For any agreement, the real intent of the parties is germane: High Court of Delhi.
In the event the written arbitration agreement is not signed by the parties, it is essential to ascertain if there is an intention on the part of the parties to settle their disputes through arbitration. A single Judge bench compromising Hon’ble Justice Sanjeev Narula, in the matter of Swastik Pipe Ltd. Vs. Shri Ram Autotech Pvt. Ltd. (ARB. P. 241/2021), dealt with an issue where the petitioner had filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of a sole arbitrator to adjudicate the disputes arising from the tax invoices issued by the Petitioner [hereinafter referred to as ‘SPL’] in the course of their dealings with the Respondent [hereinafter referred to as ‘SRAPL’].
In the present case, SRAPL had placed orders with SPL for the purchase of ‘C.R. Strips’. The same was supplied by SPL as per SRAPL’s request and specifications, on a running account basis. The said commercial dealings between the parties lasted between 1st April 2019 to 29th December 2020. While some payment was made, an amount of 15,63,217/- was outstanding on the part of SRAPL. Since such payment was outstanding, a legal notice was issued against SRAPL, for either payment of the outstanding amount or to agree to arbitration in accordance with the terms and conditions of the invoices which contained an arbitration clause. But neither SRAPL paid the outstanding amount nor did they send any reply to the legal notice.
Thereby SPL approached the court with this petition seeking the appointment of a Sole Arbitrator. The petition was taken up and notice was issued on 15th February 2021, despite serving notice, none appeared for SRAPL. The matter was heard at length on 18th March but still, there was no representation from SRAPL’s side. Thereby the court proceeded to decide the petition ex-parte on the basis of submissions advanced by the Counsel of SPL.
The counsel of SPL had contended that the goods accompanying the invoices had been duly received by SRAPL under a Goods Receipt, signed and acknowledged by the representative of SRAPL. Later it was found that the invoices containing the arbitration agreement were not signed by SRAPL. Therefore, a pertinent question arose as to whether the terms and conditions appearing on the invoices accompanying the delivery of goods would constitute a valid arbitration agreement between the parties.
After referring to section 7 of the Arbitration and Conciliation Act, 1996, the court observed that- “Since the terms and conditions printed on an invoice are generally inserted unilaterally by the party issuing the invoice, the Court had called upon SPL to validate the mutual intention of the parties to settle the disputes through arbitration”. Further, the court held that-“Despite service of notice, SRAPL have chosen not to appear, for reasons best known to them” and hence the court allowed the petition and appointed the sole arbitrator to adjudicate the disputes arising between the petitioner and the respondent.