A.No.3836 of 2011 and A.No.2879 of 2011 in C.S.No.364 of 2011 VINOD K. SHARMA,J. The applicant / defendant in A.No.3836 of 2011 has moved this application to refer the dispute to arbitration in terms of the arbitration agreement contained in the Letter of Intent dated 12.12.2008 and the amended Letter of Intent dated 22.04.2009. 2. The plaintiff / non applicant filed a suit for recovery of Rs.1,30,33,392/- (Rupees One Crore Thirty Lakhs Thirty Three Thousand Three Hundred and Ninety Two only) with further interest at the rate of 21% p.a. from the date till realization. 3. The plaintiff was issued a Letter of Intent (LOI) dated 12.12.2008 followed by an amended Letter of Intent dated 22.04.2009 for the work of designing, manufacturing, supplying and erecting Pre- Engineered Buildings (PEB) for the applicant / defendant for its project at Sricity Industrial Area, Near Tada at Andhra Pradesh. The Letter issued to the plaintiff expressly stated that this Letter of Intent was subject to terms and conditions mentioned in the attached annexure and on execution of this LOI agreed to be bound by the terms and conditions contained in the annexure. The LOI specifies a total consideration payment terms, time schedule for completion of project. 4. Clause-17 of the LOI reads as under: "17. Arbitration: It is specifically agreed that in case of any dispute arising out of or in relation to this LOI (including the existence and validity thereof), the parties herein shall seek to resolve the same by amicable arrangement and compromise. If the parties herein fail to resolve the same by amicable arrangement and compromise within 30 days from the emergence of such dispute, the parties herein shall resort to arbitration as provided in the cause herein below. Any dispute arising out of or in relation to this agreement shall be settled by arbitration in accordance with the provisions of the Arbitration and Conciliation Act, 1996 or any statutory modification or amendment thereof for the time being in force. The venue of arbitration shall be at Chennai and the language of the Arbitration shall be in the English language." 5. The plaintiff / non applicant accepted the Letter of Intent by counter signing each page. Thereafter, the amended LOI, as desired by the plaintiff also contains the the following clause: "7. The arbitration proceedings referred to in the LOI will be conducted by a sole arbitrator, if the same is agreeable to both parties, failing which the same would be conducted by a panel of three arbitrators, with each party appointing an arbitrator and the two arbitrators so appointed nominating a third arbitrator who shall be the presiding arbitrator. 8. The existence of any dispute or disagreement or reference of any dispute to arbitration shall not result in any stoppage or delay in the progress or completion of work in accordance with the timelines provided under the LOI. Any such delay or stoppage shall attract Liquidated damages as mentioned under the LOI." 6. The case of the applicant is that the dispute, in the suit, is covered by arbitration clause. The LOI has been placed on record by the plaintiff with the suit. 7. The Prayer made is to refer the parties to arbitration in terms of arbitration agreement. 8. The application is opposed by the plaintiff / non applicant by submitting that the suit filed by the plaintiff is for recovery of its due for the work done by them for the applicant, as detailed in the plaint. On completion of work, the amount was claimed from the applicant / defendant, but it was not paid by complaining of certain defects, which were not the result of work done by the plaintiff. It is denied in the counter that parties had agreed for referring the matter for arbitration. It is also denied that there was any agreement for arbitration nor any concluded contract between the parties. 9. It is pleaded that the validity clause that decision of Arbitrator should be valid and binding on both parties, is missing, therefore, the arbitration clause, referred to above, cannot be treated to be a valid arbitration clause. It is also stand of the plaintiff / non applicant that the main issue of the contract was fully agreed upon between the parties, therefore, there arises no question of arbitration agreement between the parties. In absence of valid and binding clause, it is meaning less arbitration clause, which cannot be said to be an arbitration clause, therefore, it is prayed that application be dismissed. 10. Learned counsel for the applicant / defendant, in support of this application, placed reliance on the judgment of the Hon'ble Supreme Court in the case of Trimex International FZE Limited, Dubai vs. Vedanta Aluminium Limited, India, (2010) 3 SCC 1, wherein the Hon'ble Supreme Court was pleased to lay down that once the contract is concluded orally or in writing, the mere fact that a formal contract has to be prepared and initialled by the parties would not affect either the acceptance of the contract so entered into or implementation thereof, even if the formal contract has never been initialed. 