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2024 SCC OnLine Del 7750

In the High Court of Delhi at New Delhi

(BEFORE DINESH KUMAR SHARMA, J.)

Balaji Steel Trade … Plaintiff;

Versus
Fludor Benin S.A. and Others … Defendants.
CS(COMM) 544/2023, I.A. No. 16015/2023
Decided on November 8, 2024, [Reserved On - 11.09.2024]
Advocates who appeared in this case :
Mr. Tejas Karia, Ms. Shruti Sabharwal, Mr. Nishant Doshi, Mr. Nitin
Sharma, Mr. Ankit Juneja, Mr. Abhinav Mathur, Mr. Nitesh Srivastava,
Mr. Manish Parmor, Advs.
Mr. Abhijnan Jha, Ms. Urvashi Misra, Mr. Arnab Ray, Advs. with D-1
Mr. Susshil Daga with Mr. Chitransh Mathur, Mr. Parul Singhal, Mr.
Ashish Sharma, Advs. with D-2 & 3.
The Judgment of the Court was delivered by
DINESH KUMAR SHARMA, J.:—
I.A. No. 16015/2023 (on behalf of Defendant No. 1 u/s. 45 of the
Arbitration and Conciliation Act, 1996, seeking dismissal of the
suit) & CS(COMM) 544/2023
1. By way of the present application filed under Section 45 of the
Arbitration and Conciliation Act, 1996 (hereinafter, ‘the A&C Act’),
Defendant no. 1 seeks dismissal of the instant suit along with reference
of disputes to arbitration seated in Benin in light of the arbitration
agreement contained in Article 11 of the Buyer Seller Agreement
(hereinafter, ‘BSA’) dated 06.06.2019 and Article 5 of Addendum dated
09.01.2021.
Brief facts
2. The Plaintiff is a partnership firm bearing registration no.
13/1071/2016, registered under the provisions of the Indian
Partnership Act, 1932 and having its registered office at A-501-502,
Nagar Residency, Malviya Nagar, Dist. Jaipur, Rajasthan, 30201. The
Plaintiff is stated to be in the business of steel trading and various
agricultural products since 2016. Plaintiff is involved in
instrumentalizing and developing of several products, predominantly for
the agrarian sector of India with its business ventures extending to
national and international markets.
3. Defendant No. 1 is a private limited company registered under the
laws of Benin having its registered office at 513, Avenue Mgr.,
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Steinmetz, 03 BP 4304, Jericho, Cotonou, Republic of Benin. Defendant

No. 2 is Vink Corporation DMCC, a company having its registered office
in Dubai, UAE and Defendant No. 3 is Tropical Industries International
Private Ltd., a private limited company registered in New Delhi, India.
Defendant Nos. 1 to 3 are stated to be part of the group of companies
owned and controlled by Tropical General Investments Ltd., Nigeria
(“TGI, Nigeria”). TGI Nigeria holds 100% shares of Defendant No. 1,
51% shares in Defendant No. 2 and 99.73% shares in Defendant No. 3.
Further, Defendant Nos. 1 to 3 also have two common directors namely,
Mr. Rahul Savara and Mr. Cornelis Gerardus Vink. Mr. Rahul Savara is
also Group Managing Director of TGI Group.
4. Defendant No. 1 approached Plaintiff with a business idea for the
manufacturing and sale of Cottonseed Cakes (“Product”) in Benin. It
was stated that Defendant No. 1 had an abundant supply of cotton
seeds from a cotton seeds distribution company, namely Sodeco.
Pursuant to the inter-se discussions, Plaintiff and Defendant No. 1
executed the Collaboration and Buy Back Agreement (“Collaboration
Agreement”) on 10.12.2018. Clause 20 of the Collaboration Agreement
provided the dispute resolution mechanism i.e., disputes would be
resolved through arbitration and the arbitration will take place in Benin
and shall be administered by the Center of Arbitration, Mediation and
Conciliation, Benin. It is further stated that pursuant to the
Collaboration Agreement, at the request of Defendant No. 1, Plaintiff
executed a Buyer-Seller Agreement dated 06.06.2019 (“BSA”) for a
period of the next 5 years, which is stated to have superseded the
collaboration agreement.
5. After executing the BSA, Defendant No. 1 assigned its obligations
to Defendants No. 2 & 3. Subsequently, most transactions were made
through Defendants No. 2 & 3. Defendants No. 2 and 3 entered into
several Sales Contracts with plaintiff, all including arbitration clauses
under the Indian Arbitration Act, with New Delhi as the arbitration
location. During COVID-19, defendant No. 1 started renegotiating the
BSA, proposing to eliminate the plaintiff's exclusive rights. In October
2020, an Addendum to BSA was signed on 09.01.2021, allowing
Defendant No. 1 to sell to third parties, provided they prioritised
Plaintiff's orders. It was stated that after the execution of the
Addendum, defendant No. 1 reduced supplies to Plaintiff, citing
external factors, despite having enough stock.
6. The plaintiff further stated that between March and April 2022,
Plaintiff and Defendant No. 3 executed several High Sea Sale
Agreements (HSSAs) which, inter-alia, recorded the rights and
obligations of Defendant No. 3 as the Seller and Plaintiff as the Buyer of
the Product. Clause (g) of the High Sea Sale Agreements recorded that
the disputes were to be referred to arbitration under the Indian
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Arbitration Act, 1940.

