1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO. 3472 OF 2006 IN SUIT NO. 2866 OF 2006 Shree Precoated Steels Limited ) a company duly incorporated ) under the Companies Act, 1956 ) and having its Registered Office ) at City Mall, Link Road, Andheri ) (W), Mumbai - 400 053. ) ..Plaintiff. Versus 1) Macsteel International Far ) East Ltd., a Company having ) its office at 1921, Sun Hung ) Kai Center, 30 Harbour Road, ) Wanchai, Hongkong, GPO Box ) 2220, Hongkong and also ) carrying on business in India ) at B203, Phoenix House, ) Phoenix Mills Compound, 462, ) Senapati Bapat Marg, Lower ) Parel, Mumbai - 400 013. ) 2) MSTC Ltd., ) (A Government of India ) Enterprises) having its ) Registered Office at 225-C, ) Acharya Jagdish Chandra Bose ) 2 Road, Kolkata - 700 020. ) ..Defendants. ALONG WITH NOTICE OF MOTION NO. 1343 OF 2007 IN SUIT NO. 2866 OF 2006 Mr.Janak Dwarkadas, Senior Advocate with Mr. Sandip Parikh with Mr.Amit Pradhan i/b. M/s.Wadia Gandhy & Co. for the Plaintiff. Mr. F. E. DeVitre, Senior Advocate with Mr. D. D. Madon, Senior Advocate with Mr. Zarir Bharucha i/b. Ashwin Shankar for Defendant No.1. Mr.O. Mohandas i/b. M/s. Little & Co. for Defendant No.2. CORAM : S. J. VAZIFDAR, J. DATED : 2ND NOVEMBER, 2007. JUDGEMENT : It would be convenient to deal with both the notices of motion by a common order as the facts involved therein are the same. 2. Defendant no.1 is a company based in Hongkong and also has an office in Mumbai, India. Defendant no.2 is MSTC Limited, a Government of India enterprise. 3. The plaintiff has sought a declaration that there is no 3 contract between defendant no.1 and itself in respect of two sets of documents, I will shortly refer to. The plaintiff has also sought a declaration that defendant no.1 is not entitled to claim from it any amount by way of damages or otherwise under the said documents. The plaintiff has further sought a perpetual order and injunction restraining defendant no.1 from claiming any amount under the said documents and from proceeding further with the proceedings filed by defendant no.1 in the High Court of Judicature, Queen's Bench Division, Commercial Court, Royal Court of Justice in the United Kingdom. 4. Notice of Motion No. 3472 of 2006 is taken out by the plaintiff seeking an injunction restraining defendant no.1 from proceeding and/or taking any steps in furtherance of the English proceedings. By an order dated 18th October, 2006, I had granted an ad-interim order to this effect in favor of the plaintiff. Notice of Motion No.1343 of 2007 is taken out by defendant no.1 seeking a discharge / setting aside of the ad-interim order and an order staying this suit until the hearing and final disposal 4 of the suit filed by defendant no.1 in the United Kingdom. 5. The subject matter of this suit and of the proceedings instituted by defendant no.1 in the United Kingdom are two contracts for sale of steel by defendant no.1 to the plaintiff allegedly arrived at between the plaintiff and defendant no.1. Defendant no.1 contends that the plaintiff is in breach of the said contracts and has, therefore, claimed damages in the English proceedings. The plaintiff on the other hand contends that neither of the contracts was arrived at and further that the terms and conditions purportedly incorporated therein by reference were never forwarded to the plaintiff. Further in respect of one of the contracts, in any event, the plaintiff is not liable as it is addressed to defendant no.2. 6. There is and can be no dispute that ordinarily this Court would have jurisdiction and that no part of the cause of action has arisen in the United Kingdom. Defendant no.1 has based the English proceedings and the reliefs claimed in its Notice of Motion on an English non-exclusive jurisdiction clause contained in conditions of sale, the receipt whereof is denied by the plaintiff. 5 7. Before going further it is important to note that Mr.DeVitre, the learned Senior Counsel appearing on behalf of defendant no.1, expressly stated that he would not deal with the merits of the rival contentions including regarding the formation of the contracts and the terms and conditions thereof. I will therefore state the facts only briefly. FACTS - 8(A). In respect of the first alleged contract, an Order Confirmation dated 31st March, 2005 was sent by defendant no.1 to the plaintiff. The first two sentences thereof read: "Thank you for your firm proposal. We are pleased to accept the order as under-". This is followed by certain terms and conditions including as regards quantity, price and mode of payment. It is necessary to note the term regarding payment, which reads: "Payment - by irrevocable, confirmed, sight