ALVA ALUMINIUM LTD. BANGKOKversusGABRIEL INDIA LIMITED

               [2010] 13 (ADDL.) S.C.R. 803


            ALVA ALUMINIUM LTD. BANGKOK                           A
                              v.
                  GABRIEL INDIA LIMITED
             (Arbitration Petition No. 2 of 2010)
                   NOVEMBER 16, 2010
                                                                  B
                     [T.S. THAKUR, J.]

    ARBITRATION AND CONCILIATION ACT, 1996:

      ss 11 (9), (5) and 16 - Appointment of arbitrator - Issue   c
as regards existence of arbitration agreement in the contract
between the parties - Held: Once existence of arbitration
agreement itself is questioned, the same will have to be
decided by the Chief Justice or his designate, as the case
may be - The power available to arbitral tribunal uls 16 does     D
not imply that the issue can be or ought to be left to be
determined by it, even if in the application u/s 11, there is a
dispute between the parties as regards existence of arbitration
agreement between them - In the instant case, there is a
written contract document between the parties containing an       E
arbitration clause - Accordingly, arbitrator appointed -
Contract Act, 1872.

     CONTRACT ACT, 1872:

     Contract - Signing of - Plea of the company that its officer F
had only negotiated the contract on its behalf and was not
competent to sign the contract and that he was misguided/
enticed by the opponent - Held: Cannot be accepted-
Documents, information and correspondence, when taken in
their totality, especially in the light of the signed contract G
document that stipulates the mutual rights and obligations of
the parties, do not show that they were simply negotiating a
contract but are, on the contrary, clearly suggestive of the
parties having finalised and signed a contract - Besides,
                             803                                  H
   804    SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.


A there is nothing on record to establish that the signatures
  appended by the officer concerned to the contract document
  in token of its acceptance were vitiated by any
  misrepresentation etc.-Arbitration and Conciliation Act,
  1996.
B
       The petitioner, a joint venture company incorporated
  under the provisions of the laws of Thailand, filed the
  instant application under sub sections (5) and (9) of s. 11
  of the Arbitration and Conciliation Act, 1996 stating that
  on 30. 7 .2008 it entered into a contract with the ·
c respondent, a company incorporated under the
  provisions of the Companies Act, 1956, for sale by the
  petitioner and purchase by the respondent of 150 mts of
  "Aluminium Alloy Ingots AC28" on the terms and
  conditions stipulated in the said contract, but the
D respondent did not open the requisite letter of credit. The
  stand of the respondent was that the contract document
  relied upon by the petitioner was not signed on its behalf
  by an authorised person and, therefore, the same was not
  binding or enforceable against it; that the person who
E signed the said document, namely, 'SKD", was
  authorised only to negotiate the terms of purchase and
  not to sign a contract; that the signatures of 'SKD' were
  obtained by misguiding/ enticing and misdirecting him;
  and that no arbitration agreement existed between the
F parties that could provide the basis for making a
  reference.

       The questions for consideration before the Court
  were: (1) whether the Court, in a petition u/ss 11 (5) and
G 11 (9) of the Arbitration and Conciliation Act, 1996, was
  required to determine the existence of an arbitration
  agreement between the parties? and (2) whether any
  such agreement was executed between the parties to call
  for the appointment of an arbitrator for adjudication of the
  disputes and differences that arose between them?
H
ALVA ALUMINIUM LTD. BANGKOK v. GABRIEL INDIA 805
                   LIMITED
       Allowing the petition, the Court                         A