7. Thereafter, certain disputes arose between the plaintiff and
defendant No. 1 with respect to the supply of the product and financial
liabilities, leading to the plaintiff issuing a Legal Notice on 15.07.2022.
defendants No. 2 and 3 responded, denying liabilities, while defendant
No. 1 did not reply to the said legal notice. Consequently, plaintiff
issued a termination notice on 06.09.2022 for ongoing breaches on
behalf of the respondent company. On account of the actions of the
defendants that amounted to criminal breach of trust, criminal
conspiracy, fraud and cheating, the Plaintiff lodged an FIR dated
17.02.2023 bearing no. 0073 under Sections
405/406/415/417/419/420/506 and 120-B of the Penal Code, 1860, at
PS Malviya Nagar, Jaipur (East), Rajasthan, against the Defendants.
8. The plaintiff further stated that in the meanwhile, defendant No. 1
initiated a CAMEC-administered arbitration in Benin, as per the
arbitration clause provided under the Collaboration Agreement. CAMEC
issued a letter dated 12.04.2023 requesting the plaintiff to appoint its
nominee arbitrator. On 15.05.2023, the plaintiff issued a detailed
response to CAMEC refusing to appoint the nominee arbitrator and
further clarifying that defendant No. 1 had erroneously approached
CAMEC as there was no arbitration agreement governed by CAMEC
between plaintiff and defendant No. 1. Further, it was submitted that
the arbitration in Benin could not take place as there were multiple
parties which were involved in the dispute. CAMEC took note of the
plaintiff's refusal and requested the defendant to review its decision
vide its e-mail dated 19.05.2023. Meanwhile, on 31.05.2023, defendant
No. 1 issued another notice invoking arbitration (“NIA”) in terms of
Clause 11 of the BSA. Plaintiff replied to the NIA vide letter dated
30.06.2023, whereby it denied the contents of the NIA. Thereafter, the
plaintiff issued a notice dated 13.07.2023 under Section 21 of the A&C
Act, 1996, for referring the disputes between the parties to arbitration
because, as per the plaintiff's understanding, the conspectus of all the
agreements executed between the parties suggests that seat of
arbitration was India. It was also submitted that the said notice was
addressed to defendants nos. 1 to 3 because they always represented
themselves to be alter egos of each other. It is further stated that the
plaintiff apprehended precipitative actions by the defendants.
Therefore, the plaintiff approached this Court seeking a permanent
injunction against defendant No. 1 from proceeding and continuing with
the Benin Arbitration.
9. While the matter rested thus, the application bearing I.A. No.
16015/2023 was filed by defendant No. 1 under section 45 of the A&C
Act on 16.08.2023, seeking rejection and dismissal of the present Suit
filed by plaintiff, and also seeking reference of the plaintiff and
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defendant No. 1 to the pending arbitration proceedings in the Republic

of Benin. At the outset, it is pertinent to note that, notwithstanding the
issuance of an award by the Arbitral Tribunal constituted in Benin, the
issue presently raised by defendant No. 1 pertains to a substantive
legal question, which warrants judicial scrutiny and determination. It is
also pertinent to mention that vide order dated 08.11.2023, this court
ordered that any proceeding/award passed in Benin will be subject to
the decision of the present suit.
10. Defendant No. 1, in its application, stated that it had initiated
the Benin Arbitration proceedings by invoking the arbitration
agreement between the plaintiff and defendant No. 1 contained in the
BSA dated 06.06.2019 read with the Addendum dated 09.01.2021.
Defendant No. 1 initiated the said proceedings pursuant to the
defendant's Notice of Arbitration dated 31.05.2023 (“Fludor NOA”)
following certain disputes that have arisen between defendant No. 1
and plaintiff under the BSA read with the Addendum. Defendant No. 1
stated that the suit is misconceived and a counterblast to the Benin
arbitration proceedings.
11. It is further stated in the application that the BSA read with the
Addendum is the sole agreement between the plaintiff and defendant
no. 1, setting out the rights and obligations of the plaintiff and
defendant no. 1 in relation to the pricing and supply of “Product”.
Therefore, only plaintiff and defendant no. 1 are the two sole parties to
the BSA read with the Addendum. It is also stated that the disputes
that are the subject matter of the Suit are rooted in the BSA and
Addendum, and the plaintiff and the defendant no. 1 have, under
Article 11 of the BSA, admittedly agreed to arbitrate in the Republic of
Benin.
12. Defendant no. 1 further stated in the application that Plaintiff
has not challenged the existence of the arbitration agreements in the
present Suit. Moreover, the plaintiff itself acceded to the arbitration
clause of BSA in Article 5 of the Addendum, wherein the plaintiff and
defendant No. 1 agreed that the BSA should be construed, governed
and interpreted in accordance with the laws of the Republic of Benin.
Hence, any dispute between the plaintiff and defendant no. 1 arising
from or relating to the BSA and Addendum can be decided only as per
the Parties' agreed-to adjudication process. i.e. arbitration in the
Republic of Benin, as per the laws of the Republic of Benin.
13. Defendant No. 1 stated that the Parties' agreement of arbitration
in the Republic of Benin had been consistently followed under the three
separate contractual arrangements, namely, the Collaboration
Agreement dated 10.12.2018 and thereafter, the BSA dated
06.06.2029 read with the Addendum dated 09.01.2021.
14. Defendant no. 1 further contended in the application that
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Section 45 of the A&C Act provides that a judicial authority, when

