In the matter of Concrete Additives and Chemicals Pvt. Ltd v. S N Engineering Services Pvt. Ltd, the Bombay High Court dealt with an application filed under the Arbitration and Conciliation Act, 1996 (the Act) whereby Concrete Additives and Chemicals Pvt. Ltd (Concrete) had prayed for appointment of an arbitral tribunal to adjudicate the dispute which had arisen under the purchase orders that were issued by S N Engineering Services Pvt. Ltd (SN).
While executing the purchase orders, Concrete issued tax invoices which were printed forms, and under the “Terms & conditions”, the following clause was incorporated:-
“1) All or any disputes or differences that may arise between the parties hereto shall be referred to the arbitration of a sole arbitrator to be appointed by CONCRETE ADDITIVES & CHEMICALS PVT. LTD. The arbitration proceedings shall be governed by the provisions of the Arbitration & Conciliation Act, 1996. The venue of the arbitration shall be at Mumbai.”
Hence, on the basis of such tax invoices, Concrete approached the Court and contended that the tax invoices were accepted by SN and therefore, it was to be presumed that there existed a conscious arbitration agreement between the parties to refer the disputes for adjudication in arbitration.
The Court remarked that, contract between the parties was born under the purchase orders issued by SN and that the said purchase orders did not contain any reference to an arbitration agreement. The Court held that, the issuance of tax invoices was a unilateral act by Concrete and acceptance of the tax invoices was required to be held to be relevant by accepting the delivery of the goods and subsequent payment be made under the said invoices. The Court further held that merely because the tax invoices which were in response to the purchase orders provide for arbitration for dispute resolution, did not bring about an arbitration agreement as contemplated under Section 7 of the Act.
Hence, the Bombay HC rejected the petition saying the whole was without any merit and ruled that acceptance of tax invoices by the opposite party, containing a reference to arbitration, does not lead to the presumption that an arbitration agreement exists between the parties.