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2018 Supreme(All) 1740
IN THE HIGH COURT OF ALLAHABAD
Surya Prakash Kesarwani, J.
M/s. Blue Star Ltd. – Appellant
Versus
M/s. Z-Square Shopping Mall Pvt. Ltd. – Respondent
Arbitration and Application No. 49 of 2015
Decided On : 20-04-2018
For the Appellants : Sunil Bhalla, Vikram Bhalla.
For the Respondent: Udayan Nandan.
An arbitration agreement need not be signed by the parties if the record of the agreement is provided by exchange of correspondence, and the court should give effect to the intentions of the parties.
Headnote:
Arbitration Agreement - Appointment of Arbitrator - Arbitration and Conciliation Act, 1996, Section 11(5) - Section 7
Fact of the Case:
The applicant filed for the appointment of an Arbitrator under section 11(5) of the Arbitration and Conciliation Act, 1996, based on an agreement in the form of a work order containing an arbitration clause. The respondent disputed the agreement's validity, citing lack of signatures and a pending civil suit.
Finding of the Court:
The court found that despite the lack of signatures, the correspondence between the parties and the existence of an arbitration clause in the agreement constituted a valid arbitration agreement under Section 7 of the Act. The court concluded that an Arbitrator needed to be appointed to resolve the dispute.
Issues: Validity of the arbitration agreement, requirement of signatures for an arbitration agreement, and the maintainability of the application due to a pending civil suit.
Ratio Decidendi: An arbitration agreement need not be signed by the parties if the record of the agreement is provided by exchange of correspondence. The court emphasized the need to give effect to the arbitration agreement and the intention of the parties, rather than invalidate it based on technicalities.
Final Decision: Mr. Justice Sushil Harkauli was appointed as an Arbitrator to resolve the dispute, subject to his consent.
Surya Prakash Kesarwani, J.
1. Heard Sri Vikram Bhalla, learned counsel for the applicant and Sri Udayan Nandan, learned counsel for the respondent.
2. This application under section 11(5) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act) has been filed for appointment of an Arbitrator.
3. Learned counsel for the applicant submits that there is an agreement in the form of work order between the parties which contains an arbitration clause. This fact has been admitted by the respondent in their reply dated 2.4.2013 sent to the applicant in response to the notice dated 21.3.2013. He submits that apart from the above, copy of the agreement filed as Annexure-2 to the application, was a communication by fax and the reference made therein to the tender documents etc. stands affirmed by Clause 2(a) of the reply of the respondent dated 2.4.2013. Thus, the aforesaid papers shall constitute an agreement in writing between the parties containing an arbitration clause under Section 7 of the Act.
4. Learned counsel for the respondent submits that the agreement does not bear the signature of the parties, although it appears to have been exchanged through fax. Since, it does not bear the signature of the parties, therefore, it is not an agreement within the meaning of Section 7 of the Act. He submits that even if an arbitration clause has been quoted in the reply dated 2.4.2013, yet it shall not constitute an agreement containing an arbitration clause. He submits that Original Suit No. 123 of 2012 was filed by the respondent against the applicant in the Court of Civil Judge (Sr. Division), Kanpur Nagar on the same set of dispute, hence the present application is not maintainable. Since, the suit has been filed by the State, as aforesaid, therefore, the appropriate course for the applicant would be to approach the civil court concerned where the civil suit is pending to seek appointment of an Arbitrator under Section 8 of the Act. He submits that although the aforesaid suit was dismissed for non prosecution but a restoration application has been filed, which is pending.
5. Learned counsel for the applicant submits that the restoration application has also been rejected. Thereafter, the respondent has filed another restoration application.
6. I have carefully considered the submissions of the learned counsel for the parties.
7. The submission of the learned counsel for the opposite party, as noted above, has no substance.
8. Before I enter to examine the facts of the present case in the light of the provisions of the Act, it would be appropriate to quote the provisions of Section 7 of the Act, as under :
"7. Arbitration agreement:-
(1) In this Part "arbitration agreement" means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
(3) An arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing if it is contained in:-
(a) a document signed by the parties.
(b) an exchange of letters, telex, telegrams or other means of tele communication [including communication through electronic means] which provide a record of the agreement.
(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.
(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract."
9. In paragraph 5 of the application, the applicant referred to an agreement dated 12.10.2007 and also filed a copy thereof as Annexure-2. In paragraph Nos. 6, 7 and 8 of the application, the applicant referred to several clauses of the
