Holding

Clause 8.28 does not create a valid arbitration agreement because it lacks a clear, binding intent to refer disputes to arbitration and to be bound by the arbitrators' decision.

Summary

The appellant, a private hospital, entered into a software implementation agreement with the respondent, a digital health‑technology firm, which contained Clause 8.28 purportedly providing for arbitration. After repeated technical failures, the appellant invoked the clause and sought appointment of a sole arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996. The High Court held that the clause merely set out a three‑tier dispute‑resolution process of negotiation, mediation and, if unresolved, recourse to courts, and dismissed the application. On appeal, the Supreme Court examined whether the clause satisfied the requirements of an arbitration agreement under Section 7 of the Act, focusing on the need for a clear intent to refer disputes to arbitration and a binding effect. Relying on precedents, the Court concluded that the clause lacked the essential attributes of an arbitration agreement, particularly finality and independence of the arbitrators, and that mere use of the word “arbitration” was insufficient. Consequently, the Court affirmed the High Court’s decision and dismissed the appeal, leaving the appellant to pursue relief in civil court.

Issues considered

Whether Clause 8.28 of the Software Implementation Agreement constitutes a valid arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996.
Whether the mere use of the term “arbitration” in a contractual clause is sufficient to create an arbitration agreement.
Whether post‑notice correspondence by the respondent, which did not deny the existence of an arbitration clause, can affect the determination of an arbitration agreement.

Legislation cited

Arbitration and Conciliation Act, 1996s. 11(6), s. 12(5), s. 7
Limitation Act, 1963s. 14

Headnote

Issue for Consideration Whether Clause 8.28 of the Agreement can be considered to be a valid arbitration agreement under the Arbitration and Conciliation Act, 1996. Headnotes† Arbitration and Conciliation Act, 1996 – s.7 – Arbitration agreement – When a private healthcare institution entered into a Software Implementation Agreement with the respondent, specialising in digital health-management platforms for upgrading its existing hospital-information software to a more advanced, integrated system – Disputes arose between the parties

Subjects

Section 7Arbitration and Conciliation Act, 1996Arbitration agreementValidity of arbitration clauseSoftware implementation agreementDigital health‑management platformsFinality and binding effectMere use of word arbitrationNegotiation and mediation processInternal dispute resolution

Judgment

[2025] 12 S.C.R. 24 : 2025 INSC 1289

M/s Alchemist Hospitals Ltd.
v.
M/s ICT Health Technology Services India Pvt. Ltd.
(Civil Appeal No. 13405 of 2025)
06 November 2025
[Dipankar Datta* and Augustine George Masih, JJ.]

Issue for Consideration
Whether Clause 8.28 of the Agreement can be considered to be a
valid arbitration agreement under the Arbitration and Conciliation
Act, 1996.

Headnotes†
Arbitration and Conciliation Act, 1996 – s.7 – Arbitration
agreement – When not – Appellant, a private healthcare
institution entered into a Software Implementation Agreement
with the respondent, specialising in digital health-management
platforms for upgrading its existing hospital-information
software to a more advanced, integrated system – Disputes
arose between the parties – Appellant invoked Clause 8.28
(Arbitration) of the Agreement calling upon the respondent to
concur in the appointment of a sole arbitrator – Eventually,
it filed application u/s.11(6) praying for the appointment of a
sole arbitrator to adjudicate the disputes – Dismissed by High
Court holding that the term “arbitration” was loosely employed
in Clause 8.28 and the clause only provided for negotiation
and mediation at an internal company level between senior
management executives and in case the dispute remained
unresolved, the parties were free to approach civil courts –
Clause 8.28 of the Agreement, if can be considered to be a
valid arbitration agreement:
Held: No – Mere use of the word “arbitration” is not sufficient to
treat the clause as an arbitration agreement when the corresponding
mandatory intent to refer the disputes to arbitration and the
consequent intent to be bound by the decision of the arbitral tribunal
is missing – When an agreement provides that the decision of the
authority will not be final and binding on the parties, or that if either

* Author
[2025] 12 S.C.R. 25

M/s Alchemist Hospitals Ltd. v.
M/s ICT Health Technology Services India Pvt. Ltd.

