Delhi High Court: In a petition filed under Section 11 of the Arbitration and Conciliation Act, 1996 (‘Act’) seeking the appointment of an arbitrator to adjudicate disputes between the parties in terms of an arbitration clause contained on invoices issued by the petitioner to the respondent, a Single Judge Bench of Prateek Jalan, J. allowed the petition and referred the disputes between the parties to arbitration while stating that despite being given opportunities, the respondent had not filed an affidavit to deny the case pleaded by the petitioner.
Background
The petitioner was a manufacturer and supplier of corrugated boxes, cartons, rolls, and other packaging materials. He stated that he made certain supplies to the respondents on the terms and conditions mentioned in its invoices, but the respondent had failed to make payment against the invoices in full.
The petitioner invoked the arbitration clause contained in the invoices and asked the respondent to pay the balance of Rs. 1,25,80,425/- due on 15-09-2023 through legal notice dated 06-11-2023.
The respondent replied to the notice on 05-12-2023 and contested the existence of an arbitration agreement.
Analysis and Decision
The Court stated that time was granted to the parties to file their written submissions on whether an arbitration clause in an invoice could constitute an arbitration agreement under Section 7 of the Act.
The Court also stated that the respondent remained absent, and it was made clear that if the respondent did not appear despite notice being issued, the petition would be heard in his absence. Further, the Court noted that the respondent remained absent even upon calls being made by the counsel for the petitioner.
The Court referred to Swastik Pipe Ltd. v. Shri Ram Autotech Pvt. Ltd. 2021 SCC OnLine Del 3604 to state that Vidya Drolia v. Durga Trading Corpn. (2021) 2 SCC 1 laid down that at the stage of proceedings under Section 11 of the Act, the Court is required only to form a prima facie view as to the existence of the arbitration agreement and a detailed examination of this question could be left to the Arbitral Tribunal.
The Court referred to various other cases and noted that all of them consistently laid down the proposition that reference could be declined only if there was no trace of doubt as to the non-existence of the arbitration agreement. Further, the Court also noted that the default course in doubtful cases was to refer the matter to arbitration and leave the question open for adjudication by the Tribunal.
In the present matter, the Court noted that the respondent had placed various orders between June 2021 and September 2023 for which the petitioner had accordingly raised invoices that contained various terms and conditions one of which stated that “All disputes subject to ‘Delhi’ jurisdiction arbitration only”. The representatives of both the parties signed these invoices.
The Court stated that even though the respondent had taken a stand that his signature was only to acknowledge the receipt of goods, it was not a matter that could be decided in these summary proceedings.
The Court, keeping in mind its limited jurisdiction at the pre-reference stage, stated that the petitioner had made out a case for reference to arbitration, leaving all questions open for adjudication by the Arbitrator, including the defence, if any, regarding the existence of the arbitration agreement.
Thus, the Court allowed the petition and referred the disputes between the parties to arbitration, and requested the Arbitrator to furnish a declaration under Section 12 of the Act, before the reference.
[Dhawan Box Sheet Containers Pvt. Ltd. v. SEL Manufacturing Co. Ltd., 2024 SCC OnLine Del 4779, Decided on 10-07-2024]
Advocates who appeared in this case :
For Petitioner — Advocate Aayush Malhotra, Advocate Shobhit Garg
For Respondent — None
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