Arbitration Agreement Is Valid Even Without Signature If Parties Acted Upon It: Kerala High Court
The Kerala High Court held that written agreement need not to be signed by the parties if the consensus ad idem and intention to arbitrate is reflected from the conduct of the parties and documentary evidence. Justice S. Manu allowed the application seeking reference to arbitration holding that an arbitration agreement in writing may exist even without signatures provided there is a...
The Kerala High Court held that written agreement need not to be signed by the parties if the consensus ad idem and intention to arbitrate is reflected from the conduct of the parties and documentary evidence.
Justice S. Manu allowed the application seeking reference to arbitration holding that an arbitration agreement in writing may exist even without signatures provided there is a clear evidence that both parties acted upon it.
Sigmatic Nidhi Ltd had advanced loans to the respondents. Following default in repayment, the petitioner invoked arbitration under the loan agreement. The agreement had only been signed by the borrowers. A sole arbitrator was appointed which passed an award. Subsequently, an execution petition was also dismissed by the court holding that appointment of the arbitrator was invalid which rendered the award unenforceable. Thereafter, the petitioner had filed an application under section 11 of the Arbitration Act seeking appointment of new arbitrator.
The Petitioner submitted that it is clear from the other documents produced that the parties acted on it, and therefore, from the facts and circumstances, it can be inferred that there was consensus between the parties and that the Agreement was treated as binding by both sides. It was further submitted that there is no requirement under the Arbitration Agreement that the agreement shall always be signed by the parties.
The court after referring to a catena of judgments of the Supreme Court observed that signature is not a formal requirement for an arbitration agreement to be valid under Section 7(4)(b) or 7(4)(c) of the Arbitration Agreement if the parties have exchanged communication acknowledging the agreement or one party alleges existence of agreement and other party does not deny it or their conduct demonstrate that they acted upon it.
It relied on Mahanagar Telephone Nigam Ltd. v. Canara Bank and others where it was held that “a commercial document has to be interpreted in such a manner so as to give effect to the agreement, rather than to invalidate it. An “arbitration agreement” is a commercial document inter partes, and must be interpreted so as to give effect to the intention of the parties, rather than to invalidate it on technicalities.”
The court observed that from a consistent position of the Supreme Court, it is clear that an arbitration agreement need not be signed by all parties to be valid under section 7 of the Arbitration Act. It further observed that following principles emerged from the above discussion- the agreement need not be in any particular form, the essential element is the consensus to refer the parties to arbitration, a written document even if unsigned can constitute an arbitration agreement, it may be inferred from exchanges between the parties etc.
In light of the above discussion, the court held that signature is not a formal requirement for an arbitration agreement to be valid under section 7 of the Arbitration Act.
Accordingly, the court allowed the present application holding that arbitration agreement need not be signed by all parties to be valid under section 7 of the Arbitration Act.
Case Title: SIGMATIC NIDHI LIMITED Versus SURESH KUMAR
Case Number: AR NO. 68 OF 2025
Citation: 2025 LiveLaw (Ker) 725
Judgment Date: 10/11/2025
For Petitioner: SHRI.P.PAULOCHAN ANTONY SHRI.SREEJITH K.