Arb.A. 8/2010 BEFORE HON’BLE MR. JUSTICE A.C. UPADHYAY JUDGMENT AND ORDER This appeal under Section 37 of the Arbitration and Conciliation Act, 19 96, is directed against the impugned order dated 4.12.2010 passed by the Additio nal Deputy Commissioner, Dima Hasao, Halflong in Misc. Case No.8/2010, whereby t he interim injunction order was vacated. 2. The facts leading to the filing of this appeal may be summarized, in bri ef, as follows - The appellant as a partnership firm, having expertise in extracting/fell ing/handling and transporting raw materials for paper mills, entered into an agr eement with the respondent No.1, on 6.11.2008. In pursuance of the aforesaid agr eement, the appellant, as a contractor, agreed to fell/extract/handle/transport and supply bamboos, for the Hindustan Paper Corporation (HPC). The said agreemen t agreed to continue the entrusted work in force and effect, for a period of 11 (eleven) years, with liberty to parties to terminate the agreement by serving th ree (3) months notice. 3. It is also stipulated vide clause 9.1 of the said agreement that in case of intended termination of contract, in the event of any dispute/controversy et c. each party will appoint a representative within a period of 30 (thirty) days from the date of arising of the dispute. Thereafter, make an endeavour to resolv e the dispute amicably within a period of 30 (thirty) days from the date of appo intment of the representative or within such extended period, as may be amicably agreed to by the parties. It has also been agreed that no formal arbitration pr oceedings would commence, until internal dispute resolution procedure has been e xhausted. 4. In terms of Clause 9.2 of the agreement, arbitration was agreed to be in itiated in-accordance with the provision of the Arbitration and Conciliation Act , 1996, by a sole, neutral arbitrator, agreed by the parties to the dispute, wit hin 30 (thirty) days from the date of request by any party, to initiate arbitrat ion or within such extended period agreed to by the parties to the dispute. Howe ver, in the case of failure to agree to appoint the sole arbitrator, it was agre ed to be made in-accordance with the provision of Arbitration and Conciliation A ct, 1996 (hereinafter 1996, Act). 5. On 14.9.2010, the respondent No.1 served a notice upon the appellant see king an explanation as to why appropriate action should not be taken, for non-su pply of bamboo to HPC Limited, as per the terms of the agreement. On receipt of said show cause notice, the appellant submitted reply on 22.9.2010, narrating de tailed reasons, for non-performance of the terms of the contract with regard to the supply of bamboos. The appellant detailed the reasons, which included deteri orating road condition for movement of trucks in Meghalaya; Railway strikes from April, 2009 to May, 2009, and enormous extremist problems prevailing in the loc ality. However, work order bearing No.2717-39 dated 7.8.2010, were issued in fav our of the petitioner, for performance of the work in pursuance to the said agre ement. 6. The appellant after having came to know from the reliable source that th e respondent No.1 is intending to terminate the agreement in order to engage a t hird party, in violation of clause 9.2 of the said agreement, preferred an appli cation under Section 9 of the Arbitration and Conciliation Act, 1996, before the Court of Deputy Commissioner, Dima Hasao, being Misc. Case No.8/2010, praying f or execution of terms of the agreement aforesaid. The Additional Deputy Commissi oner, Dima Hasao, Halflong, on consideration of the said application passed an o rder dated 2.11.2010, to show cause as to why prayer made by the applicant shoul d not be granted to prevent the respondent No.1 from violating the terms and con ditions of the agreement and as an interim measure, the respondent No.1 was rest rained from doing any act in violation of the terms of the said agreement till t he next date fixed for hearing i.e. on 2..12.2010. 7. The appellant thereafter, on 2.11.2010, received a letter of termination of agreement, for non-supply of requisite quantity of bamboo, as per the terms of the agreement dated 6.11.2008. On 4.12.2010, an application was filed by the respondent No.1 for vacation/modification of the exparte interim order dated 2.1 1.2010, passed by the Additional Deputy Commissioner, Dima Hasao, Halflong, in M isc. Case No.8/2010. Accordingly, the learned Additional Deputy Commissioner, Di ma Hasao, Halflong, vide order dated 4.12.2010, vacated the order of injunction on the ground that Clause 6.3 of the agreement stipulated that both the parties had agreed that the contract can be terminated at any time by giving three (3) m onths notice. The operative extract of the impugned order dated 4.12.2010, reads as follows - I have also read Clause 6.3, which shows that both parties agreed that the appo inted can be terminated at any time by giving three months notice. I have also s een the termination notice. Since Dima Hasao Autonomous Council has terminated t he agreement as per the terms and conditions of the agreement, the action of the applicant cannot be faulted with. The learned Advocate appearing for Council ha s also submitted that the interim order passed by this Court, if is allowed to c ontinue, will cause severe revenue loss to the State. Since, the whole apprehens ion of Tribal Cultivation and Harvesting Agency was that the applicant is likely to terminate the agreement without giving them the requisite notice, I find tha t in view of the fact that the applicant has already terminated the agreement gi ving them the required notice under the terms and conditions of the agreement. In fact, the two paper mills, being the Public Sector Undertakings, whic h concerns large scale functioning, are depending mainly on the appropriate, pro per and regular supply of raw material i.e. bamboo. Hence, after careful conside ration of the matter and after going through the papers submitted by both the pa rty as well as after hearing of submission made by the learned Advocates of both the party, the Tribal Cultivation and Harvesting Agency was unable to fulfill t he terms and conditions of the agreement and hence I find that there is no merit /ground for keeping further extension of injunction order passed by this Court d ated 2.11.2010. Therefore it is ordered that the injunction order dated 2.11.2010 passed by this Court stands vacated. 