Rajiv Shakdher, J. - (1.)Preface: -
1. This is an application filed by the defendant i.e. Derco Foods [hereafter referred to as Derco] under Order VII Rule 11 of the Code of Civil Procedure, 1908 [in short "CPC"] read with Section 45 of the Arbitration and Conciliation Act 1996 [in short "1996 Act"].

1.1. Derco, via this application, seeks a direction for referring the parties to arbitration in terms of the arbitration agreement obtaining between them. Besides this, Derco also seeks rejection of the plaint under Order VII Rule 11 of the CPC. In addition, thereto, costs are also sought by Derco.

1.2. Notice in this application was issued on 27.07.2020. After pleadings in the application were completed, the judgement was reserved.

Background facts: -

(2.)To render a decision in the application, the following broad facts are required to be noticed as adverted to in the pleadings filed by the parties and based on the documents placed on record.
2.1. Plaintiff no. 1 is a partnership firm. Plaintiff no. 2 and 3 are partners in plaintiff no. 1. Plaintiff no. 4 is a company in which plaintiff nos. 2 and 3 are appointed as directors.

2.2. [Hereafter, for the sake of convenience, plaintiff no. 1/Uttam Chand Rakesh Kumar will be referred to as the "firm" while plaintiff nos. 2 and 3 will be referred to by their names i.e. "Mr. Rakesh Kumar Bhatia" and "Mr. Akshay Kumar Bhatia" respectively. Likewise, plaintiff no. 4 will, hereafter, be referred to as the "Company". However, wherever the context requires, the firm, Mr. Rakesh Kumar Bhatia and Mr. Akshay Kumar Bhatia and Company will be collectively referred to as "plaintiffs".]

2.3. The dispute, on merits, veers around 44 contracts titled "seller contracts". Out of 44 contracts, 36 have been executed between the firm and Derco while the remaining 8 have been executed between the Company and Derco.

2.4. Thus, the transaction between the parties concerns sale of 45,000 lbs of "almonds in-shell non-pareil" having 70% meat yield [in short "goods"] by Derco to the firm and the Company under the aforementioned seller contracts.

2.5. As per the plaintiffs, 30 containers/consignments were shipped by Derco. It is averred that the firm was the consignee qua the said shipments. It is stated by the plaintiffs that the said consignments arrived at the Nhava Sheva port in Mumbai between 27.02.2020 and 03.05.2020.

2.6. It is also averred by the plaintiffs that out of the 30 consignments, the sale documents pertaining to 21 consignments were despatched/transmitted to the firm's bankers. Insofar as the remaining 9 consignments were concerned, it is stated, Derco had not gone this far.

2.7. The plaintiffs also aver that since the Government of India [GOI] imposed a lockdown commencing from 25.03.2020 on account of the spread of the Coronavirus pandemic, the force majeure event was triggered.

2.8. The plaintiffs claim that before the lockdown i.e. between 16.03.2020 and 21.03.2020 qua other contracts [I would assume, other than the seller contracts] the firm paid Rs. 7, 69,50,973/- to Derco.

2.9. It is asserted by the plaintiffs that between Decemvir 2019 up until 21.03.2020 the firm and the Company had paid all told Rs. 54, 79,19,275/- to Derco.

(3.)The plaintiffs also aver that because of spread of Coronavirus and the resultant lockdown, they had requested Derco to enhance the "free time at port" from 14 days to 25-28 days by making an endeavour, in that behalf, with the shipping line.
3.1. The plaintiffs claim that several options were discussed including the firm offering to make payments for consignments which were lying at Nava Sheva port subject to "temporary assistance" being given by Derco. The plaintiffs claim that they also offered to make up losses suffered by Derco in future.

3.2. According to the plaintiffs, Derco suggested payment of money towards 3-5 loads per week against pending/unshipped loads. This counter-offer was not found feasible by the plaintiffs on account of financial crunch and cash flow difficulties which emanated from the Coronavirus pandemic. It is averred, though, by the plaintiffs that some contracts were amended and the period of shipment was extended to April/May 2020.

3.3. As per the plaintiffs, since parties could not arrive at a negotiated settlement Derco requested that the seller contracts be "cancelled" and that a "no objection certificate" [in short "NOC"] be issued in that behalf by the firm and the Company so that the goods could be sold to the third parties. In this behalf, the plaintiffs rely upon the e-mail dated 04.05.2020 issued by Derco.

3.4. The plaintiffs claim that Derco, thus, sought recall of all documents from the custom-house clearing agents [in short "CHAs"] of the firm and the Company concerning each consignment. Besides this, Derco also sought a copy of the import/export certificate concerning the firm and the Company and the documents despatched by it to their bankers in India.

3.5. It is emphasized that NOCs were issued by the firm and the Company in respect of all 44 consignments, although, only 30 consignments had reached the Nhava Sheva port. The plaintiffs, thus, claim that NOCs were issued to Derco to enable it to resell the goods in India. The plaintiffs aver that losses, if any, suffered by Derco would have arisen on account of its self-inflicted wounds and could not be attributed to them.

3.6. More pertinently, the plaintiffs claim [and this is the nub of the matter] that in return for NOCs, Derco executed a declaration cum undertaking dated 07.05.2020 [in short "DCU"] which resulted in the cancellation of the seller contracts. Based on the DCU, the plaintiffs assert that neither party can lay a legal or financial claim against the other under the seller contracts. As per the plaintiffs, the DCUs were executed by Derco voluntarily without duress and/or coercion.

3.7. It appears that Derco did not have the same perspective of the matter as the plaintiffs and, therefore, took out a publication on 02.06.2020 which inter alia conveyed to the persons in the trade that the plaintiffs were defaulters. According to the plaintiffs, this publication damaged their business interest and by way of an example relied upon a letter dated 02.06.2020 issued by an entity based in California which had purportedly cancelled its contract with the firm with effect from 01.06.2020.

3.8. The plaintiffs, it appears, to stem the possible adverse impact on their business issued a letter dated 05.06.2020 to the tree nut industry to explain what they thought was the correct version of the events as they transpired between the parties.

3.9. The plaintiffs claim that Derco did not rest with the issuance of the aforementioned defamatory publication but also wrote to the Directorate General of Foreign Trade [DGFT] on 09.06.2020. Derco followed this with the invocation of arbitration proceedings via its notice dated 19.06.2020.