[Cites 34, Cited by 0]
Kerala High Court
M/S. Agro Indus Credits Limited vs Mangalan S @ Jagan Mangalan on 18 December, 2025
2025:KER:97789
A.R.Nos.131 & 138 of 2025
1
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE S.MANU
THURSDAY, THE 18TH DAY OF DECEMBER 2025 / 27TH AGRAHAYANA, 1947
AR NO. 131 OF 2025
04.01.2025 IN EP NO.1031 OF 2021 OF DISTRICT COURT &
SESSIONS COURT, THIRUVANANTHAPURAM
PETITIONER/APPLICANT:
M/S. AGRO INDUS CREDITS LIMITED,
FORMERLY AGRO INDUS FINANCE AND LEASING INDIA
LTD, THADIKKARAN CENTER PALARIVATTOM, COCHIN
REPRESENTED BY ITS LEGAL AND RECOVERY HEAD
MR.JOHN THITHEEMOS,
PIN - 682025.
BY ADVS.
SRI.V.S.THOSHIN
SMT.NAKSHATRA SHIKA
RESPONDENTS/RESPONDENTS:
1 MANGALAN S @ JAGAN MANGALAN
AGED 73 YEARS
S/O. SADASIVAN, SAROJA MANDIRAM, KADAKKAVOOR P.O,
THIRUVANANTHAPURAM, PIN - 695306.
2 LALITHA S
AGED 69 YEARS
W/O. MANGALAN S, SAROJA MANDIRAM,
KADAKKAVOOR P.O,THIRUVANANTHAPURAM, PIN - 695306.
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2
3 VIMAL M
AGED 42 YEARS
S/O. JAGAN MANGALAN, SAROJA MANDIRAM,
KADAKKAVOOR P.O, THIRUVANANTHAPURAM,
PIN - 695306.
BY ADVS.
SRI.K.SANEESH KUMAR
SMT.V.B.SANTHINI
THIS ARBITRATION REQUEST HAVING COME UP FOR ADMISSION ON 11.12.2025,
ALONG WITH AR.138/2025, THE COURT ON 18.12.2025 PASSED THE FOLLOWING:
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3
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE S.MANU
THURSDAY, THE 18TH DAY OF DECEMBER 2025 / 27TH AGRAHAYANA, 1947
AR NO. 138 OF 2025
06.02.2024 IN EP NO.1046 OF 2021 OF DISTRICT COURT &
SESSIONS COURT, THIRUVANANTHAPURAM
PETITIONER/APPLICANT:
M/S. AGRO INDUS CREDITS LIMITED
FORMERLY AGRO INDUS FINANCE AND LEASING INDIA LTD
THADIKKARAN CENTER PALARIVATTOM, COCHIN,
PIN - 682025.
REPRESENTED BY ITS LEGAL AND RECOVERY HEAD
MR.JOHN THITHEEMOS.
BY ADVS.SRI.V.S.THOSHIN
SMT.NAKSHATRA SHIKA
RESPONDENTS/RESPONDENTS:
1 MANGALAN S @ JAGAN MANGALAN,
AGED 73 YEARS
S/O SADASIVAN, SAROJA MANDIRAM, KADAKKAVOOR P.O,
THIRUVANANTHAPURAM, PIN - 695306.
2 LALITHA S
AGED 69 YEARS
W/O. MANGALAN S, SAROJA MANDIRAM, KADAKKAVOOR
P.O, THIRUVANANTHAPURAM, PIN - 695306.
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4
3 VIMAL M
AGED 42 YEARS
S/O.JAGAN MANGALAN, SAROJA MANDIRAM, KADAKKAVOOR
P.O, THIRUVANANTHAPURAM, PIN - 695306.
BY ADVS.
SRI.K.SANEESH KUMAR
SMT.V.B.SANTHINI
THIS ARBITRATION REQUEST HAVING COME UP FOR ADMISSION ON 11.12.2025,
ALONG WITH AR.131/2025, THE COURT ON 18.12.2025 PASSED THE FOLLOWING:
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A.R.Nos.131 & 138 of 2025
5
[CR]
S.MANU, J.
