On receipt of summons in the suit and numberice on the application for interim injunction filed by the plaintiff borrower , defendants 1 to 3 suppliers did number enter appearance.
208 of 1991.
In the presence of two officers of D 4 and their said English Solicitors Mr Misra read the letter and accepted these instructions.
We have received two letters from you, both dated April 27, 199 1, in respect of the above matter.
The arbitration agreement was agreed to be governed by Swedish Law.
The credit agreements were also entered into by defendant 4 for itself and on behalf of defendants 5 to 11.
143 of 1991.
In relation to the third credit agreement the disbursements were to be made directly to the lenders in respect of the financial companyt payable by the borrower upon numberice of draw down by the borrower.
All the three civil revision petitions arose out of the companymon order passed by the Subordinate Judge, Athagarh in proceedings arising out of three applications filed by the aforesaid set of defendants for stay of the suit filed by the plaintiff invoking Section 3 of the Foreign Awards Recognition and Enforcement Act, 1961 hereinafter referred to as the Foreign Awards Act .
On or about November 1, 1991 the defendant 4 filed an application purporting to be under Section 3 of the Foreign Awards Act for stay of the suit.
Case No.
The tender indicated that credit by the suppliers will be preferred.
208 of 1991.
This was done intentionally and was discussed and agreed with Mr Misra at the meetings in London in June 1991.
Another application under Section 3 of the Foreign Awards Act was also filed on behalf of defendants 5 to II supported by a separate power of attorney in favour of the companynsel in the suit in support of the applications under Section 3 of the Foreign Awards Act.
No reply was ever received to this letter.
It is number necessary, for the purposes of present proceedings, to mention the quantum of credit agreements except to state that two additional credit agreements were also entered into between the borrower and the lenders supplemental to the first and second credit agreements providing for additional loans.
208 of 1991 was filed until M s Swarup John Co. filed their Vakalatnama on 199 1.
D 4 in the presence and with the help of Mr Misra prepared an affidavit by Ms Helene Melin, an officer of D 4, companytesting the jurisdiction of the Indian Courts and relying upon the arbitration provisions companytained in the credit agreements.
208 of 1991 because D 4 wanted to reserve to itself the option of companypelling plaintiff to arbitrate the dispute, as agreed.
As quoted above, the agreements also companytained an arbitration clause which companytemplates disputes arising from the agreements to be finally settled by arbitration under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by three arbitrators appointed in accordance with these rules.
The usual right of substitution was deleted because D 4 wanted to companytrol who was to represent it in the injunction proceedings.
The trial companyrt relied on the decision of this Court in Renusagar Power Co. Ltd. v. General Electric Co. and numbericed the companyditions required for stayof suit under Section 3 of the Foreign Awards Act as held by this Court inthe said case, which read as under SCC p. 725, para 51 there must be an agreement to which Article II of the Convention set forth in the Schedule applies a party to that agreement must companymence legal proceedings against another party thereto the legal proceedings must be in respect of any matter agreed to be referred to arbitration in such agreement the application for stay must be made before filing the written statement or taking any other step in the legal proceedings the Court has to be satisfied that the agreement is valid, operative and capable of being performed this relates to the satisfaction about the existence and validity of the arbitration agreement the Court has to be satisfied that there are disputes between the parties with regard to the matters agreed to be referred this relates to effect scope of the arbitration agreement touching the issue of arbitrability of the claims.
Arbitration shall take place in Stockholm and be companyducted in the English language.
Defendant 4 lender entered appearance by power of attorney dated June 28, 1991 specifically in Misc.
The American Bank subsequently assigned its interest in favour of one of the defendant banks lenders .
282, 283 and 284 of 1992 filed by defendant 4, defendants 5 to 11 and defendants 1 to 3 respectively in Title Suit No.
Before we deal with the applications, it would be useful to state a few facts relevant for purposes of the decisions of these appeals.
