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PETITIONER: AGARWAL ENGINEERING CO.

       Vs.

RESPONDENT: TECHNOIMPEX HUNGARIAN MACHINE INDUSTRIES

DATE OF JUDGMENT18/07/1977

BENCH: KRISHNAIYER, V.R. BENCH: KRISHNAIYER, V.R. SARKARIA, RANJIT SINGH SINGH, JASWANT

CITATION:  1977 AIR 2122            1978 SCR  (1) 167  1977 SCC  (4) 367

ACT: Arbitration Act-Parties entered into two separate  contracts on different dates for sale of machinery and appointing  the appellant  as  sole  selling  agent  of  the  machinery-Both contracts contained arbitration clauses-Whether  arbitration clause  in later contract supersedes the arbitration  clause in earlier contract.

HEADNOTE: As a result of negotiations between the appellant, an Indian engineering  concern and the respondent, a  Hungarian  State Undertaking carrying on export import trade, the parties had drawn up on April 2, 1970 (Annexure A) a, broad  arrangement between them.  The first four clauses of Annexure A  related to the appellant being chosen to represent the respondent in the  sale  of their goods exclusively in  certain  specified States in India and the second part deals with the  purchase of two specific items, namely, Counterblow Hammer Type EK 25 and EK 13A machines.  On the same date two formal  contracts (Annexurea B1 and B2) were entered into between the parties. Clause  8 of Annexures B1 and B2 states that all  questions, disputes,  etc. relating to the contract, shall be  referred to  the  arbitration of Bharat Chamber of Commerce.   By  an agreement dated April 6, 1970 (Annexure C) the appellant was appointed as sales-representative of the respondent.  Clause 14  of this agreement contained an arbitration clause.   But the  two arbitration clauses differed on the composition  of the  arbitrators as well as the substantive  and  processual laws to be applied. The appellant alleged that there was a breach of contract in that the machines supplied by the respondent did not  accord with the bargain. Disputes  having arisen between the parties as to  which  of the   two   arbitration  clauses  of  the   agreements   was applicable, the High Court held that the arbitration  clause in an Annexure C was the one binding on the parties. Allowing the appeal, HELD : (1) ’Me arbitration clause that governs the sales  of the two items of machinery in these proceedings is cl. 8  of Annexure B1 and B2.  Annexures B1 and B2 are  self-contained and constitute a separate contract-set and they  exclusively

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relate  to  the  terms  of purchase of EK  25  and  EK  13A. Annexure  C is futuristic and relates to sales ’agency’  and later purchase. [174 D] (2)The  reference by the High Court to the principle  that the  last  deed  must govern the  relationship  between  the parties   superseding  the  earlier  ones,  when  there   is inconsistency  between  the two has no room for  play  here. [175 D-E] (3)Clause  1  of Annexure A grants a  right  of  exclusive representation  to the appellant "to act as its sole  agent" in certain specified territories.  Clause 2 states that "the detailed text of the agreement will be air-mailed until  the 7th  April,  1970".   Clause  5  deals  with  the  appellant agreeing  immediately to place an order for  machines.   Two machines  had been agreed to be sold and to give  effect  to this agreement referred to in cl. 5 to 8 of Annexure A,  two orders,  each independent, namely, Annexure B1 and B2,  were executed  on  April 2, 1970.  The terms  and  conditions  of these  two sales were printed on the back of the order,  the first  of  which  stated  "this  order  shall  be  the  sole repository  of  the transaction. . . . ". If  the  exclusive repository of the terms of the transaction was Annexures  B1 and  B2,  purchase  of the machinery EK 25 and  EK  13A  was covered by this complete deed and there was no justification for  travelling beyond it to ascertain the intention of  the parties. [172 A-B; H] 168 (4)The totality of the terms concerning the sale of the  two machines  had been documented in Annexure B1 and B2, such  a concluded  contract could cease to be  operative  ordinarily only by performance or novation or in any other manner known to the law of contract. [173 C] In the instant case, cl. 8 of Annexures B 1 and B2 is valid, unless Annexure C extinguished Annexures B1 and B2. [173 D] (5)The  whole of cl.  1 of Annexure C devotes itself to  the appointment  of  the  appellant  as  sole  buyers  from  the respondent.  The terms "hereby" and "hereinafter"  mentioned in  that clause postulated that while the minutes  (Annexure A)  projected the proposal for appointing the  appellant  as exclusive  agents it was only under Annexure C,  the  actual scheme  was to come into force on acceptance, and  not  from any   anterior   date.   Moreover,   absence   of   "special introduction  discount" in Annexure C in contrast to such  a provision in Annexures B1 and B2 only showed that Annexure C did not deal with the two sales covered by Annexures B1  and B2. [173 F] Clause 12 of Annexure C stated that "this agreement is valid from  after  the  7th April, 1970".   The  two  machines  in dispute  were agreed to be purchased on April 2, 1970  under Annexures B1 and B2 but Annexure C became operative. only in regard  to  transactions from after April  7,  1970.   These terms  cannot  be  given retroactive  effect  since  cl.  13 expressly states that "this agreement enters into force when both parties have signed it." [174 A]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  1413  of 1976. Appeal by Special Leave from the Judgment and Order dated 3- 2-1976 of the Calcutta High Court in Award Matter No. 109 of 1975. V.   M. Tarkunde, B. M. Bagaria and D. P. Mukherjee for  the Appellant.

