Case: Yogi Agarwal Vs. M/S Inspiration Clothes &amp; U

2. There is a delay of 182 days in filing this petition. The only reason assigned by the petitioner, a seasoned businessman, to explain the delay is that he was confused by diverse opinions about filing of special leave petition. The explanation is neither satisfactory nor sufficient to condone the delay. Even assuming that the delay is condonable, we find that the special leave petition is liable to be rejected on merits.3. The plaintiff filed the suit on 9.9.2003 for recovery of Rs.9,48,143 with interest allegedly due in regard to (i) price of two consignments supplied by plaintiff to the nominees of the first defendant company and (ii) value of nine samples made available by the plaintiff to defendants. In the said suit, defendants made an application dated 17.12.2005 under section 8 of the Act, for referring the parties to arbitration. To show the existence of arbitration agreement, the defendants relied upon three invoices of ‘Yash Traders, a proprietary concern of the second defendant (petitioner herein), dated 2.11.1999, 22.6.2001 and 11.2.2003 in regard to the sale of cotton fabric by the said Yash Traders to the plaintiff containing the following note: "All disputes pertaining to this transaction if any will be subject to the Arbitration Rules & Regulations of Bharat Merchant Chamber". The defendants alleged that the said invoices were accepted by the plaintiff thus resulting in a binding arbitration agreement.4. The trial court noted that there was no arbitration agreement in regard to the suit transactions and that the defendants wanted the three invoices (containing a provision for arbitration) relating to some other transactions to be treated as an arbitration agreement between parties in regard to the suit transactions. It examined the three invoices and held that the said invoices could not be treated as containing an arbitration agreement within the meaning of Section 7 of the Act, as the invoices were signed only by ‘Yash Traders and not by the plaintiff. The said decision has been affirmed by the High Court.

Court's reasoning:
In this case, neither of the two conditions was satisfied. Firstly, the suit related to transactions said to have taken place between plaintiff and first defendant company and its two directors, whereas the documents put forth as containing the arbitration agreement related to some transactions between a proprietary concern of second defendant and plaintiff. Secondly, the provision for arbitration is not contained in any contract or document relating to the suit transactions, but contained in documents relating to some unconnected independent transactions. It is significant that, in their application under section 8 of the Act, the defendants did not even allege that there was an arbitration agreement in regard to the subject matter of the suit. What they alleged was that ‘subject matter of the suit was similar to or identical with the ‘subject matter of the arbitration agreement. That does not entitle them to seek relief under section 8 of the Act. As there was no ‘arbitration agreement, the requirements of section 7 were not met.