1 Anand IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION APPEAL FROM ORDER NO.71 OF 2009 Deepak Fertilisers And ..Appellant Petrochemicals Corporation Ltd Having its registered office Opposite Golf Course, Shastri Nagar, Yerawada, Pune  411 016. Versus 1. Vitol S.A. Boulevard Du Pont D'-Arve 28 P.O.Box 384 1211 Geneva 4 Switzerland. ..Respondents 2. Crescent Organics Pvt. Ltd. Windsor, 2nd Floor, CST Road, Kalina, Santacruz (E), Mumbai  400 098. Mr.N.N.Seervai, Senior Counsel with Mr.P.A.Kabadi i/b.M/s.Doijode Associates, Advocate, for the Appellant Mr.Zal Andhyarujini with Ms.Duhita Lewis i/b.Chamber Javed Gaya, Advocate, for the Respondents CORAM : R.C.CHAVAN, J. JUDGMENT RESERVED ON : 11TH JUNE, 2010 JUDGMENT PRONOUNCED ON : 16TH JULY, 2010 2 JUDGMENT . By consent of parties, this Appeal against Order passed by the learned 5th Joint Civil Judge, Senior Division, Pune, below Exhibit 27 in Special Civil Suit No.312 of 2008 before him is taken up for final disposal at admission stage. 2. Facts which are material for deciding this Appeal are as under :- Appellant, an Indian Corporation had purchased methanol from Respondent No.1 a Swiss Corporation, on a few occasions from 1999 to 2004. On each occasion, after negotiations between Appellant and Respondent No.1's representatives in India, Respondent No.2, a sales indent, accompanied by terms & conditions, used to be sent to the Appellant. After approval, the Appellant would sign the indent and send it to Respondents, whereupon the contract would come in force. These indents contained a jurisdiction clause 3 conferring exclusive jurisdiction over any disputes to Courts at London and also provided that English Law was to apply, though neither the parties nor the transaction had any English connection. 3. In 2004 Appellant's dealings with Respondents ceased due to commercial differences, but were sought to be revived in 2007. According to Appellant, in order to test waters parties decided to have some spot transactions. First such shipment was agreed to, by the Respondents sending a draft indent on 11th January, 2007, which was approved, signed and returned by Appellant to Respondent No.1, and a consignment of 3000 MT Methanol @ US $ 515/MT was received by Appellant. 4. According to Appellant the terms & conditions of the shipment were not to bind the parties for shipments to follow, since parties were contemplating a long term 4 arrangement (which was to contain an arbitration clause) and so, till then, each shipment was to be governed by what was to be agreed on each occasion. 5. Parties were negotiating for a second shipment in March, 2007. On 2nd February, 2007 Respondent No.2 sent draft indent for second shipment, which, according to Appellant, did not contain any terms & conditions overleaf as mentioned in the indent. It is not in dispute that Appellant did not sign and return this indent. It appears that in the meanwhile prices of methanol fell. Appellant refused to take delivery. Respondents eventually filed a claim against Appellant in the High Court of London. 6. The Appellant put in an appearance and questioned the jurisdiction of the Court at London. The High Court at London on 21st December, 2007 dismissed Appellant's objection 5 to its jurisdiction saddling costs of £ 15000 and refused leave to Appeal. 7. On 8th February, 2008 Appellant filed the suit before Civil Judge, Senior Division, Pune to restrain Respondents from enforcing the alleged contract in respect of Second Shipment. Respondent No.1 moved an Application for framing a preliminary issue as to the jurisdiction of the Court. The Appellant filed a reply opposing the prayers. The learned Trial Judge framed such an issue and answered it against the Appellant by his impugned Order dated 1st July, 2008, which is challenged in the present Appeal. 8. In the meanwhile, the proceedings before the High Court at London went ahead. Appellants did not participate in those proceedings. On 21st May, 2008 the High Court entered a Judgment for the Respondent No.1. This Judgment was however not noticed by the 6 learned Trial Judge, who, by his impugned Order dated 1st January, 2008 directed return of plaint for presentation to proper Court (i.e.High Court at London). 