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Sachin Choudhary and D. N. Gupta for the Respondent. The Judgment of the Court was delivered by KRISHNA IYER, J. Commercial causes, we may observe  prolego- menary  fashion, should, as far as possible, be adjusted  by non-litigative   mechanism  of   dispute-resolution,   since forensic  processes,  dilatory and contentious,  hamper  the flow of trade and harm both sides, whoever Wins or loses the lis.   That. is why arbitration is often prudently  resorted to  when  controversies  erupt in  the  course  of  business dealings But when basic differences spring up as to which is the  arbitration  clause  that governs, in  a  plurality  of contracts or several steps in evolving a final contract  but containing  divergent arbitral provisions, the  Court  comes into  the picture, willy nilly.  Even so, having  regard  to the  larger  interests of justice, an exercise  in  pretrial settlement,  consistent  with  judicial  non-alignment,   is desiderable,  and  so  we had suggested to  counsel,  at  an earlier  hearing,  to  bring the  parties  together  on  the limited  question  of  the  arbitral  locus  and  law,  but, notwithstanding genuine efforts by counsel, and perhaps  due to substantial factors weighing with the parties, the effort proved fruitless.  A legal adjudication may be flawless  but heartless  but a negotiated settlement will  be  satisfying, even  if  it  departs from  strict  law.   The  respondent’s counsel  stated  that  his client a  foreign  State  Trading Organization-was  rather keen-and this may well  be  true-on getting  the law declared by this Court for future  guidance and so we proceed to narrate the litigative story and  169 cut the legal knot for the benefit of both sides.  Since the subject  matter  relates to the sensitive  area  of  foreign trade   we   still  hope  the  dispute,   even   after   our pronouncement,  will be dissolved and goodwill and  business dealings  revived  between  the  parties  to  their   mutual benefit. The dramatis personae or legal actors in this action are  an engineering  firm in India (the appellant) and  a  Hungarian State  undertaking  doing  export-import  trade  with  other countries  in  machinery (the respondent)  and  the  contest relates  to  the  competency of the  appellant  to  refer  a dispute  regarding  purchase of two  Hungarian  Counterblows (machinery).   The  Indian went to Budapest to try  and  buy Hungarian  machinery and the negotiations fructified as  the minutes of April 2, 1970, drawn up of the broad  arrangement between  the parties, disclose.  Having been followed up  by format deeds, these minutes mark the beginning of and  serve as setting to but not in themselves constitutive of complete contracts.   A  significant  dichotomy  which  characterises these  minutes cannot be missed, though resisted by  counsel for   the  respondent.   The  first  part  relates  to   the appellant,   being  exclusively  chosen  to  represent   the respondent  in  the sales of their manufactures  in  certain specified  States in India.  The second part is  devoted  to purchase  of two specific items of machinery plus  provision for a third to be concretised. later.  This duality analysis may be driven home by reading the text of the minutes here                        MINUTES Drawn in Budapest on the 2nd April, 1970, Present.... 1.   Technoimpex    grants    the   right    of    exclusive representation to the Agarwal Engineering Company to act  as its sole agent in the territories of West Bengal, Bihar  and Orissa.   It  will be decided at a later  date  whether  the representation  agreement will be extended to the  State  of Assam. 2.   The  detailed text of the agreement will be  air-mailed

