Acceptance Of Goods Delivered Under Tax Invoice Amounts To Accepting Terms Governing It, Including Arbitration Clause: Delhi High Court

Brief Facts of the case:

The respondent along with his son, entered into a business transaction with the petitioner wherein against the purchase orders issued the petitioner supplied alcoholic beverages to the respondent and his son. The present dispute arose with respect to various tax invoices that was issued in the name of the respondent. An arbitration clause was mentioned in the Terms & Conditions printed in the invoices. After the cheque issued by the respondent's son was dishonoured, the petitioner filed a complaint under Section 138 of the Negotiable Instruments Act. Also, the petitioner invoked the arbitration clause mentioned in the tax invoices and then approached the High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of a Sole arbitrator.

The question that is examined by the court is that whether an arbitration clause contained in an invoice, issued unilaterally by one of the parties to the dispute, amounts to a valid arbitration agreement between the parties.

Observation of the Court:

The court observed that it is now a settled position in law is that even if there is a doubt as to the existence of the arbitration agreement between the parties, the court ought to refer the parties to Arbitration. All contentions as to the existence and validity of an arbitration agreement are to be looked into by the Arbitral Tribunal.

Further, the court noted that the parties were engaged in continuous business transactions and had a running account maintained between them. As against the subject invoices issued by the petitioner, not only were the subject goods accepted by the respondent without any complaints/claims, but also part payment was made to discharge part liability arising out of the said transactions. The conduct of the parties point towards intention to be governed by the terms of the invoices. Moreover, the arbitration clause contained in the invoice itself is clear to the extent that acceptance of subject goods delivered under the invoice would amount to accepting the terms governing it, including the arbitration clause contained therein. The same was in knowledge of the respondent, who, at no point, objected to the same.

Then, the court held that as long as a prima facie opinion can be formed as to the existence of an arbitration agreement between the parties and the facts point to mutual consent between them to be governed by it, the Court is bound to refer the dispute to arbitration.

Consequently, the court refereed the dispute to the Arbitral Tribunal and appointed a sole Arbitrator to adjudicate the dispute.

Case Title: RADICO KHAITAN LIMITED versus HARISH CHOUHAN

Citation: 2025 LiveLaw (Del) 368

Case Number: ARB.P. 1560/2024

Counsel for the Petitioner: Mr. Kamal Garg, Advocate

Counsel for the Respondent: None

Date of Judgment: 04.03.2025

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