{"id":234310,"date":"2005-04-26T00:00:00","date_gmt":"2005-04-25T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/ms-gea-energy-system-india-ltd-vs-litostroj-e-i-on-26-april-2005"},"modified":"2014-05-12T22:27:44","modified_gmt":"2014-05-12T16:57:44","slug":"ms-gea-energy-system-india-ltd-vs-litostroj-e-i-on-26-april-2005","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/ms-gea-energy-system-india-ltd-vs-litostroj-e-i-on-26-april-2005","title":{"rendered":"M\/S. Gea Energy System (India) Ltd vs Litostroj E.I on 26 April, 2005"},"content":{"rendered":"
Madras High Court<\/div>\n
M\/S. Gea Energy System (India) Ltd vs Litostroj E.I on 26 April, 2005<\/div>\n
       \n\n  \n\n  \n\n \n \n In the High Court of Judicature at Madras\n\nDated: 26\/04\/2005 \n\nCoram \n\nThe Hon'ble Mr. Justice P. Sathasivam\nand \nThe Hon'ble Mr. Justice S.K. Krishnan\n\nO.S. Appeal No.70 of 2005 \nAnd \nCMP.No.6454 of 2005  \n\nM\/s. GEA Energy System (India) Ltd., \n443, Anna Salai\nTeynampet, Chennai 600 018.                             .. Appellant\n\n-Vs-\n\n1.LITOSTROJ E.I., \n  Litostrojska 40\n  Sl-1001 Ljubljana, P.O.308\n  Slovenija\n  Rep. By Mr. V. Subramanian \n  Branch Office<\/a> at 4\/1 Karunanidhi Street\n  Mettupalayam, Chennai 600 033. \n\n2.Canara Bank \n  Mount Road Branch, Royala Towers,  \n  Anna Salai, Chennai 600 002.\n\n3.Tamil Nadu Electricity Board\n  Head Quarters Office, N.P.K.R.R. Maligai\n  144, Anna Salai, Mount Road \n  Chennai 600 002.\n  (R.2 and R.3 are given up)                            .. Respondents\n\n\n                Original Side Appeal preferred under Order  XXXVI  Rule  2  of\nOriginal  Side  Rules  against  the  order  dated  11.03.2005 made in Original\nApplication No.931 of 2004 in C.S.No.904 of 2004, on the file of this Court.\n\n!For appellant  :  Mr.  R.  Muthukumarasamy,Sr.Counsel\n                For Mr.  G.  Sundaram\n\n^For respondents :  Mr.  Arvind P.  Datar, Sr.  Counsel\n                For Mr.  Karthikeyan for R.1\n\n:JUDGMENT   \n<\/pre>\n
(Judgment of the Court was delivered by P.  Sathasivam,J., )<\/p>\n
                By consent of both the parties,  the  main  appeal  itself  is
\ntaken up for disposal.\n<\/p>\n
        2.  The above original side appeal has been filed against the order of
\nthe  learned  single  Judge  dated  11.03.2005  made  in O.A.No.931 of 2004 in
\nC.S.No.904 of 2004, in and by which the learned Judge, after finding that  the
\napplicant \/ plaintiff has not made out a case for interim order, dismissed the
\nsaid application.\n<\/p>\n
        3.  The  plaintiff  in  C.S.No.904 of 2004 is the applicant.  He filed
\nthe said suit against the defendant\/  first  respondent  in  this  appeal  for
\ndeclaration  that the termination notice dated 21.07.2004 is null and void and
\nfor permanent injuncti ing the defendant from invoking the Arbitration  Clause
\n7.5.4  of  the contract agreement dated 26.09.2002 \/ 15.11.2002 as well as for
\nmandatory injunction for fulfilling the  contractual  obligation  as  per  the
\ncontract agreement dated 26.09.2002 \/ 15.11.2002.  Pending suit, the plaintiff
\n\/   applicant  filed  O.A.No.931  of  2004,  praying  for  interim  injunction
\nrestraining  the  first  respondent  from  proceeding  with  the   arbitration
\nproceedings  as  contemplated  under Article 7 of the Contract Agreement dated
\n26.0 9.2002 \/ 15.11.2002.  The said application  was  resisted  by  the  first
\nrespondent by  filing  counter  statement.  The learned Judge, by the impugned
\norder, after finding that there is a  valid  agreement  between  the  parties,
\nwhich  contains arbitration clause, and hence, no injunction as claimed can be
\ngranted, dismissed the said application.  Questioning the same, present appeal
\nhas been filed.\n<\/p>\n
        4.  Heard Mr.    R.    Muthukumarasamy, learned senior counsel for the
\nappellant and Mr.  Arvind P.  Datar, learned senior counsel for the contesting
\nfirst respondent.\n<\/p>\n
        5.   The  case  of  the  appellant\/petitioner  is  that  the  Contract
\nAgreement  dated  26.09.2002  \/  15.11.2002  was  signed  by the petitioner at
\nChennai and it was  forwarded  to  the  first  respondent  together  with  the
\naddendum  which, inter alia, contains the clauses regarding the law applicable
\nand the place of jurisdiction for arbitration.  The  first  respondent  though
\nnot  signed  the  addendum, expressed that the matters covered by the addendum
