S. B. SINHA, J. ( 1 ) THE short question which arises for consideration in this application is as to whether Section 7 (4) (c) of the arbitration and Conciliation Act, 1996 (for the sake of brevity hereinafter referred to as the Act ) is applicable in the facts and circumstances of this case. ( 2 ) IT is not in dispute that the applicant and the respondent entered into an agreement for blast hole drilling and earth work excavation of various rocks/earth cuttings, loading, transportation, dumping, etc. It is not in dispute that no objection clause existed in the agreement entered into by and between the parties. During pendency of the contract several disputes and differences had arisen between the parties. The applicant herein has laid various claims before the authorities. But the respondent issued a letter of termination dated 11. 7. 2000. This arbitration application was filed inter alia on the ground that by a letter dated 10. 10. 2000 it was stated: though the Chairman and Managing director in his letter Ref. No. CMD/ps/h/559, dated 10. 6. 2000 addressed to Shri S. V. Prasad, secretary to C. M. has stated that the finalization of the contract would be done by General manager, Ramagundam Area-III, the settlement is not done till today. We, in our various correspondences dated 12. 7. 1999, 14. 9. 1999, 10. 11. 1999, 18. 11. 1999, 6. 12. 1999, 5. 1. 2000, 3. 2. 2000, 9. 2. 2000, 14. 2. 2000,19. 2. 2000, 6. 4. 2000 and 22. 5. 2000 have raised various issues inter alia the issues referred above, no final settlement has been done by the General Manager, ramagundam Area-Ill. The Singareni collieries instead of settling our disputes have issued the letter of termination on 11. 7. 2000. Even though the termination was 11. 7. 2000, our amounts amounting to more than Rs. 1. 68 corers have been withheld by the Singareni Collieries. In the said circumstances, we request your kind authority to refer the above stated issues to the General Manager, Ramagundam Area- ill for complete settlement and for refunding of the entire amounts due to us in the interest of justice. ( 3 ) MR. 1. 68 corers have been withheld by the Singareni Collieries. In the said circumstances, we request your kind authority to refer the above stated issues to the General Manager, Ramagundam Area- ill for complete settlement and for refunding of the entire amounts due to us in the interest of justice. ( 3 ) MR. A. SUNDERSHAN Reddy, the learned Counsel appearing for the applicant, would submit that having regard to the fact that claims had been raised by reason of the aforementioned letter which had not been replied, an arbitration agreement would be presumed in terms of Section 7 (4) (c) of the Act. Section 7 (4) (c) reads thus: an exchange of statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other. ( 4 ) ARBITRATION agreement is an agreement between the parties. The parties, therefore, must ad idem as regards final determination of their claim by a neutral selected by them or by the Court as the case may be. ( 5 ) SECTION 7 of the Act must be read as a whole. Section 7 (4) (c) would be attracted provided an arbitration agreement is in writing and the same is contained in statements of claim and defence in which the existence of the agreement is alleged by one party and not denied by the other. In the instant case admittedly there does not exist any arbitration agreement. In the aforementioned letter dated 10. 10. 2000 the existence of an arbitration agreement had not been stated and as such question of denial thereof does not arise. ( 6 ) THE basic concept of an arbitration is that the parties must repose trust and faith in the person chosen as arbitrator. ( 7 ) IN Nimet Resources Inc. v. Essar steels Ltd. , whereupon Mr. Sudershan Reddy placed strong reliance the apex Court observed: if the contract is in writing and the reference is made to a document containing arbitration clause as part of the transaction it would mean that the arbitration agreement is part of the contract. ( 7 ) IN Nimet Resources Inc. v. Essar steels Ltd. , whereupon Mr. Sudershan Reddy placed strong reliance the apex Court observed: if the contract is in writing and the reference is made to a document containing arbitration clause as part of the transaction it would mean that the arbitration agreement is part of the contract. Therefore, in a matter where there has been some transaction between the parties and the existence of the arbitration agreement is in challenge, the proper course for the parties is to thrash out such question under Section 16 of the Act and not under section 11 of the Act. ( 8 ) PROVISIONS of Section 7 (4) of the actare attracted only at a later stage. There is nothing to show that the parties had entered into an agreement in writing whereby and where under disputes and differences between them should be referred to a third party whose decision would be final. The preconditions of arbitration agreement having not been fulfilled, this application is not maintainable. ( 9 ) IN the instant case neither the contract contains an arbitration clause nor an arbitration agreement had been entered into between the parties in another document or by exchange of letters. In the instant case admittedly there is no such arbitration agreement. ( 10 ) FOR the reasons aforementioned, i am of the opinion that no case has been made out for reference of the dispute to the arbitrator. The application is accordingly dismissed.