party is not satisfied with the decision of the authority, he may file
a civil suit seeking relief, it cannot be termed as an arbitration
agreement – Clause 8.28 does not evince an intention to refer
disputes to arbitration and does not indicate that the proposed
“arbitration” was supposed to be final and binding – The clause
stipulated that should the dispute not be resolved within fifteen
days after arbitration, the complaining party shall seek remedies
through the courts of law – This suggests an attempt at amicable
resolution inter se rather than a definitive submission to arbitration,
failing which the party has the option to proceed to the courts of
law – Further, the individuals designated as “arbitrators” under the
clause were the respective Chairmen of the parties themselves –
Though, this does not ipso facto disqualify the clause from being an
arbitration agreement since this may be waived under the proviso
to s.12(5) but, it is a significant circumstance in discerning the
true intention of the parties – There was no arbitration agreement
in the present case – Impugned judgment and order of the High
Court affirmed. [Paras 15, 24-27, 31]
Arbitration and Conciliation Act, 1996 – s.7 – Requirements to
be fulfilled to satisfy the attributes of an arbitration agreement,
stated – Mere use of the word “arbitration” in a clause of an
agreement is not clinching or decisive – s.7 presupposes an
express intention of the dispute/difference being resolved
through arbitration and mere reference to the term is not
sufficient to meet this threshold – In essence, an arbitration
agreement should have an element of the nature of finality to
refer the matters to arbitration. [Paras 11-13, 17, 23]

Arbitration and Conciliation Act, 1996 – Whether the non-
denial of the arbitration agreement by the respondent in the
correspondence between the parties post the notice being
issued would have any bearing upon the decision to refer
the parties to arbitration:
Held: In the present case, there was no denial of the existence
of an arbitration agreement by the respondent in its responses
to the notice issued by the appellant – However, here, when
there was indeed no arbitration agreement in the first place,
therefore, subsequent correspondence between the parties cannot
displace the original intention – Such correspondence would have
indeed been sufficient to displace the original intention if it was
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unequivocally clear about referring the disputes to arbitration, i.e.,
the test mentioned u/s.7 of the A&C Act, which does not exist in
the instant case – There was no arbitration agreement in the first
place, thus, there exists no option available to the appellant other
than approaching the courts of law. [Para 31]

Case Law Cited
Smt. Rukmanibai Gupta v. Collector, Jabalpur & Ors. (1980) 4
SCC 536; K.K. Modi v. K.N. Modi [1998] 1 SCR 601 : (1998) 3
SCC 573; Jagdish Chander v. Ramesh Chander [2007] 5 SCR
720 : (2007) 5 SCC 719; Mahanadi Coalfields Ltd. v. IVRCL AMR
Joint Venture [2022] 7 SCR 522 : (2022) 20 SCC 636; Bangalore
Electricity Supply Co. Ltd. v. E.S. Solar Power (P) Ltd. (2021) 6 SCC
718; Wellington Associates Ltd. v. Kirit Mehta (2000) 4 SCC 272;
Bihar State Mineral Development Corporation v. Encon Builders
BGM [2003] Supp. 2 SCR 812 : (2003) 7 SCC 418; BGM and
MRPL-JMCT (JV) v. Eastern Coalfields Limited, 2025 SCC OnLine
SC 1471 – referred to.
Powertech World Wide Ltd. v. Delvin International General Trading
LLC [2011] 13 SCR 122 : (2012) 1 SCC 361; Visa International
Ltd. v. Continental Resources (USA) Ltd. [2008] 16 SCR 1043 :
(2009) 2 SCC 55 – distinguished.

List of Acts
Arbitration and Conciliation Act, 1996.

List of Keywords
Section 7, Arbitration and Conciliation Act, 1996; Arbitration
agreement; Valid arbitration agreement; Software Implementation
Agreement; Digital health-management platforms; Hospital-
information software; Arbitration loosely employed; No intention
to refer disputes to arbitration ; Proposed arbitration not final and
binding ; No arbitration agreement; Mere use of word “arbitration”
in a clause of an agreement is not decisive; Mere use of the word
“arbitration” not sufficient to treat the clause as an arbitration
agreement; Dispute remained unresolved; Parties were free to
approach civil courts; Attributes of an arbitration agreement; Non-
denial of arbitration agreement in the correspondence between
the parties.
[2025] 12 S.C.R. 27

M/s Alchemist Hospitals Ltd. v.
M/s ICT Health Technology Services India Pvt. Ltd.

Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 13405 of 2025
From the Judgment and Order dated 27.05.2024 of the High Court
of Punjab & Haryana at Chandigarh in ARB No. 471 of 2021

Appearances for Parties
Advs. for the Appellant:
Puneet Bali, Sr. Adv., Aditya Soni, Gunjan Rishi.
Advs. for the Respondent:
Shamik Shirishbhai Sanjanwala, Rishab Gupta, Ms. Aakanksha
Luhach, Aditya Tripathi, Ms. Aarushi Gupta.

Judgment / Order of the Supreme Court

Judgment

Dipankar Datta, J.

1. Leave granted.
2. The present civil appeal assails the judgment and order of the High
Court of Punjab & Haryana at Chandigarh1 in ARB No. 471 of 2021,
whereby a learned Judge of the High Court dismissed an application
under Section 11(6) of the Arbitration and Conciliation Act, 19962
filed by the appellant.

Brief Facts
3. The material facts relevant to decide the present appeal are as follows:
a. The appellant is a private healthcare institution having its
principal establishment at Panchkula, Haryana. Desirous of
upgrading its existing hospital-information software to a more
advanced, integrated system, the appellant entered into a
Software Implementation Agreement3 dated 1st November 2018

1 High Court
2 A&C Act
3 Agreement
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with the respondent, a Bengaluru-based technology company
specialising in digital health-management platforms.
b. Under the agreement, the respondent undertook to implement
its proprietary hospital-management product known as “HINAI
Web Software”4, a software intended to streamline patient-care
operations, billing, diagnostics, and record management across
the appellant’s facilities.
c. Clause 8.28 of the Agreement which forms the focal point of
this lis is reproduced as follows:
“8.28 – Arbitration
The parties shall attempt in good faith to resolve any
dispute arising out of or relating to this Agreement
promptly by negotiation between executives, who
have authority to settle the controversy and who are
at a higher level of management, than the persons
with direct responsibility for administration of this
Agreement.
If the matter is not resolved by negotiation pursuant
to paragraph above, then the matter will proceed to
mediation as set forth below:
Any dispute, controversy or claim arising out of or
relating in any way to the Agreement/the relationship,
including without limitation, any dispute concerning
the construction, validity, interpretation, enforceability
or breach of the Agreement, shall be resolved by
arbitration through senior management comprising
respective Chairmen of the two parties (Arbitrators).
Should the dispute not be resolved within fifteen (15)
days after arbitration, the complaining party shall seek
remedies through the courts of law. The demand for
arbitration should be made within a reasonable time
(maximum 60 days) after the dispute or matter in
question has arisen.”

4 HINAI software
[2025] 12 S.C.R. 29

M/s Alchemist Hospitals Ltd. v.
M/s ICT Health Technology Services India Pvt. Ltd.

d. Following execution of the agreement, the appellant began
implementing the HINAI software in November 2018. However,
the appellant alleges that there were repeated procedural delays
and technical failures on the part of the respondent, including
sluggish performance, billing malfunctions, and incomplete
integration of diagnostic modules.
e. Relying on assurances from the respondent, the appellant
permitted a second attempt at implementation within three
months. The HINAI software went live again on 1st January 2020.
The appellant alleges that there were numerous operational
issues once again and the system was rolled back on 1st April
2020.
f. On even date, the appellant addressed an e-mail to the
respondent invoking Clause 8.28 of the Agreement and
requesting a mediation meeting between the Chairmen of the
two companies at Panchkula or, alternatively, through video-
conference in view of pandemic restrictions. The respondent
replied on 3rd April, 2020 vide e-mail asking for the appellant’s
cooperation.
g. Appellant called upon the respondent to concur in the
appointment of a sole arbitrator and suggested the names of
two retired Chief Justices for acting as an arbitrator by a notice
dated 29th June, 2020, issued under Sections 11 and 21 of the
A&C Act. Respondent acknowledged receipt of the notice by
e-mail dated 29th July 2020, sought time to respond, and on
25th August 2020 filed a reply requesting trial of the project
one last time.
Having spent so much of effort by both parties.
It was an unfortunate decision of roll back. For
ICT it is not only loss of name but also loss in
revenue as our cost incurred till date is more
than the revenue we have got from Alchemist.
We still request Alchemist if there is any way
for making the project lie which will be in the
best interest of both sides. For which if ITC has
to spent some more effort, we will be honouring
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the same if Alchemist ensures Master date and
processes are frozen and agreed one last time.
h. Constrained by the respondent’s communication, the appellant
approached the High Court invoking Section 11(6) of the A&C
Act and praying for the appointment of a sole arbitrator to
adjudicate the disputes arising under the Agreement.

