JUDGMENT
Usha Mehra, J.
(1) M/S Bhartia Cutler Hammer Ltd. has filed a suit under the summary procedure of the Code of civil procedure for recovery of Rs.2.24.895 – against Avn Tubes Limited. Plaintiff has based his claim on the basis of the outstanding bills amount not paid by the defendant. The defendant had placed an order on the plaintiff company for the supply of Thyristor drive and Motors (hereinafter called the equipment). This order was placed vide letter dated 16th April, 1987 Plaintiff supplied the materials and equipments as per order which was accepted by the defendant. The equipment was installed & commissioned by the plaintiff on 22nd May, 1987, 7/9th July, 1987 and 22nd October, 1987 respectively. After the installation, the equipment is working satisfactorily. The defendant company was to furnish the sales-tax Form-C to the plaintiff company in order to get exemption for the sales-tax. Even that the defendant has failed to furnish. Therefore, the plaintiff will have to pay additional 6% Csi which they are entitled to recover from the defendant. The defendant has failed and neglected to pay the outstanding bills amount in spite of repeated reminders, hence this suit under Order xxxvii of the code of Civil Procedure.
(2) Notice under Form-IV Schedule B of Order 37 was issued to the defendant. In response to which while entering appearance, the defendant has moved the present application under Section 34 of the Arbitration Act, inter alia pleading that in view of the arbitration clause in the agreement entered into by the parties, the suit is not maintainable. The letter dated 16th April, 1985, on the basis of which the order was placed by the defendant on the plaintiff, a concluded contract came into existence. The said letter dated 16th April, 1985 incorporated a clause No.18 which is an arbitration Clause. In view of this arbitration clause the remedy with the plaintiff was to seek arbitration instead of filing a civil Suit. The defendant has always been ready and willing to apoint arbitrator.
(3) Therefore, according to the defendant since disputes have arisen those are liable to be referred to an Arbitrator as per arbitration clause in the contract. Arbitrator is to be appointed by the defendant company as per Clause 18 of the Contract. On plaintiff raising the dispute defendant vide its letter dated 6th May, 1989 invoked the arbitration clause and informed the plaintiff accordingly. The defendant has referred the matter to arbitration for settlement of the disputes in accordance with the Clause 18. But the plaintiff for the first time has disputed the Arbitration of clause No.18 and has in fact denied the said clause illegally and wrongly. The acceptance of the agreement dated 16th April, 1985 is not disputed by the plaintiff therefore the Arbitration clause 18 is deemed to have been admitted. Plaintiff is therefore estopped from denying the existence of the arbitration clause at this stage. An Arbitrator has already been appointed and he having entered upon reference, the plaintiff cannot choose not to appear before him and instead move an application under Sections 30 & 33 of the Arbitration Act seeking declaration that there does not exists any arbitration clause or that the said arbitration clause is invalid.
(4) Plaintiff has repudiated these averments of the defendant inter alia on the grounds that even if it is presumed that there is an arbitration clause in the agreement dated 16th April, 1985, still that clause being unilateral cannot be enforced. Clause 18 give power only to the defendant for referring its disputes to arbitration. It denies the same right to the plaintiff, therefore, this clause 18 is bad in law and cannot be called an arbitration clause. Moreover the present dispute of the applicant does not fall in the scope of the arbitration agreement.
(5) I have heard the learned counsel for the parties and perused the record. The short point for determination in this case is whether clause 18 of the alleged Arbitration Clause is unilateral and not enforceable in law? In order to appreciate this argument we have to look to clause 18 which is reproduced as under :-
“18.ARBITRATIONWithout prejudice to the above Clause 17, of the contract the Company, M/s. Avn Tubes Limited, reserves its right to go in for arbitration, if any dispute so arisen is not mutually settled within 3 months of such notice given by the Company to the Contractor. And, the award of the Arbitrator, to the appointed by the Company, M/s. Avn Tubes Limited, shall be final and binding on both the Company and the Contractor. Mr. Banati contends that by no stretch of imagination this clause can be called bilateral. In fact the remedy of this clause shows that the defendant kept to himself the power to refer its disputes only to Arbitration. But no such power of invoking the Arbitration clause are given to plaintiff. This clause is one sided, it reserves the right of arbitration only to defendant company. This shows that the contractor, i.e. the present plaintiff has no right to invoke the provisions of Clause 18. The right is only reserved by the defendant M/s Avn Tubes Limited. Such a clause cannot be called an arbitration clause. He has placed reliance on the decision of Court of Appeal in the case Baron v.SUNDERLAND Corporation reported in All England Report 1966(1) 349(351). In the case before the Court of Appeal, the question for consideration was that if there was a want of mutuality, can such an agreement be called an arbitration agreement? The answer given was in the negative. Therefore. What the Court of the appeal held was that in order to invoke the arbitration clause, there has to be mutuality. But in the case in hand, the right had been reserved by the defendant of taking its disputes only to arbitration and nowhere the right was given to the contractor i.e. the plaintiff for invoking the arbitration clause. Therefore, apparently this clause suffers for want of mutuality. He has then placed reliance on the decision of the Calcutta High Court in the case of Union of India v. Ratilal R. Taunk reported in 