[Arbitration Act] S.11 Application Is Maintainable Even Without Notice U/S 21 If Other Party Is Aware Of Dispute: Rajasthan High Court

The Rajasthan High Court Jaipur Bench has held that a Section 11 petition under the A&C Act without issuing the notice invoking arbitration (“NIA”) u/s 21 of the A&C Act would be maintainable if the Respondents were aware of the dispute being referred to arbitration. The bench noted that the Respondents were well-versed in the dispute raised by the Petitioner. They could not have been surprised after the Petitioner's plaint was returned by the trial court under Order VII Rule 10 of the CPC after the Respondent filed a section 8 application r/w section 5 of the A&C Act. The Respondent's case was that a Section 11 application under the A&C Act cannot be maintainable without issuing a valid Section 21 notice. It was the Petitioner's case that the Respondents were well aware of the entire dispute between the parties and the filing of a partition before the District Judge, Ajmer. Therefore, there is no need to issue a notice u/s 21 of the A&C Act addressed to the Respondents. Reliance was also placed on the decision of a Coordinate bench in Suresh Chandra Gupta v. Kishan Gopal Gupta, wherein the Court had held that once the dispute is within the other party's knowledge, the requirement of issuing a Section 21 notice is discretionary. The bench of Justice Anoop Kumar Dhand, while hearing the Section 11 application, observed that: "...the respondents were not taken by surprise regarding invocation of the arbitration clause by the applicants for the first time before this Court since the applicants submitted a suit for partition of property against the respondents before the Court of ADJ, where an application was submitted by none other than the respondents themselves under Sections 8 and 5 of the Act of 1996 that Civil Suit is not maintainable and an Arbitration Application under Section 11 of the Act is maintainable, hence accepting their prayer, the learned ADJ returned the plaint to the applicants under Order 7 Rule 10 CPC for its presentation before the competent court of law…" The bench noted that a Section 21 notice has certain definite purposes, including notifying the opposing side regarding the nature of the dispute, providing an opportunity to the opposing party to challenge the claims, marking the date of receipt of the NIA, which determines the commencement of the arbitration, etc. Furthermore, the bench perused the ratio laid down in Arif Azim Co. Ltd. v. Aptech Ltd. [2024 (5) SCC 313], wherein the Supreme Court has held that merely referring to a claim and stating that a dispute has arisen between the parties does not satisfy the conditions u/s 21 of the A&C Act. The bench noted that the Respondent had moved a Section 8 and 5 application under the A&C Act before the Court of ADJ. Therefore, the bench concluded that the Respondents were cognizant of the dispute concerning the partition of the property, and the Section 11 petition could not have surprised them. In the above terms, the bench observed that the Section 11 application is maintainable despite the non-issuance of the Section 21 application. Case Name: Shekharchand Sachet and Anr. v. S.M.F.G. India Home Finance Company Limited and Anr. Case Number: S.B. Arbitration Application No.81/2024Citation: 2025 LiveLaw (Raj) 345 Counsel for the Petitioners: Mr. Dilip Sharma, Adv. Counsel for the Respondents: Mr. Naman Yadav Mr. Jitendra Choudhary, Advs. Click Here To Read/Download The Order

[Arbitration Act] S.11 Application Is Maintainable Even Without Notice U/S 21 If Other Party Is Aware Of Dispute: Rajasthan High Court

Mohd Talha Hasan

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