Delhi High Court
Cosmo Retail Solutions Private Limited vs Sumant Agarwal & Ors on 16 July, 2026
Author: Subramonium Prasad
Bench: Subramonium Prasad
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 16th JULY, 2026
IN THE MATTER OF:
+ ARB.P. 293/2026 & I.A. 4036/2026
COSMO RETAIL SOLUTIONS PRIVATE LIMITED .....Petitioner
Through: Mr. Navin Kumar, Ms. Prakriti Priya,
Ms. Nitika, Advocates.
versus
SUMANT AGARWAL & ORS. .....Respondents
Through: Mr. Satyajit Sarna, Mr. Sudev Singh
Juneja and Ms. Rukmani Banka, Mr.
Ritk Raj, Advocates for Respondent
Nos.1, 2 and 3.
CORAM:
HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD
JUDGMENT
1. The present petition has been filed under Section 11(6) of the
Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the A&C
Act”) by the Petitioner seeking appointment of an Arbitrator.
2. Shorn of unnecessary details, the facts leading to the filing of the
present petition are that the Respondents are the allottees of Flat bearing
No.A-1201, 12th Floor, Tower A, having Super Built up Area admeasuring
approx. 1950 Sq. Ft. and Plot No.B-45, having area admeasuring approx.
223 Sq. yard which was allotted in a project called “Gold Souk Golf Links”
which was being developed in Sohna, Haryana.
3. It is the case of the Petitioner that the Respondents induced the
Petitioner to purchase rights, title and interest in their disputed flats beingSignature Not Verified
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Flat bearing No.A-1201, 12th Floor, Tower A, having Super Built up Area
admeasuring approx. 1950 Sq. Ft., provisionally allotted to Respondent No.2
and Plot No.B-45, having area measuring approx. 223 Sq. yard,
provisionally allotted to Respondent No.3. It is stated that substantial
amount of money have been parted with by the Petitioner to the
Respondents on the promise that the Respondents shall sign an Agreement
to Sell in favour of the Petitioner and hand over the original allotment papers
of the aforesaid immovable properties after receiving the full payment. It is
stated that even though the entire payment has been made, the requisite
documents have not been executed by the Respondents in favour of the
Petitioner.
4. This Court is not going further into facts which are not germane to
issue of the appointment of an Arbitrator. Suffice it to say that the
Agreement to Sell entered into between the Petitioner and the Respondent
contains an arbitration clause, being Clause 11, which reads as under:
“11. That in case of any dispute(s) and/or difference(s)
arising between the parties in relation to this
Agreement to sell, then, the matter shall be referred to
the sole arbitrator appointed by the both parties
agreement. The arbitration proceedings shall be held
at Delhi and shall be governed by the Arbitration and
Conciliation Act, 1996. Any disputes referred to
arbitration under this clause shall be decided
according to the relevant India law. The
Courts/Tribunals/Commission of Delhi shall have the
exclusive jurisdiction to try and entertain the
Arbitration Proceedings.”
5. It is stated that disputes arose between the Petitioner and the
Respondents and a notice under Section 21 of the A&C Act invoking
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arbitration was issued by the Petitioner to the Respondents on 27.02.2024
relying upon the aforementioned Clause 11 of the Agreement to Sell.
6. Material on record indicates that the Petitioner had unilaterally
appointed an Arbitrator. The arbitration proceedings culminated in an
Award dated 13.02.2025. The said Award was a subject matter of challenge
before the District Judge (Commercial Courts)-03, South-West District,
Dwarka Courts, New Delhi and the said Award was set aside vide Order
dated 05.01.2026 on the ground that Arbitrator had been appointed
unilaterally by the Petitioner which is contrary to the settled law laid down
by the Apex Court in Perkins Eastman Architects DPC & Anr. vs. HSCC
(India) Limited, (2020) 20 SCC 760 and a Division Bench of this Court in
Mahavir Prasad Gupta & Sons v. State (NCT of Delhi), 2025 SCC OnLine
Del 4241.
7. The Petitioner has, therefore, approached this Court by filing the
present petition seeking the appointment of an Arbitrator to recommence the
adjudication of the dispute that have arisen between the parties
8. A preliminary objection has been raised by the learned Counsel for
the Respondents by stating that the present petition under Section 11 of the
A&C Act, is not maintainable in the absence of a fresh notice under Section
21 of the A&C Act.
