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Inox Wind Ltd vs.Northex Logistics Pvt Ltd. - (High Court of Delhi) (04 Oct 2023)

Arbitration agreement would be considered as in writing, if it is contained in exchange of letters, telex, telegrams or other means of telecommunication



The Appellant has filed the present appeal under Section 37(1)(a) of the Arbitration and Conciliation Act, 1996 (Arbitration Act') impugning an order declining to refer the parties to arbitration.The respondent has filed a suit for recovery of an amount of ₹17,31,386along with interest at the rate of 18% per annum.

The Appellant had filed an application under Section 8 of the Arbitration Act praying that the parties be referred to arbitration. The learned Commercial Court rejected the said application in terms of the impugned order.The principal controversy that needs to be addressed is whether, prima facie, an arbitration agreement exists between the parties which covers the disputes raised by the Respondent.

There is merit in the Appellant's contention that the logistics services which are covered under the sixteen unpaid invoices are traceable to certain Work Orders. The learned Commercial Court had thus erred in proceeding on the basis that there were no Work Order covering the services as mentioned in the unpaid invoices in question. However, it is apparent that the Work Orders relied upon by the appellant were issued after the invoices have been raised.

In normal circumstances, Work Orders are issued prior to the execution of the works. However, in the present case the Work Orders, were unilaterally issued by the appellant, after the respondent had rendered the services and in most cases it had raised the invoices.

In terms of Sub-section (3) of Section 7 of the Arbitration Act, an arbitration agreement is required to be in writing. Sub-section (4) of Section 7 of the Arbitration Act expressly provides that the agreement would be in writing, if it is contained in an exchange of letters, telex, telegrams or other means of telecommunication, which provide a record of the Agreement.

In the present case, the arbitration agreements which are sought to be relied upon by the appellant are not document signed by both the parties. There is no material on record to show dispatch or receipt of the Work Orders relied upon by the appellant. Therefore, this Court is unable to accept that the arbitration clause contained in the said Work Orders constitutes an arbitration agreement in terms of Section 7(4)(b) of the Arbitration Act.

Considering that some of the Work Orders have been issued after the disputes have arisen, present Court is unable to accept that, the Appellant has prima facie established existence of arbitration agreement(s) covering the subject matter of the suit instituted by the Respondent.The Appellant's prayer that the parties be referred to arbitration cannot be accepted. Appeal dismissed.


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