Existence of an arbitration clause overrides conflicting departmental mechanisms and necessitates arbitrator appointment despite non-exhaustion of internal appeals.

The Petitioner was awarded a contract for constructing an office building for the Respondent (MMB) via a Work Order dated January 25, 2023

Due to alleged delays and breaches, the Respondent issued a termination order on August 18, 2025

The Petitioner invoked Clause 25 of the General Conditions of Contract (GCC) to appoint a Dispute Review Expert (DRE), but the Respondent did not comply

Consequently, the Petitioner invoked arbitration under Section 21 of the Arbitration and Conciliation Act, 1996, and filed an application under Section 11 for the appointment of an arbitrator and a petition under Section 9 for interim measures against the termination and subsequent fresh tender

1. Whether a valid arbitration agreement exists between the parties that covers disputes relating to the termination of the contract.

2. Whether the Petitioner was required to exhaust internal departmental remedies (appeals to the Chief Engineer/Secretary) as a mandatory pre-condition before seeking the appointment of an arbitrator.

Section 11 of the Arbitration and Conciliation Act, 1996 regarding the appointment of arbitrators

Clause 25.2 of the GCC, which provides for referral of disputes to arbitration

Principle of "harmonious construction" to reconcile conflicting contractual clauses

Visa International Limited v. Continental Resources (USA) Ltd., establishing that if correspondence shows settlement is impossible, pre-arbitral conditions shouldn't block the appointment of an arbitrator

Quick Heal Technologies Ltd. v. NCS Computech Pvt. Ltd. to emphasize that headnotes do not override the express content of a clause

The Respondent argued that Clause 36 of the Contractor’s Bid (giving priority under GCC Clause 2.3) only provided for internal appeals and not arbitration

However, the Court found that Clause 25.2 of the GCC contained an express agreement to arbitrate which was not in conflict with Clause 36, but rather supplementary

Significantly, the Court noted that Clause 3.3 of the Special Conditions of Contract (SCC), which originally excluded termination from arbitration, had been consciously deleted by the parties, signifying an intent to arbitrate termination disputes

Regarding pre-arbitral steps, the Court reasoned that since the termination decision was taken by the Chief Executive Officer (CEO)—who is higher in rank than the appellate authorities mentioned in the internal mechanism (Chief Engineer)—such internal remedies were "clearly inapplicable" and "not possible"

The Court held that in cases of conflicting or confusing clauses, it must rule in favor of arbitration to facilitate de-clogging of courts

The Court allowed the Section 11 application and appointed Smt. Justice Anuja Prabhudesai (Retd.) as the Sole Arbitrator. The Section 9 Petition was converted into an application under Section 17 to be decided by the newly constituted Arbitral Tribunal. All rights and contentions were kept open for the Tribunal's adjudication