Case Note & Summary
The petitioner, M/s Indo Unique Flame Ltd., filed a writ petition challenging the order dated 18th January 2018 passed by the Commercial Court, Nagpur, rejecting its application under Section 8 of the Arbitration and Conciliation Act, 1996 for referring the dispute to arbitration. The dispute arose from a bank guarantee given by respondent no.1 to the petitioner pursuant to a work order dated 28th September 2015. The respondent no.1 filed a commercial suit for declaration and injunction regarding the bank guarantee. The petitioner contended that the work order contained an arbitration clause and sought reference to arbitration. The Commercial Court rejected the application on the ground that the work order was not signed by the respondent no.1. The High Court examined the facts and found that the work order was issued by the petitioner and acted upon by the respondent no.1, who had furnished a bank guarantee in compliance. The court held that an arbitration agreement need not be signed if there is sufficient evidence of mutual acceptance, and the parties had acted upon the work order. The court set aside the impugned order and allowed the petition, directing the Commercial Court to refer the parties to arbitration in accordance with the arbitration clause. The court also directed that all contentions of the parties be kept open before the arbitral tribunal.
Headnote
A) Arbitration Law - Reference to Arbitration - Section 8 of the Arbitration and Conciliation Act, 1996 - Existence of Arbitration Agreement - The petitioner sought reference of a bank guarantee dispute to arbitration based on an arbitration clause in the work order dated 28th September 2015. The Commercial Court rejected the application on the ground that the work order was not signed by the respondent. The High Court held that the arbitration agreement need not be signed if there is sufficient evidence of mutual acceptance, and the work order was acted upon by both parties. The court set aside the rejection and allowed the petition, directing reference to arbitration (Paras 2, 4.1, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47, 48, 49, 50).
Issue of Consideration
Whether the Commercial Court was justified in rejecting the application under Section 8 of the Arbitration and Conciliation Act, 1996 for referring the dispute to arbitration, despite the existence of an arbitration clause in the work order.
Final Decision
The High Court allowed the writ petition, set aside the order dated 18th January 2018 passed by the Commercial Court, Nagpur, and directed the Commercial Court to refer the parties to arbitration in accordance with the arbitration clause contained in the work order dated 28th September 2015. All contentions of the parties were kept open before the arbitral tribunal.
Law Points
- Section 8 of the Arbitration and Conciliation Act
- 1996
- existence of arbitration agreement
- reference to arbitration
- commercial suit
- bank guarantee dispute
