AGARWAL ENGINEERING CO. versus TECHNOIMPEX HUNGARIAN MACHINE INDUSTRIES

Citation: [1978] 1 S.C.R. 167 · Decided: 18-07-1977 · Supreme Court of India · Bench: V.R. KRISHNA IYER · Disposal: Appeal(s) allowed

Judgment (excerpt)

167 
AGARWAL ENGINEERING CO. 
v. 
TECHNOIMPEX HUNGARIAN MACIDNE INDUSTRIES 
July 18, 1977 
A 
[V. R. KRISHNA IYER, R. S. SARKARIA AND JASWANT SINGH, JJ.] 
B 
Arbitration Act-Par-ties entered into two separate contracts on different 
dates for sale of machinery and appointing the appellant as sole selling agent 
of the machinery-Both contracts contained arbitration clauses-Whether arbi-
tration clause in later contract supersedes the arbitration clause in earlier con-
tract. 
As a result of negotiations between the appellant, an Indian engineering 
C 
concern and the respondent, a Hungarian State Undertaking carrying on export-
import trade, the parties had drawn up on April 2, 1970 (Annexure A) a 
broad arrangement between them. The first four clauses of Annexure A related 
to the appellant being chosen to represent the respondent in the sale of their 
goods exclusively in certain specified States in India and the second part deals 
with the purchase of two specific items, namely, Counterblow Hammer Type EK 
2S and EK 13A machines. On the same date two formal contracts (Annexures 
B 1 and B2) were entered into between the parties. Clause 8 of Annexures B 1 
and B2 states that all questions, disputes, etc. relating to the contract, shall be 
D 
referred to the arbitration of Bharat Chamber of Commerce. By an agreement 
dated April 6, 1970 (Annexure C) the appellant was appointed as sales-represen-
tative of the respondent. Clause 14 of this agreement contained an arbitration 
clause. But the two arbitration clauses differed on the composition of the arbi-
trators as well as the substantive and processual laws to be applied. 
The appellant alleged that there was a breach of contract in that the machines 
supplied by the respondent did not accord with the bargain. 
E 
Disputes having arisen between the parties as to which of the two arbitration 
clauses of the agreements was applicable, the High Court held that the arbitration 
clause in an Annexure C was the one binding on the parties. 
Allowing the appeal, 
HELD : ( 1 ) The arbitration clause that governs the sales of the two items 
of machinery in these proceedings is cl. 8 of Annexure B 1 and B2. Annexures 
F 
Bl and B2 are self-contained and constitute a separate contract-set and they 
exclusively relate to the terms of purchase of EK 25 and EK 13A. Annexure C 
is futuristic and relates to sales 'agency' and later purchase. [174 D] 
(2) The reference by the High Court to the principle that the last deed 
must govern the relationship between the parties superseding the earlier ones, 
when there fa inconsistency between the two bas no room for play here. 
[175 D-El 
(3) Clause 1 of Annexure A grants a right of exclusive representation to 
G 
the appellant "to act as its sole agent" in certain specified territories. 
Clause 2 
states that "the detailed text of the agreement will be air-mailed until the 7th 
Apri1, 1970". Clause 5 deals with the appellant agreeing immediately to place 
an order for machines. Two machines had been agreed to be sold and to give 
effect to this agreement referred to in cl. 5 to 8 of Annexure A, two orders, 
each independent, namely, Annexure Bl and B2, were executed on April 2. 
1970. The terms and conditions 'of these two sates were printed on the back of 
the order, the first of which stated "this order shall be the sole repository of 
the transaction .... ". If the exclusive repository of the terms of the transaction 
H 
was Annexures Bl and B2, purchase of the machinery EK 25 and EK 13A was 
covered by this complete deed and there was no justification for travelling beyond 
it to ascertain the intention of the parties. [172 A-B; HJ 
168 
SUPREME COURT REPORTS 
(1978] 1 S.C.R. 
A 
( 4) The totality of the terms concerning the sale of the two machines had 
been documented in Annexure B 1 and B2, such a concluded contract could 
cease to be operative ordinarily only by performance or novation or in any other 
manner known to the law of contract 
[173 C] 
B 
In the instant case, cl. 8 of Annexures B 1 and B2 is valid, unless Annexure C 
extinguished Annexures Bl and B2. 
[173 DJ 
(5) The whole of cl. 1 of Annexure C devotes itself to the appointment of 
the appeUant as sole buyers from the respondent. 
The terms "hereby" 
and 
"hereinafter" 
mentioned in that clause 
postulated that while the 
minutes 
(Annexure A) projected the proposal for appointing the appellant as exclusive 
agents it was only under Ailnexure C, the actual scheme was

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