Back
2025 Supreme(Online)(Mad) 64922
IN THE HIGH COURT OF JUDICATURE AT MADRAS
M.SUNDAR, HEMANT CHANDANGOUDAR, JJ
M/s.Jindal Stainless Limited – Appellant
Versus
M/s.ABCD Technology – Respondent
C.M.A. (CAD) No.1638 of 2025
For the Appellants/Petitioners: Mr.Kishore Balasubramanian
For the Respondents: No appearance
The arbitration clause within an order acceptance was incorporated into the broader MoU, validating referral to arbitration despite the absence of a clause in the Memorandum of Understanding.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 8 - Appeal against refusal to refer parties to arbitration - The Principal Commercial Court dismissed an application for arbitration under the premise that the suit seeks claims not covered by the arbitration clause - Court found the clause is incorporated into the Memorandum of Understanding via order acceptance, thus enabling arbitration. (Paras 4, 8.1-10)
(B) Arbitration Agreement - Constructive incorporation - The arbitration clause within the order acceptance was held to apply to the broader MoU between parties, validating the defendants' plea for arbitration, countering the Commercial Court's interpretation. (Paras 8.1-8.8)
Facts of the case:
The appeal was filed by the defendant who sought arbitration for a suit where the plaintiff claimed substantial outstanding amounts, contesting absence of arbitration clauses in either initial agreement or subsequent orders.
Findings of Court:
The appeal was allowed, setting aside the Commercial Court's order, confirming the arbitration clause’s applicability to the MoU and ordering referral to arbitration as valid.
Issues: The primary issue was whether the arbitration agreement in the order acceptance extended to the claims arising under the MoU.
Ratio Decidendi: The arbitration agreement's existence and validity were affirmed due to incorporated provisions in the MoU referencing the order acceptance’s terms.
Result: Appeal allowed, impugned order set aside and parties referred to arbitration.
| Table of Content |
|---|
| 1. facts surrounding the arbitration agreement and claims. (Para 4) |
| 2. arguments supporting the incorporation of arbitration clauses. (Para 5) |
| 3. court's rationale for recognizing arbitration agreement. (Para 8) |
| 4. final ruling and order regarding referral to arbitration. (Para 10) |
[Judgement of the Court was delivered by M.SUNDAR, J.,]
Captioned Appeal is one under Section 37 (1)(a) of ' The Arbitration and Conciliation Act, 1996 (Act 26 of 1996)' (hereinafter 'A and C Act' for the sake of convenience and clarity). The 'Principal Commercial Court, Egmore, Chennai' (hereinafter 'said Commercial Court' for the sake of convenience and clarity) in and vide an 'order dated 27.02.2025 made in I.A.No.3 of 2024 in C.O.S. No.274 of 2024' (hereinafter 'impugned order' for the sake of convenience and clarity) refused to refer the parties to arbitration under Section 8 of A and C Act. In other words, impugned order is one by which said Commercial Court has dismissed an application under Section 8 of A and C Act taken out by the sole defendant in the suit.
2. The sole defendant in the suit who took out Section 8 application is on appeal and Mr.Kishore Balasubramanian, learned counsel for appellant is before us. As regards respondent in the captioned appeal (plaintiff before said Commercial Court), sole respondent has been duly served, name and full/complete address of sole respondent as in the short and long cause titles of the memorandum of grounds of appeal has been shown in the cause list but none appears. We are informed by the Registry that sole respondent has not chosen to enter appearance through counsel. 3. From hereon and henceforth in this order, we shall refer to the parties by their respective ranks in the said Commercial Court for convenience. We may also refer to 'plaintiff' as 'ABCD' and 'defendant' as 'JSL' denoting 'ABCD Technology' and 'Jindal Stainless Limited'
respectively.
4. Factual Matrix in a nutshell is that there is a 'Memorandum of Understanding dated 17.07.2020' (hereinafter 'said MoU' for the sake of brevity, convenience and clarity) between JSL and ABCD; that at the time of execution of said MoU, Jindal Stainless Corporate Management Service Private Limited (JSCMS) was authorised representative of JSL but subsequently there has been amalgamation which has been approved by the National Company Law Tribunal, Chandigarh vide order dated 02.02.2023; that therefore said MoU, now is one between JSL and ABCD; that said MoU was valid for a period of nine months from 01.07.2020 to 31.03.2021; that said MoU was for the purpose of supply of products as per market demand; that said MoU refers to general terms and conditions vide Clause C (g) thereat which makes it clear that said MoU shall be implemented as per general terms and conditions of order acceptance and other guidelines issued by JSL and suppliers from time to time on aspects like order booking, pending order position (PoP) payment terms etc., ; that pursuant to said MoU, an order acceptance dated 29.07.2020 vide Sales Order No.558025453 was made; that this order acceptance specifically refers to system code 1010017434; that the arrangement between parties i.e., between JSL and ABCD ran into rough weather; that therefore ABCD filed a suit in COS No.274 of 2024 inter-alia claiming a sum of little over Rs.36.95 lakhs towards bill outstanding amount; that there is no arbitration clause in said MoU but there is certainly an arbitration clause in the order acceptance dated 29.07.2020; that JSL took out an application under Section 8 of A and C Act predicating its plea to refer to arbitration on the arbitration clause in the order acceptance; that the said Commercial Court made the impugned order inter-alia on the ground that suit is one that seeks turn over discount, consistency bonus, continuity bonus, relationship bonus etc., whereas the order acceptance does not pertain to the same; that the aggrieved defendant is on appeal before us under Section
