Bombay High Court
Unistar Metals Private Limited vs Ge Power Limited on 14 July, 2026
ARBAP(L)-15413-2026.DOC
ARP
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION APPLICATION (L) NO. 15413 OF 2026
Unistar Metals Private Limited
Digitally signed
by AJIT A Company Duly incorporated under
AJIT RAMESH
RAMESH PATHRIKAR The Companies Act, 1956
PATHRIKAR Date:
2026.07.14
19:55:50 +0530 having its registered office at
'Vardhan' Suite No.306, 3rd floor,
25A Camac Street, Kolkata,
West Bengal - 700016,
Through its Authorized Representative
Mr. Gaurav Jhawar
Age about - 39 Years,
Occupation - Business ...Applicant
Versus
GE Power Limited
a company duly incorporated under
The Companies Act, 1956
having its registered office at
Regus Magnum Business Centre,
9th Floor, Platina Block - G,
Plot C-59, BKC, Bandra (E),
Mumbai - 400051. ...Respondent
Mr. Pranit Bag (Bar At Law), Mr. Chetan Arvind Alai, Mr. Rahul
Poddar and Mr. Pranit Pawar, for the Applicant.
Ms. Lizum C. Wangdi i/b Mr. Aniket Mokashi, for the Respondent.
CORAM ARUN R. PEDNEKER, J.
RESERVED ON: 06th JULY 2026
PRONOUNCED ON: 14th JULY 2026
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JUDGMENT:
–
1. By the present Arbitration Application, the Applicant seeks
appointment of Arbitrator on account of certain disputes arising
out of an Purchase order dated 25th March 2019 incorporating the
General Conditions for dispute resolution through arbitration.
Clause 20.2 is the arbitration clause and is quoted below for ready
reference:
“20.2 Dispute Resolution. In the event of any dispute arising out
of or in connection with this Order, including any question
regarding their existence, validity, interpretation, breach, violation
or termination, the parties agree to submit such dispute to
arbitration. Any arbitration proceeding shall be finally settled under
the Rules of Delhi International Arbitration Centre by three
arbitrators appointed in accordance with the said Rules. The place
of arbitration shall be New Delhi and the language shall be English.
The arbitration shall be confidential. The competent courts at the
place of registered office of the Buyer shall have exclusive
jurisdiction in relation to this Order and for implementation of the
arbitral awards.”
2. Brief facts as stated in the application leading to the filing of
the application are that the Respondent issued a Purchase Order
dated 25th March 2019 in favour of the Applicant for the supply of
2,52,926.62 kgs. of ESP Cold Roof materials for a total contract
value of Rs.2,15,52,322.35/-. The said Purchase Order
incorporated the “G.E. Power Terms of Purchase Rev-A-India,”
which includes Clause 20 providing for arbitration as the notice of
disputes resolution as noted above. On account of disputes that
have arisen between the parties in the supply of goods and
fabrication work carried out by the Applicant, the Applicant
invoked the arbitration clause by issuing notice under Section 21Page 2 of 23
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ARBAP(L)-15413-2026.DOCof the Arbitration and Conciliation Act, 1996 (“the Act”) on 9th
September 2024. On 17th October 2024, the Respondent replied to
the arbitration notice, refusing to concur in appointment of an
arbitrator and raised an objection regarding limitation. On 20 th
January 2026, the application under Section 11 of the Act was
filed before the Delhi High Court. However, it was withdrawn as
jurisdictional objection was raised and thereafter the present
application is filed before this Court.
3. Mr. Pranit Bag, the learned counsel appearing for the
Applicant, submits that in view of the sentence in the arbitration
clause 20.2 i.e. “The competent courts at the place of registered
office of the Buyer shall have exclusive jurisdiction in relation to
this Order and for implementation of the arbitral awards.”, the
application under Section 11 of the Act is presented before this
Court, as the registered office of the Buyer is situated within the
jurisdiction of this Court. He thus prays that an arbitrator be
appointed in the matter.