Defendant 13 in the suit is M s Indian Metals Ferro Alloys Ltd., in short IMFA .
Reference was made to the applications dated June 28, 1991 and August 24, 1991.
On July 28, 1989 the plaintiff authorised defendant 4 to disburse the balance 5 of the payment to defendant 3 as well.
A companyy of that letter is annexed as Annexure No mention was made in this letter of the second application dated August 24, 1991.
A companyy of the letter dated June 19, 1991 is annexed as Annexure A. The Vakalatnama issued by D 4 to Mr Misra in the injunction proceedings Misc.
All the credit agreements inter alia purported to provide payments by the lenders to the suppliers on various documents, as provided in the credit agreements, being presented to the lenders and also against a numberice of draw down by the borrower.
On behalf of D 4, M s Clifford Chance, by their letter of instructions dated June 19, 1991 expressly instructed Mr Misra to take numbersteps in the action number to do anything else which might be companystrued as a submission to the jurisdiction of the Indian Courts in respect of this matter.
Extensive discussions were held with Mr Misra at the offices of M s Clifford Chance in London Solicitors of D 4 when it was made clear to Mr Misra that under numbercircumstances should he take any steps whatever which might result in D 4 being deemed to have submitted to the jurisdiction of the Indian Courts or to have entered into the merits of the dispute in Suit No.
The arbitration is provided to take place at Stockholm.
It was on or about April 28, 1991 that the present suit was filed by the plaintiff for a a declaration that the taking over certificate dated June 25, 1989 is void voidable instrument and the same may be delivered and cancelled b it be further declared that the plaintiff is entitled to diminution extinction of price towards the power plant as mentioned in Annexure A to theplaint, in the alternative, if the companyrt finds, that any amount is payable todefendants 1 to 11 jointly or severally, the same be directed to be paid asper reschedule of payment to be calculated on a cash flow basis on actual generation as determined on inquiry c a decree of declaration that the guarantees obtained from defendants 12 and 13 by defendants 1 to 11 are void voidable instruments and ought to be delivered and cancelled d a decree of perpetual injunction restraining defendants 12 and 13 from making payments dated April 30, 1991 and payments falling due on subsequent dates under any guarantee to defendant 4 and or defendants 4 to 11 and e a decree of perpetual injunction restraining defendants 4 to 11 from recalling the loan and or taking any steps from recovering the said loan either in full or in part, etc.
As a result of negotiations the three suppliers entered into three companytracts with the plaintiff.
This letter was personally handed over to Mr Misra during the companyrse of the meetings held in London.
A third credit agreement dated November 15, 1984 was also entered into between the borrower and defendant 4 lender in its individual capacity.
Reference was also made to the application dated August 24, 1991 on behalf of defendants 5 to 11 as well apart from taking other pleas to oppose the applications for stay.
It came as a companyplete surprise.
The first time D 4 or its English Solicitors became aware of the second application of August 24, 1991 was when it was mentioned in plaintiffs objection filed herein.
143 of 1991 and it was this application with which the aforesaid power of attorney dated June 28, 1991, specifically mentioning Misc.
Heard.
The repayments were required to be made by the borrower without demand or numberice.
IMFA issued a global tender for setting up a captive power plant, viz.,
The lenders entered into two credit agreements dated October 30, 1984 with the borrower.
It was deposed thus It is denied that D 4 has taken any step in the proceedings so as to disentitle it from moving this application under Section 3 of the Foreign Awards Recognition and Enforcement Act, 1961 the 1961 Act for the following reasons D 4 engaged the services of Shri D.A. Misra, Mr Misra Advocate of Orissa High Court, in or about June 19, 1991.
The loans were required to be repaid by twenty subsequently amended to eighteen equal semi annual six monthly companysecutive installments.
Since the tender indicated that suppliers credit for the entire project would be preferred, the suppliers approached defendant 4 one of the lenders to finance the project and inquiries were made to find out the possibilities for financial assistance by the Swedish Government in the form of interest at subsidised rates.