       HELD:
      1.1 Once the existence of the arbitration agreement
itself is questioned by any party to the proceedings
initiated uls 11 of the Arbitration and Conciliation Act,       B
1996, the same will have to be decided by the Chief
Justice or his designate, as the case may be. That is
because existence of an arbitration agreement is a
jurisdictional fact which will have to be addressed while
making an order on a petition uls 11 of the Act. [Para 17]      C
[815-D-F]
    National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd.
2008 (13) SCR 638 = 2009 (1) SCC 267; A.P. Tourism.
Development Corpn. Ltd. v. Pampa Hotels Ltd. 2005 (4) D
Suppl. SCR 688 = 2010 (5) SCC 425; SBP & Co. v. Patel
Engg. Ltd. 2005 (8) SCC 618- relied on.
     1.2 The power available to the arbitral tribunal uls 16
of the Act does not imply that the issue can be or ought
to be left to be determined by the arbitral tribunal even in    E
cases where one of the parties has filed a petition uls 11
of the Act and the other party opposes the making of a
reference on the ground that there exists no arbitration
agreement between them. It is quite evident that the
question whether or not an arbitration agreement exists         F
between the parties will have to be answered for it is only
if the answer to that question is in the affirmative that the
Chief Justice or his designate can pass an order of
reference of the disputes for adjudication. [Para 17) [816-
C-F]                                                            G
    2.1 In the instant case, it is not in dispute that there
is a written contract document between the parties,
which contains an arbitration clause; that 'SKD' had
negotiated the contract on behalf of the respondent; that
correspondence between the parties was exchanged                H
    806   SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.


A   before the signing of the document and the said
    correspondence was not only with 'SKD' but was also
    with 'SG', who according to the respondent, was the
    competent authority to sign the document. In this
    backdrop, the plea of the respondent that 'SKD' was not
B   competent to sign the contract and that he had been
    misguided/enticed/misdirected to initial the contract and,
    as such, the contract is non est and is void in terms of
    the Contract Act, 1872, cannot be accepted. The
    documents, information and correspondence when
C   taken in their totality, especially in the light of the sign~d
    contract document that stipulates the mutual rights and
    obligations of the parties, do not show that the parties
    were simply negotiating a contract but are, on the
    contrary, clearly suggestive of the parties having finalized
    and signed a contract. [Para 18-20) (816-G-H; 817-A-B; F-
0   H]
       2.2 It is not correct to say that 'SKD', who was
  admittedly negotiating the contract on behalf of the
  respondent, had no authority to do so and that the
E petitioner had misdirected, enticed or misguided him.
  There are no particulars leave alone any material, to
  establish that the signatures appended by 'SKD' to the
  contract document in token of its acceptance, were
  vitiated by any misrepresentation or such other
F considerations that could have the effect of vitiating the
  contract. In the absence of details and particulars of
  what, according to the respondent, constituted
  inducement, misguidance or misdirection, it cannot avoid
  a contract that had come into existence between the
G parties. [Para 20) [818-A-C]
        2.3 A heavy duty lies upon the party, who seeks to
    avoid a contract on the ground of mis-representation,
    fraud or coercion, to prove any such allegation. Nothing
    of the sort has been done in the instant case by the
H   respondent. So much so, the respondent has not even
ALVA ALUMINIUM LTD. BANGKOK v. GABRIEL INDIA 807
                   LIMITED
placed on record any charter of duties and powers of          A
'SKD' and 'SG' nor has it chosen to place on record any
material· to suggest that any action was indeed taken
against 'SKD' for the alleged transgression of the limits
of his authority and, if so, the nature of the disciplinary
action taken against him. All this information and material   B
was within the special knowledge of the respondent.
Non-furnishing of such information must, therefore, give
rise to an adverse interference against it. [Para 21] [818-
C-F]
     2.4 The petitioner company had in any event no C
reason to believe or even suspect that 'SKD', with whom
it was dealing, did not have the authority to sign the
contract which was finalized between the two companies
acting through their representatives. That is so especially
when even according to the respondent, 'SKD' had been D
authorized to negotiate the terms on its behalf. If 'SKD'
was competent to negotiate the terms of the contract, the
petitioner cannot be said to have induced or defrauded
him into signing of the contract, which was forwarded to
the respondent and which was returned duly signed by E
'SKD'. The petitioner was in this backdrop justified in .
proceeding on the basis that the contract was duly
negotiated and signed on behalf of the respondent
company. [Para 21) [818-F-H; 819-A-B]
                                                            F
     2.5 In the totality of the circumstances, there is no
doubt that a legally valid contract had indeed come into
existence between the parties, which contained an
arbitration clause, for adjudication of disputes that may
arise between them. Arbitrator is appointed for
adjudication of the disputes between the parties. [Paras G
21-22] [819-8-D]
                    Case Law Reference:
    2008 (13) SCR 638           relied on        para 16
                                                              H
       808     SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.