8. It has been submitted on behalf of the appellant that in terms of the Fo rce Majeure clause in the agreement, even if the appellant Contractor failed to perform the contract, he would not be responsible and he would be exempted from performing the agreement during the Force Majeure period. Therefore, the termina tion of contract is being illegal, the vacation of the injunction by the learned Court below is liable to be set aside. 9. Learned counsel for the appellant vehemently submitted that different co rrespondences amongst the appellant, the respondent Council and the Paper Mills, clearly show that at the relevant period, the appellant was unable to supply re quired quantity of bamboo, due to insurgent activities prevailing in the Distric t, leading to the disturbance in road and Railway communication. In reply to the show cause issued by the respondent Council, the appellant also stated to have informed by referring to different correspondences between the parties, contendi ng inter-alia, that regular supply was disrupted due to the insurgent activities and that the appellant would make best effort to continue the supply of bamboos as before. However, the respondent Council having been dissatisfied with the re ply, terminated contract with the appellant by giving 90 days notice. 10. Learned counsel for the appellant emphasized on the fact that breach of any of the terms of contract during the continuance of Force Majeure Clause, cou ld not have given rise to grounds for termination of the contract. Therefore, th e termination of contract by the respondent being not valid in the eye of law, t he appellant is entitled to interim relief as prayed for, to resume the work ent rusted by the respondents 11. Mr. D.K. MKisra, learned counsel for the respondent No.1 however, submit ted that since the performance of the appellant in supplying the allotted quanti ties of bamboo was very poor in the Nagaon Paper Mill of Jagiroad and Cachar Pap er Mill of Panchgram, the respondent No.1 expressed their grave concern because of disruption in supply drastically affected their production process. Further m ore, poor supply of bamboo by the appellant simultaneously resulted into negativ e trend for the Council in accumulating revenue. 12. Learned counsel for the respondent No.1 further submitted that the appel lant had entered into an agreement with the respondents knowing fully well the p revailing situations and the disturbances in the locality. The decision to termi nate the contract was taken after considering all these aspects of the matter n the Executive Committee Meeting of the respondent No.1, since the Council failed to fulfill its demand for supply of bamboo to the Central Government Public Sec tor Units due to the failure of the appellant. Consequently, in terms of the pro vision of Clause 6.1 of the agreement, the respondent Council finally had to ter minate their agreement with the appellant. 13. Before we embark on to discussion of the issues raised by the learned co unsel for the appellant as well as the respondents, it would be in fitness of th ings to extract herein below, the relevant terms and conditions of the contract signed between the parties, which read as follows - TERM AND TERMINATION 6.1 Subject to the provisions of clause 8.1 below regarding gregarious flowering this agreement shall continue in forced effect for a period of 11 (eleven) year s from the commencement date. 6.2 Either party shall have right to renew this agreement on such terms and cond itions which shall be mutually agreed. However, if the Council decided to make f resh agreement upon expire of this agreement, it shall give the first preference to the Contractor and only after obtaining refusal (which refusal shall be comm unicated within 30 days of the Council expressing of this nature with another pa rty). 6.3 That the parties shall have the right to terminate the agreement with 3 (thr ee) months notice. The rights and obligations of the parties on such termination shall be determined mutually, failing which, it shall be determined by arbitrat ion as stated later in this agreement. 9.1 In the event of any dispute, controversy or claim arising out of or relating to this agreement including, without limitation, the breach, intended terminati on performance, validity or invalidity, interpretation or application of this ag reement or as to the rights duties or liabilities of the parties hereunder (each a ’Disputer’) each party will appoint a representative for the purpose of endea vouring to amicably resolve such dispute. The representative shall be appointed within a period of 30 (thirty) days from the date of occurrence of the dispute. The parties shall endeavour to resolve such dispute amicably within 30 (thirty) days from the date of appointment of the last of the representatives or within s uch extended period as may be mutually agreed to between the parties to the disp ute. No formal arbitration proceedings shall commence until this internal disput e resolution procedure has been exhausted. 