Appeal to implement arbitration clause allowed and arbitrator appointed by Supreme Court. Trade associations and professional bodies will be sufficient to incorporate the arbitration clause.
January 7, 2018
A Bench of Justice S.A. Bobde and L. Nageswara Rao passed Judgment in an appeal filed by an appellant, a manufacturer of wind turbine generators (WTGs) in Inox Wind Ltd v. Thermocables Ltd, Civil Appeal No. 19 of 2018.
The facts of the case are that two purchase orders dated 13.12.2012 and 02.02.2013 were issued by the Appellant to the Respondent for supply of cables for their WTGs. According to the Purchase Order, the supply was to be according to the terms mentioned in the order and the Standard Terms and Conditions that were attached thereto. Apart from the other conditions, the Standard Terms and Conditions contain a clause pertaining to dispute resolution. The said clause provides for a dispute to be resolved by a sole arbitrator in accordance with the provisions of the Arbitration and Conciliation Act, 1996. The material on record indicates that the Respondent accepted all the terms and conditions mentioned in the Purchase Order except the delivery period as is evident from a letter dated 15.12.2012.
The Respondent, pursuant to the Purchase Order, supplied wind power cables to
the Appellant. While laying the cables supplied by the Respondent-company, the
Appellant discovered that the outer sheaths of the cables of 150 sq. mm. were
cracked. This forced them to stop the WTGs so as to avert damage to expensive
equipment. According to the Appellant, the Respondent-company did not replace
the cables. The Appellant, therefore, was constrained to issue a notice dated
30.10.2014 proposing the name of a sole arbitrator in terms of the Standard
Terms and Conditions. In the absence of any response, the Appellant moved the
High Court of Judicature at Allahabad by filing an application under Section 11
(6) of the Act.
The High Court dismissed the said application by holding that an arbitrator
cannot be appointed as the Appellant did not prove the existence of an
arbitration agreement.
Supreme Court said that:
"In the present case, the purchase order was issued by the Appellant in which
it was categorically mentioned that the supply would be as per the terms
mentioned therein and in the attached standard terms and conditions. The
Respondent by his letter dated 15.12.2012 confirmed its acceptance of the terms
and conditions mentioned in the purchase order except delivery period. The
dispute arose after the delivery of the goods. No doubt, there is nothing
forthcoming from the pleadings or the submissions made by the parties that the
standard form attached to the purchase order is of a trade association or a
professional body. However, the Respondent was aware of the standard terms and
conditions which were attached to the purchase order. The purchase order is a
single contract and general reference to the standard form even if it is not by
a trade association or a professional body is sufficient for incorporation of
the arbitration clause."
Supreme Court allowed the appeal and appointed Justice Sushil Harkauli as
the Arbitrator to adjudicate the dispute between the parties.
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Read the Judgment of Supreme Court in Inox Wind Ltd v. Thermocables Ltd dated 5.1.2018