*1* nms.2067.10.sxw kps IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.2067 OF 2010 IN SUIT NO.2063 OF 2010 Indiagames Ltd.. ..Plaintiff -Versus- Wireless Developer Inc. and another. ..Defendants .......... Mr.S.U.Kamdar, Senior Counsel a/w Pooja Patil, Amit Vyas and Varun Mamnia i/b Rajani Associates, for the Plaintiff. Mr.Pravin Samdani, Senior Counsel a/w Sahil, V.Desai, Ranjana Adhikari i/b Nishith Desai & Associates, for the Defendant No.1. .......... CORAM : S.C.DHARMADHIKARI, J. DATE : 26th November, 2010. P.C. 1 This is a Notice of Motion for interim reliefs and particularly restraining the Defendants from initiating and continuing the Arbitration proceedings, pursuant to a notice, under the aegis of the Defendant No.2. 2 The suit is filed claiming the following declaration and permanent injunction:- “(a) That this Hon’ble Court may be pleased to declare that the said Arbitration Agreement is not valid and binding agreement between the parties and thus inoperative and cannot be enforced upon; (b) That this Hon’ble Court may be pleased to declare that the purported arbitration agreement incorporated in the Amendment Agreement dated March 1, 2004 executed between the Plaintiff and the Defendant No.1 is vague and indeterminate and hence void and incapable of being *2* nms.2067.10.sxw enforced; (c) That this Hon’ble Court may be pleased to declare that Defendant No.2 has no jurisdiction under the Agreements and arbitration proceedings cannot be commenced or consummated under the aegis of Defendant No.2;” 3 It is contended that the Plaintiff has been engaged in the business of development, aggregation, publishing and distribution of mobile telecommunication content including wireless games, wallpapers, screensavers, ring tones. It is an Indian Company incorporated under the provisions of the Indian Companies Act, 1956. The Plaintiff was desirous of extending its business activities in United States of America by appointing some fit and proper person to be their agent for soliciting the contracts for the Plaintiff. 4 The Defendant No.1 is a company incorporated under the laws of United States of America and is engaged in the business of acting as intermediaries for mobile content owners and carriers. The Plaintiff, therefore, appointed the Defendant No.1 as its agent for USA in or about 2002. The contractual agreements in that behalf are entered into and are referred to in the plaint and particularly in paragraph Nos.2.1.3 and 2.1.4. In paragraph No.2.2 onwards the relevant clauses of the Standard Agent Agreement dated 23.05.2002 (Exhibit-A to plaint) have been reproduced and it is alleged that under the terms and conditions of this agreement, the Defendant No.1 was appointed as a representative of the Plaintiff for facilitating and maintaining the distribution of the Plaintiff’s contents as set out in the agreements. It is alleged that to the utter disappointment of the Plaintiff, the Defendant No.1 failed to facilitate distribution of the Plaintiff’s content to vital carriers and failed to discharge its duty to maintain relations with certain channels as required under the said agreements. However, the Defendant No.1 raised invoices on the Plaintiff *3* nms.2067.10.sxw for commission which necessitated the Plaintiff to incur costs amounting to Rs.20 lacs. It is stated that in 2006 the Defendant No.1 lost its channel relationship with “Verizon Wireless” one of the major brands operating through the “Qualcomm Brew System” and thereafter, there was no intermediary or other facilitation role played by the Defendant No.1 with regard to offering of the content of the Plaintiff to Verizon Wireless. Ultimately, the Plaintiff on its own accord approached the said Verizon Wireless. All these allegations are set out in paragraph No.2.5 and with relation to another carrier “Qualcomm”, more or less same allegations are made in paragraph No.2.6. It is in such circumstances, it is alleged that several letters and emails were exchanged disputing the payment of commission as per the invoices raised by the Defendant No.1 throughout 2008 and 2009. 5 The terms and conditions of the agreements are relied upon and it is then alleged that on 18.05.2010 the Plaintiff received a letter from the Case Manager of the International Centre for Dispute Resolution (ICDR), New York (Defendant No.2), requesting the Plaintiff to join ICDR as the Defendant No.1 had by virtue of amendment to the Standard Agent Agreement purported to refer the disputes thereunder to the Defendant No.2. The dispute pertains to non payment of consideration aggregating to USD 133000/-. It is alleged that the Defendant No.1 never served any communication on the Plaintiff about their desire to commence the arbitration. In reply to the letter dated 18.05.2010, on 11.06.2010 the Plaintiff expressed surprise on the matter being referred to the arbitration and stated that the arbitration clause is