They appointed an arbitrator by mutual consent. Then the court said it was invalid.
The Supreme Court held that Section 11(6) of the Arbitration Act cannot be used when there is no written arbitration agreement, even if both sides agreed on the arbitrator.
2008
years.
The Supreme Court held that Section 11(6) of the Arbitration Act cannot be used when there is no written arbitration agreement, even if both sides agreed on the arbitrator.
The arbitrator's chair sat empty on that day in 2008. The Agarwal family had agreed on a name, but no one had signed a thing. Two brothers, caught in a property partition dispute, had done what seemed sensible: they mutually appointed a sole arbitrator to sort it out. Everyone agreed. No written contract. No signed arbitration clause. Just a handshake and a name.
Then the arbitrator missed a hearing date. Some family members moved to revoke his mandate, citing delay. And suddenly, the question that would travel all the way to the Supreme Court was this: When two people agree on an arbitrator by word of mouth, can a court step in and appoint a new one when the arrangement falls apart?
When the arbitrator didn't show up
The sole arbitrator—appointed by mutual consent on August 4, 2008—began scheduling hearings. In a small hearing room, the stack of papers grew. The parties prepared their submissions, gathered their documents, and waited for the arbitrator to resolve their property partition dispute. But on one date, the arbitrator's chair sat empty. For some family members, that was the breaking point.
They filed applications before the District Court under Section 14(1)(a) of the Arbitration and Conciliation Act, 1996—the provision that lets a party seek termination of an arbitrator's mandate when the arbitrator cannot perform or delays without reason. The applications argued that the arbitrator's unavailability constituted a failure to act, making the mandate eligible for termination. The District Court desk received these applications, and the procedural machinery began to turn.
While those applications were still pending on the District Court desk, one party took a different route. They filed an application under Section 11(6) of the Act before the High Court of Madhya Pradesh, asking the court to terminate the existing arbitrator's mandate and appoint a fresh one. Section 11(6) is the provision that lets a court appoint an arbitrator when the parties cannot agree on one, or when the agreed appointment procedure fails. The party argued that because the arbitrator had become unavailable, the appointment procedure had failed, and the High Court should step in.
The High Court agreed. On September 7, 2017, it terminated the arbitrator's mandate and appointed a substitute. The writ petitions challenging this order were dismissed. The family members who had originally appointed the arbitrator appealed to the Supreme Court.
Earlier, on July 15, 2010, some family members had also filed an application under Order VII Rule 11 of the Code of Civil Procedure, 1908—seeking rejection of the plaint on grounds of maintainability—before the District Court. That application was dismissed. The procedural journey was already thick with filings, each one adding to the weight of the case file. The case had become a procedural maze, with multiple applications pending before different courts on overlapping questions.
The missing piece: a written agreement
The Supreme Court bench—Justice M.R. Shah and Justice B.V. Nagarathna—looked at the facts and saw a fundamental problem. The entire edifice of the High Court's order rested on an assumption that Section 11(6) could be used whenever parties had once agreed on an arbitrator. But the Act requires something more.
The court held, in its ratio, that "Section 11(6) is maintainable only where there is a contract containing an arbitration agreement with a prescribed appointment procedure agreed in writing." Without that written foundation, the provision simply does not apply. The court's reasoning was clear: the power to appoint an arbitrator under Section 11(6) is not a general power to fix broken arbitration arrangements. It is a specific power that exists only within the framework of a written arbitration agreement.
Here, the arbitrator was appointed by mutual consent. No written arbitration agreement existed. No contract specified how an arbitrator should be appointed or replaced. The parties had simply agreed on a name. That, the Supreme Court held, falls entirely outside the scope of Section 11(6).
The court examined the language of Section 11(6) carefully. The provision speaks of a "procedure for appointment of arbitrator" that has been "agreed upon by the parties." The court interpreted this to mean that the agreement on procedure must be in writing, as part of an arbitration agreement. A mere oral understanding, no matter how genuine, does not trigger the court's power under Section 11(6).
Why Section 11(5) didn't help either
The court also examined Section 11(5)—the provision for appointing a sole arbitrator when no procedure is agreed. That provision applies only where the parties have not agreed on an appointment procedure. But even Section 11(5) presupposes the existence of an arbitration agreement in writing. Without that written agreement, neither Section 11(5) nor Section 11(6) can be invoked.
The distinction is critical. The Arbitration Act is built on the foundation of a written agreement. Section 7 of the Act defines an arbitration agreement as an agreement in writing. Oral agreements to arbitrate—no matter how genuine—do not create the legal framework that the Act is designed to enforce.
