Court holds absence of separate signature on arbitration clause does not negate its validity where parties acted upon invoices and made part payments
In a significant ruling delivered on September 9, 2026, the Delhi High Court, presided over by Justice Om Prakash Shukla, appointed a sole arbitrator to adjudicate disputes between M/s Tinna Rubber and Infrastructure Limited and Mr. Pankaj Gandhi, reinforcing the binding nature of arbitration clauses printed on the reverse side of commercial invoices.
The petitioner, M/s Tinna Rubber and Infrastructure Limited, moved the court under Section 11 of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator based on Clause 18 of the terms and conditions of sale printed on the back of invoices raised to the respondent. The petitioner argued that the respondent had accepted the goods, received the invoices with the arbitration clause on their reverse, and even made part payments without raising any contemporaneous objections, thereby indicating acceptance of the terms including the arbitration agreement.
The respondent contested the petition, asserting that no arbitration agreement existed as the arbitration clause was not separately signed or accepted. He contended that the terms and conditions were on a separate sheet not supplied or acknowledged by him, and thus there was no mutual agreement to arbitrate disputes.
Justice Shukla, after examining the submissions and materials, clarified that the issue before the court was limited to the prima facie existence of an arbitration agreement. The court observed that the absence of a separate signature on the arbitration clause printed on the invoice's reverse did not automatically invalidate the arbitration agreement, especially when the conduct of the parties, such as acceptance of goods and part payments, indicated consent to the terms.
Relying on the precedent set by the Division Bench in M/s Triom Hospitality v. M/s J.S. Hospitality Services Pvt. Ltd. (2025 SCC Online Del 8647), the court reiterated that Section 7 of the Arbitration and Conciliation Act does not mandate a separate signature on the arbitration clause. The intention to arbitrate can be inferred from the written record, surrounding circumstances, and conduct of the parties. The court emphasized that substantive validity issues requiring deeper evidentiary scrutiny are to be decided by the arbitral tribunal, not during the appointment stage under Section 11.
Accordingly, the Delhi High Court appointed Ms. Mansvini Jain, Advocate, as the sole arbitrator to adjudicate the disputes. The arbitrator is required to commence proceedings within two weeks and must furnish disclosures as per Section 12(2) of the Act. The arbitration will proceed under the rules of the Delhi International Arbitration Centre (DIAC), and the parties are free to raise any jurisdictional or arbitrability objections before the arbitrator.
The court's decision underscores the judiciary's pro-arbitration stance, ensuring that technicalities like absence of a separate signature on arbitration clauses do not derail the arbitration process when parties' conduct signifies agreement. It also clarifies that detailed disputes on the validity of contract terms and the arbitration agreement itself are to be resolved by the arbitral tribunal.
This ruling is a crucial precedent for commercial entities relying on printed arbitration clauses in transactional documents and reinforces the efficacy of arbitration as a dispute resolution mechanism in India's commercial jurisprudence.
Bottom Line:
Arbitration Agreement - Existence of arbitration clause in the terms and conditions printed on the reverse of invoices - Absence of separate signature on arbitration clause does not negate its existence if parties' conduct indicates acceptance.
Statutory provision(s):
Arbitration and Conciliation Act, 1996 Sections 7, 11(6), 12(2), 16
