TaxTMI 
TaxTMI 
2007 (11) TMI 671
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.... to. The plaintiff has also sought a declaration that defendant No. 1 is not entitled to claim from it any amount by way of damages or otherwise under the said documents. The plaintiff has further sought a perpetual order and injunction restraining defendant No. 1 from claiming any amount under the said documents and from proceeding further with the proceedings filed by defendant No. 1 in the High Court of Judicature, Queen's Bench Division, Commercial Court, Royal Court of Justice in the United Kingdom. 4. Notice of Motion No. 3472 of 2006 is taken out by the plaintiff seeking an injunction restraining defendant No. 1 from proceeding and/or taking any steps in furtherance of the English proceedings. By an order dated 18th October, 2006, I had granted an ad interim order to this effect in favour of the plaintiff. Notice of Motion No. 1343 of 2007 is taken out by defendant No. 1 seeking a discharge/setting aside of the ad interim order and an order staying this suit until the hearing and final disposal of the suit filed by defendant No. 1 in the United Kingdom. 5. The subject matter of this suit and of the proceedings instituted by defendant No. 1 in the United Kingdom ....
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....sted alterations, written in hand, in respect of the Coil Weight and the mode of payment. It is pertinent to note that the Sales Contract expressly provided that the payment terms mentioned must be strictly conformed to. Whereas the Sales Contract provided that the payment be made by full workable Irrevocable Confirmed Sight Letter of Credit with confirmation costs for the buyer/applicant's account, to be established by a first Class Bank in India (to be acceptable to the Seller) in terms of the contract in favour of defendant No. 1, the plaintiff suggested that the Letter of Credit should be 120 days usance LC. Whereas the Sales Contract stipulated that the Letter of Credit should be in their hands latest by 8th April, 2005, the plaintiff suggested that the date be 15th April, 2005. Defendant No. 1, however, did not respond to the amendments proposed by the plaintiff. The plaintiff, therefore, contends that there was no concluded contract between defendant No. 1 and itself. (C). The last Clause of the Sales Contract reads as under: Conditions of Sale: As per attached and are expressly incorporated into this contract. The plaintiff, however, contends ....
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....he earlier Sales Contract dated 6th April, 2005. The plaintiff contends that the conditions of sale in this case were also not received and that there was no response from defendant No. 1 to the alterations proposed by the plaintiff. (C). It is pertinent to note moreover that the Sales Contract is addressed to defendant No. 2 as the customer. The Sales Contract provides: "Further to our recent negotiations, we have pleasure in confirming our sale to you of the following:...." Thus, in addition to the contentions raised in respect of the first alleged contract, the plaintiff has also contended that assuming that the second contract was finalized the case, if any, of defendant No. 1 is against defendant No. 2 and not against the plaintiff. 10. Though Mr. Devitre categorically refused to deal with the merits of the disputes it is necessary to identify them. (A). Both the Sales Contracts provided that the payment terms were to be strictly conformed to. The last date by which the Letters of Credit were to be in the hands of defendant No. 1 was substantially before the date of shipment. The amendment proposed by the plaintiff was that the Letters of Credit should be 120 days ....
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....sell the goods at a loss. Defendant No. 1 through its Solicitor's letter dated 24th August, 2005 demanded a sum of US $ 14,10,225.14/- towards damages. The plaintiff by its advocate's letter dated 23rd September, 2005 denied the claim. Defendant No. 1 therefore adopted proceedings in the English Courts to recover damages on account of the plaintiffs breach of the contracts. 14. The plaintiff contends that defendant No. 1 shipped the goods despite no contract having been arrived at between the parties with a view to portray that there was a concluded contract between them in an attempt to force the plaintiff to make payment for the goods at a price which was higher than the prevailing market price for the said goods. As regards the letter dated 11th May, 2005 the plaintiff has given a detail explanation contending that the same was given at the insistence of one Mhatre, a representative of defendant No. 1 and that it does not evidence a concluded contract. It is not necessary, in view of Mr. Devitre's stand on merits, to consider the merits of this stand. THE LEGAL PROCEEDINGS 15(A). On 20th October, 2005, defendant No. 1 filed an application in the High Court o....
