JUDGMENT :

Heard the learned counsel appearing for the parties.

2. A preliminary objection taken by the non-applicant has led to an interesting question in the present application pertaining to jurisdiction of this Court under section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the “said Act”), in the context of section 21 thereof, as regards the invocation of arbitration by either party.

3. The facts in brief leading to filing of the present application are that the non-applicant was awarded contract by the Nagpur Municipal Corporation for laying pipelines and in that context the non-applicant engaged the applicant by issuing work order, after the terms were agreed upon negotiations. The work order executed in favour of the applicant consisted of a clause for settlement of disputes by arbitration. Upon the execution of the works, certain disagreements seem to have occurred between the parties as regards the extent of work done, the time taken for the said work and the entitlement of the applicant towards payment in terms of the agreement between the parties. There was exchange of communications between the parties, including a letter dated 07/09/2020, sent on behalf of the applicant to the General Manager of the non-applicant, stating that the representatives of the non-applicant had agreed to make necessary amendments to the work order for facilitating payments, but such amendments were not carried out and eventually it was requested that the non-applicant may take necessary steps so that the applicant was properly compensated.

4. Thereafter, on 07/10/2020, the applicant sent a legal notice to the non-applicant, through Advocate, stating in detail about its grievances and claims. The applicant quantified the amount that it expected the non-applicant to release along with interest within one month. It is significant that despite the aforesaid arbitration clause, having enumerated its grievances, the applicant only stated in the said notice that if the payment was not released as requested, the applicant would be constrained to seek redressal of grievances by approaching the competent Court of Law.

5. The non-applicant sent reply to the aforesaid legal notice through its Advocate on 29/09/2020. In this reply, the non-applicant repudiated the claims made by the applicant and instead demanded that a specific amount towards penalty be deposited by the applicant with the non-applicant. In this reply also, no reference was made to the arbitration clause and it was simply stated that if the applicant failed to pay the penalty amount, the non-applicant would be constrained to approach the appropriate forum.

6. Thereafter, the applicant filed the present application under section 11(6) of the said Act, seeking appointment of sole Arbitrator from amongst names proposed in the application or for appointment of any other competent independent Arbitrator for adjudication of the claims of the applicant. This Court issued notice in the present application. The non-applicant filed an affidavit raising preliminary objection as regards maintainability of the present application under section 11(6) of the said Act. Two issues were raised in the said affidavit. Firstly, that the arbitration clause provided for a two-tier procedure envisaging the applicant to first refer the dispute to the non-applicant, whose decision would be final and binding. In case, the said step failed, the dispute would be referred for arbitration to a sole Arbitrator and it would be governed by the provisions of the said Act. According to the non-applicant, the first tier of the procedure itself was not exhausted by the applicant and therefore, there was no question of the second tier of the procedure of invoking arbitration being resorted to.

7. Secondly, it was contended that even if it was to be assumed that the first tier of procedure had been satisfied, in the present case, the legal notice dated 07/10/2020, issued by the applicant did not