No requirement to issue fresh notice for re-commencingarbitration proceeding after first arbitration award is set aside.

Facts

• The petitioner company entered into a Dealership Agreement with respondent company on 06.2013.
• The disputes arose regarding unpaid invoices of 14,86,932/- for goods delivered by the Petitioner to the Respondent.
• The Petitioner invoked the arbitration clause on 10.2018, unilaterally by appointing an arbitrator.
• The appointed arbitrator issued an award in favour of the Petitioner on 11.2020.
• The Respondent challenged the award dated 11.2020 before the District Judge, Pune. On 7.01.2023, the District Judge set aside the arbitral award, citing the unilateral appointment of the arbitrator violated the Arbitration and Conciliation Act, 1996, as interpreted by the Supreme Court.
• The Petitioner filed a petition seeking the appointment of a Sole Arbitrator under Section 11(6) of the Arbitration and Conciliation Act,
• The Respondent argued that the petition was premature, as a fresh notice invoking arbitration under Section 21 was

Issue

1. Whether a fresh notice invoking arbitration under Section 21 of the Arbitration and Conciliation Act, 1996 is required after an arbitral award is set aside due to the unilateral appointment of the arbitrator ?

Legal Analysis

• The Court analysed the statutory scheme of the Arbitration and Conciliation Act, 1996, examining Sections 7, 11, 21, and Chapters III and V, to determine the proper procedure for appointing an arbitrator and commencing arbitration
• The Court clarified that Section 21, while often referred to as “invocation of arbitration,” does not use that specific It simply establishes that arbitral proceedings commence on the date the respondent receives the request for arbitration, unless otherwise agreed upon by the parties.
• The Court rejected the Respondent’s argument, holding that a fresh notice under Section 21 was The Court reasoned that the Petitioner’s initial notice on 30.10.2018, effectively commenced the arbitration proceedings. Setting aside the award due to the improper appointment of the arbitrator did not negate the existence of the dispute or the initiation of the proceedings.
• The Court emphasized that the Respondent was aware of the ongoing dispute and the agreement to resolve it through Requiring a fresh notice would be a mere formality and would not serve the Act’s objective of efficient dispute resolution.

 Conclusion

The Court held that a fresh notice under Section 21 of the Arbitration and Conciliation Act, 1996 is not required when an arbitral award is set aside solely due to the improper appointment of the arbitrator. The Court appointed a new Sole Arbitrator to adjudicate the dispute. This decision underscores  that procedural irregularities in appointing  an  arbitrator  do  not  necessitate restarting the entire arbitration process, particularly when the dispute and the parties’ intention to arbitrate are clear.