9.2 The arbitration shall be in accordance with the provision of the Arbitration and Conciliation Act, 1996 by a sole, neutral arbitrator agreed by the parties to the dispute within 30 (thirty) days from the date of a request by any party t o initiate arbitration (or such extension period agreed by the parties to the di spute). In case there is no agreement on sole arbitrator shall be made in accord ance with the provinces of the Arbitrator and Conciliation Act, 1996. The venue of the arbitration shall be at Halflong. The decision of the Arbitrator shall be final and binding. FORCE MAJEURE : 10.1 The Contractor shall not be held liable for non performances and/or any los ses if the fulfillment of any term and provision of this agreement are delayed o r prevented or failed owing to any act of nature or act of law full Government, revolution, direct of indirect consequences of war, declare or undeclared, hosti lities, national emergency, flood, riot, strikes, civil or military commotion, l ockouts, fire, earthquake or other cases, including insurgency related activitie s which are prevailing in the entire North East India at present, not within the control of the Contractor. If the Contractor is constrained to invoke this Forc e Majeure clause then it will inform the Council immediately about the reasons o f invoking the Force Majeure clause and the Contractor will be exempted from per forming the agreement during the Force Majeure period and the Council will not l odge and any claim nor will demand nor be entitled to any royalty during the per iod. 10.2 NOTICE Any notice or the order communication required to be given here under shall be i n writing and given by post or facsimile at the addresses contained in this agre ement or such other address as shall been notified by either party to the other for the purpose of this agreement. 15. On plain reading of the aforesaid terms and conditions of the agreement, it is apparent that the contract was for a period of 11 years and both the part ies had the right to terminate the contract by giving 90 days notice. In terms o f the clause 4, the Contractor is exempted by the respondent Council from perfor ming the contract, on the ground of Force Majeure and during the Force Majeure p eriod, the respondent Council would not lodge any claim, nor demand royalty. 16. Learned counsel for the appellant submitted that parties were well aware of the disturbed political situation attended by insurgent activities in the su rrounding areas of operation, disrupted supply of bamboo, thereby, frustrate the contract, but for no fault of the Contractor. It is in these circumstances, wit h a view to avoid the change and to protect the interest of both the parties, Fo rce Majeure clause was incorporated in the contract, under which parties agreed to exempt, the Contractor from performing the contract during the period of Forc e Majeure. Learned counsel for the appellant further pointed out that it was cle ar in the mind of the parties that contract is to continue its full term i.e. fo r the period of 11 years and the failure to perform the contract in between, for any ground specified in Force Majeure clause of the agreement, would not stand in the way. 17. According to the appellant it is not conceivable that the agreement, whi ch was executed with a precondition of protecting non performance of the contrac t, on the ground of Force Majeure, could have been applied as an weapon to termi nate the contract. 18. Learned counsel for the appellant submitted that the object of the cont ract and the surrounding circumstances, ascertain with certainty that the intent ion of the parties was not to exercise the right to terminate, even if there is violation, in terms of Clause 6.3 of the contract during continuance of Force Ma jeure, as detailed in clause 10 .1. 19. M. B.C. Das, learned senior counsel appearing for the appellant, submitt ed that a harmonious interpretation of the term leads to the conclusion that the contract could not be terminated by invoking clause 6.1, since the intention of the parties was not to terminate the contract on the plea of failure to perform the contract if such failure was due to the insurgency etc. covered by Clause 1 0 of the contract. Mr. Das, learned senior counsel pointed out that from the cla use of the agreement, it is well nigh clear that the contract, may be liable to be terminated only on reasonable ground beyond Force Majeure. 20. The term Force Majeure is a French version of relative expression Vis-Ma jor, but its wider connotation and analysis would reflect that where reference i s made to Force Majeure, the intention is to save the performing party, from the consequences of anything, over which he would have no control. The concept of F orce Majeure is a device by which even continuance of business does not get frus trated, if it is beyond control of the parties. Therefore, as a logical conclusi on, Mr. Das, learned senior counsel submitted that it was the intention of the p arties to save the contract at all cost, any termination on any of the grounds c aused by Force Majeure will be arbitrary and not sustainable in law. 21. Learned counsel for the appellant pointed out section 9 of the Arbitrati on and Conciliation Act, 1996, provides for interim protection to a party in res pect of a dispute, which is subject to arbitration.Therefore, interim relief is available from the Court even before the commencement of the arbitration proceed ings. The only condition which is required to be satisfied is existence of a val id arbitration agreement and the intention of the appellant to carry the dispute to arbitration. The Section 9 of the Arbitration and Conciliation Act, 1996 pro vides as follows - 9. Interim measures, etc. by Court.