and other processes issued by-
(a) any Civil or Revenue Court established in any part of India to which the provisions of this Code do not extent, or
(b) any Civil or Revenue Court established or continued by the authority of the Central Government outside India, or
(c) any other Civil or Revenue Court outside India to which the Central Government has, by notification in the Official Gazette, declared the provisions of this section to apply *†,,
may be sent to the Courts in the territories to which this Code extends, and served as if they were summonses issued by such Courts.]
Section 11 of Civil Procedure Code,1908,
No Court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a Court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such Court.
Explanation I- The expression "former suit" shall denote a suit which has been decided prior to the suit in question whether or not it was instituted prior thereto.
Stay of Suit in India
Section 10 of Civil Procedure Code,1908,
Stay of Suit.
No Court shall proceed with the trial of any suit in which the matter in issue is also directly and substantially in issue in a previously instituted suit between the same parties, or between parties under whom they or any of them claim litigating under the same title where such suit is pending in the same or any other Court in [India] having jurisdiction to grant the relief claimed, or in any Court beyond the limits of [India] established or continued by [the Central Government] [***] and having like jurisdiction, or before [the Supreme Court].
Explanation- The pendency of a suit in a foreign Court does not preclude the Courts in [India] from trying a suit founded on the same cause of action.
Jurisdiction for Instituted a Suit in India.
Suit to be Instituted where defendants reside or cause of action arise.
Section 20 of Civil procedure Code,1908,
Subject to the limitations aforesaid, every suit shall be instituted in Court within the local limits of whose jurisdiction-
(a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or
(b) any of the defendants, where there are more than one, at the time of the commencement of the suit actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or
(c) the cause of action, wholly or in part, arises.
Issues in Civil Cases in India
ORDER XIV of Civil Procedure Code 1908,
SETTLEMENT OF ISSUES AND DETERMINATION OF SUIT ON ISSUES .
1. Framing of issues
(1) Issues arise when a material proposition of fact or law is affirmed by the one party and denied by the other.
(2) Material propositions are those propositions of law or fact which a plaintiff must allege in order to show a right to sue or a defendant must allege in order to constitute his defence.
(3) Each material proposition affirmed by one party denied by the other shall form the subject of distinct issue.
(4) Issues are of two kinds :
(a) issues of fact,
(b) issues of law.
(5) At the first hearing of the suit the Court shall, after reading the plaint and the written statements, if any, and 1[after examination under rule 2 of Order X and after hearing the parties or their pleaders], ascertain upon what material propositions of fact or of law the parties are at variance, and shall thereupon proceed to frame and record the issues on which the right decision of the case appears to depend.
(6) Nothing in this rule requires the Court to frame and record issues where the defendant at the first hearing of the suit makes no defence.
1. Subs, by Act No. 104 of 1976 for certain words (w.e.f. 1-2-1977)
1[2. Court to pronounce judgment on all issues
(1) Notwithstanding that a case may be disposed of on preliminary issue, the Court shall, subject to the provisions of sub-rule (2), pronounce judgment on all issues.
(2) Where issues both of law and of fact arise in the same suit, and the Court is of opinion that the case or any part thereof may be disposed of on an issue of law only, it may try that issue first if that issue relates to-
(a) the jurisdiction of the Court, or
(b) a bar to the suit created by any law for the time being in force, and for that purpose may, if it thinks fit, postpone the settlement of the other issues until after that issue has been determined, and may deal with the suit in accordance with the decision on that issue.]
1. Subs, by Act No. 104 of 1976, for rule 2 (w.e.f. 1-2-1977).
3. Materials from which issues may be framed
The Court may frame the issues from all or any of the following materials :-
(a) allegations made on oath by the parties, or by any persons present on their behalf, or made by the pleaders of such parties;
(b) allegations made in the pleadings or in answers to interrogatories delivered in the suit;
(c) the contents of documents by either party.
4. Court may examine witnesses or documents before framing issues
Where the Court is of opinion that the issues cannot be correctly framed without the examination of some person not before the Court or without the inspection of some document not produced in the suit, it 1[may adjourn the framing of the issues to a day not later than seven days], and may (subject to any law for the time being in force) compel the attendance of any person or the production of any document by the person in whose possession or power it is by summons or other process.
1. Subs, by Act No. 46 of 1999 section 24 (w.e.f. 1-7-2002) for certain words.
1[5. Power to amend, and strike out, issues.
(1) The Court may at any time before passing a decree amend the issues or frame additional issues on such terms as it thinks fit, and all such amendments or additional issues as may be necessary for determining the matters in controversy between the parties shall be so made or framed.
(2) The Court may also, at any time before passing a decree, strike out any issues that appear to it to be wrongly framed or introduced.]
1. Rule 5 which was omitted by Act No. 46 of 1999, section 24 have now been substituted for the original Rule by Act No. 22 of 2002, section 11 (w.e.f. 1-7-2002).
6. Questions of fact or law may by agreement be stated in form of issues-
Where the parties to a suit are agreed as to the question of fact or of law to be decided between them, they may state the same in the form of an issue, and enter into an agreement in writing that upon the finding of the Court in the affirmative or the negative of such issue,-
(a) a sum of money specified in the agreement or to be ascertained by the Court, or in such manner as the Court may direct, shall be paid by one of the parties to the other of them, or that one of them be declared entitled to some right or subject some liability specified in the agreement;
(b) some property specified in the agreement and in dispute in the suit shall be delivered by one of the parties to the other of them, or as that other may direct; or
(c) one or more of the parties shall do or abstain from doing some particular act specified in the agreement and relating to the matter in dispute.
7. Court, if satisfied that agreement was executed in good faith, may pronounce judgment
Where the Court is satisfied, after making such inquiry as it deems proper,-
(a) that the agreement was duly executed by the parties;
(b) that they have a substantial interest in the decision of such question as aforesaid, and
(c) that the same is fit to be tried and decided,
it shall proceed to record and try the issue and state its finding or decision thereon in the same manner as if the issue had been framed by the Court, and shall, upon the finding or decision on such issue, pronounce judgment according to the terms of the agreement, and, upon the judgment so pronounced a decree shall follow.