Case Note & Summary
The appellant-defendant, T.A.I. Pharma Ltd., entered into a Clearing and Forwarding Agency Agreement dated 1st January 2007 with the respondent-plaintiff, Wockhardt Ltd. The agreement contained an arbitration clause. Subsequently, the plaintiff supplied goods to the defendant under various invoices and purchase orders, which the defendant failed to pay for. The plaintiff filed a Summary Suit No. 2086 of 2011 for recovery of the amount due. The defendant filed a Notice of Motion No. 58 of 2012 seeking reference of the dispute to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996, relying on the arbitration clause in the agency agreement. The learned Single Judge dismissed the Notice of Motion, holding that the dispute arose from independent sale transactions and not from the agency agreement. The defendant appealed. The Division Bench of the Bombay High Court upheld the Single Judge's order, finding that the invoices and purchase orders constituted independent contracts for sale of goods, and the arbitration clause in the agency agreement did not cover those transactions. The court noted that the agency agreement was for clearing and forwarding services, not for sale of goods. Therefore, the dispute was not arbitrable under the said clause. The appeal was dismissed.
Headnote
A) Arbitration Law - Scope of Arbitration Agreement - Dispute Arising from Independent Transactions - The dispute pertained to recovery of price of goods sold under invoices and purchase orders, which were independent transactions not governed by the Clearing and Forwarding Agency Agreement containing the arbitration clause. The court held that the arbitration clause in the said Agreement did not cover the dispute, as the sale transactions were separate and not part of the agency agreement. (Paras 1-10) B) Civil Procedure - Summary Suit - Maintainability - The plaintiff filed a summary suit for recovery of a liquidated sum based on invoices and purchase orders. The court held that the summary suit was maintainable and the existence of an arbitration clause in a separate agreement did not bar the suit. (Paras 1-10)
Issue of Consideration
Whether the dispute between the parties arising out of the sale of goods under invoices and purchase orders is covered by the arbitration clause contained in the Clearing and Forwarding Agency Agreement dated 1st January 2007.
Final Decision
The appeal is dismissed. The order of the learned Single Judge refusing to refer the dispute to arbitration is upheld.
Law Points
- Arbitration clause in a contract does not apply to disputes arising from independent transactions not governed by that contract
- Summary suit for recovery of price of goods sold is maintainable despite existence of arbitration clause in a related agreement
- Court must examine whether dispute falls within scope of arbitration agreement before referring parties to arbitration
