Petitioner companypany is based in Cyprus having its offices in Russia and India.
M s Sunvijay Rolling and Engineering Ltd. requested the petitioner vide letter dated 23.5.2005 to decrease the price by US 50 PMT.
The last date of shipment was 15.5.2005.
According to the petitioner herein, there was numbersuch requirement in the alleged companytract dated 24.3.2005.
Subsequently, M s Sunvijay Rolling and Engineering Ltd. informed the petitioner that they prefer to buy the Billets through M s M.S.T.C. Ltd. respondent herein .
According to M s M.S.T.C. Ltd. the Draft Purchase Order cannot be vested with the trapping of a binding or companyclusive companytract and, therefore, the said Order did number companystitute an arbitration agreement.
The date of shipment was 15.5.2005 and payment was to be made through irrevocable LC to be opened by First Class Indian Bank.
The said receipt was presented to the bank along with the documents.
Clauses 19 and 20 of the Purchase Order read as under ARBITRATION Any disputes, companytroversies and or claims arising out of or relating to this agreement or any modification thereto, or any alleged breach or cancellation thereof, which cannot be settled amicably between Seller and buyer, shall be settled by arbitration in London, and in accordance with rules of arbitration of the Great Britain arbitration and the award in pursuance thereof shall be binding on the parties.
One of the companytentions raised on behalf of the petitioner herein is that vide letter dated 19.9.2006 M s M.S.T.C. Ltd. had waived its option to be governed by the Rules of Arbitration of Great Britain as mentioned in clause 19, quoted above.
On 26.5.2005 the bankers of M s M.S.T.C. Ltd. stated that the LC was inoperative as certain companyditions were number satisfied, namely, number execution of the performance guarantee.
However on 13.5.2005 M s Sunvijay Rolling and Engineering Ltd. addressed a letter to the petitioner to suspend all the dispatches on the LC opened by M s M.S.T.C. Ltd. On the same day, the petitioner informed M s Sunvijay Rolling and Engineering Ltd. that it was number possible to suspend the dispatches as the goods were already placed at the port.
However, without prejudice to the aforestated companytentions, M s M.S.T.C. Ltd., in its reply, stated that if the petitioner insisted on arbitration then it had numberoption but to companycur in principle to be guided by the said Act for the purpose of procedural law as well as the substantive law, namely, the Indian Contract Act.
Petitioners banker was M s BNP.
M s S.T.C. Ltd. further companytended that there was numberconcluded companytract, much less an agreement to arbitration.
On 29.3.2005 M s M.S.T.C. Ltd. requested M s Indian Overseas Bank, Kolkata for opening of an irrevocable LC.
They companytended that the Purchase Order was a draft and that it never became a binding companytract since the companyditions preceding did number materialize.
The LC was payable against presentation of FCR a receipt of companyfirmation of goods at the port of loading.
On 24.3.2005 a Draft Purchase Order dated 24.3.2005 was issued by M s S.T.C. Ltd. which was accepted by the petitioner.
According to M s M.S.T.C. Ltd. the Draft Purchase Order on which the petitioner has made its claim was a provisional one and never matured in terms of a binding or companyclusive companytract and since there was numbercontract there was numberarbitration agreement and, therefore, the present petition was misconceived and inappropriate.
The goods arrived at the port in Ukraine and a FCR was issued to this effect.
Payment was to be made through irrevocable companyfirmed letter of credit LC payable 100 at sight.
In response to the said Notice, M s M.S.T.C. stated vide reply dated 19.9.2006 that the alleged companytract was number est and that the above Purchase Order did number companystitute a valid and binding companytract between parties.
The LC was to be made operative only after receipt of credential report from Dan Bradstreet.
By the said Notice, the petitioner stated that it was aggreable to be governed by Arbitration and Conciliation Act, 1996 for the purposes of procedural law as the substantive law applicable was the Indian Contract Act.
The facts giving rise to this petition briefly are as follows.
The petitioner was further informed that the LC would remain suspended till the petitioner agrees to decrease in the price.
Accordingly, on 10.3.2005 petitioner forwarded proforma invoice to the said Sunvijay Rolling and Engineering Ltd. for the required quantity of Billets for a total companysideration of US 22,25,000.
It is the case of the petitioner that the said purchase order was issued as a result of negotiations between the petitioner and M s M.S.T.C. Ltd According to the petitioner, this companystituted a companytract between the parties at Kolkata.
By way of companynter, M s M.S.T.C. Ltd. submitted that the arbitration petition was number maintainable as it was based on an alleged companytract, which, in any event, was number est as it did number companystitute and as it did number acquire the character of a valid and binding companytract between the parties.
On 20.4.2005 the petitioners banker companyfirmed the LC.
KAPADIA, J. M s Aurohill Global Commodities Ltd. has filed an arbitration application herein under Section 11 9 read with Section 11 5 of the Arbitration and Conciliation Act, 1996 the said Act for the appointment of arbitrators to settle the dispute between the said companypany and M s S.T.C. Ltd. PSU .
Accordingly, M s Indian Overseas Bank informed the petitioners bankers that LC has been opened on the request of M s M.S.T.C. Ltd. and that the petitioner was the beneficiary under the LC.
The petitioner refused to reduce the price.
The LC was to operate only after receiving companyfirmation from the Opening Bank.
On 23.8.2006 a legal Notice was given by the petitioner requesting M s S.T.C. Ltd. to settle the dispute through arbitration before a sole arbitrator.
Ultimately, on 31.5.2005 M s M.S.T.C. Ltd. informed the petitioner that the LC stood cancelled.
Vide letter dated 2.3.2005, M s Sunvijay Rolling and Engineering Ltd., Nagpur placed an order on the petitioner for supply of 5000 MT of Billets.
Petitioner has been exporting steel products for more than a decade.
The date of expiry of the LC was 5.6.2005.
