- (1.) Commercial causes, we may observe prolegomenary fashion should, as far as possible, be adjusted by non-litigative mechanisms of dispute-resolution since forensic processes, dilatory and contentious, hamper the flow of trade and harm bothsides, whoever wins or loses the lis. That is why arbitration is often prudently resorted to when controversies erupt in the course of business dealings. But when basic differences spring up as to which is the arbitration clause that governs, in a plurality of contracts or several steps in evolving a final contract but containing divergent arbitral provisions, the Court comes into the picture, willy nilly. Even so, having regard to the larger interests of justice, and exercise in pre-trial settlement, consistent with judicial non-alignment, is desirable, and so we had suggested to counsel, at an earlier hearing, to bring the parties together on the limited question of the arbitral locus and law, but, notwithstanding genuine efforts by counsel, and perhaps due to substantial factors wighing with the parties, the effort proved fruitless. A legal adjudication may be flawless but heartless but a negotiated settlement will be satisfying, even if it departs from strict law. The respondent's counsel stated that his client -m a foreign State trading Organization was rather keen - and this may well be true on getrting the law declared by his court for future guidance and so we proceed to narrate the litigative story and cut the legal knot for the benfit of both sides. Since the subject-matter relates to the sensitive area of foreign trade we still hope the dispute, even after our pronouncement, will be dissolved and goodwill andbusiness dealings revived between the parties to their mutual benefit.
(2.) The drmatis personae or legal actyors in this action are an engineering firm in India (the appellant) and a Hugarian state undertaking doing export-import trade with other countries in machinery ( the respondent) and the contest relates to the competency of the appellant to refer a dispute regarding purchase of two Hungarian Counterblows (machinery). The Indian went to Buidapest to try and buy Hungarian machinery and the negotiations fructified as the minutes of April 2, 1970, drawn up of the broadarrangement between the parties, disclose. Having been followed up by formal deeds, these minutes mark the beginning of and serve as setting tobut not in themselves constitutive of complete cntracts. A significant dichotomy which characterises these minutes cannot be missed, though resisted by counselfor the respondent. The first part relates to the appellant, being exclusively chosen to represent the respondent in the sales of their manufactures in certain specifiedates in India. The second part is devoted to purchase of two specific items of machinery plus provsion for a third to be concretised later. This duality analysis may be driven home byreading the text of the minutes here: MINUTES "Drawn in Budapest on the 2nd April, 1970, Present......... 1. Technoimpex grants the right of exclusive representation to the Agarwal Engineering Co. to act as its sole agent in the territories of West Bengal, Bihar and Orissa. It will be decided at a later date whether the representation agreement will be extended to the State of Assam. 2. The detailed text of the agreement will be air-mailed until the 7th April 1970. 3. A letter in duplicate addressed to STC with the request to issue a stock and tale licence in a avalue of 2 Million rupees will be sent to the Hungarian Trade Commissioner in Calcutta who hands over t to M/s Agarwal Engineering Co., after signing the agency agreement. 4. Detailed pro forma invoices in six copies will be sent with the agreement and catalogus at least siz copies. 5. It has been agreed that Techno impex supplies and the Agarwal Engineering companu immediately places the order for the following machines: One counterblow Hammer Type EK gross C and F Price Rs. 1,000.000 One counterblow Hammer Type EK-13A Rs. 522.596 Other machines in a value of Rs. 300.000 6. Technoimpex grants a special introduction discount of 10% in the free Hungarian border prices i.e., on EK --- 25 Rs. 915.550 EK --- 13A Rs. 466.200 and of 5 % in the free Hungarian border prices of the other machine as per price list handed over to the Agarwal Engineering Company. 7. Payment conditions of counter-blow hammer type EK 25 would be: 25" throgh irrevocable L/C sto be opened 30 days before the date of despatch. 75% in 3 years in6 equal instalments for which 6% interest will be charged extra. The EK 13A counter blow hammer will be paid 25% through irrevocable L/C tobe opened 30 days before tre date of despatch. 75% 12 months credit to be paid in two equal instalments for which 6% interest will be charged extra. Other machine types will be supplied at 6 months credit and 65 interest will be charged p.a. The gurantee of a first class bank should be sent with the order to cover the credits granted. The cridit is reckoned from the date f B/L. In case of cash payment no interest will be charged. 8. The machines mentioned in these minutes canbe sold only in the territories enumerated under S.I. by M/s Agarwal Delivery terms: Counterblow Hammer Type EK-25 16th October 1970 Counterblow Hammer Type EK-13-A 15th October 1970 Budapest, 2nd April 1970 On behalf of Agarwal Co. On behalf of Technoimpex."
(3.) The first four clauses focus on the 'exclusive representation' rights while the last four specificate the agreed terms for purchase of two items of machinery, such as the price, 'introduction discount', conditions of payment and the like. The former speek of what is proposed to be done, to be set down in an agreement to be despatched on or before April 6, 1970. The letter, now and here, spell out the essential contents of two contracts of purchase of two Counterblows Hammer Type - one EK-25 and the other EK-13A. In keeping with this legal 'dialysis' we find on the same date, i.e., April 2, 1970, two formal contracts relating to the sale of the 'Counterblows'. These run virtually on the same lines and set out the terms of the two sales, one of the common terms whereof engrafts an arbitration clause (Clause 8) which reads: "8. All matters, questions, disputes, differences and/or claims arising out of and/or concering and/or in connection with and/or in consequence of or relating to the contract whether or not the obligations of eithr or both parties under this contract be subsisting at the time of such dispute and whether or not this contract has been terminated or purported to be terminated or completed shall be subject ot the jurisdiction of Calcutta High Court only and shall be referred to the jurisdiction of Calcutta High Court only and shall be referred to the arbitration of the Bharat Chamber of Commerce under the rules of its Tribunal of Arbitration for the time being in force and according to such rules the arbitration shall be conducted.";