11. Learned counsel for the applicant / defendant also placed on the judgment of the Hon'ble Supreme Court in the case of Rashtriya Ispat Nigam Ltd and another vs. Verma Transport Co., (2006) 7 SCC 275, wherein the Hon'ble Supreme Court was pleased to lay down that application under Section 8, when filed after objection to the grant of exparte interim injunction to plaintiff would not mean acquiescence to jurisdiction of Court or waiver or right to arbitration. 12. Learned counsel for the plaintiff / non applicant opposed this application by contending that the suit filed by the plaintiff / non applicant is for recovery of amount for the work done by the plaintiff. It is also contended that the parties had not agreed to refer the matter for arbitration and in fact there is no arbitration agreement for want of concluded contract for referring the matter to arbitration. 13. In support of this contention, reliance was placed by the learned counsel for the plaintiff / non applicant on the judgment of the Hon'ble Supreme Court in the case of K.K.Modi, Appellant vs. K.N.Modi and others, Respondenets, AIR 1998 SC 1297, wherein the Hon'ble Supreme Court was pleased to lay down that the arbitration agreement must contemplate that the decision of the Tribunal will be binding on the parties to the agreement, therefore, the contention of the learned counsel for the non applicant was that in absence of clause making the award binding on the parties, would amount to invalid arbitration agreement. 14. The Hon'ble Supreme Court, in the case of K.K.Modi, Appellant vs. K.N.Modi and others, Respondenets (supra) was pleased to lay down as under: "Among the attributes which must be present for an agreement to be considered as an arbitration agreement are: (1) The arbitration agreement must contemplate that the decision of the tribunal will be binding on the parties to the agreement; (2) That the jurisdiction of the tribunal to decide the rights of parties must derive either from the consent of the parties or from an order of the Court or from a statute, the terms of which make it clear that the process is to be an arbitration; (3) The agreement must contemplate that substantive rights of parties will be determined by the agreed tribunal; (4) That the tribunal will determine the rights of the parties in an impartial and judicial manner with the tribunal owing an equal obligation of fairness towards both sides; (5) That the judgment of the parties to refer their disputes to the decision of the tribunal must be intended to be enforceable in law and lastly; (6) The agreement must contemplate that the tribunal will make a decision upon a dispute which is already formulated at the time when a reference is made to the Tribunal. The other factors which are relevant include, whether the agreement contemplates that the tribunal will receive evidence from both sides and hear their contentions or at least give the parties an opportunity to put them forward; Whether the wording of the agreement is consistent or inconsistent with the view that the process was intended to be an arbitration, and whether the agreement requires the tribunal to decide the dispute according to law. 15. It was the contention of the learned counsel for the plaintiff / non applicant, that the LOI was not accepted and in fact the work was done without concluded contract, therefore, consensus ad idem to refer the disputes to arbitration is missing in the present case. 16. In support of this contention, reliance was placed on the judgment of the Hon'ble Supreme Court in the case of U.P.Rajkiya Nirman Nigam Ltd., Appellant vs. Indure Pvt. Ltd. and others, AIR 1996 SC 1373, wherein the Hon'ble Supreme Court was pleased to lay down as under: "Held, that the conduct of appellant of submitting unilateral tender did not amount to acceptance of the counter offer made by the respondents. Clause (10) of the draft agreement which thrusts responsibility on the respondent was deleted in the counter proposal. The Clause 12 for joint responsibility unilateral liability was incorporated. In other words the respondent disowned its material responsibilities. Unless there is acceptance by the appellant to those conditions no concluded contract can be said to have emerged. The material alterations in the contract make world of difference to draw an inference of concluded contract. There was therefore no consensus ad idem on the material terms of the contract which contains several clauses. In the absence of any consensus ad idem on the material terms of the contact to be entered into between the parties, there emerged no concluded contract. Since the tenders  the source of the contract between the parties  had not transformed into a contract, even if the proposal and counter proposal are assumed to be constituting an agreement, it is a contingent contract and by operation of S.32 of the Contract Act, the counter proposal of the respondent cannot be enforced since the event of entering of into the contract with the Board had not taken place. In view of the fact that S.2(a) of the Act envisage a written agreement for arbitration and that written agreement to submit the existing or future differences to arbitration is a pre-condition and further in view of the fact that the original contract itself was not a concluded contract, there existed no arbitration agreement for reference to the arbitrators." 