Contractual arbitration procedure prevails where security deposit is a condition precedent to constituting the arbitral board.

Clause 29 of the arbitration agreement created a complete contractual appointment mechanism, requiring the dispute to be referred first to the Chief Engineer and then to MPL Com. before an Arbitration Board could be constituted, and making the contractor's furnishing of a security deposit a condition precedent to maintainability of the reference and to the Corporation's duty to constitute the Board. Because the security deposit had not been furnished, that contractual obligation had not arisen. The High Court therefore could not bypass the agreed procedure and appoint a retired Chief Justice as sole arbitrator under Section 11(6)(c) of the Arbitration and Conciliation Act, 1996.

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Issues: Whether the High Court could appoint a sole arbitrator ignoring the contractual procedure under Clause 29 of the arbitration agreement, including the requirement that the contractor furnish security deposit before constitution of the Arbitration Board.

Analysis: Clause 29 prescribed a complete appointment mechanism: the dispute had first to be taken to the Chief Engineer, then to MPL Com., and only thereafter could the Corporation constitute an Arbitration Board. The clause also made furnishing of security deposit by the contractor a precondition for maintainability of the reference and for the Corporation's obligation to constitute the Board. As the respondent had not furnished the security deposit, the contractual obligation to constitute the Board had not arisen. In such circumstances, the High Court could not bypass the agreed procedure and appoint a retired Chief Justice as sole arbitrator under Section 11(6)(c) of the Arbitration and Conciliation Act, 1996.

Conclusion: The appointment of the sole arbitrator by the High Court was unjustified and contrary to the arbitration agreement; the contractual mechanism had to be followed, with constitution of the Arbitration Board arising only upon furnishing of the required security.

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