Madras High Court
M/S.Saagrr Infra Limited vs Pioneer Tools & Hardware on 12 October, 2012
Author: R.S.Ramanathan
Bench: R.S.Ramanathan
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATE: 12.10.2012. CORAM THE HON'BLE MR.JUSTICE R.S.RAMANATHAN C.R.P.(PD)Nos.1733 and 1734 of 2012 and M.P.Nos.1 of 2012 (2 petitions) M/s.Saagrr Infra Limited rep by its Director .. Petitioner vs. Pioneer Tools & Hardware rep by its Partner, Mustufa M.Lohani .. Respondent Civil Revision Petition against the order dated 21.2.2012 in I.A.Nos.15744 and 15743 of 2011 in O.S.No.2745 of 2011 on the file of the XI Assistant Judge, City Civil Court, Chennai. For petitioner : Mr.V.Kuberan for M/s.Rank Associates For respondent : Mr.Sandeep S.Shah for M/s.Shah & Shah COMMON ORDER
Defendant is the revision petitioner in both the revisions.
2. The respondent filed the suit in O.S.No.2745 of 2011 on the file of the XI Assistant Judge, City Civil Court, Chennai for recovery of a sum of Rs.2,73,180/=. The revision petitioner filed I.A.No.15743 of 2011 under section 8 of the Arbitration and Conciliation Act, 1996 to refer the parties to Arbitration and also filed I.A.No.15744 of 2011 under section 8 of the Arbitration and Conciliation Act to stop all further proceedings in the suit. Both the applications were dismissed and aggrieved by the same, these revisions are filed.
3. It is submitted by the learned counsel for the revision petitioner that the respondent filed a suit on the basis of the purchase order made by the revision petitioner and the sale of articles pursuant to the purchase order by the respondent and the purchase order contains an arbitration clause and therefore, the applications were filed to refer the dispute to arbitration and to stop all further proceedings in the suit and that was not properly appreciated by the court below.
4. Learned counsel appearing for the respondent submitted that the court below, having regard to the express provision of section 8 of the Arbitration and Conciliation Act, rightly held that there is no arbitration agreement between the parties and the reference to arbitration in the purchase order cannot be construed as an arbitration agreement agreed by the parties and admittedly, the invoices were made even before the purchase order was made and therefore, the goods were delivered not pursuant to the purchase order and the delivery was made even prior to the purchase order and therefore, even assuming that there is an arbitration clause in the purchase order, that cannot bind the parties. He, therefore, submitted that there is no need to refer the matter to arbitration and also relied upon the judgment in NEPC INDIA LTD. v. S.GOPAKUMAR (2009-1-LW 896). He also submitted that even as per the purchase order, the parties agreed to settle the disputes within the courts of Chennai and an option was given to the parties to go for arbitration and in such cases, there is no necessity to refer the matter to arbitration and relied upon the judgment in WELLINGTON ASSOCIATES LTD. v. KIRIT MEHTA ((2000) 4 SCC 272).
5. To appreciate the contention of the revision petitioner, we will have to see the pleadings. As stated supra, in the pleadings, it is stated in para 4 that the revision petitioner approached the respondent at Madras and placed the purchase order and pursuant to that, the respondent/plaintiff sold and delivered goods to the defendant/revision petitioner on various dates under various invoices the articles worth Rs.3,31,831.51. It is further stated that the amount payable by the revision petitioner is Rs.2,73,181/= and therefore, for recovery of the said amount, the suit is filed. Therefore, it is admitted in the plaint that pursuant to the purchase order, supplies were made. A copy of the purchase order is filed in the typed set of papers wherein clause 16 says that all disputes and differences arising between the parties pertaining to the purchase order would be adjudicated through the medium of arbitration and in such event, the revision petitioner will appoint the sole arbitrator to resolve such dispute. Therefore, it is seen from the purchase order that there is an arbitration clause for referring the dispute to arbitration. It is seen from the typed set of papers that in the invoices, the purchase order is also mentioned. Though the purchase order is dated subsequent to the delivery of articles as per the invoices, having regard to the admission made by the plaintiff/respondent, it has to be held that the supply was made pursuant to the purchase order. Nevertheless, it is contended by the learned counsel for the respondent that the purchase order cannot be termed as arbitration agreement as per section 8 of the Arbitration and Conciliation Act.
6. Section 8 of the Arbitration and Conciliation Act, 1996 reads as follows:-
"Power to refer parties to arbitration where there is an arbitration agreement.--
(1) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration.
(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof.
(3) Notwithstanding than an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made."
7. Arbitration agreement is dealt with under section 7 as follows:-
"Arbitration agreement.--
(1) In this Part, 'arbitration agreement' means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
(3) An arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing if it is contained in --
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement; or
(c) 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.
(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract."
8. Therefore, a reading of section 7 makes it clear that arbitration agreement must be in writing signed by both parties and if the reference in a contract to a document containing arbitration clause constitutes an arbitration agreement, that contract must be in writing signed by both parties. The invoices by which supply was made pursuant to the purchase order is signed by the respondent, it is not signed by the revision petitioner. The reference to purchase order is signed by the revision petitioner and not by the respondent. Therefore, though in the purchase order, there is an arbitration clause, it will not become the arbitration agreement as it was not signed by both parties. Therefore, the arbitration clause in the purchase order does not satisfy the arbitration agreement as defined in section 7 of the Arbitration and Conciliation Act and when there is no arbitration agreement as stated in the said Act, the provisions of Arbitration and Conciliation act cannot be made applicable. This was properly appreciated by the court below and it was held that the clause in the purchase order will not enable the revision petitioner to refer the matter to arbitration or to invoke the provisions of Arbitration and Conciliation Act and rightly dismissed the applications and I do not find any reason to interfere with the order of the court below.
In the result, the revisions are dismissed. No costs. The connected miscellaneous petitions are also dismissed.
ssk.
To
1. XI Assistant Judge, City Civil Court, Chennai.
2. The Record Keeper, V.R. Section, High Court, Chennai