[Cites 6, Cited by 0]
Rajasthan High Court - Jodhpur
Modern Insulators Limited vs Mayur Lime And Chemical Limited ... on 2 April, 2026
[2026:RJ-JD:15103-DB]
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
D.B. Civil Misc. Appeal No. 1412/2023
Modern Insulators Limited, Through Managing Director Shri
Sachin Ranka, Address- A-4, Vijay Path, Tilak Nagar, Jaipur
302004, Office Post Box No. 23, Abu Road 307023
----Appellant
Versus
Mayur Lime And Chemical Limited, (A Company Incorporated
Under The Companies Act, 1956) Through Director Anil Daga,
Age 52 Yrs., Resident Of 55, Behind New Power House Industrial
Area Jodhpur
----Respondent
For Appellant(s) : Mr. Saransh Vij
Mr. Gaurav Kumar Singh
For Respondent(s) : Mr. Himanshu Maheshwari
Mr. Bharat Maheshwari
HON'BLE MR. JUSTICE ARUN MONGA
HON'BLE MR. JUSTICE SUNIL BENIWAL
Order(Oral)
02/04/2026
Per: Arun Monga, J.
1. The present appeal has been preferred by the appellant
assailing the Order dated 07.08.2023 passed by the learned
Commercial Court, No. 2, Jodhpur, whereby the application filed
by the appellant under Section 8 of the Arbitration and Conciliation
Act, 1996 for rejection of suit came to be dismissed.
2. Facts of the case leading to the present appeal are that the
respondent-plaintiff instituted a suit being Commercial Suit No.
34/2023 (NCV No. 37/2019), titled Mayur Lime & Chemical Ltd.
vs. Modern Insulator Ltd. before the Commercial Court, Jodhpur
for recovery of money of Rs.72,98,077.50 p. from the appellant-
defendant.
(Uploaded on 10/04/2026 at 05:12:01 PM)
[2026:RJ-JD:15103-DB] (2 of 7) [CMA-1412/2023]
2.1. The appellant filed an application under Section 8 of the
Arbitration and Conciliation Act, 1996 (hereinafter referred to as
'Act of 1996'), inter alia, contending that the disputes between the
parties are governed by an arbitration agreement and, therefore,
the suit was not maintainable before the Commercial Court. The
respondent filed a reply to the said application, to which the
appellant submitted a rejoinder.
2.2. The learned Commercial Court, vide impugned order dated
07.08.2023, rejected the application filed by the appellant under
Section 8 of the Act of 1996.
2.3. Hence, the instant appeal.
3. Learned counsel for the appellant argues that the learned
Commercial Court has committed a grave error both in law and on
facts while passing the impugned order dated 07.08.2023 and in
rejecting the application preferred by the appellant. It is
contended that the Court failed to appreciate the contradictory
stand of the respondent. On one hand, the respondent in para 4 of
the plaint categorically admitted the existence of a contract
between the parties, while on the other hand, in the reply to the
application, it denied the existence of any agreement. Such
mutually destructive pleas could not have been permitted, and the
failure of the learned Commercial Court to take note of this
contradiction vitiates the impugned Order.
3.1. He further argues that the learned Commercial Court failed
to appreciate that the communication dated 10.06.2014, duly
signed by the Director of the respondent, clearly contains an
arbitration clause and satisfies all the essential ingredients of an
arbitration agreement within the meaning of Section 7 of the Act
(Uploaded on 10/04/2026 at 05:12:01 PM)
[2026:RJ-JD:15103-DB] (3 of 7) [CMA-1412/2023]
of 1996. The said document manifests the clear intention of the
parties to refer disputes to arbitration, specifically to the Executive
Director of the appellant. Learned counsel relied on the judgment
passed by the Apex Court in the case of Punjab State & Ors. Vs.
Dina Nath & Ors.1.
3.2. It is further submitted that the subsequent amendment
introduced by the Arbitration and Conciliation (Amendment) Act,
2015, relating to qualifications of arbitrators, does not invalidate
or nullify an otherwise valid arbitration agreement. In fact, the
appellant has already invoked the arbitration clause by filing S.B.
Arbitration Application No.29/2021 under Section 11 of the Act of
1996 before the High Court, which is presently pending
consideration.
3.3. It is also contended that the learned Commercial Court has
erroneously relied upon judgments cited by the respondent which
are wholly inapplicable to the facts of the present case. The
judgments cited by the respondent pertain to the repealed
Arbitration Act, 1940, whose provisions and definition of
arbitration agreement are materially different from the Act of
1996.
3.4. Lastly, learned counsel submits that the learned Commercial
Court, having acknowledged the existence of a contract between
the parties, erred in rejecting the application without appreciating
that the said contract satisfies all the requirements of a valid
arbitration agreement under Section 7 of the Act of 1996. The
statutory provision clearly recognizes arbitration agreements in
the form of signed documents or exchange of communications,
both of which stand fulfilled in the present case. In view of the
1 (2007) 5 SCC 28
(Uploaded on 10/04/2026 at 05:12:01 PM)
[2026:RJ-JD:15103-DB] (4 of 7) [CMA-1412/2023]
aforesaid submissions, it is urged that the impugned order suffers
from patent illegality and deserves to be quashed and set aside.
4. In the aforesaid backdrop, we have heard learned counsel for
the parties and perused the material available on record.
