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2009 DIGILAW 389 (BOM)

M/s. Mikesh Corporation v. M/s. Picotee Exports

2009-03-23

A.A.SAYED, S.A.BOBDE

body2009
Judgment : Oral Order: 1. The appellant has preferred this appeal against the judgment dated 16.6.2003 of the learned single Judge of this Court setting aside the award on the ground that the appellant, who was the claimant, has not established the existence of an arbitration between the parties. 2. The appellant preferred a claim before the Arbitrator in accordance with the Mahajan Arbitration Rules and Regulations framed by the Mumbai Textiles Merchant Mahajan for a sum of Rs.8,85,951/-in respect of balance amount for cloth allegedly supplied to the respondents along with interest. The respondents resisted the claim, inter alia, on the ground that they were not a members of the Mahajan and was, therefore, not bound to submit to arbitration under the Mahajan Arbitration Rules and Regulations. 3. Initially, the Arbitrator gave an award. This award was set aside on the ground that he gave no reasons. Thereafter, the Arbitrator heard the matter again and came to the conclusion that the respondents are liable for the aforesaid sum. The Arbitrator rejected the contention on behalf of the respondents that there was no arbitration agreement and held that there was an arbitration agreement between the parties which was printed on the invoices which were raised by the appellant on the respondents along with delivery of the goods. The learned Arbitrator took the view that since the goods were supplied by the appellant to the respondents and payments were made for the goods, this must have been on the basis of invoices which were delivered to the respondents by the appellant. 4. Thelearned single Judge while hearing the challenge under section 34 of the Arbitration and Conciliation Act, came to the conclusion that the Arbitrator could not have inferred the existence of an arbitration agreement which is said to have been printed on the invoices without proof or delivery of the invoices to the respondents. This judgment is challenged before us. 5. Mr.Jain, the learned counsel for the appellant, submitted that there was every reason to infer the existence of an arbitration agreement since admittedly the goods have been delivered and the invoices raised by the appellant have been paid by the respondents. It is, however, not possible to accept the contention merely because it is a possibility that invoices containing the arbitration agreement were raised. It is, however, not possible to accept the contention merely because it is a possibility that invoices containing the arbitration agreement were raised. It is not prudent to infer that invoices containing an arbitration clause were raised on a party and handed over to them merely because certain payments have been made. In fact, it would not be proper to draw an inference, particularly where there has been a consistent denial by the respondents that they are not members of the Mahajan and are not subject to the rules of arbitration. In the present case, the learned counsel for the respondents has submitted that most of the amounts have been paid as advance. 6. Section 7 of the Arbitration and Conciliation Act, 1996 reads as follows:- "7. 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) Thereference 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." The provision clearly contemplates the existence of an arbitration agreement in writing, though the writing may be contained in a document signed by the parties or letters or statements of claims exchanged by the parties in which there is an arbitration agreement as alleged by one party and is not denied by the other. In the present case, there is no document purporting to be an arbitration agreement signed by both the parties. In the present case, there is no document purporting to be an arbitration agreement signed by both the parties. It is true that letters, telegrams or other means of telecommunication could also contain an arbitration agreement, but that requires proof that such letters, telex, telegrams, etc., were exchanged by the parties that is mutually delivered and actually received by each other. We find that there is no proof that the appellant, in fact, delivered invoices containing the arbitration agreement to the respondents. Therefore, there cannot be said to have been an exchange of letters, etc., as required by section 7(4)(b), supra. The findings of the learned single Judge that the existence of an arbitration clause has not been established by demonstrating that the invoices were received by the appellant does not call for any interference. 7. In this view of the matter, we find that there was no arbitration agreement as required by law. There is thus no merit in the appeal which is hereby dismissed.