TaxTMI 
TaxTMI 
2026 (4) TMI 1069
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....']. The eventual product was to be delivered to South Carolina, USA, and regarding such transport, the appellant contracted with the respondent for a total consideration of Rs. 2,23,550/- which was inclusive of freight charges, ocean freight, ACD charges, container maintenance charges etc. The total consignment was of six containers, out of which four were delivered successfully prior to the dispute arising between the parties. When it came to the delivery of the fifth container, the dispute in question arose. Apparently, when the respondent delivered the fifth consignment to AAI, the latter failed to pay the requisite amount or, as per established practice, produced the original bill of lading at the time of delivery. Despite this the respondent handed over the goods to AAI on 21st October 2020 resulting into financial loss to the appellant as did not receive payment for supply of the goods to the tune of USD 28064.86. On 10th December 2020 the appellant raised this issue with the respondent, who asserted the factum of a differing past practice of handing over the goods without production of the original bill of lading and denied any liability. It may be noted here that the bil....
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....y form for an arbitration agreement. Apart from that, the intent of the parties to have arbitration be the chosen method of dispute resolution is evident from the bill containing a clause to that effect. The heading of the clause acquires importance in view of the judgment of this Court in Eastern Coalfields v. Sanjay Transport Agency and Another 2009 (7) SCC 345, it has also been held in Babanrao Rajaram Pund v. M/s Samarth Builders And Developers 2022 (9) SCC 691 and Enercon (India) Ltd. v. Enercon GmbH 2014 (5) SCC 1 that a pragmatic approach should be taken to interpretation of arbitration clauses. The drafting of such a clause, in view of the intention demonstrated otherwise, cannot be taken advantage of by any party [See: Visa International Ltd. v. Continental Resources USA Limited 2009 (2) SCC 55]. In reference to Vidya Drolia v. Durga Trading Corporation 2021 (2) SCC 1, it is submitted that at the stage of Section 11 application only the existence of the clause is to be looked into, in other words a prima facie view is to be taken. Reliance is also placed on the observation that when there is a doubt, Courts should lean towards referring the matter to arbitration. Further, ....
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....ies must mutually intend to refer their differences to arbitration as consent is the source of the Arbitral Tribunal's jurisdiction over them." In other words, Alternate Dispute Resolution mechanisms or more particularly, arbitration, which is relevant in this case, can only be the chosen method if both/all parties to the dispute can agree that it will be so. This freedom is not only in so far as choosing the medium, but it also encompasses choice of forum, applicable law and to some extent even procedural norms. This enables parties to have their dispute decided by keeping in view their own structures and realities. 7. Since the judgment impugned before us was an application for appointment of arbitrator, it is apposite to refer to the duty cast upon the Court in deciding such an application. The main dispute before us swings on the interpretation of the word 'can'. As ordinarily understood, it means capacity, capability or factual possibility. The Oxford Learner's Dictionary discusses the word 'can' as a word that is "used to say that it is possible for someone or something to do something, or for something to happen"[https://www.oxfordlearnersdictionaries.com/american_eng....
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....aling with the issue of "accord and satisfaction" under Section 11 extends to weeding out ex facie non-arbitrable and frivolous disputes would continue to apply despite the subsequent decision in Interplay Between Arbitration Agreements under the Arbitration Act, 1996 & the Stamp Act, 1899, In re [Interplay Between Arbitration Agreements under the Arbitration Act, 1996 & the Stamp Act, 1899, In re, (2024) 6 SCC 1 : 2023 INSC 1066]. ... 127. Section 11 also envisages a time-bound and expeditious disposal of the application for appointment of arbitrator. One of the reasons for this is also the fact that unlike Section 8, once an application under Section 11 is filed, arbitration cannot commence until the Arbitral Tribunal is constituted by the Referral Court. This Court, on various occasions, has given directions to the High Courts for expeditious disposal of pending Section 11 applications. It has also directed the litigating parties to refrain from filing bulky pleadings in matters pertaining to Section 11. Seen thus, if the Referral Courts go into the details of issues pertaining to "accord and satisfaction" and the like, then it would become rather difficult to ....
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....herwise fortifies the intention cannot delegitimize the arbitration clause. As is obvious, the intention of the parties is anything but clear in the present case. This latter aspect will be elucidated with more clarity in the succeeding paragraphs of this judgement. 9.3 In Visa International (supra) the dispute resolution clause provided that any disputes arising between the parties, if any, shall be settled in accordance with the provisions of the A&C Act; and did not specifically state as to whether the chosen method would be arbitration or conciliation. While holding that a binding arbitration clause did exist, the Court held that one or two words being absent is not the deciding factor and in fact, it is the whole clause providing for the settlement of disputes that are to be seen together to gather the intention of the parties. There can be no qualms with this position. Reading the arbitration clause in this case, it can in no way be said that the intent of the parties is clear. This is on two counts, one the use of the word 'can' and second, providing for the incomplete procedure regarding appointment of arbitrators if at all. 9.4 In Enercon (India) (supra) the question....
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....ispute before us being purely of a commercial nature, it is the parties themselves that cannot agree on arbitration being the chosen medium. When that is the case, it is not for a Court to compulsorily send such parties before the jurisdiction that they have not chosen. 10. The appellant's reliance on Panasonic India (P) Ltd. (supra) is misplaced for the learned Single Judge therein observed that the word 'can' featuring in the subject arbitration clause was not qua arbitration itself but was in reference to the ability resting with either party to invoke arbitration. Here, the situation is different. 11. In light of the above discussion, it is also to be noted that principles of contractual interpretation are now well settled. The words chosen by the parties are the most reliable manifestation of the intent. The meaning of the words used in contract is not found in strict etymological propriety or popular usage of word(s) as in the subject, occasion or context in which they are used, within the contractual realm. The latin maxim 'Ex praecedentibus et consequentibus optima fit interpretatio' signifies this statement. [See: Union of India v. Raman Iron Foundry (1974) 2 SCC 231....
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....d provides only a possibility, the same does not constitute a valid arbitration agreement. 13. Turning to the words used in Clause 25, we find it to stipulate to the effect that if there is any dispute between the parties, they can settle the same by arbitration. In view of Jagdish Chander (supra) which holds as under: "(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. Suc....