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2026 Supreme(Online)(P&H) 84306
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
Jasgurpreet Singh Puri, J
Aditya Birla Real Estate Limited – Appellant
Versus
Orient Craft Limited – Respondent
ARB-230-2023(O&M)
For the Appellants/Petitioners: Ojaswini Gagneja
For the Respondents: Bhumi Sharma, Jaiveer Singh
A note in a commercial purchase order specifying a jurisdiction for arbitration constitutes a valid arbitration agreement when the contract is acted upon by the parties, notwithstanding the absence of specific signatures on every purchase order.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 7(4), 11(6) - Appointment of Sole Arbitrator - Existence of arbitration clause within purchase order - Whether a note providing jurisdiction for arbitration constitutes a valid arbitration agreement - Contract acted upon by parties through supply of goods and payments - Held, arbitration clause exists; prima facie conditions for appointment of arbitrator satisfied. (Paras 7, 8, 22)
(B) Arbitration Agreement - Validity - Definition under Section 7 - Argument that missing signatures on purchase order invalidate arbitration clause - Misconceived where parties have acted upon the contract - Prima facie existence is sufficient for reference under Section 11. (Paras 21, 22)
Facts of the case:
The parties entered into twenty separate purchase orders for the supply of fabric. While no formal master agreement existed, each purchase order contained an identical note providing that the jurisdiction for arbitration would be Gurugram, Haryana. A dispute arose regarding outstanding payments and fabric quality. The petitioner invoked the arbitration clause and sought appointment of an arbitrator when the respondent failed to respond.
Findings of Court:
The Court observed that the note in the purchase order regarding arbitration jurisdiction is sufficient to constitute an arbitration agreement under the Act. Despite the respondent's argument regarding the lack of signed acceptance, the Court noted that both parties had acted upon the purchase orders through trade and partial payments. Thus, the legal requirements for appointment under Section 11 were satisfied.
Issues: Whether the note in the purchase orders constitutes a valid arbitration agreement and whether the petition is maintainable despite the absence of signed acceptances.
Ratio Decidendi: A commercial document containing an arbitration clause must be interpreted to give effect to the agreement. As long as parties have acted upon the contract, the absence of a signed copy of the purchase order does not invalidate the arbitration clause, and a reference court should not hold a mini-trial at the Section 11 stage.
Result: Petition allowed; sole arbitrator appointed.
| Table of Content |
|---|
| 1. existence of arbitration clause in recurrent purchase orders. (Para 1 , 2 , 3) |
| 2. prima facie arbitration clause existence despite lack of formal signing. (Para 4 , 5 , 9 , 21 , 22) |
| 3. court's duty to lean in favor of arbitration. (Para 11 , 12 , 13 , 14 , 18 , 19 , 23) |
| 4. appointment of sole arbitrator to resolve multiple related disputes. (Para 24 , 25 , 26 , 27 , 28 , 29) |
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JASGURPREET SINGH PURI , J. (Oral)
1. The present petition has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’) for appointment of a Sole Arbitrator.
2. Ms. Ojaswini Gagneja, learned counsel appearing on behalf of the petitioner submitted that in the present petition there were 20 purchase orders, which were issued by the respondents to the petitioner for the purchase of fabric and which have been attached with the present petition as Annexure P-1(Colly) and in this way, the petitioner was to supply the fabric to the respondents on the basis of said purchase orders after accepting the same. The parties in all the purchase orders are same and the purchase orders were issued on different dates individually but there is no separate mother agreement between the parties. However, all the purchase orders contain an arbitration clause in the form of a note appended to Clause 12, which provides that in the event of a dispute, the jurisdiction for arbitration will be Gurugram (Haryana) and in addition thereto, the dispute may also be referred to Forum of Consumers Rights in India at the discretion of the buyer. She submitted that the language of the arbitration clause used in all the purchase orders is identical.
3. Learned counsel further submitted that the purchase orders issued by the respondents were accepted by the petitioner, which made the agreement as a concluded contract and the respondents who were to purchase the fabric also made certain payment to the petitioner. However, a dispute eventually arose between the parties pertaining to outstanding payments and quality of the fabric supplied. She submitted that in this way, the purchase orders issued by the respondent to the petitioner, which became a concluded contract, were acted upon by both the parties but a dispute has arisen with regard to the aforesaid subject matter. She submitted that the petitioner had initially issued a notice to the respondent with regard to certain payments to be made vide Annexure P-8 dated 04.02.2022. The respondent replied to the said notice vide Annexure P-9 dated 24.02.2022, wherein respondent denied the claim of the petitioner on the ground that the goods supplied were defective and not as per the required specifications and the petitioner had failed to perform its obligations to the satisfaction of the respondent. She submitted that in this way, the respondent has disputed the quality of the products and ultimately a dispute arose between the parties and the respondent did not release the outstanding payment to the petitioner and therefore, the petitioner issued a notice under Section 21 of the Act vide Annexure P-13 dated 07.02.2023 invoking Clause 12 and also proposed the name of an Arbitrator to be appointed as a Sole Arbitrator but no response was received from the respondent. She further submitted that since the mechanism for appointment of an Arbitrator has failed, the present petition has been filed under Section 11 of the Act for appointment of an independent Sole Arbitrator by this Court.
4. She submitted that since there are 20 different purchase orders between the same parties each containing an identical arbitration clause, single Arbitrator may be appointed by constituting 20 separate Arbitral Tribunals for each purchase order. She referred to a judgment of Hon’ble Supreme Court in M/s Govind Rubber Ltd. vs. M/s Louids Dreyfus Commodities Asia Pvt. Ltd. , 2015 (13) SCC 477 and also Gujarat High Court in Alphard Maritime Pvt. Ltd. vs. Malara Enterprises , R/PETN. Under Arbt
