HC expounds Signature of either party on the Arbitration Agreement is not mandatory

  

On 5^th July, a single judge bench of Delhi High Court consisting of Justice Sanjeev Narula while considering the validity of an arbitration agreement that was not signed by a party held that taking into consideration the language deployed in section 7(4) (b) there can be no doubt that, the signature of either party on the Arbitration Agreement is not mandatory. The court further held that an arbitration agreement need not be in a particular form, and a valid agreement can be constituted if it has all the necessary attributes.

The court then passed an ex parte decision in favor of the petitioner, Swastik Pipe Ltd., and appointed Ms. Kanika Sinha as the sole arbitrator to adjudicate the disputes arising between the parties.

Facts of the case:

The present petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 sought for the appointment of a Sole Arbitrator to adjudicate the disputes arising from the tax invoices issued by the Petitioner – Swastik Pipe Ltd (SPL) in the course of their dealings with the Respondent – Shri Ram Autotech Pvt. Ltd. (SRAPL). While some payment was made to the petitioner but an amount of INR 15,63,217/- is outstanding against the goods which have been already been delivered to and received by SRAPL.

Contention of the plaintiff:

 

Mr. Sanjay Jain, learned counsel for SPL contented the following:

1. It was contended that the clause contained in the invoice constitutes a valid arbitration agreement in view of the judgments of the Supreme Court in Trimex International FZE Ltd. Dubai v. Vedanta Aluminium Ltd., India and thus the Court must proceed to appoint an Arbitrator.
2. SPL contends that the goods accompanying the invoices have been duly received by SRAPL under a Goods Receipt, signed and acknowledged by the representative of SRAPL. In view of the above, the transaction between the parties and the resultant dispute arising on account of alleged non-payment of outstanding sums is prima facie established.
3. Mr. Jain also relied upon Section 7(4) of the Act and stressed that SRAPL has not denied the existence of the arbitration agreement, notwithstanding the categorical assertion to that effect in the notice of invocation of arbitration, and thus, this Court should not have any hesitation in appointing an Arbitrator.

Observation and Judgement of the court:

The Hon’ble bench of the court made the following observation:

 

1. The first issue before the court was that since the invoices containing the arbitration agreement are not signed by SRAPL therefore what was the validity of the agreement? However taking into consideration the language of Section 7 (b) the court found that there can be no doubt that, the signature of either party on the Arbitration Agreement is not mandatory.
2. It was also observed that for any agreement, the real intent of the parties is germane. Since the terms and conditions printed on an invoice are generally inserted unilaterally by the party issuing the invoice, the Court had called upon SPL to validate the mutual intention of the parties to settle the disputes through arbitration.
3. In the instant case, although there is no exchange of statements of claim and defence, in the sense that there is no reply from SRAPL, but the fact remains that the existence of the arbitration agreement specifically alleged by SPL with the narration of transaction, has not been refuted by SRAPL.
4. The consequence of non-appearance of SRAPL is that the assertion of existence of the arbitration agreement is unrebutted. Thus, prima facie, it can be inferred that the arbitration agreement exists between the parties.

In the light of the above the court while allowing the present petition appointed Ms. Kanika Sinha, Advocate, as the Sole Arbitrator to adjudicate the disputes arising between the parties. The parties were further directed to appear before the learned Arbitrator, as and when notified.

Read Judgment ;

 

 

SOURCE ;  https://www.latestlaws.com

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