Janarthanam, J. - (1.) FOR the Loyal Textile Mills Limited (in short 'Indian Company') is registered under the Companies Act, having its office located at No. 855, Anna Salai, Madras-600002. It is engaged inter alia in the manufacture of textiles. It imports cotton from foreign countries, including United States of America, African countries and Pakistan, for the manufacture of textiles. It negotiated for the purchase of foreign cotton with one M/s. Gill & Co. Pvt. Ltd., Bombay (negotiator).
(2.) ALLENBERG Cotton Company (in short 'American Company') and Esteve Bros. Co., Inc. are the two companies located at United States of America engaged in the sale of American cotton. The negotiator, purporting to be the agent of the said two American Companies, started negotiating with the Indian Company as respects the purchase of American Cotton. In the course of negotiations, the negotiator forwarded the terms of contract, purporting to be from American Company. Subsequently, negotiations between them continued mainly over telephone. In the process of such negotiation, the Indian Company opened Letters of Credit for the purchase of cotton from the two American Companies. M/s. Esteve Bros. Co., Inc. supplied the requisite cotton on the Letters of Credit as per the understanding. However, the American Company wanted certain amendments to the terms of the Letters of Credit before ever cotton was to be supplied. The amendments, as suggested were not acceptable to the Indian Company. Consequently, the American Company treated the Indian Company as having committed breach of the contract and thereafter, sought to refer the matter for arbitration, pursuant to a clause in the terms of the contract.
(3.) THE American Company is a member of the Liverpool Cotton Association Limited (in short 'the Association') situate at 620, Cotton Exchange Building, Edmund Street, Liverpool L3 9LH, England. Under the Rules prescribed, the Association purported to conduct arbitration under its auspices at the instance of the American Company. Mr. R. B. Davies of England had been appointed by the American Company as their Arbitrator while R. J. Anderson of England had been appointed by the Association as the Arbitrator for the Indian Company, which is not its member.;