seized of an action in a matter wherein the parties have made an
agreement referred to in Section 44, shall at the request of one of the
parties refer the parties to arbitration unless it prima facie finds that
the said agreement is null and void, inoperative or incapable of being
performed.
15. It has further been stated that in view of the express mandate
provided under Section 45 of the A&C Act, this Court while considering
the Application, is only required to satisfy itself of the following:
i. There is an agreement as referred in Section 44 of the Arbitration
Act;
ii. a party to such an agreement has brought an action before the
Court;
iii. the substance of the action is the subject of the agreement;
iv. the other party has approached the Court seeking directions to
refer the parties to arbitration; and
v. such a reference shall he made unless the Court prima facie finds
that the said agreement is null and void. inoperative or incapable
of being performed.
16. Defendant No. 1 further submitted that the arbitration
agreement, as contained in Article 11 of the BSA, is an agreement in
terms of section 44, i.e., a written arbitration agreement governed by
the Convention on the Recognition and Enforcement of Foreign Arbitral
Awards (“New York Convention”). Consequently, Part II of the A&C Act
applies to the same. It is submitted that Section 45, which is contained
in Part II of the A&C Act, casts a statutory mandate on courts to refer
parties to arbitration agreements to arbitration.
17. It is further stated in the application that in the present Suit, the
substance of the dispute is the product that had to be supplied under
the BSA, read with the Addendum. Further, Section 45 permits only a
limited enquiry, on a prima facie basis, taking into question whether
the arbitration agreement is “null and void”, “Inoperative”, and
“incapable of being performed”. The plaintiff's sole contention is that
the Benin Arbitration proceedings are purportedly vexatious,
inconvenient, unconscionable, oppressive, and cause demonstrable
injustice to the plaintiff. It is submitted that this contention does not in
any manner result in the arbitration agreement under Article 11 of the
BSA becoming ‘null and void’, inoperative and incapable of being
performed, which is the statutory standard contained in Section 45 of
the Arbitration Act.
18. It is also contended in the application that defendant no. 1, in
terms of the arbitration agreement contained in Article 11 of the BSA,
initiated Benin Arbitration proceedings on 31.05.2023 by issuing the
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Fludor NOA. The plaintiff and the applicant are both parties to the Benin
Arbitration proceedings. However, the plaintiff did not appoint the
arbitrator and called upon defendant No. 1 to withdraw from the Fludor
NOA. Thereafter, defendant no. 1 approached the competent court in
Benin for construing the arbitral tribunal in terms of articles 5 and 6 of
the Uniform Act on arbitration of the organisation for the Harmonisation
of Business Law in Africa.
19. Defendant No. 1 lastly stated that the competent Court in the
Republic of Benin, vide its order dated 26.07.2023, appointed the sole
Arbitrator, and hence, the Arbitral Tribunal in the Republic of Benin
stands constituted in terms of Article 11 of the BSA read with Article 5
of the Addendum.
20. In reply to the section 45 application, the plaintiff submitted
that defendant No. 1 has wrongly conferred the seat of arbitration to be
Benin, as the BSA does not find mention of the seat of arbitration but
only states that the arbitration “will take place in Benin”. Therefore,
Benin is not the seat but only a venue to conduct the Arbitration
proceedings.
21. The plaintiff submitted that it is a settled position of law that
‘seat of arbitration’ and ‘venue of arbitration’ cannot be used
interchangeably, and the mere expression of ‘place of arbitration’ shall
not become the basis to determine the intention of the parties that they
have intended that place as the seat of Arbitration. Thus, considering
the settled position, Benin cannot be considered a seat of arbitration, as
it is just a venue/place for conducting the arbitral proceedings. The
plaintiff further submitted that the intention of the parties as to the
seat of arbitration should be determined from other clauses in the
agreement and the conduct of the parties.
22. The plaintiff further submitted that in the instant case, there are
significant contrary indicators by way of novation and assignment,
which without a doubt, establishes the seat as India for adjudicating
the claims under arbitration. Therefore, by any stretch of the
imagination, Benin, as a venue of arbitration, cannot be treated as the
seat of arbitration, rather, it is merely only a venue having no
significance as a seat of arbitration.
23. It is further submitted that defendant No. 1 has invoked the
wrong section, let alone the wrong part of the Arbitration Act, as the
seat of arbitration is India, and therefore, only Part-I of the Arbitration
Act is applicable, and Part-II is inapplicable. The plaintiff submitted
that defendant No. 1 had conferred the seat of arbitration to a wrong
jurisdiction by completely disregarding subsequent arbitration
agreements contained in the Sales Contracts and HSSAs executed by
and between the plaintiff and defendant No. 2 and 3, which contain
arbitration clauses with the seat of arbitration to be in India.
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24. The plaintiff also submitted that defendant No. 1 has initiated
the Benin Arbitration only against the plaintiff and has failed to array
defendant Nos. 2 and 3, who are proper and necessary parties to the
inter se disputes. Defendant Nos. 2 and 3 stepped in the shoes of
Defendant No. 1 as its alter egos to supply and sell the Product to the
plaintiff. It is furthermore submitted that the dispute also pertains to
the advance amounts paid by the plaintiff, which are not adjusted or
paid back to the plaintiff. Hence, defendant No. 1 illegally initiated
Benin Arbitration without impleading the proper and necessary parties.
Accordingly, the Benin Arbitration is tainted with fraud right from its
inception and hence, required to be injuncted.
25. Lastly, in its reply, the plaintiff submitted that the oppressive
acts can be seen from the fact that the Plaintiff was completely
unaware of the application of appointment of arbitrator filed by
Defendant No. 1 before the Benin Court. The basic principle of natural
justice, i.e. audi alteram partem of the Plaintiff, was compromised even
at the stage of appointment of the arbitrator.
26. Sh. Rajiv Nayyar, Learned senior counsel for defendant no. 1,
submitted that all ingredients of Section 45 are satisfied in the present
case and the arbitration agreement in Article 11 of the BSA is a valid
arbitration agreement to which the New York Convention applies. The
Plaintiff has neither pleaded that this agreement is null and void,
inoperative or incapable of being performed nor sought any declaratory
reliefs in this regard. Therefore, as per Section 45 of the Arbitration Act,
the parties ought to be referred to the Benin Arbitration Proceedings. It
is further settled law that the terms ‘seat’ and ‘place’ are often used
interchangeably and that the law of the seat or place where the
arbitration is held is normally the law to govern that arbitration.
27. Learned senior counsel for defendant no. 1 further submitted
that the BSA read with the Addendum is the principal agreement,
which regulates the continuous supply and pricing of the products to be
supplied to Plaintiff. The six Sales Contracts and the four HSSAs are
merely consignment-based limited-term contracts. It is submitted that
it is a settled law that in case of a conflict between the arbitration
clause of the principal agreement and the subsequent agreements for
the limited purpose of supply of the product, which arises out of the
principal agreement, the arbitration clause of the principal agreement
will govern the dispute between the parties.
28. Lastly, the learned senior counsel for defendant No. 1 submitted
that defendant no. 1 is a separate and independent legal entity from
defendant No. 2 and defendant No. 3. Even though the defendants
belong to the same business group, they neither hold any shareholding
in one another nor do they control and/or have any dominance over the
affairs of one another. Therefore, the plaintiff's ground of alter ego is
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contrary to its own theory of purported assignment. If the defendants