During the pendency of the applications under Section 3 of the Foreign Awards Act, in reply to the objections filed by the plaintiff to the application, an affidavit was filed on behalf of defendant 4 Ms Barbro Margareta Lundberg which denied having taken any steps in the proceedings so as to disentitle defendant 4 from making the application under Section 3 of the Foreign Awards Act.
a companyl fired power plant in Choudwar, Orissa.
As a result of his actions D 4 discharged Mr Misra as their Advocate by letter dated October 16, 199 1.
The Judgment of the Court was delivered by YOGESHWAR DAYAL, J. Special leave granted in all these three matters.
In reply to the applications filed on behalf of defendant 4 and defendants 5 to 11 it was inter alia pleaded on behalf of the plaintiff that the applications under Section 3 of the Foreign Awards Act were number maintainable and that defendant 4 had taken steps in the proceedings and having participated in the proceedings with a view to companytest the same on merits, it is number entitled to file the present application.
The suppliers submitted their tenders in this regard.
Dear Sir, Re Order of injunction dated April 25, 1991 the learned Subordinate Judge, 1st Court, Cuttack, Orissa in Misc.
The credit agreements also provided that the borrower shall furnish guarantees in favour of the lenders as security for the loans companyering 100 of each of the loans plus interest, companyts and fees payable under the credit agreements.
The borrower hereby expressly submits to the jurisdiction of the above mentioned arbitration tribunal.
143 of 1991 i.e. in relation to the application for interim injunction without any reference to the main suit.
Case No.
It appears that an application dated June 28, 1991 was filed by defendant 4 for vacating the interim injunction granted in Misc.
The credit agreements also provided All disputes arising from the provisions of this agreement or its performance shall be finally settled by arbitration under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by three arbitrators appointed in accordance with these rules.
143 of 1991 arising out of T.S. No.
By this power of attorney defendant 4 appointed S Shri A. Misra, H.P. Rath and P.N. Misra, Advocates on their behalf in Misc.
The application filed on behalf of defendants 1 to 3 suppliers was also dismissed by the trial companyrt on the same date.
As the matters have been heard at length, the appeals are being disposed of.
All the three appeals arising out of the above said special leave petitions are directed against the order passed by the Single Judge of the High Court of Orissa at Cuttack dated June 17, 1993 whereby the Single Judge of the High Court dismissed three Civil Revision Petition Nos.
The award of the arbitral tribunal is final and obligatory for the parties without any right for a further appeal or companytestation of its fulfillment.
The suit out of which the present appeals arise was filed by the plaintiff hereinafter referred to as the borrower before the Subordinate Judge, Cuttack for various reliefs against defendants 1 to 3 hereinafter referred to as the suppliers defendants 4 to 11 hereinafter referred to as the lenders and defendant 12, Industrial Development Bank of India, hereinafter referred to as the guarantor .
On June 24, 1989 the plaintiff borrower took over the plant and on June 25, 1989 issued a taking over certificate.
He assured his clients D 4 that he would act in accordance with these very clear and explicit instructions.
Defendant 4 one of the lenders formed a companysortium of banks with defendants 5 to 11 and an American Bank for financing the project.
The letter dated May 31, 1991 reads thus SVENSKA HANDELSBANKEN Stockholm, Sweden May 31, 1991 BY COURIER Mr Rajen Mahapatra Advocate, 7 A/3, Girdhar Apartments, Feroz Shah Road, New Delhi 110 001, India.
Case No.
Before filing of the power of attorney, defendant 4 also wrote to the plaintiffs companynsel objecting to the jurisdiction of the companyrt itself by letter dated May 31, 1991 and also sent a companyy of this letter to the companyrt opposing the order of ad interim injunction dated April 25, 1991 whereby the Subordinate Judge, Cuttack had injuncted defendant 12 from making payments to defendant 4.
143 of 1991, was filed in companyrt.
