Clause Contained In Invoices Stipulating Reference To Arbitration Deserves To Be Construed As Arbitration Clause: Bombay HC

The Bombay High Court held that a clause contained in the invoices stipulating reference to an arbitration deserves to be construed as an arbitration clause.

The Court was dealing with an application seeking to enforce an arbitration clause in an invoice.

A Single Bench of Justice Bharati Dangre observed, “… in the present case, it can be clearly seen that the parties have acted upon the invoices and there was no denial of the invoices raised by the applicant, the clause contained in the invoices which clearly stipulate a reference to arbitration, deserve to be construed as an arbitration clause.”

The Bench overruled the objection raised by the respondent and accepted the fact that the clause contained in the tax invoice amounts an arbitration clause.

“The decision of this Court in case of Concrete Additives (supra) is delivered in the peculiar facts of the case and the law being well crystallized to the effect that any document in writing exchanged between the parties which provide a record of the agreement and in respect of which there is no denial by the other side, would squarely fall within the ambit of Section 7 of the Arbitration and Conciliation Act, 1996 and would amount to an arbitration clause”, the Court said.

Advocate Ashish Kamat appeared on behalf of the applicant while Advocate Girish Kedia appeared for the respondent.

Brief Facts –

The applicant, a news media company indulging into various activities like news publishing, T.V, internet, radio and outdoor domain, had an interface with the respondent, an advertising agency, to be approached by various advertisers to place advertisements in the applicant’s newspapers, channels, radio and other outdoor publications via release orders.

The respondent was expected to discharge the obligations to make the payment to the applicant within a period of 120 days from receipt of the invoices and the payment made thereafter would attract interest @ 18% p.a. However, the respondent defaulted in making the payments in a timely manner despite the invoices being raised and therefore, the applicant invoked the arbitration seeking appointment of the sole arbitrator as contemplated in the Dispute Resolution Clause, which was a part of the tax invoice.

The issue before the High Court was whether a clause contemplating reference of disputes and differences arising out of, or in relation to a contract or order of advertisement, bill or otherwise breach thereof, to be referred to Sole Arbitrator, printed at the back of the tax invoice would amount to an arbitration clause.

The High Court while considering the above issue asserted, “I am persuaded to exercise the powers under sub-section 6 of Section 11 of the Act …”

The Court, therefore, passed orders in terms of appointment of the arbitrator, communication to arbitrator of the order, disclosure, appearance before the arbitrator, fees, venue and seat of arbitration, etc.

“Upon appointment of Arbitrator to adjudicate the disputes between the parties, the Petition filed under Section 9 of the Act is permitted to be converted into Application u/s.17 of the Act, before the learned Arbitrator, who is requested to take it for consideration at the earliest”, the Court noted.

Accordingly, the Court disposed of the application.

Cause Title- Bennett Coleman & Co. Ltd v. MAD (India) Pvt. Ltd.

Click here to read/download the Judgment