\nwill be discussed later.  Therefore, there is  no  consensus  with  regard  to
\narbitration  proceedings,  such as venue of arbitration and the law applicable
\nto arbitration proceedings.  In the absence of such consensus, it is the  case
\nof  the  petitioner that there is no concluded Agreement regarding arbitration
\nsuch as, the venue and the law governing arbitration proceedings.  Or  in  the
\nalternative,  since  the first respondent did not strike off Article 13 of the
\nContract at the time of  signing,  it  has  to  be  presumed  that  the  first
\nrespondent has agreed to the contents of addendum.\n<\/p>\n
        6.  The first respondent has terminated the contract by issuing notice
\ndated  21.07.2004  without  any  valid  reason  and without complying with the
\npre-requisites of the contract dated 26.09.2002 \/ 15.11.2002.  In reply to the
\nnotice of termination, the applicant has conveyed its refusal  to  accept  the
\ntermination and also informed the first respondent by letters dated 24.07.2004
\nand 27.07.2004 that the applicant would always be ready and willing to perform
\nits part as per the terms of the Contract dated 26.09.2002\/15.11.2002.  Though
\noriginally an order of ad-interim injunction was granted in O.A.No.931 of 2004
\nrestraining the first respondent from proceeding with arbitration proceedings,
\nthe said order was vacated and the application was dismissed on 1 1.03.2005 on
\nthe ground  that the interim prayer is beyond the scope of the suit.  The case
\nof the petitioner is that the reasoning of the learned Judge and the  ultimate
\norder  dismissing  the injunction application cannot be sustained, as there is
\nno valid agreement between the parties regarding arbitration.\n<\/p>\n
        7.  Mr.  R.  Muthukumarasamy, learned senior counsel appearing for the
\nappellant,  after  taking  us  through  the  Contract  Agreement  between  the
\nplaintiff   and   defendant  dated  26.09.2002\/15.11.2002,  addendum,  various
\ncorrespondences between the parties and the  ultimate  order  of  the  learned
\nJudge, would contend that in view of Article 13 of the Agreement, the addendum
\nshould  be  read along with the main Agreement and the same is binding on both
\nthe parties, including the first respondent.  He also contended  that  if  the
\naddendum is not agreeable, the main contract will become unenforceable.\n<\/p>\n
        8.  On the  other  hand, Mr.  Arvind P.  Datar, learned senior counsel
\nappearing for the contesting first respondent would submit that in view of the
\nfact that the addendum has  not  been  signed  and  agreed  to  by  the  first
\nrespondent,  in  the  absence  of  consensus ad-idem, the main agreement dated
\n26.09.2002 \/ 15.11.2002 would bind both the parties and so, the terms relating
\nto the law and place of jurisdiction for arbitration referred to therein would
\ngovern the parties.\n<\/p>\n
        9.  In order to appreciate the rival  contentions,  it  is  useful  to
\nrefer certain Articles of the Contract.  Article 1.3 reads as under:-\n<\/p>\n
“1.3:   After  the  signing  of  the CONTRACT, no other text, document or data
\nexcept as herein specified, shall have any force or effect whatsoever, or may,
\nin any way whatsoever, be taken into consideration in  the  interpretation  of
\nthe terms and conditions of the CONTRACT.”\n<\/p>\n
Article 7.2  speaks  about  termination  of  the contract.  Article 7.5 speaks
\nabout disputes.  Articles 7.5.1, 7.5.4 and  13  which  are  relevant  for  the
\npurpose of this case read as under:-\n<\/p>\n
“7.5.1:  This  CONTRACT  shall be governed, exclusively by the Swiss Law.  Any
\ndisputes and differences which may arise in connection with the  execution  of
\nthe contract during its lifetime should be settled in an amicable way.\n<\/p>\n
7.5.4:   In case the above disputes and differences could not be settled in an
\namicable way by intervention of the management  of  companies  involved,  they
\nshall  be  finally  settled  in  accordance with the rules of Conciliation and
\nArbitration of the International  Chamber  of  Commerce.    Three  arbitrators
\nappointed  in  accordance  with  said  rules  shall  carry  their  mission  in
\naccordance with the said Rules  and  shall  on  their  behalf,  make  a  final
\ndecision which shall be binding for both Purchaser and Subcontractor.\n<\/p>\n
Article 13:    The addendum to this agreement shall form part of the Contract.
