S. K. Mahajan ( 1 ) SHORT question that arises for consideration is whether a person who is not a party to the arbitration agreement can invoke the same on the ground that he had been assigned a part of the job under the main contract to which he is not a party. Facts in short are: ( 2 ) A petition under Section 11 of the Arbitration and Conciliation Act was filed on the allegations that the first respondent had entered into a turn key contract with respondent No. 2 in respect of its cooling towers at Ghaziabad and under that contract respondent No. 1 was required to supply certain material to respondent no. 2 and that by an agreement entered into between the petitioner and first respondent on 17/01/1994, the petitioner had agreed to supply 7480 cubic meters of finished fill of the specifications mentioned in the agreement. The petitioner and the first respondent also agreed that in case of any disputes arising between them under the supply older dated 17/01/1994, the matter shall be referred to the Arbitrator in accordance with the provisions of the Arbitration Act including amendments thereof. Disputes having arisen between them, the present petition was filed for appointment of an Arbitrator and reference of disputes to him. ( 3 ) RESPONDENT No. 2 was made party to the petition on the ground that pursuant to certain discussions held between the petitioner, respondent No. 1 and ntpc, the NTPC had agreed to make direct payment to the petitioner and had also given benefit of the excise duty refund to the petitioner. The petitioner had also provided a Bank guarantee in terms of the discussion held between the parties on 29/07/1993, 30th July, 1993 and 3rd 3/08/1993. It was, therefore, the- submissions of the petitioner that as a part of the contract had been assigned by first respondent to the petitioner, the second respondent was also liable under the agreement entered into between the petitioner and the first respondent and certain disputes having arisen between the first respondent and the petitioner the same were liable to be referred to arbitration in which the second respondent was also a necessary party. ( 4 ) THE second respondent in its reply has taken a preliminary objection to the maintainability of the petition on the ground that there was no arbitration agreement between the petitioner and the second respondent for reference of disputes to an arbitrator and consequently the petition under Section 11 against the second respondent was not maintainable. It is stated that the petition does not disclose any cause of action against the second respondent and was, therefore, liable to be dismissed. ( 5 ) LEARNED Counsel for the petitioner submits that since the discussions were held in a meeting between the petitioner and the first respondent when second respondent was also present and certain benefits were agreed to be passed on to the petitioner to which the first respondent would have been entitled under the contract between the first and the second respondent, the petitioner can take benefit of the arbitration agreement which existed between the first and the second respondent for reference of disputes to the Arbitrator. Reliance is placed upon the judgment of this Court in Sh. Patanjal and Another v. M/s. Rawalpindi Theatres Pvt. Ltd. , AIR 1970 Delhi 9, to contend that if the subject matter of the arbitration agreement was capable of assignment, then the assignee would step into the shoes of his assignor and be both bound by it and entitled to enforce it, but for this purpose. Court should look to the law relating to assignment of contractual rights and obligations and also to see whether in a given case, the assignee has exercised his right as such. It is, therefore, submitted by Mr. Gupta, learned Counsel for the petitioner, that as a part of the work under the contract between the respondents inter se was assigned to the petitioner by respondent No. 1, he can claim a right to enforce the arbitration agreement. ( 6 ) UNDER Section 7 of the Arbitration and Conciliation Act, 1996, an arbitration agreement means an agreement by the parties to submit all or certain matters of disputes arisen between them under a contract. An arbitration agreement according to Act shall be in writing. In the present case, admittedly there is no agreement in writing between the petitioner and the second respondent. An arbitration agreement according to Act shall be in writing. In the present case, admittedly there is no agreement in writing between the petitioner and the second respondent. All that has been argued is that because of the assignment of a part of the contract between the respondents inter se in favour of the petitioner, that contract would be deemed to have been assigned in favour of the petitioner and consequently the written contract between the first respondent and the second respondent will be a contract between the petitioner and the second respondent. ( 7 ) I have