The court cited several precedents to reinforce this point. In Antrix Corporation Limited v. Devas Multimedia Private Ltd., (2014) 11 SCC 560, the Supreme Court had held that the existence of a valid arbitration agreement is a prerequisite for the court's power to appoint an arbitrator. In S.P. Singla Constructions Pvt. Ltd. v. State of Himachal Pradesh, (2019) 2 SCC 488, the court had clarified that Section 11(6) can only be invoked when the appointment procedure agreed by the parties fails—and that procedure must be in writing. The court also relied on ACC Limited v. Global Cements Limited, (2012) 7 SCC 71, and Union of India v. Uttar Pradesh State Bridge Corporation Ltd., (2015) 2 SCC 52, to reinforce the requirement of a written arbitration agreement for court intervention.
The court's analysis of these precedents was methodical. Each case was examined to extract the core principle: the court's power to appoint an arbitrator is not a free-standing remedy. It is tied to the existence of a written arbitration agreement. Without that foundation, the court cannot act.
The right remedy: Section 14(2) before the right court
So what should the family have done? The Supreme Court laid out the correct path. When the mandate of an arbitrator is sought to be terminated under Section 14(1)(a)—failure or impossibility to act—the controversy must be raised before the 'court' as defined under Section 2(e) of the Act. Section 2(e) defines 'court' as the principal civil court of original jurisdiction in a district, or the High Court in certain cases.
That means the District Court—where the family had already filed applications under Section 14(1)(a), and where the Order VII Rule 11 application had been dismissed—was the proper forum. The High Court, acting under Section 11(6), had no jurisdiction to terminate the arbitrator's mandate or appoint a substitute when there was no written arbitration agreement to begin with.
The Supreme Court also clarified what happens after termination. When an arbitrator's mandate is terminated and substitution is required, the same procedure must be followed as was applicable to the initial appointment of the replaced arbitrator. Since the original arbitrator was appointed by mutual consent, any substitute must also be appointed by mutual consent—not by the court. This principle ensures consistency in the arbitration process. The parties cannot use a procedural breakdown as an opportunity to change the method of appointment.
The court also examined the interplay between Sections 12, 13, 14, and 15 of the Act. Section 12 deals with grounds for challenging an arbitrator. Section 13 sets out the challenge procedure. Section 14 deals with termination of mandate. Section 15 deals with substitution. The court held that these provisions form a coherent scheme. When a controversy arises about an arbitrator's mandate, it must be resolved through this scheme—not through a short-circuit application under Section 11(6).
The practical implication is significant. Parties who appoint an arbitrator by mutual consent without a written agreement cannot later approach the High Court under Section 11(6) for a substitute. They must go to the District Court under Section 14(2). This means the District Court—not the High Court—becomes the forum for resolving disputes about the arbitrator's mandate.
What the court ordered
The Supreme Court allowed the appeals in part. The High Court's order exercising Section 11(6) to terminate the arbitrator's mandate and appoint a substitute was set aside. The Section 11(6) application was held to be not maintainable. The proper remedy, the court said, remains Section 14(2) before the court under Section 2(e)—the District Court where the original applications were already pending.
The court did not direct the District Court on how to decide the pending applications. It simply restored the matter to the correct forum, with the correct legal framework. The review petition filed before the High Court on November 17, 2017—which had been dismissed—was effectively overtaken by this Supreme Court ruling.
The court's operative order was precise. It set aside the High Court's order, held the Section 11(6) application not maintainable, and clarified the correct remedy. The court did not comment on the merits of the Section 14(2) applications pending before the District Court. Those applications would now be decided in accordance with law, with the Supreme Court's ruling as the guiding framework.
The case also carries implications for the interpretation of Section 14(2). The court clarified that the 'court' under Section 14(2) is the court as defined in Section 2(e)—not the High Court exercising Section 11(6) powers. This distinction is crucial for practitioners. Filing a Section 11(6) application in the wrong forum can lead to dismissal and delay.
The broader lesson for arbitration practice
The Supreme Court's decision in Swadesh Kumar Agarwal v. Dinesh Kumar Agarwal & Ors serves as a cautionary tale for parties who rely on informal arbitration arrangements. The case demonstrates that procedural informality can create jurisdictional dead ends. What seemed like a sensible arrangement—a handshake agreement on an arbitrator—turned into a procedural quagmire that took years to resolve.
The case also highlights the importance of understanding the jurisdictional boundaries of different provisions in the Arbitration Act. Section 11(6) is not a catch-all remedy for every arbitration breakdown. It is a specific tool that operates only within the framework of a written arbitration agreement. Parties who step outside that framework lose access to that tool.
For practitioners, the lesson is clear: when advising clients on arbitration appointments, always insist on a written arbitration agreement. The few minutes it takes to draft and sign a written agreement can save years of litigation. The Agarwal family's experience is a costly reminder of what happens when procedural formalities are ignored.
THE PLAY: Before you appoint an arbitrator by mutual consent, put it in writing—without a written arbitration agreement, a court cannot step in to replace the arbitrator if the arrangement breaks down.
The two brothers picked an arbitrator together. No papers, no signatures. And when one backed out, the court had no power to help. The Supreme Court's ruling ensures that the next family facing a similar situation will know: the handshake is not enough. The law requires the signature.