Subhro Kamal Mukherjee, J.:— This is an application under article 227 of the Constitution of India against an order dated January 24, 2005 passed by the sole arbitrator. By the order impugned, the arbitrator held that he had jurisdiction to adjudicate upon the disputes and differences between the parties.
2. The petitioner namely, Surujit Saha, the sole proprietor of Babaji Automotive, was appointed as a distributor of Servo Brand Lubricants of Indian Oil Corporation Limited. The parties have entered into an agreement and in terms of the agreements, the petitioner took delivery of such lubricants from Indian Oil Corporation Limited. The petitioner used to take lubricants on credit facility. It is alleged that the banker of the petitioner dishonoured several cheques issued by the petitioner when Indian Oil Corporation Limited presented those cheques for encashment.
3. It is alleged that the lube distributorship agreement contains an arbitration clause requiring the parties to refer their disputes and differences to the sole arbitration of the Director (Marketing) of Indian Oil Corporation Limited, who may either himself act as the arbitrator or nominate some other officer of the said Corporation to Act as the arbitrator.
4. Invoking the said arbitration clause, the said corporation referred the disputes and differences between the parties to the arbitration of the Director (Marketing) of the said corporation. The said Director nominated Subrata Ghosh, a Deputy General Manager of the said Corporation, as the sole arbitrator.
5. The petitioner appears before the arbitrator and files an application under section 16 of the Arbitration and Conciliation Act, 1996 challenging the jurisdiction of the arbitrator on the ground that there is no valid arbitration agreement between the parties. The petitioner, therefore, requests the arbitrator to rule on his jurisdiction and to drop the arbitral proceeding.
6. The arbitrator by the order impugned dated January 24, 2005 rules that there is a valid arbitration agreement between the parties.
7. Mr. Debasish Kundu, ld. advocate, appearing in support of this application, draws my attention to a copy of the lube distributorship agreement, annexed at page 32 to this application, and submits that the said document is not signed by both the parties, but is only signed by the present petitioner. He, also, draws my attention to the findings of the arbitrator that the document contains the signature only of the petitioner. Mr. Kundu relies upon Sub-section (4) of section 7 of the Arbitration and Conciliation Act, 1996 and submits that as the document containing the alleged arbitration agreement is not signed by both the parties, there is no valid arbitration agreement empowering the arbitrator to enter upon the reference.
8. In order to appreciate the points raised by Mr. Kundu, it is necessary to note the provisions of section 7 of the Arbitration and Conciliation Act, 1996, which run as under:
‘Arbitration Agreement— (1) In this part, “arbitration agreement” means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
(3) An arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing if it is contained in—
(a) a document signed by the parties,
(b) an exchange of letters, telex, telegrams or other means of telecommunication which provide record of the agreement, or
(c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.
(5) The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is such as to make that arbitration clause part of the contract.’
9. Prior to passing of the Arbitration Act, 1940, oral agreements to refer to arbitration were perfectly valid. With the enactment of Arbitration Act, 1940 law in this respect was changed. Under section 2(a) of the Arbitration Act, 1940 arbitration agreement means a written agreement to submit present or future difference to arbitration, whether an arbitrator is named therein or not. With the enactment of the Arbitration and Conciliation Act, 1996, the similar position of law is maintained, that is, an arbitration agreement shall be in writing. Therefore, an oral arbitration agreement is not recognised, only arbitration agreement in writing is recognised. Sub-section (4) of section 7 contemplates that an arbitration agreement is in writing if it is contained in (a) a document signed by the parties; (b) an exchange of letter, teles, telegrams or other means of telecommunication, which provided a record of the agreement, (c) an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other.
10. My reading of section 7 of the Arbitration and Conciliation Act, 1996 is that under sub-section (3) of section 7 of the said Act, it is imperative that an arbitration agreement must be in writing. Sub-sections (4) and (5) of section 7 explains as and when an arbitration agreement is considered to be in writing. Written agreement means an agreement in which the terms agreed by the parties are reduced into writing. It is, therefore, not necessary that the agreement must be signed by the both parties.
11. In this case the existence of a valid arbitration agreement can be spelt out from the conduct of the parties. The petitioner admittedly signed the lube distributorship agreement accepting all its terms and conditions. The petitioner in furtherance to the said agreement took delivery of lubricants from the said Corporation. When he has committed defaults, under clause 39 of the agreement, the disputes and differences between the parties have been referred to arbitration. It is not open to the petitioner, at this stage, to deny the existence of a valid arbitration agreement.
12. The application is, therefore, rejected.
13. I make no order as to costs.
14. Let xerox plain copy of this order, if applied for, be supplied to the ld. advocate for both the parties on usual undertaking.
Application rejected.
A.D