2nd 1966(2) Calcutta, Page 527. In the case before the Calcutta High Court, a contractor had instituted a suit for recovery against the Uoi pleading therein that the contract agreement was voidable because of mutual mistake of facts and alternatively it was voidable as it was based on mis-representation. Uoi took up the plea that the suit was not maintainable because of arbitration clause embodied in the contract document. The question before that Court was whether an arbitration agreement is unilateral if one of the party only had the option to refer the disputes and differences to arbitration; whether such option can be validly accepted in law at the instance of other parties. It was held that according to Section 2(a) of the Arbitration Act. When an arbitration agreement gives an option or liberty to only one of the parties to agree to submit, present or future differences to arbitration, it is not an arbitration agreement, there must be an unqualified or unconditional agreement in favor of all the parties to exercise the option to submit present or future differences to arbitration. In order to be valid and binding, such agreement must be bilateral and not unilateral. Mr. Banati, therefore contended that this arbitration clause 18 is unilateral because by this clause defendant reserved to itself the right to go in for arbitration. This clause does not confer any right on the plaintiff/contractor to invoke this clause. Therefore such a clause cannot be called an arbitration clause. There is no binding arbitration agreement between the parties nor the Court can stay the suit on the basis of clause 18. Relying on the Calcutta decision Mr. Banati contended that even if defendant has chose n to invoke the provisions of this clause, still such a clause would be void for want of mutuality. On the other hand Ms. Kumkum Sen appearing for the defendant contended that there is no question of want of mutuality in this case. The parties agreed to refer their disputes arisen between them to arbitration, therefore, no fresh consent was necessary. To strengthen her argument. She placed reliance on the Division Bench judgment of this Court in the case of P.C. Aggarwal, Appellant v. K.N. Khosla and others, respondents . Relying on the observation in that case, Ms. Sen contended that the consent by the plaintiff had been given in advance for submission to arbitration. This consent makes this clause bilateral and not unilateral this consent was given in advance it can be now acted upon. The defendant has infact already acted upon the same. The previous consent will bind the plaintiff throughout. In this case the plaintiff after going through the contents of the arbitration clause entered into this agreement and thus bound himself with the same. Now since the disputes have arisen the matter has to be referred to arbitration. It does not behave on the part of the plaintiff to allege that it is unilateral clause. Even if it is mentioned in this clause that the reference will be in a particular manner, still it will be binding on the plaintiff. The actual reference to the arbitration has to be recorded as a bilateral reference. The particular mode or the manner or the language used in Clause 18 of the agreement will not make it unilateral. Unilateral reference would mean that the agreement does not include reference of future disputes to Arbitration. If it is simply mentioned that in case of dispute those would be decided by Arbitration then such a clause cannot be called bilateral because it does not include reference of future disputes to Arbitration. But if the arbitration agreement between the parties includes the reference of future disputes to arbitration then the parties, or one of the parties, will have an option to proceed either under the provisions of Chapter Ii or under the provisions of Chapter Iii in proceeding with the reference. That is called bilateral clause. The Division Bench decision quoted by the respondent does not help him, because in that case the option was given to both the parties to invoke the arbitration clause. The arbitration clause which came up for interpretation before the Division Bench reads as under:-
“IN the event of any claim (whether admitted or not), difference or disputes arising between you and me/us out of these transactions the matter shall be referred to arbitration in Delhi as provided in the Rules. Bye-law and Regulations of Delhi Stock Exchange Association Ltd. Delhi.”
A bare reading of the arbitration clause in the P.C. Aggarwal’s case would show that both the parties had the option to invoke the clause. But that is not the case in hand. In the case in hand the right to invoke the arbitration is restricted only to the defendant. This to my mind, would not amount to bilateral arbitration clause nor the pre-consent can validate such a clause. The language used in Clause 18 clearly show it is one sided. Only disputes of defendants could be referred to Arbitration. The term arbitration agreement has been defined in the act which presupposes that the parties must agree mutually that in case of any dispute having arisen between them, the have the option to invoke the said clause. Therefore, the point for consideration before the Division Bench was not as in this case. In this case right is only given to the defendant to invoke the arbitration clause without any option to plaintiff. That being so this clause 18 cannot be called bilateral. Prior giving of consent for such a clause would not make it bilateral. The facts of this case are somewhat similar to the facts of Calcutta High Court which decision will squarely apply to the facts of this case. In view of my above observation I am of the opinion such a clause as clause 18 cannot be called an arbitration clause. On the basis of clause 18 suit cannot be stayed. Clause 18 is not a valid arbitration clause hence the application of the defendant deserve dismissal. The same is accordingly dismissed. The plaintiff should now get the summons for judgment issued by taking proper steps and appear before the Deputy Registrar on 12th July, 1991.