LC allowing TT reimbursement". The document concludes: "Please counter sign in acceptance. Our formal Sales contract will follow shortly". One Sanjay Ajmera of the plaintiff signed the documents for the plaintiff under the words: 6 "Counter signed in acceptance". The plaintiff contends that Sanjay Ajmera signed the documents in token of receipt and not in acceptance of all the terms and conditions. (B). Defendant No.1 thereafter on 6th April, 2005 sent a "Sales Contract" containing detailed terms and conditions. Admittedly, the plaintiff suggested alterations, written in hand, in respect of the Coil Weight and the mode of payment. It is pertinent to note that the Sales Contract expressly provided that the payment terms mentioned must be strictly conformed to. Whereas the Sales Contract provided that the payment be made by full workable Irrevocable Confirmed Sight Letter of Credit with confirmation costs for the buyer / applicant's account, to be established by a first Class Bank in India (to be acceptable to the Seller) in terms of the contract in favor of defendant no.1, the plaintiff suggested that the Letter of Credit should be 120 days usance LC. Whereas the Sales Contract stipulated that the Letter of Credit should be in their hands latest by 8th April, 2005, the plaintiff suggested that the date be 15th April, 2005. 7 Defendant No.1, however, did not respond to the amendments proposed by the plaintiff. The plaintiff, therefore, contends that there was no concluded contract between defendant no.1 and itself. (C). The last clause of the Sales Contract reads as under: "Conditions of Sale: As per attached and are expressly incorporated into this contract." The plaintiff, however, contends that no such terms were attached to the document and that it was not aware of the same. It is, therefore, submitted that the parties were not ad idem regarding the terms of the contract. The terms include clause 15 containing the English non- exclusive jurisdiction clause which reads as follows :- "15. In case of a dispute or disagreement arising in respect of this contract, the Seller and Buyer will attempt to resolve such disputes in an amicable manner. The validity, construction and performance of the contract shall be governed by the laws of England and any disputes, differences or questions that may arise under or in relation to the contract (including any 8 disputes, differences or questions relating to its validity and construction) which are not settled by negotiation between the Seller and the Buyer or customer within 10 (ten) days after either party has requested the other party to enter into such negotiation, shall be referred to the non- exclusive jurisdiction of the courts of England to which the Seller and the Buyer hereby submit, unless the Seller, should elect within a further period of 10(ten) days to have the dispute determined by arbitration. If the Seller so elects to arbitrate, the arbitration shall take place in London in accordance with the Rules of the London Court of International Arbitration (“LCIA”). The number of arbitrators shall be three, one to be nominated by each party and the third (Chairman) to be of a nationality independent of the parties and to be nominated by the other two arbitrators failing which the LCIA. The parties agree that services of any notices in connection with any such legal proceedings or arbitration effected at the addresses given in the contract shall be determined to be valid notice.” 9(A). This brings me to the second alleged contract. Defendant no.1 forwarded another Order Confirmation dated 28th April, 2005. The document is similar to the Order Confirmation dated 31st March, 2005 in respect of the particulars I have set out in 9 reference to the same. It was also signed by the said Sanjay Ajmera in a similar manner. (B). As in the first case, the Order Confirmation dated 28th April, 2005 was followed by a "Sales Contract” dated 3rd May, 2005. The Sales Contract is similar to the Sales Contract dated 6th April, 2005. On this Sales Contract too the plaintiff proposed amendments as it did to the earlier Sales Contract dated 6th April, 2005. The plaintiff contends that the conditions of sale in this case were also not received and that there was no response from defendant no.1 to the alterations proposed by the plaintiff. (C). It is pertinent to note moreover that the Sales Contract is addressed to defendant no.2 as the customer. The Sales Contract provides : "Further to our recent negotiations, we have pleasure in confirming our sale to you of the following: ....". Thus, in addition to the contentions raised in respect of the first alleged contract, the plaintiff has also contended that assuming that the second contract was finalized the case, if any, of defendant no.1 is against 10 defendant no.2 and not against the plaintiff. 