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until the 7th April, 1970. 3.   A letter in duplicate addressed to STC with the request to  issue a stock and tale licence in a value of  2  Million Rupees  will be sent to the Hungarian Trade Commissioner  in Calcutta who hands over it to M/s.  Agarwal Engineering Co., after signing the Agency agreement. 4.   Detailed  proforma invoices in six copies will be  sent with the agreement and catalogues at least six copies. 5.   It  has been agreed that Technoimpex supplies  and  the Agarwal Engineering Company immediately places the order for the following machies : One counterblow Hammer Type EK-Gross C & F Price                           Rs.     1,000.000 One counterblow Hammer Type EK-13A    Rs.       522.596 Other machines in a value of          Rs.       300.000 170 6.   Technoimpex  grants a special introduction discount  of 10% in the free Hungarian border prices i.e. on EK-25           Rs. 915.550 EK-13A                   Rs.         466.200 and of    5%  in  the free Hungarian border  prices  of  the other machine, as per    price  list  handed  over  to   the Agarwal Engineering Company. 7.   Payment  conditions  of counterblow hammer  type  EK-25 would be : 25" through irrevocable L/C to be opened 30  days before the date of despatch. 75% in 3 years in 6 equal instalments for which 6%  interest will be charged extra EK  13A counterblow hammer will be paid 25% through  irrevo- cable L/C to be opened 30 days before the date of despatch. 75  % 12 months credit to be paid in two  equal  instalment& for which 6% interest will be charged extra. Other machine types will be supplied at 6 months credit  and 6% interest will be charged p.a. The guarantee of a first class bank should be sent with  the order to cover the credits granted.  The credit is  reckoned from the date of B/L. In case of cash payment no interest will be charged. 8.   The  machines  mentioned in these minutes can  be  sold only  in  the  territories enumerated  under  S.I.  by  M/s. Agarwal. Delivery terms : Counterblow Hammer Type EK-25 16th October 1970. Counterblow Hammer Type  EK-13A 15th October 1970. Budapest, 2ND April 1970. On Behalf Agarwal Co.        On behalf of Technoimpex." The   first   four   clauses   focus   on   the   ’exclusive representation’  rights while the last four specificate  the agreed terms for purchase of two items of machinery, such as the price, ’introduction discount, conditions of payment and the like.  The former speak of what is proposed to be  done, to be set down in an agreement to be despatched on or before April  6,  1970.  The latter, now and here,  spell  out  the essential  contents  of  two contracts of  purchase  of  two Counterblows Hammer Type one EK-25 and the other EK-13A.  In keeping with this legal ’dialysis we find on the same  date, i.e.,  April 2, 1970, two formal contracts relating  to  the sale of the ’Counterblows.  These run virtually on the  same lines  and  set out the terms of the two sales, one  of  the common terms whereof engrafts an arbitration clause  (clause 8) which reads               "8.   All   matters,   questions,    disputes,               differences  and/or  claims  arising  out   of               and/or  concerning and/or in  connection  with               and/or  in consequence of or relating  to  the

