Summary
The appellant and the respondent entered into two con- tracts on two different dates for supply of HPS groundnut Kernels jaras. After the usual terms as to quality, quanti- ty, price etc., the first contract provided in clause II thereof "that other terms and conditions as per FOSFA--20 contract terms." However, clause 9 of the second contract did not make any mention of FOSFA--20 contract and all that was stated was that all other terms and conditions for supply not specifically shown and covered therein should be as per previous contract signed between the parties for similar supply of HPS groundnut. The 'FOSFA-20 contract'
contained an arbitration clause to the effect that any dispute arising out of this contract, including any question of law arising in connection therewith, shall be referred to arbitration and neither party, hereto, nor any persons claiming under either of them shall bring any action or other legal proceedings against the other in respect of any such dispute until such dispute shall first have been heard and determined by the arbitrators.Disputes and differences arose between the parties. The appellant in Civil Appeal No. 1755/1982 alleged that the respondent therein committed breach of their obligations under both the contracts and sought to commence arbitration proceedings. The respondent on the other hand filed a peti- tion in the High Court under s.33 of the Arbitration Act, 1940 alleging that there was no valid arbitration agreement between the parties and contended that when it agreed in clause 11 of the first contract that the parties would be governed by the terms and conditions of 'FOSFA-20 contract', it only had in mind such terms and 958conditions as would govern the relationship between the parties and the fact that there was an arbitration clause inFOSFA-20 contract came as a complete surprise to the re- spondent. This petition was opposed by the appellant.A Single Judge of the High Court held that in view of the fact that the respondent had been nominated the canalis- ing agent for export of HPS groundnut, it would not be unjustified to assume that the respondent was well aware of the foreign trade in groundnut and the implications of reference to 'FOSFA-20 contract' when he put his signatures to the contract in question; that the arbitration clause inFOSFA-20 contract was incorporated into the first contract by virtue of clause 11 providing 'other terms and conditions as per FOSFA-20 contract terms'. With regard to the second contract it was held that it did not make any mention ofFOSFA-20 contract and all that was stated in clause-9 there- of was that all terms and conditions for supply not specifi- cally shown and covered therein should be as the previous contract signed between the parties for similar supply of HPS.It was accordingly held that there existed no arbitra- tion agreement between the parties and, as such, none of them was entitled to seek reference to arbitration; and that a term about arbitration was not incidental to supply of goods and it was difficult to read from the provisions of clause 9 of the contract that the arbitration clause was lifted from there and made a part of the same.The applications under s.33 of the Arbitration Act was allowed in so far as it related to the second contract, and disallowed so far as the first contract was concerned. Both parties filed appeals to this Court.Dismissing the appeals,HELD: 1(i) The arbitration clause of an earlier contract can, by reference, be incorporated into a later contract provided however, it is not repugnant to or inconsistent with the terms of the contract in which it is incorporated.[962F-G]1(ii) Where the parties are aware of the arbitration clause of an earlier contract, the subject-matter of which is different from the contract which is being entered into by them, incorporating the terms of the earlier contract by reference by using general words, there would be no bar to such incorporation merely because the subject-matters of the two contracts are different, unless however, the incorpora- tion of the 959arbitration clause will be insensible or unintelligible.[965G-H; 966A]1 (iii) There is no proposition of law that when a contract is entered into for supply of goods, the arbitra- tion clause must form part of such a contract. The parties may choose some other method for the purpose of resolving any dispute that may arise between them. But in such a contract the incidents of supply generally form part of the terms and conditions of the contract. [966F-G]1 (iv) When the incorporation clause refers to certain particular terms and conditions, only those terms and condi- tions are incorporated and not the arbitration clause.[967A]2. The normal incidents of terms and conditions of supply are those which are connected with supply, such as, its mode and process, time factor, inspection and approval, if any, reliability for transit, incidental expenses etc. An arbitration clause is not a term of supply. [966E-F]In the instant case, there is a good deal of difference between clause 9 of the second contract and clause 11 of the first contract. Clause 11 has been couched in general words, but clause 9 refers to all other terms and conditions for supply. The first contract includes the terms and conditions of supply and as clause 9 refers to these terms and condi- tions of supply, it is difficult to hold that the arbitra- tion clause is also referred to and, as such, incorporated into the second contract. [966C-D]Dwarkadas & Co. v. Daluram Gaganmull, AIR 1951 Cal 10F.B., approved.Hamilton & Co. v. Mackie & Sons, [1889] 5 TLR 677 (C.A.),The Annefield, [1971] 1 All. E.R. 394 & The Njegos,[1935] All ER Rep. 863, held inapplicable.See the full content of this document
Extract
Alimenta S.A. Etc. VS. National Agricultural Co-operativemarketing Federation Of I
PETITIONER: ALIMENTA S.A. ETC.Vs.RESPONDENT: NATIONAL AGRICULTURAL CO-OPERATIVEMARKETING FEDERATION OF INDATE OF JUDGMENT09/01/1987BENCH: DUTT, M.M. (J)BENCH: DUTT, M.M. (J)MISRA RANGNATHCITATION: 1987 AIR 643 1987 SCR (1) 957 1987 SCC (1) 615 JT 1987 (1) 117CITATOR INFO : RF 1989 SC 818 (4)ACT: Arbitration Act, 1940, s.2--Arbitration Agreement--Con- struction of--Contract for supply of goods--Whether arbitra- tion clause must form part of such contract--Parties enti- tled to choose other method for resolving dispute--When incorporation clause refers to certain particular terms and conditions only those to be incorporated--Not arbitration clause.JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1755 & 1756 of 1982 From the Judgment and Order dated 11.12.1981 of the Delhi High Court inC.M.P.No. 41 to 1981.P.R. Andhyarjina, D.N. Misra and M.P. Baroocha for the Appellant.G. Ramaswamy, Additional Solicitor General, V.P. Singh and Miss Sushma Relan for the Resp...
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