17. Reliance was also placed on the judgment in the case of Jagdish Chander vs. Ramesh Chander and Ors., (2007) 6 MLJ 317 (SC), wherein it was again held that where clause requires the consent of both parties before the dispute could be referred for arbitration, then it would not be an arbitration agreement, thus, it is pleaded that the application be dismissed. 18. In order to appreciate the respective contentions, it may be noticed that the plaintiff itself in the plaint has pleaded as under: "4. In the year December, 2008, the defendant entrusted to the plaintiff the work of Designing, Manufacturing, Supplying and Erection of PEB for its project at Sricity Industrial Area, Near Tada at Andhra Pradesh. The defendant offered to pay the plaintiff's entire charges for the said work. The parties discussed the entire work at Chennai in the office of the plaintiff mentioned above wherein it was finally agreed and accepted between the parties herein in the form of a concluded contract that the work offered / entrusted by the defendant to the plaintiff was accepted by the plaintiff who will be carrying out the same and the defendant will pay the cost of the same to the plaintiff. It was further agreed in the aforesaid meeting that a detailed written Contract covering the entire terms and conditions accepted by both the parties relating to the subject work, will be entered into later. The initial cost of the project was projected / indicated at Rs.7,47,00,000/-. Thus, a clear understanding was established between the parties at the said plaintiff's office at No.AC69, Shanthi Colony, Anna Nagar, Chennai-40, independent of any further written agreements and / or Contracts, that the subject work was entrusted by the defendant to the plaintiff which entrustment of the subject work was accepted by the plaintiff therein for the promised consideration payable to plaintiff by the defendant and that everything will be reduced into writing later in the form of a written contract. 6. In any case, this original said Letter of Intent dt.12.12.208 was amended by the defendant who issued an Amended Letter of Intent dt.22.4.2009, which substituted the said original Letter of Intent dt.12.12.2008, wherein the defendant made certain changes on the basic issues like price, time for completion etc. Even this was not completely accepted and/or agreed to by the plaintiff as can be seen from the endorsement made by the plaintiff on the said Amended Letter of Intent dt.22.4.2009. In fact, the last clause of the said Amended Letter of Credit says that a copy of the same should be signed and sent back by the plaintiff as a token of acceptance of the same. But, this was not done by the plaintiff who on the same Amended Letter of Intent, made an endorsement that the same was accepted only subject to certain conditions mentioned therein with regard to terms of payment etc. Therefore, even the said Amended Letter of Intent was not a final agreement/contract which in fact clearly stated that a detailed contract will be entered into later between the parties which never was entered into/made between the parties till date." 19. The pleadings clearly show that LOI was sent for acceptance and modified on request. It is not for the plaintiff now to say that there was no concluded contract between the parties, after having performed the work in pursuance to Letter of Intent. The plea that there is no contract between the parties, therefore, cannot be accepted in view of law laid by the Hon'ble Supreme Court in the case of Trimex International FZE Limited, Dubai vs. Vedanta Aluminium Limited, India (supra). 20. It then leaves us to question whether the Clause in the LOI, which is in writing can be said to be an arbitration clause. The reading of Clause-17 as amended in the LOI, leaves no manner of doubt that it is an arbitration clause clearly stipulating that the matter in dispute shall be settled by arbitration in accordance with the provisions of Arbitration and Conciliation Act, 1996, which itself stipulates that the decision of the Arbitrator have to be final and binding between the parties. Therefore, clause cannot be held to be invalid. 21. It is now well settled law that the dispute in the suit is covered by arbitration clause and the applicant / defendant on notice appeared submitting to the jurisdiction of the judicial authority, for reference to the arbitration, Court is bound to refer the dispute for arbitration. 22. Consequently, A.No.3836 of 2011 is ordered as prayed for and the parties are referred to the arbitration in terms of arbitration agreement. 23. In view of the detailed order passed herein above, A.No.2879 of 2011 is dismissed as having been rendered infructuous. No costs. 13.12.2011 Index: Yes Internet: Yes ar VINOD K. SHARMA,J. ar Pre-Delivery order in A.No.3836 of 2011 and A.No.2879 of 2011 in C.S.No.364 of 2011 13.12.2011