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.... dated 4th/6th October, 2006 for circulation and production of the papers and proceedings in Notice of Motion No. 3472 of 2006 on 9th October, 2006 at 11.00 a.m. as it intended making an application for ad interim reliefs in terms of the reliefs claimed in the Notice of Motion. (B). By a letter dated 5th October, 2006 the plaintiffs Advocates gave notice to defendant Nos. 1 and 2 of the said application to be made on 9th October, 2006 at 11 a.m. and forwarded all the papers and proceedings to them. (C). An application for ad interim relief was made by the plaintiff on 9th October, 2006. The defendants did not appear. The application was adjourned to 11th October, 2006. (D). By a letter dated 9th October, 2006 the plaintiffs advocates informed the defendants of the same. 19(A). On 10th October, 2006 defendant No. 1 made an application to the English Court to restrain the plaintiff herein from taking any further steps in the above suit and from instituting or pursuing any other proceeding against defendant No. 1 arising out of or in connection with the said contract. The witness statement in support of the anti-suit and anti-anti-suit reliefs claimed by defendant No. 1 be....
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....ad kept defendant No. 1 informed of the proceedings. To specific queries in this regard, Counsel for defendant No. 1 were unable to indicate from the record before me that these facts were brought to the attention of the English Court. (E). By an order dated 10th October, 2006 the application was allowed and the learned Judge of the English Court restrained the plaintiff herein upto and including 20th October, 2006 or further order in the following terms: (a) From taking any further steps in proceedings issued by it on or about 4 October 2006 in the High Court of Judicature at Bombay known as Suit No. 2866 of 2006 and. (b) From instituting or pursuing any other proceedings against the applicant arising out of or in connection with either or both of the contracts for the sale by the applicant of 4250 metric tonnes and 8000 metric tonnes respectively of steel coils, contained in or evidenced by order confirmations dated 31 March 2005 and 28 April, 2005 and/or sales contracts dated 6 April 2005 and 3 May 2005. (F). The order dated 10th October, 2006 was served on the plaintiff on 10th October, 2006 by a communication dated 10th October, 2006. It is pertinent to....
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.... filed in the English Court on the same day. The notice specifically stated that the hearing of the anti-suit application in the English Court had been scheduled for 20th October, 2006 and that defendant No. 1 intended applying on that date to continue the injunction granted on 10th October, 2006. It was further stated that the plaintiff had a right to attend the hearing to ask the Court to vary or discharge the order dated 10th October, 2006. 23(A). Despite this curiously, defendant No. 1 filed a third witness statement of one Philip John Stephenson, its Solicitor, dated 18th October, 2006 and sought on that day itself the continuation of the order dated 10th October, 2006 despite the fact that by the notice dated 17th October, 2006 the Solicitors of defendant No. 1 had informed the plaintiff that the application was posted for and would be heard on 20th October, 2006. What is even more startling is the fact that this application was made without notice to the plaintiff and after being made aware of the ad interim injunction passed by this Court earlier that day. (B). It is extremely important to note the contents of this third witness statement. It is admitted that defendan....
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....at the application was a "procedural step" for extension of the interim order dated 18th October, 2006. 25. I find it difficult to accept all this. Defendant No. 1 informed the plaintiff by the letters dated 10th October, 2006 and-17th October, 2006 that it would apply on 20th October, 2006 for the order dated 10th October, 2006 to be made permanent and that the plaintiff had a right to appear on that day to ask the Court to vary or discharge the order. Despite this defendant No. 1 advanced the date of this application to 18th October, 2006. This application was without notice to the plaintiff and in breach of the injunction dated 18th October, 2006. This cannot be a "procedural step" for surely this cannot be the procedure of the English Courts. Mr. Devitre was unable to invite my attention to anything in the English law or to any procedure of the English Courts to substantiate this submission. The third witness statement in support of the application certainly does not indicate any such thing. I am constrained to say that the first defendant's application in the English Court was made suppressing facts and in an unfair manner deliberately avoiding giving notice to the plai....