given my thoughtful consideration to the arguments advanced by the petitioner but I have not been able to persuade myself to agree with the same. There is no assignment whatsoever of the contract by the first respondent in favour of the petitioner with the approval of the second respondent. Even a perusal of the discussions held between the parties show that it was at the instance of the first respondent that the second respondent had agreed to make payment to the petitioner but such payment was for and on behalf of the first respondent and any amount paid to the petitioner was in the account of the first respondent. No independent contract was ever arrived at between the second respondent and the petitioner. During the discussion between the parties, the petitioner had agreed to give a Bank guarantee, but merely giving a Bank guarantee will not make the arbitration agreement between the respondents inter se enforceableby the petitioner against the second respondent. Nowhere in the discussions the parties had agreed that the disputes between the petitioner and the second respondent would be liable to be referred to the Arbitrator in terms of the agreement between the first respondent and the second respondent. Only a party to a contract can sue on it, in order to constitute a valid arbitration agreement. Amongst other things, there should be a valid agreement, the terms of which are reduced into writing and the parties thereto should be ad-idem, in other words, the agreement of the parties should be established so that they can be held to be bound by the subject matter of the reference and the authority of the Arbitrator in the reference, arising out of the agreement has, therefore, to be traced to the agreement of reference only. Third persons, who are not parties to the arbitration agreement or the contract containing the arbitration clause are not bound by such agreement. And not being bound, they would be disentitled to enforce the agreement. The petitioner, therefore, not being a party to the contract containing arbitration clause is not entitled to enforce the same. ( 8 ) THE fact that petitioner is not entitled to enforce the arbitration agreement between the respondents inter se is clear from its letter dated 22/03/1994. By this letter supply order between the petitioner and the first respondent was modified in the light of discussions held in the presence of NTPC and it is clearly stated in this letter that the parties, namely, the petitioner and the first respondent will be continued to be governed by the terms and conditions contained in supply order dated 17/01/1994 issued by the first respondent. Supply order of 1 7/01/1994 contained an arbitration clause which is not binding upon the second respondent as it is not a party to the same. ( 9 ) IT will not be out of place to mention that the petitioner had earlier filed a suit being S. No. 2047/97 in this Court against both the respondents wherein the only relief claimed was to restrain the second respondent from invoking the Bank guarantee given by the petitioner. In case it had been agreed or even otherwise the intention of the parties was that the arbitration agreement between the respondents inter se would be applicable to the petitioner due to a part of the work having been assigned to the petitioner, the petitioner would not have filed suit for injunction but would have taken recourse to Section 9 of the Arbitration and Conciliation Act for seeking injunction. The fact that a suit was filed by the petitioner for an injunction against the respondent clearly shows that all the parties had clearly understood that the petitioner cannot take advantage of the agreement entered into between the respondents inter se. ( 10 ) THE judgment cited by learned Counsel for the petitioner in my view is not applicable to the facts of the present case. The Supreme Court in a judgment reported as K. Sasidharan v. Kerala State Film Development Corporation, (1994) 4 scc 135 , has held that the arbitration agreement is collateral to the substantial stipulation of the contract. The Supreme Court in a judgment reported as K. Sasidharan v. Kerala State Film Development Corporation, (1994) 4 scc 135 , has held that the arbitration agreement is collateral to the substantial stipulation of the contract. It is merely procedural and ancillary to the contract and it is a mode of settling the disputes. Arbitration is distinguishable from other clauses in the contract. The other clauses set out the obligations which the parties have undertaken towards each other binding them, but the arbitration clause does not impose on one of the parties an obligation towards the other. It embodies an agreement of both parties with consensus ad idem that if any dispute arises with regard to the obligations undertaken therein which one party has undertaken towards the other, such a dispute shall be settled by a Tribunal of their own constitution. It must be