Impugned Judgment and Order
4. The High Court observed that on a plain reading of Clause 8.28 of
the Agreement, the parties had envisaged a three-tier process for
resolving disputes: first, by negotiation between senior management
executives; next, through mediation between the respective Chairmen
of the parties; and finally, by permitting the complaining party to
seek remedies through the courts of law if the dispute remained
unresolved within fifteen days.
5. The High Court held that the term “arbitration” had been loosely
employed in Clause 8.28 and that the true intention discernible from
its language was only to provide for negotiation and mediation at an
internal company level. It was further observed that the Chairmen
of both parties could not be regarded as private or independent
adjudicators, and that no element of finality or binding effect was
attached to their determination. Also, in the event of a disagreement
between the two Chairmen, an outcome not improbable, the process
would reach a deadlock, after which the parties were expressly free
to approach civil courts.
6. The High Court further observed that nothing in Clause 8.28 indicated
any intention of the parties to refer their disputes to a private
adjudicatory forum or to abide by its decision. The clause, in the
High Court’s view, merely contemplated negotiation and mediation
without creating a binding arbitral process and hence, it proceeded
to dismiss the appellant’s application under Section 11(6) of the A&C
Act holding that Clause 8.28 is not a valid arbitration agreement.

Issue
7. The seemingly simple question that we are tasked to decide in this
appeal is whether Clause 8.28 of the Agreement can be considered
to be a valid arbitration agreement under the A&C Act.
[2025] 12 S.C.R. 31

M/s Alchemist Hospitals Ltd. v.
M/s ICT Health Technology Services India Pvt. Ltd.

Analysis
8. We have heard Mr. Puneet Bali, learned senior counsel for the
appellant and Mr. Rishab Gupta,# learned counsel for the respondent.
9. An “arbitration agreement” is defined by the A&C Act as follows:
7. Arbitration agreement.—
(1) In this Part, “arbitration agreement” means an
agreement by the parties to submit to arbitration all or
certain disputes which have arisen or which may arise
between them in respect of a defined legal relationship,
whether contractual or not.
(2) An arbitration agreement may be in the form of an
arbitration clause in a contract or in the form of a separate
agreement.
(3) An arbitration agreement shall be in writing.
(4) An arbitration agreement is in writing if it is contained
in—
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other
means of telecommunication including communication
through electronic means which provide a record of
the agreement; or
(c) an exchange of statements of claim and defence
in which the existence of the agreement is alleged
by one party and not denied by the other.
(5) The reference in a contract to a document containing
an arbitration clause constitutes an arbitration agreement
if the contract is in writing and the reference is such as to
make that arbitration clause part of the contract.
10. Modelled on the UNCITRAL Model Law on International Commercial
Arbitration, 1985, the A&C Act forms the primary legislation for
arbitration of disputes, especially for contractual and commercial
disputes, giving primacy to the intent of the parties and every step of

# Ed. Note: “Mr. Rishab Gupta” instead of “Mr. Shamik Sanjanwala” in terms of subsequent corrigendum.
32 [2025] 12 S.C.R.

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the way is dictated by party autonomy, as far as practicable. Section 7
of the A&C Act is no exception to this rule and party autonomy is
foundational for any reference to arbitration of any dispute and/or
difference that arises or might arise by and between the parties.
11. Therefore, Section 7 of the A&C Act posits certain requirements that
need to be fulfilled so as to satisfy the attributes of an arbitration
agreement. They are (a) there must exist an agreement between the
parties to refer a dispute/all disputes to arbitration, either before or
after the said disputes arise; (b) the disputes must be in connection
with a defined legal relationship, whether contractual or not, and
lastly, (c) the agreement must be in writing.
12. The second and the third requirements of the disputes being in
connection with a defined legal relationship and that the agreement
must be in writing, are non-issues in the instant case. The crux of
the controversy lies in the first requirement, i.e., whether the parties
agreed to have the disputes and differences arising by and between
them referred to arbitration in terms of Clause 8.28.
13. It is settled law that Section 7 or any other provision of the A&C Act
requires that an arbitration agreement need not be in any specific
form, apart from compliance with the requirements that Section 7
of the A&C Act ordains. One may profitably refer to the decision in
Smt. Rukmanibai Gupta v. Collector, Jabalpur & Ors.5 for this
proposition.
14. In K.K. Modi v. K.N. Modi 6, this Court set out the relevant factors to
determine the existence of an arbitration agreement. The indicative
factors and attributes are:
17. Among the attributes which must be present for an
agreement to be considered as an arbitration agreement are:
(1) The arbitration agreement must contemplate that
the decision of the tribunal will be binding on the
parties to the agreement,
(2) that the jurisdiction of the tribunal to decide the
rights of parties must derive either from the consent