were alter ego, there would be no requirement to separately assign any
rights.
29. Mr. Sushil Dagar, Learned counsel for defendants no. 2 & 3 has
submitted that the plaintiff has incorrectly arrayed defendant No. 2 as a
party to the present suit. It was submitted that defendant No. 2 does
not have any dispute with the plaintiff, and it has only entered into six
consignment-based, limited-term Sales Contracts with the plaintiff, and
its liability is limited to these six Sales Contracts. It was further
submitted that the plain language of the arbitration clause in each of
these six Sales Contracts shows that the same are limited to the
disputes arising out of a specific Sales Contract. Learned counsel
submitted that undisputedly, the consignments under each of these six
Sales Contracts have been delivered by defendant No. 2, and payment
has been released by the plaintiff to defendant No. 2. Hence, there is
no dispute and consequently, trigger for invoking the arbitration clause
of any of these six Sales Contracts.
30. Learned counsel for defendants No. 2 & 3 submitted that
admittedly, the plaintiff has not even raised any dispute in relation to
any of these six Sales Contracts in the present suit. The plaintiff's suit
is entirely premised on the Buyer & Seller Agreement dated 06.06.2019
and addendum dated 09.01.2021 (“Fludor-Balaji Contracts”). It was
submitted that defendant No. 2 is neither a party to the Fludor-Balaji
Contracts nor any other agreement to which the plaintiff and defendant
No. 1 are parties. It was also submitted that defendants No. 2 & 3 do
not have any role to play in the dispute between the plaintiff and
Defendant No. 1. Therefore, the plaintiff has no cause of action against
the defendant No. 2, and it ought to be removed as a party to the
present suit.
31. Learned counsel furthermore submitted that the six Sales
Contracts and their respective arbitration clauses do not make any
reference to any other contracts/agreements. As is clear from a perusal
of the arbitration clauses in each of the six Sales Contracts, the same
are limited to a specific Sales Contract. Hence, the said clause can only
be invoked, if there is a dispute relating to a specific Sales Contract.
Learned counsel submitted that admittedly, the plaintiff has not raised
any such dispute which is evident from a perusal of the notice dated
15.07.2023, termination notice dated 06.09.2023, notice dated
13.07.2023 and the present suit filed by the Plaintiff.
32. Learned counsel also submitted that the plaintiff's failure to
identify a specific Sales Contract (out of the six Sales Contracts) under
which it is invoking the arbitration clause establishes that there is no
dispute whatsoever between the plaintiff and defendant No. 1. In this
regard, it is pertinent to mention that claims, if any, relating to the
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Sales Contract dated 07.06.2020 are barred by limitation. Learned

