TMI Blog2014 (12) TMI 1362X X X X Extracts X X X X X X X X Extracts X X X X ..... s, telex, telegrams or other means of telecommunication. Section 7(4)(c) provides that there can be an arbitration agreement in the exchange of statements of claims and defence in which the existence of the agreement is alleged by one party and not denied by the other. If it can be prima facie shown that the parties are at ad idem, then the mere fact of one party not signing the agreement cannot absolve him from the liability under the agreement. In the present day of e-commerce, in cases of internet purchases, tele purchases, ticket booking on internet and in standard forms of contract, terms and conditions are agreed upon. In such agreements, if the identity of the parties is established, and there is a record of agreement it becomes an arbitration agreement if there is an arbitration clause showing ad idem between the parties. Therefore, signature is not a formal requirement under Section 7(4)(b) or 7(4)(c) or under Section 7(5) of the Act. In the instant case, admittedly, the respondent issued a sales contract for supply of goods incorporating in the said sales contract various terms including hundred per cent payment against letter of credit and also providing the governing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailand origin). The respondent issued a sales contract bearing No. 03S8733 for 200 MT of Thai RSS-3 at US $2880 per metric tonne, CIF Nhava Sheva, India with payment term 100% against letter of credit for shipment in September 2008. The said sales contract, signed by the representative of the respondent, provided the governing terms as Singapore Commodity Exchange . The name of the appellant was described as buyer, who issued Purchase Order No. BOM:PO:2008-09:286 dated 21-8-2008. As pleaded by the appellant, by this purchase order, the appellant placed orders on the terms and conditions set out therein. The appellant thereafter requested to change the payment term in the said sales contract to be 10% advance by TT (Telegraph Transfer) and balance 90% by DP (documents against payment) at sight through email dated 26-8-2008. This request for amendment was accepted by the respondent and accordingly it issued invoice dated 27-8-2008 for the 10% advance payment for 200 MT RSS-3 @ US $2880.MT. It is the case of the respondent that later the invoice was split into two invoices of 100 MT each for which 10% of contract value was US $28,800. Cargo of 200 MT RSS-3 was accordingly shipped to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... By the said letter, the appellant lodged its counterclaim on the first party for US $3734036.25 and also agreed for acceptance of nomination to Mr Leon Tim Fook as their sole arbitrator. 6. The appellant contended that the Singapore Commodity Exchange or its committee did not have any jurisdiction. It was submitted that the jurisdiction shall be in Mumbai. The Arbitral Tribunal made award dated 18-12-2009 directing the appellant to pay to the respondent a sum of US $716283 for breach of contract and also to bear cost and expenses of the said arbitration amounting to Singapore Dollar 20330. The Arbitral Tribunal, rejected the counterclaim made by the appellant and recorded a finding that Sicom and its Arbitral Tribunal had arbitration jurisdiction over the two contracts in dispute and the said two sales contracts existed and were valid. 7. The appellant did not challenge the aforesaid award before the High Court. On the other hand, in the year 2010, the appellant filed a suit against the respondent in the High Court inter alia praying for damages. The respondent has also filed notice of motion in the said proceedings. During the pendency of the said suit, the respondent filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes inasmuch as the parties were not ad idem to refer the dispute for arbitration. The learned counsel submitted that the High Court has failed to appreciate the case of the appellant and grossly erred in holding that the appellant did not raise jurisdiction in the counterclaim filed by it. The learned counsel submitted that as against the specific conditions fixed in the purchase order regarding the jurisdiction of the Bombay High Court, the respondent did not respond to the said letter objecting to the jurisdiction of the Bombay High Court. Mr Bhushan then submitted that making a counterclaim in response to the notice sent by the arbitrator will not amount to waiver of jurisdiction. Lastly, the learned counsel submitted that the High Court has further gravely erred by recording a finding that the appellant has acted upon the sales contract as concluded contract. 10. Per contra, Mr Jay Savla, learned advocate firstly contended that the sales contract is a concluded contract and the appellant acted on the terms of the sales contract and issued the supply order to the respondent. The appellant thereafter requested to change the terms of payment mentioned in the sales contract to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e agreement, we would like to refer Section 7 of the Arbitration and Conciliation Act, which reads as under: 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) The reference 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. 15. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e plain, ordinary and popular sense (see Article 6 at p. 16). The learned author also said that the agreement has to be interpreted in order to effectuate the immediate intention of the parties . Similarly, Russell on Arbitration (21st Edn.) opined, relying on Astro Vencedor Compania Naviera S.A v. Mabanaft GmbH 1970 2 Lloyd's Rep 267, that the court should, if the circumstances allow, lean in favour of giving effect to the arbitration clause to which the parties have agreed. The learned author has also referred to another judgment in Paul Smith Ltd. v. H and S International Holdings Inc. 1991 2 Lloyd's Rep 127 in order to emphasise that in construing an arbitration agreement the court should seek to give effect to the intentions of the parties . (See p. 28 of the book.) 18. The Apex Court also in Union of India v. D.N Revri and Co. AIR 1976 SC 2257, held that a commercial document between the parties must be interpreted in such a manner as to give efficacy to the contract rather than to invalidate it. The learned Judges clarified it by saying: (SCC p. 151, para 7) 7. It must be remembered that a contract is a commercial document between the parties and it must be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the correspondence, can safely be inferred that there had been a meeting of mind between the parties and they were ad idem to the terms of sales contract which contained the forum of dispute resolution at Singapore Commodity Exchange. Apart from that, after the dispute was referred to Singapore Commodity Exchange for arbitration, the appellant in response to the notice made a counterclaim before the Arbitral Tribunal contending that the appellant had incurred huge loss in view of the failure on the part of the respondent to supply the goods in time. By making a counterclaim, the appellant indeed submitted to the jurisdiction of the arbitrator. 22. The principles laid down by the House of Lords in Cairncross v. Lorimer 1860 7 Jur NS 149 were approved of by the Judicial Committee in Sarat Chunder Dey v. Gopal Chunder Laha 1891-92 19 IA 203. We may also take the liberty of reading a passage from another Privy Council decision where the general principle applicable to such cases is stated. On the whole, therefore, Their Lordships think that the appellant, having a clear knowledge of the circumstances on which he might have founded an objection to the arbitrator proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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