The validity of an arbitration agreement depends on the clear intention and obligation of the parties to refer disputes to arbitration, as well as the absence of further consent for reference to arbitration.

Vipin Sanghi, J. (Oral)

1. This petition has been preferred under Section 11 of the Arbitration & Conciliation Act, 1996 (the Act) to seek the appointment of an Arbitrator.

2. The case of the petitioner is that the petitioner and the respondent-IND Swift Ltd., had entered into a contract as contained in the purchase order dated 10.12.2013 which contains an arbitration clause 11, which reads as under:

“Arbitration-Dispute if any arising out of this Agreement shall be subject to the exclusive jurisdiction of the courts in city of Delhi.”

3. One of the objections earlier raised by the respondent was that even the terms and conditions, inter alia, containing the aforesaid clause did not form part of the work order placed by the petitioner on the respondent. However, since the petitioner has filed additional documents, counsel for the respondent does not press the said objection. The only other objection pressed by the respondent is that on a perusal of the aforesaid clause, the same does not constitute an arbitration agreement.

4. The submission of learned counsel for the respondent is that a reading of the said clause does not evince a clear intention of the parties to refer their disputes arising out of the agreement to arbitration. He submits that the clause, in fact, provides that the disputes, if any, arising out of the agreement shall be subject to the exclusive jurisdiction of the courts in the city of New Delhi. In support of his submission, he has placed reliance on the judgment of the Supreme Court in Wellington Associates Ltd. Vs. Kirit Mehta (2000) 4 SCC 272, the judgment of the Madras High Court in Sankar Sealing Systems Pvt. Ltd. Vs. Jain Motor Trading Co. & Anr. AIR 2004 Mad 127, the judgment of the Supreme Court in Jagdish Chander Vs. Ramesh Chander and Ors. 2007(3) AWC 2402 (SC) and Bernhard Consultancy Private Ltd. Vs. Ind Agro Synergy Limited, Nagpur 2001(4) ALD 720.

5. On the other hand, learned counsel for the petitioner has contended that the agreement between the parties evinces the intention of the parties to refer their disputes to arbitration, that is why, at serial No. 11 of the terms and conditions, the expression, ‘arbitration’ was used in relation to resolution of disputes arising out of the agreement.

6. Counsel for the petitioner has also sought to place reliance on the judgment of the Supreme Court in Trimex International FZE Limited, Dubai Vs. Vedanta Aluminium Ltd., India (2010) 3 SCC 1 in support of her submission. The clause in the agreement in the contract read as follows:

“6. ..........This contract is covered by Indian Law and arbitration in Mumbai Court.”

7. The Supreme Court rejected the submission of the respondent that the aforesaid clause was unclear and ambiguous by observing that it was clear that the intention of the parties was to arbitrate any dispute which arises in relation to the contract.

8. Having heard learned counsels for the parties and perused the clause in question as well as the decisions relied upon by the parties, I am of the view that there is merit in the respondent’s objection that the aforesaid clause does not constitute an arbitration agreement to refer the disputes arising between the parties under the work order/contract in question to arbitration. In Wellington Associates Ltd. (supra), a similar defence was raised by the respondent, wherein the Supreme Court considered the following clauses of the contract between the parties:

“Clause 4. It is hereby agreed that, if any dispute arises in connection with these presents, only courts in Bombay would have jurisdiction to try and determine the suit and the parties hereto submit themselves to the exclusive jurisdiction of the courts in Bombay.

Clause 5. It is also agreed by and between the parties that any dispute or differences arising in connection with these presents may be referred to arbitration in pursuance of the Arbitration Act, 1940 by each party appointing one arbitrator and the arbitrators so ap