In Brief
The South Delhi Municipal Corporation challenged a High Court order appointing an Arbitrator to resolve a dispute with SMS AAMW Tollways, which had invoked Clause 16.3 of their toll collection agreement. The Supreme Court held that Clause 16.3, which provides for an appeal to the Municipal Commissioner, does not constitute a valid arbitration agreement. Since the clause only allows the contractor to appeal, lacks an impartial adjudicator, and serves merely to prevent disputes rather than resolve them, it does not meet the essential characteristics of arbitration. The Court set aside the High Court's appointment order and allowed the appeal.
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