Mandatory compliance of Section 21 Arbitration and Conciliation Act, 1996, but can you still bypass it?
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
In 2017, Delhi High Court Justice S. Murlidhar in the case Alupro Building
System Pvt. Ltd. v. Ozone Overseas Pvt. Ltd. (2017) SCC Online Del 7228 (O.M.P
3/2015 decided on 28.02.2017) held that the compliance of sending a notice of
invocation of arbitration to the other party is mandatory in nature and a party
cannot straight away file arbitration petition before the High Court or
However, in 2020, Delhi High Court Justice Prateek Jalan in the case Badri
Singh Vinimay Pvt. Ltd. v. MMTC Limited held that even if a party has not
provided an arbitration invocation notice to the other party, but has provided a
legal notice which expressly mentions that, 'úon the failure of payment we shall
resort to legal proceedings especially arbitration'Ě, then in such a scenario,
legal notice fulfils the requirement of Section 21.
Facts: Disputes between the parties arose and the Respondents had initiated
arbitration proceedings. The Petitioner contended that the petition was not
maintainable as the compliance under section 21 was not done and relied on the
Alupro judgement. On the other hand, the Respondent counsel contended that the
petitioner had the notice of the arbitration and did not participate in the
The court drew its attention to a legal notice wherein the Respondents had
expressly mentioned that in case of 'ú...failure to comply my client shall be
constrained to initiate legal proceedings including arbitration
proceedings....'Ě. The Court also relied on the judgement passed by Rajasthan
High Court in the case of Riico Ltd., Jaipur & Others v. Manoj Ajmera & Anr.
(2008) 2 ArbLR 388, wherein it was held that a communication claiming a disputed
amount and contemplating arbitration in the alternative is sufficient notice of
a request for arbitration.
Reasoning: 'úThis judgment in Alupro (supra) is distinguishable on facts. First,
there was no notice to the respondent at all in that case. In the present case,
the legal notice dated 14.12.2012 fulfils the requirement of Section 21. The
purpose of Section 21, as set out in paragraph 25 of Alupro, was clearly
fulfilled by the said notice and the subsequent correspondence between the
petitioner and the ICA. Second, the parties in the present case had agreed on
the applicability of the ICA Rules.
The petitioner expressly declined to appoint an arbitrator in terms thereof. In
Alupro also, the Court notices that parties can agree to waive the requirements
of Section 21. This judgment itself makes it clear that the provisions are
derogable, and it is possible in a given case that agreement on the rules to be
followed would constitute waiver of the statutory requirement. As I have held
that the statutory requirements were in fact fulfilled in the present case, it
is not necessary to consider this in greater detail in the present case.'Ě
Compliance of Section 21 is mandatory however, clear indication of initiating
arbitration proceeding in legal notice also fulfils its requirements and the
same cannot be bypassed if no notice is provided.
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