5. Before examining the merits of the case, it would be apposite
to refer to the clause upon which the appellant places reliance. It
is pertinent to note that the said clause is contained in a letter /
communication dated 10.06.2014 (Annexure-A/1) exchanged
between the parties, which reads as under:
"10-6-2014
M/s. Mayur Lime & Chemicals Ltd.,
XXX XXX XXX
Kind Attn: Mr. Anil Daga
Dear Sir,
This has reference to your letter and subsequent discussions we
had with you at our office. Accordingly we are pleased to award
you a contract for lifting of rejected insulators scrap which is of
no use including rejected/fired insulator scrap/cutting
booms/insulator broken during testing from our factory @ Rs.
100/- PMT + excise duty & other taxes etc. as applicable and
advance payment in two installments. Loading and transportation
shall be in your account.
Before lifting scrap of insulators if any metal part is attached, it
should be removed. Identifying the rejected scrap of insulators
before lifting is solely under the discretion of the management.
The booms & scrap which are being required for captive
consumption shall not be lifted.
You shall lift the above scrap from the specified places as directed
by the management from time to time during the period of
contract.
In case of any dispute arising during the period of contract, the
decision of our Executive Director will be final and binding on
both the parties.
This contract is valid from Ist April 2014 to 31" March 2015.
Kindly return one copy duly signed & sealed in token of your
acceptance of the same.
Thanking you,
Yours faithfully,
For-Modern Insulators Ltd.,"
(Uploaded on 10/04/2026 at 05:12:01 PM)
[2026:RJ-JD:15103-DB] (5 of 7) [CMA-1412/2023]
6. Having gone through the letter/communication dated
10.06.2014, which is jointly signed by the parties, it appears that
the clause relied upon by the appellant does not contain any
reference to the Act of 1996, nor does it contemplate adjudication
of disputes through an arbitral process involving the appearance of
the parties before an adjudicator or arbitrator, or the reference of
disputes to any such forum.
7. The definition of 'arbitration agreement' is provided under
Section 7 of the Act of 1996, which reads as under:
"7. Arbitration agreement. - (1) In this Part, "arbitration
agreement" means an agreement by the parties to submit to
arbitration all or certain disputes which have arisen or which may
arise between them in respect of a defined legal relationship,
whether contractual or not.
(2) An arbitration agreement may be in the form of an arbitration
clause in a contract or in the form of a separate agreement.
(3) An arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing if it is contained in-
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other means
of telecommunication including communication through
electronic means which provide a record of the agreement;
or
(c) an exchange of statements of claim and defence in which
the existence of the agreement is alleged by one party and
not denied by the other.
(5) The reference in a contract to a document containing an
arbitration clause constitutes an arbitration agreement if the
contract is in writing and the reference is such as to make that
arbitration clause part of the contract."
8. The clause relied upon by the appellant is to be examined in
light of the Section 7 of the Act of 1996. A bare perusal of the said
clause reveals that, in the event of any dispute, the Executive
Director of Modern Insulators, i.e., the appellant herein, is
empowered to render a decision. However, the said clause is
conspicuously silent as to the procedure to be followed, whether
(Uploaded on 10/04/2026 at 05:12:01 PM)
[2026:RJ-JD:15103-DB] (6 of 7) [CMA-1412/2023]
such decision is to be rendered ex parte or after affording an
opportunity of hearing to the parties, whether any pleadings are
to be filed, or whether any evidence or record is to be produced.
There is no indication of adherence to any adjudicatory
mechanism akin to that envisaged under the Act of 1996. The
clause merely stipulates, in a cryptic manner, that the decision of
the Executive Director shall be final. Such a stipulation, by no
stretch of imagination, can be construed as an arbitration clause.
9. Moreover, there exists no independent or substantive
contract executed between the parties governing their business
relationship. The sole document relied upon by the appellant is the
aforesaid letter/communication.
10. As discussed, the said letter/communication does not satisfy
the requirements of an arbitration agreement as contemplated
under Section 7 of the Act of 1996. Accordingly, this Court is of
the considered view that there is no express arbitration agreement
between the parties.
11. The reliance placed by the learned counsel for the appellant
upon the judgment of the Hon'ble Supreme Court in Dina Nath
(supra) is wholly misplaced. In the said judgment, although the
term "arbitration" was not expressly used, the clause under
consideration clearly indicated that disputes were to be
adjudicated by a competent authority, namely the Superintending
Engineer, through a process bearing the trappings of adjudication.
The facts of the present case are entirely distinguishable, as the
clause in question does not envisage any such adjudicatory
process. Therefore, the said judgment is not applicable to the
facts of the present case.
(Uploaded on 10/04/2026 at 05:12:01 PM)
[2026:RJ-JD:15103-DB] (7 of 7) [CMA-1412/2023]
12. In view of the foregoing discussion, the present appeal,
being devoid of merit, is hereby dismissed. The learned
Commercial Court shall proceed further in accordance with law.
13. It is further clarified that the present appeal is being
dismissed for the reasons recorded hereinabove, independent of
and de hors the observations made by the learned Commercial
Court.
14. All pending applications stand disposed of.
(SUNIL BENIWAL),J (ARUN MONGA),J
Ashutosh-32
(Uploaded on 10/04/2026 at 05:12:01 PM)
Powered by TCPDF (www.tcpdf.org)
