1. Petition under Section 11 of Arbitration Act for appointment of sole arbitrator to adjudicate disputes arising from unpaid invoices. (Para 1 , 2 )
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2026 Supreme(Online)(Bom) 630
HIGH COURT OF BOMBAY
HON'BLE SHRI JUSTICE SANDEEP V. MARNE
INGRAM MICRO INDIA PRIVATE LIMITED – Appellant
Versus
VINOD MURLIDHAR MULCHANDANI) KARTA OF VINOD MURLIDHAR) MULCHANDANI HUF TRADE NAME G K WEB – Respondent
CARAP/695/2025
Important Points
An arbitration clause printed on tax invoices is binding if the parties' conduct—such as acknowledging the invoices with stamps and making part payments—demonstrates acceptance of the terms, establishing a valid arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996.
Subject
Commercial Law - Arbitration
Act Referred
Arbitration and Conciliation Act, 1996: S.11, S.21, S.7(4)(b), S.6-A, S.12(1)
Bombay High Court (Fee Payable to Arbitrators) Rules, 2018
Bombay High Court (Fee Payable to Arbitrators) Rules, 2018
Headnote
(A) Arbitration and Conciliation Act, 1996 - Sections 7 and 11 - Appointment of Arbitrator - Arbitration clause printed on tax invoices - Whether such a clause is binding if invoices are acknowledged and acted upon - Conduct of parties is a relevant and determinative factor - If invoices are received, acknowledged by stamps, and part payments are made, the arbitration agreement is considered valid and binding. (Paras 7, 8)
(B) Nature of Arbitration Agreement - Agreement need not be in any particular form - Intention to settle disputes through arbitration can be expressly or impliedly spelt out from documents or correspondence exchanged between the parties - A common sense approach should be adopted to determine if parties were ad idem, rather than a pedantic and legalistic interpretation. (Para 11)
Facts of the case:
The Applicant, engaged in the distribution of IT hardware and software, supplied products to the Respondents. Disputes arose regarding the non-payment of invoice amounts. The tax invoices issued by the Applicant contained an arbitration clause. The Respondents contended that the invoices were unilateral documents, not countersigned or acknowledged, and therefore the arbitration agreement was denied. However, the invoices bore the acknowledgments and stamps of the Respondents, and certain invoices had been paid.
Findings of Court:
The Court observed that the parties had acted upon the invoices, which were acknowledged by the Respondents. Given the history of transactions and the part payments made, the clause printed on the invoices falls within the ambit of Section 7 of the Act, establishing a valid arbitration agreement.
Issues: Whether an arbitration clause stipulated in tax invoices, which are acknowledged and acted upon by the parties despite the absence of a signed formal contract, constitutes a binding arbitration agreement.
Ratio Decidendi: The conduct of the parties is determinative in establishing the existence of an arbitration agreement. When a party accepts goods and makes payments against invoices containing an arbitration clause without protest, they are deemed to have accepted the terms of the agreement by conduct.
Result: Commercial Arbitration Applications are allowed and disposed of, and a Sole Arbitrator is appointed.
(B) Nature of Arbitration Agreement - Agreement need not be in any particular form - Intention to settle disputes through arbitration can be expressly or impliedly spelt out from documents or correspondence exchanged between the parties - A common sense approach should be adopted to determine if parties were ad idem, rather than a pedantic and legalistic interpretation. (Para 11)
Facts of the case:
The Applicant, engaged in the distribution of IT hardware and software, supplied products to the Respondents. Disputes arose regarding the non-payment of invoice amounts. The tax invoices issued by the Applicant contained an arbitration clause. The Respondents contended that the invoices were unilateral documents, not countersigned or acknowledged, and therefore the arbitration agreement was denied. However, the invoices bore the acknowledgments and stamps of the Respondents, and certain invoices had been paid.
Findings of Court:
The Court observed that the parties had acted upon the invoices, which were acknowledged by the Respondents. Given the history of transactions and the part payments made, the clause printed on the invoices falls within the ambit of Section 7 of the Act, establishing a valid arbitration agreement.
Issues: Whether an arbitration clause stipulated in tax invoices, which are acknowledged and acted upon by the parties despite the absence of a signed formal contract, constitutes a binding arbitration agreement.
Ratio Decidendi: The conduct of the parties is determinative in establishing the existence of an arbitration agreement. When a party accepts goods and makes payments against invoices containing an arbitration clause without protest, they are deemed to have accepted the terms of the agreement by conduct.
Result: Commercial Arbitration Applications are allowed and disposed of, and a Sole Arbitrator is appointed.