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.... was given and in fact had due notice of the hearing of the applications on 5th October, 2006, 9th October, 2006 and 16th October, 2006. Defendant No. 1 was also aware that the order was to be pronounced in open Court on 18th October, 2006. Defendant No. 1 refused to appear on every occasion. Secondly, it is admitted that the Indian Solicitors of defendant No. 1 in fact attended the proceedings in this Court although they did not appear in them. Thirdly, the Indian Solicitors of defendant No. 1 were aware of the order dated 18th October, 2006 and of the effect thereof. Lastly, defendant No. 1 was informed by the Indian Solicitors of the proceedings and of the order dated 18th October, 2006. 30. Mr. Devitre did not dispute the fact that under Indian law a party is bound to obey the order of a Court even if the party did not appear in Court but was aware of the same. I did not understand him to contend that English law is to the contrary. In any event, he did not invite my attention to any provision of English law to the contrary. Foreign law being a question of fact must be proved and until the contrary is established the presumption is that it is the same as Indian law. 31. M....
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....eptember, 2006 the transcript was made available and actually in the possession of the plaintiff. The plaintiff having discharged its English Solicitors, it is quite possible that it did not have a copy of the reasoned order when the application was made. 35. Faced with this, Mr. Devitre contended that the plaintiff, though aware that a reasoned order had been passed, did not disclose the same in the plaint. In other words, according to him, the plaintiff suppressed the fact that reasons had been furnished in support of the order though the same were not available when the application was made in this suit. 36. This submission is equally unfounded. It is evident from paragraph 8 of the ad interim order dated 18th October, 2006 relied upon by Mr. Devitre that it was the absence of reasons, perse, that was material and not the absence of the fact that reasons had been given in support of the order. I see no intention on the part of the plaintiff to have suppressed any material fact. 37. Mr. Devitre then submitted, relying upon an affidavit of the first defendant's English Solicitors, that the procedure in the English Court for interlocutory hearings is that the learned J....
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....x indicating its intention to contest jurisdiction. The form further provides: If you do not file an application to contest the jurisdiction within 28 days of the date of service of the acknowledgment of service, it will be assumed that you accept the Court's jurisdiction. The plaintiff, therefore, had no option but to contest the jurisdiction. In these circumstances, it can hardly be stated that the plaintiff voluntarily submitted to the jurisdiction of the English Court in respect of the merits of the case. 42. Nor do I find any substance in the contention that there was a delay in filing this suit. The suit was filed in the peculiar circumstances of the case. Had the plaintiff succeeded in its challenge to the jurisdiction of the English Court, this suit would not have been necessary. The plaintiff had no claim for breach of contract - indeed according to it there is no contract. There was no occasion therefore for the plaintiff to file any proceedings. If the plaintiff is right in its contention on merits, namely, that there was no contract and in any event Clause 15 did not operate between the parties, as a copy of the terms and conditions, wherein it is con....
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....erein in regard to exclusive or non-exclusive jurisdiction of the Court of choice of the parties are not determinative but are relevant factors and when a question arises as to the nature of jurisdiction agreed to between the parties the Court has to decide the same on a true interpretation of the contract on the facts and in the circumstances of each case. (4) A Court of natural jurisdiction will not normally grant anti-suit injunction against a defendant before it where parties have agreed to submit to the exclusive jurisdiction of a Court including a foreign Court, a forum of their choice in regard to the commencement or continuance of proceedings in the Court of choice, save in an exceptional case for good and sufficient reasons, with a view to prevent injustice in circumstances such as which permit a contracting party to be relieved of the burden of the contract; or since the date of the contract the circumstances or subsequent events have made it impossible for the party seeking injunction to prosecute the case in the Court of choice because the essence of the jurisdiction of the Court does not exist or because of a ITS major or force majeure and the like. (....
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....ere can be no doubt that in purely what may be described as physical terms, it is India and not the United Kingdom which would be the most convenient jurisdiction to adjudicate the disputes between the plaintiff and the defendants. No part of the cause of action has arisen in the United Kingdom. A material part of the cause of action alleged by defendant No. 1, itself has arisen in Mumbai. Logistically and financially too, Mumbai would be more convenient than the United Kingdom for both the parties. The transcript of the arguments in the English Courts referred to the arguments on behalf of defendant No. 1 including on the question of costs. The transcript indicates an admission that an important part of the first defendant's case depends upon documents which are in India. The witness statement on merits on behalf of defendant No. 1 in the English proceedings is of one Mhatre, who is from Mumbai. 51. These facts however do not determine the plaintiffs Notice of Motion in its favour. The question is squarely answered in favour of defendant No. 1 by the judgment in Modi Entertainment Network and in particular, paragraphs 24(5), (6) and (7). This of course, is on the assumption....
