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SANJAY KAROL, N. KOTISWAR SINGH
Nagreeka Indcon Products Pvt. Ltd. – Appellant
Versus
Cargocare Logistics (India) Pvt. Ltd. – Respondent
Key Points: - The judgment addresses whether the word "can" in an arbitration clause creates a binding arbitration agreement or merely a future possibility. (!) (!) (!) - It outlines the criteria for an arbitration clause to be binding, citing requirements that the agreement contemplate a binding tribunal, derive its jurisdiction from consent or statute, and intend enforceable rights, among others. (!) (!) (!) (!) (!) (!) (!) - It discusses the interpretation of contractual language, emphasizing that the written word reflects intent and that mere use of "arbitration" or "arbitrator" is not sufficient without an immediate obligation to refer disputes. (!) (!) - It references prior judgments and principles (e.g., Jagdish Chander, K.K. Modi, Vidya Drolia) to determine when a clause constitutes an arbitration agreement and the limits of Section 11 proceedings. (!) (!) (!) - The Court held that Clause 25 did not constitute a binding arbitration agreement due to its wording indicating future possibility and lack of immediate consent. (!) (!) (!)
JUDGMENT :
SANJAY KAROL J.
Leave Granted.
2. The short but significant question arising in this appeal is, when the arbitration clause in the contract uses the word ‘can’, does it necessitate the reference of all disputes to arbitration or is recourse to other dispute resolution mechanisms, including that of the Civil Court, open for the parties.
3. The facts of this case lie in a narrow compass. The appellant is a manufacturer of aluminium foil containers and kitchen rolls. In the course of business, it received a contract for purchase of corrugated boxes of aluminium foil from M/s. American Alupack Industries1[‘AAI’]. The eventual product was to be delivered to South Carolina, USA, and regarding such transport, the appellant contracted with the respondent for a total consideration of Rs.2,23,550/- which was inclusive of freight charges, ocean freight, ACD charges, container maintenance charges etc. The total consignment was of six containers, out of which four were delivered successfully prior to the dispute arising between the parties. When it came to the delivery of the fifth container, the dispute in question arose. Apparently, when the respondent delivered the fifth consignment
(1) Reference of disputes to arbitration – Alternate Dispute Resolution mechanisms or more particularly, arbitration, can only be the chosen method if both/all parties to dispute can agree that it wi....
A dispute resolution clause using the word 'can' rather than 'shall' fails to create a binding arbitration agreement, as it indicates a mere possibility of arbitration requiring further mutual consen....
The use of 'may' in arbitration agreements indicates optionality rather than obligation, requiring mutual consent for arbitration to be valid.
An agreement with a clause stating disputes 'may' be resolved through arbitration does not constitute a binding arbitration agreement under the Arbitration and Conciliation Act, as it does not reflec....
An arbitration agreement must evidence an unambiguous intention to refer disputes to arbitration, and mere use of the word 'arbitration' is not sufficient to construe an agreement as an arbitration a....
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