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             contract  whether  or not the  obligations  of               either or both parties under this contract  be               subsisting at the time of such dispute and               171               whether   or  not  this  contract   has   been               terminated  or purported to be  terminated  or               completed shall be subject to the jurisdiction               of  Calcutta  High  Court only  and  shall  be               referred to the jurisdiction of Calcutta  High               Court  only  and  shall  be  referred  to  the               arbitration of the Bharat Chamber of  Commerce               under the rules of its Tribunal of Arbitration               for  the time being in force and according  to                             such rules the arbitration shall be conducted. " We  have stated at the outset that the Minutes (Annexure  A) envisioned  the appointment of the appellant firm  as  sales representatives of the respondent exporters and this project is  given concrete form in the shape of an  agreement  dated April  6,  1970 (Annexure C, p. 86).  It is not  in  dispute that  this,  by  acceptance, ripened into  a  contract  with detailed terms and conditions one of which is an arbitration clause  (cl.  14).  It is substantially different  from  the earlier one.  We may set it out without comment since it  is patent  and  uncontested that the  two  arbitral  provisions diverge  on  the fori of decision, the  composition  of  the arbitrators  as well as the substantive and processual  laws to be applied.  Briefly, the bone of contention between  the parties   is  the  bare  question.  of  which  of  the   two incompatible arbitration projects governs the dispute  about the  sale of the two machines mentioned in Annexures B1  and B2.   For, these were forwarded by sea, one to Calcutta  and the  other  to Bombay, but according to the  appellants  the goods  delivered  did not accord with the  bargain  and  the contract had been breached by the sellers. This  controversy  erupted in two proceedings,  one  at  the instance of the appellant under s. 41 of the Arbitration Act and the other, instituted by the respondent, under s. 33  of that  Act.  The former failed and the  latter-succeeded  and from  this  adverse order the appellant has  arrived,  under special leave, to challenge its correctness. The  High  Court  has  set  out  the  details  of  the   two proceedings but the crux of the matter turns on one material issue.   Did the second contract (Annexure C) supersede  the earlier  contract (Annexures B1 and B2) so that by  novation the  first  contract, and together with it  the  arbitration clause,  perished and could not be availed of by the  appel- lant ? If annexures B1 and B2 as well as annexure C, related to  independent subject matters and could  co-exist  without the  latter  superseding the earlier,  the  appellant  would succeed in the appeal.  On the contrary, if Annexure C  took in  its wings the contract relating to the sale of  the  two items  of  machinery,  the minutes (Annexure  A)  being  the basis, the documents annexures B1 and B2 being steps towards the  culmination of the contract which found  expression  in Annexure Cas argued by Shri Sachin Choudhry on behalf of the respondent  then,  maybe  the  terms  for  the  purpose   of reference to arbitration would have to be sought in Annexure C   and  not  in  the  earlier  ’contracts’.   Shri   Sachin Choudhary’s position also is that no case of novation arises because there has been no contract arrived at under Annexure B1 and B2, the real and the only contract being Annexure C. A study of the relevant clauses, taking a conspectus of  the triple stages, may take us to a sound solution of the  legal problem.   The minutes, Annexure A have been scanned  by  us