9. I have heard the learned Counsel for parties. Before going into arguments on implications flowing from Application of law, it may be first useful to ascertain and recount facts which could prima facie be held as established. There is no dispute that from 1999 to 2004 every consignment was governed by terms of Agreement embodied in the indent which Respondent used to send to Appellant and which Appellant used to approve, sign and return to Respondent. The parties did not have any transaction from 2004 to 2007. In 2007 when parties wanted to resume transaction, they were negotiating a long term agreement, which was to contain an arbitration clause, but no such Agreement is actually entered into. 7 10. The first shipment in 2007, for testing water also followed the pattern of Respondent sending an indent and Appellant approving, signing and returning it to Respondents. Terms and conditions embodied in this indent undisputedly provided for resolution of disputes exclusively by English Courts by applying English Law. 11. It cannot also be disputed that but for the jurisdiction clause in indents, English Courts would have no jurisdiction since neither the transaction nor the parties had any causal connection with English Courts. 12. In respect of of the second shipment, too, which has given rise to the dispute, Respondents sent an indent to Appellant. Copy of indent dated 2nd February, 2007 sent by Respondent to Appellant is at page 69 of the compilation filed on record. This shows that 8 against the column of country of origin among other countries, China was also mentioned. The terms & conditions mentioned on the face of the document contains following term No.6. 6. The sales will be governed and construed in accordance with English Law and both buyer (and seller) hereby submit to the exclusive jurisdiction of the London High Court . The indent ends with the following sentence :- The buyer hereby admit that they have read and understood the terms and conditions mentioned overleaf and have accepted the indent . The indent is then signed for and on behalf of Vitol S.A.(the Respondent No.1) for Crescent Organics Pvt. Ltd.(Respondent No.2) by a director. The space meant for signature of buyers authorised signatory is blank. 13. The Appellant contends that the terms and conditions mentioned overleaf were never forwarded to Appellant. Without going into 9 the question whether they were actually forwarded or not, for the sake of argument, the contention may be accepted. It is likewise not necessary to refer to each and every communication between the parties till the relations agained soured up. Reference to some communications which have a bearing on the issue should be enough. 14. On 15th February, 2007 it was informed by a message that M/T Chembulk New York or substitute was the vessel nominated for supplying 3000 MT methanol. Appellant responded on 19th February, 2007 (Exhibition K at page No.74 of compilation) accepting the vessel subject to confirmation by cosignor on two aspects  namely that number of bills of lading were to be 20 plus (more than twenty) and that the vessel was expected to arrive in India between 21st to 25th March, 2007. This was followed by another message on 2nd February, 2007 (Exhibit L page No.75) 10 accepting the vessel and adding Meanwhile please forward the indent . This was replied on same day stating that the indent had already been forwarded on 2nd February, 2007, but was being forwarded again for being stamped, signed and returned to Respondents. On the same day Appellant mailed back requesting to drop China as country of origin as Chinese products were not acceptable to Appellant. The indent was, however, never stamped, signed or returned by Appellant. 15. Thereafter, on 1st March, 2007, Appellant sent a fax message to Respondent stating about instability in market, falling prices, inability to sell anything from previous consignment etc and requesting the seller to accept buyers pricing formula, which marked the beginning of the dispute. 16. The learned Senior Counsel for the Appellant submitted that the English Court 11 presumed that it had jurisdiction, without first ascertaining whether there was a conract containing such a jurisdiction clause between the parties, and the Civil Court at Pune merely followed the English Judgment. He further submitted that Section 9A of the Code of Civil Procedure, 1908 was not meant for resolving jurisdictional issues under Private International Law. And hence, the order impugned is liable to be set aside. He relied on a Judgment of this Court in Shree Precoated Steels Limited Versus Macsteel International Far East Ltd. & anr. reported in 2008(2) Bom.C.R.681, which, according to the learned Counsel, squarely applies to case at hand. 17. His learned adversary was of the other view & submitted that contentions raised in the Appeal are barred by the principle of issue estoppel. On this question he placed reliance on famous Judgment of HOUSE OF LORDS 12 in CARL ZEISS STIFTUNG VERSUS RAYNER & KEELER LTD. AND OTHERS (1966) 3 WLR 125 and also on Judgment in D S V SILO-UND VERWALTUNGSGESELLSCHAFT MBH VERSUS OWNERS OF THE SENNAR AND 13 OTHER SHIPS (1985) 1 WLR 490. 