An arbitration agreement must clearly indicate the parties' intention to refer disputes to arbitration; mere mention of arbitration without binding terms does not constitute a valid agreement.

JUDGMENT

Mr. Suvir Sehgal, J.

This is a petition filed under section 11(6) of the Arbitration and Conciliation Act, 1996 (for short 'the Act') for appointment of an independent Arbitrator.

2. Case of the petitioner is that it is registered under the Ministry of Rural Development for Implementation of Deendayal Upadhyay Grameen Kaushal Yojna (DDUGRKY) as a Project Implementation Agency (PIA) and by order dated 17.10.2017, Annexure P-1, sanction was issued to the petitioner for placement linked skill development of 1850 rural youth in different districts of the State of Haryana. A Memorandum of understanding (MOU), dated 26.10.2017, Annexure P-2, was signed between the parties. The total duration of the project was three years, and its cost was Rs.21,38,21,725. After depositing the requisite bank guarantee, the petitioner started execution of the project, but the respondents created hurdles in its implementation and after issuing a show cause notice, respondent terminated the MOU vide letter dated 07.08.2019, Annexure P-5. Petitioner filed an appeal but it was dismissed by order dated 24.12.2019, Annexure P-8. Petitioner issued a notice, Annexure P-9 under Clause 10.1 of the MOU for amicable settlement, but without responding to it, the respondents encashed the Bank guarantee furnished by the petitioner. Petitioner served a notice dated 22.02.2021, Annexure P-11 invoking the arbitration clause and an Empowered Committee comprising of Government officials was appointed, some meetings were held, but without any result.

3. Upon notice, petition has been contested by the respondents on the ground that there is no arbitration clause in the MOU between the parties and the dispute is not arbitrable. It has been further submitted that the Principal Secretary to Government of Haryana, Rural Development Department, who decided the appeal, is a necessary party and has not been impleaded.

4. Counsel for the petitioner has placed reliance upon the judgment of the High Court of Rajasthan in SB Arbitration Application No.29/2021 titled as Disha Education Society and another v. Rajasthan Skills and Livelihood Development Corporation, decided on 04.11.2022 and judgment of the High Court of Himachal Pradesh in Arbitration case No.1 of 2022 titled as M/s Apollo Med Skills Ltd. v. HP State Rural Livelihood Mission decided on 25.03.2022 to contend that in a similar situation, arbitrator was appointed by the High Court to adjudicate the dispute between the parties.

5. On the other hand, counsel for the respondent has argued that in the absence of an arbitration clause, there can be no reference to an arbitrator. He has placed reliance upon the judgments of the Supreme Court in Jagdish Chander v. Ramesh Chander and ors, (2007) 5 SCC 719, State of Orissa and ors. v. Bhagyadhar Dash (2011) 7 SCC 406, Mahanadi Coalfields Ltd. and another v. M/s IVRCL AMR Joint Venture, 2023 (1) Apex Court Judgments (SC) 370 and an unreported judgment of High Court of Gujarat in Arbitration Petition No.107 of 2021 titled as Surya Wires Private Limited Through Managing Director S.K. Jain v. Gujarat Livelihood Promotion Corporation Limited decided on 18.02.2022.

6. I have heard counsel for the parties and considered their respective submissions.

7. After referring to the case law on the subject, in Jagdish Chander's case (supra), Supreme Court has set out the following principles in regard to what constitutes an arbitration agreement:-

"(i) The intention of the parties to enter into an arbitration agreement shall have to be gathered from the terms of the agreement. If the terms of the agreement clearly indicate an intention on the part of the parties to the agreement to refer their disputes to a private tribunal for adjudication and an willingness to be bound by the decision of such tribunal on such disputes, it is arbitration agreement. While there is no specific form of an arbitration agreement, the words used should disclose a determination and obligation to go to arbitrat