[Cites 6, Cited by 0]
Madhya Pradesh High Court
Riddhesh Corporation Manawar Private ... vs Tata Motors Ltd. on 11 December, 2025
NEUTRAL CITATION NO. 2025:MPHC-IND:35029
1 AC-118-2024
IN THE HIGH COURT OF MADHYA PRADESH
AT INDORE
BEFORE
HON'BLE SHRI JUSTICE PAVAN KUMAR DWIVEDI
ON THE 11th OF DECEMBER 2025
ARBITRATION CASE No. 118 of 2024
RIDDHESH CORPORATION MANAWAR PRIVATE LIMITED
THROUGH ITS. DIRECTOR RIDDHESH AGARWAL AND OTHERS
Versus
TATA MOTORS LTD. AND OTHERS
Appearance:
Shri Manu Maheshwari - Advocate for the applicants.
Shri Kaivalya Ratnaparkhe - Advocate for respondents No. 1 and 2.
Shri Yogesh Kumar Mittal - Advocate for respondent No. 3.
Reserved on: 25.08.2025
Pronounced on: 11.12.2025
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ORDER
The present application has been filed under Section 11 of the
Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act of
1996') for appointment of Arbitrator.
Facts of the case in brief are as under:
2. The applicant No. 1 is a private limited company and has been
engaged in the business of trading, consultancy, C&F agency and
transportation since the year 2017 having its registered office at Jawahar
Marg, Manawar, District Dhar (MP). Applicant No. 2 is a proprietorship
concern having its office at Krishi Upaj Mandi Pragan, Dhar Road,
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Manawar, District Dhar (MP). The respondent No. 1 - Tata Motors Ltd. is a
registered company and manufacturer of goods carriage vehicles. The
respondent no. 2 is the office bearer of respondent No.1 and respondent No.
3 is a dealer selling vehicles manufactured by respondent No.1.
3. The applicants purchased 22 trucks from respondent No. 3 in the
months of January to March, 2023. Out of the 22 trucks, 17 were purchased
in the name of applicant No.1 and 05 were purchased in the name of
applicant No.2 and for the said purchase, sale consideration of Rs.
4,29,25,000/- and Rs. 1,26,25,000/-, respectively was paid.
4. As it has been stated in the application, there were some
manufacturing defects as the engine of the trucks frequently got broken
down, tyres started wearing down, gearboxes were defective and there were
multiple body defects leading to leakage and water seepages during rain. As
such complaint was raised by the applicants before the respondents. After
initial repair, there was no proper response. Some work was carried out on
the vehicles in question for welding the leakages on 23.08.2023 but the same
was without applicants' permission. The meeting which happened on
01.08.2023 at the office of respondent no.3 remained unfruitful as even after
a promise of permanent solution within six days, nothing was done. The
retrofication work done on 23.08.2023 was without permission. In such
circumstances, a notice was sent by the applicants to the respondents on
06.03.2024 raising a claim of Rs. 5,28,00,000/-. In addition, reimbursement
of expenses incurred in the repair of trucks and other direct and indirect
consequential losses were also claimed. The total compensation of Rs.
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19,28,41,855/- was claimed. However, no response was forthcoming from
the respondents. Therefore, the applicants sent a notice invoking arbitration
on 24.06.2024. The respondent No. 3 replied to the said notice through its
counsel on 16.07.2024 thereby denying its liability as also the availability of
arbitration proceeding. The respondents No. 1 and 2 through their reply
dated 03.08.2024 denied any liability whatsoever and have also denied
existence of any arbitration agreement between the applicants and the
respondents no. 1 and 2. Thus, the present application for appointment came
to be filed on the strength of invoices issued by respondent no.3.
5. The case of the applicants is that Clause 8 and 9 contained in the
invoices issued to applicant No.1 provide that all the dispute arising between
the parties shall be referred to arbitration and the Courts at Indore shall have
jurisdiction in relation to any such proceedings. Same is the case for the
invoices issued to applicant No. 2 in which Clause 7 and 8 were there to the
same effect.
Submissions of learned counsel for the parties
6. The learned counsel for the applicants submits that there is a clear
dispute between the parties as they have failed to fulfill their contractual
obligation of sale as they have not only sold defective vehicles but then
failed to respond for redressing the grievance of the applicants. Learned
counsel also submits that there is a clear existence of an arbitration
agreement in view of the fact that specific arbitration clause has been
inserted in invoices by respondent No.3 to both the applicants. He thus
submits that the ingredients which are required in terms of Section 7 of the
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Act of 1996 are present in its full vigour. There is an agreement in writing,
there is mutual acceptance by both the parties in as much as respondent No.