--------------------------------------------------
A.R.Nos.131 & 138 of 2025
-------------------------------------------------
Dated this the 18th day of December, 2025
ORDER
The legal question to be resolved in this arbitration request
pertains to whether a new notice or request must be issued to
the respondents to initiate a subsequent arbitral
proceeding, in light of the fact that the previous arbitral award
was annulled on the rationale that the appointment of the
arbitrator was legally untenable.
2. Applicant is a non-banking finance company. The
respondents availed two loans of Rs.95,00,000/- and
Rs.55,00,000/- from the applicant. An agreement was executed
on 17.7.2018 with respect to the loan of Rs.55,00,000/-.
Another agreement was executed on 18.9.2018 for availing the
loan of Rs.95,00,000/-. Respondents agreed to repay the loans
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within a period of 36 months' time. It was also agreed to pay
interest at the rate of 20% per annum with monthly rest
agreeing to service interest at every month. For securing the
loan, they executed demand promissory notes in favour of the
applicant. They also executed security delivering letters in
favour of the applicant. However, they allegedly failed to pay off
the entire outstanding amounts even after expiry of 36 months.
According to the applicant, though several requests were made,
they did not care to repay the amounts.
3. The applicant invoked the arbitration clauses in the
loan agreements and an Arbitrator was appointed. The
respondents raised objection, disagreeing with the appointment
of an inhouse arbitrator. The Arbitrator however proceeded
further and passed awards on 30.12.2019. Applicant filed
E.P.Nos.1046/2021 and 1031/2021 in the Commercial Court,
Thiruvananthapuram for executing the awards. The respondents
approached the Commercial Court, Ernakulam in AOP
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Nos.11/2021 and 116/2021 challenging the awards. The
Commercial Court, Ernakulam found that the appointment of the
Arbitrator itself was bad and the entire arbitration proceedings
were null and void as the appointment of the Arbitrator was
unilateral. The awards were declared as nullity. AOPs were
allowed by setting aside the awards. Thus, the first round of
arbitration proceedings failed to yield any results as far as the
applicant is concerned. Hence, the applicant filed the above
Arbitration Requests for appointment of an Arbitrator by this
Court to determine the disputes between the applicant and the
respondents.
4. Respondents entered appearance through counsel
and raised objection regarding the maintainability of the
arbitration request. They contended that no notice as
contemplated under Section 21 of the Arbitration and
Conciliation Act, 1996 (henceforth mentioned as 'the Act'] was
issued before filing the instant Arbitration Request and therefore
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the requirements under Section 11 of the Act are not satisfied
for invoking the jurisdiction of this Court. They contended that
the said issue may be considered before proceeding further.
5. Heard Sri.Thoshin.V.S., learned counsel for the
petitioners and Sri.K.Saneesh Kumar, learned counsel for the
respondents.
6. Sri.Thoshin submitted that this is the second round of
proceedings and in the first round of arbitral proceedings, notice
was issued under Section 21 of the Act, an Arbitrator was
appointed and awards were passed. Respondents challenged the
awards by approaching the Commercial Court and the court set
aside the awards only for the reason that the appointment of
the Arbitrator was unilateral. He contended that since the
arbitral proceedings commenced as provided under Section 21
of the Act when the respondents received the initial notice, no
fresh notice is required. The learned counsel relied on a
judgment of a learned Single Judge of the Bombay High Court in
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support of his contention. He pointed out that the same issue
was considered by the Bombay High Court and it was held that
an application under Section 11(6) of the Act need not be
preceded by a fresh notice under Section 21 when the first
award was set aside. He hence submitted that there is no merit
in the objection raised by the respondents and the Arbitration
Requests may be allowed.