18. The learned Senior Counsel for the Appellant submitted that issue estoppel was neither pleaded nor raised before the Trial Court & in any case question of issue estoppel does not arise. 19. First, I may deal with the scope of Section 9A of the Code of Civil Procedure, 1908. The State of Maharashtra introduced Section 9A in the Code in order to prevent Civil Courts from granting injunctions even without looking into serious jurisdictional issues raised. It therefore obliges the Civil Courts to try & decide jurisdictional issues when such a question is raised. Section 9A 13 in itself does not at all decide in which cases a particular Civil Court will or will not have a jurisdiction. However, the requirement of Section 9A, namely that jurisdictional issue may be decided before taking up question of grant of injunction, would apply equally to cases where jurisdiction is sought to be set up in a Foreign Court, just as it will apply to pleas of lack of jurisdiction based on municipal laws. In this case, since Appellant had sought a temporary injunction, the learned Trial Judge rightly framed issue of jurisdiction which was raised before him, as required under Section 9A of the Code of Civil Procedure, 1908. 20. This takes me to the next question of issue estoppel, which was not raised before the learned Trial Judge. Yet, since it is a purely a legal plea, it may not be proper to disallow such a plea on a technicality. 14 21. In CARL ZEISS STIFTUNG VERSUS RAYNER & KEELER LTD. AND OTHERS (1966) 3 WLR 125, referred to by the learned Counsel for the Respondents, the principal question pertained to applicability/enforceability of a decree by the then German Democratic Republic (East Germany) which the UK did not recognise. The question of res-judicata & issue estoppel, including the question of consequences of a former Judgment being one of a foreign Court came to be considered. The relevant observations may be usefully reproduced as under :- From the variety of cases relative to judgments being given in evidence in civil suits, these two deductions seem to follow as generally true : first, that the judgment of a court of concurrent jurisdiction, directly upon the point, is as a plea, a bar, or as evidence, conclusive, between the same parties, upon the same matter, directly in question in another court: secondly, that the judgment of a court of exclusive jurisdiction, directly upon the point is, in like manner, conclusive upon the same manner, between the same parties, coming incidentally in question in another court, for a different purpose. But neither the 15 judgment of a concurrent or exclusive jurisdiction is evidence, of any matter which comes collaterally in question, though within their jurisdiction; nor of any matter incidentally cognizable: nor of any matter to be referred by argument from the judgment. The difficulty which I see about issue estoppel is a practical one. Suppose the first case is one of trifling importance but it involves for one party proof of facts which would be expensive and troublesome; and that party can see the possibility that the same point may arise if his opponent later raises a much more important claim. What is he to do ? The second case may never be brought. Must he go to great trouble and expense to forestall a possible plea of issue estoppel if the second case is brought ? This does not arise in cause of action estoppel: if the cause of action is important, he will incur the expense: if it is not, he will take the chance of winning on some other point. It seems to me that there is room for a good deal more thought before we settle the limits of issue estoppel. But I have no doubt that issue estoppel does exist in the law of England. And, if it does, it would apply in the present case, if the earlier judgment had been a final judgment of an English court. Next I must consider whether it makes any difference that the former judgment was the judgment of a foreign court. At one time foreign judgments were regarded as being only 16 evidence and not conclusive. But at least since the decision in Godard v. Gray they have been regarded as equally conclusive with English judgments (subject to any difference there may be resulting from there being no merger of a cause of action in a foreign judgment). The same pleas, for example, fraud or lack of jurisdiction, are good against both. It would seem that the only plea which may be available against foreign judgments alone is perversity, if Simpson v. Fogo was rightly decided. In that case Page Wood V.