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IN THE HIGH COURT OF DELHI AT NEW DELHI
SANJEEV NARULA, J.
Swastik Pipe Ltd. – Petitioner
Versus
Shri Ram Autotech Pvt. Ltd. – Respondent
Arb. Pet. No. 241 of 2021
Decided On : 05-07-2021
Arbitration and Conciliation Act, 1996 - Sections 11(6), 7(4) , 7(3) and 7(4)(b) - Legal notice - Seeking the appointment of a Sole Arbitrator - Whether terms and conditions appearing on the invoices accompanying a delivery of goods would constitute a valid arbitration agreement between the parties - Whether contractual or not - Whether the award rendered on a dispute referred to arbitration by the Respondent/Claimant was legal and binding, inasmuch as, did parties enter into an arbitration agreement - Whether condition on invoices can amount to binding arbitration clauses - whether a guarantor, who is not a party to a Loan Agreement containing arbitration agreement, can be made a party to a reference to arbitration - Whether an arbitration agreement could be inferred from exchange of statements of claim and defence as contemplated under Section 7(4)(c) of the Act - Whether arbitration agreement was in writing - Whether arbitration agreement was contained in exchange of letters, telecommunication etc - Whether core contractual ingredients qua arbitration agreement were fulfilled - Whether subject matter of dispute is arbitrable - Whether there exists an arbitration agreement or not, uninfluenced by the observations made by Court which are only prima-facie in nature - Arbitration agreement between parties - Business of manufacturing, exporting, and supplying steel pipes and tubes to heavy engineering industries in India and abroad - SRAPL is in business of manufacturing and supplying sheet metal and plastic moulded components. SRAPL placed orders with SPL for purchase of ‘C.R. Strips’ - Same were supplied by SPL as per SRAPL’s request and specifications, on a running account basis - Commercial dealings between the parties lasted between - While some payment was made, but an amount of INR - Outstanding against goods have been already been delivered to and received by SRAPL - Legal notice was issued by SPL, calling upon SRAPL to make good amount due or agree to arbitration in accordance with terms and conditions of invoices which contained an arbitration clause.
Finding of the Court:
Court has not examined any of the contentions of parties on merit, and both parties shall be free to raise their claims/counter-claims before the learned Arbitrator in accordance with law - All rights and contentions of parties are left open - SRAPL shall be free to raise all objections as are available under law, including but not limited to existence of arbitration agreement before learned Arbitrator - As and when such a plea is raised, the learned Arbitrator would be competent to rule on their own jurisdiction and decide as to whether there exists an arbitration agreement or not, uninfluenced by observations made by this Court which are only prima-facie in nature.
Result: Petition is allowed and stands disposed of.
JUDGMENT :
SANJEEV NARULA, J.
1. The present petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 [hereinafter referred to as the ‘Act’] seeks appointment of a Sole Arbitrator to adjudicate the disputes arising from the tax invoices issued by the Petitioner-Swastik Pipe Ltd. [hereinafter referred to as ‘SPL’] in the course of their dealings with the Respondent-Shri Ram Autotech Pvt. Ltd. [hereinafter referred to as ‘SRAPL’].
2. Briefly stated, the facts emerging from the petition, are as follows: SPL is engaged in the business of manufacturing, exporting, and supplying steel pipes and tubes to heavy engineering industries in India and abroad. SRAPL is in the business of manufacturing and supplying sheet metal and plastic moulded components. SRAPL placed orders with SPL for the purchase of C.R. Strips. The same were supplied by SPL as per SRAPL’s request and specifications, on a running account basis. The said commercial dealings between the parties lasted between 1st April, 2019 to 29th December, 2020. While some payment was made, but an amount of INR 15,63,217/- (inclusive of interest @ 18% p.a. till 29th December, 2020 for the delayed payments), is outstanding against the goods which have been already been delivered to and received by SRAPL.
3. Since the liability was not discharged, a legal notice dated 31st December, 2020, was issued by SPL, calling upon SRAPL to make good the amount due or agree to arbitration in accordance with the terms and conditions of the invoices which contained an arbitration clause. The said notice was served on SRAPL at their Delhi office on 6th January, 2021, and also at their Gurugram office on 14th January, 2021, despite which, SRAPL neither made the payment nor replied to the said notice. In these circumstances, SPL has approached this Court seeking the appointment of a Sole Arbitrator by way of the present petition.
4. The petition was taken up and notice was issued on 15th February, 2021 which was returnable on 17th March, 2021. On this date, despite successful service of notice, none appeared for SRAPL. The matter was heard at length on 18th March but again, there was no representation from SRAPL’s side. Thus, it can only be surmised that SRAPL has wilfully chosen not to appear before this Court. In these circumstances, the Court has proceeded to decide the present petition ex-parte on the basis of the pleadings and the submissions advanced by the counsel for SPL.
5. Mr. Sanjay Jain, learned counsel for SPL argued that in view of the arbitration agreement between the parties, the Court must proceed to appoint an Arbitrator. On a query raised by the Court relating to the existence of a valid arbitration agreement, Mr. Jain contended that the clause contained in the invoice constitutes a valid arbitration agreement in view of the judgments of the Supreme Court in Trimex International FZE Ltd. Dubai vs. Vedanta Aluminium Ltd. (2010) 3 SCC 1 and M/s. Caravel Shipping Services Pvt. Ltd. vs. Premier Sea Food Exim Pvt. Ltd. (2019) 11 SCC 461. Further, Mr. Jain sought to differentiate the decision of a coordinate bench of this Court in Parmeet Singh Chatwal vs. Ashwani Sahani, MANU/DE/0442/2020. Additionally, Mr. Jain also relied upon Section 7(4) of the Act and stressed that SRAPL has not denied the existence of the arbitration agreement, notwithstanding the categorical assertion to that effect in the notice of invocation of arbitration, and thus, this Court should not have any hesitation in appointing an Arbitrator.
ANALYSIS AND FINDINGS
6. It is noticed that the arbitration clause is on the same page as the details of the invoice. It is in a readable font size, under the heading “Remarks: Terms and Conditions” with two other conditions (viz. interest rate and verification of condition of goods). As per SPL, this term constitutes an arbitration agreement between the parties. It reads as under:
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