5 (1980) 4 SCC 536
6 (1998) 3 SCC 573
[2025] 12 S.C.R. 33

M/s Alchemist Hospitals Ltd. v.
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of the parties or from an order of the court or from
a statute, the terms of which make it clear that the
process is to be an arbitration,
(3) the agreement must contemplate that substantive
rights of parties will be determined by the agreed
tribunal,
(4) that the tribunal will determine the rights of the
parties in an impartial and judicial manner with the
tribunal owing an equal obligation of fairness towards
both sides,
(5) that the agreement of the parties to refer their
disputes to the decision of the tribunal must be
intended to be enforceable in law and lastly,
(6) the agreement must contemplate that the tribunal
will make a decision upon a dispute which is already
formulated at the time when a reference is made to
the tribunal.
18. The other factors which are relevant include, whether
the agreement contemplates that the tribunal will receive
evidence from both sides and hear their contentions or at
least give the parties an opportunity to put them forward;
whether the wording of the agreement is consistent or
inconsistent with the view that the process was intended
to be an arbitration, and whether the agreement requires
the tribunal to decide the dispute according to law.
15. It would further be apposite to refer to Jagdish Chander v. Ramesh
Chander 7 where this Court has succinctly encapsulated the law on
the point. The relevant passage therefrom reads:
8. This Court had occasion to refer to the attributes or
essential elements of an arbitration agreement in K.K.
Modi v. K.N. Modi [(1998) 3 SCC 573] , Bharat Bhushan
Bansal v. U.P. Small Industries Corpn. Ltd. [(1999) 2
SCC 166] and Bihar State Mineral Development Corpn.

7 (2007) 5 SCC 719
34 [2025] 12 S.C.R.

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v. Encon Builders (I) (P) Ltd. [(2003) 7 SCC 418] In
State of Orissa v. Damodar Das [(1996) 2 SCC 216] this
Court held that a clause in a contract can be construed
as an “arbitration agreement” only if an agreement to
refer disputes or differences to arbitration is expressly
or impliedly spelt out from the clause. We may at this
juncture set out the well-settled principles in regard to
what constitutes an arbitration agreement:
(i) The intention of the parties to enter into an
arbitration agreement shall have to be gathered
from the terms of the agreement. If the terms of the
agreement clearly indicate an intention on the part of
the parties to the agreement to refer their disputes to
a private tribunal for adjudication and a willingness
to be bound by the decision of such tribunal on such
disputes, it is arbitration agreement. While there is no
specific form of an arbitration agreement, the words
used should disclose a determination and obligation
to go to arbitration and not merely contemplate
the possibility of going for arbitration. Where there
is merely a possibility of the parties agreeing to
arbitration in future, as contrasted from an obligation
to refer disputes to arbitration, there is no valid and
binding arbitration agreement.
(ii) Even if the words “arbitration” and “Arbitral
Tribunal (or arbitrator)” are not used with reference
to the process of settlement or with reference to
the private tribunal which has to adjudicate upon
the disputes, in a clause relating to settlement of
disputes, it does not detract from the clause being
an arbitration agreement if it has the attributes or
elements of an arbitration agreement. They are: (a)
The agreement should be in writing. (b) The parties
should have agreed to refer any disputes (present
or future) between them to the decision of a private
tribunal. (c) The private tribunal should be empowered
to adjudicate upon the disputes in an impartial manner,
giving due opportunity to the parties to put forth their
case before it. (d) The parties should have agreed
[2025] 12 S.C.R. 35

M/s Alchemist Hospitals Ltd. v.
M/s ICT Health Technology Services India Pvt. Ltd.