-C. refused to give effect to judgment of the Supreme Court of Louisiana. There was no question of perversity in the ordinary sense of obstinately or dishonestly shutting one's eyes to what one knows to be right. The Supreme Court had applied what they believed to be their common law, but it was at variance with a generally accepted rule of private international law, which required foreign (in this case, English) law to be applied in the circumstances of that case. Page Wood V.-C. called this a perverse and deliberate refusal to recognise the law of the country by which title has been validly conferred. I shall have to return to this case later. I can see no reason in principle why we should deny the possibility of issue estoppel based on a foreign judgment, but there appear to me to be at least three reasons for being cautious in any particular case. In the first place, we are not familiar with modes of procedure in many foreign countries, and it may not be 17 easy to be sure that a particular issue has been decided or that its decision was a basis of the foreign judgment and not merely collateral or obiter. Secondly, I have already alluded to the practical difficulties of a defendant in deciding whether, even in this country, he should incur the trouble and expense of deploying his full case in a trivial case: it might be most unjust to hold that a litigant here should be estopped from putting forward his case because it was impracticable for him to do so in an earlier case of a trivial character abroad, with the result that the decision in that case went against him. These two reasons do not apply in the present case. The case for the Stiftung, or on this issue those who purported to represent it, was fought as tenaciously in West Germany as this case has been fought here, and it is not difficult to see what were the grounds on which the West German judgment was based. But the third reason for caution does raise a difficult problem with which I must now deal. It is clear that there can be no estoppel of this character unless the former judgment was a final judgment on the merits. But what does that mean in connection with issue estoppel ? When we are dealing with cause of action estoppel it means that the merits of the cause of action must be finally disposed of so that the matter cannot be raised again in the foreign country. In this connection the case of Nouvion v. Freeman is important. There had 18 been in Spain a final judgment in a summary form of procedure. But that was necessarily the end of the matter, because it was possible to reopen the whole question by commencing a different kind of action: so the summary judgment was not res judicata in Spain. I do not find it surprising that the House unanimously refused to give effect in England to that summary judgment . 21A. In D S V SILO-UND VERWALTUNGSGESELLSCHAFT MBH VERSUS OWNERS OF THE SENNAR AND 13 OTHER SHIPS (1985) 1 WLR 490, a Dutch Court held that in view of clause conferring exclusive jurisdiction to Sudanese courts in the Bill of lading about which there was no dispute that it had no jurisdiction. Relying on Judgment in CARL ZEISS STIFTUNG, Admirality court in England declined jurisdiction in a subsequent action. Relevant observations may be usefully extract as under :- The argument in relation to the first contention was that the judgment of the Dutch Court of Appeal was procedural in nature, in that it consisted only of a decision that a Dutch court had no Jurisdiction to entertain and adjudicate upon the 19 appellants' claim, and did not pronounce in any way on the question whether the claim itself, or any substantive issue in it, if it were to be entertained and adjudicated on, would succeed or fail. In my opinion, this argument is based on a misconception with regard to the meaning of the expression on the merits as used in the context of doctrine of issue estoppel. Looking at the matter negatively a decision on procedure alone is not a decision on merits. Looking at the matter positively a decision on the merits is a decision which establishes certain facts as proved or not in dispute; states what are the relevant principles of law applicable to such facts; and expresses a conclusion with regard to the effect of applying those principles to the factual situation concerned. If the expression on the merits is interpreted in this way, as I am clearly of opinion that it should be, there can be no doubt whatever that the decision of the Dutch Court of Appeal in the present case was a decision on the merits for the purpose of the application of the doctrine of issue estoppel. In my view, therefore, the argument for appellants on this point is misconceived and should be rejected. 