No valid arbitration agreement means no jurisdiction; participation in proceedings does not cure the foundational defect.

An arbitral reference is invalid where the underlying contract contains no written agreement to arbitrate and the statute invoked does not authorise the State Government to impose arbitration on a concluded contract. A clause providing reference to a Collector and departmental appeal is not an arbitration agreement, and mutual consent remains essential. Participation in the proceedings does not confer jurisdiction, cure the absence of an arbitration agreement, or create estoppel where the jurisdictional objection is raised at the earliest stage. The award is therefore a nullity, and the jurisdictional challenge survives.

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Issues: (i) whether the dispute could be referred to arbitration in the absence of a valid arbitration agreement and whether the State Government had authority to appoint an arbitrator under the municipal statute; (ii) whether participation in the arbitral proceedings created estoppel or cured the jurisdictional defect.

Issue (i): whether the dispute could be referred to arbitration in the absence of a valid arbitration agreement and whether the State Government had authority to appoint an arbitrator under the municipal statute.

Analysis: The contract clause relied upon did not contain a written agreement to submit disputes to arbitration. It provided for reference to the Collector and further departmental appeal, which was not the same as arbitration. Section 143-A(3) of the Maharashtra Municipal Councils, Nagar Panchayats and Industrial Townships Act, 1965 permitted directions on the manner and procedure of octroi collection, but did not empower the State Government to superimpose arbitration on a concluded contract. Mutual consent was absent, and without consensus ad idem there could be no valid arbitration agreement.

Conclusion: The reference to arbitration was invalid, the arbitrator lacked jurisdiction, and the award was a nullity.

Issue (ii): whether participation in the arbitral proceedings created estoppel or cured the jurisdictional defect.

Analysis: Mere participation did not confer jurisdiction where the foundational requirement of an arbitration agreement was missing. The challenge to jurisdiction had been raised at the earliest available stage, so the conduct of the municipal council did not amount to waiver of the objection or acceptance of the arbitral forum.

Conclusion: No estoppel arose against the municipal council and the jurisdictional objection survived.

Final Conclusion: The arbitral award and the order of the civil court were not sustainable, and the High Court's interference was upheld.

Ratio Decidendi: An arbitral tribunal cannot acquire jurisdiction in the absence of a valid arbitration agreement and mutual consent, and participation in the proceedings does not cure that foundational defect or create estoppel.

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