Court affirms jurisdiction under Arbitration and Conciliation Act, 1996, resolving disputes over 20 purchase orders with a single Arbitrator.
In a significant ruling, the Punjab and Haryana High Court, led by Justice Jasgurpreet Singh Puri, has appointed a Sole Arbitrator to resolve the disputes between Aditya Birla Real Estate Limited and Orient Craft Limited. The decision comes amidst contentions regarding the validity of the arbitration clause embedded in 20 purchase orders for the supply of fabric, which have been a point of contention between the two companies.
The court was approached under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of an Arbitrator due to disputes over outstanding payments and product quality. The petitioner, Aditya Birla Real Estate Limited, argued that the purchase orders contained a clause specifying Gurugram (Haryana) as the jurisdiction for arbitration, which constituted a prima facie arbitration clause. Despite the absence of a detailed mechanism, the court found the clause sufficient to invoke its jurisdiction to appoint an Arbitrator.
Justice Puri noted that even unsigned documents, if acted upon by both parties, could establish a valid arbitration agreement, referencing Section 7(4) of the Act. The court emphasized that the existence of a prima facie arbitration clause and its invocation through a notice were the only prerequisites for appointing an Arbitrator.
The respondent, Orient Craft Limited, contended that the arbitration clause lacked specificity and that the purchase orders were not signed with acceptance of all terms, thus questioning the contract's conclusiveness. However, the court dismissed these arguments, highlighting that both parties had engaged in the contract, evidenced by transactions and communications, thereby upholding the arbitration clause's validity.
In alignment with the court's decision, Hon'ble Mr. Justice Ajay Tewari, a former judge of the same court, has been nominated as the Sole Arbitrator. The Arbitrator is tasked with adjudicating the disputes related to each of the 20 purchase orders, with proceedings expected to be completed within statutory time limits as prescribed under Section 29-A of the Arbitration Act.
The ruling underscores the judiciary's inclination to honor arbitration agreements and resolve commercial disputes efficiently, in line with established legal precedents. This decision is expected to streamline the resolution process and provide clarity on the enforceability of arbitration clauses in commercial contracts.
Bottom Line:
Arbitration and Conciliation Act, 1996 - Clause in purchase orders specifying "jurisdiction for arbitration" constitutes a prima facie arbitration clause. Court appointed a Sole Arbitrator to adjudicate disputes arising from 20 purchase orders, even in the absence of a detailed arbitration mechanism.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Sections 11(6), 7(4), 29A
