Whether an arbitration clause in the invoices constitutes “arbitration agreement”
The Respondent had availed the services of the Applicant for outdoor advertisements on hoardings. The applicant claims outstanding payments for such services.
The case of the applicant is that each of the invoices raised by it during the period of February 2018 and June 2019 had contained arbitration clause and these invoices were acted upon. The services based on invoices were accepted, the amounts were paid on such invoices, tax was deducted at source on mot of the invoices and each invoice bears endorsement / seal of the respondent.
HELD that the parties acted on the invoices, cheques were issued and if the invoices were not acceptable, there would been a resistance to it. Since there were multiple invoices, there were multiple opportunities to object to them. Instead, the invoices were indeed were processed and cheques were issued. Therefore, whether the party accepting the invoice was authorized to bind the Respondent to an arbitration agreement also becomes a moot issue. In any case, examining whether there is a prima facie existence of a formal arbitration agreement is what falls within the scope of section 11 jurisdiction.
On 22.8.2023, the applicant invoked arbitration. This was objected on the ground that there is no arbitration agreement and that, an arbitration clause in an invoice cannot be an arbitration agreement.
Judgment dated 11.3.2025 of the High Court of Bombay Commercial Arbitration Application No.458 of 2024 (OS) of Sanjiv Manmohan Gupta Vs. Sai Estate Consultants Chembur Pvt Ltd. With connected matter.