10. Though Mr.DeVitre categorically refused to deal with the merits of the disputes it is necessary to identify hem. (A). Both the Sales Contracts provided that the payment terms were to be strictly conformed to. The last date by which the Letters of Credit were to be in the hands of defendant no.1 was substantially before the date of shipment. The amendment proposed by the plaintiff was that the Letters of Credit should be 120 days usance LC. Payment is an essential term of a contract. The mode of payment was clear and was made an essential term of the contract. The amendments proposed by the plaintiff were indeed material and in respect of essential terms of the agreement. They would carry the date of receipt of payment well beyond the date of shipment. Defendant no.1 did not respond to the counter-offer. The plaintiff therefore submits that there is no concluded agreement. (B). As regards the second contract it is further alleged that it is defendant no.2 and not the plaintiff who is liable even assuming the contract was entered into. 11 (C)(i). The most important dispute for a consideration of these applications is the plaintiff's denial of the receipt of conditions of sale which, included clause 15, the English non-exclusive jurisdiction clause, stated to have been attached to the sale agreements in both cases. (ii). Thus the disputes are not restricted to the legal effect of admitted documents or transactions. In other words, they are not restricted to questions of formation or existence of contracts to be decide on legal principles based on admitted facts and documents. They also include disputes as to the existence of the facts themselves. 11. Defendant no.1, however, even before the issuance of the Letters of Credit or before any response to the proposed amendments shipped the goods to India. Defendant no.1 vide e-mail messages dated 9th May, 2005 and 10th May, 2005 stated that in respect of the first contract the vessel was to arrive in Mumbai by 10th May, 2005 and 30th May, 2005 respectively. The plaintiff was called upon to establish the Letter of Credit on an urgent 12 basis. The plaintiff by its letter dated 11th May, 2005 stated that the Letter of Credit was being issued by defendant no.2 on its behalf and that defendant no.1 may proceed with the shipment as planned. The plaintiff further assured defendant no.1 that it would organize the Letter of Credit at the earliest and hopefully by the following week. 12. The goods thereafter landed in Mumbai but the plaintiff refused to accept delivery thereof. 13. According to defendant no.1, during the course of negotiations, there was a fall in the international prices of steel. The plaintiff therefore failed to take delivery of the cargo and pay for the same. Defendant no.1 contends that it was forced to sell the goods at a loss. Defendant no.1 through its Solicitor' s letter dated 24th August, 2005 demanded a sum of US $ 14,10,225.14 /- towards damages. The plaintiff by its advocate's letter dated 23rd September, 2005 denied the claim. Defendant no.1 therefore adopted proceedings in the English Courts to recover damages on account of the plaintiff's breach of the contracts. 14. The plaintiff contends that defendant no.1 shipped the 13 goods despite no contract having been arrived at between the parties with a view to portray that there was a concluded contract between them in an attempt to force the plaintiff to make payment for the goods at a price which was higher than the prevailing market price for the said goods. As regards the letter dated 11th May, 2005 the plaintiff has given a detail explanation contending that the same was given at the insistence of one Mhatre, a representative of defendant no.1 and that it does not evidence a concluded contract. It is not necessary, in view of Mr.DeVitre's stand on merits, to consider the merits of this stand. THE LEGAL PROCEEDINGS - 15(A). On 20th October, 2005, defendant no.1 filed an application in the High Court of Judicature, Queen's Bench Division, Commercial Court, Royal Court of Justice, United Kingdom for permission to issue a claim form for service out of jurisdiction on the plaintiff. Under C.P.R. 6.20(5)(c) and (d) a claim form may be served out of the jurisdiction of the Court in the United Kingdom with the permission of the Court if a claim is made in respect of a contract 14 where the contract is governed by English laws or contains a term to the effect that the English Courts shall have jurisdiction to determine any claim in respect of the contract. The witness statement