Mere Pendency Of Formal Signature By One Party Doesn't Preclude Parties From Being Referred To Arbitration: Delhi HC Allows Vedanta's Plea

The Delhi High Court bench of Justice Subramonium Prasad has held that the mere pendency of a formal signature by one party, when the other party has signed the agreement after reading and understanding its terms, including the arbitration clause, does not prevent the parties from being referred to arbitration. The Petitioner has filed this petition under section 11(6) of the Arbitration Act seeking appointment of the Respondent's nominee arbitrator to adjudicate disputes. The Petitioner submitted that the fact that mere formal Gas Sales Agreement ("GSA") had not been signed cannot mean that there was no formal arbitration clause which could not be invoked. Even if no formal agreement is executed, the Courts can still infer the existence of an arbitration clause. It was submitted that once having agreed to be bound by the GSA which contained an arbitration clause, the mere formal non-signing of GSA by the Respondent cannot deny the Petitioner the option to invoke arbitration as the parties had agreed to submit themselves to settle their disputes by arbitration. Per contra, the Respondent submitted that mere acceptance of the Respondent's bid did not result in conclusion of the GSA and this would not be considered as an Arbitration Agreement in terms of Section 7 of the Arbitration Act. It was further submitted that theRequest for Proposal bearing No.RFP/RJ-ON-90/1/2023/1 dated 28.12.2022 ("RFP") itself does not contain any arbitration clause and the Arbitration Clause as referred to is only present in the draft GSA which was never finalised and is not binding on the Parties. The key question that arose for consideration before the court was whether the acceptance of the RFP along with the finalisation of price and gas quantity is sufficient to infer existence of arbitration agreement between the parties or such agreement arises only upon signing of the GSA. The court noted that the signed and duly filled copy of the GSA was supplied to the Respondent. In the copy, effective date, gas price and volume which were agreed upon during the RFP process as evident from e-mail, were also incorporated in the GSA. The court noted that the signed and duly filled copy of the GSA was supplied to the Respondent. In the copy, effective date, gas price and volume which were agreed upon during the RFP process as evident from e-mail, were also incorporated in the GSA. After the conclusion of the contract, the GSA was formally sent by the Petitioner to the Respondent for execution who had read, understood and confirmed its contents. Furthermore, the submission of Forms C1 and C6 by the Respondent fortifies the conclusion that the terms of the GSA including the arbitration clause were accepted. It concluded that when the Respondent following the conclusion of the RFP placed 46 bids after understanding and reading the RFP and GSA and declared his readiness to offtake the gas as per the agreed terms and one party has already signed the GSA and only the Respondent's formal signature is pending, this shows that a prima facie arbitration agreement exists between the parties. This is sufficient to refer the parties to Arbitration under the terms of the GSA. Accordingly, the present application was allowed. Case Title: VEDANTA LIMITED versus GUJARAT STATE PETROLEUM CORPORATION LTDCitation: 2025 LiveLaw (Del) 902 Case Number: ARB.P. 853/2023 & I.A. 20643/2023 Judgment Date: 28/07/2025 For Petitioner: Mr Jayant Mehta, Sr. Advocate with Mr. Sulabh Rewari, Ms. Vasudha Sharma, Ms. Tina Aneja and Mr. Shubhansh Thakur, Advs. For Respondent: Mr. Ramji Srinivasan, Sr. Advocate with Mr. Piyush Joshi, Ms. Sumiti Yadava, Ms. Meghna Sengupta, Ms. Vatsla Bhatia and Mr. Yagya Sharma, Advs. Click Here To Download Order/Judgement

Mere Pendency Of Formal Signature By One Party Doesn't Preclude Parties From Being Referred To Arbitration: Delhi HC Allows Vedanta's Plea

Mohd Malik Chauhan

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