The dispute arose out of a document titled "Multimodal Transport Document/Bill of Lading" (hereinafter referred as "B/L"). The B/L specifies the Appellant to be an agent of M/s Premier Sea Foods Exim Pvt. Ltd. who facilitates transport.
The opening clause of B/L states that "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". Also, clause 25 of the B/L, which was a printed condition annexed thereto, contained the arbitration clause.
The Respondent had filed a suit in 2009 before the Sub- Judge's Court in Kochi to recover a sum of Rs.26,53,593/- wherein B/L was expressly stated to be a part of cause of action. Immediately after the filing of this suit, the Appellant filed an Interlocutory Application (hereinafter referred as "I.A.") in 2009 under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred as "the Act"), wherein it was pointed to the Sub-Court, Kochi, that the printed terms annexed to the B/L has an arbitration clause included in it. The I.A. was dismissed by the Sub-Court, Kochi basing its decision on the reasoning that printed conditions annexed to the Bill of Lading is not binding on the parties.
The Appellant then moved to Hon'ble Kerala High Court under Article 227 of the Constitution of India. The Hon'ble High Court dismissed the Petition by referring to the provisions of the Multimodal Transportation of Goods Act, 1993, and that the parties had no intention to arbitrate and there was nothing to show that the Clause (printed in B/L) was brought to the notice of the Respondent. A review petition filed by the Appellant was also dismissed by the High Court.
Arguments Advanced on behalf of both the Parties
The Appellant stated that both the parties were bound by the express printed conditions referred to in the B/L and that reading Section 7(5) of the Act and M.R. Engineers and Contractors Private Limited v Som Datt Builders Limited1 judgment together, it is clear that there is reference of an arbitration clause in the contract which is in writing hence forming part of the contract.
The Respondent on the other hand stated that section 7(4)(a) of the Act requires the arbitration agreement to be in a document signed by the parties and that since B/L is not signed by Respondent, it was not bound by that Arbitration Clause.
Court's Finding and Judgment
I. The court stated that B/L in its opening clause specified the term 'Merchant' defined as shipper, consignor or consignee under clause (1) (e) of the Standard Conditions Governing Multimodal Transport Document.
II. That on the perusal of Clause 25 of the B/L, it can be stated that parties have expressly agreed to be bound by the terms despite the Arbitration Clause being in a printed condition, annexed to the B/L.
III. The Respondent cannot blow hot and cold by relying on the B/L (though unsigned) for the purpose of suit filed by them, and for the purpose of Arbitration stating that it should be signed.
IV. That in Jugal Kishore Rameshwardas v Mrs. Goolbai Hormusji2, the court has held that an arbitration agreement needs to be in writing though it need not be signed. Further, adding to this, the Court held that section 7(4) of the Act only adds that an arbitration agreement would be found on the circumstances mentioned in the sub-clauses of section 7(4).
Therefore, reading section 7(5) of the Act with M.R. Engineers case, it can be held that reference in B/L is such as to make arbitration clause part of the contract and that the arbitration agreement needs to be in writing though it is not signed by the parties. Accordingly, the Supreme Court allowed the appeal and set aside the judgments of the High Court.
1 (2009) 7 SCC 696
2 A.I.R. 1955 S.C. 812
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