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Civil Law

Not Signing doesn’t Cancel Arbitration Agreement

 28-Aug-2025

Glencore International AG v. M/s. Shree Ganesh Metals and another

“Under Section 7(3) of the Arbitration and Conciliation Act, 1996, an arbitration agreement must be in writing but need not be signed. Section 7(4) provides examples of what constitutes a written agreement, including exchanges of letters or other communications that record the agreement. Therefore, the requirement is that the agreement be documented, not necessarily signed. This principle applies equally to arbitration agreements under Sections 44 and 45 of the Ac ” 

Justices Sanjay Kumar and Satish Chandra Sharma

Source: Supreme Court  

Why in News? 

Recently, Justices Sanjay Kumar and Satish Chandra Sharma has held that an arbitration agreement need not be signed to be enforceable if the parties otherwise demonstrate mutual consent—via written conduct such as emails—setting aside the Delhi High Court’s refusal to refer the dispute to arbitration solely because one party did not sign the arbitration agreement. 

  • The Supreme Court held this in the matter of Glencore International AG v. M/s. Shree Ganesh Metals and another (2025). 

What was the Background of Glencore International AG v. M/s. Shree Ganesh Metals and another, (2025) ? 

  • Glencore International AG, a Swiss mining and commodity trading company, had an established business relationship with Shree Ganesh Metals, an Indian proprietorship concern producing zinc alloys in Himachal Pradesh. Between 2011-2012, Shree Ganesh Metals purchased zinc metal under four contracts, all containing London arbitration clauses. 
  • In March 2016, parties negotiated a fifth contract for 6,000 metric tons of zinc metal delivery from March 2016 to February 2017. Through email exchange on 10-11 March 2016, Glencore proposed terms including LME pricing based on 10-day average, while Shree Ganesh Metals accepted but requested modification to 5-day LME average. Glencore prepared Contract No. 061-16-12115-S incorporating the agreed modification and signed it, but Shree Ganesh Metals never signed the document. 
  • Shree Ganesh Metals accepted 2,000 metric tons of zinc metal, arranged Standby Letters of Credit through HDFC Bank specifically referencing the unsigned contract, and engaged in correspondence acknowledging the contract terms. When payment disputes arose, Glencore encashed the Letters of Credit in February 2017. 
  • Shree Ganesh Metals sued in Delhi High Court seeking to declare the Letter of Credit encashment void and claiming US$ 1.2 million damages. Glencore sought arbitration reference under the unsigned contract's arbitration clause, which both the single judge and Division Bench rejected solely due to absence of signature. 

What were the Court’s Observations? 

  • The Supreme Court observed that arbitration agreements need only be in writing under Section 7(3) of the Arbitration Act, 1996, and signatures are not mandatory requirements. Electronic communications and conduct demonstrating mutual consent can establish valid arbitration agreements. 
  • The Court noted that Shree Ganesh Metals' conduct - accepting material delivery, issuing Letters of Credit referencing the contract, and corresponding about contract performance - unequivocally demonstrated acceptance of all contract terms including the arbitration clause, making signature absence irrelevant. 
  • The Court observed that modern commercial practices including e-commerce, internet transactions, and standard form contracts frequently operate without traditional signatures, emphasising that established party identity and recorded agreement consensus suffice for valid arbitration agreements. 
  • The Court noted that referral courts need establish only prima facie proof of arbitration agreement existence and should favour giving effect to arbitration clauses rather than finding technical grounds for invalidation, leaving detailed validity determinations to arbitral tribunals. 
  • The Court observed that Delhi High Court ignored crucial factual evidence of contract acceptance and performance, erroneously focusing solely on signature absence while disregarding clear conduct demonstrating mutual agreement and arbitration clause binding effect. 

Can Arbitration Agreements Be Enforced Without Signatures? 

