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IN THE HIGH COURT OF DELHI AT NEW DELHI
RAJIV SAHAI ENDLAW, J.
Saarschmiede Gmbh Freiformschmiede - Appellant
Versus
Bharat Heavy Electricals Ltd - Respondent
Civil Suit (Comm) No. 486 of 2016; Interlocutory Application No. 5646 of 2016
Decided on : 26-03-2019
Arbitration - Application under Section 8 of the Arbitration & Conciliation Act, 1996 - Section 8
Fact of the Case:
The defendant sought reference of the parties to arbitration in a suit for recovery of money. The plaintiff contested the arbitration clause, claiming that the parties were governed by a different clause in the 'Order Confirmation' sent by the plaintiff with respect to each of the Purchase Orders.
Finding of the Court:
The court found that a binding contract came into existence between the parties on the terms and conditions contained in the Purchase Order, including the arbitration clause. The 'Order Confirmation' sent by the plaintiff beyond three weeks of the Purchase Order was deemed to have no effect. The court held that the suit is disposed of by referring the parties to arbitration.
Issues: The main issue was whether the parties were bound by the arbitration clause contained in the Purchase Order or by the clause in the 'Order Confirmation' sent by the plaintiff.
Ratio Decidendi: The court applied the first principles of the law of contracts and held that a binding contract came into existence on the terms and conditions contained in the Purchase Order, including the arbitration clause. The court also emphasized that the 'Order Confirmation' sent by the plaintiff beyond three weeks of the Purchase Order was of no avail.
Final Decision: The application succeeded, and the suit was disposed of by referring the parties to arbitration.
Rajiv Sahai Endlaw, J.
IA No.8091/2018 (of the defendant under Section 8 of the Arbitration & Conciliation Act, 1996)
This application came up first before this Court on 1st June, 2018 when the following order was passed:
“4. The defendant in this suit, now confined only to recovery of money, seeks reference of the parties to arbitration.
5. The counsel for the plaintiff appears on advance notice and seeks time to file reply.
6. On such applications, adjournment cannot be granted automatically for reply, unless it is shown that anything is required to be pleaded. Nothing is stated.
7. The counsel for the plaintiff then states that he has to take instructions, whether there is an arbitration clause and whether annexure, containing the arbitration clause and copy of which has been filed by the defendant along with this application to the purchase order admittedly placed by the defendant on the plaintiff was part of the purchase order or not.
8. The counsel for the defendant/applicant has drawn attention to page 36 of Part-III file being a copy of the purchase order placed by the defendant/applicant on the plaintiff filed by the plaintiff along with the plaint and which is found to inter alia record “With reference to above, we are pleased to place an order on you for the supply of following items, on conditions given below & in annexure PU93”. The counsel for the defendant/applicant states that what has been filed by the defendant/applicant along with this application is nothing else but Annexure PU93.
9. The counsel for the plaintiff states that he needs to take instructions, whether the said Annexure PU93 is in the records of the plaintiff.
10. In my view, the same is immaterial. Even if, Annexure PU93 is not in the records of the plaintiff as of today, the plaintiff having accepted the purchase order on the terms aforesaid, even if did not receive Annexure PU93 along with the purchase order, ought to have asked for it or taken a stand that it was not willing to accept the terms of Annexure PU93. The plaintiff admittedly did not do the same and today cannot take the ground that it needs to be verified, whether the said Annexure PU93 is in the record of the plaintiff or not.
11. Moreover, the advance copy of the application was received by the plaintiff much prior to today and instructions, if any required, could have been taken.
12. I may in this regard also notice that the counsel for the defendant/applicant on the past dates of hearing also and as recorded in the orders of the said date has been taking a stand of there being an arbitration agreement between the parties and for this reason also, the plaintiff should have been prepared on the said aspect.
13. In these circumstances, though adjournment sought is not justified, list on 20th July, 2018.”
2. Pleadings in the application have been completed and the counsels have been heard.
3. What transpires is, that (i) the defendant/applicant floated an enquiry for purchase of machinery and the plaintiff submitted its offers to the defendant; (ii) the defendant placed four Purchase Orders on the plaintiff in pursuance to the aforesaid enquiry and the offers submitted by the plaintiff and stating as under:
“with reference to above, we are pleased to place an order on you for the supply of following items, on conditions given below & in annexure PU93”;
(iii) PU93 contains Clause 2 as under:
“2. ACCEPTANCE: Please acknowledge the receipt of this Purchase Order by return of mail. This purchase order will be deemed to have been accepted if no communication to the contrary is receipt of the same OR three weeks from the date of despatch.” and Clause 14 as under:
“14. ARBITRATION: In the event of any dispute or difference arising between parties to this contract regarding execution of same or their respective rights and liabilities there under, the same shall expect as otherwise expressly provided their in, be referred to the arbitration of two arbitrators, one to be appointed by each party or
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