A purchase order containing an arbitration clause, signed by one party, constitutes a valid arbitration agreement under Section 7(4) of the Arbitration & Conciliation Act, 1996.

Soumen Sen, J.

1. The plaintiff has instituted the suit against the defendant for recovery of a sum of Rs. 52,45,258/- on account of price of goods sold and delivered. The plaintiff states that between 14th November, 2011 and 9th October, 2013, the defendant has issued diverse purchase orders on the petitioner for supply of pipes of diverse specifications and quantities in connection with an ongoing project of civil works for their Swastik Metro Project (Metro Station Commercial Tower and Residential Tower). The plaintiff has given the details of eight purchase orders on the basis of which the plaintiff had sold, supplied and delivered the goods specified in such purchase orders to the defendant. The defendant had duly received and accepted the said goods but did not pay the price of such goods sold and delivered.

2. The plaintiff has also taken out an interlocutory application in the suit praying, inter-alia, for a judgment upon admission for a sum of Rs. 52,45,258/-. It is stated that the petitioner has unconditionally and unequivocally admitted, confirmed and acknowledged its indebtedness to the plaintiff for the aforesaid sum which would appear from letters both dated 27th March, 2014. When this interlocutory application was moved, the defendant came up with an application being G.A. No. 3306 of 2014 for stay of the suit on the ground that the subject matter of the suit is covered by an Arbitration Agreement. It is stated in the said petition that the purchase orders referred to in the plaint contains a dispute resolution clause which states:-

"Arbitration: In the event of any difference or dispute arising out of or in connection with this purchase order, the same shall be first amicably settled by mutual dialogue. If the parties fail to settle their difference or dispute arising out of or in connection with this work order (including interpretation of the terms thereof,), the same shall be referred to arbitration. The Arbitration proceedings shall be by a Single Arbitrator appointed by the Company Secretary of Simplex Infrastructure Limited and the award/decision of such arbitrator shall be final and binding upon both the parties. The venue of the Arbitration shall be Kolkata. However the work shall not be stopped during the pendency of the proceedings and it shall be ensured that such work is proceeded uninterruptedly."

3. The applicant-defendant has annexed a true copy of one of such invoices entered into and between the parties containing the arbitration clause.

4. Mr. Pratap Chatterjee, learned senior Counsel appearing on behalf of the defendant in support of the said application contends that there is a valid and enforceable arbitration agreement within the meaning of Section 2(1)(b) read with Section 7 of the arbitration Act. It is submitted that the purchase order contains the said arbitration clause and in view of such arbitration clause, all disputes and differences are required to be resolved by the mechanism of arbitration. It is submitted that after execution of the aforesaid work orders, disputes and differences had arisen between the parties regarding payments thereof. The plaintiff instead of carrying out the works, in terms of the said work orders and in utter disregard of the arbitration clause contained in the said agreement has instituted this suit against the defendants. It is submitted that the subject matter of the suit is squarely covered by the arbitration agreement and in view thereof the parties are required to refer to arbitration.

5. Per contra Mr. Abhrajit Mitra, the learned Senior Counsel appearing on behalf of the plaintiff submits that the application for stay of suit is required to be rejected, inter-alia, on the grounds stated hereinafter.

6. Even if the purchase orders constitute a valid contract between the plaintiff and the defendant No. 1, the arbitration clause contained therein will not be an arbitration agreement within the meaning of Section 7 of the Arbitration & Conciliation