Delhi High Court Reiterates Receipt of Notice Under Section 21 as Mandatory for Arbitration Proceedings

The Delhi High Court has reaffirmed that for arbitration proceedings to commence under the Arbitration and Conciliation Act, 1996, it is not merely the sending but the receipt of the notice under Section 21 that is essential. This was emphasized by the single-judge bench of Justice Dinesh Kumar Sharma while rejecting a petition seeking the appointment of a Sole Arbitrator due to improper notice service.

Case Overview:

• Judge: Justice Dinesh Kumar Sharma
• Act: Arbitration and Conciliation Act, 1996
• Sections Involved: Section 11(6), Section 11(8), and Section 21

Key Points

Petitioner’s Claim:

• The petitioner sought the appointment of an Arbitral Tribunal to resolve disputes between the parties.

Respondent’s Argument:

• Counsel for the respondent highlighted that the notice under Section 21 was sent to an incorrect address, hence not served properly.
• Argued that without proper notice under Section 21, the petition is not maintainable and is barred by limitation.

Court’s Reasoning and Decision

The Court agreed with the respondent’s argument and provided the following observations:

• Notice Service: It is a settled proposition that the service of notice under Section 21 of the Arbitration and Conciliation Act, 1996, is a prerequisite for the commencement of arbitration proceedings.
• Precedents Cited: The Court referenced the cases of Alupro Building Systems Pvt. Ltd. v. Ozone Overseas Pvt. Ltd. and Amit Guglani & Anr. v. L and T Housing Finance Ltd. to support its view. Both cases establish that merely sending the notice is insufficient without proof of receipt.
• Judgment: The Court emphasized that proper service of notice, including accurate address details, is mandatory. In the present case, the notice was not sent to the correct address, leading to incomplete service under Section 21, which is a mandatory prerequisite.

Conclusion:

The petition was rejected as the notice under Section 21 was not properly served, thus failing to meet the essential requirement for initiating arbitration proceedings.

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