Implied acceptance by non-return of contract forms can create a binding arbitration agreement in a continuing commercial arrangement.

A prior commercial understanding that failure to return contract forms would amount to acceptance can create a binding written arbitration agreement when the forms expressly contain arbitration terms. On that footing, non-return of the forms operated as implied acceptance, and the Chamber rules and byelaws with compulsory arbitration became binding. The text also records that Roshan Lal acted for the joint Hindu family business as karta or manager, despite his father being alive, and his conduct in the transactions bound the family firm. The transactions were therefore treated as validly entered into and referable to arbitration under the agreed commercial terms.

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Issues: (i) Whether non-return of the contract forms, in the light of the prior arrangement between the parties, amounted to acceptance of the proposal and thus created a written arbitration agreement binding on the parties. (ii) Whether Roshan Lal was acting as karta of the joint Hindu family business so as to bind the defendant firm and its transactions to arbitration.

Issue (i): Whether non-return of the contract forms, in the light of the prior arrangement between the parties, amounted to acceptance of the proposal and thus created a written arbitration agreement binding on the parties.

Analysis: The prior oral understanding could not by itself satisfy the requirement of a written arbitration agreement. However, the contract forms sent thereafter contained the terms and conditions, including compulsory arbitration, and the parties had previously agreed that non-return of the forms with a letter would amount to acceptance. The Court treated the contractual practice as a continuing commercial arrangement in which silence or omission to return the forms operated as implied acceptance. Once accepted, the forms became a written agreement containing the arbitration clause. The rules and byelaws of the Chamber, including the provision for compulsory arbitration, therefore became binding.

Conclusion: The non-return of the contract forms amounted to acceptance and the resulting written contract forms constituted a valid arbitration agreement, against the appellants.

Issue (ii): Whether Roshan Lal was acting as karta of the joint Hindu family business so as to bind the defendant firm and its transactions to arbitration.

Analysis: The evidence showed that Roshan Lal had throughout acted for the family business and had even described himself as karta in prior proceedings. Although his father was alive, the father was elderly and Roshan Lal was functioning as the manager of the joint Hindu family business. The Court accepted that he represented the firm in the transactions in question and that the transactions entered into by him were binding on the family firm.

Conclusion: Roshan Lal was the karta for the purposes of the business, and the transactions were binding on the defendant firm, against the appellants.

Final Conclusion: The appeal failed because the transactions were validly entered into and were referable to arbitration under the agreed commercial terms and Chamber byelaws.

Ratio Decidendi: Where parties have a prior commercial understanding that non-return of contractual forms will amount to acceptance, silence in the form of non-return can constitute implied acceptance and a written agreement containing an arbitration clause may be formed even without signatures of both parties.

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