Fresh Section 21 arbitration notice not required after award is set aside, Delhi High Court rules

The Petitioner filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996 (“the Act”) seeking appointment of a sole arbitrator to adjudicate disputes with the Union of India.

The disputes had previously been referred to arbitration pursuant to an earlier Section 21 notice, culminating in an award dated 11 August 2018.

That award was subsequently set aside by the Commercial Court on 10 July 2024, and the earlier arbitral proceedings were held to be vitiated or void on account of unilateral appointment of the arbitrator.

The Respondent opposed the Section 11 petition as premature, contending that the Petitioner was required to issue a fresh notice under Section 21 before seeking appointment of a new arbitrator.

1. Whether a fresh notice under Section 21 of the Act was necessary before filing a Section 11 petition for appointment of a new arbitrator after the earlier award had been set aside on the ground of unilateral appointment.

2. Whether the Petitioner was entitled to appointment of a sole arbitrator to adjudicate the disputes between the parties.

The Court applied Sections 11, 21, 43(4), and 12(2) of the Act.

Section 21 provides for commencement of arbitral proceedings upon receipt of a request for reference to arbitration; its purposes include notifying the opposing party of the dispute and arresting limitation.

Section 43(4) excludes, for limitation purposes, the period between commencement of arbitration and the date on which the award is set aside, and does not mandate recommencement of the same dispute through a fresh Section 21 notice.

Relying on Cosmo Retail Solutions Pvt. Ltd. v. Sumant Agarwal & Ors., 2026:DHC:5742, and the principles referred to therein from M/s Bhaghreeratha Engineering Ltd. and Adavya Projects Pvt. Ltd., the Court held that once the dispute has been validly notified and arbitration has commenced, setting aside the award does not by itself require a fresh Section 21 notice.

The Court also directed compliance with the disclosure requirement under Section 12(2).

The Court rejected the Respondent’s objection because the original Section 21 notice had already notified the Respondent of the disputes and had fulfilled the statutory purpose of commencing arbitration and preserving limitation.

Following Cosmo Retail Solutions, the Court held that the subsequent setting aside of the award, even where the earlier proceedings were vitiated by unilateral appointment, did not transform the existing dispute into a new dispute requiring fresh invocation.

Section 43(4) supported this conclusion by contemplating exclusion of the period spent in the earlier proceedings without requiring the dispute itself to be recommenced.

Accordingly, the absence of a fresh Section 21 notice did not render the Section 11 petition premature or non-maintainable.

The arbitrator was directed to enter upon the reference within two weeks and furnish the requisite disclosures under Section 12(2).

The arbitration was directed to be conducted under the rules and aegis of the Delhi International Arbitration Centre, with fees as per the DIAC schedule.

The parties remained free to raise objections concerning arbitrability and jurisdiction before the arbitrator, and the arbitrator was directed to decide them in accordance with law.

The petition was consequently disposed of in these terms.