3 has issued invoices and the applicants have accepted the terms of the
invoices by making payment pursuant to the same, hence, there is a
concluded contract. He further submits that respondent No. 3 is a dealer of
respondents No. 1 and 2, hence he acts on behalf of respondents No. 1 and
2. As such, the invoices and the agreement contained therein binds not only
respondent no. 3 but respondents No. 1 and 2 also. He thus prays for
appointment of Arbitrator as the respondents have failed to consent for
appointment of Arbitrator by mutual agreement.
7. Controverting to the submissions of learned counsel for the
applicants, learned counsel for respondents No. 1 and 2 submits that in fact
there is no agreement at all. He submits that invoices cannot be termed by
any stretch of imagination as agreement between respondents No. 1 & 2 and
the applicants. There is no privity of contract between the applicants and
respondents No. 1 & 2. All these invoices have been issued by respondent
No.3 and a careful scrutiny of the invoices would show that it relates to the
act of sale. As such the payment and disputes relating to those payments are
the subject matter of those agreements and not manufacturing of vehicles and
consequential inconvenience due to any shortcomings in those vehicles by
the respondents No. 1 and 2. He further submits that respondent no.3 is the
dealer authorized to sell the vehicles and in the dealership agreement, which
is on record as Annexure R/1-2, Clause 3(h) which provides that the dealer is
not an agent of the manufacturer. Therefore, any act done by the dealer is in
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his own capacity as a principal and not as an agent of the respondent No.1.
He thus submits that there is no agreement between respondents No. 1 & 2
and the applicants and in absence of an arbitration agreement, resort to
Section 11 cannot be made and Arbitrator cannot be appointed.
8. Learned counsel for respondent No.3 in the same line, not only
supports the arguments raised by respondents No. 1 and 2 but buttresses the
same by stating that respondent No.3 has issued only tax invoices and thus,
any dispute relating to tax invoices i.e. tax and sale transaction which are
covered but not the dispute relating to manufacturing. He further refers to
Annexure P/3 and points out that even if the invoices are seen, then it would
be apparent that there are no signatures of the customers on the invoices.
Thus, in fact there is no concluded contract.
9. In rejoinder submissions, learned counsel for the applicants
submits that respondent No. 3 represents respondents No. 1 & 2 and once it
is a manufacturing defect, they are involved in the issue and all three of them
are bound by their act of selling and issuance of invoices. They are veritable
parties and if any one of them is left out, then the dispute cannot be decided.
He further submits that invoices cannot be bisected for different purposes.
By referring to the judgment of the Hon'ble Apex Court in case of Cox &
Kings Ltd. vs. SAP India (P) Ltd., (2024) 4 SCC 1 learned counsel for the
applicants submits that even a non-signatory can be involved in arbitration.
He thus submits that the application be allowed and sole Arbitrator for
adjudication of dispute be appointed.
Appreciation and conclusion
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10. Heard learned counsel for the parties. Perused the record.
11. On perusal of invoices, it is seen that Clause 8 in the invoice
issued to applicant No. 1 and Clause 7 in the invoices issued to applicant No.
2 provides as under :
''All disputes arising between the parties hereto shall be referred to
arbitration according to the arbitration laws of the country.''
12. A close scrutiny of the language employed in the terms and
conditions appended to the tax invoices would show that it says that all
disputes arising ''between the parties hereto'' shall be referred to arbitration.
Thus, the invoice says, parties hereto and as per the invoice, the parties are
Riddesh Corporation Manawar Private Limited (applicant No.1) and Sanghi
Brothers (Indore) Pvt. Ltd. (respondent No.3) and not the respondents No. 1
and 2. Same is the case in the invoices issued for applicant No. 2. As such
the tax invoices if at all considered as containing arbitration agreement, still
it is between two parties i.e. the applicants and respondent no.3. The learned
counsel for the applicants while referring to the judgment of the Hon'ble
Apex Court in case of Cox & Kings (supra) submits that it is not that a non-
signatory cannot be involved in a arbitration and Arbitrator cannot be
appointed, but the important aspect is that whether the person or any entity
intended or consented to be bound by the arbitration agreement or the
underline contract containing the arbitration agreement through their acts or
conduct. Thus, what is required to be seen by this Court while considering
the issues is whether there is any privity of contract by conduct of
respondents No. 1 and 2 so as to bind them with the arbitration agreement as
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contained in the invoices issued by respondent No.3. For this, the relation
between the respondent No.3 and respondents No. 1 & 2 is required to be
seen.
