Alchemist Hospitals Ltd. Vs ICT Health Technology Services India Pvt. Ltd (Supreme Court of India)
Clause Titled “Arbitration” Was Only Mediation – SC: No Valid Arbitration Agreement Between Hospital & Software Firm
Mere Use of Word ‘Arbitration’ Insufficient – SC: Clause Reflects Negotiation & Mediation, Not Binding Adjudication
The dispute arose from a Software Implementation Agreement dated 01.11.2018 between Alchemist Hospitals Ltd., Chandigarh, & ICT Health Technology Services India Pvt. Ltd., Bengaluru, for installation of a hospital management software called HINAI Web Software. The agreement contained a clause titled “8.28 – Arbitration”, which prescribed a three-tier mechanism for dispute resolution:
- First, senior executives of both companies were to meet & resolve disputes amicably.
- If unresolved, the matter was to be “referred to the Chairmen of both companies for arbitration,” who were to make all efforts to settle the matter within 15 days.
- If still unresolved, parties were free to approach courts of law for relief.
Background of the Dispute
After installation, Alchemist alleged that the software was defective & unfit for hospital operations. ICT Health denied the allegations, attributing system errors to improper integration by the hospital’s internal IT team. When the disagreement persisted, Alchemist invoked Clause 8.28 & proposed appointment of a retired Chief Justice of India as sole arbitrator. ICT Health opposed the request, maintaining that the clause did not contemplate arbitration in the legal sense.
