DRESSER RAND S.A. versus M/S. BINDAL AGRO CHEM LTD. AND ANR.

Citation: [2006] 1 S.C.R. 308 · Decided: 12-01-2006 · Supreme Court of India · Bench: ARUN KUMAR · Disposal: Dismissed

Cited by 3 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
DRESSER RAND S.A. 
v. 
MIS. BINDAL AGRO CHEM LTD. AND ANR. 
JANUARY 12, 2006 
[ARUN KUMAR AND R.Y. RA VEENDRAN, JJ.] 
Arbitralion--Arbitralion agreement-Existence of--Purchaser-lndian 
Company offering invitation to bid to Foreign Company for •upply of 
equipment--General Conditions of Purchase containing arbitration clause 
C modified by supplier-Foreign Company and agreed to by Indian Company 
and Foreign Company-Subsequent issue of leiter of intent by Indian Company 
lo Foreign Company-letter of intent contemplating issuance of regular and 
de/ailed purchase order--However, purchase order not issued--Dispule 
between parties·-Arbitration agreement, if brought inlo existence--Held: 
D Invitation to bid and also acceptance of modification lo General .Condition of 
Purchase by purchaser as suggested by supplier merely set out terms on 
which parties were ready to do business when purchase order was placed by 
purchaser--Since no purchase order placed, neither General Conditions of 
Purchase nor Arbitration Clause contained therein became effective and 
enforceable-lei/er of lnlent provides that when purchase order 1~5 placed 
E General Condition of Purchase containing arbitralion clause would become 
applicable and available lo parlies--No purchase order placed and feller of 
intent cannot be /reated as purchase order, issuance of /euer of inten' did not 
mean arbitralion clause enforceable-Hence, there is no arbitration agreement 
lo resolve disputes. by arbilration-Foreign Awards (Recognition and 
F Enforcement) Act, 1961-Seclion 3 
G 
Foreign Awards (Recognition and Enforcement} Act, /961: Section 3 
Staying of proceedings in respect of mailers to be referred to arbitrution--
£ristence of arbitration agreement-Determination of--Held: Fulls/or decision 
of the Court under section 3 and has to be finally decided by Court. 
Mere acquiescence or ac~eptance to the jurisdiction of arbitrator by 
Indian Company, if Indian Company estopped from challenging existence of 
arbitration ugreemenl-Held: When mutter comes up before the Court under 
section 3. Indian Company can slate that /here was no arbitration agreement--
There is no question of waiver or acquiescence. 
II 
308 
.. 
< 
DRESSER RANDS.A."· BINDAL AGRO CHEM. LTD 
309 
) 
A 
Res1>ondent No. I-Indian Company invited bid for purchase of 
certain equipments for its new project from the appellant, a foreign 
company. Appellant offered to supply'. the equipments. Appellant suggested 
certain modifications to the General Conditions of Purchase containing 
an arbitration clause. Representatives of both appellant and respondent 
no. I initialed the revision clauses dated 10.6. f 991 containing modifications B 
to General Conditions of Purchase. Thereafter, representative of the 
respondent no. I issued letters of intent dated 12.6.1991 on the letterhead 
of another company-respondent no. 2, on the appellant and the appellant 
countersigned them. Letters of intent contemplated issue of regular and 
detailed purchase order. Respondent no. I neither placed any purchase 
order nor issued any confirmation that Letters of Int~nt _were placed by c 
respondent no. 2 on its behalf. Thereafter, respondent no. I informed the 
·appellant that it proposed to obtain the equipments from an alternative . 
source, expressing its inability for the same. Thereafter, appellant issued 
several notices to the respondents to open Letters of Credit otherwise it 
·( 
would proceed on the basis that the respondents had repudiated the D 
contract. Then in terms of General Conditions of Purchase incorporated 
in the agreement of 12.6.1991, it referred the disputes relating to the 
agreement against respondents to International Chamber of Commerce 
for resolution by Arbitration. ICC issued notice to respondents regarding 
the said claim by the appellant. Advocate B acting under instructions from 
respondents sent telex to ICC that the respondents were in .process of E 
jointly nominating an arbitrator. Thereafter, another advocate sent 
communications to ICC that he had been instructed to represent the 
respondents in place of Advocate B and denied the existence of arbitration 
agreement and sought rejection of claim lodged by appellant. 
Respondent no. I and 2 filed suit for declaration that there was no F 
arbitration agreement between itself and appellant and for an injunction 
restraining the appellant from proceeding with arbitration before ICC. 
They also filed applications seeking tempo

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