Section 21 notice not a mandatory precondition for arbitration: Delhi high court

Delhi High Court Rules Section 21 Notice Not Mandatory for Arbitration Proceedings, Allowing Greater Flexibility in Legal Disputes.

Sunil Walia v. Delhi International Arbitration Centre and Anr. | W.P.(C) 6019/2026 | Delhi High Court | Decided: May 4, 2026 | Justice Purushaindra Kumar Kaurav

The Delhi High Court, in a petition filed under Article 227 of the Constitution of India, dismissed a challenge to an interlocutory order passed by a sole arbitrator under the aegis of the Delhi International Arbitration Centre (DIAC). The petitioner had sought to quash the arbitral proceedings on the ground that no fresh notice under Section 21 of the Arbitration and Conciliation Act, 1996 was issued after the original award was set aside by the Court in earlier proceedings.

Background The disputes arose from a partnership firm, M/s Jason Enterprises, constituted under a deed dated December 29, 2004. Following disputes between the partners, arbitral proceedings were initiated before DIAC, which concluded in an award dated November 18, 2014. That award was set aside by the Delhi High Court vide order dated March 23, 2017 in Prakash Chand Goyal (HUF) v. Sunil Walia, with liberty to the parties to initiate fresh arbitration in accordance with law.

Pursuant to this, DIAC issued a communication dated January 4, 2018 appointing a sole arbitrator, and proceedings resumed under case reference No. DIAC/1664/04-17. The petitioner contended that respondent No. 2 never issued a fresh notice invoking arbitration under Section 21 before the second round of proceedings was initiated, rendering the entire arbitration void ab initio.

The petitioner also raised objections before the arbitrator under Section 16 of the Act. An earlier Section 16 application preferred on January 16, 2019 had already been dismissed vide order dated February 11, 2019, and was never challenged by either party. A fresh application was filed again, which the arbitrator dismissed vide the impugned order dated April 11, 2026, noting that the matter was at the stage of final arguments and the mandate for conclusion of proceedings was expiring on June 30, 2026. Issue Before the Court

The primary question before the Court was whether non-issuance of a fresh notice under Section 21 of the Act, after the earlier award was set aside and liberty was granted for fresh arbitration, would be fatal to the validity of the subsequent arbitral proceedings.

Court's Analysis

The Court relied on the Supreme Court's decision in Bhagheeratha Engineering Ltd. v. State of Kerala (2026 SCC OnLine SC 5), which reiterated that Section 21 of the Act is not a mandatory precondition for the commencement of arbitration. The purpose of Section 21, the Supreme Court had held, is only to determine the date of commencement of arbitral proceedings for the purpose of reckoning limitation. Failure to issue such a notice would not be fatal to a party if the claim is otherwise valid and the disputes are arbitrable. The Court also noted that the petitioner had been participating in the proceedings before the arbitral tribunal and had, prima facie, not raised any objection regarding the absence of a Section 21 notice at the inception of the proceedings.

On the question of maintainability of the writ petition itself, the Court referred to S.B.P. & Co. v. Patel Engineering Ltd. (2005) 8 SCC 618, wherein the Supreme Court held that parties must wait until an award is passed before challenging orders of an arbitral tribunal, unless a right of appeal exists under Section 37 of the Act. The Court further cited Surender Kumar Singhal v. Arun Kumar Bhalotia (2021 SCC OnLine Del 3708), which laid down that interference under Article 227 in arbitral proceedings is permissible only in exceptional circumstances where an order is completely perverse or patently lacking in inherent jurisdiction. The Court found no such exceptional circumstances in the present case.

Ruling

The writ petition was dismissed. The Court clarified that the petitioner remained at liberty to raise all pleas in proceedings under Section 34 of the Act, if occasion arose.

Coram: Justice Purushaindra Kumar Kaurav | Counsel for Petitioner: Mr. Bharat Bhushan Bhatia