that the decision of the private tribunal in respect of
the disputes will be binding on them.
(iii) Where the clause provides that in the event of
disputes arising between the parties, the disputes
shall be referred to arbitration, it is an arbitration
agreement. Where there is a specific and direct
expression of intent to have the disputes settled by
arbitration, it is not necessary to set out the attributes
of an arbitration agreement to make it an arbitration
agreement. But where the clause relating to settlement
of disputes, contains words which specifically exclude
any of the attributes of an arbitration agreement or
contains anything that detracts from an arbitration
agreement, it will not be an arbitration agreement. For
example, where an agreement requires or permits an
authority to decide a claim or dispute without hearing,
or requires the authority to act in the interests of only
one of the parties, or provides that the decision of the
authority will not be final and binding on the parties,
or that if either party is not satisfied with the decision
of the authority, he may file a civil suit seeking relief,
it cannot be termed as an arbitration agreement.
(iv) But mere use of the word “arbitration” or “arbitrator”
in a clause will not make it an arbitration agreement, if
it requires or contemplates a further or fresh consent
of the parties for reference to arbitration. For example,
use of words such as “parties can, if they so desire,
refer their disputes to arbitration” or “in the event of any
dispute, the parties may also agree to refer the same
to arbitration” or “if any disputes arise between the
parties, they should consider settlement by arbitration”
in a clause relating to settlement of disputes, indicate
that the clause is not intended to be an arbitration
agreement. Similarly, a clause which states that “if
the parties so decide, the disputes shall be referred
to arbitration” or “any disputes between parties, if
they so agree, shall be referred to arbitration” is
not an arbitration agreement. Such clauses merely
indicate a desire or hope to have the disputes settled
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by arbitration, or a tentative arrangement to explore
arbitration as a mode of settlement if and when a
dispute arises. Such clauses require the parties to
arrive at a further agreement to go to arbitration, as
and when the disputes arise. Any agreement or clause
in an agreement requiring or contemplating a further
consent or consensus before a reference to arbitration,
is not an arbitration agreement, but an agreement to
enter into an arbitration agreement in future.
(emphasis ours)

What, therefore, follows from the above passage is that the mere
use of the word “arbitration” is not sufficient to treat the clause as
an arbitration agreement when the corresponding mandatory intent
to refer the disputes to arbitration and the consequent intent to be
bound by the decision of the arbitral tribunal is missing.
16. A similar issue arose before this Court in Mahanadi Coalfields
Ltd. v. IVRCL AMR Joint Venture8. The clause in question therein
was as follows:
“15. Settlement of Disputes/Arbitration:
15.1. It is incumbent upon the contractor to avoid litigation
and disputes during the course of execution. However, if
such disputes take place between the contractor and the
department, effort shall be made first to settle the disputes
at the company level. The contractor should make request
in writing to the Engineer-in-Charge for settlement of such
disputes/claims within 30 (thirty) days of arising of the
case of dispute/claim failing which no disputes/claims of
the contractor shall be entertained by the company.
15.2. If differences still persist, the settlement of the
dispute with government agencies shall be dealt with
as per the Guidelines issued by the Ministry of Finance,
Government of India in this regard. In case of parties other
than government agencies, the redressal of the disputes
may be sought in the court of law.”

8 (2022) 20 SCC 636
[2025] 12 S.C.R. 37

M/s Alchemist Hospitals Ltd. v.
M/s ICT Health Technology Services India Pvt. Ltd.