insufficient especially with respect to jurisdiction. In paragraph Nos.2.12 and 2.13 of the plaint, it is stated as under:- “2.12 The Respondent No.2 however, requested the Plaintiff to be present on the call and take up its *4* nms.2067.10.sxw grievance on the call. Accordingly, a team from both the parties were present on a call on June 15, 2010 with the concerned Respondent No.2 official. During the aforesaid call, the Plaintiff specifically declined to subject themselves to any arbitral or other such proceedings for adjudicating the matter. The Respondent No.2 consented to the fact that jurisdiction was unclear in the matter and asked both parties to give reasons for and against choosing Respondent No.2. The Respondent No.2 also offered mediation as an alternative for resolution of the dispute, a proposal which was not accepted by the Plaintiff during the call. 2.13 The Plaintiff, by its communication dated July 9, 2010 withdrew its earlier letter dated July 2, 2010 invoking arbitration addressed to Defendant No.1 pursuant to obtaining legal advice on this issue. By the said letter dated July 9 2010, Plaintiff informed Defendant No.1 that the arbitration clause is invalid, indeterminate, not final and is incapable of being enforced and that the same is an issue that first needs to be determined conclusively. Hereto annexed and collectively marked as Exhibit “F” and “G” are copies of the correspondences dated July 9, 2010 and July 2, 2010 referred to above respectively. The Plaintiff craves leave to refer to and rely upon other ancillary correspondences exchanged with Defendants.” 6 At this stage, it would also be convenient to reproduce the contents of Annexures-F and G to the plaint:- Annexure-F “We have obtained legal advise on this issue and understand that the arbitration clause is invalid, indeterminate, not final and is incapable of being enforced, which is an issue that first needs to be determined conclusively. In view thereof, please treat the notice addressed to you earlier as withdrawn and cancelled.” Annexure-G *5* nms.2067.10.sxw “Pls find attached our formal letter invoking arbitration against you as per the Amendment to our Standard Agent Agreement dated June 9, 2004.” 7 It is in such circumstances that the Plaintiffs have filed this suit for declaration and permanent injunction. 8 In furtherance of these reliefs, the instant Notice of Motion has been moved particularly on apprehension that the Defendant No.1 has already filed the claim before the Defendant No.2 and the meeting of the Arbitral Tribunal is scheduled pursuant to filing of the claim and the proceedings are on. The next hearing is to take place on 29.11.2010. 9 This suit and the Notice of Motion are pending for considerable period of time and ultimately, after service on the Defendant Nos.1 and 2 was complete and the contesting Defendant No.1 filed the reply affidavit that the Plaintiff proceeded to file its rejoinder thereto. 10 It is requested by both sides that on this material the Court should proceed to determine the request to grant injunction in aforementioned terms. 11 Having heard the detailed submissions and even perused the case law and the relevant statutory provisions, that I am of the view that the motion can be disposed of finally at this stage itself. 12 Mr.Kamdar, learned Senior Counsel appearing on behalf of the Plaintiff in support of this Notice of Motion, contended that there is no dispute about the proposition that a civil suit is maintainable to claim the aforesaid relief. Relying on the provisions of Section 45 of the Arbitration and Conciliation Act, 1996, Mr.Kamdar submits that the phraseology thereof is very clear and the power thereunder is absolute. The Section begins with non-obstante clause that nothing that has been stated in Part-I of the Arbitration and Conciliation Act, 1996 or in the Code of Civil *6* nms.2067.10.sxw Procedure, 1908 a judicial authority, when seized of an action in a matter in respect of which the parties have made an agreement referred to in section 44, shall, at the request of one of the parties or any person claiming through or under him, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed. Mr.Kamdar submits that irrespective of whether any request is made by the contesting Defendant in terms of this statutory provision, once the challenge is made to the arbitration, the Court can draw necessary conclusion in terms of Section 45 of the Arbitration and Conciliation Act, 1996 and must hold that the suit is maintainable and consider the application for grant of temporary injunction as made by the Plaintiff. Inviting my attention to clauses in the agreement in question and particularly clauses 3, 5 and 6, Mr.Kamdar submits that the instant suit is to enforce the agreement at Exhibit A to the plaint. Relying upon the averments in the plaint, Mr.Kamdar submits that the amendment at page 28 (Exhibit-B) contains an arbitration clause. Since heavy reliance is placed on the arbitration clause by both sides, therefore, it would be convenient to refer to the arbitration clause in the Standard Agent Agreement (Exhibit-B), which reads thus:- “Arbitration: Any controversy or claim arising out of or relating to this Agreement or any breach of it shall first be settled by arbitration according to the Rules of the American Arbitration Association and judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The prevailing party shall be entitled to reimbursement for costs and reasonable attorneys’ fees. If Arbitration proceedings fail, then the Parties are entitled to take further legal action.” 