13. Learned counsel for the applicants while establishing the relation
between respondents No. 1 and 3 refers to Clause 17 of the Dealership
Agreement (Annexure R/1-2) and submits that the dealer has been put to an
obligation that it shall have no authority to give its purchaser a different
warranty binding upon the company than what the company has provided.
Thus, the dealer has been bound to meet the company's warranty obligation
to the purchaser of the product and/or value added services in accordance
with the procedures and policies issued or to be issued by the company from
time to time. The learned counsel thus submits that the company binds
dealer and dealer has executed agreement with the applicants, thus all three
of them i.e. the applicant, the dealer and the company have this agreement
which is binding and consequently, the act of issuance of tax invoice will
bind not only the dealer but also the manufacturer i.e. the respondent No.1.
14. This assertion of the learned counsel for the applicants has to be
seen in view of the nature of relationship between the manufacturer i.e.
respondent No.1 and the dealer i.e. respondent no.3. This nature of
relationship is manifest from Clause 3(h) of the agreement which provides as
under:
''3(h) This Agreement has been entered into and executed by the Parties on a
Principal-to-Principal basis and is a contract for sale of products and services by the
Company to the dealer and resale thereof by the dealer mentioned above. There is no
express or implied relationship of employer and employee between Dealer's
employees/personnel/ representatives and the Company. The Dealer, its employees,
agents and representatives shall resale products and provide Services as independent
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entity and nothing contained herein shall be deemed to create any partnership, joint
venture between the Parties or a merger of their assets or their fiscal or other
liabilities or undertakings or create any employment or relationship of principal and
agent between the Company and Dealer and/or its representatives, employees and
agents.''
15. Thus, it has clearly been mentioned in the agreement that dealer
is not an agent of the manufacturer. The clause declares that the agreement
has been executed by the parties on a Principal-to-Principal basis and it is a
contract for sale of products and services by the company to the dealer and
resale thereof by the dealer mentioned above. There is no expresss or
implied relationship of employer and employee between the two. It is thus
clear that the dealer does not act as a representative of manufacturer. He is
neither the agent nor an employee of the manufacturer. He acts as a
principal completely independent of the manufacturer. In fact this agreement
is an agreement for sale of product. As such in the considered view of this
Court, there is no privity of contract between the parties.
16. The learned counsel for the applicant during the course of
argument has placed reliance on the judgment of the Hon'ble Apex Court
rendered in the case of Glencore International AG vs. M/s Shree Ganesh
Metals and Anr. in Civil Appeal No. 11067 of 2025 (dated 25.08.2025)
based on which it was tried to emphasize that the requirement of Section 7 of
the Act of 1996 is not that it must be signed in all circumstances and
arbitration agreement need not be signed. The only pre-requisite is that it
should be in writing and in the present case it is in writing and the conduct of
the parties would show that all of them have consented to that agreement.
17. The above scenario is not relatable to the controversy involved in
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the present case as there is complete absence of any agreement between the
respondent No.1 and the applicants. However, respondent No.3 did issue
some invoices to the applicants in which an arbitration clause is present. The
stand of respondent No.3 is that it was limited to disputes relating to invoices
and not the manufacturing of vehicles. This Court is of the considered view
that in fact this will not bind the respondent No.1 for the simple reason that
the dealer was acting as a principal and not as the agent of respondent No. 1
and that too only for the purposes of invoice i.e. the rates, rate of tax and
ancillary matters and not the manufacturing issues of the vehicles.
18. The High Court of Bombay while considering this aspect in case
of Concrete Additives and Chemicals Pvt. Ltd. vs. S.N.Engineering Services
Pvt. Ltd., 2022 SCC OnLine Bom 8034, in para 3 and 4 has held as under:
''3. It is on the basis of the tax invoices, the applicant is before the Court to contend
that there is an arbitration agreement between the parties. Such a contention as urged
on behalf of the applicant cannot be accepted as issuance of tax invoice is certainly
required to be held to be a unilateral act on the part of the applicant. The contract
between the parties is actually born under the purchase orders. The purchase orders
do not contain or make any reference to an arbitration agreement between the
parties.