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earlier.  Even so, an 12-722 SCI/77 172 insightful scrutiny may be helpful in unlocking the  problem confronting us. Annexure was drawn up in Budapest where both the  parties  were present.  Clause (1) grants  a  right  of exclusive representation to the appellant by the  respondent ’to act as its sole agent in the territories of West Bengal, Bihar  and Orissa’.  The very next- clause states that  ’the detailed text of the agreement will be air-mailed until  the 7th April 1970.’ Clauses 3 & 4 are mainly in furtherance  of the ’agency agreement’.  What is important to notice is that the  agreement  to be concluded as per clause 2  relates  to ’the right of exclusive representation’. Then we start off with clause 5 onwards.  This fasciculus of clauses is devoted to the immediate purchase of  Counterblow Hammer  Type (EK 25 and EK-13A) machines.  Contextually  and discerningly  read,  clause  5  deals  with  the   appellant agreeing  immediately to place an order for  three  machines two of which we have just referred and the third was not  to be bought right away but only later, although its price  was indicated  in clause 5. Since the parties were  beginning  a business relationship which was expected to be enduring, the respondent granted a ,special introduction discount’ of  10% on  EK-25 and EK-13A and 5% on the other machine  which  was the third item in clause 5. Clause 7 speaks of the payment conditions and gives details. Clause 8 puts a condition on the area in which the  machines purchased  as  per clause 5 are to be sold.   The  terms  of delivery, especially the time of delivery, are also, set out in  cause 8 of the minutes.  It follows that the  contention of  Shri  Sachin Choudhry that Annexure C  is  one  integral document and to dichotomise it as Shri Tarkunde, counsel for the respondent did, is to do injury to the consensus of  the parties  is  unacceptable.   Actually  there  was  to  be  a principal to principal relationship established between  the parties  and,  to start with, there was to be  an  immediate purchase of two or three items, forthwith, the terms whereof were  generally set down.  It is apparent that two  machines had  been  agreed  to be sold and to  give  effect  to  this agreement  referred to in clauses 5 to 8 of Annexure A,  two orders,  each independent, viz., Annexures B1 and  B2,  were executed  between the parties on the same date, viz.,  April 2,  1970.  The seller and the buyer had already settled  the terms  of the sale and so it was thought they could and  did execute  specific contracts in regard to the  two  machines. The  terms and conditions of these two sales were  identical and  were  printed  on  the  back  of  the   ’order/indent’. Moreover, almost every detail of the manner of despatch, the manner  packing,  the prepayment of freight,  the  time  for despatch  and the manner of drawing up the invoice and  many other  particulars,  including ’full  literature,  drawings, instructions  covering  the  supply  and  insurance   policy covering  comprehensive risks was written into Annexures  B1 and B2.  It was also indicated that part delivery would  not be  accepted and that the destination was ’Calcutta/  Indian port. The  terms and conditions printed over leaf again  ran  into further  details.  But what is most significant in the  very first condition which states : ’This order shall be the sole repository  of the transaction and the terms and  conditions mentioned  herein shall not apply, (emphasis  added).   Thus the nidus of the terms and conditions governing the contract regarding the purchase of the two mechines was Annexures  173 B1 and B2.  If the exclusive repository of the terms of  the