A            2005 (4) Suppl. SCR 688      relied on        para 16
         CIVIL ORIGINAL JURISDICTION : Arbitration Petition No.
    2 of 2010.
      Under Section 11 (5) and 11 (9) of the Arbitration and
B Conciliation Act, 1996.

        Kauvin Gulati, Shabhit Chandra, Umesh Kumar Khaitan for
    the Petitioner.

C       T.K.A. Padmanabhan, Ramesh Lal Bhatia for the
    Respondent.

             The Judgment of the Court was delivered by

         T.S. THAKUR, J. 1. This petition has been filed under
D sub-sections (5) and (9) of Section 11 of the Arbitration and
    Conciliation Act, 1996 for the appointment of an independent
    and impartial person as a sole arbitrator for the adjudication
    of the disputes that have arisen between the parties. The
    respondent has appeared to contest the petition primarily on
E the ground that no valid arbitration agreement exists between
  . the parties so as to call for the appointment of an arbitrator in
    terms thereof. The respondent's case precisely is that the
    contract document which the petitioner relies upon has not been
    signed on its behalf by an authorized person and is not,
    therefore, binding or enforceable against it. Two questions
F essentially arise for determination in the light of the pleadings
    of the parties and the submissions made by them at the bar.
    These are:

                    (1)   Whether this Court is in a petition under
G                         Sections 11 (5) and 11 (9) of the Arbitration
                          and Conciliation Act, 1996 required to
                          determine the existence of an arbitration
                          agreement between the parties? and

                    (2)   Whether any such agreement has indeed
H ·-
ALVA ALUMINIUM LTD. BANGKOK v. GABRIEL INDIA 809
           LIMITED [T.S. THAKUR, J.]
                   been executed between the parties in the          A
                  ·present case to call for the appointment of an
                   arbitrator for adjudication of the disputes and
                   differences that have arisen between them?

    2. I shall presently deal with both these questions but          B
before I do so I may set out the facts necessary for the
determination of the said questions.

     3. The petitioner is a joint venture company between the
G.P. Group in Thailand and Kliss Group in India, incorporated
under the provisions of the laws of Thailand. The respondent,        C
on the other hand, is an Indian company incorporated under the
provisions of Companies Act, 1956. The disputes sought to be
referred for adjudication thus involves international commercial
arbitration within the meaning of Section 11 (9) read with
Section 2(f) of the Act aforementioned.                              D

     4. The petitioner-company appears to have had
commercial transactions with the respondent for sometime
past. One of the transactions which they appear to have
entered into in the course of their business relationship was
                                                                     E
contract No.057/2008 for the sale by the petitioner and purchase
by the respondent of 75 MTs of "Aluminium alloy ingots ADG
12". The present proceedings, however, do not concern the sa_id
contract. These proceedings relate to contract No.073/2008
executed on 30th July, 2008 for the sale by the petitioner and
the purchase by the respondent of 150 MTs of "Aluminium Alloy
                                                                     F
Ingots AC2B" on the terms and conditions stipulated in the said
contract. The contract among other terms and conditions
stipulated the price of the goods to be US $ 3490 per MT (CIF)
payable by a 100% Letter of Credit (LC).
                                                                     G
      5. The petitioner's case is that the contract was duly
signed on its behalf and forwarded to the respondent for its
signature. A photocopy of the duly signed version of the
contract was then returned to the petitioner by the respondent.
It is not in dispute that the contract document, a copy whereof      H
    810    SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.


A   has been placed on record, contained the following arbitration
    clause:

          "Disputes & Arbitration: Should a claim for quantity and/
          or quality arise, the buyer has to duly notify the seller within
          10 days upon receipt of material at buyer's factory along
B
          with proof of deviation from quantity or quality as agreed
          between both parties.