\n”\n<\/p>\n
        10.   The  appellant  \/ subcontractor has signed the said agreement on
\n26.09.2002 and the first  respondent  \/  purchaser  has  signed  the  same  on
\n15.11.2002.   Addendum  to  the  Contract Agreement between LITOSTROJ and M\/s.
\nGEA Energy System (India) Ltd., dated 26.09.2002 contains 7  Clauses,  out  of
\nwhich, Clauses 5 and 6 are relevant.\n<\/p>\n
“5.  This contract is subject to the laws of India.\n<\/p>\n
6.  The place of jurisdiction for Arbitration shall be Chennai.  ”\n<\/p>\n
        11.   Though  the appellant\/subcontractor signed the addendum on 26.09
\n.2002 itself, admittedly, the same  was  not  signed  by  the  1st  respondent
\nherein\/purchaser.    Mr.R.Muthukumarasamy,  learned  senior  counsel  for  the
\nappellant by drawing our  attention  to  Article  13  would  submit  that  the
\naddendum  though  not  signed by the purchaser \/ first respondent herein, is a
\npart of the Contract; accordingly, as per Clauses 5 and 6 of the addendum, the
\nContract is subject to the laws of India and the jurisdiction for  arbitration
\nproceedings,  if  any,  shall  be  at  Chennai and in such a circumstance, the
\narbitration proceedings at Slovenia cannot be proceeded with and  the  learned
\nJudge ought to have granted injunction.  In support of his claim, he very much
\nrelied  on the decisions of the Supreme Court in the cases of Ramji Dayawaka &
\nSons (P) Ltd., vs.  Invest Import<\/a> reported in AIR 1981 S.C.    2085  and  U.P.
\nRajkiya Nirman  Nigam Ltd., vs.  Indure Pvt., Ltd.,<\/a> reported in JT 1996 (2) SC\n<\/p>\n
322.  In AIR 1981 SC 2085 (cited supra), it is  pointed  out  that  where  the
\ncontract  is  in  a  number  of  parts, it is essential to the validity of the
\ncontract that the contracting party should either have assented to  or  should
\nbe  taken  to  have  assented  to the same thing in the same sense or as it is
\nsometimes put, there should be consensus ad idem.  It  is  further  held  that
\napart from this, a party may be taken to have assented, if he has so conducted
\nhimself as  to  be  estopped  from  denying  that  he  has so assented.  Their
\nLordships also held that, even apart from this, it would still be open to  the
\nparty  contending  negation  to  prove  that he had not accepted a part of the
\noriginal agreement.  In the latter case, i.e., in JT 1996 (2) SCC  322,  their
\nLordships  have  held that in the absence of consensus ad idem on the material
\nterms of the contract to be entered into between the parties, there emerged no
\nconcluded contract.\n<\/p>\n
        12.   The  learned  senior counsel submitted that since Article 13 has
\nnot been complied with, there is no consensus ad idem on the material terms of
\nthe Contract, which contains several clauses.   Pointing  out  the  principles
\nlaid  down  therein,  it is argued that in the absence of consensus ad idem to
\nthe contract to be entered into between the parties,  there  is  no  concluded
\ncontract;  hence,  the  claim  that  Swiss  law  alone  is  applicable and the
\narbitration is to take place in Slovenia cannot be sustained.\n<\/p>\n
        13.  In this regard, Mr.  Arvind P.   Datar,  learned  senior  counsel
\nappearing  for  the contesting first respondent rightly pointed out that first
\nof all the addendum was not accepted by the purchaser;  hence,  the  purchaser
\ndid  not  sign  the  addendum and consequently, it sent an E-Mail stating that
\nregarding addendum to the Contract Agreement, they will discuss it later.   As
\npointed out by  Mr.   Arvind P.  Datar, though Article 13 refers that addendum
\nis a part of the Contract, the fact remains that since the  addendum  was  not