9. Learned Counsel appearing for the Petitioner states that a notice under
Section 21 of the A&C Act had been issued to the Respondents. Arbitrator
was appointed, Award was pronounced, and the same has been set aside. He
states that the purport of Section 21 notice is only to commence the
arbitration and once the arbitration is commenced then the fact that the
Award which was passed by the Arbitrator has been set aside does not mean
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that a fresh dispute has arisen between the parties which would require
issuance of a second or fresh notice under Section 21 of the A&C Act, 1996.
10. Learned Counsel for the Petitioner places reliance upon a judgment
passed by a Single Bench of the Karnataka High Court in M/s Re
Sustainability Healthcare Solutions Limited v. Bruhat Bengaluru
Mahanagara Palike, 2026:KHC:1929 wherein a specific question i.e.,
whether a fresh notice under Section 21 of the A&C Act is required for
recommencement of arbitration was answered in the following manner.
“14.7. Insofar as the requirement of issuance of a
notice under Section 21 of the Act is concerned, a
notice under Section 21 serves the limited purpose of
formally invoking the arbitral process. Once an
arbitral award has been set aside and the disputes
stand revived, the initiation of fresh arbitral
proceedings cannot be rendered impermissible on the
ground that an award had earlier been passed. The
setting aside of the award restores the parties to the
position as if no adjudication had taken place. In
such circumstances, the requirement of a fresh notice
under Section 21 is procedural and cannot be
elevated to a jurisdictional bar so as to defeat the
substantive right of a party to seek arbitration,
particularly when the opposite party is already fully
aware of the disputes and has previously participated
in arbitral proceedings.
14.8. As regards limitation, the period during which
the arbitral proceedings and the proceedings under
Section 34 were pending is liable to be excluded while
computing limitation for the purpose of initiating fresh
arbitral proceedings. A party which has bona fide
pursued its remedies under the Act cannot be non-
suited on the ground of limitation once the award is set
aside and the disputes are revived. To hold otherwiseSignature Not Verified
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would render the statutory remedy under Section 34
illusory and defeat the very object of the Act.
14.9. Accordingly, I answer Point No.2 by holding that
the passing of an arbitral award which has
subsequently been set aside in proceedings under
Section 34 does not operate as res judicata. The
disputes stand revived, and the parties are entitled to
seek resolution through fresh arbitral proceedings in
accordance with law, subject to limitation and the
terms of the arbitration agreement, as recognised by
the decisions of the Hon‟ble Supreme Court in Nortel
Networks, Steel Authority of India, and Associated
Construction.”
(emphasis supplied)
11. Per contra, learned Counsel appearing on behalf of the Respondents
contends that Section 32(1) of the A&C Act provides that the arbitration
proceedings initiated by issuance of notice under Section 21 of the A&C Act
terminates after the issuance of the final arbitral award, that is to say that the
arbitral tribunal becomes functious officio and if the award is set aside, then
for recommencement of arbitration, a notice under Section 21 of the A&C
Act is mandatory. Unless the notice under Section 21 is issued, arbitration
proceedings cannot be commenced afresh. Reliance is placed on a judgment
of the Division Bench of the Bombay High Court in Harkisandas Tulsidas
Pabari and Another v. Rajendra Anandrao Acharya, (2025) SCC OnLine
Bom 2697. Relevant paragraphs of the said judgment is being reproduced as
under:-
“20. There is yet another reason why the learned
arbitrator could not have resumed the arbitration
proceedings. The learned Single Judge, while granting
liberty to the parties to “move afresh”, specifically
directed that the intervening period would be saved bySignature Not Verified
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virtue of provisions of Section 43(4) of the Arbitration
Act. Section 43(4) of the Arbitration Act provides thus:
“43. (4) Where the Court orders that an arbitral award
be set aside, the period between the commencement of
the arbitration and the date of the order of the Court
shall be excluded in computing the time prescribed by
the Limitation Act, 1963 (36 of 1963), for the
commencement of the proceedings (including
arbitration) with respect to the dispute so submitted.”
