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Signing of either parties is not mandatory in an arbitration agreement; valid if it has all necessary attributes.
In the light of Swastik Pipe Ltd. vs Shri Ram Autotech Pvt. Ltd. in ARB. P. No. 241/2021, decided on 05.07.2021 by the Delhi High Court.
Introduction: SPL handles manufacturing, exporting, and supplying steel pipes and tubes to heavy engineering companies in India and overseas. SRAPL specialises in the production and distribution of sheet metal and plastic-moulded components. Orders for ‘C.R. Strips' were placed with SPL by SRAPL. SPL provided the same on a running account basis, following SRAPL's request and specifications. The parties' commercial interactions took place between April 1, 2019, and December 29, 2020. While some payments have been paid, there is still an outstanding balance of INR 15, 63,217/- against items previously delivered to and accepted by SRAPL.
SPL issued a legal notice dated December 31, 2020, asking SRAPL to make reasonable the sum due or consent to arbitration in line with the terms and circumstances of the invoices, which contained an arbitration clause, because the respondent had not been discharged.
Even though the notice was delivered on SRAPL at their Delhi office on January 6, 2021, and at their Gurugram office on January 14, 2021, SRAPL did not make the payment or respond to the notice. In light of these circumstances, SPL has filed a petition under Sec. 11(6) of the Arbitration and Conciliation Act, 1996, with the High Court of Delhi seeking the appointment of a Sole Arbitrator.
There was no representation from SRAPL’s side, so the court decided the petition ex parte based on submissions and pleadings by SPL.
Decision and Findings: The court notes that the arbitration clause in the invoice is in readable font under the heading of “Remarks: Terms and Conditions”. The arbitration agreement in the invoice read as:
“All disputes, touching and/or concerning this bill, shall be, solely, resolved by an arbitrator duly appointed by the Hon’ble Delhi High Court under The Arbitration and Conciliation Act, 1996, amended unto date or any repeal thereof. The seat of arbitration shall be Delhi and shall be solely and exclusively subject to Delhi jurisdiction. The language of arbitration proceedings shall be English.”[1]
The Court relies on SPL’s contentions that the goods accompanying the invoices have been received by SRAPL under a Goods Receipt, which has been signed and acknowledged by SRAPL's representative, and copies have been kept on file. There are also additional papers that prove the supply and sale of products, such as e-Way Bills. In light of the preceding, the parties' transaction and the ensuing dispute stemming from claimed non-payment of due monies is prima facie proven. But, the invoice comprising of the arbitration agreement was not signed by SRAPL.
Issue: The question presented before the court was whether the terms and conditions appearing on the invoices accompanying the delivery of goods would constitute a valid arbitration agreement between the parties.
The Court looked at Section 7 of the 1996 Arbitration and Conciliation Act and found that an arbitration agreement must be written. However, Section 7(4) of the Arbitration Act indicates that the legislature intended to include a written document not signed by the parties within the scope of a valid arbitration agreement, as Section 7(4) (b) states that an arbitration agreement can take the form of an exchange of communication that provides a written record of the agreement. Given the language used in the clause above, there can be no question that either party's signature on the Arbitration Agreement is not required.
Furthermore, the provision mentioned above demonstrates that an arbitration agreement does not have to be in a particular format. A valid agreement can be formed, provided it contains all of the necessary attributes.
In Conclusion, in this case, the Court found enough evidence on the record to show that the invoice conditions/clauses were accepted and acted upon, that the parties were ad idem, and that an arbitration agreement may be reasonably inferred. Furthermore, because the Respondent had purposefully decided not to engage in the proceedings, the petitioner's claim that an arbitration agreement existed went unchallenged.
[1] Swastik Pipe Ltd. Versus Shri Ram Autotech Pvt. Ltd.Arb.P, 241 of 2021.
This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, or Religion, Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts made to ensure the accuracy and correctness of the information published, White Code VIA Mediation and Arbitration Centre Foundation shall not be responsible for any errors caused due to human error or otherwise.
- Introduction
- Decision and Findings
- Conclusion