The Court held that the mere use of the word “Arbitration” in the title
of the clause without any corresponding substantive part relating
to arbitration could not be considered a valid arbitration agreement
under Section 7 of the A&C Act.
17. The above rulings lead us to the irresistible conclusion that mere
use of the word “arbitration” in a clause of an agreement is not
clinching or decisive. Section 7 presupposes an express intention of
the dispute/difference being resolved through arbitration and mere
reference to the term is not sufficient to meet this threshold. The
A&C Act acknowledges the existence of an arbitration agreement
based on its substance rather than its form. Regardless of the
formal structure, effect has to be given to an arbitration agreement
in essence. Arbitration being the creature of a contract, the ad idem
intention of the parties is paramount to determine whether there
exists a valid arbitration agreement. That being said, the invocation
of the word “arbitration” nonetheless provides, at the very least, a
discernible clue to the parties’ underlying intention.
18. The exercise of legal drafting partakes equally of art, science and logic,
but we fear that Clause 8.28 does not seem to show allegiance to
any. Be that as it may, the task of interpreting the clause is embarked
upon bearing in mind the authoritative rulings in the field.
19. Clause 8.28 of the Agreement states that the parties must first
attempt to negotiate the dispute in good faith. This part of the clause
is admittedly not disputed in its meaning. The next part of the clause
specifies that if the negotiation fails, then the parties would be
obligated to mediate in the stated procedure and is then followed
by the punctuation (:) colon, following which it prescribes that any
dispute arising out of or relating in any way to the Agreement shall
be resolved by “arbitration” through senior management comprising
respective Chairmen of the two parties (Arbitrators). Moreover, the
agreement further stipulates that should the dispute not be resolved
within fifteen (15) days after the proposed “arbitration”, the complaining
party shall seek remedies through the courts of law.
20. The word “arbitration” apart from appearing in the title of the relevant
clause has been used 3 (three) times in the body of the clause. It
is but obvious that the appellant has sought to rely on this inclusion
of the word within the clause to submit that it forms an arbitration
agreement.
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21. Is mere repetitive use of the word “arbitration” clinching/decisive? It
is now time to ascertain in line with the aforesaid decisions, whether
the parties’ intention was indeed to arbitrate, or merely to delineate
a structured process of mediation.
22. Since, at this stage, we are reminded of the decision in the case
of Bangalore Electricity Supply Co. Ltd. v. E.S. Solar Power (P)
Ltd.9, it would be apt to note what was observed. There occurs an
interesting passage of what the Court should be minded about while
gathering the intentions of the parties in a clause of the contract. It
was observed:
17. The duty of the court is not to delve deep into the
intricacies of human mind to explore the undisclosed
intention, but only to take the meaning of words used i.e.
to say expressed intentions [Kamla Devi v. Takhatmal
Land, (1964) 2 SCR 152 : AIR 1964 SC 859]. In seeking
to construe a clause in a contract, there is no scope for
adopting either a liberal or a narrow approach, whatever
that may mean. The exercise which has to be undertaken
is to determine what the words used mean. It can happen
that in doing so one is driven to the conclusion that clause
is ambiguous, and that it has two possible meanings. In
those circumstances, the court has to prefer one above
the other in accordance with the settled principles. If one
meaning is more in accord with what the court considers
to be the underlined purpose and intent of the contract,
or part of it, than the other, then the court will choose
the former or rather than the latter [Ashville Investments
Ltd. v. Elmer Contractors Ltd., 1989 QB 488 : (1988) 3
WLR 867 : (1988) 2 All ER 577 (CA)]. The intention of
the parties must be understood from the language they
have used, considered in the light of the surrounding
circumstances and object of the contract. [Bank of India v.
K. Mohandas, (2009) 5 SCC 313 : (2009) 2 SCC (Civ)
524 : (2009) 2 SCC (L&S) 32] . Every contract is to be
considered with reference to its object and the whole
of its terms and accordingly the whole context must be

9 (2021) 6 SCC 718
[2025] 12 S.C.R. 39

M/s Alchemist Hospitals Ltd. v.
M/s ICT Health Technology Services India Pvt. Ltd.

considered in endeavouring to collect the intention of the
parties, even though the immediate object of inquiry is
the meaning of an isolated clause. Bihar SEB v. Green
Rubber Industries [Bihar SEB v. Green Rubber Industries,
(1990) 1 SCC 731].
23. In a catena of decisions, this Court has ruled that, in essence, an
arbitration agreement should have an element of the nature of
finality to refer the matters to arbitration. To name a few, one may
make a reference to the decisions made in the cases of Wellington
Associates Ltd. v. Kirit Mehta10, Bihar State Mineral Development
Corporation v. Encon Builders11, BGM and M-RPL-JMCT (JV) v.
Eastern Coalfields Limited12, K.K. Modi (supra) and Mahanadi
(supra).
24. In Jagdish Chander (supra), this Court discussing a similar situation
as is in the present case, observed that when an agreement provides
that the decision of the authority will not be final and binding on the
parties, or that if either party is not satisfied with the decision of the
authority, he may file a civil suit seeking relief, it cannot be termed
as an arbitration agreement. That is precisely the case here.
25. Upon a perusal of Clause 8.28, we are of the view that there is no
indication that the proposed “arbitration” was supposed to be final
and binding. In fact, the penultimate sentence of the clause stipulates
that should the dispute not be resolved within fifteen (15) days after
arbitration, the complaining party shall seek remedies through the
courts of law. This suggests an attempt at amicable resolution inter
se rather than a definitive submission to arbitration, failing which the
party has the option to proceed to the courts of law.
26. Lastly, the individuals designated as “arbitrators” under the clause
are the respective Chairmen of the parties themselves. Ordinarily,
arbitration contemplates reference to a neutral third party, a process
supported by Section 12 read with the Seventh Schedule of the A&C
Act. Here, however, the mechanism envisaged is akin to an internal
settlement process between the Chairmen of the two companies.

