R.M. INVESTMENT AND TRADING CO. PVT. LTD. versus BOEING CO. AND ANR.

Citation: [1994] 1 S.C.R. 837 · Decided: 10-02-1994 · Supreme Court of India · Bench: S.C. AGRAWAL · Disposal: Dismissed
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Judgment (excerpt)

R.M. INVESTMENT AND TRADING CO. PVT. LTD. 
A 
v. 
BOEING CO. AND ANR. 
FEBRUARY 10, 1994 
[S.C. AGRAWAL AND M.K. MUKHERJEE, JJ.] 
Arbitration: Foreign Awards (Recognition and Enforcement) Act, 
1961-Sections 2 and J--,-Stay of proceedings-Commercial relationship within 
B 
, 
~ 
the meaning of section 2 should exist between the parties-Suit for non-pay-
ment of compensation arising out of such commercial relationship could be C 
stayed-Stay of suit ordered by Division Bench-Trial Court has no jurisdic-
tion to proceed with the suit in any way whatsoever including allowing amend-
ment of plaint and addition of party-C.P. C. Order 39 Rule I and Order 6 
Rule 17. 
Words & Phrases-'Commercial'-'Commercial Relationship'-Mean-
D 
ing of in the context of Section 2 of Foreign Awards (Recognition and 
_....l_ 
Enforcement) Act, 1961. 
The petitioner Company (RMI) entered into an agreement with the 
Respondent • an American Company (Boeing) whereby R.M.I. agreed to E 
provic\e consultancy services for promoting sale of Boeing aircrafts in 
India. The agreement was initially operative till the end of December, 1986 
but was extended till 30.4.1987. The agreement contained an arbitration 
clause. In August, 1987 Definitive Purchase Agreements for purchase of 
two aircrafts were executed between Boeing and Air India. R.M.I. claimed 
commission from Boeing on the said transaction, but it was refused. F 
Thereupon R.M.I. filed a suit in the High Court for the recovery of U.S.$ 
17.S million by way of compensation and remuneration on the basis of its 
agreement with Boeing along with other incidental reliefs. 
In the sai~ suit R.M.I. filed an application for an injunction and the G 
Trial Judge passed an interim order directing that if any payment is made 
by Air India to Boeing a sum of U.S.$ 17.S million shall be retained with 
Air India. 
Boeing moved an application for stay of the said suit on the ground 
that the matter was covered by the arbitration clause and it was willing to H 
837 
838 
SUPREME COURT REPORTS 
(1994] 1 S.C.R. 
A 
do everything necessary for the proper conduct of the arbitration. R.M.I. 
filed an application for amending its plaint and adding Air India as a party 
defendant. 
B 
The Trial Judge passed an order staying the suit and all proceedings 
except the pending interlocutory application. Boeing moved an application 
for vacating the interim order. The trial Judge dismissed the application 
for stay of the suit. Appeal against the said order was allowed by a Division 
Bench of the High Court against which R.M.I. filed the first of the three 
special leave petitions. 
C 
The application for amendment of the plaint and adding Air India 
as a party was allowed by the trial Judge. Boeing tiled separate appeals. A 
Division Bench allowed these appeals against which the other two Special 
Leave Petitions have been tiled by R.M.I. 
D 
E 
Dismissing the Special Leave Petitions, this Court 
HELD: 1. The High Court was right in holding that the agreement 
to render consultancy services by R.M.I. to Boeing is commercial in nature 
and that R.M.I. and .Boeing do stand in commercial relationship with each 
other. While construing the expression 'Commercial Relationship' in Sec-
tion 2 of the Act, aid can also be taken from the Model Law prepared hy 
UNCITRAL wherein relationship of a commercial nature include "com-
mercial representation or agency" and "consulting." [845-C; 846·A] 
Atiabari Tea Co. Ltd. v. The State of Assam & Ors., [1961] 1 S.C.R. 
809, Fatehchand Himmatlal & Ors. v. State of Maharashtra etc., [1977] 2 
F 
S.C.R. 828, Renusagar Power Company Ltd. v. General Electric Company & 
Anr., [1985] 1 S.C.R. 432 and Koch Nevigation v. Hindustan Petroleum, 
[1989] Supp. 1 S.C.R. 70, relied on. 
2. It cannot be said that the claim in the suit is de hors the consultant 
services Agreement and is not a claim arising under the said agreement. 
G 
(846-G] 
3. Air India was not originally impleaded as a defendant in the suit 
and was impleaded as a party only after the filing of the application of stay 
under Section 3 by Boeing. Even after impleadment of Air India as a 
defendant the main relief in the suit is claimed against Boeing and Air 
H Indian has been impleaded as a defendant only to obtain discovery and 
., ' 
RM. INVESTMENT v. BOEING CO., 
839 
production of certain documents. If the suit against hoeing bas to be stayed A 
under Section 3 of the Foreign Awards (Recognition & Enforcement) Act, 
1961 it is
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