counsel also submitted that the arbitration clauses in the six Sales
Contracts are distinct from and not aligned with the arbitration clauses
in the Fludor-Balaji Contract (BSA) and the four HSSAs. The arbitration
clause in each of the six Sales Contracts provides for the resolution of
disputes relating to the Sales Contracts by a sole arbitrator in
accordance with the Arbitration and Conciliation Act, 1996, with New
Delhi as the place of the arbitration. It was submitted that the Fludor-
Balaji Contracts provide for the resolution of disputes through
arbitration in Benin, while the HSSAs provide for arbitration under the
Indian Arbitration Act, 1940. Hence, the plaintiff cannot be permitted
to rely upon the same when there is no dispute under any of the six
Sales Contracts and the disputes raised are limited to the Fludor-Balaji
Contract.
33. Learned counsel for the respondent no. 2 & 3 furthermore
submitted that defendant No. 2 is not a party to any contract to which
the plaintiff and Defendant No. 1 are parties. Further, neither have
rights and obligations under the Fludor-Balaji Contracts been assigned
to defendant No. 2 nor has it purportedly been given control of the
supply chain, as alleged. It was further submitted that defendant No. 2
is a separate and independent legal entity from defendant No. 1 and/or
defendant No. 3. While defendant No. 1, defendant No. 2 and
defendant No. 3 belong to the same business group, they do not have
any cross-shareholding in each other. Further, the defendant No. 2 does
not exercise any control over the affairs of Defendant No. 1 and/or
defendant No. 3 and vice-versa. Therefore, there is no merit in the
plaintiff's allegation that Defendant No. 2 is an alter ego of Defendant
No. 1 and/or Defendant No. 3.
34. Learned counsel has lastly submitted that Defendant No. 2 is not
a party to any composite transaction. None of the ingredients required
under law for forming a composite transaction are satisfied in the
present case. The six Sales Contracts, the Fludor-Balaji Contracts, and
four HSSAs are three distinct categories of contracts having no
interlinkage. They have different parties, distinct and different scope of
supplies and different arbitration clauses. Further, these three types of
contracts have been executed at different periods of time, to the
exclusion of one another. The Plaintiff has only made bald allegation in
a desperate attempt to incorrectly array Defendant No. 2 as a party to
the Suit.
35. Sh. Tejas Karia, learned counsel for the plaintiff, has submitted
that the Benin Arbitration is non-est proceedings initiated by defendant
No. 1 since there is no contractual backing for the seat of arbitration to
be Benin as the BSA does not mention the seat of arbitration to be
Benin but only states that the arbitration “will take place in Benin”.
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Learned counsel submitted that the Supreme Court, in the case of

Mankastu Impex Pvt. Ltd. v. Airvisual Ltd. held that ‘seat of arbitration’
and ‘venue of arbitration’ cannot be used interchangeably and mere
expression of ‘place of arbitration’ shall not become the basis to
determine the intention of the parties that they have intended that
place as the seat of arbitration. The Supreme Court further stated that
the intention of the parties as to the seat of arbitration should be
determined from other clauses in the agreement and the conduct of the
parties.
36. Learned counsel for the plaintiff submitted that the arbitration
agreement in the BSA was novated by the parties by executing the
High Sea Sales Contracts and Sales Contracts to the extent that the
seat of arbitration was designated to be India, more specifically to be
New Delhi.
37. It is further submitted by the learned counsel for the plaintiff
that Defendant No. 1 has disregarded subsequent arbitration
agreements contained in the Sales Contracts and High Sea Sales
Contracts executed by and between the Plaintiff and Defendant No. 2
and 3, which contain arbitration clauses with the seat of arbitration to
be in India. Thus, in multiple agreements between the parties towards
the execution of one composite transaction, the real intention of the
parties is required to be considered.
38. It is further submitted that the arbitration proceedings initiated
by Defendant No. 1 will be inconvenient to the Parties since Plaintiff has
its registered office in India, and Defendants (through Defendant No.
3), also have a registered office in India and are in a position to
adequately represent its interests in India due to its strong presence.
Further, it will be extremely onerous for the Plaintiff to conduct
arbitration proceedings in Benin, which is a French speaking nation.
Since multiple parties outside of Benin are involved in the dispute and
have also agreed to India being the seat of arbitration, Benin as a place
of arbitration fails to offer neutrality. Hence, it would be incorrect and
inconvenient for the arbitration to proceed anywhere except India.
39. Learned counsel for the plaintiff further submits that the Benin
Arbitration is illegal, oppressive, and vexatious as Defendant No. 1 has
failed to array Defendant Nos. 2 and 3, who are proper and necessary
parties to the inter se disputes. Defendant Nos. 2 and 3 stepped in the
shoes of Defendant No. 1 as its alter egos to supply and sell the Product
to Plaintiff. It bears mention that 75% of the quantity of Product
received by Plaintiff during the subsistence of BSA, was supplied and
sold to Plaintiff by Defendant Nos. 2 and 3. Thus, if the substratum of
the dispute pertains to shortage of supply of the Product, sale of
Product at erratic rates, and selling the Product to third parties in
contravention of the BSA, then Defendant Nos. 2 and 3, which sold and
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supplied the majority of Product to the Plaintiff and other third parties
are required and necessary parties for the adjudication of the dispute
between Plaintiff and Defendants.
40. It is also submitted by the learned counsel for the plaintiff that
in case the Benin Arbitration is allowed to proceed, demonstrable
injustice would be caused to the Plaintiff as it would be constrained to
participate in non-est proceedings in Benin. It is submitted that Benin
Arbitration is nothing but an abuse of process of law and has been
initiated only to harass the Plaintiff and to make the Plaintiff bear
unnecessary and exorbitant costs. Thus, in order to protect the rights of
the Plaintiff, this Court ought to grant a stay on the Benin Arbitration.
41. It is Furthermore submitted that defendant No. 1 is aware of the
fact that plaintiff will not be able to prove the fraudulent conduct of
defendants in arbitration proceedings, if defendant Nos. 2 and 3, who
supplied far less quantity of the Product than agreed under the BSA
and sold the product to the plaintiff at erratic and arbitrary prices, are
not parties to the same. Hence, defendant No. 1 has illegally initiated
Benin Arbitration without impleading the proper and necessary parties.
Accordingly, the Benin Arbitration is tainted with fraud right from its
inception and hence, required to be injuncted.
42. It is also submitted by the learned counsel for the plaintiff that
the plaintiff has already invoked arbitration in India in terms of the BSA
read with the Addendum, HSSAs and Sales Contracts. Hence, if the
Benin Arbitration is allowed to continue, the same may lead to the
passing of contradictory awards with conflicting findings on the same
dispute, causing inconvenience to the Plaintiff.
43. Learned counsel for the plaintiff further submitted that as per
material available on public domain, TGI Nigeria holds 100% shares of
Defendant No. 1, 99.73% shares in Defendant No. 3 and 51% shares in
Defendant No. 2. Defendant Nos. 1 to 3 have two common directors,
namely, Mr. Rahul Savara and Mr. Cornelis Gerardus Vink and Mr. Rahul
Savara is Group Managing Director of TGI Nigeria. It is also pertinent to
mention that several communications regarding the subject transaction
of sale and supply of the Product to the Plaintiff were undertaken by Mr.
Rohan Savara and Mr. Moitra, who represented the Defendants and
handled TGI Group's India operations therefore, all Defendants
collectively attempted to fulfil the obligations under the BSA, by acting
as alter ego of each other and therefore, are a proper and necessary
party for adjudication of the present dispute.
44. I have considered the submission of the parties. The issues that
need to be answered for deciding the application filed on behalf of
Defendant No. 1 under section 45 of the A&C Act are as follows:
I. What are the requisites to be considered by the court while
deciding an application filed under section 45 of the A&C Act;
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II. Whether the BSA and Addendum entered between plaintiff and
defendant no. 1 are different/separate agreements from the Sales
contracts and High Sea Sales agreements (HSSAs) entered
between plaintiff and defendants no. 2 & 3;
III. Whether the arbitration clause/articles of the BSA and
Addendum are valid as having been agreed by both parties; and
IV. Whether the arbitration proceedings will be initiated under the
arbitration clauses/articles of BSA and Addendum or as per the
arbitration clauses/articles of Sales agreement and HSSAs.
45. Section 45 of the Arbitration Act is extracted below for ease of
reference:
“-45. Power of judicial authority to refer parties to arbitration.—
Not withstanding anything contained in Part I or in the Civil
Procedure Code, 1908 (5 of 1908), a judicial authority, when seized
of an action in a matter in respect of which the parties have made an
agreement referred to in Section 44, shall, at the request of one of
the parties or any person claiming through or under him. refer the
parties to arbitration, unless it prima facie finds that the said
agreement is null and void, inoperative or incapable of being
performed.”
46. The use of the terms “shall” and “refer the parties to arbitration”
in Section 45 of the Arbitration Act, as interpreted unambiguously by
the aforementioned statute, makes it essential for the Court to refer the
parties to arbitration if the agreement in question is neither void nor
inoperative nor incapable of being performed. To put it another way,
the Court has no discretion other than sending the parties to arbitration
once it is found that the agreement in question is a legal and valid
agreement that is capable of being performed by the parties to the
Suit.
47. Section 45 stipulates the requirements for a judicial authority
when seized of an action to refer the parties to arbitration. The section
stipulates that the action must be in a matter in respect of which the
parties have made an agreement referred to in section 44. Further, the
reference should be made at the request of one of the parties. This is
subject only to the agreement being found by the judicial authority to
be null and void, inoperative or incapable of being performed. It is not
the Plaintiff's case that the agreements for arbitration are null and void,
inoperative or incapable of being performed.
48. The points which have been raised by the plaintiff, i.e.,
oppressive, unjust, inconvenient, non-impleading of necessary parties
and harassment are beyond the purview of section 45 of the A&C Act.
Thus, in the present matter, the question of applicability of section 45
is limited to a consideration of whether, with respect to the subject
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matter of the suit, the parties have made an agreement referred to in

