Signing Below Non-Applicable Clauses Does Not Incorporate Them Into Contract: Delhi High Court Grants Anti-Arbitration Injunction
The Bench held that prior Fixture Recap inadmissible to vary unambiguous terms of final Booking Note for UN Peacekeeping cargo shipment to Sudan; distinguished English Common law on rectification of contracts.
Justice Vivek Chaudhary, Justice Renu Bhatnagar, Delhi High Court
The Delhi High Court has held that a party's signature at the foot of a multi-page document does not, by itself, incorporate every clause on that page into the contract, where the parties have specifically identified only certain clauses as applicable elsewhere in the agreement. The Bench held that merely because the arbitration clause appeared on the same page as, and immediately above, the parties' signatures, it did not become part of the Booking Note, since the parties had consciously chosen to incorporate only Clauses 20 to 41 of the additional rider clauses, deliberately excluding Clauses 42 and 43, which contained the arbitration mechanism.
The Court further held that once terms are reduced to a signed, clear and unambiguous document, the prior Fixture Recap exchanged between the parties' agents becomes inadmissible under the Indian Evidence Act, 1872, to vary those terms, precluding reliance on it to read an arbitration clause into the charter agreement for transporting military cargo for the United Nations Peace Keeping Force to Sudan. Distinguishing Indian evidence law from English Common law, the Court held that while foreign jurisdictions may permit rectification of a written instrument to reflect the parties' prior common intention, Indian courts cannot look beyond an unambiguous document to ascertain what was purportedly agreed earlier. Consequently, the Court granted an anti-arbitration injunction restraining the London arbitral proceedings, holding that the final Booking Note expressly superseded all previous arrangements and intentionally excluded the arbitration mechanism.
The arbitration sought to be restrained had been invoked before the London Maritime Arbitrators Association (LMAA) pursuant to Clause 43 of the Booking Note's additional rider clauses.
A Division Bench comprising Justice Vivek Chaudhary and Justice Renu Bhatnagar observed, “…The language is clear, unambiguous and admits of only one meaning, namely, that Clauses 20 to 41 of the additional riders are to apply. There is neither any reference to Clauses 42 or 43, nor is there any language which can reasonably be construed to incorporate Clause 43. Merely because Clauses 41, 42 and 43 appear on the same page of the additional riders, and the signatures of parties are below Clause 43, it cannot result in Clause 43 becoming part of the Booking Note. The parties specifically chose to incorporate only Clauses 20 to 41 and thus only the same shall apply. We also find that the learned Senior Counsel for respondent, could not show even a single line in the entire Booking Note where the language is either defective or ambiguous. To the contrary, the language of each clause of the Booking Note is not merely specific but clarifies each aspect of the matter and prevails and supersedes any earlier exchange of emails/Fixture Recap. There is no ambiguity in reflecting the intention of the parties in the Booking Note”.
Senior Advocate Dayan Krishnan appeared for the appellants Senior Advocate Sandeep Sethi appeared the respondent
SARR Freights Corporation was engaged to transport military cargo for the United Nations Peace Keeping Force from New Delhi to Sudan. During negotiations, the parties' agents exchanged emails and a Fixture Recap stipulating "English law and London arbitration".
Subsequently, a formal Booking Note was executed and signed by both parties. This final document explicitly incorporated only rider Clauses 20 to 41, deliberately leaving out the arbitration clause (Clause 43) located on the final page, and contained a paramount provision stating that the Booking Note would prevail over any previous arrangements. Following a dispute over force majeure cancellations triggered by conflict in Sudan, Argo Coral Maritime Ltd. invoked arbitration in London under Clause 43, prompting the appellants to seek judicial intervention.
The appellants instituted a suit before the Delhi High Court seeking an anti-arbitration injunction to restrain the London Maritime Arbitrators Association (LMAA) proceedings. A Single Judge rejected the interim injunction application, relying on the prior Fixture Recap to conclude that the reference to "clause 20–41" instead of "clause 20–43" in the final Booking Note was a mere typographical error. The appellants subsequently challenged this refusal before the Division Bench.
The Division Bench overturned the Single Judge’s finding, strictly applying Sections 91, 92, and 94 of the Indian Evidence Act, 1872. The Court observed that the final Booking Note was a carefully negotiated document where parties consciously modified standard terms, added specific operational conditions, and explicitly restricted the applicability of rider clauses.
“The Indian law is codified and long-settled. Once the terms of an agreement have been reduced to the form of a document, signed by the parties, and are clear and unambiguous, the terms of such agreement are to be proved from the document itself, and no evidence of prior negotiations, correspondence or communications is admissible for the purpose of contradicting, varying, adding to or subtracting from its terms. The parties, during negotiations, are free to alter or modify the terms. However, once they have reduced their agreement into a written and signed agreement, the same governs the terms agreed between them…”, it noted.
“…Where the language used in the document is plain in itself and applies accurately to the existing facts, no evidence can be given to show that it was not meant to apply to such facts. It is only where the language is not clear, ambiguous or defective that the surrounding circumstances or other evidence may be looked into, to explain or supply its meaning. The Court is, therefore, barred from relying upon prior negotiations, correspondence or communications to contradict, vary, add to or subtract, from clear and unambiguous terms of the written agreement. The true construction of the contract must depend upon the import of the words used therein, and the intention of the parties is to be ascertained from the language of the agreement itself”, the Bench further observed.
Allowing the appeal, the Court set aside the Single Judge’s order. Concluding that no valid arbitration agreement existed between the parties, the Bench granted an anti-arbitration injunction, restraining Argo Coral Maritime Ltd. from continuing or taking any steps in the LMAA arbitration proceedings.
“…the English Common law is materially different from the above noted position under the codified Indian law, under which, once the terms have been reduced into a written and signed agreement, prior negotiations, correspondence or communications cannot be relied upon for contradicting, varying, adding to or subtracting from the terms of the written agreement, unless they are ambiguous or defective”, the Bench noted.
Cause Title: SARR Freights Corporation & Anr. v. Argo Coral Maritime Ltd. (Neutral Citation: 2026:DHC:7971-DB)
Appearances:
Appellants: Dayan Krishnan, Senior Advocate, Saurabh Seth, Shantanu Aggarwal, Sukrit Seth, Sumer Dev Seth, Neelampreet Kaur, Abhiroop Rathore, Kabir Dev, and Sukhbir Singh.
Respondent: Sandeep Sethi, Senior Advocate, Arvind K Gupta, Tripti Sharma, Krishna Gambhir, Shreya Sethi, Abhiesumat Gupta, and Ashish Singh.