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transaction  was  Annexure B1 (and B2),  we  could  sensibly infer  that the purchase of the machinery EK-25  and  EK-13A was  covered  by  this  complete  deed  and  there  was   no justification  for  travelling beyond in  to  ascertain  the intention of the parties connected with the bargain relating to  the sale of the two machines.  Prima  facie,  therefore, the parties were bound to abide by the arbitration  clauses, contained  in condition 8 of Annexure B-1 and B-2.   Indeed, clause 9 made the supplier responsible for ’all consequences by  virtue  of fines etc.’ arising from  wrong  shipment  of goods  and  it  was  also clearly  stated  that  the  prices mentioned  in, this order were firm and that they would  not be  altered  even  after any  gold  price  variation  unless otherwise  specifically  mentioned therein.  In  one  sense, therefore, the totality of the terms concerning the sale  of the two machines had been documented in Annxeures B-1 and B- 2.   Such a concluded contract could cease to  be  operative ordinarily  only by performance or novation or in any  other manner  known to the law of contract.  In the  present  case the  ,dispute  was regarding whether there had  been  proper performance, and, this dispute was sought to be referred  to the  Bharat Chamber of Commerce as envisaged in clause 8  of Annexures  B1  and B2.  Such ,a proceeding would  be  valid, unless, as was contended by Shri Sachin Chaudhri, Annexure C extinguished Annexures B1 and’ B2 so that a ’substitution or novation  took  place, of course, it is fair to  state  that Shri  Sachin Chaudhry drew our attention to certain  details and minor differences between Annexure B series and Annexure C, which, in our view, are but frills and do not affect  the core contention. We  may,  in this, view, have to examine the  provisions  in Annexure  C and their effect upon Annexures B1 and B2.   The competing  clauses-rather,  the  rival  versions-from  their relevance to the question posed above, may be looked into at this  stage.   Clause (i) is  significantly  self-evident  : "Sellers  hereby  appoint  buyers as sole  buyers  of  their machine  tools of all kinds,... on the terms and  conditions hereinafter  mentioned  and the buyers  hereby  accept  such appointment on such terms and conditions".  The whole clause clearly  devotes itself to the appointment of the  appellant as  ’sole  buyers’  from the respondent.   The  emphasis  on ’hereby’  and ’hereinafter mentioned’ postulated that  while the minutes Annexure A projected the proposal for appointing the  appellants  as  exclusive  agents  it  was  only  under Annexure  C, dated April 6, 1970, the actual scheme  was  to ,come  into force. on acceptance, and not from any  anterior date.  ,Clauses  (2)  and (3) do not relate  to  the  ’sales representatives’ part of the contract.  Clause (4) continues the  same idea and spells (-,tit the terms of the sale.   It is  noteworthy  that  there  is  no  ’special   introduction discount’  provided for in Annexure C in contrast to such  a provision  in Annexures B1 and B2.  The likely inference  is not that the said discount is withdrawn but that Annexure  C does not deal with those two sales (covered by Annexures  B1 and B2). Likewise,  the  terms of payment mentioned in clause  5  are such  as  are  ’to  be arranged from  time  to  time’  while Annexures  B1 and B2 specify the terms of payment so far  as the  two  machines  covered by  them  were  concerned.   The subsequent clauses (6) to (11) deal with 174 kindred  matters  of  sales agency.   Clause  12,  captioned ’duration of agreement’ states that ’this agreement is valid from  after the 7th of April 1970 till 31st December,  1970. The two machines with which we are concerned in this  appeal

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were  agreed to be purchased, as it were, on April 2,  1970, under  Annexures B1 and B2 but Annexure C  became  operative only  in  regard to transactions from after April  7,  1970. Indeed, these terms cannot be given retroactive effect since clause 13 expressly states that ’this agreement enters  into force when both parties have signed it’. Clauses  15, 16 and 17 are also not germane to the  purchase of  the two machines but in the background we  have  traced, clause  14  has  to be decoded.   That  clause,  as  already mentioned,  is  a  new  arbitration  clause.   substantially different  from  the one contained in Annexures B1  and  B2. The question is : Can the arbitration provision in clause 14 have  retroactive effect to bind sales effected on April  2, 1970 especially when such a contention runs in the teeth  of clause  13  which directs that Annexure C shall  enter  into force  only  when both parties have signed it,  which  event obviously took place only on or after April 6, 1970. The  analysis of Annexures A to C which we have made,  leads only to, one conclusion, viz., that Annexures B1 and B2  are self-contained  and constitute a separate contract-set,  and that they exclusively relate to, the terms of purchase of EK 25  and  EK 13A.  Annexure C is futuristic  and  relates  to sales ’agency’ and later purchases.  The arbitration  clause that  governs  the sales of the two items  of  machinery  in these proceedings is clause B. in Annexures B1 and B2.  This necessarily  means that the dispute between the parties  may be  completely  arbitrated by the  Arbitration  Tribunal  of Bharat Chamber of Commerce. The  High  Court  has taken a contrary  view,  ignoring  the effect  of Annexures B1 and B2 and over-emphasising,  indeed misreading,  the  minutes of April 2, 1970 and the  deed  of April 6, 1970.  These two formal contracts (B1 and B2)  have been dismissed not by argument but by assertion :               "In  my view, the placing of the order by  the Standard  Pri nted  indent/order form  of  the               Respondent with the petitioner for the  supply               of  the  said  two machines  can  only  be  in               pursuance of the said Parent agency  agreement               which  was arrived at between the  Parties  in               the meeting dated,’ the 2nd of April, 1970 and               the   details  were  of  which  was   formally               recorded  in  the document dated  the  6th  of               April,  1976.  The party never  intended  that               the said order/indent placed by the respondent               with  the petitioner would be  an  independent               and  separate  agreement as now sought  to  be               contended  by  Mr.  Bhabre on  behalf  of  the               Respondent." How  the  learned  Judge reaches  the  conclusion  that  the arbitration  clause in B1 and B-2 is inoperative  beats  our comprehension.  175               "Further,  from  the minutes  of  the  meeting               dated the 2nd of April, 1970, and the document               dated the 6th of April, 1970, it is made quite               clear  that  the  parties  intended  to   have               transaction  only  on the basis of  the  forms               which were fully set out in the document dated               the  6th  of  April,  1970.   Therefore,   the               arbitration clause in the said document dated.               the  6th  April,  1970, is the  one  which  is               operative and binding between the parties  and               the arbitration clause in the Standard Printed               Indent/Order  form  of the Respondent  has  no               effect  as the said order was formally  placed