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....t the plaintiff had committed contempt of the order dated 10th October, 2006. It was, therefore, necessary according to him, to allow the plaintiffs Notice of Motion. 54. It is not necessary for me to consider this aspect of the matter in view of Mr. Devitre's statement that defendant No. 1 will ensure that the plaintiff will not face any obstacle to defending the claim against it on merits in the English proceedings. In particular, he added, defendant No. 1 will waive any time limit that may have passed in the English Court so as to enable the plaintiff to put in its defence and will not take any steps to strike out the plaintiffs defence. He added, however, that this would be provided the plaintiff withdraws its application for an anti suit injunction restraining defendant No. 1 from continuing the English proceedings and undertakes not to bring any subsequent application before this Court to restrain defendant No. 1 from continuing with the English proceedings or in the event of this Court dismissing the plaintiffs Notice of Motion No. 3472 of 2006 and vacating the ad interim order dated 18th October, 2006 and such order of dismissal and/or discharge of the ad interim ord....
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....glish Court held that it had no jurisdiction defendant No. 1 would not adopt proceedings in any other Court for recovery of its claim on merits. This would result in tremendous inconvenience and an unnecessary financial burden on all the parties including defendant No. 1 itself. This aspect when considered with what I have stated earlier, regarding the obvious benefits of litigating in this Court is a strong argument, in favour of the plaintiff. 57. I do not suggest that the argument is without any force. Despite the same, I am not inclined to allow the plaintiff's application for it would be contrary to the principle of comity. 58. The learned Judge in the English Commercial Court has taken a prima facie view that defendant No. 1 has an arguable case regarding jurisdiction. I have no intention of disregarding that view and, in effect, precluding the English Courts from adjudicating the proceedings filed before it. I would not grant the injunction even in the absence of that decision. The matter must proceed on the basis that the plaintiffs contentions including the question whether the contracts were entered into or not are open both in the English proceedings and in the....
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...., p.90: "The Court will give credit to foreign courts for doing justice in their own jurisdiction." The case of Wright v. Simpson (1802) 6 Ves. 714, 31. 1972, referred to by the learned lord justice, is an illuminating case with respect to the principles of law to be applied in this case. At p. 730 Lord Eldon, then the Lord Chancellor, said: "With the next passage, that the Courts of that country must be supposed to be deciding according to the laws of that country, I agree to this extent; that natural law requires the Courts of this country to give credit to those of another for the inclination and power to do justice." 63. Mr. Dwarkadas however submitted that the English Court has in the present case granted an anti-suit injunction in respect of these proceedings without notice to the plaintiff. 64. I do not take the manner in which the applications were made by defendant No. 1 in the English Court as a basis for my decision. I would not allow the course of my judgment to be determined by the orders of the English Courts. I am not sitting in Appeal over the orders of the English Courts. Moreover, the orders of the English Courts being non-speaking orders, I am not ....
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.... 69. This brings me to the prayer in the first defendant's Notice of Motion for the stay of this suit. 70. Mr. Devitre submitted that this suit ought to be stayed on the principle of issue estoppel in view of the judgment of the English Court dated 28th July, 2006 holding that the plaintiff therein i.e. defendant No. 1 herein, had a good arguable case and dismissing the plaintiffs' application to set aside the order directing the service outside jurisdiction. 71. In support of his submission, Mr. Devitre relied upon the commentary in Oxford Monographs in Private International Law dealing with The Preclusive Effects Of Foreign Judgments In Private International Law. The commentary deals in some detail with the judgment of The House of Lords in (The Sennar (No. 2) [1985] 1 WLR 490 and the judgment of the Court of Appeal in (Desert Sun Loan Corporation v. Hill) [1996] 2 All. E.R. 847. One of the main issues dealt with in these judgments and in the commentary pertains to the decision in The Sennar, being a turning point as it broadened the range of foreign judgments capable of founding the issue of estoppel to include issue as to a decision. I will however proceed on....
