Referee in place with fighting turning bad (12)
I believe the answer is:
putrefaction
'turning bad' is the definition.
(process of going bad or going rotten)
'referee in place with fighting' is the wordplay.
'referee' becomes 'ref' (synonyms).
'in' indicates putting letters inside.
'place' becomes 'put' (synonyms).
'with fighting' becomes 'action' (as in military action. I am not sure about the 'with' bit.).
'put'+'action'='putaction'
'ref' inserted into 'putaction' is 'PUTREFACTION'.
(Other definitions for putrefaction that I've seen before include "Process of rotting" , "Rot" , "Corruption" .)