13 Mr.Kamdar submits that the suit clearly lays challenge to the arbitration agreement. He submits that breach of the terms and conditions *7* nms.2067.10.sxw of the agreement at Exhibit-A is on the part of the Defendant No.1, which commences the dispute and the arbitration is invoked by the Defendant No.1. The Plaintiffs have, therefore, conveyed their inability to participate in the arbitration. Mr.Kamdar submits that this arbitration clause is vague and indeterminate. 14 Mr.Kamdar submits that the phraseology of the arbitration clause makes it clear that in case of dispute the parties have recourse to both proceedings i.e. the arbitration so also the legal proceedings. If both are permitted to be resorted to for resolving the dispute under the contract, then, there is no finality attached to the arbitration proceedings and they are not of binding character. Mr.Kamdar submits that this makes the clause uncertain and when no procedure is provided for conduct of the arbitration proceedings, then, the arbitration clause cannot be relied upon to commence and institute the arbitration proceedings. Once it cannot be relied upon, then, continuation of the arbitration proceedings is wholly illegal. Thus, prima facie case for grant of interim injunction is made out by the Plaintiff. The balance of convenience is in favour of the Plaintiff because it is Indian based company. The Plaintiff will suffer irreparable loss and injury if it is forced to participate in the proceedings under such an arbitration clause when there are no set rules applicable to the arbitration proceedings. For all these reasons, Mr.Kamdar submits that the Notice of Motion be made absolute. 15 Mr.Kamdar, in support of the above contentions, relies upon the following decisions:- (i) 2004(3) All MR 409 (High Court of Bombay) Global Marketing Direct Ltd.. v/s GTL Ltd. and another. (ii) 2003(2) All MR 608 (High Court of Bombay) GTC Limited v/s Royal Consulting RV and another. *8* nms.2067.10.sxw (iii) (2007) 5 SCC 719 (Supreme Court) Jagdish Chander v/s Ramesh Chander and others (iv) (2005) 127 Comp.Cas.97 (SC) Shin-ETSU Chemical Co.Ltd. v/s Aksh Optifibre Ltd. and another. (v) Judgment dated 04th June, 2010 by the Delhi High Court in I.A. No.5382/2009 and I.A. No.6643/2009 in CS (OS) No.519/2009. (Sara International Ltd. v/s Golden Agri International PTE Ltd. and another). (vi) Judgment dated 06th September, 2010 passed by this Court in Notice of Motion No.2099/2010 in Suit No. 1916/2010. IND Synergy Ltd. and others. v/s Clearwater Capital Partners Singapore Fund III Pvt.Ltd. and another. (vii) 2008(2) Bom.C.R. 901 (Bombay High Court) Nilesh C. Sanghani and others. v/s Rakesh V. Zangda and others. (viii) 2005(1) R.A.J. 19 (Jammu & Kashmir High Court) Sharika Peeth Sanastha and others. v/s Bansilal Raina and others. (ix) Judgment dated 17th September, 2010 passed by this Court in Appeal (L) No.534/2010 in Notice of Motion No.1809/2010 in Suit No.1828/2010. MSM Satellite (Singapore) Pvt. Ltd. v/s World Sport Group (Mauritius) Limited. 16 On the other hand, Mr.Samdani, learned Senior Counsel appearing on behalf of the Defendant No.1, submits that the Defendant No.1 is appearing under protest and without giving up the plea of *9* nms.2067.10.sxw jurisdiction of this Court. He submits that the arbitration clause is an agreement between the parties to refer any dispute arising out of or relating to the contract to Arbitration and to be settled by the Arbitrator according to the rules of American Arbitration Association. Mr.Samdani submits that the Defendant No.1 has invoked the arbitration under the amendment to the Standard Agent Agreement entered into between the parties on 09.06.2004. Mr.Samdani submits that the International Centre for Dispute Resolution (ICDR), a division of the American Arbitration Association, is already seized of the matter. He submits that the date of commencement of the arbitration is 14.05.2010 and a perusal of the ICDR Rules shows that they are comprehensive in nature. Mr.Samdani submits that if Articles 1, 13 and 15 of the rules are perused, it is clear that all pleas that are being raised in the present suit are capable of being raised and dealt with by the Arbitrator. Mr.Samdani submits that