The Allahabad High Court held that compliance with Section 21 of the Arbitration and Conciliation Act, 1996 is mandatory and in the present case, there is non-fulfilment of the requirements of service of notice to the petitioners as required under Section 21 before the commencement of arbitration proceedings.
Brief Facts:
The present petition was filed by the petitioners seeking issuance of a writ in the nature of Certiorari for quashing the arbitration proceedings pending before Ld. Sole Arbitrator Ms. Zesshana Khan in the matter of Shivalik Small Finance Bank Ltd. V. Samyam Industries & Ors. bearing Case No. Arb-26/2023.
Contentions of the Petitioner:
The learned counsel appearing on behalf of the petitioner raised a purely legal question stating that as per Section 21 of the Arbitration and Conciliation Act, 1996, a notice invoking arbitration dated 26.06.2023 is to be issued by the respondent to the petitioners. However, no such notice has been received by the petitioners nor respondent has produced proof of delivery of said notice at any point of time in the arbitration proceeding as per the requirement of Section 21 of the Act. Unless otherwise agreed by the parties, the arbitral proceeding with respect to a particular dispute commences on the date on which a request for that dispute to be referred to arbitration is received by the respondent.
Observations of the court:
The court referred to the order sheet and noted that there is nothing to show that any such notice as required, before proceeding, has been received by the petitioners. In the order dated 03.07.2023, passed by the arbitral tribunal, it is also mentioned that notice under section 21 of the Act was issued to the respondent i.e. petitioner on 26.06.2023 but no objection and suggestion have been received from the respondent that goes to show that requirement of notice by the respondent that is the petitioner as required under section 21 of the Act for initiation of arbitration proceedings which is mandatory has not been served upon the petitioners.
The court stated that there is non-fulfilment of the requirements of service of notice to the petitioners as required under section 21 before the commencement of arbitration proceedings and no purpose will be served in keeping the petition pending, by issuing notice to respondent no. 1 in view of order proposed to be passed.
The decision of the Court:
The court allowed the petition and quashed the entire arbitration proceedings.
Case Title: M/S Samyam Industries And Ors. vs Shivalik Small Finance Bank Ltd.
Coram: Hon’ble Mrs. Justice Manju Rani Chauhan
Case No.: WRIT - C No. - 41115 of 2023
Advocate for the Petitioner: Pallavi Mishra
Advocate for the Respondent: Standing Counsel
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