  • Section 7(3) of the Arbitration and Conciliation Act, 1996 mandates that arbitration agreements must be in writing, establishing this as the sole formal requirement for validity without imposing any signature obligation. 
  • Section 7(4) recognises three distinct forms of written arbitration agreements: documents signed by parties  
    • under clause (a), exchange of communications providing agreement records  
    • under clause (b), and mutual non-denial of arbitration existence in pleadings  
    • under clause (c), demonstrating that signature represents only one pathway among several valid formation methods. 
  • Section 7(4)(b) specifically includes "exchange of letters, telex, telegrams or other means of telecommunication including communication through electronic means" as valid forms of written arbitration agreements, provided they maintain records of the agreement, thereby eliminating signature requirements for electronically communicated consent. 
  • Section 7(4)(c) establishes that arbitration agreements exist when one party alleges their existence in statements of claim and defence while the other party fails to deny such existence, creating binding arbitration obligations through procedural conduct rather than signature formalities. 
  • Section 45 empowers courts to refer parties to arbitration upon request unless they find the agreement "prima facie null and void, inoperative or incapable of being performed," establishing a low threshold that focuses on agreement substance rather than signature formalities. 
  • Modern commercial practices including e-commerce transactions, internet purchases, telephone bookings, and standard form contracts frequently operate without traditional signatures, requiring legal recognition of alternative consent manifestation methods to maintain commercial viability. 
  • When parties demonstrate mutual consent through contract performance, material acceptance, financial arrangements, and ongoing correspondence referencing specific agreement terms, such conduct constitutes sufficient evidence of arbitration agreement acceptance regardless of signature absence. 
  • Courts applying Section 45 need establish only prima facie proof of arbitration agreement existence rather than conducting detailed validity examinations, preventing technical signature requirements from defeating substantive arbitration consent demonstrated through party behaviour. 

Civil Law

Order XXX Rule 10 CPC

 28-Aug-2025

Dogiparthi Venkata Satish And Anr. V. Pilla Durga Prasad & Ors.

“ Order XXX Rule 10 CPC permits a suit against a proprietorship in its trade name, but this does not bar suing the proprietor personally—since a proprietorship has no separate legal identity, both are the same ” 

Justices Vikram Nath and Sandeep Mehta 

Source: Supreme Court  

Why in News? 

Recently, Justices Vikram Nath and Sandeep Mehta t ruled that a proprietorship and its proprietor are legally the same, holding that a suit filed against a proprietorship firm can validly proceed in the proprietor's name, setting aside the Andhra Pradesh High Court's contrary decision. 

  • The Supreme Court held this in the matter of Dogiparthi Venkata Satish And Anr. V. Pilla Durga Prasad & Ors.(2025). 

What was the Background of Dogiparthi Venkata Satish And Anr. V. Pilla Durga Prasad & Ors. 2025 Case? 