          The seller shall then amicably settle the claim with the
          buyer.
c
          As per the International Trade 0.5% of Weight Calibration
          is acceptable on Net Weight.

          In case both parties are unable to resolve any disputes
          amicably in connection to the contract or breach thereof,
D
          results from the arbitration carried out in accordance with
          laws of India shall be final and binding upon both parties.
          Arbitration charges and any other charges in this
          connection shall be borne or reimbursed by the losing
          party."
E
        6. The above was followed by an addendum dated 24th
  September, 2009. The execution of the contract and an
  addendum to the same notwithstanding the respondent did not
  open the requisite Letter of Credit despite repeated requests
F and reminders sent by the petitioner company to the former.
  The petitioner company in that view instructed its Advocates &
  Solicitors to send a legal notice in which the respondent was
  given a final opportunity to open a letter of credit in favour of
  the petitioner within seven days of the receipt of the notice
G failing which the petitioner proposed to initiate appropriate legal
  proceedings in which the petitioner would hold the respondent
  responsible for all the damages and costs suffered by the
  petitioner on account of the breach of the terms of the contract.
  The notice did not evoke any response from the respondents
H
ALVA ALUMINIUM LTD. BANGKOK v. GABRIEL INDIA 811
           LIMITED [T.S. THAKUR, J.]
nor did the subsequent two notices sent on behalf of the            A
petitioner.

      7. Fourth and final notice was eventually sent by the
petitioner through their legal consultants in which the petitioner
reiterated that the respondent had failed to fulfill its obligations B
under the contract resulting in heavy losses to the petitioner
which the petitioner assessed at USO 338,286.34 equivalent
to Rs.1,69, 75,208.54. A demand for payment of that amount
was accordingly made against the respondent. It was only, at
this stage, that the respondent broke its silence and sent a reply . C
through Padmanabhan Associates their Advocates & Solicitors
in which the respondent for the first time came out wittl the
defence that the contract referred to by the petitioner had not
been signed by an authorized person. Mr. Sandeep K. Dabir
who had signed the contract document was not, alleged the
respondent, authorised to sign the contract. It was further D
alleged that the documents, information and correspondence
provided by the respondent to the petitioner company was only
"some sort of negotiation" in respect of the purchase of the
material in question. According to the respondent while Shri
Dabir was authorized to negotiate the terms of purchase he was E
at no point of time authorized to enter into a contre>ct. It was
asserted that his signatures were obtained by misguiding/
enticing and misdirecting him. The alleged contract was,
therefore, repudiated as being void and unenforceable.
                                                                    F
     8. The petitioner sent a rejoinder to the reply in which he
pointed out that the respondent had been represented not only
by Shri Sandeep K. Dabir but even by Shri S. Sengupta with
whom considerable correspondence had been exchanged. It
was further asserted that at no stage during the correspondence     G
was any indication given to the petitioner that Shri Dabir and
Shri Sengupta were not competent to finalise and sign the
contract in question.

     9. The parties having thus taken totally contradictory
positions, the petitioner informed the respondent that it had       H
    812    SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.


A   nominated Shri Rahul Narichania as a sole Arbitrator to
    adjudicate upon the disputes and that in case they had any
    objection to his acting as a sole Arbitrator, the respondent could
    nominate an Arbitrator on their behalf. Since the respondent
    stuck to its stand that there was no valid contract between the
B   parties and consequently there existed no arbitration agreement
    for r~ferring the dispute for arbitration, the petitioner was left
    with no alternative except to file the present petition seeking
    appointment of an independent Arbitrator.

C       10. The petition has been, as noticed earlier, opposed by
  the respondent not only on the merits of the claim made by the
  petitioner but also on the ground that no arbitration agreement
  exists between the parties that could provide a basis for making
  a reference. According to the respondent, the petitioner had
  obtained the signature of Shri Dabir for blackmailing the
D respondent company. It is further alleged that the respondent
  company had not only taken disciplinary action against Shri
  Oabir but refused to ratify the unauthorized act of its employee.
  It is alleged that it was only Shri Sengupta who was competent
  to enter into a contract and that the earlier contract dated 7th
E July 2008 signed by the said officer on behalf of the respondent
  had been honoured.