4. Per contra, Ms. Lizum Wangdi, the learned counsel
appearing for the Respondent has not disputed the submission of
the Applicant that the Respondent had contended before the Delhi
High Court that the Bombay High Court would have the
jurisdiction in the matter and the application was accordingly
withdrawn. However, she raises objections to the arbitration
application on the following grounds:
(i) The Notice Invoking Arbitration is invalid, and hence,
Section 11 is not maintainablePage 3 of 23
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ARBAP(L)-15413-2026.DOCIn this regard, it is submitted that the notice invoking
arbitration dated 9th September 2024 issued by the Applicant is ex-
facie contrary to and in derogation of the procedure expressly
agreed between the parties under Clause 20.2 of the Terms of
Purchase Order. Consequently, the said notice does not constitute a
valid invocation of arbitration in the eyes of law. It is further
submitted that Clause 20.2 of the arbitration agreement
unequivocally provides that disputes between the parties shall be
finally settled under the Rules of the Delhi International
Arbitration Centre (“DIAC”) by three arbitrators appointed in
accordance with the said Rules. The parties, therefore, consciously
agreed not only to resolve disputes through arbitration but also
prescribed the specific procedure for constitution of the arbitration
tribunal. It is further submitted that the settled principle of
arbitration law is that party autonomy forms the cornerstone of
arbitral proceedings. The procedure agreed by the parties for
constitution of the arbitration tribunal is binding upon them and
cannot be unilaterally altered by either party. Any departure from
such agreed procedure strikes at the very foundation of the
arbitration agreement and renders the invocation legally
unsustainable. In the instant case, despite the arbitration
agreement expressly contemplating adjudication by a three-
member arbitral tribunal, the Applicant, by its notice invoking
arbitration dated 9th September 2024, purported to invoke
arbitration through the appointment/proposal of a sole arbitrator.
The said notice completely disregards the contractual mechanism
agreed between the parties and seeks to unilaterally substitute the
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agreed procedure with an entirely different one. It is further
submitted that the Applicant could not have, by way of a unilateral
notice, rewritten the arbitration agreement between the parties.
Having consciously entered into a contract providing for
adjudication by three arbitrators, the applicant was bound to
adhere to the agreed procedure. The attempt to invoke arbitration
through a mechanism alien to the arbitration agreement is legally
impermissible and liable to be rejected. Thus, the invocation of
arbitration itself is invalid. The procedure for constitution of the
arbitral tribunal is not a mere technicality or an empty formality. A
valid invocation of arbitration is a condition precedent to the
exercise of jurisdiction under Section 11 of the Act and unless
arbitration is invoked in accordance with the arbitration
agreement, no cause of action arises for seeking the intervention of
this Hon’ble Court under Section 11 of the Act. In this regard,
reliance is placed on the judgment of this court in the case of Arohi
Infrastructure & Ors. Vs. Tata Capital Financial Services Limited 1,
wherein it was held that the arbitration application based on such
defective notice was not maintainable.
(ii) Invocation not as per DIAC Rules
It is submitted that the parties have agreed to conduct
arbitration as per the DIAC Rules. The said Rules prescribe a
comprehensive procedure not only in respect of the conduct of
arbitration, but also in respect of the manner in which the
arbitration is required to be invoked and the arbitration tribunal is
consequently to be constituted. Rule 4 provides for “Request of
1 2015 SCC OnLine Bom 5883
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Arbitration”, which is required to be filed before the DIAC. The
Applicant has not complied with the aforesaid. It is further
submitted that where the arbitral tribunal is to comprise of three
arbitrators, the procedure is prescribed under Rule 8.5 of the DIAC
Rules, which are not complied by the Applicant. It is further
submitted that the DIAC Rules further contemplate a procedure
whereby the appointment of the arbitrator is referred to a sub-
committee in the event the parties either fail to appoint their
respective nominee arbitrators or the nominee arbitrators fail to
appoint the presiding arbitrator. The present case could have been
referred to the sub-committee had the Applicant adopted the
agreed procedure. The DIAC Rules also provide for a challenge
under Rule 10 in respect of the appointment made by the Sub-
committee. It is further submitted that filing of the present
application by the Applicant invoking this Court’s jurisdiction
under Section 11 of the Act is premature as the procedure
prescribed under the institutional rules has not been exhausted.
(iii) There is no dispute that could be referred to Arbitration
It is submitted that the present controversy between the
parties arose on account of Applicant’s failure to honour the terms
of the Purchase Order and to conform to the quality and quantity
of the goods required to be supplied thereunder (“subject goods”)
in accordance with the technical specifications of the Purchase
Order. In view of such failure, the subject goods supplied by the
Applicant were rejected. Therefore, the Respondent never took
delivery of any subject goods, and consequently, the Applicant
never raised any invoice thereupon. In the absence of any invoice,
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there is no obligation to remit any payment to the Applicant.