  • The present dispute originated from a property lease transaction involving landlords Dogiparthi Venkata Satish and another, who owned certain schedule property. Upon request from Aditya Motors, a sole proprietorship concern operated by respondent Pilla Durga Prasad, they agreed to lease out the premises. A registered lease deed was executed on 13th April, 2005, formally leasing the schedule premises to Aditya Motors. 
  • During the lease period, Aditya Motors, without obtaining consent from the owner-appellants, permitted M/s. Associated Auto Services Pvt. Ltd. to occupy and use the leased premises. Upon expiry of the stipulated lease period, the lessee failed to vacate the premises despite termination of tenancy rights. The appellants, after serving due notice under Section 106 of the Transfer of Property Act, 1882, instituted eviction proceedings against the original lessee, the unauthorized occupant, and its directors. 
  • In the original suit, Aditya Motors was impleaded as defendant no.1, M/s. Associated Auto Services Pvt. Ltd. as defendant no.2, and the company's two directors as defendants nos. 3 and 4.  
  • During litigation pendency, appellants filed an application under Order VI Rule 17 of the Code of Civil Procedure seeking plaint amendment. The primary amendment sought deletion of Aditya Motors as defendant no.1 and substitution of Pilla Durga Prasad as the lessee's representative in his personal capacity. 
  • The amendment application was allowed by order dated 28th March, 2018, which attained finality as it remained unchallenged. The cause title consequently changed from "Dogiparthi Venkata Satish and another Vs. Aditya Motors and others" to "Dogiparthi Venkata Satish and another v. Pilla Durga Prasad and others." 
  • Following the amendment, the defendant filed an application under Order VII Rule 11 seeking plaint rejection. The respondent contended that since the registered lease deed was executed with Aditya Motors as lessee, and the plaint had been amended to delete Aditya Motors and substitute Pilla Durga Prasad, no cause of action was disclosed against Pilla Durga Prasad individually. 
  • The appellants opposed this application, asserting that Aditya Motors was merely a proprietorship concern with Pilla Durga Prasad as sole proprietor. They argued that since proprietorship concerns lack juristic personality, substituting the proprietor would not prejudice any substantive rights. They contended the cause of action had always been against Pilla Durga Prasad personally, as he was the sole lease deed signatory. 
  • The Trial Court rejected the Order VII Rule 11 application by order dated 2nd July, 2018. Aggrieved, Pilla Durga Prasad filed a civil revision petition before the High Court of Andhra Pradesh at Amaravati. The High Court allowed the revision petition and set aside the Trial Court's order, holding that the proprietorship concern ought to have been made a party as it could be sued but could not sue independently, relying primarily upon Order XXX Rule 10. 

What were the Court’s Observations? 

  • The Supreme Court observed that the Trial Court had correctly rejected the Order VII Rule 11 application, while the High Court committed serious error in interpreting Order XXX Rule 10. The Court noted that a proprietorship concern is merely a trade name adopted by individuals for conducting business activities and does not constitute a juristic person with independent legal existence. 
  • The Court held that the permissive language in Order XXX Rule 10, particularly "may," indicates that making a proprietorship concern a party is discretionary rather than mandatory. The provision does not preclude suits being filed directly against proprietors, especially when proprietorship concerns can only be defended by proprietors themselves. 
  • The Court observed that when proprietors are impleaded representing proprietorship concerns, no prejudice is occasioned to interested parties. Proprietorship interests are adequately protected by the sole person owning and controlling them. Order XXX Rule 10 creates no bar against instituting suits directly against proprietors. 
  • The Court noted that whether proceedings are instituted against proprietorship concerns in their trade names or through proprietors acting as representatives amounts to the same legal effect. The High Court had adopted an overly technical approach without recognising that no prejudice had been caused. 
  • The Court concluded that the cause of action had legitimately accrued against the proprietor personally, as he was the sole lease deed signatory on behalf of the proprietorship concern. The Supreme Court allowed the appeal and set aside the High Court order, directing the Trial Court to proceed with suit adjudication on merits. 

What is Order XXX Rule 10 of Code of Civil Procedure? 

  • About 
    • Order XXX Rule 10 of the Code of Civil Procedure, 1908 is a procedural provision that governs suits against persons carrying on business in names other than their own personal names. 
  • Statutory Provision 
    • The rule states that any person carrying on business in a name or style other than his own name, or a Hindu undivided family carrying on business under any name, may be sued in such name or style as if it were a firm name, and in so far as the nature of such case permits, all rules under this Order shall apply accordingly. 
  • Key Elements of the Rule 
    • Order XXX Rule 10 applies to two categories of business entities. First, it covers any person who conducts business operations under a trade name or business style that differs from their personal name. Second, it encompasses Hindu undivided families that carry on business activities under any designated name or style. 
    • The rule provides that such persons or Hindu undivided families may be made defendants in legal proceedings using their business name or trade style, treating them as if they were partnership firms for procedural purposes. 
    • The provision employs permissive language by using the word "may," indicating that suing in the business name is optional rather than mandatory. Plaintiffs have the discretion to sue either in the trade name or in the personal name of the proprietor.