w w w . L a w y e r S e r v i c e s . i n


M/s. Jain Irrigation Systems Limited, rep. by its Joint Managing Director Ajit Bhavarlal Jain v/s M/s. Satyam Computer Services Limited, Rep. by its Managing Director

    Arbitration Application No.141 of 2010
    Decided On, 18 July 2011
    At, High Court of Andhra Pradesh
    By, THE HONOURABLE MR. JUSTICE B. SESHASAYANA REDDY
    For the Petitioner: M/s. C. Kodandaram, Senior Counsel. For the Respondent: M/s. Shireen Sethana Baria, Advocate.


Judgment Text
1. This Arbitration Application has been taken out by the applicant under sub-sections (5) & (6) of Section 11 of the Arbitration and Conciliation Act, 1996 (for short, 'the Act'), r/w. Scheme for Appointment of Arbitrators, 1996, seeking appointment of an arbitrator.

2. The applicant-M/s.Jain Irrigation Systems Limited, is a company registered under the Companies Act, 1956, engaged in the business of production and supply of equipment used in irrigation projects. The respondent-M/s. Satyam Computer Services Limited is a company registered under the Companies Act, 1956, engaged in the business of providing information technology services. In order to streamline the day-to-day activities of business, integrate and link all its departments and have a single platform for having complete coordination with all its departments, the applicant decided to implement SAP, which, in simple words is a software that has to be integrated in a company’s existing computer systems for effective streamlining of the day-today business operations of the company. Negotiations held between the applicant and the respondent and ultimately, negotiations culminated in appointing the respondent as service provider of the applicant for the purpose of implementation of MySAP ERP ECC 6.0 vide letter dated 23.11.2007. The said letter contained preliminary terms of the contract such as scope of work, consideration, payment schedule, etc. The applicant paid an amount of Rs.1,01,12,400/- to the respondent towards its remuneration for providing the services required by the applicant. An annual maintenance agreement, dated 14.11.2008, also came to be executed between the parties. According to the applicant, the respondent failed to carry out proper and timely services in respect of MySAP implementation for the applicant and also failed to honour the confidentiality agreement. Thereupon, the applicant issued a notice, dated 04.01.2010 to the respondent seeking return of an amount of Rs.9,00,00,000/- apart from damages and compensation for wrongful abandonment and breach of confidentiality. The applicant also indicated in the notice with regard to invocation of arbitration clause and reference of disputes to Mr.Bharat B. Jain, Advocate, as sole arbitrator. The respondent received the notice and remained non-responsive. Thereupon, the applicant by notice, dated 21.01.2010, invoked the arbitration clause 14.2 of the agreement for services and appointed Justice H.Suresh, Retd. Judge of Bombay High Court and sought for consent of the respondent. The respondent did not respond to the notice. I will complete the narration of facts set out in the application by referring Paras.2-s and 5 of the affidavit filed in support of the application, which read as hereunder:

'2. s. The applicant states and submits that all previous attempts of an amicable settlement and negotiations between the parties have failed. The Applicant states that the Respondent has failed to honour the said Confidentiality Agreement. The Applicant states that the Respondent has also failed to carry out proper and timely services in respect of MySAP implementation for the Applicant and have failed to resolve the numerous issues arising out of their faulty services and therefore, disputes and differences have arisen between the parties. The Applicant submits that there is no formal written signed contract between the parties. An agreement was reached between the parties, but no document was executed by the parties. Though there is no written signed document, the agreement came into existence, as the parties have acted upon the agreement. The deponent is advised to state that a formal written signed document not being present and available does not ipso facto disentitle the applicant to invoke the Arbitration Clause in the present case.'