the email of ICDR has been replied by the Plaintiff’s legal counsel on 11.06.2010 and he raised a preliminary objection to the venue of the arbitration proceedings. Inviting my attention to the communication in that behalf, Mr.Samdani submits that what the Plaintiffs urged therein is that they cannot submit to the jurisdiction of the ICDR as they believe that the arbitration has not been invoked validly. Mr.Samdani also invites my attention to the email dated 09.07.2010 and contends that it is clear from perusal of the letter dated 02.07.2010 which is a formal attachment to the Plaintiffs’ letter invoking arbitration, that the Plaintiffs are invoking arbitration as per the amendment to the Standard Agent Agreement dated 09.06.2004. There is absolutely no plea raised of uncertainty, finality and binding nature of the arbitration agreement between the parties. Instead relying upon the very same agreement the Plaintiffs seek to appoint an Arbitrator in India. In such circumstances, the Plaintiffs cannot turn *10* nms.2067.10.sxw around and thereafter, address a letter to the Defendant No.1 that they do not wish to proceed and rather raising a plea that the arbitration agreement is inoperative and unenforceable. Mr.Samdani submits that the contents of email dated 09.07.2010 clearly indicate that on legal advise the Plaintiffs stated that the arbitration clause is invalid, indeterminate, not final and is incapable of being enforced, which is an issue that the Plaintiffs would like to have determined conclusively and therefore, their earlier notice be treated as withdrawn and cancel. Mr.Samdani submits that this turn around, in the instant facts and circumstances, is enough to deny any discretionary and equitable reliefs in favour of the Plaintiffs. Mr.Samdani submits that once the Plaintiffs have understood the arbitration agreement as being certain and clear and they rely upon the same, then, it will not be open for them to urge that it is vague, uncertain, indeterminate and unenforceable. Therefore, assuming that the Plaintiffs would have made any application of the present nature, they are disentitled from any Injunctive reliefs. 17 Mr.Samdani submits that the test that will be applicable to such an application is the one summarized by the Supreme Court in case of Modi Entertainment Network and another Vs. WSG Cricket PTE.Ltd. (2003) 4 SCC 341, particularly paragraph No.24 thereof, which reads thus:- “24. From the above discussion the following principles emerge : (1) In exercising discretion to grant an anti-suit injunction the court must be satisfied of the following aspects : (a) the defendant, against whom injunction is sought, is amenable to the personal jurisdiction of the court; (b) if the injunction is declined the ends of justice will be defeated and injustice will be perpetuated; and (c) the principle of comity – respect for the court in which the commencement or continuance of action/proceeding is *11* nms.2067.10.sxw sought to be restrained - must be borne in mind; (2) In a case where more forums than one are available, the Court in exercise of its discretion to grant anti-suit injunction will examine as to which is the appropriate forum (forum conveniens) having regard to the convenience of the parties and may grant anti-suit injunction in regard to proceedings which are oppressive or vexatious or in a forum non-conveniens; (3) Where jurisdiction of a court is invoked on the basis of jurisdiction clause in a contract, the recitals therein in regard to exclusive or non-exclusive jurisdiction of the court of choice of the parties are not determinative but are relevant factors and when a question arises as to the nature of jurisdiction agreed to between the parties the court has to decide the same on a true interpretation of the contract on the facts and in the circumstances of each case; (4) a court of natural jurisdiction will not normally grant anti-suit injunction against a defendant before it where parties have agreed to submit to the exclusive jurisdiction of a court including a foreign court, a forum of their choice in regard to the commencement or continuance of proceedings in the court of choice, save in an exceptional case for good and sufficient reasons, with a view to prevent injustice in circumstances such as which permit a contracting party to be relieved of the burden of the contract; or since the date of the contract the circumstances or subsequent events have made it impossible for the party seeking injunction to prosecute the case in the court of choice because the essence of the jurisdiction of the court does not exist or because of a vis major or force majeure and the like; (5) Where parties have agreed, under a non-exclusive jurisdiction clause, to approach a neutral foreign forum and be governed by the law applicable to it for the resolution of their disputes arising under the contract, ordinarily no anti- suit