P.SATHASIVAM, J. - (1.) IN this petition the Petitioner-Company seeks to invoke arbitration clause under Section 11 (6) of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator as per the Arbitration Agreement contained in clause 6 of the Commercial Offer (purchase order) dated 15.10.2007 and clause 29 of the Agreement exchanged between the parties on 08.11.2007.
(2.) THE case of the petitioner is as follows: 2.1. THE Petitioner-Company is registered in Dubai and engaged in the business of trading in Minerals across the world. Based on the orders from their purchasers, they procure mineral Ores from the suppliers, negotiate and finalize shipments with the ship owners and arrange for the shipment of Minerals across the world. THE Respondent is a Company registered in India using Aluminium Ore as one of the major inputs for their operations. On 15.10.2007, the petitioner submitted a commercial offer through e-mail for the supply of Bauxite to the respondent. After several exchanges of e-mails and after agreeing on the material terms of the contract, the respondent conveyed their acceptance of the offer through e-mail on 16.10.2007 confirming the supply of 5 shipments of Bauxite to be supplied from Australia to Vizag/Kakinada. On the basis of the acceptance by the respondent, the petitioner concluded the deal with the Bauxite supplier in Australia on the same day and entered into a binding Charter Party Agreement with the ship owner in Oslo on 17.10.2007. A meeting was held between the representatives of the respondent and the petitioner at Lanjigarh, Orissa on 26.10.2007 and the minutes of this meeting were signed by them. The acceptance of the offer is acknowledged by the respondent in these minutes. A formal contract containing a detailed arbitration clause was also sent by the respondent to the petitioner on 08.11.2007 which was accepted by the petitioner with some changes and returned the same to the respondent the same evening. On 09.11.2007, the petitioner entered into a formal Bauxite sales Agreement with Rio Tinto of Australia for the supply of 225000 tonnes of Bauxite. On 12.11.2007, the respondent requested the petitioner to hold the next consignment until further notice. On 13.11.2007, the petitioner informed the respondent that it was not possible to postpone the cargo and requested them to sign the Purchase Agreement. On 13.11.2007 itself, the ship owners nominated the ship for loading the material on 28.11.2007. The petitioner terminated the contract on 16.11.2007 reserving the right to claim for damages. On 18.11.2007, the petitioner formally informed the ship owners about the cancellation of the carriage. On 19.11.2007, the ship owners made a claim of 1 million US$ towards commercial settlement and on 30.11.2007, the petitioner informed the respondent to pay a sum of 1 million US$ towards compensation for loss on account of the estimated loss for five shipments and 0.8 million towards compensation for loss of profit and other costs and expenses for cancellation of the order. The respondent rejected the claim of the petitioner on damages. On compensation not being paid, the ship owners served a notice on the petitioner. After negotiations, a settlement was arrived at between the ship owners and the petitioner to pay a lump-sum of 600,000 US$ to be paid in two installments. The petitioner paid the amount in two installments on 27.02.2008 and 31 03.2008. On 01.09.2008, the petitioner served a notice of claim-cum-arbitration on the respondent to make the payment immediately otherwise treat the notice for referring the dispute to arbitration as per Clause 29 of the Purchase Order and informed about nominating Mr. Shiv Shankar Bhatt, a retired Judge of the Karnataka High Court as the arbitrator from their side and requested the respondent to nominate their own arbitrator within 30 days. On 14.11.2008, the respondent rejected the arbitration notice stating that there was no concluded contract between the parties. Hence, the petitioner filed the present petition for appointment of an Arbitrator. According to the respondent, as seen from the counter affidavit, there was no concluded contract between the parties and the parties are still not ad idem in respect of various essential features of the transaction. Further the draft contract received from the petitioner was yet to be accepted/confirmed by the respondent. The commercial offer provided two options of shipment lot, namely, 2 shipments and 5 shipments. The only understanding that had been arrived at between the parties as a result of the correspondence subsequent to the receipt of the commercial offer from the petitioner was that the transaction would be in respect of 5 shipments. All other terms and conditions pivotal and essential to the transaction were under negotiation as is evident from the correspondence between the parties. The product specifications, price, inclusions in the contract price, delivery point, insurance, commencement and conclusion dates of the contract, transfer of title, quality check and demurrage are all factors that are at large and remain undecided. In such a scenario, where the parties were not in one mind with respect to any aspect of the transaction, the contention of the petitioner that there existed a binding contract between the parties as also a binding arbitration agreement is wholly erroneous and misleading. Apart from the commercial offer dated 15.10.2007, subject matter of the instant proceedings, the petitioner had sent another commercial offer on 05.09.2007 bearing No. TID/F/194/2007 also for 45000 MTs of Bauxite (of Australian origin) which offer had been followed up with a purchase order executed by and between the parties. While the commercial offer, subject- matter of the instant petition, was being negotiated and the terms discussed, a shipment of Bauxjte covered under the previous commercial offer dated 05.09.2007 was received by the respondent at its plant on or around 12.11.2007. The product was being analysed to determine its utility value for the respondent at its plant. On account of such analysis being conducted, the respondent on 12.11.2007 wrote to the petitioner bringing the factum of the ongoing analysis to its notice and instructed the petitioner to defer the new shipments till the analysis was completed and the results obtained with respect to the utility value of the said product. Despite being put on notice by the respondent for deferment of shipment, the petitioner permitted the nomination of the Vessel to take place on 13.11.2007. Apart from there being no valid and binding contract/arbitration agreement between the parties, it is the stand of the respondent that in this petition, the petitioner seeks to commence proceedings to fasten a liability on to the respondent for which the respondent was not responsible in any manner whatsoever having informed the petitioner prior to the occurrence of the event giving rise to the alleged liability.
(3.) IN the light of the above pleadings of both the parties, heard Mr. K.K. Venugopal, learned senior counsel for the petitioner and Mr. C.A. Sundaram, learned senior counsel for the respondent. Mr. K.K. Venugopal, learned senior counsel for the petitioner, after taking me through the sequence of events which took place on 15.10.2007 and 16.10.2007, submitted that the contract between the petitioner and the respondent stood concluded by acceptance of the offer for five shipments by the respondent at 3.05 p.m. on 16.10.2007. He further contended that the commercial offer of 16.10.2007 was pursuant to the request of the respondent on 10.10.2007 and on the basis of a similar transaction which had been concluded in the previous month between the parties. By taking me through various e-mails exchanged between the parties, he contended that the charter was entered into a contract by the parties on 17.10.2007 i.e. the next day. He finally submitted that from the materials it was established beyond doubt that the intention of parties in case of any dispute between them arising out of the contract which was concluded on 16.10.2007 at 3.06 p.m. shall be settled through arbitration. On the other hand, Mr. C.A. Sundaram, learned senior counsel for the respondent contended that there was no concluded contract between the parties and that the agreement between the petitioner and the respondent was only in respect of the number of shipments (two or five) and nothing more. According to him, there is no arbitration agreement and that clause 6 is vague and ambiguous. He further contended that even in the legal notice dated 01.09.2008 issued by the petitioner's counsel, there is no specific reference to clause 6 of the commercial offer but mentioned only clause 29 of the purchase order exchanged between the parties on 08.11.2007 but the present petition before this Court mentions both of them. He also pointed out that the Charter Party Agreement (CPA) entered into between the petitioner and the ship owner is only a draft. Further, there were differences in the purchase orders exchanged between the parties on 08.11.2007 and that it is only a draft form and prayed for dismissal of the present petition.;