Therefore, there is no dispute that could have arisen between the
parties.
5. She submits that the notice of invoking arbitration has,
therefore, not been issued in accordance with the DIAC Rules,
which stipulate that the parties have to approach the DIAC and
relies upon clause Nos. 4, 8.5 and 8.6 of the DIAC Rules, which
read as under:
“4. Request for Arbitration
4.1 A party shall file with DIAC a written Request for
Arbitration, including in cases where a reference to DIAC has been
made by any Court/Authority. The request shall, in so far as
applicable, and be accompanied by-
(a) provisional terms of reference, if any,
(b) where reference is received from a Court, referral order of the
Court;
(c) a request that the dispute be referred to arbitration
(d) the full terms of the arbitration clause or the separate
arbitration agreement that is invoked
(e) where the arbitration clause or the separate arbitration
agreement does not provide that arbitration shall be conducted
under the aegis of DIAC, a duly executed memorandum of
understanding stating that both the parties have agreed to submit
the dispute for arbitration before DIAC*;
(f) a copy of the contract(s) or other instrument(s) out of or in
relation to which the dispute arises;
(g) a disclosure of any other arbitration proceedings between the
parties where the disputes or differences therein are identical and
between the same parties or between the parties having
commonality of interest or where such disputes arise out of
separate contracts but relate to the same transaction.
(h) the full names and contact details, including postal
address(es), telephone number(s), and Mobile number(s) facsimilePage 7 of 23
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ARBAP(L)-15413-2026.DOCnumber(s) and electronic mail address(es), to the extent known, of
the parties to the arbitration and their legal representatives, if any;
(i) a statement briefly describing the nature and circumstances of
the dispute and the claims advanced by the Claimant against any
other party to the arbitration, each such party being here separately
described as the “Respondent” specifying the relief claimed,
including the amounts of any quantified claims and, to the extent
possible, an estimate of the monetary value of any other claims;
(j) a statement of any matters which the parties have previously
agreed to as to the conduct of the arbitration or with respect to
which the Claimant wishes to make a proposal (such as the number
of Arbitrator(s), the applicable rules of law, the language(s) of the
arbitration, the seat of arbitration etc.);
(k) in case of arbitration by Sole Arbitrator, unless the parties
have agreed otherwise or an Arbitrator has been named by the
Court, the request shall contain a list of five Arbitrators from the
Panel as suggested Arbitrator to the arbitration. In case of
arbitration by a Tribunal of three Arbitrators, the party making the
request shall nominate an Arbitrator from the Panel on its behalf.
The party shall take the consent of the Arbitrator so nominated and
also ensure that such Arbitrator does not suffer from any
disqualification as mentioned in Section 12(5) of the Act:
Provided that in case the Panel does not include a person
possessing requisite qualification as per the arbitration agreement,
the parties may nominate an Arbitrator from outside the Panel;
(l) proof of service of the Request for Arbitration and any
documents filed there with on the other parties to the satisfaction
of DIAC; and
(m) confirmation that the requisite administrative charges have
been paid.
4.2 In case no such request in terms of Rule 4.1 is received, no
further action will be taken by the DIAC. A request which is
inchoate in the opinion of the DIAC will not be considered as a
valid request.
4.3 Party making Request for Arbitration may also file
Statement of Claim as referred to in Rule 16.1 along with the
request.
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4.4 The contents of the Request for Arbitration does not prevent a
party from subsequently adding, supplementing or amending its
pleadings, the matters referred to arbitration or the reliefs claimed:
Provided that where the request is with the Statement of Claim,
such amendment shall only be accompanied considered by the
Arbitral Tribunal in accordance with Rule 18.
8.5 Where the agreement provides for the appointment of three
Arbitrators, the Claimant shall appoint its Arbitrator at the time of
filing the request and the Respondent shall appoint its Arbitrator at
the time of filing of its response to the Request for Arbitration, and
the two Arbitrators shall within 21 days, appoint the Presiding
Arbitrator.
8.6 Where the parties fail to appoint their respective Arbitrators
or where the Arbitrators appointed by the parties fail to appoint the
Presiding Arbitrator, in terms of Rule 8.5, then within 21 days
thereof, the Chairperson/ Sub-Committee shall appoint the
Arbitrator/ Presiding Arbitrator as the case may be:
Provided that in a case of an International Arbitration, where the
parties belong to different nationalities, the Presiding Arbitrator
may be of a nationality other than the nationalities of the parties.”