in support of the application, inter-alia, in paragraph 10, reserves the right to bring additional proceeding against defendant no.2. The plaintiff, therefore, contends that this is an express admission by defendant no.1 that it has a claim against defendant no.2 and not merely against the plaintiff. (B). The application was an ex-parte application made without notice to the plaintiff. By an order dated 26th October, 2005, the application was granted and defendant no.1 was permitted to serve the claim form on the plaintiff. Thereafter, the Solicitors of defendant no.1 forwarded the original claim form to the plaintiff's Solicitors in India under cover of their letter dated 20th December, 2005. (C). The plaintiff filed an application challenging the jurisdiction of the English Court and for setting aside the service on the plaintiff out of jurisdiction. This application was dismissed by an order dated 15 28th July, 2006. A plain reading of this order makes it clear that the learned Judge has not expressed a final opinion on any of the points raised but has only held that defendant no.1 has a good arguable case. Indeed, the learned Judge has expressly observed that the plaintiff' s case may well be accepted finally. This is clear inter-alia from paragraphs 6 and 9 of the order, which I will set out later. 16. On 28th September, 2006, the Plaintiff filed the present suit and took out Notice of Motion No. 3472 of 2006. THE ANTI-SUIT AND ANTI-ANTI SUIT INJUNCTION APPLICATIONS OF THE PLAINTIFF AND DEFENDANT NO.1 - CONTEMPT BY DEFENDANT NO.1 - 17. The following facts demonstrate how defendant no.1 and the plaintiff pursued their respective anti-suit injunction applications in the English proceedings and in this suit respectively. 18(A). The plaintiff filed a preceipe dated 4th/6th October, 2006 for circulation and production of the papers and proceedings in Notice of Motion No.3472 of 2006 on 9th October, 2006 at 11.00 a.m. as it intended making an application for ad-interim reliefs in terms of the reliefs claimed in the Notice of Motion. 16 (B). By a letter dated 5th October, 2006 the plaintiff's advocates gave notice to defendant nos.1 and 2 of the said application to be made on 9th October, 2006 at 11 a.m. and forwarded all the papers and proceedings to them. (C). An application for ad-interim relief was made by the plaintiff on 9th October, 2006. The defendants did not appear. The application was adjourned to 11th October, 2006. (D). By a letter dated 9th October, 2006 the plaintiff' s advocates informed the defendants of the same. 19(A). On 10th October, 2006 defendant no.1 made an application to the English Court to restrain the plaintiff herein from taking any further steps in the above suit and from instituting or pursuing any other proceeding against defendant no.1 arising out of or in connection with the said contract. The witness statement in support of the anti-suit and anti-anti-suit reliefs claimed by defendant no.1 before the English Court, inter-alia, states as under :- ". . . . However, so long as the Claimant remains a party to the Indian proceedings, there is a risk that the Defendant might 17 obtain some sort of judgment as to the position of...." "..... that it might seek to obtain an order from the Indian Court before Wednesday, 11 October, when its application is due to be heard." (B). Mr. Dwarkadas commented strongly on the nature of and the language used in the witness statement which he said were disparaging about the Courts of this country. I am not quite sure what the deponent of the witness statement meant by saying that “.....there is a risk that the defendant (plaintiff herein) might obtain some sort of judgment.......". People however are certainly entitled to their views of and to determine their level of confidence in the legal system of a country. I would not deny defendant no.1 the reliefs I believe it is entitled to because it may have little regard for the Courts of this country. (C). I cannot however understand how any objection could possibly validly be taken to a party filing an application in this Court. Defendant no.1 was entitled to appear and to oppose the application. It ought to have done so if it thought that “there is a risk that the 18 Defendant (Plaintiff herein) might obtain some sort of judgment”. The facts that follow establish that not only did defendant no.1 have ample opportunity to defend the plaintiff's ad-interim application, it in fact instructed a leading solicitor's firm to attend the Court on its behalf to watch the proceedings in this Court but not to appear in them. Admittedly, the Indian Solicitors kept defendant no.1 and its English Solicitors informed of what