Unsigned invoices may constitute valid arbitration agreements when parties’ conduct demonstrates acceptance of their terms.

The petitioner, a registered partnership firm engaged in trading disposable products, instituted a commercial suit seeking recovery of ₹23,09,361 with interest from the respondent, who was engaged in manufacturing and selling such products.

The parties had a continuing commercial relationship involving an open and running account.

The petitioner alleged that the respondent’s last two consignments were substandard and overpriced, and claimed that ₹21,18,680 remained outstanding as on 15 June 2024.

The respondent filed a written statement and an application under Section 8 of the Arbitration and Conciliation Act, 1996, relying on arbitration clauses contained in invoices dated 9 April, 10 April, 24 May, 13 June and 15 June 2024.

The petitioner opposed the application, contending that the invoices were unsigned by it and therefore did not constitute a valid arbitration agreement under Section 7.

The Commercial Court allowed the application and referred the parties to arbitration on 10 July 2026.

The petitioner challenged that order under Article 227 of the Constitution.

Whether an arbitration clause contained in invoices, which were not signed by the petitioner, could constitute a valid arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996.

Whether the petitioner’s conduct—acceptance of the invoices, advance payments, continuing business dealings and reliance on the invoices in the recovery suit—demonstrated consent and an intention to be governed by the arbitration clause.

Whether the Commercial Court had correctly referred the dispute to arbitration under Section 8 on a prima facie examination of the arbitration agreement.

Section 7(3) of the Arbitration and Conciliation Act, 1996 requires an arbitration agreement to be in writing, but Section 7(4) does not mandate a signature in every case; an arbitration agreement may be established through written documents, correspondence or the parties’ conduct.

In Caravel Shipping Services Pvt. Ltd. v. Premier Sea Foods Exim Pvt. Ltd., the Supreme Court held that a party relying on an unsigned document as the basis of its claim cannot reject the arbitration clause contained in the same document, and that an arbitration agreement need not invariably be signed.

Glencore International AG v. Shree Ganesh Metals similarly recognises acceptance of contractual terms containing an arbitration clause through conduct, despite non-signing.

Scholar Publishing House Pvt. Ltd. v. Khanna Traders confirms that Section 7 does not prescribe a particular form and that arbitration may be inferred from correspondence and conduct.

Under Vidya Drolia v. Durga Trading Corporation, In Re: Interplay Between Arbitration Agreements and the Indian Stamp Act, 1899, and SBI General Insurance Co. Ltd. v. Krish Spinning, the referral court’s role under Section 8 is limited to a prima facie examination of the existence and validity of the arbitration agreement.

In cases of doubt, the law favours reference to arbitration where the parties’ conduct indicates acceptance of the arbitration arrangement.

The Court held that the absence of the petitioner’s signature on the invoices was not determinative.

The invoices were in writing and contained a complete arbitration clause.

More importantly, the petitioner had engaged in continuous transactions with the respondent, maintained an open and running account, made advance payments against the transactions, accepted and acted upon the invoices, and relied on those invoices as part of the cause of action in the recovery suit.

Having relied on the invoices for its substantive claim, the petitioner could not selectively disown the arbitration clause contained in them.

These circumstances established, at least prima facie, the petitioner’s acceptance of the invoice terms and its intention to be governed by arbitration.

The Court further held that the Commercial Court was not required, at the Section 8 stage, to conduct a detailed inquiry into consent or the merits of the dispute; the prima facie existence and validity of the arbitration agreement were sufficient.

The authorities relied upon by the petitioner were distinguished as factually inapplicable.

It held that the unsigned invoices, read with the parties’ conduct and the petitioner’s reliance upon them, constituted a valid arbitration agreement for the purposes of Section 7, and that the dispute was properly referable under Section 8.

The challenge to the Commercial Court’s order dated 10 July 2026 was dismissed, along with the pending applications.

The Court clarified that it had expressed no opinion on the merits of the underlying dispute, leaving all rights and contentions open before the arbitral tribunal.