Arbitration and Conciliation Act, 1996: ss.7(3), 7(4), 8 – Bill of lading – Suit for recovery by respondent-consignor in Kochi court – Application filed by appellant, who is agent to facilitate transport under s.8 of AC Act on the basis of arbitration clause in Bill of Lading – In the application, it was pointed out that s.11 application was also filed in Chennai court – Kochi court dismissed s.8 application on the ground that the printed conditions annexed to the Bill of Lading would not be binding upon the parties and also that as no part of cause of action arose in Chennai, application was not maintainable – High Court dismissed the Original Petition filed under Art.227 of the Constitution of India accepting the view of Kochi court – On appeal, held: Respondent expressly agreed to be bound by the arbitration clause despite the fact that it was a printed condition annexed to the Bill of Lading – Further, respondent itself had filed recovery suit by relying upon the Bill of Lading as part of its cause of action – Therefore, respondent cannot blow hot and cold and argue that for the purpose of its suit, it will rely upon the Bill of Lading (though unsigned) but for the purpose of arbitration, the requirement of the Arbitration Act that the arbitration clause should be signed is not fulfilled – The order of High Court is set aside.
Allowing the appeals, the Court
HELD:1. The Bill of Lading makes it clear that the term “Merchant” (which is defined in the Standard conditions Governing Multimodal Transport Documents - Clause (1) (e) as meaning shipper, consigner or consignee) expressly agrees to be bound by all the terms, conditions, clauses and exceptions on both sides of the Bill of Lading whether typed, printed or otherwise. A perusal of the arbitration clause, which is Clause
25 being a printed condition annexed to the Bill of Lading, shows that the respondent has expressly agreed to be bound by the arbitration clause despite the fact that it is a printed condition annexed to the Bill of Lading. Secondly, it must be remembered that the respondent has itself relied upon the Bill of Lading as part of its cause 5 of action to recover the sum of Rs.26,53,593/in the suit filed by it. The respondent, therefore, cannot blow hot and cold and argue that for the purpose of its suit, it will rely upon the Bill of Lading (though unsigned) but for the purpose of arbitration, the requirement of the Arbitration Act is that the arbitration clause should be signed. [Paras 7, 8][292-E-F; 293-A-B]
2. The fact that the arbitration agreement shall be in writing is continued in the 1996 Act in Section 7(3) thereof. Section 7(4) only further adds that an arbitration agreement would be found in the circumstances mentioned in the three sub-clauses that make up Section 7(4). This does not mean that in all cases an arbitration agreement needs to be signed. The only pre-requisite is that it be in writing, as has been pointed out in Section 7(3). This being the case, the present is a clear case where,under Section 7(5) of the Act the reference in the Bill of Lading is such as to make the arbitration clause part of the contract between the parties. [Paras 9, 10][293-D-E]
M.R. Engineers and Contractors Private Limited v. Som Datt Builders Limited (2009) 7 SCC 696 : [2009] 10 SCR 373 ; Jugal Kishore Rameshwardas v. Mrs.
Goolbai Hormusji AIR 1955 SC 812 : [1955] SCR 857 – relied on.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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