The Bombay High Court allowed an application seeking to enforce an arbitration clause in an invoice. The Court observed that there was a valid arbitration clause as none of the parties denied the invoice and duly acted upon it.
Brief Facts:
The applicant, a news media Company, had an interface with the respondent, an advertising agency, to be approached by various advertisers to place advertisements in the applicant’s newspapers, channels, radio, and other outdoor publications via release orders.
Based on such release orders received from the respondent, the applicant would publish the requisite advertisement in distinct media platforms and subsequently raise an invoice upon the respondent for payment towards the issuance of such advertisement. The respondent was then expected to discharge his obligations to make the payment to the applicant.
Between
July 2017 to April 2019, the respondent issued various release orders
on the applicant and the applicant claims that the respondent defaulted
in making the payments in a timely manner. The applicant alleged that
the default continued from July 2017 to April 2019, despite the invoices
being raised, and the attempts on part of the applicant to recover the
overdue payment failed on every occasion.
The applicant invoked the arbitration on 11/7/2022, seeking the appointment of the sole arbitrator as contemplated in the Dispute Resolution Clause, which is a part of the tax invoice. This gave rise to the question of whether the said clause can be construed as an arbitration clause.
Contentions of the Applicant:
The Counsel for the applicant contended that the respondent was obligated to make payments of the advertisement placed upon the Member Publications of INS, but there was complete neglect even to respond to the correspondence from the applicant. He argued that there is no denial of the existence of the arbitration clause in the tax invoice which has been acted upon and hence, the clause has to be construed as a mutually agreed clause that binds both parties, whatever may be the wording applied in the said clause.
Contentions of the Respondent:
The Counsel for the respondent opposed the application and denied the existence of the arbitration agreement. He argued that there was no conscious agreement between the parties to refer the disputes for adjudication and merely because the tax invoice which was issued in respect of the purchase orders provided for arbitration, such invoices would not bring about an arbitration agreement.
Observations of the Court
The Court observed that in the present case, it can be seen that the parties acted upon the invoices and there was no denial of the invoices raised by the applicant. Thus, the Court observed, the clause contained in the invoices, which clearly stipulated a reference to arbitration, deserves to be construed as an arbitration clause.
The decision of the Court:
The Bombay High Court, allowing the application, held that the clause contained in the invoices can be construed as an arbitration clause.
Case Title: Bennett Coleman & Co. Ltd. v MAD (India) Pvt.Ltd
Coram: Hon’ble Justice Bharati Dangre
Case no.: COMM. ARBITRATION APPLICATION (L) NO.211 OF 2022 WITH COMM. ARBITRATION PETITION (L) NO.29338 OF 2022
Advocate for the Applicant: Mr. Ashish Kamat, Mr.Pradeep Mane, Ms.Huzan Bhumgara,
and Mr.Dhruv Dandekar
Advocate for the Respondent: Mr.Girish Kedia and Mr.Kushang Kedia
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