transpired in Court. (D). On the other hand and in stark contrast, the application by defendant no.1 to the English Court was without notice to the plaintiff. The application did not even disclose to the English Court the fact that defendant no.1 had been served with the notice dated 5th October, 2006 stating that the application was to be made on 9th October, 2006. Nor did it disclose the fact that it had been served with a notice dated 9th October, 2006 stating that the application was made on 9th October, 2006 and was adjourned to 11th October, 2006. Nor did it disclose the fact that it had instructed solicitors to attend this Court and that they had kept defendant no.1 informed of the proceedings. To specific queries in this regard, counsel for defendant no.1 were 19 unable to indicate from the record before me that these facts were brought to the attention of the English court. (E). By an order dated 10th October, 2006 the application was allowed and the learned Judge of the English Court restrained the plaintiff herein upto and including 20th October, 2006 or further order in the following terms :- “(a) From taking any further steps in proceedings issued by it on or about 4 October 2006 in the High Court of Judicature at Bombay known as Suit No. 2866 of 2006 and (b) From instituting or pursuing any other proceedings against the Applicant arising out of or in connection with either or both of the contracts for the sale by the Applicant of 4250 metric tonnes and 8000 metric tonnes respectively of steel coils, contained in or evidenced by order confirmations dated 31 March 2005 and 28 April, 2005 and/or sales contracts dated 6 April 2005 and 3 May 2005.” (F). The order dated 10th October, 2006 was served on the 20 plaintiff on 10th October, 2006 by a communication dated 10th October, 2006.It is pertinent to note, for what transpired later, that the said communication, inter alia, stated:- "This Order continues until 20 th October 2006 when a further hearing has been scheduled, constituting the return date referred to in the enclosed Order and the Application Notice. Please note we intend to apply on that day for the Order to be made permanent. You have a right to attend on that day to ask the Court to vary or discharge this Order, and we advised you to appoint English solicitors to represent you as soon as possible." (emphasis supplied). (G). The order does not furnish any reasons. I cannot speculate about the reasons which may have persuaded the learned Judge to pass the orders. 20 (A). The matter appeared in this Court on 11th October, 2006 for ad-interim reliefs. Defendant no.1 again refused to appear. It was adjourned once again to 16th October, 2006 when it was heard. Defendant no.1 again refused to appear. The ad-interim order was pronounced in open Court on 18th October, 2006. Defendant no.1 yet again refused to appear. A copy thereof was forwarded to the Defendants on 19th October, 2006. 21 (B). The Solicitors of defendant no.1 were however present in Court throughout observing the proceedings but not appearing in them. Nor did the Solicitors of defendant no.1 even disclose this to the Court or to the plaintiff. 21. By a detailed order dated 18th October, 2006, I granted an ad-interim order in terms of prayer (a) of the notice of motion thereby restraining defendant no.1 from proceeding and/or taking any steps in furtherance of the claim filed by it against the plaintiff in the Royal Court of Justice in the United Kingdom. I noticed that I would be extremely hesitant to grant an anti-suit injunction on the principle of comity and that my reluctance would be greater in view of the order dated 10th October, 2006 granted by the English Court. The last sentence in para 2 of my order is incorrect as the injunction did not restrain the plaintiff from proceeding with the proceedings in the Court of United Kingdom. The inadvertent error was on my part and quite clearly did not form the basis of the order. 22. In the meantime, defendant no.1 by its Solicitor's letter dated 17th October, 2006, enclosed by way of service upon the 22 plaintiff a copy of an application dated 17th October, 2006 and the second witness statement filed in the English Court on the same day. The notice specifically stated that the hearing of the anti-suit application in the English Court had been scheduled for 20 th October, 2006 and that defendant no.1 intended applying on that date to continue the injunction granted on 10th October, 2006. It was further stated that the plaintiff had a right to attend the hearing to ask the Court to vary or discharge the order dated 10th October, 2006. 23(A). Despite this curiously, defendant no.1 filed a third witness