Case: M/S Shakti Bhog Foods Limited Vs. Kola Shipping Limited

3. The appellant is a company dealing in the business of manufacturing and exporting food products and cereals/grains etc. The appellant was to export sorghum (hereinafter referred to as the "cargo") to the State of Niger. The appellant thereafter negotiated with the head of the State of Niger through a lady Principal Officer for an export order. In that process, the appellant herein obtained an irrevocable letter of credit from the State Bank of India, Overseas Branch, New Delhi, on 12th of July, 2005. On 26th of July, 2005, the appellant addressed an e-mail to the respondent through its broker Brisk Marine Services. As per the contents of the mail the appellant promised to load 13,500 MT of the cargo at Kakinada Port for transportation to Cotonou. The respondent herein, issued a bill of lading. As per the terms and conditions of the Charter Party Agreement, the appellant had to load the said cargo within nine days on or before 6th of August, 2005. The vessel M.V. Kapitan Nazarev arrived at Kakinada Port on 24th of July, 2005. The surveyor of the appellant inspected the vessel on 25th of July, 2005. For some reason or the other, the proposal of the appellant did not fortify. On 9th of August, 2005, the appellant informed the respondent that he could not get the export order from the State of Niger due to some unreasonable conditions imposed by it. As per the Charter Party Agreement, existence of which was alleged by the respondent and denied by the appellant, the appellant had to load maize to Colombo from Kakinada Port, in case he failed to get the export order from Niger. On 19th of August, 2005, the appellant addressed an e-mail to the respondent stating that he was ready to compensate the respondent for the loss suffered by it. On 24th of August, 2005, the respondent addressed an email back to the appellant stating that it was not satisfied with the demurrage amount offered to be paid by the appellant. A perusal of the facts clearly reveal that the dispute started between the appellant and the respondent with regard to the quantum of demurrage. The appellant herein loaded 1100 MT of the cargo in the vessel from 6th of August, 2005 to 9th of August, 2005 as against 13,500 MT of the agreed cargo. On 5th of September, 2005, the appellant sent an email to the respondent requesting it to unload the cargo from the vessel. But the cargo was not unloaded from the vessel due to the ongoing disputes between the parties. The respondent initiated proceedings in the High Court of Delhi seeking interim orders in the matter of discharge of 1,100 MT of the cargo under Section 9 of the Act. The said application came to be allowed by the High Court on 28th of September, 2005. The appellant carried the matter in appeal and subsequently withdrew the same on 22nd of January, 2007. In the meantime the appellant had also filed a suit claiming damages as by the time the cargo unloaded from the ship had become unworthy of consumption. The appellant also filed an application for injunction under Order XXXIX Rules 1 and 2 of the Civil Procedure Code, seeking interim injunction directing the Port Officer, Kakinada Port, to detain the vessel of M.V. Kapitan Nazarev at Kakinada harbour till the disposal of the suit. The application came to be dismissed by the III Additional District Judge, Kakinada, by an order dated 11th of November, 2005. The appellant thereafter unsuccessfully challenged the said order by filing an appeal before the High Court of Andhra Pradesh. The respondents then entered into appearance in O.S. No. 44 of 2005 and moved an application under Section 45 of the Act to refer the dispute between the parties to arbitration in London under the provisions of the English Arbitration Act, 1996 and stay all further proceedings in the suit pending arbitration. The Learned III Additional District Judge, Kakinada, allowed the application by an order dated 30th of November, 2006. Feeling aggrieved, the appellant filed a Civil Revision Petition before the High Court of Andhra Pradesh at Hyderabad which was dismissed on a finding that there was a Charter Party Agreement in existence and the appellant could not deny the existence of the same.4. It is this order of the High Court, which was under challenge by way of a Special Leave Petition, which on grant of leave, was heard in presence of the learned counsel for the parties.

Court's reasoning:
conclude that there existed a charter party between the parties to the suit which can be identified from the correspondence between the parties to that effect as also from the fixture note and the bill of lading signed by theper the provisions of the Section 45 of the Act, it is clear that at the request of one of the parties or any person claiming through or under him the court shall refer the parties to arbitration unless it finds that the said agreement is null and void, inoperative or incapable of being performed. In the present case, there appears to be no such thing to say that the so called agreement entered into by the parties is in any way to be termed as null and void or inoperative or incapable of being performed. It is further observed by us that the claims raised by the appellant before us about the non-existence of the charter party agreement can also be raised by the same before the arbitral tribunal at London. Under the English Arbitration Act 1996, as per Sections 30 and 31 of the said Act, the arbitral tribunal may rule on its own jurisdiction and also can decide on the existence of a valid arbitration agreement. This is similar to the provisions under Section 16 of the Act, whereby the arbitral tribunal can decide on its jurisdiction as also on the existence or validity of the arbitrationthe light of the discussions above-mentioned, we are convinced that there is a charter party agreement existing between the parties and, that as per the provisions of Section 45 of the Act, the High Court as well as the trial court were fully justified in allowing the application preferred by the respondent and accordingly, impugned order must bethe reasons aforesaid, we are of the view that the High Court was justified in passing the impugned judgment and there is no infirmity in the impugned order in the same for which we can interfere.