A dispute-resolution clause is not an arbitration agreement absent clear intent and arbitral safeguards.

The petitioner, a civil-construction company, was awarded a contract by the Space Application Centre for construction of residential quarters at PRL Vikramnagar Housing Colony, Ahmedabad, for a contract value of approximately ₹4.63 crore and a contractual completion period of 21 months.

The petitioner alleged that delay in completion was attributable to the respondents, that the final bill was not timely released, and that ₹28,977 was unilaterally deducted from the final payment, which the petitioner accepted under protest.

After pursuing the internal dispute-resolution procedure before the Group Head and the Directors under Clause 25 of the General Conditions of Contract, the petitioner invoked Clause 25 by notice dated 10 February 2025 and sought appointment of a sole arbitrator.

The respondents denied that Clause 25 contained an arbitration agreement.

The petitioner therefore approached the Gujarat High Court under Section 11 of the Arbitration and Conciliation Act, 1996, seeking appointment of a sole arbitrator.

1. Whether Clause 25 of the General Conditions of Contract constituted a valid arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996, notwithstanding that the word “arbitration” appeared only in the heading and not in the operative provisions.

2. Whether the petitioner was entitled to appointment of a sole arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996.

3. Whether the decision in Harcharan Dass Gupta v. Union of India required the Court to treat Clause 25 as an arbitration clause.

Section 7 of the Arbitration and Conciliation Act, 1996 requires an arbitration agreement to reflect a clear and mutual intention to refer disputes to arbitration, provide for a binding adjudicatory process, and conform to essential arbitral norms, including party autonomy, neutrality, and an adjudicatory mechanism.

Appointment of an arbitrator under Section 11 presupposes the existence of a valid arbitration agreement.

The Court considered K.K. Modi v. K.N. Modi, (1998) 3 SCC 573, and Zhejiang Bonly Elevator Guide Rail Manufacture Co. Ltd. v. Jade Elevator Components, (2018) 9 SCC 774, for the principle that nomenclature is not decisive and that an arbitration agreement may exist even without use of the word “arbitration,” provided the substance of the clause demonstrates an intention to arbitrate.

However, relying principally on South Delhi Municipal Corporation of Delhi v. SMS Ltd., 2025 INSC 693, the Court held that the requirements of clear intent to arbitrate, a binding adjudicatory process, and compliance with arbitral norms are conjunctive and must coexist.

The Court distinguished Harcharan Dass Gupta v. Union of India, 2025 SCC OnLine SC 1111, observing that the proceedings there concerned the seat and jurisdiction of arbitration and did not conclusively determine whether Clause 25 itself was an arbitration agreement.

The Court examined Clause 25 as a whole and found that, although its heading referred to “Settlement of Disputes and Arbitration,” the body of the clause contained no operative reference to arbitration, an arbitrator, or an arbitral tribunal.

Instead, it established an internal administrative mechanism under which disputes were first referred to the Group Head and thereafter to the Director of the Centre or Unit; if the contractor remained dissatisfied, it could approach the specified law court under the “Remedy” provision.

The clause did not provide for party participation in appointing a neutral adjudicator, an independent arbitral forum, or a structured adversarial process.

Applying the conjunctive test in South Delhi Municipal Corporation, the Court held that the mere use of “arbitration” in the heading could not overcome the absence of a clear intention to arbitrate and the lack of essential arbitral features.

The Court further held that Zhejiang Bonly was distinguishable because the word “arbitration” appeared in the body of that clause and expressly contemplated reference to an arbitration body.

It also rejected reliance on Harcharan Dass Gupta, since that decision had proceeded on the assumption that Clause 25 was an arbitration clause while addressing the separate question of the seat and jurisdiction of arbitration.

Consequently, no arbitration agreement existed to support an application under Section 11.

Since the existence of a valid arbitration agreement was a prerequisite to relief under Section 11, the petitioner was not entitled to appointment of a sole arbitrator.

The petition was accordingly dismissed, with no order as to costs.