7. Sri.K.Saneesh Kumar, the learned counsel for the
respondents submitted that the statutory scheme of Arbitration
Act contains specific provisions regarding commencement of
arbitral proceedings and also termination of arbitral
proceedings. He submitted that Section 21 of the Act provides
that arbitral proceedings in respect of a particular dispute
commences on the date on which a request for that dispute to
be referred to arbitration is received by the respondents. He
referred to Section 32 of the Act which deals with termination of
proceedings. He pointed out that various situations under which
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the arbitral proceedings can be considered as terminated are
mentioned in Section 32. He submitted that in view of Section
32(1), the arbitral proceedings shall be terminated by the final
arbitral award or by an order of the Tribunal under sub-section
(2). He pointed out that in these cases, in the previous round,
final awards were passed by the Arbitrator. He hence submitted
that with the passing of the final awards, the arbitral
proceedings commenced with receipt of notice by his parties
were terminated. The learned counsel hence submitted that
under such circumstances issuing fresh notices was essential for
commencement of the arbitral proceedings anew. The learned
counsel further submitted that a comprehensive reading of the
provisions of the Arbitration Act makes it clear that the point of
time of commencement of the arbitral proceedings as well as
the culmination are statutorily provided. Once the arbitral
proceedings are terminated, in order to initiate a second round
of proceedings, issuing fresh notices is unavoidable. The learned
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counsel hence submitted that these Arbitration Requests are not
liable to be entertained for want of notices under Section 21 of
the Act. He pointed out that the power of High Court under
Section 11 of the Act cannot be exercised unless there was a
request from the applicant to the respondent for appointment of
Arbitrator to resolve the dispute. He submitted that the
provisions of Section 32 of the Act as also the Scheme of the Act
were not pointed out to the Bombay High Court in Kirloskar
Pneumatic Company Ltd v. Kataria Sales Corporation
[2024 SCC OnLine Bom 941] and hence the suppositions in the
said judgment may not be followed.
8. Reference to the relevant provisions of the Act is
essential. Section 21 of the Act reads as under:-
"21. Commencement of arbitral
proceedings.--Unless otherwise agreed by
the parties, the arbitral proceedings in
respect of a particular dispute commence on
the date on which a request for that dispute
to be referred to arbitration is received by the
respondent."
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9. Section 32 of the Act is extracted hereunder:-
"32. Termination of proceedings.--(1) The
arbitral proceedings shall be terminated by the
final arbitral award or by an order of the
arbitral Tribunal under sub-section (2).
(2) The arbitral Tribunal shall issue an order
for the termination of the arbitral proceedings
where--
(a) the claimant withdraws his claim,
unless the respondent objects to the
order and the arbitral Tribunal
recognises a legitimate interest on his
part in obtaining a final settlement of
the dispute,
(b) the parties agree on the termination
of the proceedings, or
(c) the arbitral Tribunal finds that the
continuation of the proceedings has for
any other reason become unnecessary
or impossible.
(3) Subject to section 33 and sub-section (4)
of section 34, the mandate of the arbitral
Tribunal shall terminate with the termination
of the arbitral proceedings."
10. Sections 11(4) and (5) of the Act are extracted
hereunder:-
"11. Appointment of arbitrators.
............................................................
(4) If the appointment procedure in sub-
section (3) applies and--
(a) a party fails to appoint an arbitrator
within thirty days from the receipt of a
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request to do so from the other party; or
(b) the two appointed arbitrators fail to
agree on the third arbitrator within thirty
days from the date of their appointment,
the appointment shall be made, upon
request of a party, by the Supreme Court or,
as the case may be, the High Court or any
person or institution designated by such
Court;
(5) Failing any agreement referred to in sub-
section (2), in an arbitration with a sole
arbitrator, if the parties fail to agree on the
arbitrator within thirty days from receipt of a
request by one party from the other party to
so agree the appointment shall be made, upon
request of a party, by the Supreme Court or,
as the case may be, the High Court or any
person or institution designated by such
Court."
11. In view of Section 11(4)(a) and 11(5) of the Act, the
Hon'ble Supreme Court or as the case may be the High Court or
any person or institution designated by such Courts shall make
necessary measure for securing the appointment of Arbitrator if
the parties fail to agree on the Arbitrator within 30 days from
the receipt of a request by the one party from the other party.
Hence, to invoke the jurisdiction of courts under Section 11 of
the Act, it is indispensable to make a request. In view of Section
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21 of the Act, on receipt of the request by the respondents, the
arbitral proceedings would be deemed to have commenced.
