Valid arbitration agreement required: unilateral appointment and participation in void proceedings could not cure lack of jurisdiction.

A valid arbitration agreement must rest on mutual consent; contractual dispute-resolution language referring matters to the Collector and a departmental appeal did not amount to arbitration, and the State Government could not unilaterally create arbitration jurisdiction under Section 143-A(3). The appointment of the arbitrator was therefore without jurisdiction and the resulting award was a nullity. Mere participation in the proceedings did not cure the defect, because the Municipal Council had consistently challenged the appointment and award, so no waiver, estoppel, or acquiescence arose.

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Issues: (i) Whether clause 22 of the contract or the State Government's action under Section 143-A(3) created a valid arbitration agreement and conferred jurisdiction to appoint an arbitrator; (ii) Whether participation in the arbitral proceedings by the Municipal Council barred it from challenging the award on jurisdictional grounds.

Issue (i): Whether clause 22 of the contract or the State Government's action under Section 143-A(3) created a valid arbitration agreement and conferred jurisdiction to appoint an arbitrator.

Analysis: The dispute-resolution language in the contract did not amount to a written arbitration agreement. Clause 22 contemplated reference to the Collector and a further departmental appeal, not arbitration. Section 143-A(3) empowered the State Government only to issue directions regulating the manner and procedure of octroi collection, and not to impose arbitration unilaterally on a concluded contract. Since arbitration depends on mutual consent and consensus ad idem, the absence of a valid arbitration agreement meant that the appointment of the arbitrator lacked jurisdictional foundation.

Conclusion: The issue was decided against the petitioner and in favour of the respondent.

Issue (ii): Whether participation in the arbitral proceedings by the Municipal Council barred it from challenging the award on jurisdictional grounds.

Analysis: Participation could not confer jurisdiction where none existed at the threshold. The Municipal Council had consistently challenged the validity of the appointment and the award before the civil court and the High Court. In such circumstances, no estoppel, waiver, or acquiescence arose to validate proceedings that were coram non judice and the resulting award was a nullity.

Conclusion: The issue was decided against the petitioner and in favour of the respondent.

Final Conclusion: The award was unsustainable for want of a valid arbitration agreement and jurisdiction, and the High Court's interference with the award was upheld.

Ratio Decidendi: Arbitration can arise only from a valid mutual agreement, and a unilateral governmental appointment cannot substitute for the parties' consent; participation in void proceedings does not cure the jurisdictional defect.

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