Super Smelters Limited v. Universal Cables Limited, AP-COM 470 of 2024, High Court at Calcutta, Commercial Division, Judgment dated 30th June 2025 delivered by Justice Shampa Sarkar.
Background
Purchase orders and invoices are frequently treated as administrative formalities. A judgment delivered by the Calcutta High Court on 30th June 2025 illustrates precisely what is at stake when they are — and carries important implications for lawyers advising commercial clients.
(For a broader examination of the legal risks embedded in commercial documentation, see: The Hidden Risks in Purchase Orders and Invoices: What Every Business Should Know.)
The case arose from a commercial transaction between Super Smelters Limited (“SSL”), a manufacturer of iron alloy and steel products, and Universal Cables Limited (“UCL”). SSL floated a tender for the design, manufacture, supply, testing, and commissioning of capacitor power factor improvement panels for its plant at Jamuria, Burdwan. UCL participated and was awarded the contract. SSL issued a purchase order dated 6th September 2019, which UCL accepted without objection.
The purchase order contained a detailed set of terms and conditions, including an arbitration clause under Clause 23 providing for arbitration at Kolkata, and Clause 24 conferring jurisdiction on the Calcutta High Court and courts thereunder. UCL subsequently raised invoices in connection with the transaction. These invoices contained a jurisdiction clause purporting to confer exclusive jurisdiction on the courts at Satna.
Disputes arose. SSL invoked arbitration under the purchase order. UCL objected, contending that the jurisdiction clause in the tax invoices had superseded the arbitration clause in the purchase order, and that the appropriate remedy lay before the civil courts at Satna — not in arbitration. UCL further argued that the purchase order had not been signed by it, and that there was therefore no consensus ad idem to support the arbitration clause.
SSL filed an application under Section 11 of the Arbitration and Conciliation Act, 1996 before the Calcutta High Court seeking appointment of an arbitrator.
Issues before the Court
The Court was called upon to determine two principal questions:
- Whether the purchase order, rather than the tax invoice, constituted the principal agreement between the parties?
- Whether the arbitration clause in the purchase order remained operative notwithstanding the conflicting jurisdiction clause in the subsequently issued tax invoices?
Observations made by the Court
1. The Purchase Order was the principal agreement
Justice Shampa Sarkar held without ambiguity that the purchase order dated 6 September 2019 was the principal agreement between the parties. The Court noted that the commercial terms and conditions, the general terms and conditions, and the entire structure of the transaction were contained in the purchase order. UCL had accepted the purchase order and acted upon it — receiving payment, supplying goods, and conducting itself throughout in accordance with the purchase order's terms.
2. A unilateral invoice cannot amend a mutually agreed contract
The Court rejected UCL’s argument that the jurisdiction clause in the tax invoices had displaced the arbitration clause in the purchase order.
The Court held that the tax invoice was a unilateral document issued by UCL in connection with payment. It did not contain an arbitration clause. Its jurisdiction clause specified Satna courts. Critically, the tax invoice did not expressly state that it superseded the purchase order. The Court observed that a later document can amend or replace an earlier contract only where there is clear mutual agreement to that effect — either by express language or by conduct clearly establishing a fresh agreement between the parties. A unilaterally issued invoice that is silent on the question of supersession cannot have the effect of overriding terms that were mutually negotiated and accepted.
The Court further noted that UCL had not objected to the purchase order when it was issued. It had accepted the goods receipt note in January 2021 in terms of the purchase order. Its entire commercial conduct was referable to the purchase order, not to the invoice.
On this basis, the Court held that the purchase order's arbitration clause continued to govern the parties, and that the jurisdiction clause in the tax invoice could not defeat it.
3. The Seat and Venue Question
The purchase order also contained an Annexure referencing Mumbai High Court jurisdiction under "Other Terms." UCL sought to use this Annexure to argue that the Calcutta High Court lacked jurisdiction under Section 11. The Court rejected this argument as well, holding that the Annexure reference to Mumbai was not connected to the arbitration provisions. Clauses 23 and 24 of the purchase order clearly provided for arbitration at Kolkata and jurisdiction of the Calcutta High Court. These provisions were unambiguous and governed the seat and venue of the arbitration.
4. The Scope of Inquiry Under Section 11
The Court also reaffirmed the limited nature of a court's inquiry at the Section 11 stage. The Court's function is confined to determining whether a prima facie arbitration agreement exists. Questions of novation — whether the purchase order had been amended or superseded by the tax invoice — were matters going to the merits of the dispute and were properly left to the arbitrator. The Court appointed a sole arbitrator accordingly.
Implication of this judgment:
The decision offers several practical lessons for businesses, procurement teams, and legal advisors:
- Where a comprehensive purchase order governs a commercial transaction — setting out terms, conditions, payment structure, and dispute resolution — it constitutes the main contract between the parties.
- A unilateral jurisdiction clause in an invoice does not override a mutually agreed arbitration clause. To displace an arbitration clause that was part of the original bargain, a subsequent document must expressly state that it supersedes the earlier agreement, or the parties' conduct must unambiguously establish a fresh agreement. Silence on the question of supersession is not enough.
- Conduct can establish a binding arbitration agreement. Signature is not the only route to an enforceable arbitration agreement. Where parties exchange documents electronically and act upon them, the requirement of a written agreement under the Arbitration Act is satisfied.
- Novation is a matter for the arbitrator at the merits stage. A party cannot stall arbitration by raising a novation argument at the Section 11 stage. The Court's inquiry at that stage is limited to the prima facie existence of an arbitration agreement.
This judgment has direct relevance to the structure of commercial documentation and the advice lawyers give to clients engaged in supply and procurement arrangements.
More broadly, this judgment reinforces an important principle of commercial contracting: purchase orders, invoices, quotations, delivery challans, and correspondence should not be viewed in isolation. They form part of a larger contractual framework, and inconsistencies between them often become the foundation of jurisdictional and contractual disputes. Careful drafting and periodic review of standard commercial documentation remain one of the most effective ways of reducing legal risk before a dispute arises.