6. In response to the objections raised, Mr. Bag submits that
once the process available under the arbitration clause 20.2 has
failed, it is for this Court to appoint the arbitrator. The learned
counsel submits that, the jurisdiction to appoint an arbitrator
under Section 11 in the instant case is admittedly of this Court.
Thus, this Court should appoint an arbitrator and it would be for
the arbitrator to follow the DIAC Rules thereafter. He further
submits that, at the highest, it can be said from the reading of the
agreement that the venue of arbitration would be New Delhi, while
the seat would remain at Mumbai. He also relies upon the
judgment of the Delhi High Court in the case of M/s Magnolia
Glass Private limited Vs. Pernod Ricard India Private Limited 2 that
2 Order dated 9.10.2025 passed in ARBP/939/2025
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the DIAC rules are primarily procedural in nature and cannot
interfere with the jurisdiction of a referral court in referring the
disputes to arbitration and that it is not necessary that the parties
have to approach the DIAC for appointment of the arbitrator. He
also relies upon the following judgments:
(i) Office for Alternative Architecture Vs. Ircon Infrastructure3.
7. Having considered the rival submissions, the issue as regards
the jurisdiciton of this Court to entertain the present application is
not contested by the Respondent, since the Respondent had earlier
objected to the jurisdiction of the Delhi High Court to deal with
Section 11 application. In view of the objection raised, the
application filed before the Delhi High Court under Section 11 was
withdrawn and filed before this Court. Thus, the issues for
determination before this Court are (i) whether the Applicant
ought to have approached the DIAC before invoking the arbitration
clause; (ii) whether the invocation notice under Section 21 is not
in terms of the arbitration clause; (iii) when the arbitration clause
contemplates three arbitrators, the notice invoking such arbitration
ought to have stated the names of three arbitrators and not by a
sole arbitrator, and, whether the notice under Section 21 is
defective; and what are the consequences thereof?
3 2025 SCC Online SC 1098
4 (2024) 5 SCC 313
5 2026 SCC OnLine SC 5
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8. As regards the invocation of notice under Section 21,
without suggesting names of three arbitrators and the notice being
not in confirmity with the arbitration clause, the law on the object
of notice under Section 21 is discussed in the judgment of the
Supreme Court, in the case of Bhagheeratha Engineering Ltd
(supra), as under:
” 16. Secondly, the object of Section 21 of A&C Act, is only for the
purpose of commencement of arbitral proceedings is also well
settled. Section 21 is concerned only with determining the
commencement of the dispute for the purpose of reckoning
limitation. There is no mandatory prerequisite for issuance of a
Section 21 notice prior to the commencement of Arbitration.
Issuance of a Section 21 notice may come to the aid of parties and
the arbitrator in determining the limitation for the claim. Failure to
issue a Section 21 notice would not be fatal to a party in
Arbitration if the claim is otherwise valid and the disputes
arbitrable. In ASF Buildtech Private Limited vs. Shapoorji Pallonji &
Company Private Limited, one of us, J.B. Pardiwala J., felicitously
put the principle thus: –
163. The marginal note appended to Section 21 of the
1996 Act makes it abundantly clear that the notice to be issued
thereunder is for the purpose of “commencement of arbitration
proceedings”. The substantive provision further makes it clear
that the date on which a request/notice of invocation for
referring a dispute is received by the respondent, would the
date on which the arbitral proceedings in respect of a particular
dispute commences. The words “particular dispute” assume
significance in the interpretation of this provision and its
underlying object. It indicates that the provision is concerned
only with determining when arbitration is deemed to have
commenced for the specific dispute mentioned in the notice.
The language in which the said provision is couched is neither
prohibitive or exhaustive insofar as reference of any other
disputes which although not specified in the notice of
invocation yet, nonetheless falls within the scope of the
arbitration agreement. The term “particular dispute”, does not
mean all disputes, nor does it confine the jurisdiction of the
Arbitral Tribunal which is said to be one emanating from the
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“arbitration agreement” to only those disputes mentioned in the
notice of invocation, as it would tantamount to reading a
restriction into the jurisdiction of the Arbitral Tribunal to the
bounds of the notice of invocation instead of the arbitration
agreement. Thus, there is no inhibition under Section 21 of the
1996 Act for raising any other dispute or claim which is
covered under the arbitration agreement in the absence of any
such notice. Section 21 is procedural rather than jurisdictional
it does not serve to create or validate the arbitration agreement
itself, nor is it a precondition for the existence of the Tribunal’s
jurisdiction, but merely operates as a statutory mechanism to
ascertain the date of initiation for reckoning limitation.
