Modified arbitration clause made inter se arbitration contingent on first pursuing claims through SCOPE, so Section 11(6) was premature.

Supplementary agreements can modify an original arbitration clause and require the parties to follow a different dispute-resolution sequence before any inter se arbitration arises. Where the amended contract obliges the parties to first pursue claims jointly through a third-party mechanism, arbitration between them becomes contingent on residual disputes surviving that process. On that basis, a Section 11(6) application for appointment of an arbitrator was premature while the contractual mechanism with SCOPE still had to be exhausted, and the appointment order was set aside. The court also directed that the final bill process be completed promptly so that any surviving disputes could then proceed to arbitration if necessary.

---

---

Issues: (i) Whether the original arbitration clause survived in its unamended form despite the supplementary agreements. (ii) Whether an application for appointment of an arbitrator under Section 11(6) was maintainable at the stage when disputes had first to be taken up with SCOPE under the modified contractual mechanism.

Issue (i): Whether the original arbitration clause survived in its unamended form despite the supplementary agreements.

Analysis: The original contract permitted inter se arbitration between the contractor and the sub-contractor, but the first and third supplementary agreements materially altered that arrangement. The amended understanding required the parties, in the first instance, to jointly pursue the respondent's claims through the appellant against SCOPE. Only after the contractual mechanism with SCOPE had been worked out and any residual dispute still survived could a fresh reference to arbitration arise. The supplementary agreements therefore changed the dispute-resolution route and displaced immediate arbitration between the parties.

Conclusion: The original clause did not survive in its unamended form for immediate inter se arbitration, and it stood modified by the supplementary agreements.

Issue (ii): Whether an application for appointment of an arbitrator under Section 11(6) was maintainable at the stage when disputes had first to be taken up with SCOPE under the modified contractual mechanism.

Analysis: The contractual scheme, as modified, required the appellant and respondent to act jointly and first exhaust the claims before SCOPE. Since the final bill process with SCOPE had substantially progressed, the Court held that immediate constitution of an arbitral tribunal between the parties was premature. At the same time, to protect the respondent's interests, directions were issued to ensure prompt finalization of the bill and to permit arbitration only if surviving disputes remained after the agreed process with SCOPE.

Conclusion: The Section 11(6) application was not maintainable at that stage, and the High Court's appointment of an arbitrator was set aside.

Final Conclusion: The dispute-resolution mechanism had to operate in the sequence contractually agreed by the parties, with arbitration between them arising only if residual disputes remained after proceedings with SCOPE.

Ratio Decidendi: Where parties have, by supplementary agreements, novated the original arbitration arrangement and made inter se arbitration contingent upon first pursuing claims through a third-party contractual mechanism, a court cannot appoint an arbitrator prematurely under Section 11(6) of the Arbitration and Conciliation Act, 1996.

---