Lion Rubber Industries Private Limited & Anr. v. Santec Exim Private Limited & Ors.

What happened

Lion Rubber Industries Private Limited and another, the applicants, invited quotations in January 2024 for the purchase of a machine, the respondents sent a quotation on 18 June 2024, and the applicants issued a domestic purchase order of 19 June 2024 for a hydraulic press with technical and commercial terms on delivery, payment, installation, commissioning and warranty. Clause 9 of the commercial terms reads, in its entirety, Arbitration ~ Subject to Mumbai Jurisdiction. After correspondence between 5 August and 23 September 2025, the applicants received on 15 November 2025 the records of an unnumbered commercial suit filed against them by the respondents at the Gurugram court complex, in which the applicants entered appearance, filed a written statement and said that they had applied under section 8 of the Arbitration and Conciliation Act, 1996, which the respondents said they had never been served with. On 11 February 2026 the applicants invoked the arbitration clause and suggested names of advocates as sole arbitrator, the respondents replied on 23 February 2026 denying that there was an arbitration agreement, and the applicants applied under section 11(6).

The respondents argued that clause 9 is not an arbitration agreement under section 7 because it has no words that disputes shall or will be referred to arbitration, no procedure for appointing an arbitrator, no statement that the award is final and binding and no procedure for conducting the arbitration, relying on Jagdish Chander v. Ramesh Chander, K.K. Modi v. K.N. Modi, Mahanadi Coalfields v. IVRCL AMR Joint Venture and BGM and M-RPL-JMCT (JV) v. Eastern Coalfields, and that Mumbai jurisdiction means the jurisdiction of civil courts, so that the applicants' reliance on the same clause as an exclusive jurisdiction clause and as an arbitration agreement is inconsistent. The applicants argued that the clause is a valid and continuing arbitration agreement, that the respondents' suit in Gurugram breaches it, and that they reserved their liberty to apply under section 8.

Questions before the court

• Does a purchase-order term reading Arbitration ~ Subject to Mumbai Jurisdiction amount to a written arbitration agreement on which an arbitrator can be appointed under section 11(6)?

Why the court ruled this way

The Court said that the question was whether there is an arbitration agreement in writing, and that the purchase order is a written commercial document in which the word Arbitration appears as a numbered term (paragraphs 8–10). Section 7 does not require any particular words, and the clause being short and lacking the features of a detailed clause does not mean there is no agreement; the attributes listed in K.K. Modi and Babanrao Rajaram Pund do not each have to be written out but are tested by whether the words, read with the whole contract, show an intention to have disputes decided by arbitration and not by a civil suit (paragraphs 12–16). Unlike the clauses in Jagdish Chander and in BGM, which used words such as may be sought that required later agreement, clause 9 contains no words such as if the parties agree or if mutually decided, so no fresh consent is needed (paragraphs 17–22). A short clause can be valid, as the English Court of Appeal found in Tritonia Shipping and Hobbs Padgett v. J.C. Kirkland, which are persuasive only, and the word Arbitration is not a mere heading, as the clause has to be read as one with Subject to Mumbai Jurisdiction, which can be understood as connecting the arbitration with a place, whereas the respondents' reading would give the word Arbitration no meaning (paragraphs 23–35 and 46–48). The Court found it unnecessary to decide the territorial jurisdiction of the Gurugram court, since Mumbai jurisdiction does not destroy the arbitration agreement (paragraph 36). The applicants' later conduct in the Gurugram suit neither creates nor destroys the agreement, and sections 8 and 11 arise in different situations (paragraphs 37–38). A missing procedure for appointment can be supplied by law, and failing to agree on the name of an arbitrator is different from not agreeing to arbitrate (paragraph 39), the absence of words on finality does not matter, as the Supreme Court said in Babanrao that party autonomy deserves protection, and a pragmatic approach, as in Enercon, is called for (paragraphs 40–43). Questions of coverage of particular disputes, limitation and the maintainability of the Gurugram proceedings were left open (paragraphs 49–51).

Controlling point

A short arbitration clause in a concluded purchase order, written as Arbitration ~ Subject to Mumbai Jurisdiction with no words requiring fresh consent, is a written arbitration agreement under section 7, and the absence of words such as shall, of an appointment procedure or of finality does not defeat it.

Order and next steps

The Court appointed Mr. Shadab Jan, an advocate of the High Court, as sole arbitrator to decide the disputes arising out of and in connection with the agreement, directed the applicants' advocates to send him a copy of the order within one week, requested him to send the statement of disclosure under sections 11(8) and 12(1) to the parties within two weeks, and directed the parties to appear before him for directions on the conduct of the arbitration. The arbitral costs and fees are to be borne equally in the first instance, subject to any award on costs, all issues on merits are kept open, and the Court disposed of the application on these terms.

Practical implications

A party drafting a purchase order should state the obligation to arbitrate, the seat and the method of appointment in full, because short wording invites a dispute even though this clause was upheld, and a party that is sued on a contract containing such a clause can invoke it and ask for an arbitrator under section 11.

Limits of this ruling

• The Court decided only that a written arbitration agreement exists. It did not decide whether any particular dispute is covered, limitation, the merits, or whether the Gurugram court has jurisdiction, and it used the English decisions only as persuasive material. It found it unnecessary to accept the applicants' alternative argument that the words are an exclusive jurisdiction clause for civil proceedings.