21. Thus, under provisions of sub-section (4) of Section
43 of the Arbitration Act, where the Arbitral award is
set aside, the period between commencement of
arbitration and the date of the order of the Court needs
to be excluded in computing the time prescribed by the
Limitation Act for “commencement” of the
proceedings. Thus Section 43(4) of the Arbitration Act
applies only when arbitration proceedings are to be
freshly commenced. Therefore reference made by this
Court while setting aside the award to provisions of
Section 43(4) of the Act again makes the position clear
that what was contemplated was commencement of
fresh proceedings and not remand of proceedings to
the same arbitrator.
22. When it comes to “commencement” of proceedings
under Section 43(4) of the Act, provisions of Section 21
become relevant. Section 21 of the Arbitration Act
provides thus:
“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.”
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Thus for “commencement” of the arbitral proceedings
after setting aside of the award by taking benefit of
limitation under Section 43(4) of the Arbitration Act,
the procedure under Section 21 becomes mandatory.
23. In our view therefore, the order passed by this
Court on 28-9-1998 [Rajendra A. Acharya v.
Harkishandas T. Pabari, Arbitration Petition No. 225
of 1998, order dt. 28-9-1998 (Bom)] setting aside the
previous Arbitral award dated 1-4-1998 warranted
commencement of arbitral proceedings afresh and
not resumption of the arbitration proceedings by the
same arbitrator.
24. As observed above, the arbitral proceedings would
commence after passing of order dated 28-9-1998
[Rajendra A. Acharya v. Harkishandas T. Pabari,
Arbitration Petition No. 225 of 1998, order dt. 28-9-
1998 (Bom)] only in accordance with provisions of
Section 21 of the Arbitration Act, under which it was
mandatory for the claimants to make a request to the
respondents for reference of the dispute for arbitration.
The fact that this Court envisaged application of
provisions of Section 43(4) of the Arbitration Act
would itself indicate that the fresh arbitration
proceedings were required to be commenced. If
arbitration proceedings were merely required to be
resumed by the same arbitrator there would have
been no question of application of period of
limitation. The fact that this Court envisaged that
limitation will have to be computed, it clearly meant
commencement of fresh arbitral proceedings after
setting aside of the award.
25. The contention raised on behalf of the appellants
that the award was not challenged on the ground of
failure to issue notice under Section 21 of the
Arbitration Act, does not any ice. Failure to serve
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notice under Section 21 of the Arbitration Act is merely
an additional defect as the very act of the arbitrator in
recommencing the proceedings is found to be
erroneous. One of the respondents had clearly raised
an objection to continuation of arbitration proceedings
by the same learned arbitrator, both before the
arbitrator as well as in the petition filed under Section
34 of the Arbitration Act.
26. In our view therefore, the learned Single Judge has
rightly held the award to be vitiated on account of
improper constitution of the Arbitral Tribunal.
D-2. Non-compliance with provisions of Section 21
27. Coming to the aspect of non-fulfilment of
requirements of Section 21 of the Arbitration Act, it is
an admitted position that the appellants never
requested respondents to refer the disputes to
arbitration after passing of order dated 28-9-1998
[Rajendra A. Acharya v. Harkishandas T. Pabari,
Arbitration Petition No. 225 of 1998, order dt. 28-9-
1998 (Bom)] . The appellants unilaterally wrote to the
arbitrator on 12-10-1998 for resumption of the arbitral
proceedings by representing to the arbitrator that “…
but the High Court refused to grant the request of the
said Rajendra A. Acharya and Nandkishore A. Acharya
of not referring back the said matter to you once again,
but on the contrary the High Court by sending back the
original records to you clearly indicated and clearly
expressed that the parties or any of them should move
you the arbitrator afresh”. The arbitrator acted on this
representation made by the Appellant and straightaway
proceeded to fix a date of hearing of the arbitral
proceedings by issuing letter to the respondents. On
account of fundamental flaw in comprehension of the
order passed by this Court and by erroneously
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presuming that this Court directed remission of
proceedings to the same arbitrator, the appellants
failed to follow the procedure prescribed in Section 21
of the Act.
28. Both the above aspects have been correctly
appreciated by the learned Single Judge while setting
aside the impugned award. Even if the requirement
provided under Section 21 of the Arbitration Act is
held to be Directory, still the impugned award did not
pass the muster of authorization for the Arbitral
Tribunal to resume the arbitration proceedings.”