'5. The applicant states and submits that the said Agreement was abandoned by the Respondent in or around December, 2008. The said Agreement was rescinded by the Applicant vide its advocates’ Notice dated 4th January, 2010. The Applicant invoked arbitration by its Notice, dated 21st January 2010 and the same was received by the Respondent on 25th January, 2010 and the Respondent till date has not replied to the same. Therefore, the Applicant has filed this Application for appointment of sole Arbitrator for adjudication of disputes between the parties. The cause of action of the present case arose on 23rd November, 2007 when the Applicant appointed the respondent for implementation of MySAP ERP ECC 6.0 and on 26th November, 2007 when the Respondent sent the said Agreement to the Applicant and on 19th February 2008 when the applicant signed the Confidentiality Agreement and sent to respondent and on 30th September 2008 when the Applicant pointed out the defects to the Respondent and on 23rd November 2008 when the Applicant requested the respondent to solve the pending issues pertaining to the services and on 28th November, 2008 when the Applicant submitted the list of pending issues to the Respondent and on 18th November, 2009 when the Applicant once again pointed out the deficiencies to the respondent and on 4th January 2010 when the advocates for the Applicant issues a legal notice to the Respondent and on 21st January 2010 when the counsel for the Applicant issued notice under section 21 of the Arbitration and Conciliation Act, 1996 and the cause of action is continuing. Hence, within limitation.'

Hence, this Arbitration Application.

3. Notice to the respondent came to be ordered on 07.09.2010. The respondent entered appearance through a counsel and filed counter-affidavit.

4. It is stated in the counter-affidavit that the application is not maintainable as there exists no arbitration agreement between the parties as contemplated under Section 7 of the Act. It is further stated in the counter-affidavit that mutual discussions with regard to implementation of SAP project has been culminated into a purchase/work order, dated 23.11.2007 placed by the applicant with the respondent. The said purchase/work order records that the applicant intended to sign a MSA (Master Service Agreement) and a detailed SOW (Statement of work) in the coming days. Pursuant to the said purchase/work order, dated 23.11.2007, the respondent sent a standard MSA template vide its mail dated 26.11.2007 to the applicant and clearly conveyed that the applicant would require to separately prepare SOW and incorporate the same with the pricing and payment terms. No agreement was ever executed for implementation of SAP project due to urgency shown by the applicant and the respondent proceeded on the basis of the purchase/work order, dated 23.11.2007. As the project progressed, the applicant sought undertaking from the respondent to maintain confidentiality of proprietary information. A letter of such a nature was required by the applicant for the reason that the proposed MSA which was desired to be executed between the parties did not fructify. If any such MSA was executed between the applicant and the respondent, there was no occasion to give such type of undertaking in as much as a confidentiality clause in an integral part of any such MSA and would have covered the confidentiality terms. Therefore, the respondent had sent a letter to the applicant on 19.02.2008 for maintaining confidentiality. The said letter does not refer to any agreement much less arbitration agreement as alleged by the applicant. Various allegations made by the applicant against the respondent attributing lapses on its part have been denied. The various mails referred in the application are in relation to maintenance support, for which AMS was to be executed, but was not executed. The applicant resorted to choosing arbitral proceedings over a suit because of the heavy court fees required to be paid for such type of claims. In the present case, there is neither any arbitrable dispute nor any mandate providing for arbitration. Therefore, the Arbitration Application is liable to be dismissed.

5. The applicant filed a rejoinder. It is stated in the rejoinder that the arbitration agreement or agreements containing arbitration clause are valid and subsisting even if the same are not formally executed by the parties thereto and arbitration would lie there under. The respondent by e-mail, dated 26.01.2008 forwarded the Master Services Agreement incorporating the arbitration clause at Clause No.14 therein. Therefore, it is clear that it was the intention of the respondent, in case of any dispute, to refer the same to arbitration. The respondent carried out the work for the applicant and accepted the payment in respect of the same and therefore, the respondent cannot dispute the existence of a contract between the parties, which contains an arbitration clause.

6. Heard Sri C.Kodandaram, learned senior counsel appearing for the applicant and M/s Shireen Sethana Baria, learned counsel appearing for the respondent.