22. It may be seen from the above observations that issue estoppel based on a foreign Judgment could be set up as a defence in an action if the Judgment is a final 20 Judgment even on the question of jurisdiction provided the Court had the jurisdiction to decide the issue. Does an English Court, whose jurisdiction is itself questioned on the basis of absence of contract, assume jurisdiction when the lis has, otherwise, no causal connection with the forum ? In other words should a Court not first insist upon proof of agreement which confers jurisdiction upon it before ruling on the jurisdictional issue ? Would it be permissible to assume jurisdiction on the basis of a contract which is disputed without ruling upon the existence of contract ? In such cases, jurisdictional issue would have to be decided only after ruling upon the existence of contract. 23. In our case, there is no clue in the first Judgment of the High Court of London dated 21st December, 2007 that it had examined the question of existence of contract. It is doubtful if it could be termed as a decision 21 on merits. And the second Judgment dated 21st May, 2008 was an ex-parte Judgment, since Appellant had not participated in further proceedings before the High Court of London. 24. Therefore, plea of issue estoppel may not apply, since it begs the question about existence of the contract itself. Thus, the Judgments of High Court of London by themselves would not be sufficient to oust the jurisdiction of Court at Pune & the learned Civil Judge was obliged to decide the question himself. After having gone through the impugned Order, it does not appear that the learned Judge has merely followed the English Judgment. 25. The learned Senior Counsel for the Appellant submitted that Judgment of the learned Single Judge of this Court in Shree Precoated Steels Limited 2008(2)Bom.C.R.681 would apply on all fours. He submitted that 22 facts in the said case have a striking resemblance to facts of case at hand. In that case Plaintiff had sought a declaration that there was no contract between Plaintiff & Defendant, in respect of two sets of documents. The conditions of sale contained a clause conferring jurisdiction on English Courts, which, otherwise, had no causal connection. On 20th October, 2005, Defendant therein filed proceedings in English Courts. The Plaintiff filed an Application challenging jurisdiction of English Courts, which was rejected on 28th July, 2006. Plaintiff filed the suit before this Court on 28th September, 2006 after his challenge to jurisdiction of English Court was rejected & sought interim injunction to restrain the Defendants from proceeding in any English Court. The Defendant obtained interim Orders dated 10th October, 2006 restraining Plaintiff from proceeding in Indian Courts. On 18th October, 2006, this Court granted an ad-interim 23 injunction on Plaintiff's motion restraining Defendant from taking any steps infurtherance of Defendant's claim in English Courts. The Defendant then applied to this Court by taking out a notice of motion for vacating interim Orders obtained by Plaintiff. It was submitted on behalf on behalf of Defendant that principle of issue estoppel in respect of a Foregin Judgment ought to be extended even to Judgments which are not final. In this context, this Court observed as under in paragraphs 78, 106 & 107 :- 78. I am not inclined to do so. In this regard I am in respectful agreement with the judgments in Carl- Zeiss, The Sennar and Desert Sun Loan Corpn. Vs. Hill. I see no reason to extend the principle of issue estoppel in respect of foreign judgments which are not final. For the principle to apply, there must be a final decision. If a decision is not final, what is it that a party is precluded from contending ? There is no basis to support this submission. If the decision is provisional and therefore subject to change before the same Court, the well established basis for the principle of action estoppel does not exist. 106. I am of the opinion that where 24 there is a dispute whether the contract was entered into at all, the putative law theory has no application and cannot restrain a party from proceeding with a case instituted in a Court of competent jurisdiction. If the defendant in such an action proves that the contract had in fact been entered into, it is always open to him then to make an application for the stay of the suit. Where a situation arises as in the present case, where both the parties have commenced litigation in different countries, the only course open is to let both the proceedings continue. The consequence of a decision in one Court upon the proceedings in another, is another matter, which would be decided by the Court where the decision of the other Court is relied upon. 107.