The court emphasized the importance of complying with the procedure prescribed in the arbitration agreement and held that non-compliance does not automatically lead to dismissal of the application under section 11.

This is an application under section 11 of the Arbitration and Conciliation Act, 1996 for the appointment of a suitable arbitral tribunal.

Every attempt, every gesture on the applicant's part to have the disputes referred to a conciliator and thereafter if necessary to arbitration has been rejected by the respondents on hypertechnical grounds. The applicant has agreed to the name of a conciliator suggested by the respondents. Though the arbitration clause requires a reference of the disputes to an arbitral tribunal consisting of three arbitrators the applicant has agreed to the disputes and differences being referred to the sole arbitration of the arbitrator appointed by the respondents. Even this suggestion was rejected although it was made clear that this would be without prejudice to the respondents' rights and contentions and their right to challenge this order.

2. The application is based on an arbitration clause contained in a Shareholder Agreement entered into between the parties in the year 2007. I am saved the exercise of determining the issue as to the existence of the arbitration agreement as this question has already been determined by an order and judgment of this Court dated 6th July, 2009 in Arbitration Petition No. 222 of 2008 which was taken out by the applicant for reliefs under section 9 of the said Act. It was contended on behalf of the respondents in that case that the arbitration clause was incorporated in a document which was not a concluded agreement between the parties. Consequently, no part of the agreement including the arbitration clause therein came into existence. The learned judge rejected the contention and held that the said agreement is complete and binding between the parties and the arbitration clause is valid, subsisting and binding between the parties. It is not disputed that I am bound by the judgment. Needless to add that the result of this application may well require to be reviewed in the event of the respondents succeeding in the appeal filed against the said judgment. I proceed therefore on the basis that there exists between the parties a valid arbitration agreement.

3. As the remaining contentions are based entirely on the construction of the arbitration clause it is necessary to set the same out in its entirety. It reads as under:

"ARBITRATION CLAUSE

14. DISPUTE RESOLUTION

14.1 Settlement of Disputes through Good Faith Negotiations.-

a) The parties shall endeavour, in the first instance, to resolve any dispute, disagreement or difference arising out of or in connection with this Agreement, including any question regarding its performance, existence, validity, termination and the rights and liabilities of the parties to this Agreement (a "Dispute") through good faith negotiations;

If a settlement is not reached within thirty (30) days after the date of receipt of the Dispute Notice by the non-initiating Party, such Dispute shall be referred for conciliation to one Conciliator in accordance with the provisions of Arbitration and Conciliation Act, 1996.

14.2. Arbitration

(a) If good faith negotiations and conciliation have not been able to resolve a Dispute, such Dispute shall be referred to and be finally resolved by Arbitration in accordance with the Arbitration and Conciliation Act, 1996 and the rules made thereunder. Each party to the Dispute shall appoint one Arbitrator and the two Arbitrators shall mutually agree to and appoint the third Arbitrator. The Arbitral Agency so constituted, shall be the "Arbitral Tribunal". The provisions of the Arbitration and Conciliation Act, 1996 as may be amended from time to time and the Rules, if any, made thereunder, shall apply to such Arbitration proceedings. The place of Arbitration shall be Mumbai, India. The language of the Arbitration shall be English.

(b) Any decision or award of the Arbitral Tribunal, subject to corrections/ recourse provided for under the Arbitration and Conciliation Act, 1996 be binding upon the parties. T