Contract clause referring disputes to Maharashtra Urban Development Secretary is an arbitration agreement, Bombay High Court rules

The Applicant and Sinnar Municipal Council entered into a contract on 26 August 2014, with a 24-month completion period.

Following delays, the completion date was extended to 31 March 2021, and a completion certificate was issued on 8 March 2021.

The Applicant subsequently claimed compensation and other amounts; the Council denied the claims and raised a counterclaim.

After withdrawing a writ petition, the Applicant invoked Clause 8 of the contract on 18 December 2025. The Respondents did not appoint an arbitrator, prompting this Section 11 application.

Clause 8 provided for disputes to be referred to the Principal Secretary, Urban Development Department, whose decision would be final and binding; it also provided for an appeal and stated that the contractor could not initiate a dispute in court.

Whether Clause 8 constituted an arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996, notwithstanding the absence of the word “arbitration” and the description of the named authority as an appellate authority.

Whether the named authority’s connection with the Government affected the existence of the arbitration agreement or required appointment of an independent arbitrator.

Whether Mumbai or Sinnar was the juridical seat of arbitration.

Section 7 of the Arbitration and Conciliation Act, 1996 does not require a particular form of words; the court must determine from the agreement as a whole whether the parties intended a private tribunal to decide disputes and intended to be bound by its decision (*Babanrao Rajaram Pund v. Samarth Builders & Developers*; *K.K. Modi v. K.N. Modi*; *Bihar State Mineral Development Corpn. v. Encon Builders*).

A clause providing for disputes to be referred to a named officer for a final decision may constitute an arbitration agreement even if it does not use the term “arbitrator” (*Chief Conservator of Forests v. Ratan Singh Hans*).

Finality alone is insufficient; the whole procedure and the parties’ intention must disclose adjudication rather than administrative fact-finding (*South Delhi Municipal Corporation v. SMS Ltd.*).

Ineligibility of a named arbitrator under Section 12(5) read with the Seventh Schedule is distinct from the existence of the agreement to arbitrate and may be addressed by appointing an eligible, independent arbitrator.

The seat is determined from the parties’ agreement and intention; the place where the contract was signed or work performed does not, by itself, determine the arbitral seat (*BGS SGS SOMA JV v. NHPC Ltd.*).

The Court read Clause 8 as a complete dispute-resolution mechanism: disputes were to be referred compulsorily to a named authority for a decision, an appeal was provided for, the decisions were stated to be final and binding, and recourse to court was restricted. Taken together, these features indicated an intention to provide binding adjudication, rather than mere administrative supervision or mediation; the absence of the word “arbitration” and the “appellate authority” label did not alter that conclusion.

The Court treated any ineligibility of the named authority as a separate issue concerning the person who would perform the arbitral function, not the existence of the agreement.

For the seat, it found that Mumbai was expressly connected in Clause 8 with the authority to whom disputes were referred, whereas Sinnar was only the place of contract execution and work performance; those circumstances did not establish Sinnar as the seat.

It allowed the Section 11 application and appointed Justice Avinash Gharote (former Judge) as sole arbitrator.

The parties were directed to bear the tribunal’s costs and fees equally in the first instance, subject to the final award; their merits contentions were kept open.