10 (2000) 4 SCC 272
11 (2003) 7 SCC 418
12 2025 SCC OnLine SC 1471
40 [2025] 12 S.C.R.

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While this does not ipso facto disqualify the clause from being an
arbitration agreement—since this may be waived under the proviso
to Section 12(5)—it remains a significant circumstance in discerning
the true intention of the parties.
27. In our view, Clause 8.28 of the Agreement does not evince an intention
to refer disputes to arbitration, for the above-mentioned reasons.
28. Before we part, one other interesting point that has been raised is to
be looked into. Whether the non-denial of the arbitration agreement
by the respondent in the correspondence between the parties post
the notice being issued by the respondent would have any bearing
upon the decision to refer the parties to arbitration.
29. In Powertech World Wide Ltd. v. Delvin International General
Trading LLC13, this Court no doubt took the view that correspondence
post issuance of the notice for arbitration can be a factor to determine
the intention of the parties. The pertinent passage is extracted
hereunder:
29. Thus, any ambiguity in the arbitration clause contained in
the purchase contract stood extinct by the correspondence
between the parties and the consensus ad idem in relation
to the existence of an arbitration agreement and settlement
of disputes through arbitration became crystal clear. The
parties obviously had committed to settle their disputes
by arbitration, which they could not settle, as claims and
counterclaims had been raised in the correspondence
exchanged between them. In view of the above, even the
precondition for invocation of an arbitration agreement
stands satisfied.
However, a closer perusal of the decision reveals that the decision
stands on a much different footing. The respondent therein had in
effect consented to the arbitration by stating that they wish to appoint
a different arbitrator than the one proposed. No such correspondence
exists in the present case. For ease of reference, paragraph 28 of
the decision observes:
… the respondent had neither denied the existence nor the
binding nature of the arbitration clause. On the contrary, it

13 (2012) 1 SCC 361
[2025] 12 S.C.R. 41

M/s Alchemist Hospitals Ltd. v.
M/s ICT Health Technology Services India Pvt. Ltd.

had requested the petitioner not to take any legal action
for appointment of an arbitrator, as they wanted to suggest
some other name as an arbitrator, that too, subject to the
consent of the petitioner. This letter conclusively proves that
the respondent had admitted the existence of an arbitration
agreement between the parties and consented to the idea
of appointing a common/sole arbitrator to determine the
disputes between the parties. However, thereafter there
had been complete silence from its side, necessitating the
filing of the present petition under Section 11(6) of the Act
by the petitioner.
(emphasis ours)

30. In the case of Visa International Ltd. v. Continental Resources
(USA) Ltd.14, this Court relying on the correspondence between
the parties held that this proves the existence of the arbitration
agreement. This decision too can be distinguished on similar lines
as in that case, in response to the applicant’s letter invoking the
arbitration clause, the respondent merely objected to the names of
the arbitrators inter alia contending that the suggested arbitration
would not be cost-effective and the demand for arbitration itself was
a premature one and there was no denial of an arbitration agreement
by the respondent therein.
31. In the instant case, we agree that there has indeed been no denial
of the existence of an arbitration agreement by the respondent in
its responses to the notice issued by the appellant. However, here,
when there has indeed been no arbitration agreement in the first
place, therefore, subsequent correspondence between the parties
cannot displace the original intention. Such correspondence would
have indeed been sufficient to displace the original intention if it was
unequivocally clear about referring the disputes to arbitration, i.e., the
test mentioned under Section 7 of the A&C Act, which does not exist
in the instant case. Once we take the view that there has, in fact,
been no arbitration agreement in the first place, there exists no option
available to the appellant other than approaching the courts of law.

14 (2009) 2 SCC 55
42 [2025] 12 S.C.R.

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Conclusion
32. The impugned final judgment and order of the High Court is affirmed
and the appeal is consequently dismissed.
33. Appellant is free to seek remedy in accordance with law before the
competent civil court. If the benefit of Section 14 of the Limitation
Act, 1963 is claimed, the relevant court may decide such claim
appropriately.
34. Parties shall bear their own costs.

Result of the case: Appeal dismissed.

†
Headnotes prepared by: Divya Pandey