165. Section 23 sub-section (1) places an obligation upon
the claimant to state the facts supporting his “claim”, the points
at issue and the relief or remedy sought by way of its statement
of claim, before the Arbitral Tribunal. Notably, the legislature, in
the first part of the said sub-section, has deliberately and
consciously used the term “claim” as opposed to “particular
dispute” employed in Section 21 of the 1996 Act. Although, it
could be said that the term “particular dispute” under Section 21
connotes a larger umbrella within which the term “claim” under
Section 23 would be subsumed, thereby suggesting that there is
no scope to deviate from what was sought to be referred by the
notice of invocation, we do not think so. We say so because, the
requirement for providing the points at issue and the relief or
remedy sought that exists in sub-section (1) of Section 23 of the
1996 Act is patently absent in Section 21 of the 1996 Act, which
clearly shows that the scope and object of these two provisions
are at variance to each other. Further, this sub- section does not
stipulate either explicitly or implicitly, that such “claim” must be
the same or in tandem with the “particular dispute” in respect of
which the notice of invocation was issued under Section 21 of
the 1996 Act. This distinction in terminology is neither
incidental nor redundant; rather, it reflects a conscious
legislative design to demarcate the procedural objective of
Section 21 from the substantive function sought or the framing
of issues served by Section 23. Unlike Section 23, Section 21
does not require any articulation of the relief its sole purpose is
to indicate when arbitration is deemed to have commenced, for
the limited purpose of computing the limitation period.
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169. Any restriction on the nature or content of
claims,counterclaims, or set-offs in arbitration must be sourced
solely from the express language of Section 23 and not from
Section 21. Section(s) 21 and 23 of the 1996 Act although
overlap in some aspects with each other in terms of the claims
that would ordinarily be referred to the Tribunal more often
than not tend to coincide, yet they are by no means tethered
together in such a manner that neither of them can survive
without one another. The latter serves only a procedural
function and does not condition or limit the Tribunal’s
jurisdiction to adjudicate claims that may not have been
specifically invoked at the threshold stage. To read such a
limitation into the statutory scheme would run contrary to both
the text and the object of the Act.”
(Emphasis supplied)
More recently in Adavya Projects Private Limited v. Vishal
Structurals Private Limited and others, this Court reiterating the
purpose and significance of a notice under Section 21 had the
following to observe: –
“24. At this point, it is important to note this Court’s decision
in State of Goa v. Praveen Enterprises [State of Goa v.
Praveen Enterprises, (2012) 12 SCC 581] wherein it was held
that the claims and disputes raised in the notice under
Section 21 do not restrict and limit the claims that can be
raised before the Arbitral Tribunal. The consequence of not
raising a claim in the notice is only that the limitation period
for such claim that is raised before the Arbitral Tribunal for
the first time will be calculated differently vis-Ã -vis claims
raised in the notice. However, non-inclusion of certain
disputes in the Section 21 notice does not preclude a
claimant from raising them during the arbitration, as long as
they are covered under the arbitration agreement. Further,
merely because a respondent did not issue a notice raising
counterclaims, he is not precluded from raising the same
before the Arbitral Tribunal, as long as such counterclaims
fall within the scope of the arbitration agreement.”
[Emphasis supplied]
9. The Supreme Court, while dealing with the question as to
whether non-issuance of notice under Section 21 of the Act by the
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Applicant would be fatal for it to pursue its claim before the
arbitrator, observed that the object of Section 21 of the Act is only
for the purpose of commencement of arbitral proceedings and
Section 21 concerned only with determining the commencement of
the dispute for the purpose of reckoning limitation. Issuance of a
Section 21 notice may come to the aid of parties and the arbitrator
in determining the limitation for the claim. Failure to issue a
Section 21 notice would not be fatal to a party in Arbitration if the
claim is otherwise valid and the disputes arbitrable. Any restriction
on the nature or content of claims, counterclaims, or set-offs in
arbitration must be sourced solely from the express language of
Section 23 and not from Section 21.
