Clause Printed in Tax Invoice to Sole Arbitrator is Arbitration Clause: Bombay High Court [Read Order]

The Bombay High Court ruled that the clause printed in tax invoice to Sole Arbitrator is Arbitration Clause.

The applicant, Bennett Coleman and Co. Ltd a news media Company indulging into various activities like news publishing, T.V, internet, radio and outdoor domain, had an interface with the respondent, an advertising agency, to be approached by various advertisers to place advertisements in the applicant’s newspapers, channels, radio and other outdoor publications via release orders.

The primary issue that arises for consideration in the present Arbitration Application is, whether a clause contemplating reference of disputes and differences arising out ofor in relation to a contract or order of advertisement, bill or otherwise breach thereof, to be referred to Sole Arbitrator, printed at the back of the tax invoice would amount to an arbitration clause.

The Arbitration and Conciliation Act, 1996, define “Arbitration Agreement” as an agreement referred to in Section 7 of the Actto mean 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 relationship, whether contractual or not.

The Counsel for the appellant contended that the respondent was obligated to make payments of the advertisement placed upon the Member Publications of INS, but there was a default, and in fact, there was a complete neglect even to respond to the correspondence from the applicant and a demand notice was raised by indicating clearly that legal proceedings could be instituted if there is failure to deliver the amount.

The Counsel for the respondent denied the existence of the arbitration agreement and stated that there is no conscious agreement between the parties to refer the disputes for adjudication and merely because the tax invoice which was issued in respect of the purchase orders provided for an arbitration, such invoices would not bring about an arbitration agreement.

The Bench of Justice Bharati Dangre ruled that “The clause contained in the tax invoice amount to an arbitration clause.”

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