-A party may, before or during arbitr al proceedings or at any time after the making of the arbitral award, but before it is enforced in accordance with Section 36, apply to a Court:- (i) for the appointment of a guardian for a minor or a person of unsound mind fo r the purposes of arbitral proceedings; or (ii) for an interim measure of protection in respect of any of the following mat ters, namely:- (a) the preservation, interim custody or sale of any goods which are the subject -matter of the arbitration agreement; (b) securing the amount in dispute in the arbitration; (c) the detention, preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration, or as to which any question ma y arise therein and authorizing for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorizing a ny samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full informati on or evidence; (d) interim injunction or the appointment of a receiver; (e) such other interim measure of protection as may appear to the Court to be ju st and convenient, and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it. 22. Learned counsel for the appellant further submitted that the appellant h as a very good case for setting aside the termination of the contract by the Arb itrator since he has invested a huge amount of money besides men and material. O ver and above the termination of the contract would cause irreparable loss to in jury. Further more; the balance of inconvenience is in favour of the appellant f or grant of interim order in his favour. In support of his contention, learned c ounsel for the appellant has relied on the decision reported in (2009) (5) SCC 3 13 (Bank of India Vs. K. Mohandas), the Hon’ble Supreme Court held in Para 28 an d 31 is as follows - 28. The true construction of a contract must depend upon the import of the word s used and not upon what the parties choose to say afterwards. Nor does subseque nt conduct of the parties in the performance of the contract affect the true eff ect of the clear and unambiguous words used in the contract. The intention of th e parties must be ascertained from the language they have used, considered in th e light of the surrounding circumstances and the object of the contract. The nat ure and purpose of the contract is an important guide in ascertaining the intent ion of the parties. 31. It is also a well-recognized principle of construction of a contract that it must be read as a whole in order to ascertain the true meaning of its several clauses and the words of each clause should be interpreted so as to bring them i nto harmony with the other provisions if that interpretation does no violence to the meaning of which they are naturally susceptible. 23. Mr. D.K. Mishra, learned senior counsel appearing for the respondents in reply to the contention made by the learned counsel for the appellant submits t hat in a contract between the parties, when a clause for termination of contract is incorporated, it would imply that failure of any of the parties would result in termination of contract. More so, although the contract was signed for a per iod of 11 years from the date of commencement, never the less, either party was given the option to terminate the agreement with three (3) months notice. The ri ght to terminate the contract was made available in the agreement, on the teeth of the Force Majeure clause, which therefore, clearly indicated that despite For ce Majeure, the parties were at liberty to terminate the contract. 24. Mr. Mishra, further contended that no such intention as emphasized by th e learned counsel for the appellant has been inserted in any of the clauses of t he agreement between the parties, to save the contract arbitrarily, despite fail ure of the parties to carry out the terms of the contract. Learned counsel for t he respondent pointed out that had the parties been having intention not to term inate the contract for any of the reasons indicated in Force Majeure then it wou ld have received some consideration and in that case it would have been definite ly reflected somewhere in the termination clause of the contract. Apparently the re is no indication of any restrictions in the termination clause of the contrac t to save termination during the period of Force Majeure. The clause Force Majeu re incorporated in the agreement is meant to save the parties from the liability , which could entail on the failure of any of the parties to execute the contrac t. The clause Force Majeure brought forth does not steal away the right of the p arties to terminate the agreement with three (3) months notice. Learned counsel for the respondent pointed out that it was due to miserable performance of the a ppellant. Consequent failure to meet the requirement of supply and especially lo ss of revenue compelled the respondent to terminate the agreement. 25. In the case of Dhanrajamal Gobindram Vs. Shamji Kalidas and Co. reported in (1961) SC 1285, the Apex Court held that the expression force majeure is not a mere French version of the Latin expression vis major . It is undoubtedly a term of wider import. Difficulties have arisen in the past as to what could l egitimately be included in force majeure . Judges have agreed that strikes, bre akdown of machinery, which, though normally not included in vis major are incl uded in force majeure . An analysis of rulings on the subject into which it is not necessary in this case to go, shows that where reference is made to force m ajeure , the intention is to save the performing party from the consequences of anything over which he has no control. This is the widest meaning that can be gi ven to force majeure , and even if this be the meaning, it is obvious that the condition about force majeure in the