Case Note & Summary
The applicant, Bajaj Electricals Limited, filed an application under Section 11 of the Arbitration and Conciliation Act, 1996, seeking appointment of a sole arbitrator to adjudicate disputes arising from purchase orders issued to the respondent, Chanda S. Khetawat & Anr., proprietors of M/s Windson International. The applicant issued purchase orders between 2018-19 for supply of goods for various projects. The purchase orders contained an arbitration clause. The respondent supplied goods and raised invoices but disputes arose regarding payment. The applicant invoked the arbitration clause, but the respondent denied the existence of an arbitration agreement, claiming the purchase orders were not signed by them. The court examined whether an arbitration agreement existed. It noted that the respondent had acted upon the purchase orders by supplying goods and raising invoices, indicating acceptance of the terms. The court also referred to Section 7 of the Act, which allows an arbitration agreement to be in the form of an exchange of statements where the existence is alleged and not denied. The respondent's reply did not deny the arbitration clause. The court rejected the respondent's objection regarding limitation, holding that it is for the arbitrator to decide. The court allowed the application and appointed a sole arbitrator to adjudicate the disputes.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Existence of Arbitration Agreement - Section 11 of the Arbitration and Conciliation Act, 1996 - The court considered whether an arbitration agreement exists when purchase orders containing an arbitration clause were not signed by the respondent but the respondent acted upon them by supplying goods and raising invoices. The court held that the conduct of the parties in performing the contract indicates acceptance of the terms, including the arbitration clause, and thus an arbitration agreement exists. (Paras 1-12) B) Arbitration Law - Arbitration Agreement - Requirement of Writing - Section 7 of the Arbitration and Conciliation Act, 1996 - The court examined whether an arbitration agreement must be signed to be valid. The court held that under Section 7, an arbitration agreement can be in the form of an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other. The respondent's failure to deny the arbitration clause in their reply supports the existence of the agreement. (Paras 8-10) C) Arbitration Law - Appointment of Arbitrator - Limitation - Section 11 of the Arbitration and Conciliation Act, 1996 - The court considered the objection of limitation raised by the respondent. The court held that the issue of limitation is a matter for the arbitrator to decide, not for the court at the stage of appointment under Section 11. (Para 11)
Issue of Consideration
Whether an arbitration agreement exists between the parties when the purchase orders containing an arbitration clause were not signed by the respondent, but the respondent acted upon the purchase orders.
Final Decision
The court allowed the application and appointed a sole arbitrator to adjudicate the disputes between the parties.
Law Points
- Section 11 of the Arbitration and Conciliation Act
- 1996
- existence of arbitration agreement
- purchase order containing arbitration clause
- binding effect of unsigned agreement
- conduct of parties
