Kambli 1 ARBP505.08 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO.505 of 2008 ... M/s.R.D.Fashion ...Petitioner v/s. M/s.NEC Tex ...Respondent ... Ms.Soumya Srikrishna with Mr.Nivit Shrivastava & Mr.Nimesh Bhatt for the Petitioner. Mr.L.V.Jain i/b Mr.R.G.Jain for the Respondent. ... CORAM: D.K.Deshmukh DATED: 17th March, 2011 P.C.: 1. By this petition the Petitioner challenges the award made by the Arbitrator of the Mumbai Textile Merchants’ Mahajan. The learned Counsel appearing for the Petitioner submits that before the Arbitrator the Petitioner had contended that there is no arbitration clause in the contract between the parties. The learned Arbitrator rejected that contention relying on what is stated in the bills issued by the claimant. The learned Counsel for the Petitioner Kambli 2 ARBP505.08 submits that a clause identical to one on which the arbitrator relied on in this case has been considered by the Division Bench of this Court in its judgment in the case of Divya Shivlaks Impex v/s. Shantilal Jamnadas Textiles (P) Ltd., 1999(2)Mh.L.J., 223 and the Division Bench has held that such a clause in the Bill does not amount to an arbitration clause. 2. I have also heard the learned Counsel appearing for the Respondent. 3. The arbitration clause on which reliance is placed in the present case by the Arbitrator reads as under: “This sale is subject to the “Sale Dispute and Arbitration Rules of the Mumbai Textile Merchants’ Mahajan.” . The learned Arbitrator has dealt with the contention of the Petitioner that there is no arbitration clause between the parties in paragraphs 4 of the award. Paragraph 4 reads as under: “4. Jurisdiction the defendants have through their correspondence raised objection that there was no arbtiration agreement between the parties to refer the dispute to the arbitration and hence this tribunal has no jurisdiction to arbitrate over the dispute? I have gone through the bills of the Plaintiffs and it was well stated in the terms of the bills of the Plaintiffs that this sale is subject to the “Sale Dispute and Arbitration Rules of Kambli 3 ARBP505.08 Mumbai Textile Merchants’ Mahajan”. Further Plaintiffs in their bills, the clause is mentioned that no claim shall be accepted after cutting of fabrics. Party has made claim for Garments and cut pattas. The defendants have received the goods under the said bill and have never raised any objection as to the terms of the bills and hence the jurisdiction of Mumbai Textile Merchants’ Mahajan to entertain Arbitration Proceedings between the Plaintiffs and Defendants is beyond any dispute. The terms and conditions on the bills means that the Plaintiffs intent to supply goods only on terms as mentioned on the bills and the defendants if had any objection on the bills should have communicated the same to the Plaintiffs and should not have taken the delivery of such goods. I conclude on this issue that the defendants have infact accepted the Arbitration Clause and hence this arbitration tribunal has jurisdiction to arbitrate over the dispute as per the terms more particularly mentioned on the bill.” . Perusal of the above clause shows that existence of the above clause in the Bill, according to learned Arbitrator amounts to arbitration agreement between the parties. Perusal of the judgment of the Division Bench in Divya Shivlaks Impex’s case shows the Division Bench has considered an arbitration clause which is almost identical to the arbitration clause which is relied on by the learned Arbitrator in the present case. The Arbitration Clause relied on in that case reads as under: “This sale is subject to the sale Disputes and Arbitration Rules of Mumbai Piece Goods Merchants Mahajan.” Kambli 4 ARBP505.08 . The Division Bench after considering this clause has recorded a clear finding that this clause does not amount to an agreement to refer the dispute to the arbitrator of the Mahajan. What has been observed by the Division Bench in paragraphs 16, 17, 18 & 19 of that judgment, in my opinion, is relevant. It reads as under: 16. Turning to the printed invoice, our attention was invited to one such sample invoice No. 1563 dated 15th January 1998. We have perused the original invoice of which the copy is on record. What the respondents contend is that after the details of the particulars of the goods supplied, their quality, quantity, price etc. there is a printed note on the lower portion of the invoice which reads as under : "This sale is subject to the Sale, Disputes and Arbitration Rules of Mumbai Piece Goods Merchants Mahajan." Relying upon the above printed clause in the invoice the respondents' contention is that this amounts to an agreement to refer the dispute to the Mahajan. We must hasten to add that this printed clause is not intelligible to us and, in our view, there is no clause which says that the sale was subject to the Arbitration Rules of the Mumbai Piece Goods Merchants Mahajan. It is difficult to appreciate the exact meaning of the printed words. On a plain reading of the said printed clause, in the absence of any other material to explain the said printed clause, we cannot come to the conclusion that the printed clause quoted above amounts to an agreement to refer the dispute to the arbitration of the Mahajan. In our view, therefore, the printed clause does not amount to an agreement to refer the dispute to the arbitration of the Mahajan. Kambli 5 ARBP505.08 17. The respondents invited our attention to two decisions of this Court to contend that similar clauses were held to amount to arbitration agreement between the parties. The first decision is of 10th December, 1996 in Appeal No. 782 of 1986 in Arbitration Petition No. 57 of 1986 in Award No. 10 of 1986 M/s. Rajkumar v. M/s. Bhikulal Dwarkadas. A perusal of this decision shows that though the appellants were not members of the Mahajan as is the case before us, there was a contract between the parties which contained an express clause to