4. To accept the applicant's case that there is an arbitration agreement between the
parties in my opinion, would be in the teeth of Section 7 of the Act which provides
as to what would constitute an arbitration agreement. In the present context, it can be
clearly held that there is no conscious agreement between the parties to refer the
disputes for adjudication in arbitration. Merely because the tax invoices which are in
response to the purchase orders provide for an arbitration, certainly such invoices do
not bring about an arbitration agreement as contemplated under Section 7 of the
Act.''
19. This Court is in full agreement with the proposition of law as
laid down by the said jurisdictional High Court. Similarly, the High Court of
Delhi at New Delhi in case of Mohammad Eshrar Ahmed vs. Tyshaz
Buildmart India Pvt. Ltd., 2024 SCC OnLine Del 6212 while considering
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similar issues observed in para 9, 10 and 11 as under :
''It is impossible to discern whether the invocation of arbitration, in the aforesaid
notices, dated 31 May 2023 and 7 June 2023, is in sink with the arbitration
agreement between the parties, for there is in fact, no such agreement. The only
document in which resolution of dispute by arbitration finds reference are the
invoices documents to which the notice dated 31 May 2023 refers. These invoices,
submits Ms. Swati Surbhi, were received by the petitioner for the first time on or
around 15 May 2023. The invoices have been placed on record. They do not contain
the signature of the petitioner or anything to indicate that the petitioner had
consented to the recitals in the invoices. Indeed, the invoices are practically
unintelligible.
10. It is clear that, even assuming that the recitals in these invoices envisages
resolution of dispute by arbitration, inasmuch as these invoices have not expressly or
by necessary implication been accepted by the petitioner, they cannot be said to
contain any arbitration agreement between the petitioner and the respondent.
11. No other document envisaging resolution of dispute by arbitration having ever
been made available to the petitioner, it is clear that there is no arbitration agreement
between the parties.''
20. Learned counsel for the applicants while relying on the judgment
of the Hon'ble Apex Court in the case of Cox & Kings (supra) has laid great
emphasis on the fact that to be bound by an arbitration agreement it is not
essentially required that the party concern must be a signatory to the
arbitration agreement. The learned counsel as such, implies that it is the
intention of the parties that has to be seen. The Hon'ble Apex Court in the
said case observed in para 83 and 84 as under :
''83. Reading Section 7 of the Arbitration Act in view of the discussion gives rise
to the following conclusions: first, arbitration agreements arise out of a legal
relationship between or among persons or entities which may be contractual or
otherwise, second, in situations where the legal relationship is contractual in nature,
the nature of relationship can be determined on the basis of general contract law
principles, third, it is not necessary for the persons or entities to be signatories to the
arbitration agreement to be bound by it; fourth, in case of non-signatory parties, the
important determination for the Courts is whether the persons or entities intended or
consented to be bound by the arbitration agreement or the underlying contract
containing the arbitration agreement through their acts or conduct; fifth, the
requirement of a written arbitration agreement has to be adhered to strictly, but the
form in which such agreement is recorded is irrelevant sixth, the requirement of a
written arbitration agreement does not exclude the possibility of binding non-
signatory parties if there is a defined legal relationship between the signatory and
non-signatory parties; and seventh, once the validity of an arbitration agreement is
established, the Court or tribunal can determine the issue of which parties are bound
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by such agreement.
84. It is presumed that the formal signatories to an arbitration agreement are parties
who will be bound by it. However, in exceptional cases persons or entities who have
not signed or formally assented to a written arbitration agreement or the underlying
contract containing the arbitration agreement may be held to be bound by such
agreement. As mentioned in the preceding paragraphs, the doctrine of privity limits
the imposition of rights and liabilities on third parties to a contract. Generally, only
the parties to an arbitration agreement can be subject to the full effects of the
agreement in terms of the reliefs and remedies because they consented to be bound
by the arbitration agreement. Therefore, the decisive question before the Courts or
tribunals is whether a non-signatory consented to be bound by the arbitration
agreement. To determine whether a non-signatory is bound by an arbitration
agreement, the Courts and tribunals apply typical principles of contract law and
corporate law. The legal doctrines provide a framework for evaluating the specific
contractual language and the factual settings to determine the intentions of the
parties to be bound by the arbitration agreement. [Gary Born, International
Arbitration Law and Practice, (3rd Edn., 2021) at p. 1531.]