         11. In the rejoinder to the petition, the petitioner has denied
    the allegation that Shri Dabir was not competent or that he had
F   been induced to sign the contract for ma/a fide reasons. It is
    further alleged that the issue whether Shri Dabir was authorized
    to execute the contract in question or not cannot be raised in
    the present petition.

      12. It is in the above background that two questions which
G have been formulated in the beginning of this order arise for
  my consideration which may now be taken up ad seriatim.

    Regarding Question No. (1)

          13. There is a long line of decisions of this Court in which
H
ALVA ALUMINIUM LTD. BANGKOK v. GABRIEL INDIA 813
           LIMITED [T.S. THAKUR, J.]
this Court has examined the nature and the scope of the enquiry     A
and the jurisdiction of the Chief Justice or his designate while
dealing with petitions under Section 11 of the Arbitration and
Conciliation Act, 1996. References to all those decisions is
unnecessary for the question that falls for determination here,
stands concluded by two recent decisions of this Court which        B
alone should suffice for the present.

     14. In National Insurance Co. Ltd. v. Boghara Polyfab {P)
Ltd. 2009 (1) SCC 267, this Court examined the provisions of
Section 11 of the Act and categorized the issues that may arise     C
for determination in a petition under Section 11 before the Chief
Justice or his designate and the approach to be adopted qua
the same. The Court said:

     "22.1. The issues (first category) which the Chief Justice/
     his designate will have to decide are:

     (a) Whether the party making the application has
     approached the appropriate High Court.

     (b) Whether there is an arbitration agreement and whether
     the party who has applied under Section 11 of the Act, is
     a party to such an agreement.

     22.2. The issues (second category) which the Chief
     Justice/his designate may choose to decide (or leave
     them to the decision of the Arbitral Tribunal) are:

     (a) Whether the claim is a dead (long-barred) claim or a
     live claim.

     (b) Whether the parties have concluded the contract/
     transaction by recoJding satisfaction of their mutual rights
     and obligation or by receiving the final payment without
     objection.

     22.3. The issues (third category) which the Chief Justice/
    814    SUPREME COURT REPORTS (2010) 13 (ADDL.) S.C.R.


A         his designate should leave exclusively to the Arbitral
          Tribunal are:

                 (i)    Whether a claim made falls within the
                        arbitration clause (as for example, a matter
B                       which is reserved for final decision of a
                        departmental authority and excepted or
                        excluded from arbitration).

                 (ii)   Merits or any claim involved in the arbitration."

c        15. The question whether there is an arbitration agreement
    and whether the party who has applied under Section 11 of the
    Act is a party to such an agreement in terms of the above
    decision falls in category (1) and has, therefore, to be decided
    by the Chief Justice or his designate.
D       16. The above decision was followed in AP. Tourism
  Development Corpn. Ltd. v. Pampa Hotels Ltd. 2010 (5) SCC
  425 where also one of the questions that fell for determination
  was whether existence or validity of the arbitration agreement
  is a matter to be decided by the Chief Justice/designate while
E considering a petition under Section 11 of the Act or the same
  has to be decided by the Arbitrator. Relying upon the decision
  of this Court in SBP & Co. v. Patel Engg. Ltd. 2005 (8) SCC
  618 and National Insurance Co. Ltd. v. Boghara Polyfab (P)
  Ltd. 2009 (1) SCC 267, this Court held that the question had
F to be decided by the Chief Justice or his designate. The Court
  observed:

          "It is held in SBP & Co. v. Patel Engg. Ltd. and National
          Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd. that the
G         question whether there is an arbitration agreement and
          whether the party who has applied under Section 11 of the
          Act, is a party to such an agreement, is an issue which is
          to be decided by the Chief Justice or his designate under
          Section 11 of the Act before appointing an arbitrator.
          Therefore there can be no doubt that the issue ought to
H
ALVA ALUMINIUM LTD. BANGKOK v. GABRIEL INDIA 815
           LIMITED [T.S. THAKUR, J.]
    have been decided by the learned designate of the Chief          A
    Justice and could not have been left to the arbitrator.