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....d it is not necessary therefore to refer to the decision in the Sennar on this issue. It is however important to note that in the Sennar, the decision of the Dutch Courts was a final judgment on the question of jurisdiction. It is equally important to note that the House of Lords held that in order to create an issue estoppel three requirements are to be satisfied, one of which is that the judgment in the earlier action relied on as creation of an estoppel, must be final and conclusive. It was indeed obvious and accepted that the judgment of the Dutch Court of Appeal was final and conclusive. 74. In Desert Sun Loan Corporation v. Hill, the Court of Appeal cited with approval, the commentary in Dicey and Morris, page 467, which states that for there to be such an issue estoppel, one of the requirements is that the judgment of the foreign Court must be final and conclusive and between the same parties as in the foreign litigation. The Court of Appeal held: The principle extends to issues which were not but which might have been raised in the earlier proceedings. As Spencer Bower and Turner p 148 says, this means that 'questions of considerable difficulty and nicety ma....
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....use it was possible to reopen the whole question by commencing a different kind of action, so the summary judgment was not res judicata in Spain. I do not find it surprising that the House unanimously refused to give effect in England to that summary judgment. The natural meaning of 'final and on merits' is that there has been a final, as opposed to provisional, determination of the parties' substantive rights. (emphasis supplied) There can be little if any doubt that the decision of the English Commercial Court dated 28.7.2006 on the question of jurisdiction was not a final decision. The learned Judge himself made this expressly clear. This is evident from the paragraphs 6 and 9, which read as under: 6. It is important that I bear in mind that all I am concerned with to consider is the question of whether the claimant has a good arguable case on this topic. It seems to be that it is manifest that the claimant's approach to this issue is fully and well arguable that there was a commitment between the parties as from the date of the confirmation. Whether that will prove to be so in due course may remain to be seen but I do not find it ne....
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....hen no cause of action is disclosed, the courts will not unnecessarily protract the hearing of a suit. Having regard to the changes in the legislative policy as adumbrated by the amendments carried out in the Code of Civil Procedure, the courts would interpret the provisions in such a manner so as to save expenses, achieve expedition and avoid the Court's resources being used up on cases which will serve no useful purpose. A litigation which in the opinion of the Court is doomed to fail would not further be allowed to be used as a device to harass a litigant. See (Azhar Hussain v. Rajiv Gandhi) 1986 DGLS 145 : 1986 (Supp.l) S.C.C. 315 : A.I.R. 1986 S.C. 1253 : 1986(1) SCALE 573. (B). The judgment is of no assistance to the first defendant's contention on the question of issue estoppel. Indeed, in paragraph 128, it is observed that orders under Order VII, Rule 11 of the CPC determine the rights conferred upon parties one way or the other and are stricto sensu not interlocutory orders, but having regard to their traits and trappings are preliminary judgments. As is evident from paragraph 4 of the judgment, the order appealed from was a final order holding that the plaint d....
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....t illustrated by accepting the case of defendant No. 1 itself. Let me assume, as contended by defendant No. 1, that the plaintiffs case is dishonest in every respect. Let me further accept Mr. Devitre's submission and indeed there is good reason to accept it, that litigation in this country takes many more years to be finally decided than in the Courts of the United Kingdom. The plaintiff could well have filed a suit covering the subject matter relating to the subject matter of this contract in anticipation of a claim to be made by defendant No. 1 in the English Courts. It would not tax legal ingenuity to file such proceedings which would overlap the proceedings to be adopted by defendant No. 1. If Mr. Devitre's first action principle is to be accepted, the dishonest plaintiff could frustrate the first Defendant's action in the English Courts for the entire duration of the legal proceedings in this country. 80. I have absolutely no hesitation in rejecting Mr. Devitre's submission founded on the first suit principle. It is detrimental to the interest of honest claimants. It would enable dishonest litigants to frustrate the expeditious disposal of a just clai....
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....evitre submitted that the proceedings in English Courts are decided faster than in the Indian Courts. That is not a ground for staying these proceedings. If that is so, the English proceedings will be concluded earlier and the decision in those proceedings would have their own effect. 86. I may only mention here that whereas the plaintiffs were ready and willing to do everything that is necessary for the expeditious disposal of this suit including by having the evidence recorded on commission. Defendant No. 1 has shown absolutely no inclination in that regard. Mr. Devitre stated that he would take instructions from defendant No. 1 regarding the same. He never communicated anything thereafter. 87. Mr. Devitre submitted however that the filing of this suit was itself vexatious and an abuse of the process as the suit has already been filed in the English Courts. He submitted that Courts have power under Section 151 of the CPC to strike out pleadings or to stay or dismiss proceedings which are an abuse of their process. He relied upon the judgment of the Supreme Court in (K.K. Modi v. K.N. Modi and Ors.) [1998]1SCR601 and the judgment of a Division Bench of the Madras High Court ....