(emphasis supplied)
12. Learned Counsel for the Respondents also draw attention of this Court
to a judgment passed by the learned Single Judge of the Kerala High Court
in Agro Indus Credits Limited v. Mangalan S and Others, (2025) SCC
OnLine Ker 14437, wherein the Kerala High Court has observed as under:-
“19. Thus, it is settled law that the arbitral tribunal
will no longer have any authority or function under the
Act, 1996, with the exception of exercising the limited
powers granted to it by Sections 33 and 34(4),
respectively, upon the conclusion of the arbitral
proceedings, either by a final award or an order to that
effect, as the case may be. After the proceedings are
terminated, the arbitral tribunal loses all other
authority and jurisdiction over the issue. Arbitral
proceedings may end for a variety of reasons, but the
outcome is always the same : the arbitral reference is
closed and the tribunal’s authority is extinguished
subject to the restricted powers granted to it by
Sections 33 and 34(4).
20. Section 43(4) of the Act deals with exclusion of the
period between the commencement of arbitration and
the date of the order of the court when an arbitralSignature Not Verified
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award is set aside by the court, in computing the time
prescribed by the Limitation Act, for the
„commencement of the proceedings‟ with respect to the
dispute. The words employed – „commencement of the
proceedings‟ in Section 43(4) has great significance.
As held by Hon’ble Supreme Court in Adavya Projects
Pvt. Ltd. (supra), prime object of the request
contemplated under Section 21 of the Act is to mark a
point of time for calculation of limitation. As provided
under Section 43(4) of the Act, exclusion of the period
spent in an arbitral proceeding culminated with an
award which was set aside is for computing the time
prescribed by the Limitation Act for the commencement
of the de novo proceedings. Therefore, marking the
point of time of commencement of the subsequent
arbitral proceedings is absolutely necessary. Hence,
conjoint appraisal and analysis of the provisions of
Sections 21, 32 and 43(4) of the Act shows that issuing
a fresh notice/making another request is indispensable
to initiate fresh arbitral proceedings, once an award is
set aside by the court.
21. The Bombay High Court in Kirloskar Pneumatic
Company Ltd. (supra) held as under;
“15. In the sequence of events mentioned above,
when the arbitration mechanism is already
triggered and the proceedings have commenced
upon the issuance of the notice by the petitioner to
the respondent on 30/10/2018, and therefore when
the petitioner now seek appointment of an
independent and impartial arbitrator, through the
mechanism of sub-section (6) of Section 11, I do
not deem it necessary that it should be preceded
by a fresh notice under Section 21, though the
respondent preferred to call it as „invocation
notice‟, as the arbitration proceedings are
already commenced and the respondent is awareSignature Not Verified
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about the existence of a dispute and also of the
fact, that this dispute in terms of the agreement
between the parties deserve to be resolved
through an independent arbitrator.
For the above, the submission of Mr. Dalal do not
deserve any consideration and is rejected.”
However impact of S. 32 and also of S. 43 (4) in
the scheme of the Act was not brought to the
notice of the Court. Hence, I respectfully refrain
from following the above judgment of the Bombay
High Court.
22. In these cases, arbitral awards were passed,
though they were subsequently set aside and declared
as nullity. Once an order is declared by a competent
court as nullity, it has no effect in the eye of law. A
doubt may arise as to whether passing of such an
award would amount to termination of the arbitral
proceedings. But, in the scheme of the Act, as held by
the Hon’ble Supreme Court in Harshbir Singh Pannu
(supra), with the passing of an award the arbitrator
ceases to have jurisdiction over the dispute. He can act
further in the matter only in the limited circumstances
delineated under the Act. That being so, when an
award was passed and the arbitral tribunal ceased to
have jurisdiction, whether the award was subsequently
set aside or declared as nullity is immaterial in the
context of Section 32 of the Act. Passing of the award
by the Arbitral Tribunal is the vital aspect. Hence, the
arbitral proceedings, as far as these cases are
concerned, were undoubtedly terminated with the
passing of awards. Therefore, to commence fresh
arbitral proceedings, making fresh requests were
required. I therefore hold that these arbitration
requests are premature for want of any request for
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fresh arbitration from the applicant, addressed to the
respondents.
In conclusion, these Arbitration Requests are
rejected as premature. Nonetheless, the rejection
would not preclude the applicant from
approaching this Court again after complying
with the requirement of issuing notice to the
respondents.”
