Sunday, 4 November 2018

Whether Unsigned Arbitration Agreement is valid?

 In addition, we may indicate that the law in this behalf,
in Jugal Kishore Rameshwardas vs. Mrs. Goolbai Hormusji, AIR
1955 SC 812, is that an arbitration agreement needs to be in
writing though it need not be signed. 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 prerequisite
is that it be in writing, as has been pointed out in
Section 7(3).
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 10800-10801 OF 2018
(Arising out of SLP (C) Nos. 31101-31102/2016)

M/S CARAVEL SHIPPING SERVICES PVT. LTD Vs M/S PREMIER SEA FOODS EXIM PVT. LTD.

Dated:October 29, 2018.
R.F. Nariman, J.

1) Leave granted.
2) The present appeals arise out of a document styled as
“Multimodal Transport Document/Bill of Lading” dated
25.10.2008. This Bill of Lading states that the
Consignor/Shipper is one M/s Premier Seafoods Exim Private
Limited of Kerala, and that Caravel Shipping Services Private
Limited, who is the appellant before us, is the agent who
facilitates transport. The very opening Clause of the Bill of
Lading specifies:
“In accepting this Bill of Lading the Merchant
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.”
2
3) The Respondent filed a Suit being O.S. No. 9 of 2009
before the Sub-Judge’s Court in Kochi to recover a sum of Rs.
26,53,593/- in which the Bill of Lading was expressly stated
to be a part of cause of action. Soon after the Suit was
filed, an I.A. being I.A. No. 486 of 2009 was filed by the
appellant under Section 8 of the Arbitration and Conciliation
Act, 1996 (hereinafter referred to as “the Act”) in which it
was pointed out to the Court that an arbitration clause was
included in the printed terms annexed to the Bill of Lading.
The I.A. also pointed out that a Section 11 petition to
appoint an Arbitrator in accordance with Clause 25, being the
printed term in question, has also been filed in Chennai. The
Sub-Court, Kochi, by its judgment dated 08.01.2013 dismissed
the I.A., stating that printed conditions annexed to the Bill
of Lading would not be binding upon the parties, and also that
as no part of the cause of action arose in Chennai, the I.A.
would have to be dismissed.
4) In the Original Petition filed under Article 227 of the
Constitution of India, the High Court referred to certain
provisions of the Multimodal Transportation of Goods Act, 1993,
and also stated that the arbitration clause, being in a printed
condition, there being no intention to arbitrate and nothing to
show that Clause 25 was brought to the notice of the
respondent, agreed with the learned Sub-Judge and dismissed the
Original Petition. A Review filed against the said judgment
was also dismissed by a judgment dated 14.06.2016.

5) Ms. Liz Mathew, learned counsel appearing on behalf of
the appellant pointed out that printed conditions of the Bill
of Lading were expressly referred to in the Bill of Lading and
both parties were stated to be bound by the same. This being
so, in accordance with Section 7(5) of the Arbitration Act
read with this Court’s judgment in M.R. Engineers and
Contractors Private Limited vs. Som Datt Builders Limited,
(2009) 7 SCC 696 would make it clear that there was a
reference in the contract to the arbitration clause, and since
it is in writing and the reference is such that the
arbitration clause formed part of the contract, according to
her, both the courts were in error. She also pointed out to
us that, in the meanwhile, the Madras High Court, by order
dated 09.01.2015, has referred to the Kerala proceeding, but
nonetheless applied the arbitration clause and appointed a
Senior Advocate to arbitrate between the parties in that
proceeding.
6) On the other hand, Mr. P.A. Noor Muhamed, learned counsel
for the respondent, invited our attention to Section 7(4) of
the Act and argued that Section 7(4)(a) requires an
arbitration agreement to be in a document that is signed by
the parties. Since the Bill of Lading was not signed by his
client, according to him, he is, therefore, not bound by the
arbitration clause contained in that document. Further, he
has also argued that at present the stage of the suit is that
issues have been struck and one witness is being examined.

7) Having heard learned counsel for both parties, we are of
the view that 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. The arbitration clause, which is Clause 25 being a
printed condition annexed to the Bill of Lading, reads as
under:
“25. Jurisdiction/Arbitration:
The contract evidenced by the Bill of Lading
shall be governed by the laws of India, and
subject to the exclusive jurisdiction of court
in Chennai only. Disputes/difference arising
out of this contract and/or connection with the
interpretation of any of its clauses shall be
settled by arbitration in India in accordance
with the Arbitration & Conciliation Act, 1996.
The No. of Arbitrators shall be three, the
Arbitrators shall be commercial persons the
venue for arbitration shall be Chennai.”
8) A perusal of the same 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

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.
9) In addition, we may indicate that the law in this behalf,
in Jugal Kishore Rameshwardas vs. Mrs. Goolbai Hormusji, AIR
1955 SC 812, is that an arbitration agreement needs to be in
writing though it need not be signed. 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 prerequisite
is that it be in writing, as has been pointed out in
Section 7(3).
10) This being the case, the present is a clear case where,
under Section 7(5) of the Act read with M.R. Engineers and
Contractors Pvt. Ltd. (supra) (paras 22 & 24), the reference
in the Bill of Lading is such as to make the arbitration
clause part of the contract between the parties.
11) The fact that the stage of the present suit is that a
particular witness is being examined would not come in the way
of the Section 8(3) application being allowed inasmuch as the
Section 8(3) application was filed in the same year as that of

the suit. We may also add that we have not gone into the
Multimodal Transportation of Goods Act, 1993 for the reason
that whether the present Bill of Lading is governed by the
provisions of the Act (Section 26 in particular) or not would
not make any difference to the position that an arbitration
clause forms part of an agreement between the parties, and
would, therefore, be governed by Section 7 of the Arbitration
Act.
12) We, therefore, allow the appeals and set aside the
judgments of the High Court.
.......................... J.
(ROHINTON FALI NARIMAN)
.......................... J.
(NAVIN SINHA)
New Delhi;
October 29, 2018.
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