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             in  pursuance to the agency agreement  arrived               at  between  the Parties as  recorded  in  the               minutes of the meeting dated the 2nd of April,               1970." Once  we  grasp  the scenario of  events  and  execution  of documents and give full effect and intelligible coordination to  the various documents it becomes clear that there is  no sequitur in the High Court’s reasoning.  Nor are we able  to persuade  ourselves, as the High Court has done, that  there may  be ambiguity as to the interpretation of the series  of documents and the terms of the contract concerned. We  agree that all the machinery purchased by the  appellant or  to be purchased by him from the respondent,  except  the two  items  covered by Annexures B1 and B2 are  governed  by Annexure C. The reference by the High Court to the principle that the last deed must govern the relationship between  the parties   superseding  the  earlier  ones,  when  there   is inconsistency between the two, assuming it to be right,  has no,  room for play here.  Subsequent documents, such as  the Protocol  of  November 14, 1970, February 26, 1971  and  the like, do not vary the jural relationship, vis a vis the sale of the two items of machinery we are concerned with.  We are unable  to  agree with Shri Sachin Choudhry  that  the  said protocol shows that Ex.C was taken to be the sole matrix  of the  contractual terms regarding the purchase of EK. 25  and EK.  13A.  Neither the conduct of the parties nor the  chain of  correspondence deflects us from the  conclusion  already reached, In  this  view, the inference is  inevitable  that  arbitral clause in B1 and B2 bind the parties, so far as the disputed machines are concerned. Shri Sachin Chaudhri stated at the bar that in regard to one of  the  items, ’some sort of settlement has  been  reached, although  Shri Tarkunde does not agree.  We merely.  mention this and leave it at that. We  must  further state that Shri Tarkunde did  assure  the- Court  that  irrespective of the result of the  appeal,  the appellant  was  agreeable to the  arbitral  reference  going before  any  Tribunal  of  Arbitration  of  any  Chamber  of Commerce in India.  We hold the party to that assurance. In   conclusion   we   allow  the  appeal,   but,   in   the circumstances, direct the     parties    to    bear    their respective costs.  We further direct that if the  respondent intimates the appellant in writing on or before 13-722SCI/77 176 August  15, 1977 that he chooses any particular tribunal  of Arbitration, set up by any Chamber of Commerce in Bombay  or Calcutta, the reference of the dispute will go to that body. If,  however, no such intimation is made, the  Tribunal,  of Arbitration  of  the Bharat Chamber of  Commerce  will  have jurisdiction   and  will  continue  the  proceedings.    The arbitrators will decide, according to clause 8 in  Annexures B1  and B2, the rights and liabilities of the parties.   The parties will bear their respective costs throughout. P.B.R.                            Appeal allowed 177