the effect that the dispute in respect of the sales covered by the said contract would be decided in accordance with the rules of the Mahajan. Secondly, there were invoices under which the goods were supplied. These invoices also contained an express clause to the effect that the dispute in respect of the sale covered by the invoices was to be decided in accordance with the rules of the Mahajan. The Division Bench thus came to the conclusion that "in view of the written agreement the appellant's contention that they were not bound to refer the dispute to the arbitration under the said rules and that they were not bound by the award could not be accepted. The learned Single Judge against whose decision the said appeal was preferred had also come to the same conclusion that there was a contract between the parties which contained an express clause to the effect that the disputes in respect of the sale covered by the contract would be decided in accordance with the rules of the Mahajan. So was the decision in respect of the invoice. It was in these peculiar facts that the Division Bench came to the conclusion that the appellants were bound by the arbitration agreement and the express clause in the invoice. We do not think that the ratio of the Division Bench decision in Appeal No. 782 of 1986 is of any application to the facts in the case before us. As indicated earlier, in the written contract dated 2nd January, 1998 there is no arbitration clause. There is no other correspondence from which the arbitration agreement can be spelt out. Printed condition on the invoice does not, in our view, constitute an agreement Kambli 6 ARBP505.08 to refer the dispute to the arbitrator. 18. The second contention on which Mr. Tripathi placed reliance is the decision of a learned Single Judge dated 18th February, 1988 in Arbitration Petition No. 61 of 1982 in Award No. 6 of 1982 Kishorekumar Lallubhai v. Shreenath Trading Corporation. This was also a case where the petitioners who approached this Court for setting aside the Award were not the members of the Mahajan and the respondents in whose favour the award was made were the members. On the contention as to whether there was arbitration clause between the parties, the learned Single Judge in para 3 of his judgment observed as under: "the respondents have filed affidavit of Surendra R. Shah in answer to the petition and in paragraph 3 it is pointed out that in respect of the transaction between the parties the respondents had issued and delivered to the petitioners invoices and each of the invoice contents the clause that the sale is subject to the arbitration rules of the Bombay Piece Goods Merchants' Mahajan". It was on the basis of such an express clause under which the parties had agreed to refer the dispute to the Arbitrator that it was held that the sale was subject to the Arbitration Rules of the Mumbai Piece Good Merchants Mahajan. In the absence of any such specific clause in the printed invoice which we have referred to above, we do not think that the ratio of the decision in Kishorekumar Lallubhai's case is of any assistance to the facts of the case before us. 19. In the circumstances, we hold that there was no arbitration agreement between the parties. The contract dated 2nd January, 1998 did not contain any arbitration clause. The subsequent correspondence exchanged between the parties also did not contain any stipulation that the sale was subject to the rules of the Merchants' Mahajan much less a specific agreement that the dispute would be referred to the arbitration of the Kambli 7 ARBP505.08 Merchants' Mahajan. Right from the inception, the appellants have been contending that there was no arbitration clause and that the Merchants Mahajan had no jurisdiction to arbitrate upon the dispute. The appellants have been consistently placing reliance on the original contract dated 2nd January 1998. The ratio of the two decisions of this Court on which Mr. Dalal has placed reliance are, in our view, clearly distinguishable. On facts, in each of the two cases there was an express agreement to refer the dispute to the arbitration of the Merchants' Mahajan which is conspicuously absent in the present case. Printed clause in the invoice is wholly unintelligible and does not, in our view, make out an agreement to refer the dispute to the arbitration of the Merchants' Mahajan. In the circumstances, it is not possible for us to uphold the judgment of the learned Single Judge. 4. It is a judgment of the Division Bench, which is binding on me. As the Division Bench has held that almost identical clause in the Bill does not amount to arbitration clause, in my opinion, I will have to set aside the award. What is further pointed out by the learned Counsel appearing for the Petitioner is that the arbitration clause found on the Bill which is quoted above is not even in confirmity with the Rules of the Mahajan. The learned Counsel invited my attention to Rule (c) of the Mahajan. It reads as under: (c) Each of the members of the Mahajan is required to print in their Terms and Conditions in “ankada” or “Contract” Note of “Invoice”, the condition that “This Sale is subject to the Arbitration as per the Mumbai Textile Merchants’ Mahajan’s Rules relating to Arbitrtion” in case of any dispute or differences arising Kambli 8 ARBP505.08 under such Ankada or Contract or Invoice. 5. The learned Counsel pointed out that on the Bill it is not mentioned that sale will be subject to the arbitration clause as per the Mumbai Textile Merchant Mahajan’s Rules. In any case, in my opinion, as the finding recorded by the learned Arbitrator on the aspect of his jurisdiction is clearly contrary to law laid down by the Division Bench in the case of Divya Shivlaks Impex , the award will have to be set aside as being without the authority of law. 6. In the result, therefore, the petition succeeds and is allowed. Award impugned in the petition is set aside. (D.K.Deshmukh, J.)