LexNATIONAL AGRICULTURAL COOPERATIVE MARKETING FEDERATION OF INDIA LTD. versus ALIMENTA S.A.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
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NATIONAL AGRICULTUJ{AL COOPERATIVE MARKETING
FEDERATION OF INDIA LTD.
v.
ALIMENTA S.A.
OCTOBER 26, 1988
[SABYASACHI MUKHARJI ANDS. RANGANATHAN; JJ.]
Arbitration Act 1940, Section 35-Two contracts for supply .of
goods-One of the parties invoking arbitration clause-Arbitrator
appointed-Jn the meanwhile one of the parties obtaining permission of
Supreme Court to file money suit since claims getting barred by
limitation-Money suits filed-Whether other party entitled to approach
Court and obtain stay of arbitration proceedings.
The petitioner signed two contracts, one on the 12th January, 1980
and the other on 18th August, 1980 for the supply of Indian H.P.S.
Groundnut Kernels Javas to a Swiss Company. On 20th December,
1980 the petitioner informed the respondent not to nominate any vessels
to load goods as 'it were unable to get necessary clearance from the
Government, and by a telex message on 27th January, 1981 informed
the respondent that the goods could not be exported on account of
executive/legislative ban.
The respondent invoked the arbitration proceedings with the Fed·
eration of Oil Seeds and Fats As'l"ciation who informed the petitioner
on 6th March, 1981 by a letter of the appointment of an arbitrator. The
petitioner challenged the arbitration proceedings in the Delhi High
Court. On March 23rd, 1981 a stay order was passed restraining the
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arbitration proceedings, and on llth December, 1981 the High Court
held that no arbitration agreement existed with regard to the second
contract and as such nobody was entitled to seek reference to
arbitration.
The petitioner filed a special leave petition to this Court. This
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Court passed an interim order granting special permission to the re·
spondent to file a money suit in any court since the claims were getting
barred by time. Pursuant to this order the respondent filed a regular
money suit in a foreign court, and two identical suits in the Bombay
High Court for recovering damages, for which the written statements
were filed.
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548
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AGRICULTURAL FEDERATION v.ALIMENTA S.A.
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The petitioner moved an application in one of the suits in the High
Court stating that in the interests of justice pending disposal of the three
suits an injunction should be granted restraining the parties from pro-
ceeding with the arbitration, and that the arbitration be stayed under
the principles of section 35 of the Arbitration Act, 1940. The High
Court granted interim injunction restraining the parties from proceed- ·
ing with arbitration. On 8th March, 1985, the High Court dismissed the
notice of motion and held that this Court's order dated 2nd December,
. 1983 was clear, there was no abandonment of the pending arbitration
proceedings by-the respondent and therefore stay could not he granted.
This order was confirmed by the Division Bench in appeal.
In the S.L.P. to this Court the question was: whether the High
Court was right in declining to grant stay of the artlitration
proceedings.
Dismissing the application,
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HELD: 1. The High Court rightly held that Section 35 does not
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apply. [556A]
Sujant Singh v. Seth Mohinder Paul, AIR 1964 Punj 395 ref. to.
2. In particular facts and circumstances if a party filed a suit to
save limitation the same would not vitiate the award or make the award
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bad under s. 35 of the Arbitration Act. [555F]
3. Foreign awards automatically are not 'lifeless awards'. They
can be enforced in this Court in accordance with law. [556G I
Oil & Natural Gas Commn. v. Western Co. of N. America, AIR
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1987 SC 574 ref to.
4. Whether in a particular case it would be just and equitable to
the parties to direct them to proceed with the arbitration, must depend ·
upon the facts and circumstances of a particular case having regard to
the legal provisions applicable to a particular siru<ition. [556C-D]
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In the instant case, there is a valid arbitration agreement between
the parties. In view of the direction of this Court, the continuation of
the arbitration proceedings in respect of the filing of the. suit would not
be bad. In these circumstances if the court declined to exercise its
jurisdiction under section 151 Of the Code of Civil Procedure to grant
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SUPREME COURT REPORTS
[1988] Supp. 3 S.C.R.
A stay of the proceedings of arbitration in London, the court has not acted
in excess of jurisdiction or has not exercised its jurisdiction improperly.
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