section 44 of the A&C Act and whether the same is null and void,
inoperative or incapable of being performed.
49. In Sasan Power Ltd. v. North American Coal Corpn. (India)(P)
(Ltd.), (2016) 10 SCC 813, the apex court while highlighting the
essentials under section 45 of the A&C Act, inter-alia held as under:
“50. The case of the appellant as disclosed from the plaint is that
Article X Section 10.2 is inconsistent with some provisions of the
Indian Contract Act, 1872, and hit by Section 23 of the Indian
Contract Act (as being contrary to public policy). It is a submission
regarding the legality of the substantive contract. Even if the said
submission is to be accepted, it does not invalidate the arbitration
agreement because the arbitration agreement is independent and
apart from the substantive contract. All that we hold is that the
scope of enquiry under Section 45 does not extend to the
examination of the legality of the substantive contract. The language
of the section is plain and does not admit of any other construction.
For the purpose of deciding whether the suit filed by the appellant
herein is maintainable or impliedly barred by Section 45 of the 1996
Act, the Court is required to examine only the validity of the
arbitration agreement within the parameters set out in Section 45,
but not the substantive contract of which the arbitration agreement
is a part.”
50. In Superon Schweisstechnik India Ltd. v. Europaische Holding
Intercito, 2022 SCC OnLine Del 4756, wherein it was inter alia held
that:
“17. The only point which Mr. Kapoor has stressed is that the
scope of enquiry of under Section 45 is on a prima facie basis. This
indeed is the correct position, as is evident from the language of the
provision itself. At this stage, it must also be noted that the words
“unless it prima facie finds” were introduced in Section 45 by
replacing the words “unless it finds” by way of Amending Act No. 33
of 2019, made effective from 30th August, 2019. This expression is
now at par with what can be seen under Section 8 of the Act, as
applicable to domestic arbitration. Therefore, at this stage, although
the Court will examine as to whether the Agreement sought to be
enforced by way of the instant suit is null and void, inoperative or
incapable of being performed, yet the test that would be applied
would be of a prima facie basis. This means that the Court is not to
conduct any detailed enquiry or minute trial at this stage, in order to
discern if such is the case. Hence, if the Court ex facie finds that the
Agreement is null and void, inoperative or incapable of being
performed, the Court would decline a request on behalf of a party for
reference to arbitration.”
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51. Section 45, which is contained in Part II of the Arbitration Act,