xxx xxx xxx
170. In view of the discussion above, we arrive at the following conclusions:
170.1. The definition of "parties" under Section 2(1)(h) read with Section 7 of the
Arbitration Act includes both the
signatory as well as non-signatory parties;
170.2. Conduct of the non-signatory parties could be an indicator of their consent to
be bound by the arbitration agreement;
170.3. The requirement of a written arbitration agreement under Section 7 does not
exclude the possibility of binding non-signatory parties;[...]"
21. The Hon'ble Apex Court has subsequently considered the issue
in the case of Ajay Madhusudan Patel vs. Jyotrindra S.Patel, (2025) 2 SCC
147 and while referring to the judgment in case of Cox & Kings (supra) the
Hon'ble Court held in para 81 and 83 as under:
''81. The fact that a non-signatory did not put pen to paper may be an
indicator of its intention to not assume any rights, responsibilities or obligations
under the arbitration agreement. However, the courts and tribunals should not
adopt a conservative approach to exclude all persons or entities who intended
to be bound by the underlying contract containing the arbitration agreement
through their conduct and their relationship with the signatory parties. The
mutual intent of the parties, relationship of a non-signatory with a signatory,
commonality of the subject matter, composite nature of the transactions and
performance of the contract are all factors that signify the intention of the non-
signatory to be bound by the arbitration agreement.
83. It is evident that the intention of the parties to be bound by an arbitration
agreement can be gauged from the circumstances that surround the
participation of the non-signatory party in the negotiation, performance, and
termination of the underlying contract containing such an agreement. Further,
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when the conduct of the non-signatory is in harmony with the conduct of the
others, it might lead the other party or parties to legitimately believe that the
non-signatory was a veritable party to the contract containing the arbitration
agreement. However, in order to infer consent of the non-signatory party, their
involvement in the negotiation or performance of the contract must be positive,
direct and substantial and not be merely incidental. Thus, the conduct of the
non-signatory party along with the other attending circumstances may lead the
referral court to draw a legitimate inference that it is a veritable party to the
arbitration agreement.''
22. As such, what is required to be seen is that the intention of the
parties to be bound by an 'Arbitration Agreement' and for which conduct of
the non-signatory becomes the most significant aspect. In the present case,
the conduct of respondents No. 1 and 2 is clear as is apparent from the
delearship agreement (Annexure R/1-2). It never intended to consent for
execution of an arbitration agreement. It is not even slightly apparent from
the said agreement that it, at any stage of the transaction, had intended to
authorise the respondent No. 3 to execute an arbitration agreement so as to
bind not only respondent No. 3 but also respondents No. 1 and 2. It does not
appear from invoices issued by respondent No. 3 and dealership agreement
that in fact the respondents No. 1 and 2 are the veritable parties to respondent
No. 3. On the contrary, the documents would show that the respondent No. 3
was acting in its own capacity as a seller of vehicles as a 'principal' and not
as an 'agent' of the manufacturer. As such, the conduct of the non-signatory
party i.e. respondents No. 1 and 2 in this case does not lead to draw a
legitimate inference that it is a veritable party. On the contrary, the terms of
the dealership agreement and the issuance of invoices if seen in juxtaposition
to each other would give an inescapable conclusion that the transactions are
completely independent of each other.
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23. In view of the above analysis, this court is of the considered
view that there is no existence of any arbitration agreement between the
applicants and respondents No. 1 & 2.
24. As regards the dispute between the applicants and respondent
No.3, in fact the applicants are raising dispute against respondent No.1 and
relying on the invoices issued by respondent No.3 and essentially the dispute
is with respect to quality of manufacture of vehicles for which they have no
issue against the dealer. In such circumstances, in the considered view of
this Court the present is not a case where there is existence of a dispute
connected to arbitration agreement and in absence of existence of arbitration
agreement, appointment of Arbitrator cannot be made.
25. Consequently, the application fails and is hereby rejected.
However, applicants can pursue the remedy as available under the law.
(PAVAN KUMAR DWIVEDI)
J0UDGE
vidya
