Internal departmental appeal is not arbitration where no neutral tribunal is expressly or impliedly provided.

Clause 16.3 did not constitute an arbitration agreement because it created only a two-stage internal dispute mechanism, first before a Competent Officer and then by appeal to the Commissioner. The clause did not provide for reference of disputes to a neutral tribunal chosen by both parties, nor did it expressly or by necessary implication require adjudication by an impartial arbitrator. Its language indicated supervisory and administrative control rather than arbitration, so an arbitrator could not be appointed under Section 11(6) on that basis. The order appointing an arbitrator was therefore unsustainable.

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Issues: Whether Clause 16.3 of the agreement constituted an arbitration agreement so as to justify appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.

Analysis: Clause 16 provided a two-stage dispute resolution mechanism, first before the Competent Officer and then by appeal to the Commissioner. The appellate remedy was available only to the dissatisfied contractor and was not a reference to a neutral tribunal chosen by both parties. The mechanism did not contemplate a judicial inquiry by an impartial adjudicator hearing both sides on equal terms, nor did the clause expressly or by necessary implication refer disputes to arbitration. The language and structure of the clause showed supervisory and administrative control rather than an agreement to arbitrate.

Conclusion: Clause 16.3 was not an arbitration clause, and no arbitrator could be appointed under Section 11(6) on its basis.

Final Conclusion: The order appointing an arbitrator was unsustainable, and the appeal succeeded.

Ratio Decidendi: A clause providing only an internal or departmental appeal to a superior officer, without an express or necessarily implied reference of disputes to a neutral and impartial tribunal, does not constitute an arbitration agreement.

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