Family fight over property: can a judge fire an arbitrator without a written deal?

They all agreed on one arbitrator—no paper, just a handshake. Then he took too long. One side ran to court to fire him. The judge said: wrong door.

For a family locked in a property war, the handshake was supposed to be the easy part. By the time the Supreme Court heard the case, years had passed, the arbitrator had barely moved, and one group of relatives had already tried—and failed—to fire him. The question before the bench was simple on its face: if you and your relatives pick an arbitrator by mutual consent, without signing anything, can the High Court step in and remove him when he delays?

The answer, delivered by a bench of Justice M.R. Shah and Justice B.V. Nagarathna on May 5, 2022, turned on a single word in the statute. And it sent the parties back to where they should have started.

2008: The handshake

The Agarwal family was fighting over partition of their properties. In 2008, they did what many Indian families do. They skipped the lawyers and the paperwork. They simply agreed, all of them, to refer their dispute to a single arbitrator. No written contract. No arbitration clause in a deed. Just a mutual decision, a name, and a handshake.

The arbitrator began work. Then came the adjournments. Months passed. The arbitrator did not proceed with the case at any meaningful pace. By July 2009, some family members had lost patience. They sent letters to the arbitrator unilaterally revoking his mandate—essentially telling him, "You're fired."

But firing an arbitrator is not like firing a plumber. The law has a process. And the family had just discovered they had no idea what that process was.

The wrong door, twice

One group of family members approached the District Court under Section 14 of the Arbitration and Conciliation Act, 1996 (the provision that allows a party to ask a court to terminate an arbitrator's mandate when the arbitrator is unable to act or fails to act without undue delay). That application was pending when another group of family members decided to try a different route.

They went to the High Court of Madhya Pradesh at Jabalpur and filed an application under Section 11(6) of the Act (the provision that lets a court appoint an arbitrator when the procedure agreed upon by the parties breaks down). The High Court, in September 2017, allowed the application. It terminated the arbitrator's mandate and appointed a new one in his place.

The arbitrator who had been removed, and the family members who opposed his removal, appealed to the Supreme Court. Their argument was straightforward: the High Court had no business doing what it did.

What the Supreme Court found

The Court began by reading the statute closely. Section 11(6) of the Arbitration and Conciliation Act allows a party to apply to the High Court for appointment of an arbitrator only when there is a written arbitration agreement between the parties—a contract that contains a clause saying "any dispute between us will be resolved by arbitration"—and the procedure for appointment set out in that agreement has failed.

The Agarwal family had no such agreement. They had referred their dispute to arbitration by mutual consent, but they had never reduced that consent to writing. Section 11(6), the Court held, simply does not apply to such a situation. The provision is meant for cases where the parties have already agreed, in writing, on how an arbitrator should be chosen, and that agreed procedure has broken down.

"An application under Section 11(6) of the Arbitration Act is maintainable only where there is a contract between the parties containing an arbitration agreement with a prescribed appointment procedure agreed in writing," the bench observed. "Where parties referred dispute to arbitration by mutual consent without written agreement, Section 11(6) has no application."

The exclusive remedy for a slow arbitrator

But the Court did not stop there. It also addressed the deeper question: even if the High Court had jurisdiction, was Section 11(6) the right tool for removing an arbitrator who was taking too long?

The answer was no. The Act provides a specific, exclusive remedy for this situation. Section 14(1)(a) says that the mandate of an arbitrator terminates if he becomes de jure or de facto unable to perform his functions, or if he fails to act without undue delay. Section 14(2) then says that if there is a dispute about whether this has happened, the matter must be decided by the "court" as defined under Section 2(e) of the Act—which, for most purposes, means the District Court or the High Court exercising original civil jurisdiction, not the High Court in its arbitration appointment jurisdiction.

The Court made it clear: if you want to remove an arbitrator for delay, you file an application under Section 14(2) before the appropriate court. You do not file an application under Section 11(6) before the High Court. The two provisions serve entirely different purposes. Section 11(6) is for filling a vacancy in the appointment process. Section 14(2) is for ending an arbitrator's mandate because of failure or inability to act.

The High Court had used the wrong tool for the job. Its order terminating the arbitrator's mandate was set aside.

What happens after the mandate is terminated

The Court also clarified what should happen once an arbitrator's mandate is properly terminated under Section 14(2). The same procedure that was used to appoint the original arbitrator must be followed to appoint the substitute. Since the Agarwal family had appointed their arbitrator by mutual consent, without a written agreement, the substitute arbitrator would also have to be appointed by mutual consent. The court cannot step in and appoint someone unilaterally.

This is an important practical point. Many parties assume that once an arbitrator is removed, the court will simply name a replacement. The Supreme Court said no—the parties must go back to the method they originally used. If they cannot agree on a new name, they may have to approach the court under the appropriate provision, but the court cannot bypass the parties' autonomy.

The Order VII Rule 11 subplot

The case also involved a separate procedural issue. Some family members had filed an application under Order VII Rule 11 of the Code of Civil Procedure, 1908 (a provision that allows a court to throw out a case at the very beginning if the plaint—the initial document that starts a lawsuit—does not disclose a valid cause of action, or is barred by law, or is otherwise defective). The trial court had dismissed that application. The High Court had dismissed the writ petition challenging that dismissal.

The Supreme Court, while setting aside the High Court's order on the arbitration issue, addressed this separately. It reiterated a well-settled principle: at the stage of deciding an application under Order VII Rule 11, the court must look only at the averments and allegations in the plaint. It cannot consider the written statement, the reply, or any defence that the other side might raise. The trial court's dismissal of the Order VII Rule 11 application was upheld on this basis—the plaint, on its face, disclosed a cause of action that could not be thrown out at the threshold.

THE PLAY: If you want to remove an arbitrator for delay, file an application under Section 14(2) before the District Court—not under Section 11(6) before the High Court.

The handshake that started it all was not enough to give the High Court the power to intervene. The parties must now go back to the District Court, where the Section 14(2) application was already pending, and let that court decide whether the arbitrator's delay was serious enough to justify termination. The Supreme Court did not express any view on that question. It simply said: this is where the question belongs.