No written arbitration agreement. High Court still jumped in. Supreme Court said no.

Two brothers, one arbitrator, and a High Court that jumped the gun

Swadesh Kumar Agarwal and Dinesh Kumar Agarwal are brothers. In 2008, they and other family members decided they could no longer share their properties. No written contract. No formal arbitration clause. They simply agreed — all of them — to refer their partition dispute to a single arbitrator. The arbitrator accepted. The proceedings began.

Then they stalled. The arbitrator took adjournments. The respondents grew impatient. In July 2009, two of them wrote letters unilaterally revoking the arbitrator's mandate. The arbitrator did not step down. So the respondents moved an application under Section 14(1)(a) of the Arbitration and Conciliation Act, 1996 before the District Court — the "court" defined under Section 2(e) — seeking termination of the mandate on grounds of undue delay.

That application is still pending. But the respondents did not wait. They filed a separate petition under Section 11(6) of the Act before the High Court of Madhya Pradesh at Jabalpur, asking the High Court to terminate the arbitrator's mandate and appoint a new one. In September 2017, the High Court obliged. It terminated the sole arbitrator's mandate under Section 14(1)(a) and appointed a substitute — all while exercising what it believed were its powers under Section 11(6).

The Supreme Court of India, in a judgment authored by Justice M.R. Shah and concurred by Justice B.V. Nagarathna, has now set that order aside. The question was not whether the arbitrator had delayed. The question was whether the High Court had the jurisdiction to do what it did.

What the High Court thought it could do

The High Court's reasoning was straightforward. It read Section 11(6) as a residual power to deal with any failure in the appointment process — including the failure of an already-appointed arbitrator to proceed. It treated the termination of the mandate and the appointment of a substitute as a single composite exercise under Section 11(6).

The respondents supported this view. They argued that the arbitrator's mandate had terminated automatically under Section 14(1)(a) because of undue delay. They cited ACC Limited v. Global Cements Limited (2012) 7 SCC 71 and Union of India v. Uttar Pradesh State Bridge Corporation Limited (2015) 2 SCC 52 for the proposition that termination under Section 14(1) is automatic upon the occurrence of the specified eventuality. If the mandate had already terminated, they argued, the High Court could simply appoint a new arbitrator under Section 11(6) — no need to go back to the District Court.

The appellant, Swadesh Kumar Agarwal, took a different view. He argued that once the parties had mutually appointed an arbitrator, an application under Section 11(6) was not maintainable. He relied on Antrix Corporation Limited v. Devas Multimedia Private Ltd. (2014) 11 SCC 560 and S.P. Singla Constructions Private Limited v. State of Himachal Pradesh (2019) 2 SCC 488, both of which held that Section 11(6) cannot be invoked after an arbitrator has already been appointed by the parties.

The Supreme Court agreed with the appellant. But it went further. It held that even if the respondents were right about the delay, they had knocked on the wrong door.

The missing written agreement

The first problem was fundamental. Section 11(6) of the Arbitration Act applies only where there is a contract containing an arbitration agreement with a prescribed appointment procedure agreed in writing. In this case, there was no written arbitration agreement. The parties had simply agreed orally to refer their dispute to a sole arbitrator. No written contract. No written clause. No written procedure.

"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 Court clarified that even without a written agreement, parties can validly refer disputes to arbitration by mutual consent and appoint arbitrators. In such cases, if court assistance is needed for appointment, the applicable provision is Section 11(5), not Section 11(6). But that was obiter — the real holding was simpler: no written arbitration agreement, no Section 11(6) application.

The exclusive remedy for a failed arbitrator

The second problem was even more structural. The respondents had sought termination of the arbitrator's mandate under Section 14(1)(a) — failure to act without undue delay. The High Court had granted that relief under Section 11(6). But the Act provides a specific, exclusive remedy for such cases: Section 14(2).

Section 14(1)(a) deals with situations where an arbitrator becomes de jure or de facto unable to perform his functions, or fails to act without undue delay. When such a ground is invoked, the mandate may be terminated. But the decision on whether the ground exists is not left to the parties or to the High Court under Section 11(6). It is left to the "court" as defined under Section 2(e) — in this case, the District Court.

"When the mandate of an arbitrator is sought to be terminated on grounds under Section 14(1)(a), the exclusive remedy is an application under Section 14(2) before the 'court' defined under Section 2(e), not Section 11(6) of the Act," the Supreme Court held.

The Court drew a careful distinction. Challenges to an arbitrator under Section 12 (grounds for challenge) must be raised before the Arbitral Tribunal itself under Section 13. But disputes under Section 14(1)(a) — where the arbitrator is alleged to have failed or become unable to act — go to the "court" under Section 2(e). The two routes are separate. The High Court cannot collapse them into a Section 11(6) application.

The Court also addressed what happens after termination. When an arbitrator's mandate is terminated and a substitute is to be appointed, the same procedure must be followed as was applicable to the initial appointment. Since the original arbitrator was appointed by mutual consent, the substitute must also be appointed by mutual consent — not by the High Court under Section 11(6).

The Order VII Rule 11 detour

There was a side issue. The respondents had also filed an application under Order VII Rule 11 CPC before the trial court, seeking rejection of the Section 14 application at the threshold. The trial court dismissed it. The High Court confirmed that dismissal. The Supreme Court upheld that part of the High Court's order, reiterating the settled principle that at the stage of deciding an Order VII Rule 11 application, only the averments in the plaint or application are to be considered — not the written statement, reply, or defence.

That part of the judgment is a useful reminder for practitioners. But the main event was the jurisdictional question.

What this means for practitioners

This judgment draws a clean line. If you want to terminate an arbitrator's mandate for failure to act or inability to act, you go to the "court" under Section 2(e) — typically the District Court — by way of an application under Section 14(2). You do not go to the High Court under Section 11(6).

If you want to appoint a substitute after termination, you follow the same procedure as the original appointment. If the original was by mutual consent, the substitute must also be by mutual consent. If the parties cannot agree, they may need to invoke Section 11(5) — but only if there is no written arbitration agreement. If there is a written agreement with a prescribed procedure, Section 11(6) may apply for the initial appointment, but not for termination.

The judgment also confirms that oral or informal arbitration references are valid in India. No written agreement is required to refer a dispute to arbitration by mutual consent. But the absence of a written agreement means Section 11(6) is unavailable for court-assisted appointment.

THE PLAY: When an arbitrator fails to act without undue delay, file under Section 14(2) before the District Court — not Section 11(6) before the High Court. The High Court has no jurisdiction to terminate an arbitrator's mandate under Section 11(6).

The bottom line

The Supreme Court set aside the High Court's order terminating the sole arbitrator's mandate and appointing a new arbitrator. The respondents must now approach the District Court under Section 14(2) if they wish to pursue termination of the mandate. The High Court cannot do their work for them under the wrong provision.