- (1.) The appellant. General Electric Company, a multi-national, entered into a contract with the respondent, Renusagar Power Company Limited, an Indian Company, agreeing to sell equipment for a Thermal Electric generating plant to be erected at Renukoot on the terms and conditions set forth in the contract. For the purposes of this case, it is unnecessary to set out the terms of the contract and the details of what we envisaged to be done by the parties. It is also unnecessary to set the various events that took place subsequently. It is sufficient to state that on 2/03/1982, the GEC submitted certain disputes between the GEC and Renusagar for arbitration to the International Chambers of Commerce. On 11/06/1982. Remisagar filed a suit in the Bombay High court for a declaration that the claims purported to be referred to arbitration by GEC to ICC were beyond the scope and purview of the arbitration agreement contained in the contract and sought an injunction to restrain the GEC from taking any further steps pursuant to their request for arbitration addressed to TCC on March 2. '982. In Renusagar's suit, GEC, on 11/08/1982 filed a petition under Section 3 of the Foreign Awards (Recognition and Enforcement) Act. 1961 seeking a stay of the suit. On 19/08/1982 GEC also filed a suit in the Calcutta High court against the United Comical Bank to enforce a bank guarantee given by the bank at the instance of Renusagar. On 25/11/1982. Renusagar filed a suit No. 127 of 1982 in the court of Civil Judge, Mirzapur praying for a declaration that the guarantee givenby the United Commercial Bank for and on behalf of the plaintiff stood discharged and had become ineffective and unenforceable and for a mandatory injunction against the GEC directing and ordering them to settle the plaintiff's claim regarding 75 MVA Transformers and to satisfy validly the settlement arrived at of the plaintiff's claim as mentioned in para 12 of the plaint.
(2.) It is useful to refer at this juncture to some of the happenings in the proceedings in the Bombay High court. On April 20, 1983, a learned Single Judge of the Bombay High court dismissed the notice of motion taken out by Renusagar for stay of the arbitration proceedings and allowed the application of GEC for stay of further proceedings in the Bombay High court. Appeal filed by Renusagar to the division bench of the High court were dismissed on 21/10/1983. Further appeals filed by Renusagar to the Supreme court were also dismissed on 16/08/1984. The Supreme court held that the claims of GEC were arbitrable and that the decision of the court was conclusive on that issue and would not arise before the court of arbitration of ICC.
(3.) On 17/01/1983, GEC filed an application (7-C) purporting to put on record their complaint that annexures to the plaint had not been received by them. On the same day, the Civil Judge made an order: "copy of the plaint has been given to the defendant (GEC) so that the defendant may file a written statement. " On the same day, the defendant GEC also filed another application (8-C) purporting to be under S. 20 and Order 7 Rule II read with S. 151 of the Code of Civil Procedure' praying that the court may be pleased to reject the plaint and the suit. In this application, it was stated that the suit was an abuse of the process of the court and an attempt to harass the defendants. The court was requested to dismiss the plaintiff's suit on that ground as also on other grounds which were thereafter mentioned. It was stated that the defendant did not reside and no cause of action arose within the local limits of the jurisdiction of the court. There was a violation of the stipulation laid down in S. 20 of the Code of Civil Procedure resulting in an abuse of the process of the court. It should entail a dismissal of the suit. The suit had been fraudulently instituted on insufficient court fee and for that reason also the suit deserved to be dismissed. The defendant then proceeded to state that they reserved the right to take further objections as preliminary objections to the maintainability of the suit and craved leave to add to or alter or amend the application whenever necessary. What is important to be noticed here is that there was no prayer at this juncture for a stay of the suit. On 19/01/1983. GEC filed an application (10-C) requesting the court to call upon Renusagar to furnish a complete recordof the suit and annexures. The Civil Judge passed an order: The case is called out. Shri J. P. Singh, present for the plaintiff, Shri R. S. Dhawan, advocate for the defendant. 10-C by the defendant to direct the plaintiff to give copies of complete record so that the defendant may plead preliminary objections. The copies of papers have been given. Now the defendant may file W. S. by 4/03/1983. Put up on 7/03/1983 for issues. Preliminary objections like 7-C and 8-C can be heard and disposed of after filing of written statement when the issues may be framed. On 4/03/1983 which was the date fixed by the Civil Judge for the filing of a written statement by GEC, GEC filed three applications before the Mirzapur court: 11-C, 12-C and 13-C. 13-C was styled as "objections by the defendant to the jurisdiction of the court to entertain this suit for declaration and injunction". The document began with the statement: "the Hon'ble court has no jurisdiction to entertain this suit because of the following reasons. " Seven reasons were set forth. The first and the fourth grounds related to the territorial jurisdiction of the court. The second ground stated that the plaint did not disclose any cause of action and, therefore, was liable to be rejected under Order 7 Civil Procedure Code. The third ground stated that from the statements in the plaint, the suit was barred by limitation. The plaint was, therefore, liable to be rejected under Order 7 Rule 11. The fifth ground was to the effect that the reliefs claimed were untenable on their face and the suit was liable to be straightway dismissed on that account. The sixth ground was that the suit was liable to be stayed under S. 10 or S. 151 of the Civil Procedure Code. The seventh ground was: "similarly the suit is liable to be stayed as regards the second relief claimed by the plaintiff under S. 3 of the Arbitration (Protocol and Convention) Act, 1937 and Foreign Awards (Recognition and Enforcement) Act, 1961 and/or S. 34 of the Indian Arbitration Act, 1940 or under all of them. " Thereafter the document proceeded to amplify the seven grounds by detailed reference to the allegations in the plaint and by further traversing those allegations. In regard to the seventh ground that the suit was liable to be stayed under S. 3 of the Foreign Awards (Recognition and Enforcement) Act, 1961, it was stated: The present claim arises out of the only contract between the parties entered into in 1964. Disputes arising out of or related to this contract have to be settled, after being unable to resolve such disputes by sincere negotiation by arbitration under the rules of the International Chamber of Commerce court of Arbitration because of the provisions of Article XVIII of the said contract. The defendant is ready and willing to have the present 144 dispute "aides by the plaintiff in this plaint to be settled by arbitration without prejudice to the defence of want of cause of action, the bar of limitation and all other defenses. This Honorable court is therefore "bound to stay the present suit under S. 3 of the Foreign Awards (Recognition and Enforcement) Act, 1961". The final prayer made in the application (13-C) was: For the above reasons it is prayed that the plaint be either rejected for failure to disclose the cause of action or as being barred for limitation on the face of it, or it be returned to the plaintiff for presentation to a proper forum. Further, the suit is also liable to be dismissed because reliefs claimed by the plaintiff are untenable on their face. Again, alternatively the suit is liable to be stayed under S. 10 and/or S. 151, Civil Procedure Code in respect of first relief and under S. 3 of the Foreign Awards (Recognition and Enforcement) Act, 1961 in respect of the second relief Claimed by the plaintiff in the plaint.;