M/S. GROUPE CHIMIQUE TUNISIEN SA versus SOUTHERN PETROCHEMICALS INDUSTRIES CORPN. LTD.

Citation: [2006] SUPP. 2 S.C.R. 954 · Decided: 24-05-2006 · Supreme Court of India · Bench: R.V. RAVEENDRAN · Disposal: Case Allowed

Judgment (excerpt)

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MIS. GROUPE CHIMIQUE TUNISIEN SA 
v. 
SOUTHERN PETROCHEMICALS INDUSTRIES CORPN. LTD. 
MAY 24, 2006 
[R.V. RAVEENDRAN, J.] 
Arbitration and Conciliation Act, 1996 : 
Sections 2(b) and 7(5)-/ncorporation of arbitration agreement by 
reference-Purchase orders being subject to arbitration clause 15 of F Al-
Signed by purchaser and counter signed by supplier-Held, purchase orders 
are contracts between parties and they being subject to F Al terms which 
contain arbitration clause, the case falls uls 7(5) of the Act and there is an 
arbitration agreement between the parties as per clause 15 of FA! terms-
Fertilizer Association of India Terms and Conditions (FAl)-Clause 15-
D Interpretation of Statutes-Incorporation by reference. 
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Sections JO and 11 (4)-Petition for appointing arbitrator to arbitral 
tribunal-Number of arbitrators-Arbitration clause providing for reference 
of dispute to two arbitrators and upon their not agreeing appointment of an 
umpire by them-Held, having regard to Section JO, arbitral tribunal shall 
consist of three arbitrators (one to be appointed by each of the two parties 
and the Presiding Arbitrator)-Court constituting arbitral tribunal by 
appointing a Presiding Arbitrator and two more arbitrators as were 
nominated by each of the parties. 
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Arbitration: 
Limitation-Held, is an issue which can be decided by the arbitral 
tribunal. 
Estoppel-Petitioner taking stand in a foreign court that there was no 
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arbitration agreement between parties-That Court not accepting the plea 
and dismissing suit for want of jurisdiction-Petitioner now proceeding on 
the basis that arbitration agreement existed between parties-Held, if on 
account of mistake or wrong understanding of law a party takes a particular 
stand (i.e., there is no arbitration agreement) he is not barred from changing 
H his stand subsequently or estopped from seeking arbitration. 
954 
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GROUPE CHIMIQUE TUNISIEN SA v. SOUTHERN PETROCHEMICALS INDUSTRIES CORPN. LTD. 9 5 5 
U.P. Rajkiya Nirman Nigam Ltd. v. Indore (P) Ltd, [1996) 2 sec 667, 
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relied on. 
CIVIL APPELLATE JURISDICTION: Arbitration Petition No. 4 of 
2006. 
Under Section 11(4) of the Arbitration and Conciliation Act. 
Sahjeev Sachdeva, Adv., for the Appellant. 
K.K. Mani, Adv., for the Respondent. 
The Order of the Court was delivered : 
ORDER 
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The pet1tmner has filed this petition under Section 11 ( 4) of the 
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Arbitration and Conciliation Act, 1996 (for short 'the Act') for appointment 
of an Arbitral Tribunal for adjudication of its claims and settlement of the 
disputes between the parties. 
2. The facts, in brief, as stated by petitioner are as follows: 
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2.1. Petitioner is a company incorporated under the laws of Tunisia. The 
respondent placed purchase orders dated I 0.11.2000, 17.11.2000, 4.12.2000, 
20.12.2000 and 13.7.2001 on the petitioner for supply of various quantities 
of Phosphoric Acid. Each purchase order stipulated the quantity to be 
supplied, the price, the payment terms and shipment particulars. All the 
purchase orders stated that all other terms and conditions are as per F AI terms 
(that is, the "Fertilizer Association of India Terms and Conditions for Sale 
and Purchase of Phosphoric . Acid"). Clause 15 of F AI terms provided for. 
settlement of disputes by arbitration. 
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2.2. The petitioner effected the supplies in pursuance of the purchase 
orders and raised invoice for such supplies. The respondent failed to pay the 
invoice amounts aggregating to US $ 1,50,15,913.38 in r~spect of the 
supplies against the said purchase orders, and went on seeking extension of 
time for making payment on the ground of financial Jifficulties. 
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956 
SUPREME COURT REPORTS [2006] SUPP. 2 S.C.R. 
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2.3. The petitioner, therefore, filed a suit in the Amman Court of First 
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Instance, Jordan, in Case No. 223/2002 for recovery of the amounts due. The 
respondent contested the jurisdiction of the said court, firstly, on the ground 
that the courts at Jordan did not have jurisdiction and, secondly, on the 
ground that there was an arbitration agreement between the parties, as per 
clause 15 of the F Al terms. The Amman Court of First Instance, dismissed 
the petitioner's case on 20.3 .2003 on the ground of lack of jurisdiction. The 
petitioner challenged the same before the Amman Court of Appeal in case 
No. 1229/2003 which was also dismissed on 25.6.2003. 
2.4. The petitioner issued a statutory notice dated 2.8

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