Nagreeka Indcon Products Pvt. Ltd. v. Cargocare Logistics (India) Pvt. Ltd., 2026 INSC 384 - Arbitration Agreement - Can
"When the word provides only a possibility, the same does not constitute a valid arbitration agreement.."
Arbitration and Conciliation Act 1996 - Section 7 - The words used in the agreement should disclose a determination and obligation to go for arbitration and not only provide for the possibility of going to arbitration. When the word provides only a possibility, the same does not constitute a valid arbitration agreement. (Para 12) In this case, the contractual clause read thus: Any difference of opinion or dispute thereunder can be settled by arbitration in India or a place mutually agreed with each party appointing an arbitrator - SC held - The clause indicates merely the future possibility of referring disputes to arbitration and as such, it cannot be said to be a binding arbitration agreement - The possibility of arbitration being used to settle disputes is open however, for the disputes to be settled by arbitration, further agreement between the parties would be required and needless to add, such an agreement can only come into existence when both parties agree to the same. (Para 13)
Contract Law - Interpretation - The words chosen by the parties are the most reliable manifestation of the intent. The meaning of the words used in contract is not found in strict etymological propriety or popular usage of word(s) as in the subject, occasion or context in which they are used, within the contractual realm. The latin maxim ‘Ex praecedentibus et consequentibus optima fit interpretatio’ signifies this statement. The written word is, therefore, the foundation of legal obligation. To disregard or to impute an obligation or meaning which was not intended would compromise party autonomy. (Para 11)
Case Info
Key details from the judgment
Case name and neutral citationNagreeka Indcon Products Pvt. Ltd. v. Cargocare Logistics (India) Pvt. Ltd., 2026 INSC 384
CoramJustice Sanjay KarolJustice Nongmeikapam Kotiswar Singh
Judgment date17 April 2026 (New Delhi)
Statutes / laws referredArbitration and Conciliation Act, 1996Section 7 (arbitration agreement)Section 10 (number of arbitrators)Section 11 (appointment of arbitrator)Section 16 (competence of arbitral tribunal to rule on its jurisdiction)Indian contract interpretation principles (including maxim Ex praecedentibus et consequentibus optima fit interpretatio)
Case laws and citations referred
- Eastern Coalfields Ltd. v. Sanjay Transport Agency & Anr., 2009 (7) SCC 345
- Babanrao Rajaram Pund v. Samarth Builders and Developers, 2022 (9) SCC 691
- Enercon (India) Ltd. v. Enercon GmbH, 2014 (5) SCC 1
- Visa International Ltd. v. Continental Resources (USA) Ltd., 2009 (2) SCC 55
- Vidya Drolia v. Durga Trading Corporation, 2021 (2) SCC 1
- Panasonic India (P) Ltd. v. Shah Aircon, 2022 SCC OnLine Del 3288
- Zhejiang Bonly Elevator Guide Rail Manufacture Co. Ltd. v. Jade Elevator Components, 2018 (9) SCC 774
- K.K. Modi v. K.N. Modi, 1998 (3) SCC 573
- Bihar State Mineral Development Corporation v. Encon Builders (I) (P) Ltd., 2003 (7) SCC 418
- BGM and M-RPL-JMCT (JV) v. Eastern Coalfields Ltd., 2025 SCC OnLine SC 1471
- Jagdish Chander v. Ramesh Chander, 2007 (5) SCC 719
- Cox & Kings Ltd. v. SAP India (P) Ltd., (2024) 4 SCC 1
- SBI General Insurance Co. Ltd. v. Krish Spg., (2024) 12 SCC 1
- Interplay Between Arbitration Agreements under the Arbitration Act, 1996 & the Stamp Act, 1899, In re, (2024) 6 SCC 1 : 2023 INSC 1066
- Goqii Technologies (P) Ltd. v. Sokrati Technologies (P) Ltd., (2025) 2 SCC 192
- Union of India v. Raman Iron Foundry, (1974) 2 SCC 231
- Provash Chandra Dalui v. Biswanath Banerjee, 1989 Supp (1) SCC 487
- Encon Builders (I) (P) Ltd. (cited via Bihar State Mineral; exact citation not given in extract)
- Alchemist Hospitals Ltd. v. ICT Health Technology Services India (P) Ltd., 2025 SCC OnLine SC 2354
- M.P. Rajya Tilhan Utpadak Sahakari Sangh Maryadit v. Modi Transport Service, (2022) 14 SCC 345
- NTPC Ltd. v. SPML Infra Ltd., (2023) 9 SCC 385 : (2023) 4 SCC (Civ) 342
Three‑sentence summary
The Supreme Court considered whether Clause 25 of the bill of lading, stating that disputes “can be settled by arbitration,” constituted a binding arbitration agreement requiring compulsory reference to arbitration. Applying settled principles of contractual interpretation and prior precedents on what amounts to an “arbitration agreement” under the Arbitration and Conciliation Act, 1996, the Court held that the word “can” in this context merely indicated a future possibility of arbitration and required a further consensus, and therefore did not create a mandatory or enforceable arbitration clause. Consequently, the appeal against the Bombay High Court’s refusal to appoint an arbitrator under Section 11 was dismissed.