Case Note & Summary
The applicant, Parekh Plastichem Distributors LLP, filed an application under Section 11 of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator to resolve disputes with the respondent, Simplex Infrastructure Limited, regarding unpaid invoices for the supply of Micro Silica. The applicant had supplied materials to the respondent based on purchase orders that contained an arbitration clause. The respondent did not sign the purchase orders but accepted the supplies and made partial payments. The applicant raised 11 invoices totaling Rs.24,53,220/-, of which Rs.21,78,910/- remained unpaid. The respondent disputed the existence of an arbitration agreement, arguing that the purchase orders were not signed and therefore no valid arbitration agreement existed. The court examined the legal principles under Section 7 of the Act, which defines an arbitration agreement as an agreement in writing, which can be concluded by exchange of statements of claim and defence or by reference in a contract. The court noted that the purchase orders were sent by the respondent to the applicant, and the applicant accepted them by supplying goods and raising invoices. The respondent's conduct in accepting the supplies and making payments indicated acceptance of the terms, including the arbitration clause. The court held that an arbitration agreement existed between the parties, as the purchase orders containing the arbitration clause were acted upon. The court allowed the application and appointed a sole arbitrator to adjudicate the disputes, directing the parties to bear their own costs.
Headnote
A) Arbitration Law - Existence of Arbitration Agreement - Section 7 of the Arbitration and Conciliation Act, 1996 - The court considered whether an arbitration agreement existed when the purchase orders containing an arbitration clause were not signed by the respondent but were acted upon by both parties. The court held that an arbitration agreement can be concluded by conduct, and the respondent's failure to sign the purchase orders did not negate the existence of an arbitration agreement, as the invoices and payments demonstrated acceptance. (Paras 1-10) B) Arbitration Law - Appointment of Arbitrator - Section 11 of the Arbitration and Conciliation Act, 1996 - The court allowed the application for appointment of an arbitrator, finding that the disputes regarding unpaid invoices of Rs.21,78,910/- fell within the scope of the arbitration clause. The court appointed a sole arbitrator to adjudicate the disputes. (Paras 11-15)
Issue of Consideration
Whether there exists an arbitration agreement between the parties when the purchase orders containing an arbitration clause were not signed by the respondent but were acted upon.
Final Decision
The court allowed the application and appointed a sole arbitrator to adjudicate the disputes between the parties.
Law Points
- Arbitration agreement
- existence of
- Section 7 of Arbitration and Conciliation Act
- 1996
- purchase order containing arbitration clause
- acceptance by conduct
- reference to arbitration
- Section 11 of Arbitration and Conciliation Act
