Arbitration Clause In Terms & Conditions Of Invoice Issued By A Party Is ‘Reference To Arbitration’ U/s. 7 Of A&C Act: Delhi High Court
The Delhi High Court held that an arbitration clause in the terms and conditions of an invoice issued by a party amounts to ‘reference to arbitration’ under Section 7 of the Arbitration and Conciliation Act.
The Court explained that the invoices issued by a party containing various terms and conditions mentioning that the disputes between the parties were subject to arbitration, meant ‘reference to arbitration’ under Section 7 of the Arbitration and Conciliation Act, 1996 (the Act). The Court also pointed out that these invoices were duly signed by both the parties.
A Single Bench of Justice Prateek Jalan observed, “In these circumstances, keeping in mind the limited jurisdiction of the Court at the pre-reference stage, I am of the view that the petitioner has made out a case for reference to arbitration, leaving all questions open for adjudication by the learned Arbitrator, including the defence, if any, with regard to the existence of the arbitration agreement.”
Advocate Aayush Malhotra appeared for the petitioner.
Dhawan Box Sheet Containers Pvt Ltd (petitioner) filed a petition under Section 11 of the Act for the appointment of an arbitrator to adjudicate the disputes between the parties in terms of an arbitration clause contained in invoices issued by the petitioner to M/s. SEL Manufacturing Co Ltd (respondent). However, the respondent contested the existence of an arbitration agreement.
On the question of whether an arbitration clause contained in an invoice issued by one party can be relied upon for Section 7 of the Act, the petitioner relied upon the decision of the Coordinate Bench of the High Court in Swastik Pipe Ltd. v. Shri Ram Autotech Pvt. Ltd (2021).
The High Court clarified that in Swastik Pipe (supra), the Coordinate Bench had held that at the stage of proceedings under Section 11 of the Act, a court was required only to form a prima facie view as to the existence of the arbitration agreement, leaving a detailed examination of this question to the Arbitral Tribunal.
“Although a stand is taken in the reply that the respondent’s signature was only in acknowledgement of receipt of the goods, and not in agreement with the terms and conditions, that is not a matter which can be decided in these summary proceedings. As stated above, the respondent has also not filed an affidavit to deny the case pleaded by the petitioner, despite being given opportunities for the same,” the Court remarked.
Consequently, the Bench referred the disputes between the parties to arbitration and appointed an arbitrator.
Accordingly, the High Court allowed the petition.
Cause Title: M/S Dhawan Box Sheet Containers Pvt Ltd v. M/S SEL Manufacturing Co Ltd
Appearance:
Petitioner: Advocates Aayush Malhotra and Shobhit Garg