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....ide the question of existence of the contract. 94. At the outset of the consideration of this submission, I must mention that I restrict my judgment to a case where one of the parties has denied having entered into the agreement itself. In the present case, apart from all the other submissions including regarding the counter offer not having been accepted, the plaintiffs specific case is that the conditions containing the English non-exclusive jurisdiction Clause (Clause 15) were not even forwarded to it. This is a pure question of fact and does not involve questions of formation or existence of a contract based on the legal effect of admitted facts. It is important also to note that the point at issue in these Notices of Motion relate first to the forum and not to the identity of the legal system to be applied. The English law can always be applied in our courts if it is found that the parties had agreed to be bound by the English law. But to determine the applicable law it is necessary first to establish whether or not the contract existed as a matter of fact. The commentary relied upon by Mr. Devitre and the judgments referred to therein in fact establish a case contrary to h....
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.... Appeal came to the conclusion that the document was subject to Italian law. The question of forum was neither raised nor decided. The jurisdiction of the English Courts to decide the matter was not even challenged. It was held that the document was governed by Italian law and the Court of Appeal considered expert evidence relating thereto. 97. The decision of the Court of Appeal in (Mackender and Ors. v. Feldia AG. and Ors. 1966(3) AER 849 not only does not assist defendant No. 1 but militates against Mr. Devitre's submission. (A). In this case too, the contract itself was admitted. The case involved the rights of the parties under a jeweller's block policy, issued by the insurance company covering three European companies incorporated in Switzerland, Belgian and Italy. The policy which covered the companies carrying on business of diamond merchants, against loss of their stock of jewellery, contained a foreign jurisdiction Clause to the effect that it would be governed exclusively by Belgian law and any dispute arising thereunder shall be exclusively subject to Belgian jurisdiction. The representative of the companies alleged that the stock was stolen. The underwrit....
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....the Clause; just as does a dispute as to whether one side or other was entitled to repudiate the contract; see Heyman v. Darwins Ltd. (1). Lord Diplock observed: A claim that a contract is void for illegality does not raise any issue whether or not the parties in fact agreed to the terms of the policy, including those in the foreign jurisdiction ' Clause. It concedes that they did, but asserts that their agreement gave rise to no legally enforceable rights or duties. It thus raises no dispute about the consensus ad idem of the parties as to the exclusive jurisdiction of the Belgian Courts. The alternative claim of the underwriters, however, to avoid the contract for non-disclosure of a material fact, so it has been ably argued on their behalf, does raise the question whether there was a contract at all and thus the question whether there was any agreement that Belgian law should be the proper law of the contract. This question, it is argued, is to be determined not by Belgian law but by a putative objective proper law, a concept which I find confusing, but which is said in this case to be English law. Furthermore, it is contended that such a question, by whatever la....
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....law which would govern the contract (or a term of the contract) if it were valid, subject to the special provisions in Clause (2). Apart from that special provision, the Convention rule is the same as the prior common law rule in England. The commentary which precedes this paragraph does not deal with a case such as the one before me. The term "existence" in the above quotation does not appear to include a case where a party has denied having entered into the agreement itself, as opposed to a case regarding the legal effect of the documents admittedly executed or otherwise acted upon. In other words, the term "existence" is used in relation to the legal effect consequent to what admittedly has transpired between the parties and not to the factual aspect concerning that which is alleged to have transpired. For instance, it does not include a plea of non est factum. This is clear from the commentary that follows. 100. The third decision in (Albeko Schuhmaschinen A.G. v. Kamborian Shoe Machine Co. Ltd.) (1961) 111 L.J., 519 was not made available to me. The decisions in (The Parouth A and Co.) 1982 (2) Rip, 351 and in (Union Transport pic v. Continental Lines SA) 1992 (1) WLR....