7. Learned senior counsel appearing for the applicant submits that e-mails emanating from the respondent indicate that it is the respondent who prepared the agreement for services and sent for consent. The respondent having sent the agreement for services for consent of the applicant and having acted upon it and received an amount of Rs.1,01,12,400/- cannot be permitted to resile from the terms of the agreement, which included an arbitration clause. In a way, his contention is that the e-mail correspondences between the parties are enough indication that the parties acted upon the terms of the agreement for service. The learned senior counsel took me to the e-mail message, dated 26.11.2007. In elaborating his arguments, learned senior counsel contends that the correspondence between the parties and conduct of the respondent clearly establish that the terms of Agreement for service have been acted upon and therefore, even in the absence of signature of the parties on the agreement for service, the terms therein binds the parties. His contention is that there is an agreement in writing though not signed by both the parties, but by the course of conduct of the parties, it can be spelt out that such an agreement is enough to rely upon the arbitration clause referred to therein. Learned senior counsel by referring Clause 14.2 of the agreement for services, contends that disputes between the parties are required to be resolved by taking recourse to the provisions of the Act and indeed the applicant issued a notice, dated 04.01.2010, adverting to the attention of the respondent to the above referred clause. But the respondent having received the notice failed to reply. Learned senior counsel also refers the notice, dated 21.01.2010 addressed to the respondent where under the respondent is requested to give consent for appointment of Justice H.Suresh, Retd. Judge of High Court of Bombay. Learned senior counsel, apart from placing reliance on the judgments of the Supreme Court and Karnataka High Court, laid much stress on Section 7 (4)(b) of the Act to buttress his submissions.

8. Section 7 of the Act reads as hereunder:

'7. 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 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 a 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. The judgments on which learned senior counsel placed reliance are:

1) Indowind Energy Ltd. v. Wescare(I) Ltd. & Anr. (AIR 2010 SC 1793)

2) Jindal Thermal Power Company Ltd. v. Karnataka Power Transmission Corporation Ltd. (2004 ILR (Kar.) 3463)

3) Smita Conductors Ltd. Euro Alloys Ltd. ((2001) 7 SCC 728)

4) Great Offshore Ltd. v. Iranian Offshore Engg. & Construction Co. ((2008) 14 SCC 240)

5) Shakti Bhog Foods Ltd. v. Kola Shipping Limited ((2009) 2 SCC 134)

6) Trimex International Fze. Ltd. v. Vedanta Aluminium Ltd. ((2010) 3 SCC 1), and

7) Kollipara Sriramulu (dead) by his L.R. v. T.Aswatha Narayana (dead) by his L.Rs. & Ors. ((1968) 3 SCR 387 = AIR 1968 SC 1028)

10. In Indowind Energy Ltd.’s case (1 supra), the Supreme Court while interpreting the provisions of Section 7(4) of the Act, has observed that a contract can be spelt out from correspondence or conduct. But an arbitration agreement is different from a contract. An arbitration agreement can come into existence only in the manner contemplated under Section 7 of the Act. If Section 7 of the Act says that an arbitration agreement should be in writing, it will not be sufficient for the petitioner in an application under Section 11 of the Act to show that there existed an oral contract between the parties. I deem it appropriate to refer para.19 of the cited judgment, which reads as hereunder:

'19. The scope of examination of the agreement dated 24.2.2006, by the learned Chief Justice or his Designate under Section 11(6) is necessarily to be restricted to the question whether there is an arbitration agreement between the parties. The examination cannot extend to examining the agreement to ascertain the rights and obligations regarding performance of such contract between the parties. This Court in SBP and Co. v. Patel Engineering Limited [2005 (8) SCC 618] and in National Insurance Co. Ltd. v. Boghara Polyfab Pvt. Ltd. [2009 (1) SCC 267] has held that when an application is filed under section 11, the Chief Justice or his Designate is required to decide only two issues, that is whether the party making the application has approached the appropriate court and whether there is an arbitration agreement and whether the party who has applied under section 11 of the Act, is a party to such agreement. Therefore, the Chief Justice exercising jurisdiction under section 11 of the Act has to only consider whether there is an arbitration agreement between the petitioner and the respondent/s in the application under section 11 of the Act. Any wider examination in such a summary proceeding will not be warranted.'

