The Kerala High Court, on 3 November, held that a party cannot invoke arbitration where the dispute resolution clause makes arbitration conditional on fresh mutual consent, and the parties have not reached such an agreement.
A Bench comprising Chief Justice Soumen Sen dismissed an application filed by V.K. Varghese under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator in a dispute involving Anta Builders and Developers Pvt. Ltd. and others, holding held that the parties had not mutually agreed to refer their disputes to arbitration. It observed:
“...once the parties have agreed to the dispute resolution by an arbitration on mutual consent, then, each of the parties will be required to nominate its arbitrator as laid down in the latter part of the said arbitration clause. Admittedly, there has been no mutual consensus between the parties to arbitration”.
The dispute arose from a joint venture agreement dated 20 August 2016 involving Varghese, Anta Builders and Developers Pvt. Ltd. and four others.
Varghese alleged that the developer and the other parties had failed to fulfil their contractual obligations, causing him loss and damage. He invoked Clause 12.2 of the agreement, which provided for arbitration of disputes concerning its interpretation, effect, rights or obligations, subject to mutual consent.
The clause also prescribed a procedure for appointing arbitrators. The party raising a dispute was required to nominate an arbitrator, the other side had to nominate another within 30 days, and the two arbitrators would then appoint a third.
On 20 January 2026, Varghese issued a notice under Section 21 of the Act, nominating a Senior Advocate as arbitrator and calling upon the other parties to nominate their arbitrator. When they neither replied nor made a nomination, he approached the High Court under Section 11(6), contending that the agreed appointment procedure had failed.
He also referred to earlier proceedings initiated under Section 9 of the Act for interim protection. Mediation efforts failed on 11 March 2026, while the interim relief proceedings remained pending before the High Court.
Anta Builders and the other parties opposed the application, contending that Clause 12.2 merely contemplated arbitration as an option subject to a further agreement between the parties. They also argued that Varghese's claim was time-barred, as the notice had been issued nearly seven years after the stipulated completion date.
The Court distinguished between consent to refer a dispute to arbitration and the procedure for appointing arbitrators. It held that Clause 12.2 contained two connected parts: the first required mutual consent to arbitration, while the second prescribed the procedure for appointing arbitrators after such consent was obtained.
It observed that “the second part is not independent of the first part,” and reiterated that the parties had admittedly not reached a mutual agreement to arbitrate.
Further, the Bench distinguished the precedents relied upon by Varghese, noting that those cases involved clauses containing an existing commitment to arbitration, with mutual consent relating only to the appointment of arbitrators. In the present case, mutual consent was a prerequisite for referring the dispute itself to arbitration.
It noted that even while undertaking a prima facie examination of the existence of an arbitration agreement at the stage of considering an application under Section 11, the Court could not disregard the language of the dispute resolution clause. It said:
“Even for the court to arrive at a prima facie determination of the existence of the arbitration clause at the stage of considering the application for appointment of an arbitrator, the court cannot disregard the words and expressions used in the dispute resolution clause.”
Accordingly, the High Court dismissed the application, finding no enforceable arbitration agreement between the parties, without imposing costs.
Appearances for petitioner (V.K. Varghese): Senior Advocate Santhosh Mathew; Advocates Arun Thomas, Veena Raveendran, Anil Sebastian Pulickel, Shinto Mathew Abraham, Mathew Nevin Thomas, Leah Rachel Ninan, Kurian Antony Mathew, Aparnna S., Noel Ninan Ninan, Adeen Nazar, Rohan Mathew, Cheriyil Sanil John, Karthik Rajagopal.
Appearances for respondents (Anta Builders and Developers Pvt Ltd & Others): Advocates Vishak K. Johnson, Marilin Romeo, Parvathy S.