In Brief
A municipal council in Maharashtra granted an octroi (tax) collection contract to a company. When the company later sought to reduce the contractually fixed reserve price, it requested the state government to appoint an arbitrator. The government did so under a municipal law provision, and the arbitrator issued an award in the company's favour. The municipal council challenged the award, arguing no valid arbitration agreement existed. The High Court agreed and set aside the award. The Supreme Court upheld this decision, holding that arbitration requires mutual consent and a valid arbitration clause between parties. The government's unilateral appointment of an arbitrator cannot substitute for such an agreement under the Arbitration Act, 1940. The petition was dismissed.
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