(emphasis supplied)
13. Heard learned Counsels for the Parties.
14. A short but an interesting question which arises for consideration
before this Court is when an arbitral award is set aside, then is it necessary
to issue a fresh notice under Section 21 of the A&C Act before filing a
petition under Section 11 of the A&C Act?
15. Section 21 of the A&C Act on which reliance is placed is reproduced
as under:
“Section 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.
16. It is now well settled that no arbitration proceedings can commence
without a notice under Section 21 of the A&C Act. The Apex Court in
Adavya Projects Pvt. Ltd. v. M/s Vishal Structurals Pvt. Ltd., (2025) SCC
OnLine SC 806 has, in fact, settled this issue. The relevant paragraphs of
the said judgment are being reproduced as under:-
“45. The decision in Alupro Building Systems
[Alupro Building Systems (P) Ltd. v. Ozone OverseasSignature Not Verified
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(P) Ltd., 2017 SCC OnLine Del 7228] has been relied
on by the High Court in its impugned order [Adavya
Projects (P) Ltd. v. Vishal Structurals (P) Ltd., 2024
SCC OnLine Del 4817] to hold that the notice under
Section 21 is a mandatory requirement before a
person can be made party to arbitral proceedings.
46. While we agree with the decision in Alupro
Building Systems [Alupro Building Systems (P) Ltd. v.
Ozone Overseas (P) Ltd., 2017 SCC OnLine Del 7228]
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.
47. In this light, and considering that in the facts of
the present case a Section 21 notice was in fact issued
to Respondent 1, we find it difficult to accept that the
decision in Alupro Building Systems [Alupro
Building Systems (P) Ltd. v. Ozone Overseas (P) Ltd.,
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2017 SCC OnLine Del 7228] can be relied on to
entirely reject the Arbitral Tribunal’s jurisdiction
over Respondents 2 and 3.”
17. Attention of this Court is also drawn by the learned Counsel for the
Petitioner to another judgment of the Apex Court in M/s Bhaghreeratha
Engineering Ltd v. State of Kerala, Civil Appeal No. 39/2026, to contend
that the notice under Section 21 of the A&C Act is not mandatory to
commence the arbitration. The Apex Court in the said Judgment has
observed 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 Limited3,
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 inSignature Not Verified
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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
“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 toSignature Not Verified
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“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.
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
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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 others4,
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)
18. It is pertinent to mention at this juncture that the issue which was
raised in M/s Bhaghreeratha Engineering Ltd (supra) was whether a dispute
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which is not raised in a notice under Section 21 of the A&C Act, can be
subsequently raised in arbitration proceedings or not. It is in that context that
the abovementioned paragraph was mentioned. This question is definitely
not germane to the controversy at hand.
19. It is also pertinent to mention that in the judgment passed by the
Division Bench of the Bombay High Court, no notice under Section 21 was
issued in the first instance and the judgment of the Division Bench is,
therefore, to be read in that context. Unlike, in the present case, a notice
under Section 21 of the A&C Act had been issued before appointing an
Arbitrator on 27.02.2024 and the Award had been passed. It is pursuant to
this notice that an Arbitral Tribunal was constituted and an award was
rendered, which was subsequently set aside on grounds of unilateral
appointment.
20. In light of the judgments of the Apex Court in M/s Bhaghreeratha
Engineering Ltd (supra) and Adavya Projects Pvt. Ltd. (supra), the
Petitioner had already issued a notice under Section 21, and the dispute
stood commenced.
21. The award has been set aside on the grounds of unilateral appointment
of the arbitrator. In the opinion of this Court, once the disputes stands
commenced, there is no need to recommence the same dispute again just
because the Award has been set aside. The purport of notice under Section
21 is to intimate one party that there are disputes between the parties and the
matter has been referred to arbitration. Simultaneously, the purport of notice
under Section 21 of the A&C Act is also to freeze the period of limitation.
Once this mandate of Section 21 has been achieved, in the opinion of this
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Court, the requirement of a fresh notice under Section 21 of the A&C Act is
not necessary merely because the award has been set aside.