Legal Category Hierarchy
- arbitration
- contract law
- practice and procedure
Advocates:
For the Appellants/Petitioners: Drishti Ojha
For the Respondents: Sarosh Damania, Madhura Shah
For the Appellants/Petitioners: Drishti Ojha
For the Respondents: Sarosh Damania, Madhura Shah
Table of Contents
2. Arbitration clause validity disputed: applicant relies on printed clause on invoices; respondents deny acceptance as unilateral documents. (Para 4 , 5 )
3. Invoices bore party acknowledgments and part payments; conduct indicated acceptance of terms including arbitration clause. (Para 6 , 7 , 8 )
4. A written arbitration clause in invoices, acted upon without objection, constitutes a valid arbitration agreement under Section 7 of the Act. (Para 7 , 8 )
5. Sole arbitrator appointed; objections rejected; all merits left open for the arbitral tribunal. (Para 10 , 11 )
6. Can an arbitration clause printed on the reverse of a tax invoice constitute a valid arbitration agreement?
Yes, if the invoices are acted upon, acknowledged, and paid without objection, the clause constitutes a valid arbitration agreement under Section 7 of the Arbitration Act. (Para 7 , 8 )
7. Is it necessary for an arbitration agreement to be signed by both parties to be binding?
No. Under Section 7(4)(b) of the Act, an arbitration agreement can be derived from exchange of documents and conduct, without requiring signatures from both parties. (Para 7 )
8. What is the scope of inquiry under Section 11 of the Arbitration and Conciliation Act, 1996?
The court examines whether a prima facie arbitration agreement exists; it does not adjudicate merits or factual disputes regarding liability or payment. (Para 9 )
P.C.:
1. These Petitions are filed under Section 11 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) seeking appointment of a sole Arbitrator to adjudicate the disputes and differences between the Applicant and the Respondents.
2. The Applicant is engaged in the business inter alia of distribution and sale of IT hardware and software products, telecommunication and office automation equipment and other allied services. The Respondents in both the Petitions are also engaged in the business of sale and purchase of IT products. The disputes between the parties have arisen on account of alleged non-payment of invoice amounts by the Respondents to the Applicant towards sale and supply of IT related products by the Applicant to the Respondents.
3. The Applicant relies upon clause 12 printed on reverse of tax invoices which reads thus:
12. The transaction under this invoice, shall be subject to laws of India and the Courts in Mumbai shall have exclusive jurisdiction. Any dispute pertaining to transaction under this invoice shall be referred to sole arbitrator appointed by mutually by the parties and the decision of the said Arbitrator shall be final and binding on the parties. The Arbitration shall be conducted as per the provisions of Arbitration and Conciliation Act, 1996 and the seat and venue of Arbitration shall be at Mumbai, India.
4. As the invoices remained unpaid legal notices under Section 21 of the Arbitration Act were issued on 25 September 2025 referring to clause 12 printed on the invoices. The notices are replied by the Respondents on 23 October 2025 inter alia stating in paragraphs 2 and 6 as under:
2. The invoices relied upon by your Client are unilateral documents generated by them and were never countersigned or acknowledged by our Client in acceptance of the alleged "Terms & Conditions" or the so-called arbitration clause printed overleaf or online. Hence, the alleged arbitration agreement is denied in toto.
6. Our Client categorically denies any fraudulent intent or willful default. Payments were withheld due to disputes regarding delivery discrepancies, delayed supplies, and debit-note adjustments, details of which are being collated and will be furnished in due course.
5. Thus Respondents described invoices as unilateral documents which are not countersigned or acknowledged by the Respondents in acceptance of alleged terms and conditions printed thereon including the arbitration clause.
6. However, perusal of the tax invoices would indicate that e same bear acknowledgments including stamps of the Respondents. It also appears that some of the invoices are also paid by the Respondents.
7. The law with regard to enforcement arbitration clause printed on an invoice is no more res integra. A Single Judge of this Court (Bharati Dangre, J.) in Bennett Coleman & Company Limited vs. MAD (India) Pvt. Ltd., Commercial Arbitration Application No.211 of 2022, decided on 22 December 2022 has considered various judgments on the issue and has held in paragraphs 10 to 15 as under:
10 It, therefore, becomes necessary to determine whether the present clause contained in a tax invoice, would be construed as an 'arbitration clause'. The Bombay High Court in case of Lewis W. Fernandez vs Jivatal Parpia And Ors. AIR 1947 Bom 65, dealing with the Old Arbitration Act, on being confronted with the issue of existence of arbitration agreement contained in a contract notice issued after delivery of the goods, agreeing to submit disputes to arbitration in terms of bye-laws of an association, clearly ruled that the conduct of the parties was relevant and determinative factor. It repelled the contention that in order to construe an arbitration agreement, the agreement must be signed by both the parties. The view of a Division Bench presided over by Rankin, C.J, in case of Radha Kanta Das vs Baerlein Bros. Ltd. AIR 1929, Cal. 97, was gainfully referred to and it read as under :-
"In my judgment, the law is the other way. The Ar