12. Importance of making the request/issuing notice has
been explained by the Hon'ble Supreme Court in Bharat
Sanchar Nigam Limited and Another v. Nortel Networks
India Private Limited [(2021) 5 SCC 738], the Hon'ble
Supreme Court held as follows;
"51. The period of limitation for issuing notice of
arbitration would not get extended by mere
exchange of letters, [S.S. Rathore v. State of M.P.,
(1989) 4 SCC 582 : 1990 SCC (L&S) 50; Union of
India v. Har Dayal, (2010) 1 SCC 394; CLP (India)
(P) Ltd. v. Gujarat Urja Vikas Nigam Ltd., (2020) 5
SCC 185] or mere settlement discussions, where a
final bill is rejected by making deductions or
otherwise. Sections 5 to 20 of the Limitation Act do
not exclude the time taken on account of settlement
discussions. Section 9 of the Limitation Act makes it
clear that:"where once the time has begun to run,
no subsequent disability or inability to institute a
suit or make an application stops it." There must be
a clear notice invoking arbitration setting out the
"particular dispute" (including claims/amounts)
which must be received by the other party within a
period of 3 years from the rejection of a final bill,
failing which, the time bar would prevail."
[Emphasis added]
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13. In Adavya Projects Pvt. Ltd. v. Vishal Structurals
Pvt. Ltd. and Others [2025 SCC OnLine SC 806], it was held
thus:
"46.....................................................................
The purpose of the Section 21 notice is clear -- by
fixing the date of commencement of arbitration, it
enables the calculation of limitation and it is a
necessary precondition for filing an application under
Section 11 ACA. The other purposes served by such
notice -- of informing the respondent about the
claims, giving the respondent an opportunity to admit
and contest claims and raise counterclaims, and to
object to proposed arbitrators -- are only incidental
and secondary. We have already held that the
contents of the notice do not restrict the claims, and
any objections regarding limitation and
maintainability can be raised before the Arbitral
Tribunal, and the ACA provides mechanisms for
challenging the appointment of arbitrators on various
grounds. Hence, while a Section 21 notice may
perform these functions, it is not the primary or only
mechanism envisaged by the ACA."
[Emphasis added]
14. In ASF Buildtech Private Limited v. Shapoorji
Pallonji and Company Private Limited [(2025) 9 SCC 76],
the Hon'ble Supreme Court held as follows;
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"165. .......................................................................................
Unlike Section 23, Section 21 does not require any
articulation of the relief sought or the framing of
issues -- its sole purpose is to indicate when
arbitration is deemed to have commenced, for the
limited purpose of computing the limitation period.
166. This is further fortified from the fact that
nowhere does the 1996 Act lay down any specific
format or form of notice under Section 21 of the 1996
Act, or any strict requirement of the contents to be
stipulated therein. This was noticed by this Court in
Milkfood Ltd. v. GMC Ice Cream (P) Ltd. [(2004) 7
SCC 288 : (2004) 121 Comp Cas 581], wherein it was
held that Section 21 of the 1996 Act must be
construed in tune with its analogous counterpart
provisions of Article 21 of the Uncitral Model Law read
with Article 3 of the Uncitral Arbitration Rules and
Section 14 of the English Arbitration Act, 1996
wherein at least the form of notice and strict
adherence thereto has become redundant due to the
absence of any specific form or requirement of such
notice.
..................................................................................................
171. Remarkably, Milkfood [Milkfood Ltd. v. GMC Ice
Cream (P) Ltd., (2004) 7 SCC 288 : (2004) 121 Comp
Cas 581] observes that both under Article 21 of the
Uncitral Model Law and by extension Section 21 of the
1996 Act, what is necessary in a notice or request
under the said provision, is the indication that the
claimant seeks arbitration of the dispute. This Court
consciously did not hold that such indication must be of
what all disputes is sought to be referred to arbitration.
The relevant observations read as under: (SCC pp.
301-302, para 27)
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"27. Article 21 of the Model Law which was
modelled on Article 3 of the Uncitral Arbitration
Rules had been adopted for the purpose of
drafting Section 21 of the 1996 Act. Section 3 of
the 1996 Act provides for as to when a request
can be said to have been received by the
respondent. Thus, whether for the purpose of
applying the provisions of Chapter II of the 1940
Act or for the purpose of Section 21 of the 1996
Act, what is necessary is to issue/serve a
request/notice to the respondent indicating that
the claimant seeks arbitration of the dispute."