\nacceptable, the  purchaser  \/  one  of  the party did not sign the same.  As a
\nmatter of fact, it is brought to our notice that though the purchaser informed
\nthe subcontractor that the addendum will be discussed later, the subcontractor
\nhas not taken further action to discuss the altered  conditions  mentioned  in
\nthe addendum.   In such a circumstance, though there is no dispute with regard
\nto proposition of law as enunciated in  those  decisions,  the  same  are  not
\napplicable to the case on hand.\n<\/p>\n
        14.   Though it was seriously argued that in view of Article 13 of the
\nContract, the addendum shall form part of the Contract, as discussed  earlier,
\nnot only the purchaser, the first respondent herein has not accepted the terms
\nin  the  addendum,  particularly Clauses 5 and 6 by signing the same, but also
\nconveyed that the terms in addendum to the Contract will be  discussed  later.
\nIn such a  circumstance,  as  rightly  contended by Mr.  Arvind P.  Datar, and
\naccepted by the learned single Judge that there is  a  valid  agreement  dated
\n26.09.2002 and  15.11.20  02  and the addendum cannot be enforced.  Apart from
\nthis, as  rightly  observed  by  the  learned  Judge,  the  plaintiff  is  not
\nchallenging  the  very validity of the contract, but is questioning the act of
\ndefendant in terminating the said contract.   To  put  it  clear,  unless  the
\nplaintiff  seeks  declaration  that  there is no concluded contract dated 26.0
\n9.2002 \/ 15.11.2002 between the parties, as rightly observed  by  the  learned
\nJudge,  the  injunction  cannot be granted in respect of arbitration and legal
\nproceedings in Slovenia.  Inasmuch as  we  have  already  concluded  that  the
\nContract  Agreement  dated  26.09.2002  \/  15.11.2002 is valid and it provides
\narbitration clause, the arbitration proceedings cannot be restrained by way of
\ninjunction by this Court.  Had the first respondent \/ defendant  accepted  the
\naddendum,  undoubtedly,  the  plaintiff  could  have pursued its suit and also
\nprayed for injunction from initiating  legal  steps  as  well  as  arbitration
\nproceedings at  Slovenia.    For  the reasons stated above, addendum cannot be
\nenforced by the appellant.  All these aspects have been considered and rightly
\nrejected by the learned Judge.  In view of the above discussion by us  and  on
\nperusal  of  the relevant clauses of the agreement, addendum, plaint averments
\netc., we concur with the conclusion of the learned Judge and we are unable  to
\nappreciate  the  contentions  raised  by  the  learned  senior counsel for the
\nappellant.  Accordingly, the original  side  appeal  fails  and  the  same  is
\ndismissed.  No costs.  Consequently, connected CMP., is also dismissed.  It is
\nmade clear that the conclusion of the learned Judge and the confirmation order
\nby us are only prima facie for the disposal of the injunction application.\n<\/p>\n
Index:Yes
\nInternet:Yes<\/p>\n
kh<\/p>\n
To
\nThe Sub Asst.  Registrar
\nV.R.  Section, High Court, Madras.\n<\/p><\/p>\n","protected":false},"excerpt":{"rendered":"
Madras High Court M\/S. Gea Energy System (India) Ltd vs Litostroj E.I on 26 April, 2005 In the High Court of Judicature at Madras Dated: 26\/04\/2005 Coram The Hon’ble Mr. Justice P. Sathasivam and The Hon’ble Mr. Justice S.K. Krishnan O.S. Appeal No.70 of 2005 And CMP.No.6454 of 2005 M\/s. GEA Energy System (India) Ltd., […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,13],"tags":[],"class_list":["post-234310","post","type-post","status-publish","format-standard","hentry","category-high-court","category-madras-high-court"],"yoast_head":"\nM\/S. 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