M/S. INOX WIND LTD. versus M/S. THERMOCABLES LTD.

Citation: [2018] 1 S.C.R. 86 · Decided: 05-01-2018 · Supreme Court of India · Bench: S.A. BOBDE · Disposal: Appeal(s) allowed

Cited by 5 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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86
SUPREME COURT REPORTS
[2018] 1 S.C.R.
M/S. INOX WIND LTD.
v.
M/S. THERMOCABLES LTD.
(Civil Appeal No. 19 of  2018)
JANUARY 05, 2018
[S. A. BOBDE AND L. NAGESWARA RAO, JJ.]
Arbitration and Conciliation Act, 1996 – s.11(6) – Purchase
orders were issued by the Appellant to the Respondent for supply of
cables – Respondent supplied cables to the Appellant – While laying
the cables, the appellant discovered that the outer sheaths of the
cables were cracked – Appellant asked for replacement –
Respondent company did not replace the cables – Appellant issued
notice proposing the name of a sole arbitrator in terms of the
Standard terms and conditions – In absence of any response,
appellant filed application before the High Court u/s.11(6) of the
Act – High Court dismissed the said application holding that there
was no special reference to the arbitration clause in the standard
terms and conditions, so the arbitration clause cannot be said to
have been incorporated into the purchase order – Held: According
to Purchase order, the supply was to be according to the terms
mentioned in the order and the Standard terms and conditions that
were attached thereto – Apart from other conditions, the Standard
terms and conditions contained a clause pertaining to dispute
resolution – Material on record indicates that the Respondent
accepted all the terms and conditions mentioned in the purchase
order except the delivery period – Purchase order is a single contract
and general reference to the standard form even if it is not by a
trade association or a professional body is sufficient for
incorporation of the arbitration clause – Therefore, judgment of
the High Court set aside – Arbitrator appointed to adjudicate the
dispute between the parties.
Allowing the appeal, the Court
HELD: 1. Though a general reference to an earlier contract
is not sufficient for incorporation of an arbitration clause in the
later contract, a general reference to a standard form would be
[2018] 1 S.C.R. 86
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enough for incorporation of the arbitration clause. In M.R.
Engineers case, this Court restricted the exceptions to standard
form of contract of trade associations and professional institutions.
In view of the development of law after the judgment in M.R.
Engineers’ case, this court is of the opinion that a general
reference to a consensual standard form is sufficient for
incorporation of an arbitration clause.  In other words, general
reference to a standard form of contract of one party will be enough
for incorporation of arbitration clause. A perusal of the passage
from Russell on Arbitration 24th Edition (2015) would demonstrate
the change in position of law pertaining to incorporation when
read in conjunction with the earlier edition relied upon by this
Court in M.R. Engineers’ case. This Court is in agreement with
the judgment in M.R. Engineer’s case with a modification that a
general reference to a standard form of contract of one party along
with those of trade associations and professional bodies will be
sufficient to incorporate the arbitration clause. [Para 19][100-F-
H; 101-A]
2. In the present case, the purchase order was issued by
the Appellant in which it was categorically mentioned that the
supply would be as per the terms mentioned therein and in the
attached standard terms and conditions.  The Respondent by his
letter confirmed its acceptance of the terms and conditions
mentioned in the purchase order except delivery period.   The
dispute arose after the delivery of the goods.  No doubt, there is
nothing forthcoming from the pleadings or the submissions made
by the parties that the standard form attached to the purchase
order is of a trade association or a professional body.  However,
the Respondent was aware of the standard terms and conditions
which were attached to the purchase order.  The purchase order
is a single contract and general reference to the standard form
even if it is not by a trade association or a professional body is
sufficient for incorporation of the arbitration clause. [Para 20][101-
B-D]
M. R. Engineers and Contractors Private Limited v. Som
Datt Builders Limited (2009) 7 SCC 696 : [2009]
10 SCR 373 – relied on.
M/S. INOX WIND LTD. v. M/S. THERMOCABLES LTD.
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SUPREME COURT REPORTS
[2018] 1 S.C.R.
Sea Trade Maritime Corporation v. Hellenic Mutual War
Risks Association (Bermuda) Limited, The Athena
[2006] EWHC 2530 (Comm); Habas Sinai Ve Tibbi
Gazlar Isthisal Endustri A

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