A request for arbitration under Section 11(6) of the Arbitration and Conciliation Act is premature if prior dispute resolution procedures, including mediation, are not exhausted.

JUDGMENT :

Ashutosh Kumar, ACJ.

We have heard Mr. Dhananjay Kumar, the learned Advocate for the request petitioner and Mr. P.K. Shahi, the learned Advocate General for the State.

2. The petitioner has made a request under Section 11 (6) of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator.

3. It is not in dispute that a master service agreement dated 02.08.2016 was executed between the Planning and Development Department, Government of Bihar and the petitioner for selection of System Integrated IT Solution for Mukhyamantri Nischay Swayam Sahayta Bhatta Yojna Student Credit Card Scheme Skill Development Programme.

4. According to the petitioner, as required under the agreement, he initiated the work for the development of the project and also, in the process, issued invoices on several dates against various milestones completed under the agreement. However, on receipt of a communication against those invoices that an amount of Rs. 3,51,66,755.00/- was withheld by the respondents, he inquired for the reason, but there was none. As such, a notice was issued to the respondents on 26.06.2023, which only came to be replied on 05.09.2023.

5. With respect to each of the invoices, the respondent has stated the reason for withholding of the amount. Thereafter, another notice is said to have been sent to the respondent, but it was never replied.

6. As such, the present petition has been made under Section 11 (6) of the Arbitration and Conciliation Act, 1996, for appointment of an Arbitrator.

7. Opposing the claim of the petitioner, the learned Advocate General has drawn the attention of this Court to Clause 24 of the agreement which reads as hereunder:

“24. GOVERNING LAW AND DISPUTE RESOLUTION

24.1. This Agreement shall be governed by and construed in accordance with the laws of India, without giving effect to conflict of law rules. The parties expressly agree to exclude the application of the U.N. Convention on Contracts for the International Sale of Goods (1980) to this Agreement and the performance of the parties contemplated under this Agreement, to the extent that such convention might otherwise be applicable.

24.2 Any dispute arising out of or in connection with this Agreement or the SLA shall in the first instance be dealt with in accordance with the escalation procedure as set out in the Governance Schedule set out as Schedule V of this Agreement.

24.3 In case the escalations do not help in resolution of the problem within 3 weeks of escalation, both the parties should agree on a Mediator for communication between the two parties. The process of the mediation would be as follows:

(a) Aggrieved party should refer the dispute to the identified Mediator in writing, with a copy to the other party. Such a reference should contain a description of the nature of the dispute, the quantum in dispute (if any) and the relief or remedy sought suitable.

(b) The Mediator shall use his best endeavours to conclude the mediation within a certain number of days of his appointment.

(c) If no resolution can be reached through mutual discussion or mediation within 30 days then the matter should be referred to Experts for advising on the issue.

(emphasis supplied)

24.4 In case the mediation does not help in resolution and it requires expertise to understand an issue, a neutral panel of 3 experts, agreeable to both parties should be constituted. The process of the expert advisory would be as follows:

(a) Aggrieved party should write to the other party on the failure of previous al