injunction will be granted in regard to proceedings in such a forum conveniens and favoured forum as it shall be presumed that the parties have thought over their convenience and all other relevant factors before submitting to non-exclusive jurisdiction of the court of their choice which cannot be treated just an *12* nms.2067.10.sxw alternative forum; (6) A party to the contract containing jurisdiction clause cannot normally be prevented from approaching the court of choice of the parties as it would amount to aiding breach of the contract; yet when one of the parties to the jurisdiction clause approaches the court of choice in which exclusive or non- exclusive jurisdiction is created, the proceedings in that court cannot per se be treated as vexatious or oppressive nor can the court be said to be forum non-conveniens; (7) The burden of establishing that the forum of choice is a forum non- conveniens or the proceedings therein are oppressive or vexatious would be on the party so contending to aver and prove the same.” 18 Mr.Samdani submits that these principles applicable to anti- suit injunction will have to be satisfied and the Plaintiffs have not made out any such case as the plaint lacks any pleadings in that behalf, the Court must not grant any interim injunction in their favour. 19 Mr.Samdani seeks to distinguish the judgment of this Court relied upon by Mr.Kamdar and submits that in the decisions of the learned Single Judge in two cases, ultimately, relief has been denied as the Court refused to interfere in appellate and revisional jurisdiction. For all these reasons, Mr.Samdani submits that the interim injunction be denied. 20 With the assistance of the learned Senior Counsel appearing for the parties, I have perused the plaint and annexures thereto, so also, the prayers in the Notice of Motion and all affidavits on record. I have also perused the relevant statutory provisions and the decisions brought to my notice. 21 At the outset, it must be clarified that it is not necessary to go into detail and decide any wider issue particularly in regard to the jurisdiction of this Court and maintainability of the suit. Proceeding on the *13* nms.2067.10.sxw basis that the suit is maintainable and the application of the instant nature could have been made, yet, I am of the opinion that in the facts and circumstances of the case the Plaintiffs have failed to make out prima facie case. 22 The contentions centre around the arbitration clause. It is urged that the arbitration clause is uncertain and unenforceable. I have reproduced the arbitration clause above. Bare perusal thereof would indicate that any controversy or claim arising out of or relating to the agreement between the parties or any breach of it will be first settled by arbitration in accordance with the rules of the American Arbitration Association and the judgment rendered by the Arbitrator may be entered in any Court having jurisdiction thereon. Merely because the word “first” is used does not make the clause uncertain and vague. Assuming that Mr.Samdani submits that it is condition precedent and the parties agree that if the arbitration proceedings fail, then, they are entitled to take further legal action, that by itself does not make the clause vague or uncertain. The clause in question is clearly an arbitration agreement. The principles that are relied upon by Mr.Kamdar to support his submissions, would indicate that the clause in question is an arbitration clause. In the decision reported in Jagdish Chander vs. Ramesh Chander (supra), the principles culled out therein would indicate that the clause in contract can be construed as an arbitration clause if the same is expressly or impliedly set out in the contract. In the instant case, it is not necessary to go into the test with regard to the intention of the parties in respect to the arbitration agreement because the agreement itself contemplates that any controversy or claim shall first be settled by arbitration. The parties also specify the rules which would be applicable to the arbitration. Mr.Kamdar would submit that the test is that the parties should have agreed that the *14* nms.2067.10.sxw decision of the private Arbitrator will be binding on them and this test is not satisfied in this case. I am unable to accept this submission for more than one reason. What the parties have stated in the clause is that if the arbitration proceedings fail, then, the parties are entitled to take further legal action. This is obvious. These are words which are inserted by abundant caution. The parties intend that firstly the dispute should be settled by arbitration and if they fail, the remedy is provided of further legal action. That by itself does not mean that the earlier part of the clause has to be ignored or that presence of the word “first” would take away binding nature of the agreement between the parties or of the decision or award of