Srf Limited vs. Jonson Rubber Industries Limited

Facts

SRF Limited (Petitioner) filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of a sole arbitrator to adjudicate disputes with Jonson Rubber Industries Limited (Respondent). The disputes arose from purchase orders dated December 26, 2019, and December 27, 2019, for 'Belting Fabric Material'. The Petitioner claims Rs. 50,71,455.26/- from seven invoices issued in February 2020, plus Rs. 86,428/- for interest and GST liabilities. The Petitioner invoked arbitration based on clause 22 of the invoice terms and conditions. The Respondent objected, arguing that a valid arbitration agreement under Section 7 of the 1996 Act does not exist, citing a jurisdiction clause in the purchase orders that exclusively grants jurisdiction to Delhi Courts for disputes concerning the purchase orders.

Held

The Court held that a valid arbitration agreement exists between the parties. The Court reasoned that the purchase orders, while containing a jurisdiction clause for Delhi Courts, also had a heading 'Jurisdiction for Arbitration/Dispute', indicating contemplation of arbitration. The Court found that this clause showed an intention to have disputes adjudicated in Delhi, not an intention to *not* arbitrate. Furthermore, the invoices explicitly incorporated an arbitration clause (Clause 22), which stated that disputes arising out of the transaction could be referred to a sole arbitrator appointed by the Seller, with the Buyer consenting unequivocally. The Court noted that the invoices, containing this arbitration clause, were acknowledged, and part payments were made, making it difficult for the Respondent to claim non-receipt of the invoices or their terms. The Court distinguished the case from *Concrete Additives and Chemicals Pvt. Ltd. v. S.N. Engineering Services Pvt. Ltd.*, noting that the Supreme Court had set aside the Bombay High Court's decision in that case, finding an arbitration clause in similar invoices. The Court found the Respondent's objections untenable and referred the matter to the Delhi International Arbitration Centre (DIAC) for the appointment of an arbitrator. All issues canvassed by the Respondent were left open to be decided by the Arbitral Tribunal. The Petitioner was awarded costs.

Key Issues

1. Whether a valid arbitration agreement exists between the parties under Section 7 of the Arbitration and Conciliation Act, 1996, considering the arbitration clause in the invoices versus the jurisdiction clause in the purchase orders? Petitioner's arguments: The Petitioner contended that each invoice contained an arbitration clause, and the phrase 'general terms and conditions given overleaf' in the invoices indicated that all terms, including the arbitration clause, were incorporated. They relied on Supreme Court and Delhi High Court decisions, including *Vidya Drolia v. Durga Trading Corporation*, *Swastik Pipe Ltd. v. Shri Ram Autotech Pvt. Ltd. (Swastik Pipe I)*, and *Swastik Pipe Ltd. v. Dimple Verma (Swastik Pipe II)*, arguing that courts should refer parties to arbitration even with doubts about the arbitration clause's existence. They also cited *Bennett Coleman & Co. Ltd v. Mad (India) Private Limited*. Respondent's arguments: The Respondent argued that consensus ad idem existed only for the jurisdiction clause in the purchase orders, not the arbitration clause in the invoices, which they claimed were not properly received. They asserted that the purchase orders, being earlier agreed documents, take precedence. They further argued that the invoices showed 'Page 1 of 1', suggesting no terms on the reverse, and lacked the Respondent's signature on the general terms and conditions. They also pointed to deviations in interest and GST charges from invoice terms. They relied on *Rameshwar Dass & Sons (HUF) v. Caravel Logistics Pvt. Ltd. & Anr.*, *Concrete Additives and Chemicals Pvt. Ltd. v. S.N. Engineering Services Pvt. Ltd.*, *Hetampuria Tax Fav v. Daksh Enterprises*, and *IMV India Pvt. Ltd. v. Stridewel International*.