10. The Supreme Court in the case of Adavya Projects Private
Limited Vs. Vishal Structurals Private Limited And Others. 6 has
observed as under:
“16. Section 21 falls under Part I, Chapter V of the ACA, which
deals with “Conduct of arbitral proceedings”. The provision is
extracted hereinbelow for reference:
“21. Commencement of arbitral proceedings.-Unless
otherwise agreed by the parties, the arbitral proceedings in
respect of a particular dispute commence on the date on
which a request for that dispute to be referred to arbitration
is received by the respondent.”
17. A plain reading of the provision shows that in the absence of an
agreement between the parties, arbitral proceedings are deemed to
have commenced when the respondent receives a request to refer
disputes to arbitration. It is clear that Section 21 does not expressly
mandate the claimant to send a notice invoking arbitration to the
respondents. However, the provision necessarily mandates such
notice as its receipt by the respondent is required to commence
arbitral proceedings, unless the parties have mutually agreed on
6 (2025) 9 SCC 686
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another date/event for determining when the arbitral proceedings
have commenced.
18. This Court has expounded the purpose and object underlying
the notice referenced in Section 21 in several judgments, which can
be stated as follows.
19. First, the notice is necessary to determine whether claims are
within the period of limitation or are time-barred. Section 43(1)
ACA stipulates that the Limitation Act, 1963 shall apply to
arbitrations as it applies to court proceedings. Further, Section
43(2) provides that for the purpose of the Limitation Act, an
arbitration shall be deemed to have commenced on the date
referred to in Section 21. Hence, the date of receipt of the Section
21 notice is used to determine whether a dispute has been raised
within the limitation period as specified in the Schedule to the
Limitation Act, as held by this Court in Milkfood Ltd. v. GMC Ice
Cream (P) Ltd. and State of Goa v. Praveen Enterprises.
20. Second, the date of receipt of notice is also relevant to
determine the applicable law to the arbitral proceedings. This can
be understood in two senses: (i) When the arbitral proceedings are
governed by a law that is different from the proper law of the
contract, the governing law applies only after the arbitral
proceedings have commenced, as held in Milkfood; and (ii) Section
85(2)(a) ACA provides that the Arbitration Act, 1940 and the
Foreign Awards (Recognition and Enforcement) Act, 1961 will
apply to arbitral proceedings that commenced prior to the ACA
coming into force, unless otherwise agreed by the parties. Hence,
the date of invoking arbitration is necessary to determine which
arbitration law applies to the proceedings as per the decisions in
Milkfood and Geo Miller & Co. (P) Ltd. v. Rajasthan Vidyut
Utpadan Nigam Ltd. Similarly, the applicability of amendments to
the ACA to arbitral proceedings is determined by reference to the
date on which such proceedings commenced as per Section 21
21. Third, an application before the High Court or this Court under
Section 11(6) ACA for appointment of arbitrator can be filed only
after the respondent has failed to act as per the appointment
procedure in the arbitration agreement. Hence, invocation of
arbitration as provided in Section 21, and the subsequent failure of
the respondent to appoint its arbitrator or agree to the appointment
of a sole arbitrator as provided in Sections 11(4) and 11(5), are
necessary for invoking the court’s jurisdiction under Section 11.
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This is as per the decision of this Court in BSNL v. Nortel Networks
(India) (P) Ltd. Further, the limitation period within which the
Section 11 application must be filed is also calculated with referene
to the date on which the appointment procedure under the
arbitration agreement fails.”
11. The Supreme Court in the case of Adavya Projects Private
Limited (supra) held that a plain reading of the provision of
Section 21 shows that, in the absence of an agreement between the
parties, arbitral proceedings are deemed to have commenced when
the respondent receives a request to refer disputes to arbitration.
The provision necessarily mandates such notice as its receipt by the
respondent is required to commence arbitral proceedings, unless
the parties have mutually agreed on another date/event for
determining when the arbitral proceedings have commenced.
12. The Supreme Court expounded the purpose and object
underlying the notice referenced in Section 21 in its judgments, as
follows:
(i) That the date of receipt of the Section 21 notice is used to
determine whether a dispute has been raised within the limitation
period as specified in the Schedule to the Limitation Act,
(ii) That the date of invoking arbitration is necessary to
determine which arbitration law applies to the proceedings as per
the decision in Milkfood Ltd. Vs. M/s. GMC (P) Ltd. 7 and Geo-
Miller & Co (P) Ltd. Vs. Chairman, Rajasthan Vidyut Utpadan
Nigam Ltd.8, an applicability of amendments to the ACA to arbitral
7 (2004) (7) SCC 288
8 AIR 2019 SC 4244
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proceedings is determined by reference to the date on which such
proceedings commenced as per Section 21.