casts a statutory mandate on Courts to refer parties to an arbitration
agreement to arbitration. The only limited exception carved in Section
45 is if the Court is of the prima facie opinion that the arbitration
agreement is (a) null and void; or (b) in-operative; or (c) incapable of
being performed. Unless such grounds are made out, the Court has no
discretion but to refer the parties to arbitration. The only contention on
behalf of the Plaintiff is that the arbitration before the Benin Court is
vexatious given that India is the place of arbitration in the arbitration
clause of the subsequent sales agreements and HSSAs, which as per
the plaintiff form part of the main agreements i.e., BSA and Addendum
which cannot be accepted as both are independent agreements
between different parties.
52. Defendant No. 1 is not a party to either the Sales Contracts or
HSSAs. Thus, there is no question of it being bound by the arbitration
clause contained in the Sales Contracts and/or HSSAs. It is an admitted
fact that Plaintiff and Defendant No. 1 signed the BSA and Addendum.
If Defendant No. 1 assigned its obligation to Defendant No. 2 & 3 and
Plaintiff agreed to the same, it would result in Defendant No. 2 & 3
stepping into the shoes of Defendant No. 1 for the purposes of the BSA
and addendum. Defendants No. 2 & 3 would then be bound by the BSA
and Addendum, including Article 11 and Article 5, respectively, but it
cannot be vice-versa. Hence, Articles 11 and article 5 would continue to
remain the binding arbitration agreement between the parties. The
arbitration clause/Article 11 of BSA and Article 5 of the Addendum
reads as under:
“Arbitration : All disputes will be resolved by discussions and if
Arbitration becomes one option, then it will take place in Benin and
the decision will be binding on both the parties and the Arbitration
fee will be borne by the losing party”
Article 5 of the Addendum reads as under:
“The Principal Agreement shall be construed, governed and
interpreted in accordance with the Laws of Benin”
After pursuing the arbitration clauses of BSA and Addendum, it is
clear that the plaintiff and defendant no. 1 had, out of their own will,
choose the preferred place of arbitration to be in Benin. Therefore,
Arbitration would be the method of resolving any disagreement that
might emerge between the parties to the BSA and addendum.
Therefore, it is clear that the agreements entered into between
defendants no. 2 & 3 and the plaintiff are separate from the BSA and
addendum.
53. The supplementary obligation, as stated by the plaintiff, would
be limited to the consignment identified in the Sales Contracts or
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HSSAs. The sales contracts and HSSAs were entered for the supply of
the product on behalf of defendants no. 2 & 3. Neither is there a
mention of any article/clause that states that the sales contracts and
HSSAs are just an addition to the BSA, nor any clause that states that
addendum and parties to BSA and addendum would be governed by
the clauses of sales contracts and HSSAs. Defendants No. 2 & 3 are
individual companies. Therefore, the contracts or agreements entered
into between Defendants no. 2 & 3 and the plaintiff containing an
arbitration clause with the place of arbitration in India will be
enforceable separately.
54. In the present case, all ingredients of Section 45 are satisfied.
The Plaintiff in the plaint has neither pleaded that this agreement is
null and void, inoperative or incapable of being performed nor sought
any declaratory reliefs in this regard. Instead, the Plaintiff has admitted
that it had executed the BSA and the Addendum and is thus bound by
the arbitration clause in the BSA. The Plaintiff's only allegation in the
Suit is that the said proceedings would be vexatious, inconvenient,
unconscionable, oppressive, initiated by fraud and/or would cause
demonstrable injustice to Plaintiff. None of these grounds are relevant
under Section 45.
55. In the present case, arbitration in the Republic of Benin is the
parties' chosen adjudicatory process and forum of choice as per Articles
11 & 5 of the BSA and Addendum. Under the BSA read with the
Addendum, the parties have agreed to arbitrate in the Republic of
Benin, as per its law. Neither the BSA nor the Addendum make a
reference to any other place.
56. The apex court in Balasore Alloys Limited v. Medima LLC, (2020)
9 SCC 136, while dealing with a similar case inter-alia, held that when
admittedly the parties had entered into the agreement, and there was
consensus ad-idem to the terms and conditions contained therein which
is comprehensive and encompassing all terms of the transaction and
such agreement also contains an arbitration clause which is different
from the arbitration clause provided in the purchase order which is for
the limited purpose of supply of the produce; the arbitration clause
contained in the main agreement would govern the parties insofar as
the present nature of dispute that has been raised by them with regard
to the price and the terms of payment including recovery, etc. In that
view, it would not be appropriate for the applicant to invoke the Clause
of the purchase orders, more particularly when the arbitration clause
contained in the main agreement has been invoked, and the Arbitral
Tribunal has already been appointed. It was further inter-alia held as
under:
“11. At this stage, it is necessary for us to refer to the decision
rendered in Olympus Superstructures (P) Ltd. v. Meena Vijay Khetan
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[Olympus Superstructures (P) Ltd. v. Meena Vijay Khetan, (1999) 5

