Delhi High Court
Ormaa Impex Pvt. Ltd. vs Nissai Asb Pte. Ltd. on 4 February, 1997
Equivalent citations: AIR1998DELHI15, AIR 1998 DELHI 15, (1997) 1 ARBILR 698 (1997) 66 DLT 910, (1997) 66 DLT 910
ORDER M.K. Sharma, J.
1. This is a suit instituted by the plaintiff against the defendant, for recovery of an amount of Rs. 34,24,237.50 along with damages of Rs. 10,10,774.00 with pendente lite and future interest.
2. On service of summons, the defendant has appeared and filed an application registered as I. A. No. 4578/1996, under Section 45 of the Arbitration and Conciliation Ordinance, 1996, contending inter alia, that there is a valid and subsisting arbitration agreement between the parties and in that view of the matter, the present suit for recovery instituted by the plaintiff is required to be stayed.
3. The plaintiff being interested in purchasing some machineries from the defendant approached the defendant and a quotation dated 7th July, 1994 was supplied by the deffendant. After negotiation, Sales Contract was entered into between the plaintiff and the defendant on 8th July, 1994. It appears that in the aforesaid sales contract, an arbitration agreement was incorporated to the effect that any dispute arising out of or relating to the contract shall be settled by arbitration in Tokyo, Japan in accordance with the commercial Rules of Japan Commercial Arbitration Association and that the award shall be final and binding upon both the parties.
4. According to the plaintiff, the actions of the defendant in extending the despatch schedule was illegal inasmuch as the plaintiff had in the meantime completed all formalities and fulfillled the commitments made to the defendant and that the said action resulted in grave loss, and damage to the plaintiff. The further case of the plaintiff is that the actions of the defendant by withholding the advance payment made by the plaintiff is also arbitrary and illegal.
5. While refuting the aforesaid allegations made by the plaintiff, the defendant has stated that the plaintiff did not fulfill its part of the contract and accordingly the defendant was compelled to write to the plaintiff on 22nd December, 1994 asking them if they intended to continue with the Sales Contract. However, since the plaintiff failed to carry out its part of the contract, the defendant on 5th March, informed the plaintiff that if a Letter of Credit as stipulated in the contract was not received by 15th March, 1995, the Sales Contract/Amended Contract would be deemed to be cancelled for non-performance of the conditions attached to the contract. In spite of such and similar letters having been issued by the defendant, the plaintiff not only did not comply with the said demand but filed the present suit in this Court for seeking recovery of the aforesaid amount in violation of the arbitration agreement.
6. The learned counsel appearing for the plaintiff submitted that the arbitration clause as alleged by the defendant was not to the knowledge of the plaintiff and that no notice of the same was given to the plaintiff at any point of time to the effect that an arbitration clause existed between the parties. The Sales Contract dated 8th July, 1994, is on record. Referring to the said document, the learned counsel submitted that the arbitration clause being Clause No. 10 of the said contract appears at the back page to which the parties did not put their signature and, therefore, the plaintiff had no knowledge about the existence of the aforesaid clause in the contract.
7. I have myself carefully perused the aforesaid Sales Contract dated 8th July, 1994, and I find that at the end of the said documents, the parties, to the suit have put their signature through their representatives. The back page of page No. I and facing page of each of the subsequent pages contain the arbitration clause as referred to above. When a person signs the document which contains certain contractual terms, normally parties are bound by such contract. When a party to the contract disputes the binding nature of the signed document, it is for him to prove the terms in the contract or the circumstances in which he came to sign the documents.
8. In the present case, the plaintiff at the time of signing the agreement was represented by the Managing Director of the plaintiff. The plea of the plaintiff that he was not aware of the arbitration agreement existing in the Sales Contract cannot be believed. The Sales Contract contains the arbitration clause and the Managing Director of the plaintiff Company is a signatory to the aforesaid Sales Contract. In my considered opinion, therefore, the plaintiff cannot take up the stand that it is not bound by the aforesaid arbitration clause of the contract.
9. The Sales Contract in the present case contains its price, terms and conditions and it cannot be believed that without knowing the aforesaid terms and conditions including the terms of the arbitration agreement, the plaintiff has opted to enter into the contract. A signatory to the contract, in my considered opinion, normally cannot argue that the contents of the agreement have not been communicated or that these were not read or not explained. In Bharathi Knitting Company v. DHL Worldwide Express, Courier Division of Airfreight Ltd. , the Supreme Court has held that when a person signs a document which contains certain contractual terms normally parties are bound by such contract.
In a recent decision of this Court in M/s. Classic Motors Ltd. v. Maruti Udyog Ltd. reported in 1997 (i) AD (Delhi) 190, this Court has held that the parties are bound by the terms of the Contract and once a party has put his signature to the document, it cannot be said that he was not aware of the terms and conditions of the Contract, particularly, when the Contract relates to business transaction.
10. Under the aforesaid circumstances, I hold that in view of the arbitration agreement between the parties as spelt out from the Sales Contract dated 8th July, 1994, the present suit in accordance with the provisions of Section 45 of the Arbitration and Conciliation Act 1996, and it is ordered accordingly.
11. The application filed by the defendant stands allowed and the suit instituted by the plaintiff shall stand stayed.