IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION FIRST APPEAL NO. 438 OF 1997.

Messrs. Chhabriya Cloth Stores, Manmad ] …Appellant.

Versus Messrs. Kamal Synthetics, Bombay – 400 002. ] ...Respondent.

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Ms. Rukmini Khairnar i/b Mr. P. N. Joshi for Appellant.

None for Respondent.

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Coram : Sharmila U. Deshmukh, J.

Reserved on : 18^th February, 2025 Pronounced on : 21^st February, 2025.

Judgment :

1. The First Appeal filed under Section 39(1) (iv) of the Arbitration Act, 1940 [for short, “the Arbitration Act”] challenges the impugned judgment dated 25^th August, 1995 passed by the Bombay City Civil Court in Arbitration Petition No. 81 of 1995, dismissing the objection to the Award and making the Arbitration Award rule of the Court under Section 17 of Arbitration Act.

2. Award No. 168 of 1994 was passed in favor of Respondent for sum of Rs 35,770.10/-, which was filed in the Court under Section 14 of Arbitration Act. The Appellant challenged the Award by filing Arbitration Petition No. 81 of 1995 under Section 30 and Section 33 of Arbitration Act, which was dismissed and Award was made rule of the Court, which is impugned in the present Appeal.

3. The dispute arose between the parties out of alleged claim for payment of the goods supplied by Respondent to Appellant. The Respondent invoked the arbitration clause in the invoice which provided for the dispute to be subject to the Arbitration Rules of Bharat Merchants’ Chamber. The Respondent approached Bharat Merchants’ Chamber and appointed one Mr. Anil Agrawal from the panel of arbitrators of Bharat Merchants’ Chamber vide letter dated 28^th March, 1994. On 29^th March, 1994, Bharat Merchants’ Chamber called upon the Appellant to appoint its arbitrator from the panel of arbitrators. In response, Appellant vide communication dated 7^th April, 1994 declined to appoint Arbitrator and refused to participate in arbitration proceedings. Bharat Merchants’ Chamber appointed an Arbitrator for the Appellant and proceeded with arbitration. The Appellant did not participate in the arbitration proceedings and Award came to be passed in favor of Respondent.

4. Upon the Award being filed in the Court, Respondent filed its objection to the Award being made decree of the Court by filing Arbitration Petition No. 81 of 1995. It was pleaded that there was no Arbitration Agreement between the parties and Appellant had declined to appoint an Arbitrator. It was pleaded that Award was invalid, and not binding.

5. The Petition was resisted by Respondent by filing its reply contending that invoice was signed and terms are binding. The Trial Court held that terms which are printed on the bills were binding upon the parties and there was an Arbitration clause, which has been properly considered by the Arbitrator and that the award passed is proper. The Trial Court passed a composite order dismissing the Arbitration Petition and passing Decree in terms of Award No. 168 of

1994.

6. Ms. Khairnar, learned counsel appearing for Appellant would submit that Arbitration clause was printed overleaf of the bill for supply of goods and provided for dispute to be subject of the Arbitration Rules of Bharat Merchants’ Chamber, Bombay. She has fairly stated that the same would constitute an Arbitration agreement. Her objection, however, is that despite declining to appoint an Arbitrator, without recourse to Section 20 of Arbitration Act, the unilateral appointment and unilateral reference is illegal. In support, she relies upon the decision of Apex Court in the case of Dharma Prathishthanam vs. Madhok Construction (P) Ltd.

7. Though the matter was adjourned from time to time, none appears for Respondent.

1 (2005) 9 SCC 686.

8. The following point arises for determination:

(i) Whether in facts of present case, there has been an unilateral appointment and unilateral reference rendering the Award passed by Arbitrator an illegal award by reason of non-compliance of Section 20 of the Arbitration Act, 1940?

As to Point No.