(iii) An application under Section 11(6) of the ACA for
appointment of arbitrator can be filed only after the respondent
has failed to act as per the appointment procedure in the
arbitration agreement. Hence, invocation of arbitration as provided
in Section 21, and the subsequent failure of the respondent to
appoint its arbitrator or agree to the appointment of an arbitrator
as provided in Sections 11(4) and 11(5), are necessary for
invoking the court’s jurisdiction under Section 11.
13. It is clear that by fixing the date of commencement of
arbitral proceedings by anchoring the same to a notice invoking
arbitration, Section 21 of the ACA fulfils various objects that are
time-related. The receipt of such notice is determinative of the
limitation period for substantive disputes as well as the Section
11 application, and also the law applicable to the arbitration
proceedings.
14. The Supreme Court, in the case of State of Goa Vs. Praveen
Enterprises9, held that the claims and disputes raised in the notice
under Section 21 do not restrict and limit the claims that can be
raised before the arbitral tribunal. The Supreme Court then
proceeded to hold that non-service of the notice under Section 21
and the absence of disputes being raised against respondent nos. 2
and 3 in the appellant’s notice dated 17.11.2020 do not
9 2012 (12) SCC 581
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automatically bar their impleadment as parties to the arbitration
proceedings.
15. The Supreme Court in Adavya Projects Private Limited
(supra) has further laid down as under:
“46. While we agree with the decision in Alupro Building
Systems 26 insofar as holding that the notice under Section 21 is
mandatory, unless the contract provides otherwise, we do not agree
with the conclusion that non-service of such notice on a party
nullifies the Arbitral Tribunal’s jurisdiction over him. The purpose
of the Section 21 notice is clear – by fixing the date of
commencement of arbitration, it enables the calculation of
limitation and it is a necessary precondition for filing an application
under Section 11 ACA. The other purposes served by such notice –
of informing the respondent about the claims, giving the
respondent an opportunity to admit and contest claims and raise
counterclaims, and to object to proposed arbitrators – are only
incidental and secondary. We have already held that the contents of
the notice do not restrict the claims, and any objections regarding
limitation and maintainability can be raised before the Arbitral
Tribunal, and the ACA provides mechanisms for challenging the
appointment of arbitrators on various grounds. Hence, while a
Section 21 notice may perform these functions, it is not the primary
or only mechanism envisaged by the ACA.”
16. The other purposes served by such notice under Section 21
of informing the respondent about the claims, giving the
respondent an opportunity to admit and contest claims and raise
counter-claims, and to object to proposed arbitrators are only
incidental and secondary. The contents of the notice do not restrict
the claims, and any objections regarding limitation and
maintainability can be raised before the arbitral tribunal, and the
ACA provides mechanisms for challenging the appointment of
arbitrators on various grounds. Hence, while a Section 21 notice
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may perform these functions, it is not the primary or only
mechanism envisaged by the ACA.
17. Considering the law laid down in Adavya Projects Private
Limited (supra), wherein the Supreme Court has observed that
other than the calculation of limitation, the only purpose served by
notice under Section 21 is of informing the Respondent about the
claims, giving the Respondent an opportunity to admit and contest
claims and raise counter-claims, and to object to proposed
arbitrators are only incidental and secondary and the contents of
the notice do not restrict the claims, and any objections regarding
limitation and maintainability can be raised before the arbitral
tribunal.
18. Considering this observation, the arguments of the
Respondent that the notice under Section 21 is not in terms of the
arbitration clause, particularly with regard to number of three
arbitrators being suggested cannot defeat the notice. The notice
under Section 21 invokes the arbitration clause, specifies the
disputes, and seeks resolution through arbitration. The name of
sole arbitrator is suggested. There is no objection to the notice
under Section 21 to the name of sole arbitrator on the ground that
the agreement specifies arbitral tribunal should be of three
arbitrators. Names of three arbitrators are not suggested by the
Respondent. The dispute persists, and the notice under Section 21
has not resulted in the appointment of the arbitral tribunal. On the
failure of constitution of the arbitral tribunal, this Court gets
jurisdiction to appoint an arbitrator under Section 11(6). The
purpose of notice under Section 21 is time-related and if the
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arbitral tribunal is not constituted as per the agreed procedure, this
Court gets jurisdiction to appoint an ‘Arbitral Tribunal’ under
Section 11(6).
