Alva Aluminium Ltd.Bangkok vs Gabriel India Limited

I shall presently deal with both these questions but before I do so I may set out the facts necessary for the determination of the said questions.

The petitioner-company appears to have had commercial transactions with the respondent for sometime 4 past. One of the transactions which they appear to have entered into in the course of their business relationship was contract No.057/2008 for the sale by the petitioner and purchase by the respondent of 75 MTs of "Aluminium alloy ingots ADC 12". The present proceedings, however, do not concern the said contract. These proceedings relate to contract No.073/2008 executed on 30th July, 2008 for the sale by the petitioner and the purchase by the respondent of 150 MTs of "Aluminium Alloy Ingots AC2B" on the terms and conditions stipulated in the said contract. The contract among other terms and conditions stipulated the price of the goods to be US $ 3490 per MT (CIF) payable by a 100% Letter of Credit (LC).

The above was followed by an addendum dated 24th September, 2009. The execution of the contract and an addendum to the same notwithstanding the respondent did not open the requisite Letter of Credit despite repeated 6 requests and reminders sent by the petitioner company to the former. The petitioner company in that view instructed its Advocates & Solicitors to send a legal notice in which the respondent was given a final opportunity to open a letter of credit in favour of the petitioner within seven days of the receipt of the notice failing which the petitioner proposed to initiate appropriate legal proceedings in which the petitioner would hold the respondent responsible for all the damages and costs suffered by the petitioner on account of the breach of the terms of the contract. The notice did not evoke any response from the respondents nor did the subsequent two notices sent on behalf of the petitioner.

Fourth and final notice was eventually sent by the petitioner through their legal consultants in which the petitioner reiterated that the respondent had failed to fulfill its obligations under the contract resulting in heavy losses to the petitioner which the petitioner assessed at USD 338,286.34 equivalent to Rs.1,69,75,208.54. A demand for 7 payment of that amount was accordingly made against the respondent. It was only, at this stage, that the respondent broke its silence and sent a reply through Padmanabhan Associates their Advocates & Solicitors in which the respondent for the first time came out with the defence that the contract referred to by the petitioner had not been signed by an authorized person. Mr. Sandeep K. Dabir who had signed the contract document was not, alleged the respondent, authorised to sign the contract. It was further alleged that the documents, information and correspondence provided by the respondent to the petitioner company was only "some sort of negotiation" in respect of the purchase of the material in question. According to the respondent while Shri Dabir was authorized to negotiate the terms of purchase he was at no point of time authorized to enter into a contract. It was asserted that his signatures were obtained by misguiding/ enticing and misdirecting him. The alleged contract was, therefore, repudiated as being void and unenforceable.

Regarding Question No. 2

In the totality of the above circumstances, I have no doubt that a legally valid contract had indeed come into existence between the parties which contained an arbitration clause for adjudication of disputes that may arise between them. Question No.(2) is accordingly answered in the affirmative.

In the result, I allow this petition and appoint Mr. Justice Anil Dev Singh, former Chief Justice of Rajasthan High Court as sole Arbitrator for adjudication of the disputes between the parties arising out of the contract referred to in the petition. The Arbitrator shall be free to fix his fee and charges and the ratio in which the same shall be paid by the parties. The parties shall appear before the Arbitrator on 10th 22 December, 2010 for further directions. Registry shall forthwith forward a copy of this order to the worthy Arbitrator for information and necessary action.

.................................J. (T.S. THAKUR) New Delhi November 16, 2010