A notice invoking arbitration under S. 21 is mandatory (unless otherwise agreed by parties) as its receipt fixes the date of commencement of arbitral proceedings, which is crucial for determining limitation (S. 43), applicable law

 ADAVYA PROJECTS PVT. LTD.

Vs.

M/S VISHAL STRUCTURALS PVT. LTD. AND OTHERS

( Before : Pamidighantam Sri Narasimha and Manoj Misra, JJ. )

Civil Appeal No. 5297 of 2025 Arising Out of SLP (C) No. 25746 of 2024

Decided on : 17-04-2025

  Arbitration and Conciliation Act, 1996 — Section 21 — Notice Invoking Arbitration — Mandatory Nature and Effect of Non-Service — A notice invoking arbitration under S. 21 is mandatory (unless otherwise agreed by parties) as its receipt fixes the date of commencement of arbitral proceedings, which is crucial for determining limitation (S. 43), applicable law (including amendments to the Act), and fulfilling a prerequisite for filing a S. 11 application — However, the non-service of a S. 21 notice on a person does not, by itself, preclude the arbitral tribunal from impleading that person if they are found to be a party to the arbitration agreement — The primary purpose of S. 21 relates to commencement and time-related aspects, while other functions like informing about claims or potential arbitrators are incidental. (Relied on: Milkfood Ltd. v. GMC Ice Cream (P) Ltd., (2004) 7 SCC 288; State of Goa v. Praveen Enterprises, (2012) 12 SCC 581; BSNL v. Nortel Networks (India) (P) Ltd., (2021) 5 SCC 738. Partially agreed with, but distinguished on conclusion: Alupro Building Systems Pvt Ltd. v. Ozone Overseas Pvt Ltd., 2017 SCC OnLine Del 7228)

S. 34(3) Arbitration Act | Application Filed On Next Working Day After 90 Day Period Is Within Limitation

 Affirming the High Court's decision, the judgment authored by Justice Narasimha rejected the Appellant's argument of interpreting three months under Section 34(3) of the Arbitration Act as 90 days, instead, it said that the period should be construed as 3 calendar months.

“At this stage, it is necessary to reiterate that the statutory language of Section 34(3) clearly stipulates the limitation period as “three months”, as opposed to the condonable period as “thirty days”. This difference in language unambiguously demonstrates the legislative intent that the limitation period is 3 calendar months as opposed to 90 days. Therefore, we reject the argument taken by the appellant in its written submissions that 3 months must be read as 90 days in the context of Section 34(3).”, the court said.

“In the present case, the respondent received a signed copy of the award on 09.04.2022. Since Section 12(1) applies, this date must be excluded and the 3-month limitation period must be reckoned from 10.04.2022. This expires on 09.07.2022, which happened to be a second Saturday when the court was not working. Hence, the benefit of Section 4 of the Limitation Act will inure to the benefit of the respondent.”, the Court observed.

“Therefore, the respondent's application under Section 34, which was filed on 11.07.2022, i.e., the next working day of the court, must be considered as being filed within the limitation period. Consequently, there was no delay in filing the application and sufficient cause need not be shown for condonation of delay. The High Court therefore rightly allowed the Section 37 appeal and held that the respondent's Section 34 application was filed within the limitation period.”, the court added.

In this context, the Court referred to State of West Bengal v. Rajpath Contractors and Engineers Ltd. where it upheld the application of Section 4 of the Limitation Act, allowing a party to file an application to set aside an arbitral award on the next working day if the initial three-month period expires on a court holiday.

In terms of the aforesaid, the Court dismissed the appeal.

Case Title: M/S R. K. TRANSPORT COMPANY VERSUS M/S BHARAT ALUMINUM COMPANY LTD. (BALCO)

Consumer Can Approach Consumer Forum Even If Agreement Provides For Arbitration

 

The Supreme Court recently reiterated that the arbitration clauses in an agreement would not override the consumer's choice to approach the consumer forum for adjudication of the dispute.

The Court said that a consumer cannot be forced to get the dispute adjudicated through Arbitration just because an arbitration clause is mentioned in an agreement. It added that the consumer has the exclusive right to decide whether to pursue arbitration or approach the Consumer Forum.

The Court noted that the arbitration clause could not be enforced against the consumer, as the choice of forum lies exclusively with the consumer.

"As vivid from Emaar MGF Land Ltd. v Aftab Singh, (2019) 12 SCC 751 and M Hemalatha Devi (supra), even in a consumer dispute under the Act, or for that matter, the Consumer Protection Act, 2019, arbitration, if provided for under the relevant agreement/document, can be opted for/resorted to, however, at the exclusive choice of the 'consumer' alone. As the appellant is not a 'consumer' in terms of the Act and the existence of the Tripartite Agreement is doubtful, we need not dwell further hereon."

In M. Hemalatha Devi v. B. Udayasri, the Court had observed :

“The exclusion of a dispute from arbitration may be express or implied, depending again upon the nature of the dispute, and a party to a dispute cannot be compelled to resort to arbitration merely for the reason that it has been provided in the contract, to which it is a signatory. The arbitrability of a dispute has to be examined when one of the parties seeks redressal under a welfare legislation, in spite of being a signatory to an arbitration agreement. “The Consumer Protection Act” is definitely a piece of welfare legislation with the primary purpose of protecting the interest of a consumer. Consumer disputes are assigned by the legislature to public fora, as a measure of public policy. Therefore, by necessary implication such disputes will fall in the category of non-arbitrable disputes, and these disputes should be kept away from a private fora such as “arbitration”, unless both the parties willingly opt for arbitration over the remedy before public fora.”,

M/S CITICORP FINANCE (INDIA) LIMITED VERSUS SNEHASIS NANDA

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