11. In Jindal Thermal Power Company Ltd.’s case (2 supra), a Division Bench of the Karnataka High Court while interpreting the Karnataka Electricity Reform Act, 1999, has observed that concluded contract in terms of Explanation to Section 19 and proviso to Section 27(2) of the Karnataka Electricity Reform Act, 1999, need not be in writing; it need not be in any particular form for the Act does not prescribe any particular form; it need not be a formal agreement; it need not be a PPA and it is restricted to tariff determination only. In this judgment, the Division Bench of the Karnataka High Court referred the judgment of the Supreme Court in Kollipara Sriramulu’s case (7 supra), wherein the Supreme Court in para.3 of the judgment held:

'We proceed to consider the next question raised in these appeals, namely whether the oral agreement was ineffective because the parties contemplated the execution of a formal document or because the mode of payment of the purchase money was not actually agreed upon. It was submitted on behalf of the appellant that there was no contract because the sale was conditional upon a regular agreement being executed and no such agreement was executed, we do not accept this argument as correct. It is well-established that a mere reference to a future formal contract will not prevent a binding bargain between the parties. The fact that the parties refer to the preparation of an agreement by which the terms agreed upon are to be put in a more formal shape does not prevent the existence of a binding contract. There are. however, cases where the reference to a future contract is made in such terms as to show that the parties did not intend to be bound, until a formal contract is signed. The question depends upon the intention of the parties and the special circumstances of each particular case. As observed by the Lord Chancellor (Lord Cranworth) in Ridgway v. Wharton, the fact of a subsequent agreement being prepared may be evidence that the previous negotiations did not amount to a concluded agreement, but the mere fact that persons wish to have a formal agreement drawn up does not establish the proposition that they cannot be bound by a previous agreement'. The Supreme Court in the said judgment has extracted the observations of Parker, J. in the case of Alexander, supra, extracted by lis supra, with approval. Further, the Supreme Court has also referred to the following observation of Lord Cairns in Rossiter v. Miller, with approval: 'if you find not an unqualified acceptance subject to the condition that an agreement is to be prepared and agreed upon between the parties, and until that condition is fulfilled no contract is to arise then you cannot find a concluded contract'.

12. In Smita Conductors Ltd.’s case (3 supra), the Supreme Court held that existence, validity or effect of an arbitration agreement can be determined by the court at three stages: 1)before the arbitration proceedings commence, (2) during their pendency, and (3) after the award is made and filed in the court.

13. In Great Offshore Ltd.’s case (4 supra), the Supreme Court while interpreting Section 7 of the Act, held that plain language of Section 7 does not require that the parties stamp the agreement and nothing in Section 7 of the Act suggests that the parties must sign every page of the agreement. The Supreme Court also observed that technicalities like stamps, seals and even signatures are red tape that have to be removed before the parties can get what they really want – an efficient, effective and potentially cheap resolution of their dispute. It would be improper and undesirable for the courts to add a number of extra formalities not envisaged by the legislation. The Courts’ directions should be to achieve the legislative intention.

14. In Shakti Bhogi Foods Ltd.’s case (5 supra), the Supreme Court observed that the existence of an arbitration agreement can be inferred from the document signed by the parties or an exchange of letters, telex, telegrams or other means of communication which provide a record of the agreement.

15. In Trimex International Fze Ltd.’s case (6 supra), the Supreme Court observed that once the contract is concluded orally or in writing, the mere fact that a formal contract has to be prepared and initialed by the parties would not affect either the acceptance of the contract so entered into or implementation thereof, even if the formal contract has never been initialed.

