Case Note & Summary
The petitioner, M/s. Tusker Workspace Pvt. Ltd., filed a commercial suit (Com. O.S. No.207/2024) before the LXXXVI Additional City Civil and Sessions Judge, Bengaluru (Commercial Court) against the respondent, M/s. D-Vois Communications Pvt. Ltd., seeking recovery of amounts due under a service agreement for providing co-working space. The respondent filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 read with Section 16 of the Commercial Courts Act, 2015, seeking reference of the dispute to arbitration, claiming that the invoices raised by the petitioner contained an arbitration clause. The Commercial Court allowed the application and referred the parties to arbitration, thereby dismissing the suit. Aggrieved, the petitioner filed a writ petition under Article 227 of the Constitution of India before the High Court of Karnataka. The High Court examined the facts and found that the alleged arbitration agreement was not signed by the petitioner; it was merely a clause printed on invoices unilaterally issued by the respondent. The court held that for a valid arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996, there must be a written agreement signed by both parties or evidence of mutual acceptance. Since the petitioner had not signed any document containing the arbitration clause and had disputed its existence, the Commercial Court erred in allowing the application. The High Court set aside the impugned order and restored the suit to the file of the Commercial Court for trial on merits.
Headnote
A) Arbitration Law - Section 8 of the Arbitration and Conciliation Act, 1996 - Existence of Arbitration Agreement - The court considered whether an arbitration clause contained in invoices unilaterally issued by the defendant can bind the plaintiff who did not sign any agreement containing such clause. Held that for a valid arbitration agreement, there must be a written agreement signed by both parties or evidence of mutual acceptance; mere issuance of invoices with an arbitration clause does not constitute a valid arbitration agreement binding on the other party. (Paras 1-10)
B) Commercial Courts Act, 2015 - Section 16 - Reference to Arbitration - The court examined the scope of Section 16 of the Commercial Courts Act, 2015 which mandates reference to arbitration if the subject matter is covered by an arbitration agreement. Held that the court must first satisfy itself that a valid arbitration agreement exists; if the agreement is disputed and not duly executed, the court cannot mechanically refer the matter to arbitration. (Paras 5-8)
C) Civil Procedure Code, 1908 - Section 151 - Inherent Powers - The court discussed the inherent powers of the court to set aside an order passed without jurisdiction. Held that where the Commercial Court erroneously allowed the application under Section 8 without a valid arbitration agreement, the High Court under Article 227 can interfere to prevent miscarriage of justice. (Paras 9-10)
Issue of Consideration
Whether the Commercial Court was justified in allowing the application under Section 8 of the Arbitration and Conciliation Act, 1996 and referring the parties to arbitration when the arbitration agreement was not signed by the plaintiff and was only contained in invoices.
Final Decision
The High Court allowed the writ petition, set aside the impugned order dated 16-10-2024 passed by the LXXXVI Additional City Civil and Sessions Judge, Bengaluru in Com. O.S. No.207/2024, and restored the suit to the file of the Commercial Court for trial on merits.
Law Points
- Section 8 of the Arbitration and Conciliation Act
- 1996
- Section 16 of the Commercial Courts Act
- 2015
- Article 227 of the Constitution of India
- Section 151 of the Code of Civil Procedure
- 1908
Case Details
2025 LawText (KAR) (07) 28
Writ Petition No.3430 of 2025 (GM - CPC)
Skandan P. Jain (for petitioner), Aniketh B. C. (for respondent)
M/s. Tusker Workspace Pvt. Ltd.
M/s. D-Vois Communications Pvt. Ltd.
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Nature of Litigation
Writ petition under Article 227 of the Constitution of India challenging an order of the Commercial Court allowing an application under Section 8 of the Arbitration and Conciliation Act, 1996 and referring the parties to arbitration.
Remedy Sought
Petitioner seeks setting aside of the impugned order dated 16-10-2024 passed by the LXXXVI Additional City Civil and Sessions Judge, Bengaluru in Com. O.S. No.207/2024 and restoration of the suit.
Filing Reason
The Commercial Court allowed the respondent's application under Section 8 of the Arbitration and Conciliation Act, 1996 and referred the dispute to arbitration, despite the absence of a valid arbitration agreement signed by the petitioner.
Previous Decisions
The Commercial Court passed the impugned order dated 16-10-2024 allowing the application under Section 8 of the Arbitration and Conciliation Act, 1996 and referring the parties to arbitration.
Issues
Whether the Commercial Court was justified in allowing the application under Section 8 of the Arbitration and Conciliation Act, 1996 when the arbitration agreement was not signed by the plaintiff?
Whether an arbitration clause contained in invoices unilaterally issued by the defendant can bind the plaintiff who did not sign any agreement containing such clause?
Submissions/Arguments
Petitioner argued that there was no valid arbitration agreement as the alleged arbitration clause was only in invoices unilaterally issued by the respondent and not signed by the petitioner.
Respondent contended that the invoices contained an arbitration clause and the petitioner had accepted the invoices by not objecting, thus there was a valid arbitration agreement.
Ratio Decidendi
For a valid arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996, there must be a written agreement signed by both parties or evidence of mutual acceptance. An arbitration clause contained in invoices unilaterally issued by one party does not constitute a valid arbitration agreement binding on the other party, especially when the other party disputes its existence and has not signed any document containing the clause. The court under Section 8 must first satisfy itself that a valid arbitration agreement exists before referring the parties to arbitration.
Judgment Excerpts
The petitioner/plaintiff is at the doors of this Court, calling in question an order dated 16-10-2024 passed by the LXXXVI Additional City Civil and Sessions Judge, Bengaluru in Commercial O.S.No.207 of 2024, by which the application filed by the defendant seeking reference of the matter to Arbitration comes to be allowed and consequently seeks restoration of the suit filed by the petitioner/plaintiff.
Heard Sri Skandan P. Jain, learned counsel appearing for the petitioner and Sri Aniketh B.C., learned counsel appearing for the caveator/respondent.
Procedural History
The petitioner filed a commercial suit (Com. O.S. No.207/2024) before the LXXXVI Additional City Civil and Sessions Judge, Bengaluru (Commercial Court). The respondent filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 read with Section 16 of the Commercial Courts Act, 2015 seeking reference to arbitration. The Commercial Court allowed the application on 16-10-2024 and referred the parties to arbitration. Aggrieved, the petitioner filed the present writ petition under Article 227 of the Constitution of India before the High Court of Karnataka. The High Court reserved orders on 27.06.2025 and pronounced on 08.07.2025.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 8
- Commercial Courts Act, 2015: Section 16
- Code of Civil Procedure, 1908: Section 151
- Constitution of India: Article 227