construed according to its language and in the light of the circumstances in which it was made. ( 11 ) FROM the foregoing discussion it is clear that to be a binding arbitration agreement between the parties, the same must be in writing and the parties should have specifically agreed to settle their disputes by arbitration. An arbitration agreement cannot be inferred by implication. As there is no agreement in writing between the petitioner and the second respondent, the clauses of the contract between the respondents inter se will not in any way be binding on the petitioner. In case the petitioner cannot raise any dispute about the obligations which the respondents have entered into amongst themselves, there is no question of any dispute being referred to the Arbitrator. In my view, therefore, there being no arbitration agreement between the petitioner and the second respondent, the question of appointing an Arbitrator does not arise. The petition as against the second respondent is, therefore, dismissed. ( 12 ) AS already discussed above on 17/01/1994 the petitioner and the first respondent had entered into a contract which contained an arbitration agreement for resolution of the disputes by arbitration. The petition as against the second respondent is, therefore, dismissed. ( 12 ) AS already discussed above on 17/01/1994 the petitioner and the first respondent had entered into a contract which contained an arbitration agreement for resolution of the disputes by arbitration. The contention of learned Counsel for respondent No. 1 is that this agreement was superseded by the subsequent discussions held between the parties in the presence of the NTPC and a tripartite agreement between the petitioner, respondent No. 1 and respondent No. 2 had come into existence and as such without the presence of respondent No. 2 the matter cannot be referred to the Arbitrator. ( 13 ) A perusal of the supply order dated 17/01/1994 clearly shows that the parties had agreed that in case of disputes arising under that supply order, the same shall be referred to the Arbitrator in accordance with the provisions of the arbitration Act including any amendment thereto. The only question, therefore, is whether this agreement was superseded by the subsequent discussions held between the parties. Reliance is placed by respondent No. 1 upon the discussion held on 14/02/1994. He also refers to certain other discussions held between the parties in the presence of the NTPC. Learned Counsel, however, has not been able to show me that during this discussion it was agreed that the parties will not be bound by the supply order dated 17/01/1994. That agreement was never superseded nor there is any tripartite agreement between the parties. On the other hand on 22/03/1994 when certain modifications were made in the supply order dated 17/01/1994, it was clearly agreed between the petitioner and the first respondent that all terms and conditions mentioned in the supply order dated 17/01/1994 shall hold good unless specifically modified by the order dated 22/03/1994, to which extent the supply order dated 17/01/1994 shall stand modified. This supply order with the amendments was acceptable to both the parties. NTPC is not a party even to this supply order. Even with the modified supply order dated 22/03/1994 the terms and conditions contained in supply order dated 17/01/1994 including the arbitration clause remained applicable between petitioner and the first respondent and respondent No. 1 cannot wriggle out of the arbitration agreement as contained in the aforesaid supply order dated 17/01/1994. NTPC is not a party even to this supply order. Even with the modified supply order dated 22/03/1994 the terms and conditions contained in supply order dated 17/01/1994 including the arbitration clause remained applicable between petitioner and the first respondent and respondent No. 1 cannot wriggle out of the arbitration agreement as contained in the aforesaid supply order dated 17/01/1994. ( 14 ) I am, therefore, of the view that there exists an arbitration agreement between the petitioner and respondent No. 1. The question as to whether or not the petitioner was entitled to the refund of excise duty and is entitled to reimbursement of the same and whether the petitioner is entitled to compensation as alleged in the petition are not the questions on which this Court is required to give any findings. These questions are to be decided on merits by the Arbitrator. ( 15 ) I, accordingly, allow this petition as against respondent No. 1 and appoint justice D. R. Khanna (Retd.) as the Arbitrator to decide the disputes which have arisen between the petitioner and the first respondent. The Arbitrator shall be paid a fee of Rs. 10,000/- per hearing subject to a maximum of Rs. 1,10,000/ -. The fee of the Arbitrator shall be shared equally by the parties. Petition allowed against respondent No. 1 and dismissed against respondent No. 2.