Respondent’s failure to refer the dispute to the second-stage committee cannot defeat a Section 11 application.

The petitioner was awarded a contract for providing and fixing mosquito-net doors in B-Type and Miners-Type quarters at the Kakri Project for a contract value of ₹1,77,98,937.34, pursuant to the respondents’ Letter of Acceptance dated 5 March 2021.

The parties executed an agreement dated 22 December 2021 containing a multi-tier dispute-resolution mechanism under Clause 16 and an arbitration provision under Clause 16-A.

The petitioner sought extensions of time, contending that delay was caused by COVID-19 restrictions and other circumstances beyond its control.

After a committee considered the petitioner’s claim and rejected it on 26 March 2024, the petitioner issued a further notice dated 7 July 2024 expressing dissatisfaction and seeking further action under the contractual mechanism.

The respondents did not refer the matter to the second-stage committee. Following further notices and eventual termination of the contract on 29 August 2025, the petitioner filed the present application under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of a sole arbitrator.

1. Whether the petitioner’s application under Section 11(6) of the Arbitration and Conciliation Act, 1996 was premature for failure to exhaust the second-stage contractual dispute-resolution mechanism under Clause 16.

2. Whether the petitioner’s notice dated 7 July 2024 sufficiently demonstrated dissatisfaction with the first-stage committee’s decision and triggered the respondents’ obligation to refer the dispute to the second-stage committee or otherwise proceed under Clause 16-A.

3. Whether a sole arbitrator was required to be appointed to adjudicate the disputes arising out of the agreement dated 22 December 2021.

The Court applied Section 11(6) of the Arbitration and Conciliation Act, 1996, which empowers the Court to appoint an arbitrator where the agreed appointment procedure has failed.

It also applied Clauses 16 and 16-A of the agreement, which prescribed a multi-tier mechanism involving initial consideration at the company level, reference to a second-stage committee upon dissatisfaction, and thereafter arbitration by a sole arbitrator.

The Court held that where a party clearly communicates dissatisfaction with the first-stage decision and seeks further contractual action, the opposing party cannot rely on its own failure to refer the dispute to the second stage to defeat an application under Section 11(6).

The Court found that the petitioner had participated in the first stage of the contractual mechanism and that its claim had been considered by the Area Level Committee, whose decision dated 26 March 2024 rejected the claim.

The petitioner thereafter issued the notice dated 7 July 2024, which contained a registered postal receipt and clearly conveyed its dissatisfaction with the committee’s decision.

Although the notice also sought appointment of an arbitrator, the Court treated its substance as sufficient to invoke the petitioner’s right to proceed beyond the first stage.

The respondents, rather than referring the matter to the second-stage committee as contemplated by Clause 16, remained inactive and then argued that the petitioner had not exhausted that stage.

The Court rejected this objection, holding that the respondents could not benefit from their own failure to act on the petitioner’s notice. Consequently, the contractual pre-arbitral mechanism did not bar the petitioner’s Section 11(6) application.

The arbitration was directed to take place at Jabalpur, with the arbitrator required to issue notices and fix the venue and dates.

The parties were directed to deposit the requisite fees and charges under the applicable M.P. Arbitration Centre Rules, 2019, and the other provisions of Section 15(3)–(4) of the Arbitration and Conciliation Act, 1996 were directed to apply to the substitute arbitrator.

The arbitration case was accordingly disposed of.