15. Hence, the receipt of the request by the respondent
is a crucial step in the arbitral proceedings. It is undoubtedly
indispensable. Question arising in this case is as to whether the
requests made initially can be considered as sufficient for
invoking the jurisdiction under Section 11 of the Act despite
passing of awards in the earlier round of proceedings and
subsequent judgments of the Commercial Court declaring them
as nullity.
16. Section 43 (4) of the Act reads as under;
"43. Limitations.
....................................................................
(4) Where the Court orders that an arbitral
award be set aside, the period between the
commencement of the arbitration and the date
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of the order of the Court shall be excluded in
computing the time prescribed by the Limitation
Act, 1963 (36 of 1963), for the commencement
of the proceedings (including arbitration) with
respect to the dispute so submitted."
The above provision makes it abundantly clear that fresh arbitral
proceedings, after an award passed in the earlier proceedings is
set aside, is permissible in arbitration law.
17. The Hon'ble Supreme Court in IN RE Interplay
Between Arbitration Agreements Under Arbitration And
Conciliation Act, 1996 And Stamp Act, 1899 [(2024) 6 SCC
1], held that the Arbitration and Conciliation Act is a complete
code. Hence, the scheme of the Act and provisions are to be
understood, keeping in mind that the same provides for a
comprehensive and complete statutory framework. Section 21
of the Act is encompassed in Chapter V dealing with conduct of
arbitral proceedings. The point of time of commencement of the
arbitral proceedings is marked by receipt of the request from
the applicant to refer the particular dispute for arbitration by the
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respondent. Section 32 of the Act is in Chapter VI, dealing with
making of arbitral award and termination of proceedings.
Provisions in Chapter V deals with various aspects including the
rules of procedure to be followed, place of arbitration, language
to be used in the proceedings, pleadings, hearing, adducing
evidence, etc. Provisions in Chapter VI deal with substantive law
to be followed, decision making, time limits, settlement, form
and content of the award, costs, correction and interpretation of
the award, passing of additional award, etc. The next Chapter
deals with recourse against arbitral award which contains only
Section 34 of the Act providing for application for setting aside
arbitral award. Hence, a provision regarding commencement of
arbitral proceedings has been incorporated in Chapter V and
another regarding termination of proceedings has been included
in Chapter VI of the Act. These provisions are therefore to be
considered as to have been consciously incorporated in the
statute so as to have clarity regarding the commencement of
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the arbitral proceedings as well as culmination of the same. The
arbitral proceedings get terminated by passing of the final
arbitral award in view of Section 32(1) of the Act.
18. The Hon'ble Supreme Court recently considered
various provisions of the Act dealing with termination of arbitral
proceedings in Harshbir Singh Pannu and Another v.
Jaswinder Singh [2025 SCC OnLine SC 2742]. The following
paragraphs of the judgment are pertinent in the context of the
issue arising for debate in this case;
"95. A bare perusal of the aforesaid provision,
particularly, Section 32 sub-section (1), reveals that,
the termination of arbitral proceedings under the Act,
1996, may occur in two distinct ways; first, through
the passing of the final award, or secondly by an order
of the arbitral tribunal under sub-section (2), thereof.
96. Section 32 sub-section (2) of the Act, 1996
warrants a careful examination. The said provision sets
out the three situations in which an arbitral tribunal
may, without rendering the final award, terminate the
arbitral proceedings by passing an order to that effect.
(i) First, as per sub-clause (a), if the claimant
withdraws his claim, and the respondent has no
objection to the withdrawal. However, if the
respondent raises an objection to the withdrawal, on
the ground that it may impede the dispute from being
finally resolved, the arbitral tribunal may refuse to
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terminate the proceedings. What is sought to be
conveyed by the phrase "the arbitral tribunal
recognises a legitimate interest on his part in
obtaining a final settlement of the dispute" used in
sub-clause (a) is that, the objection to the withdrawal
by the respondent, must be founded upon a genuine
interest on his part, in having the dispute resolved.