    On account of the prospective overruling direction in SBP,
    any appointment of an arbitrator under Section 11 of the         B
    Act made prior to 26-10-2005 has to be treated as valid
    and all objections including the existence or validity of the
    arbitration agreement, have to be decided by the arbitrator
    under Section 16 of the Act. The legal position enunciated
    in the judgment in SBP will govern only the applications to      C
    be filed under Section 11 of the Act from 26-10-2005 as
    also the applications under Section 11 (6) of the Act
    pending as on 26-10-2005 (where the arbitrator was not
    yet appointed)."
                                                                     D
      17. It is in the light of above pronouncements, unnecessary
to delve any further on this issue. It is clear that once the
existence of the arbitration agreement itself is questioned by
any party to the' proceeding initiated under Section 11 of the
Act, the same will have to be decided by the Chief Justice/          E
designate as the case may be. That is because existence of
an arbitration agreement is a jurisdictional fact which will have
to be addressed while making an order on a petition under
Section 11 of the Act. The position may be different where
arbitration proceedings are initiated before a nominated arbitral
Tribunal but the opposite party appears to dispute the existence     F
of the arbitration agreement. In any such situation the Arbitral
Tribunal can itself decide the issue in exercise of its powers
under Section 16(1) of the Act which reads as under:

     "Jurisdiction of arbitral tribunals                             G
     16.Competence of arbitral tribunal to rule on its
    jurisdiction.- (1) The arbitral tribunal may rule on its own
    jurisdiction, including ruling on any objections with respect
    to the existence or validity of the arbitration agreement, and
                                                                     H
    816     SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.


A         for that purpose, -

          (a) an arbitration clause which forms part of a contract shall
          be treated as an agreement independent of the other terms
          of the contract; and

B         (b) a decision by the arbitral tribunal that the contract is
          null and void shall not entail ipso jure the invalidity of the
          arbitration clause."

        So also the parties may without approaching the Chief
c Justice refer the matters in dispute to the nominated Tribunal
  including the question whether there exists an arbitration
  agreement. In any such case also the Arbitral Tribunal can
  determine the existence of the arbitration agreement. Suffice
  it to say that the power available to the Arbitral Tribunal under
0 Section   16 of the Act does not imply that the issue can be or
  ought to be left to be determined by the Arbitral Tribunal even
  in cases where one of the parties has filed a petition under
  Section 11 of the Act and the other party opposes the making
  of a reference on the ground that there exists no arbitration
E agreement between them. It is quite evident that the question
  whether or not an arbitration agreement exists between the
  parties will have to be answered for it is only if the answer to
  that question is in the affirmative that the Chief Justice or his
  designate can pass an order of reference of the disputes for
  adjudication. Question No. (1) is answered accordingly.
F
  Regarding Question No. 2

       18. That there is a written contract document between the
  parties, is not in dispute. That an arbitration clause is found in
G the said contract is also not in dispute. That Shri Sandeep K.
  Dabir had negotiated the contract on behalf of the respondent
  is also a fact that is not disputed. That corresponden::e
  between the parties was exchanged before the signing of the
  document and the said correspondence was not only with Shri
H Dabir but with Shri Sengupta, who according to the respondent,
ALVA ALUMINIUM LTD. BANGKOK v. GABRIEL INDIA 817
           LIMITED [TS. THAKUR, J.]
was the competent authority to sign the document is also not          A
in dispute. All that the respondent in the above backdrop argues
is that Shri Sandeep K. Dabir was not competent to sign the
contract and that Shri Dabir had been misdirected/ enticed/
misdirected to initial the contract which is according to the
respondent, void in terms of the Contract Act, 1872. Reply sent       B
by the respondent to the notices served upon it summarises
the twin objections to the contract set up by the petitioner in the
following words:

     "4. The documents, information and correspondence                C
     provided by our client clearly suggest that what was going
     on between Mis Kliss Trading Pvt. Ltd. the representatives
     of your client and certain officials of our client was only
     some sort of negotiation in respect of the purchase of 150
     MTAC2B aluminium ingots. At no point of time our client
     had entered into any contract with you for the purchase of       D
     the above said material.