16. Learned counsel appearing for the respondent submits that the respondent acted on the purchase order, dated 23.11.2007. The purchase order does not contain any arbitration clause and therefore, the question of reference of disputes that have arisen between the parties relatable to the purchase order does not arise. He would also contend that what is communicated to the applicant by the respondent is only a model form of agreement for services. It neither contained the name of the applicant nor signature of the respondent to infer that the agreement has become a concluded contract. He would also contend that this template agreement sent to the applicant never fructified and even the confidentiality agreement, dated 19.02.2008, does not refer to the agreement for services i.e. Master Service Agreement. The learned counsel appearing for the respondent copiously refers the contents of the purchase order and confidentiality agreement, dated 19.02.2008, to buttress his submissions that there is no clause under which parties are required to get their disputes adjudicated by taking recourse to the provisions of the Act. He would also contend that agreement for services of MySAP ERP ECC 6.0 is dated 14.11.2008. By that time, the purchase order, dated 23.11.2007, came into existence and therefore, it is beyond a comprehension that purchase order is pursuant to the agreement for services. The learned counsel by referring the decision of the Supreme Court in Trimex International Fze Ltd.’s case ( 6 supra), on which reliance has been placed by the learned senior counsel appearing for the applicant, submits that in the said decision, purchase order contains an arbitration clause and whereas, purchase order issued by the respondent herein does not contain any arbitration clause and therefore, the cited decision does not in any way helpful to the applicant. Learned counsel also submits that the decision in Great Offshore Ltd.’s case (4 supra) is not applicable to the facts of the case since the Supreme Court was dealing with a case where the agreement was signed by the parties. Coming to the facts of the case on hand, it is only model form that has been communicated to the applicant by the respondent and the name of the applicant is not indicated in the model form and therefore, it cannot be inferred that the receipt of model form by the applicant amounts to a concluded contract between the parties. Learned counsel would also submit that mere reference to MSA document in the e-mail sent to the applicant is not sufficient to infer that there is a concluded contract pursuant to the agreement for services. In support of his submissions, reliance has been placed by the learned counsel on the following judgments of the Supreme Court and the decision of the Bombay High Court:

1) Shakti Bhog Foods Ltd. vs. Kola Shipping Ltd. (5 supra)

2) National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd.( (2009) 1 SCC 267)

3) SBP & CO. v. Patel Engineering Ltd. ((2005) 8 SCC 618)

4) Jagadish Chander v. Ramesh Chander & Ors. ((2007) 5 SCC 719)

5) M.R. Engineers & Contractors (P) Ltd. v. Som Datt Builders Ltd. ((2009) 7 SCC 696)

6) Rajesh V. Choudhary v. Kshitij R. Torak & Ors. ((decided on 06.08.2010 in A.A.No.135 of 2007))

17. In SBP & Co.’s case (9 supra), the Supreme Court identified and segregated the preliminary issues that may arise for consideration in an application under Section 11 of the Act into three categories viz., 1) issues which the Chief Justice or his designate is bound to decide; (ii) issues which he can also decide, that is, issues which he may choose to decide; and (iii) issues which should be left to the Arbitral Tribunal to decide.

18. In National Insurance Company Ltd. v. Boghara Polyfab Pvt. Ltd.’s case (8 supra), the Supreme Court referred the SBP & Co.’s case (9 supra) with approval.

19. In Jagdish Chander’s case (10 supra), the Supreme Court held that existence of an arbitration agreement as defined under Section 7 of the Act is a condition precedent for exercise of power to appoint an Arbitrator/Arbitral Tribunal, under Section 11 of the Act by the Chief Justice or his designate. It is not permissible to appoint an arbitrator to adjudicate the disputes between the parties in the absence of an arbitration agreement or mutual consent. Para.8 of the cited judgment needs to be noted and it is thus:

'This Court had occasion to refer to the attributes or essential elements of an arbitration agreement in K K Modi v. K N Modi [1998 (3) SCC 573], Bharat Bhushan Bansal vs. U.P. Small Industries Corporation Ltd. [1999 (2) SCC 166] and Bihar State Mineral Development Corporation v. Encon Builders (I)(P) Ltd. [2003 (7) SCC 418]. In State of Orissa v. Damodar Das [1996 (2) SCC 216], this Court held that a clause in a contract can be construed as an 'arbitration agreement' only if an agreement to refer disputes or differences to arbitration is expressly or impliedly spelt out from the clause. We may at this juncture set out the well settled principles in regard to what constitutes an arbitration agreement :

(i) The intention of the parties to enter into an arbitration agreement shall have to be gathered from the terms of the agreement. If the terms of the agreement clearly indicate an intention on the part of the parties to the agreement to refer their disputes to a private tribunal for adjudication and an willingness to be bound by the decision of such tribunal on such disputes, it is arbitration agreement. While there is no specific form of an arbitration agreement, the words used should disclose a determination and obligation to go to arbitration and not merely contemplate the possibility of going for arbitration. Where there is merely a possibility of the parties agreeing to arbitration in future, as contrasted from an obligation to refer disputes to arbitration, there is no valid and binding arbitration agreement.

