1. Leave granted.

2. The appellant has impugned the order dated 26.8.2003 by which the Division Bench of the Kerala High Court has disposed of a Writ Petition filed under Art.226 of the Constitution of India. While refusing to entertain the Writ Petition itself on the ground that disputed facts were involved, the High Court passed the following order:

"After giving anxious consideration of the matter, we are of the view that the matter should be referred to arbitration under the Arbitration & Conciliation Act, 1996. We appoint Sri. M.R. Hariharan Nair, Retired Judge of this Court, residing in House No.T.C.36/711(1), Parijatham, K. V. Housing, Perunthanni, Thiruvananthapuram as the sole Arbitrator to decide the dispute taken by the petitioner in Ext.P9. The Arbitrator shall fix his terms and conditions with the petitioner and respondent and the Arbitrator shall complete arbitration work within six months from the date of entering appearance."

3. The named Arbitrator assumed jurisdiction on the basis of this order and held two sittings in which various directions were given. The respondent has filed its statement of claim before the Arbitrator. The appellant is yet to file any statement of defence. The appellant has challenged the order of the High Court on the ground that it had no jurisdiction whatsoever to appoint an Arbitrator, there being no agreement in writing as provided under the Arbitration Conciliation Act, 1996. Reliance has been placed on the decision of this Court reported in Tamil Nadu Electricity Board v. Sumathi and Others (2000 (4) SCC 543 [LQ/SC/2000/810] ) in support of this submission.

4. Learned counsel appearing on behalf of the respondent has, however, submitted that the impugned order of the High Court was in fact the outcome of consent as had been indicated by the parties appearing before the High Court. It is submitted that, in any event, the appellant having participated in the proceedings before the Arbitrator, the appellant was estopped from challenging the jurisdiction of the Arbitrator and must be deemed to have consented in the Arbitrators appointment. The final submission made by the respondent was that in the event this Court held in favour of the appellant, the matter should be remanded back to the High Court for reconsideration of the Writ Petition on the merits of the matter.

5. We are unable to accede to any of the three submissions made by the respondent. The Arbitration Conciliation Act, 1996, clearly provides that the arbitration agreement must be an agreement which should be in writing (see S.7(4)). In this case, there was no agreement at all, quite apart from the fact that there was no writing to this effect. The High Court has not in the impugned order recorded any consent as has been contended by the respondent. We are not prepared to act on any basis other than that expressed by the High Court itself.

6. The impugned order, therefore, cannot be sustained. In the absence of any agreement the Arbitrator could not have any jurisdiction. The participation of the appellant in the preliminary sittings before the Arbitrator would not make any difference. It is to be noted that under S.7 sub-s.(2), the ground challenging jurisdiction of the Arbitrator is required to be taken at the earliest and not later than the filing of the defence but a party shall not be precluded from raising such a plea merely because it has appointed or participated in the appointment of an Arbitrator. The language of the Section, therefore, leaves no room for doubt that mere participation in the proceedings would not tantamount to an acceptance of the jurisdiction of the Arbitrator to arbitrate disputes between the parties.

7. The decision reported in Tamil Nadu Electricity Board case (supra) is on all fours with the facts of the present case. This Court has clearly said in paragraph 2 of the decision:

"Since disputed questions of facts arose in the present appeals the High Court should not have entertained Writ Petitions under Art.226 of Constitution and then referred the matter to arbitration in violation of the provisions of the new Act. There was no arbitration agreement within the meaning of S.7 of the new Act. Under the new Act, award can be enforced as if it is a decree of a Court and yet the High Court passed a decree in terms of the award which is not warranted by the provisions of the new Act. The appellant had also raised the plea of bar of limitation as in many cases if suits had been filed those would have been dismissed as having been filed beyond the period of limitation. In our opinion exercise of jurisdiction by the High Court in entertaining the petitions was not proper and the High Court in any case could not have proceeded to have the matter adjudicated by an arbitrator in violation of the provisions of the new Act."

8. The respondent has cited Inder Sain Mittal v. Housing Board, Haryana and Others (2002 (3) SCC 175 [LQ/SC/2002/260] ) in support of its contention that the participation before an Arbitrator would preclude the appellant from assailing jurisdiction of the Arbitrator. The decision does not support the respondents submission. At the outset, we may note that the decision in that case was with reference to the Arbitration Act, 1940 which did not have a provision like S.16(2) of the 1996 Act. Further more it was held that if the party has acquiesced in the invalidity by his conduct by participating in the proceedings and had taken a chance therein until the Award went against him to challenge the Award, such a party cannot turn around and challenge the jurisdiction of the Arbitrator if the Award goes against it. Here the appellant had not waited and watched but raised a challenge even before it filed its defence.

9. The other decisions relied upon by the respondent in Harbans Lal Sahnia and Another v. Indian Oil Corporation Ltd. and Others (2003 (2) SCC 107 [LQ/SC/2002/1378] ) and ABL International Ltd. and Another v. Export Credit Guarantee Corporation of India Ltd. and Others (2004 (3) SCC 553) relate to the power of the Court under Art.226 to entertain a matter even where disputed question of facts are involved. The proposition is well settled. However, it is equally well settled that this Court normally does not interfere with the exercise of discretion by the High Court in refusing to entertain a petition under Art.226 on the ground that disputed questions of fact were involved. In Harbans Lal Sahnias case (supra) this Court indicated the exceptional circumstances in which the High Court could exercise its jurisdiction under Art.226, despite the existence of an alternative remedy. These have been stated in paragraph (7) of the report where it is said that the High Court may exercise its jurisdiction under Art. 226 in at least three contingencies even when an alternative remedy was available, namely,

"Where the Writ Petition seeks enforcement of any of the fundamental rights; (ii) where there is failure of principles of natural justice; or (iii) where the orders of proceedings are wholly without jurisdiction or the vires of an Act is challenged."

10. This Court was not, in that case, considering the question whether the Court should entertain a petition under Art.226 when disputed questions of fact were involved. In any event since the respondent has not persuaded us to hold that the disputes in question as raised in the Writ Petition were within any of the aforesaid three categories mentioned in Harbans Lal Sahnias case, the appeal must be and is hereby allowed and the decision of the High Court insofar as it purported to appoint an Arbitrator is set aside.

11. No order as to costs.