Arbitration agreement requires a present binding intention; permissive future reference clause under Section 7 was insufficient.

Under Section 11 of the 1996 Act, the referral court must conduct only a limited prima facie examination of whether an arbitration agreement exists, while the tribunal's competence to rule on jurisdiction does not remove that threshold judicial scrutiny. Clause 13 did not satisfy Section 7 because it used permissive, future-contingent language and did not show a present binding intention to submit disputes to arbitration as of right. Clause 32, which fixed civil court jurisdiction for tender disputes, did not independently create or negate arbitration. The contractual reference therefore was not a binding arbitration agreement, and appointment of an arbitrator was unsustainable.

---

---

Issues: (i) Whether the question of existence of an arbitration agreement should be left for the arbitral tribunal to decide; (ii) Whether clause 13 would constitute an arbitration agreement between the parties as contemplated under Section 7 of the 1996 Act; (iii) Whether clause 32 of Instructions to Bidders negates the existence of an arbitration agreement.

Issue (i): Whether the question of existence of an arbitration agreement should be left for the arbitral tribunal to decide

Analysis: The scope of Section 11, after the 2015 amendment, is confined to examination of the existence of an arbitration agreement. The referral court is required to undertake only a limited, prima facie scrutiny of the material placed before it and not a mini-trial on disputed questions of fact or evidence. The doctrine of competence-competence permits the arbitral tribunal to rule on its own jurisdiction, but that does not oust the court's threshold duty to see whether an arbitration agreement is prima facie shown to exist.

Conclusion: The question of existence of an arbitration agreement cannot be left entirely to the arbitral tribunal at the Section 11 stage.

Issue (ii): Whether clause 13 would constitute an arbitration agreement between the parties as contemplated under Section 7 of the 1996 Act

Analysis: An arbitration agreement must disclose an intention to submit disputes to a private tribunal and a binding obligation to be governed by its decision. A clause that merely permits or enables arbitration, or contemplates arbitration only if parties later agree, does not satisfy the requirement of consensus ad idem. Clause 13, read as a whole, provided a staged process for internal settlement and thereafter stated that redressal of disputes may be sought through arbitration in cases other than Government agencies. The wording was permissive and did not create a binding commitment that either party could unilaterally invoke arbitration as of right.

Conclusion: Clause 13 does not constitute an arbitration agreement.

Issue (iii): Whether clause 32 of Instructions to Bidders negates the existence of an arbitration agreement

Analysis: Clause 32 only specifies the civil court jurisdiction for disputes arising out of the tender and the contract. It does not by itself exclude arbitration or operate as a substitute for an arbitration clause. Since no arbitration agreement was found in clause 13, the discussion on clause 32 did not alter the result.

Conclusion: Clause 32 does not independently establish or negate arbitration, and the issue does not affect the outcome.

Final Conclusion: The appeal failed because the contractual clause relied upon was not a binding arbitration agreement and the request for appointment of an arbitrator was therefore unsustainable.

Ratio Decidendi: A clause is an arbitration agreement only if it evinces a binding and present intention to refer disputes to arbitration; a merely permissive or future-contingent reference does not satisfy Section 7.

---