(ii) Even if the words 'arbitration' and 'arbitral tribunal (or arbitrator)' are not used with reference to the process of settlement or with reference to the private tribunal which has to adjudicate upon the disputes, in a clause relating to settlement of disputes, it does not detract from the clause being an arbitration agreement if it has the attributes or elements of an arbitration agreement. They are : (a) The agreement should be in writing. (b) The parties should have agreed to refer any disputes (present or future) between them to the decision of a private tribunal. (c) The private tribunal should be empowered to adjudicate upon the disputes in an impartial manner, giving due opportunity to the parties to put forth their case before it. (d) The parties should have agreed that the decision of the Private Tribunal in respect of the disputes will be binding on them.

(iii) Where the clause provides that in the event of disputes arising between the parties, the disputes shall be referred to Arbitration, it is an arbitration agreement. Where there is a specific and direct expression of intent to have the disputes settled by arbitration, it is not necessary to set out the attributes of an arbitration agreement to make it an arbitration agreement. But where the clause relating to settlement of disputes, contains words which specifically excludes any of the attributes of an arbitration agreement or contains anything that detracts from an arbitration agreement, it will not be an arbitration agreement. For example, where an agreement requires or permits an authority to decide a claim or dispute without hearing, or requires the authority to act in the interests of only one of the parties, or provides that the decision of the Authority will not be final and binding on the parties, or that if either party is not satisfied with the decision of the Authority, he may file a civil suit seeking relief, it cannot be termed as an arbitration agreement.

(iv) But mere use of the word 'arbitration' or 'arbitrator' in a clause will not make it an arbitration agreement, if it requires or contemplates a further or fresh consent of the parties for reference to arbitration. For example, use of words such as "parties can, if they so desire, refer their disputes to arbitration" or "in the event of any dispute, the parties may also agree to refer the same to arbitration" or "if any disputes arise between the parties, they should consider settlement by arbitration" in a clause relating to settlement of disputes, indicate that the clause is not intended to be an arbitration agreement. Similarly, a clause which states that "if the parties so decide, the disputes shall be referred to arbitration" or "any disputes between parties, if they so agree, shall be referred to arbitration" is not an arbitration agreement. Such clauses merely indicate a desire or hope to have the disputes settled by arbitration, or a tentative arrangement to explore arbitration as a mode of settlement if and when a dispute arises. Such clauses require the parties to arrive at a further agreement to go to arbitration, as and when the disputes arise. Any agreement or clause in an agreement requiring or contemplating a further consent or consensus before a reference to arbitration, is not an arbitration agreement, but an agreement to enter into an arbitration agreement in future.'

20. In M.R.Engineering & Contractors Pvt. Ltd.’s case (11 supra), the Supreme Court held that the wording of Section 7(5) of the Act makes it clear that a mere reference to a document would not have the effect of making an arbitration clause from that document, a part of the contract. There should be a special reference indicating a mutual intention to incorporate the arbitration clause from another document into the contract. The exception to the requirement of special reference is where the referred document is not another contract, but a standard form of terms and conditions of trade associations or regulatory institutions which publish or circulate such standard terms and conditions for the benefit of the members or others who want to adopt the same. Section 7(5) of the Act, therefore, requires a conscious acceptance of the arbitration clause from another document, by the parties, as a part of their contract, before such arbitration clause could be read as a part of the contract between the parties. The scope and intent of Section 7(5) of the Act is summarized in the above referred decision as hereunder:

'The scope and intent of section 7(5) of the Act may therefore be summarized thus:

(i) An arbitration clause in another document, would get incorporated into a contract by reference, if the following conditions are fulfilled : (1) The contract should contain a clear reference to the documents containing arbitration clause, (2) the reference to the other document should clearly indicate an intention to incorporate the arbitration clause into the contract, (3) The arbitration clause should be appropriate, that is capable of application in respect of disputes under the contract and should not be repugnant to any term of the contract.

