Travancore Titanium Products Ltd. vs Indchem Inc.

P. Bhavadasan, J.—This is a petition filed under Section 11 of the Arbitration & Conciliation Act, 1996 seeking appointment of an Arbitrator in order to resolve the dispute that has arisen between the parties. The facts absolutely necessary for the disposal of the petition are as follows:

The petitioner had invited tenders from experienced suppliers of ilmenite for immediate supply of 5000 MTs. The respondents quoted the lowest tender and contract was awarded to them. After accepting the contract, purchase order was issued which is marked as Annexure A1. The grievance of the petitioner is that the respondents did not commence the delivery of the goods immediately on placing of the order. There was further default on the part of the respondents and they continued the erratic supply of goods. This has caused loss to the petitioner-Company and the goods supplied as per the order was only 203 MTs upto 13.04.2012. Subsequent to that date, no ilmenite has been supplied. This forced the petitioner-Company to make alternate arrangements which he may not be very much concerned.

Notice intimating about the breach committed by the respondents was issued and that is evident from Annexure A2. Annexure A3 is the reply. Invoking clause 12 of the general terms and conditions produced along with the purchase order, the petitioner submits that the matter may be referred to arbitration.

The petition is opposed by the respondents who point out that the respondents have not been served with that portion of the document which contains arbitration clause and all that they have supplied is the terms and conditions of the tender and that does not contain the arbitration clause. Further, it is contended, based on the decision in M.K. Abraham and Co. Vs. State of Kerala and Another, , that when a typed or other written agreement is available, the terms of such contract override the standard forms. If that be so, the condition available in the tender will prevail over the purchase order even assuming that there is arbitration clause. In other words, the contention of the respondents appears to be that there was no agreement for arbitration in the document supplied to them and therefore there is no necessity for arbitration.

The question is whether the document produced by the petitioner as Annexure A1 was forwarded to the respondents along with the purchase order. There can be no dispute regarding the fact that it was acting on the purchase order that the materials were supplied. It is clear from Annexure A1 as could be seen from the recital in the purchase order that the terms and conditions of tender will also form part of the order. This mode of adoption is recognised in arbitration law also. This may be either by the incorporation of terms or by reference to another deed. Whatever that be, since the respondents have acted as per the purchase order which, according to the petitioner, contains the arbitration clause, prima facie, it would appear that there is an arbitration clause binding between the parties.

It is no doubt true that in the decision in M.K. Abraham and Co. Vs. State of Kerala and Another, , it was observed as follows:

"10. If a contract consists of a printed form with cyclostyled amendments, typed additions and deletions and handwritten corrections, an endeavour shall be made to give effect to all the provisions. However, in the event of apparent or irreconcilable inconsistency, the following rules of construction will normally apply :

(i) The cyclostyled amendments will prevail over the printed terms;

(ii) The type-written additions will prevail over the printed terms and cyclostyled amendments;

(iii) Hand written corrections will prevail over the printed terms, cyclostyled amendments and typed written additions.

The above rules have evolved from the well known maxim of construction that "written, stamped or typed additions, when inconsistent with the printed terms, would normally prevail over the printed terms" and proceeds on the assumption that the printed form contained the original terms, and changes thereto were incorporated by the cyclostyled amendments, followed by changes by type-written additions and lastly the hand-written additions. The logical explanation for such assumption is this: The printed form contains standardized terms to suit all contracts and situations. It is not drafted with reference to the special features of a specific contract. When such a standard form is used with reference to a specific contract, it becomes necessary to modify the standard/general terms by making additions/alterations/deletions, to provide for the special features of that contract. This is done either by way of an attachment of an annexure to the standard printed form, incorporating the changes, or by carrying out the required additions/alterations/deletions in the standard form itself. Such additions/alterations/deletions are done by typing/stamping/hand. We may refer to the following oft-quoted enunciation of the legal position by Lord Ellenborough in Robertson v. French [1803-13] All ER Rep 350 with reference to printed form of contract with hand-written additions :

"....... that the words super added in writing are entitled, nevertheless, if there should be any reasonable doubt on the sense and meaning of the whole, to have a greater effect attributed to them than to the printed words, inasmuch as the written words are the immediate language and terms selected by the parties themselves for the expression of their meaning and the printed words are a general formula adapted equally to their case and that of all other contracting parties on similar occasions and subjects." Another parallel principle that is equally relevant is that where the contract has several annexures/attachments, prepared at different points of time, unless a contrary intention is apparent, the latter in point of time would normally prevail over the earlier in point of time".

However, the principles laid down in the above decision can have no application to the present case. It is not a case where there is conflict between the tender conditions and the purchase order. On the other hand, the claim of the respondents is that the respondents did not receive the document produced as Annexure A1 which contains the arbitration clause and they had not agreed to the arbitration. This is a disputed question of fact.

In the decision in National Insurance Co. Ltd. Vs. Boghara Polyfab Pvt. Ltd., , issues which have to be decided by the Chief Justice or his designate have been narrated. Paragraph 17.2 of the said decision deals with the issues which the Chief Justice/his designate may choose to decide or leave them to the decision of the arbitral tribunal. Paragraph 17.2 reads thus:

"17.2The issues (second category) which the Chief Justice/his designate may choose to decide (or leave them to the decision of the arbitral tribunal) are:

(a) Whether the claim is a dead (long barred) claim or a live claim.

(b) Whether the parties have concluded the contract/transaction by recording satisfaction of their mutual rights and obligation or by receiving the final payment without objection".

After having given anxious consideration to various aspects, since the two conditions made mention of in paragraph 17.2 stand satisfied, it is only proper that this Court refers the matter to Arbitration.

This petition is allowed as follows:

"i) Justice G. Sasidharan is appointed as Arbitrator.

ii) The remuneration of the Arbitrator will be fixed by the Arbitrator in consultation with both parties.

iii) The Arbitrator will be at liberty to determine whether there is arbitrable dispute and whether he has the jurisdiction to arbitrate.

iv) Award shall be passed within a period of six months from the date of receipt of a copy of this order.

v) Copy of the order shall be sent to Arbitrator."