22. A lot of emphasis has been given by the learned Counsel for the
Respondents on Section 43. Section 43 deals with limitation and Section
43(4) states that the period between the commencement of the arbitration
i.e., the date on which notice under Section 21 is received by the Respondent
and the date of the order of the Court is excluded for computing the time
prescribed under the Limitation Act, 1963 for the commencement of
proceedings including (arbitration). Learned Counsel for the Respondents
contends that a notice under Section 21 of the A&C Act would be necessary
to commence the arbitration and limitation has to be calculated depending
upon the notice issued under Section 21 of the A&C Act.
23. Section 43 of the A&C Act reads as under:
Section 43: Limitations.
(1) The Limitation Act, 1963 (36 of 1963), shall apply
to arbitrations as it applies to proceedings in court.
(2) For the purposes of this section and the Limitation
Act, 1963 (36 of 1963), an arbitration shall be deemed
to have commenced on the date referred to in section
21.(3) Where an arbitration agreement to submit future
disputes to arbitration provides that any claim to
which the agreement applies shall be barred unless
some step to commence arbitral proceedings is taken
within a time fixed by the agreement, and a dispute
arises to which the agreement applies, the Court, if it is
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on such terms, if any, as the justice of the case may
require, extend the time for such period as it thinks
proper.
(4) Where the Court orders that an arbitral award be
set aside, the period between the commencement of the
arbitration and the date of the order of the Court shall
be excluded in computing the time prescribed by the
Limitation Act, 1963 (36 of 1963), for the
commencement of the proceedings (including
arbitration) with respect to the dispute so submitted.”
(emphasis supplied)
24. The purport of Section 43(4) is to exclude the time spent from the
commencement of the arbitration to setting aside of the Award. Section
43(4) indicates that when an Award is set aside then the period between the
commencement of the arbitration i.e., the date on which the notice under
Section 21 of the A&C Act is received by the Respondent and the date of the
order of the Court, is to be excluded in computing the time prescribed by
Limitation Act, 1963 for commencement of proceedings, including
arbitration. The words “including arbitration” is of significance. Section
43(4) does not prescribe that the fresh proceedings should only be an
arbitration proceeding. It could well be a Suit or any other proceeding.
Section 43(4) cannot be read to understand that the effect of Section 43(4) is
that once an Award is set aside then there has to be a re-initiation of
arbitration proceedings. Also there can be instances where an award is set
aside on the ground that the disputes between the parties were not arbitrable
at all and a party would have to resort to filing the suit before the competent
court. It is also possible that the parties have decided to approach an arbitral
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institution in which case, the parties only have to go back to the arbitral
institution for appointment of an Arbitrator in which case, a notice under
Section 21 of the A&C Act is not required. The Court can also decide to
send the matter back to the very same Arbitrator where again a fresh notice
under Section 21 of the A&C Act is not required. It cannot be then said that
if a new Arbitrator is to be appointed then a notice under Section 21 of the
A&C Act would be required again. In the opinion of this Court, the words in
Section 43 of the A&C Act i.e., “commencement of proceedings”, does not
mean fresh proceedings which alone would require a notice under Section
21 of the A&C Act. This Court is not repeating the purpose of Section 21 of
the A&C Act which has been explained by the Apex Court in Adavya
Projects Pvt. Ltd. (supra) and M/s Bhaghreeratha Engineering Ltd (supra).
The purpose of Section 21 of the A&C Act is only to give a notice to the
other side for commencing fresh proceedings.
25. In view of the above, this Court is not inclined to accept the
objections raised by the learned Counsel for the Respondents.
26. Accordingly, Mr. Kapil Sankhla (Mob. No: 9810901009) is appointed
as the Sole Arbitrator to adjudicate upon the disputes between the parties.
27. The arbitration would take place under the aegis of the Delhi
International Arbitration Centre (DIAC) and would abide by its rules and
regulations. The learned Arbitrator shall be entitled to fees as per the
Schedule of Fees maintained by the DIAC.
28. The learned Arbitrator is also requested to file the requisite disclosure
under Section 12(2) of the Arbitration Act within two weeks of entering on
reference.
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29. All rights and contentions of the parties in relation to the
claims/counter-claims are kept open, to be decided by the learned Arbitrator
on their merits, in accordance with law.
30. Needless to state, nothing in this Order shall be construed as an
expression of this Court on the merits of the contentions of the parties.
31. The Petition stands disposed of in the above terms, along with
pending application(s), if any.
SUBRAMONIUM PRASAD, J
JULY 16, 2026
Prateek/VG
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