SCC 651] wherein this Court was confronted with the issue of there
being two different arbitration clauses in two related agreements
between the same parties. This Court while dealing with the same
had harmonised both the clauses and had on reconciliation held that
the parties should get the disputes resolved under the main
agreement.”
57. Further, as per the definition under section 2(f) of the A&C Act,
the present dispute pertains to International Commercial Arbitration as
Defendant No. 1 is a company registered in the Republic of Benin. It is
also pertinent to mention that akin to Section 16 of the Arbitration Act,
Article 11 of the Uniform Act, which is the applicable law in the
Republic of Benin, empowers the Arbitral Tribunal to rule on its own
jurisdiction. Any purported objections which Plaintiff may have might
be raised before the sole Arbitrator.
58. Section 5, which falls under Part I of the A&C Act, specifies that
no judicial authority shall intervene except where so provided. The
scheme of the act is such that the general provisions of Part I, including
section 5, will apply to all chapters or Parts of the Act. Section 2(f) of
the A&C act, which falls in part I, specifies that “this part shall apply to
all arbitrations and to all proceedings relating thereto”. Consequently, it
can be determined that Section 5 is integral to Part II of the A&C Act.
Reliance is placed upon Venture Global Engg. v. Satyam Computer
Services Ltd., (2008) 4 SCC 190 and Chatterjee Petrochem Co. v.
Haldia Petrochemicals Ltd., (2014) 14 SCC 574.
59. Furthermore, the principle of minimal judicial interference is
enshrined in Article 5 of the UNCITRAL Model Law, which provides:“In
matters governed by this law, no court shall intervene except as
provided in this law.” This legal framework has been adopted and
implemented in the A&C Act in Section 5. When arbitration proceedings
are triggered by one of the parties because of the existence of an
arbitration agreement between them, Section 5 of the A&C Act, being a
non-obstante clause, provides a clear message that there should not be
any judicial intervention at that stage scuttling the arbitration
proceedings. This provision prohibits judicial oversight of procedural
decisions made by the arbitral tribunal in the course of an ongoing
arbitration. However, it does not envisage a complete bar to judicial
intervention in arbitral proceedings. Reliance is placed upon A.
Ayyasamy v. A. Paramasivam, (2016) 10 SCC 386.
60. This court finds that the BSA, Addendum, and Sales contracts,
along with HSSAs are distinct contracts having different parties,
differing scope of work and different arbitration clauses. Merely stating
that the defendant no. 2 & 3 are the companies which are run by the
defendant no. 1 is not sufficient. Defendants No. 1 and the plaintiff
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have entered into the BSA and Addendum as individual entities

therefore, any dispute that arises out of these agreements will be
resolved as per the dispute resolution mechanism provided in the
articles of these agreements, i.e., as per article 11 of BSA and article 5
of Addendum. The Initiation of arbitration proceedings under CAMEC in
April 2023 and issuance of the Fludor NOA, demonstrate that the
Plaintiff's concerns stem from the BSA read with the Addendum as the
cause of action of the present Suit is all rooted in the BSA and the
Addendum. Therefore, disputes, if any, are to be adjudicated as per the
Parties' chosen adjudicatory forum, i.e., under Article 11 of the BSA and
the arbitration clause provided under Article 11 of the BSA. Clearly,
Plaintiff has never questioned the validity of BSA and Addendum, which
means that the Agreements are not null, void, inoperative or incapable
of being performed.
61. In light of the preceding factual and legal analysis, the answers
to the issues framed in para 44 are as under:
Issue (i.) What are the requisites to be considered by the court
while deciding an application filed under section 45 of the A&C Act?
Answer : At the time of considering an application under Section
45 of the A&C Act, a judicial authority shall, at the request of either
of the parties, refer the parties to arbitration unless it prima facie
finds that the said agreement is ‘null’ and ‘void’, ‘inoperative’ or
‘incapable of being performed’.
Issue (ii.) Whether the BSA and Addendum entered between
plaintiff and defendant no. 1 are different/separate agreements from
the Sales contracts and High Sea Sales agreements (HSSAs) entered
between plaintiff and defendants no. 2 & 3?
Answer : This court is of the view that the BSA and Addendum
entered between plaintiff and defendant no. 1 are separate
agreements as the BSA and Addendum are agreements of the same
transactions. However, the Sales contracts and High Sea Sales
agreements (HSSAs) are firstly entered between different parties,
i.e., plaintiff and defendants no. 2 & 3, and secondly, these
agreements pertain to specific transactions that are different from
the transactions of BSA and Addendum.
Issue (iii.) Whether the arbitration clause/articles of the BSA and
Addendum are valid as having been agreed by both parties?
Answer : It is observed from the perusal of the articles of the BSA
and Addendum containing the arbitration clause that these clauses
are valid, enforceable and have been agreed to by both parties, i.e.,
plaintiff and defendant no. 1.
Issue (iv.) Whether the arbitration proceedings will be initiated
under the arbitration clauses/articles of BSA and Addendum or as
per the arbitration clauses/articles of Sales agreement and HSSAs?
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Answer : This Court holds that disputes arising from transactions

related to the BSA and its addendum fall within the scope of these
agreements and should be resolved pursuant to the dispute
resolution mechanisms stipulated therein. Given that the HSSAs and
sales contracts constitute distinct transactions, arbitration cannot
proceed under the clauses set forth in the HSSAs and sales
agreements.
62. In view of the above, the Court finds merit in the application of
the Defendants. Hence, the present application of defendant No. 1 is
allowed. Consequently, the suit of the plaintiff is dismissed.
63. Since the award has already been passed, the plaintiff may avail
appropriate remedies in accordance with the Buyer Seller Agreement
and Addendum as provided under law.
———
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