Signature of Either Party on an Arbitration Agreement is not Compulsory: Delhi HC

On July 5, Justice Sanjeev Narula of the Delhi High Court, while considering the validity of an arbitration agreement that a party did not sign, ruled that by considering the language of Section 7(4)(b), there cannot be a doubt that signature of either party on Arbitration Agreement was not mandatory.

The Bench further ruled that an arbitration agreement need not be in a particular format, and an agreement could be constituted if it has all necessary attributes.

After making the observation, the Bench passed an ex-parte order favouring Swastik Pipe Ltd and proceeded to appoint Kanika Singh as the sole arbitrator.

Background:-

The instant petition u/s 11(6) of Arbitration and Conciliation Act sought the appointment of Sole Arbitrator to adjudicate the disputes arising from tax invoices issued by Petitioner. While some payment was made to the Petitioner but an amount of Rs 15,63,217 was outstanding.

Contentions:-

Counsel for the SLP raised the following contentions:-

  • The arbitration clause mentioned in the invoice constitutes a valid arbitration agreement because of Apex Court’s judgement in Trimex International FZE Ltd. vs Vedanta Aluminum Ltd. Therefore, the Court must appoint an arbitrator.
  • It was contended that SRAPL received goods given by the Petitioner, and therefore the dispute has been prima facie established.
  • Reliance was placed on Section 7(4) of the act, and the counsel stressed that SRAPL had not denied the existence of the Arbitration Agreement and, therefore, the Court should not hesitate to appoint the arbitrator.

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Court’s Observations:-

The Court considered the language of Section 7(b) and held that there could not be any doubt that the signature of either on the Arbitration Agreement was not mandatory.

Since the terms and conditions mentioned in the invoice are generally inserted by the party issuing the invoice, the Court asked the parties to settle the dispute through arbitration.

In the instant case, there was no exchange of statement of claim and defence, but the fact remained that SRAPL did not refute the existence of the arbitration agreement.

Judgements:-

In light of the observations mentioned above, the Bench allowed the instant petition and appointed an arbitrator to adjudicate the issue.

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