     8. Our client further states that since your client had
     misguided/ enticed/ misdirected Mr. Dabir to initial the
     said contract the same is also void under the provision of       E
     the Indian Contract Act, 1872."

      19. The question, therefore, is whether the contract set up
by the petitioners can be held non est for the two reasons
indicated in paragraph 4 and 8 extracted above. The defence
                                                                      F
set up by the respondent that the information and
correspondence provided by the respondent was only
suggestive of "some sort of negotiation" between the parties
has not impressed me. The documents, information and
correspondence when taken in their totality especially in the light
of the signed contract document that stipulates the mutual rights     G
and obligations of the parties do not show that the parties were
simply negotiating a contract. The information provided, the
correspondence exchanged and the documents executed are
on the contrary clearly suggestive of the parties having finalized
and signed a contract.                                                H
    818   SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.

A         20. So also the assertion of the respondent that the
    petitioner had mis-directed, enticed or mis-guided Shri Dabri
    who was admittedly negotiating the contract on its behalf, had
    no authority to do so need be noticed only to be rejected. There
    are no particulars leave alone any material to establish that the
B   signatures appended by Shri Dabir to the contract document
    in token of its acceptance, was vitiated by any
    misrepresentation or such other considerations that could have
    the effect of vitiating the contract. In the absence of details and
    particulars of what, according to the respondent, constituted
c   inducement, mis-guidance or mis-direction referred to in
    paragraph 8, it is difficult to see how a fluent use of such
    expressions can help the respondent in avoiding a contract that
    had come into existence between the parties. A heavy duty lies
    upon the party who seeks to avoid a contract on the ground of
    mis-representation, fraud or coercion to prove any such
0
    allegation. Nothing of the sort has been done in the instant case
    by the respondent. So much so the respondent has not even
    placed on record any charter of duties and powers of Shri Dabir
    and Shri Sengupta nor has it chosen to place on record any
    material to suggest that any action was indeed taken against
E   Shri Dabir for the alleged transgression of the limits of his
    authority and if so the nature of the disciplinary action taken
    against him. All this information and material was within the
    special knowledge of the respondent. Non- furnishing of such
    information must, therefore, give rise to an adverse interference
F   against it. The petitioner company had in any eve11t no reason
    to believe or even suspect that Shri Dabir with whom it was
    dealing did not have the authority to sign the contract which was
    finalized between the two companies acting through their
    representatives. That is so especially when even according to
G   the respondent, Shri Dabir had been authorized to negotiate
    the terms on behalf of the respondent. If Shri Dabir was
    competent to negotiate the terms of the contract, the petitioner
    cannot be said to have induced or defrauded him into signing
    of the contract, which was forwarded to the respondent and
H   which was returned duly signed by Shri Dabir. The petitioner
ALVA ALUMINIUM LTD. BANGKOK v. GABRIEL INDIA 819
           LIMITED [T.S. THAKUR, J.]
was in this backdrop justified in proceeding on the basis that          A
the contract was duly negotiated and signed on behalf of the
respondent company.

     21. In the totality of the above circumstances, I have no
doubt that a legally valid contract had indeed come into
                                                                        B
existence between the parties which contained an arbitration
clause for adjudication of disputes that may arise between them.
Question No.(2) is accordingly answered in the affirmative.

     22. In the result, I allow this petition and appoint Mr. Justice
Anil Dev Singh, former Chief Justice of Rajasthan High Court            C
as sole Arbitrator for adjudication of the disputes between the
parties arising out of the contract referred to in the petition. The
Arbitrator shall be free to fix his fee and charges and the ratio
in which the same shall be paid by the parties. The parties shall
appear before the Arbitrator on 10th December, 2010 for further         D
directions. Registry shall forthwith forward a copy of this order
to the worthy Arbitrator for information and necessary action.

R.P.                                        Writ petition allowed.