(ii) When the parties enter into a contract, making a general reference to another contract, such general reference would not have the effect of incorporating the arbitration clause from the referred document into the contract between the parties. The arbitration clause from another contract can be incorporated into the contract (where such reference is made), only by a specific reference to arbitration clause.

(iii) Where a contract between the parties provides that the execution or performance of that contract shall be in terms of another contract (which contains the terms and conditions relating to performance and a provision for settlement of disputes by arbitration), then, the terms of the referred contract in regard to execution/performance alone will apply, and not the arbitration agreement in the referred contract, unless there is special reference to the arbitration clause also.

(iv) Where the contract provides that the standard form of terms and conditions of an independent Trade or Professional Institution (as for example the Standard Terms and Conditions of a Trade Association or Architects Association) will bind them or apply to the contract, such standard form of terms and conditions including any provision for arbitration in such standard terms and conditions, shall be deemed to be incorporated by reference. Sometimes the contract may also say that the parties are familiar with those terms and co

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nditions or that the parties have read and understood the said terms and conditions. (v) Where the contract between the parties stipulates that the Conditions of Contract of one of the parties to the contract shall form a part of their contract (as for example the General Conditions of Contract of the Government where Government is a party), the arbitration clause forming part of such General Conditions of contract will apply to the contract between the parties.' 21. Keeping in view the proposition of law laid down in the above referred decisions, let me examine whether the correspondence between the parties infer that the parties are mutually agreed for adjudication of their disputes by taking recourse to the provisions of the Act. It is not in dispute that there is no formal written, signed contract between the parties. Indeed, this fact has been stated by the applicant in para.2-s of the affidavit filed in support of the application, which has been extracted supra. The purchase order emanating from the respondent is dated 23.11.2007. This purchase order came to be issued after due deliberations and before the parties signing on MSA. The purchase order does not contain any arbitration clause. After the purchase order, Varghese Pappachan, on behalf of the respondent, sent certain e-mail messages to the applicant. Those e-mail messages find place at page.20 of the application. What all he stated is that MSA template requires certain modifications and it is the respondent, who would prepare the MSA document and SOW (Statement of Work) and mailing to the applicant for review and consent. The proforma agreement for service has been mailed to the applicant by the respondent. Copy of the proforma agreement finds place at page. 22 of the material papers. Even the name of the applicant does not figure in the proforma agreement and it does not contain the signature of the respondent. It is only a format which is required to be considered by the applicant and communicate its consent and thereafter, it has to take the shape of contract. Till then, it remains only a format. The nature of work between the parties is governed by purchase order and confidentiality agreement. It is the contention of the learned senior counsel that confidentiality agreement is pursuant to the format agreement for service. I do not see any substance in his contention. The format contains a confidentiality clause i.e. 7.1. If the parties intend that the terms and conditions mentioned in the format have reached consciousness, there was no need for the respondent to execute confidentiality agreement, dated 19.02.2008. The very fact that the respondent executed confidentiality agreement, dated 19.02.2008, indicates that there was no consciousness among the parties in response to the terms and conditions stipulated in the format of agreement for service. A reading of the purchase order, copy of which finds place at page. No.18 of the material papers, and so also the confidentiality agreement, copy of which finds place at page No.36 of the material papers, does not indicate that the disputes between the parties are required to be settled by taking recourse to the provisions of the Act. The e-mail messages emanating from the respondent do not give any clue that the terms of MSA have been accepted and acted upon. Therefore, I find that the applicant failed to establish that there is an arbitration agreement between the parties, in which case, the application is liable to be dismissed. 22. Accordingly, the Arbitration Application is dismissed. No costs.
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