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Legal Case Shots

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Legal Case Shots is a searchable database of Supreme Court of India judgments, each broken down into the case type, the court's key holding, and a practical lesson learnt, with the full judgment available as a PDF for citation or deeper reading.

Arbitration & Commercial LawSupreme Court of India

M/S. Inox Wind Ltd. v. M/S. Thermocables Ltd.

Civil Appeal · 2018 INSC 4Decided 5 Jan 2018
Civil Appeal No. 19 of 2018
Justice S.A. Bobde · Justice L. Nageswara Rao

Background

Inox Wind, a wind turbine manufacturer, bought cables from Thermocables under purchase orders that referred to attached "Standard Terms and Conditions" containing an arbitration clause. After the supplied cables developed cracked outer sheaths, Inox Wind sought to invoke arbitration, but Thermocables did not respond, leading Inox Wind to approach the Allahabad High Court to appoint an arbitrator. The High Court refused, holding that merely referring to the standard terms in the purchase order was not enough to incorporate the arbitration clause, relying on an earlier Supreme Court ruling in M.R. Engineers v. Som Datt Builders.

Decision Breakdown

The Supreme Court revisited its earlier M.R. Engineers ruling in light of later English case law (particularly the "single contract" versus "two contract" distinction), and held that where a single contract merely attaches its own standard terms and conditions (as opposed to incorporating an entirely separate contract between different parties), a general reference to those standard terms is enough to pull in an arbitration clause contained in them: a specific, separate mention of the arbitration clause is not required. Finding that Thermocables had accepted the purchase order's terms (barring the delivery period) and was aware the standard terms were attached, the Court held the arbitration clause was validly incorporated, allowed the appeal, set aside the High Court's refusal, and itself appointed a named arbitrator (Justice Sushil Harkauli) to resolve the dispute.

Lesson Learnt

In ordinary commercial purchase orders, simply attaching your own standard terms and conditions (which include an arbitration clause) and referring to them generally in the main order is legally sufficient to bind both sides to arbitration: a business does not need to separately call out the arbitration clause by name for it to apply.

M/S. Inox Wind Ltd. v. M/S. Thermocables Ltd. – Legal Case Shots | LegalAware