19. This Court finds that Clause 20.2, particularly the second
part i.e. “The competent courts at the place of registered office of
the Buyer shall have exclusive jurisdiction in relation to this Order
and for implementation of the arbitral awards” would indicate that
the jurisdiction to entertain the Section 11 application of this
Court, as the Buyer office is admittedly within the jurisdiction of
this Court. The seat of arbitration is within the jurisdiction of this
Court. The Applicant is not required to approach the DIAC for
appointment of arbitrator in the first instance, before issuance of
notice under Section 21. In the instant case, the Respondent party
has failed to act in terms of Section 11(6)(a), as they have not
responded for appointment of arbitrator by DIAC in response to
notice under Section 21.
20. Rule 4.1.l. of DIAC provides proof of service of the request
for arbitration and any documents filed therewith on the other
parties to the satisfaction of DIAC. Thus, Rule 4.1 provides that a
party shall file with DIAC a written request for arbitration,
including in cases where a reference to DIAC has been made by
any Court/Authority. The request shall, insofar as applicable, be
accompanied by proof of service of the request for arbitration and
any documents filed there with on the other parties, to the
satisfaction of DIAC. Meaning thereby, the request should be
accompanied by the notice under Section 21 invoking the
arbitration clause, along with a copy of agreement containing and
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arbitration clause and the response to the Section 21 notice, if any.
In the instant case, this Court finds that the reply filed by the
Respondent to the Section 21 notice is that the claim is barred by
limitation and there is no question of appointing an arbitrator. No
objections are raised as regards non-following of the procedure
under the DIAC Rules. Since the invocation has met with resistance
to the appointment of arbitrator on account of the claim being
barred by limitation, further process of appointment under the
DIAC Rules does not arise. The Respondent has not responded for
appointment of arbitrator through DIAC. Since the seat of
arbitration is within the jurisdiction of this Court, this Court would
proceed to appoint an arbitrator in the matter. The parties can
apply to the arbitrator regarding the venue and the procedure to
be followed in terms of the contract governing the parties and the
Arbitration Act. The invocation notice under Section 21 has failed;
as such, the Applicant has invoked under Section 11(6) for the
appointment of the arbitrator.
21. Accordingly, this Court would allow the present Arbitration
Application and pass the following order:
ORDER
(A) Smt. Anuja Prabhudessai, Former Judge of this Court is
appointed as the sole Arbitrator to adjudicate upon the disputes
and differences between the parties arising out of and in
connection with the Agreement referred to above. The contact
details of the Arbitrator are as under :-
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Nariman Point, Mumbai – 400021.
Mobile No. : 9823855445
Email ID : [email protected]
(B) A copy of this order be communicated to the learned sole
Arbitrator by the Advocates for the Applicant within a period of 1
week from the date of uploading of this order. The Applicant shall
provide the contact and communication particulars of the parties
to the Arbitral Tribunal along with a copy of this order.
(C) Venue of the arbitration would be governed by the provisions
of the agreement executed between the parties or as agreed and
the parties are permitted to make submissions before the arbitrator
in this regard.
(D) Learned sole Arbitrator is requested to forward the statutory
Statement of Disclosure under Section 11(8) read with Section
12(1) of the Act to the Advocates for the Applicant so as to enable
them to file the same in the Registry of this Court. The Registry of
this Court shall retain the said Statement on the file of this
Application and a copy of the same shall be furnished by the
Advocates for the Applicant to the Respondent.
(E) The parties shall appear before the learned sole Arbitrator on
such date and at such place as indicated by her, to obtain
appropriate direction with regard to conduct of the arbitration
including fixing a schedule for pleadings, examination of
witnesses, if any, schedule of hearings etc. At such meeting, the
parties shall provide a valid and functional email address alongPage 22 of 23
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Advocates of the parties to the Arbitral Tribunal. Communications
to such email addresses shall constitute valid service of
correspondence in connection with the arbitration.
(F) All arbitral costs and fees of the Arbitral Tribunal shall be
borne by the parties equally in the first instance and shall be
subject to any final Award that may be passed by the Tribunal in
relation to costs.
22. All contentions of the parties are expressly kept open to be
raised before the Arbitrator.
23. With the above directions, the Arbitration Application stands
disposed of accordingly.
(ARUN R. PEDNEKER, J.)
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