No Requirement Of Fresh Section 21 Notice For Re-Commencing The Arbitration After The First Award Is Set Aside Under Section 34: Bombay High Court

The bench of Justice Bharati Dangre held that in such a situation there would be no requirement of a fresh invocation notice as the opposite party would already be aware of the existence of the dispute.

Facts

The parties entered into a Dealership Agreement dated 19/06/2013. Pursuant thereto, the Respondent placed a purchase order with the Petitioner and raised an invoice. A dispute arose between the parties in relation to the payment due for the orders placed.

Accordingly, the petitioner invoked the arbitration clause and unilaterally appointed the arbitrator. The award passed by the arbitrator was set aside on grounds of unilateral appointment. Accordingly, the petitioner filed a petition before the High Court under Section 11(6) of the A&C Act for seeking appointment of a sole arbitrator.

Submissions by the Parties

The respondent made the following objections to the maintainability of the petition:

• The petition is pre-mature since the notice under Section 21 is not given.
• Jurisdiction of the Court under Section 11(6) can only be invoked after the parties have mutually failed to appoint the arbitrator and not otherwise.

Analysis by the Court

The Court rejected the Respondent's argument that a fresh notice under Section 21 was necessary. It held that since the arbitration mechanism was already triggered and the proceedings had commenced, there was no need for a new notice.

The Court held that the dispute between the parties remained the same, and the Petitioner sought the appointment of a competent arbitrator, not a new invocation of arbitration.

The Court held that there is no requirement of Section 21 notice for re-commencing the arbitration after the first award is set aside under Section 34 of the A&C Act. It held that in such a situation there would be no requirement of a fresh invocation notice as the opposite party would already be aware of the existence of the dispute.

Accordingly, the Court allowed the petition and appointed a sole arbitrator.

Case Title: Kirloskar Pneumatic Company v. Kataria Sales Corporation, Commercial Arbitration Petition, No. 16 of 2023

Date: 21.03.2024

Counsel for the Petitioner: Mr. Sunny Shah a/w. Devanshi Sethi i/b Hemant Sethi

Counsel for the Respondent: Mr. Dormaan Dalal

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