Where such objections are motivated by any
extraneous considerations, such as an intent to either
delay or protract the dispute or to vexatiously harass
the claimant through the continuation of the
proceedings, the arbitral tribunal may decline to
entertain such objections., and proceed to order a
termination of the proceedings.
Where any objection has been raised by the
respondent, the arbitral tribunal, before passing an
order for termination of the proceedings, is required
to make a finding, that the objections raised, are not
bona-fide insofar as the resolution of the dispute is
concerned.
Insofar, as the question when such a
respondent could be said to have a legitimate interest
in securing the final settlement of dispute is
concerned, it is not possible to lay down any
straitjacket formula or prescribe any exhaustive list.
The answer must invariably turn upon the peculiar
facts and attendant circumstances of each case. Each
case would have to be assessed, keeping in mind the
nature of the claims, the stage of the proceedings,
the evidence on record, and the preliminary findings
already made by the arbitral tribunal. We shall
discuss this in more detail in the latter parts of this
judgment.
(ii) Secondly, as per sub-clause (b), where both
the parties agree to the termination of the arbitral
proceedings, the arbitral tribunal shall pass an order
to such effect.
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(iii) Thirdly, as per sub-clause (c), where the
arbitral tribunal finds that the continuation of the
proceedings has "for any other reason" become
unnecessary or impossible, the arbitral proceedings
shall pass an order terminating the proceedings.
97. We shall discuss sub-section (2) of Section 32,
particularly, the scope and extent of the arbitral
tribunal's authority to pass an order for termination of
proceedings thereunder, in more detail in the
subsequent parts of this judgment.
98. Lastly, sub-section (3) of Section 32 stipulates what
would be the legal effect of the termination of arbitral
proceedings under the Act, 1996. It provides that,
subject to the provisions of Section(s) 33 and 34(4),
the termination of the arbitral proceedings, shall in
consequence also terminate the "mandate of the
arbitral tribunal".
99. To put it simply, upon termination of the arbitral
proceedings, either by way of a final award or an order
to that effect, as the case may be, the arbitral tribunal,
save and except the exercise of the limited powers
conferred upon it by Section(s) 33 and 34(4)
respectively, shall cease to have any further power or
function, under the Act, 1996.
100. Thus, apart from the power to correct or interpret
an award and eliminating the grounds for setting aside
the arbitral award, in terms of Section(s) 33 and 34(4)
respectively, the arbitral tribunal, upon the termination
of the proceedings, is divested of all other powers, and
no longer has any jurisdiction, in respect of the dispute.
..............................................................................
240. Thus, it is manifestly clear that the aforesaid
expression has nothing to do with the nature of the
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order for termination of proceedings. The provision only
stipulates the circumstances in which it would be
permissible for the arbitral tribunal to terminate the
proceedings i.e., where the claimant fails to
communicate its statement of claims within the
specified period without any sufficient cause for such
default.
241. The expression "the mandate of the Arbitral
Tribunal shall terminate" is undoubtedly unique to the
provision of Section 32 of the Act, 1996. However, the
use of the said expression is in no manner intended to
convey that the nature of termination under Section
32(2) is distinct from the termination of proceedings
under the other provisions of the Act, 1996.
242. The expression "mandate of the Arbitral Tribunal"
only refers to the obligation of the arbitral tribunal to
administer the arbitration by conducting the
proceedings in order to adjudicate upon the dispute
referred to it. It is merely descriptive of the function
entrusted to the tribunal, namely, the authority and
duty to adjudicate the disputes before it.
243. As such, the termination of mandate of the arbitral
tribunal signifies nothing more than the cessation of the
authority of the tribunal to proceed further in the
reference. It denotes an end to the tribunal's
jurisdiction over the subject matter of the arbitration in
that particular reference and cannot be construed as
creating a specialised form of termination distinct from
the other provisions of the Act, 1996.
244. Irrespective of whether the proceedings are
terminated on account of the rendition of a final award,
or by the withdrawal of claims, or on account of default
by the claimant, or the intervention of any impossibility
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in the continuation of the proceedings, the legal effect
remains the same, inasmuch as the arbitral tribunal
thereafter stands divested of authority to act in the
reference.
..............................................................................
253. Under the scheme of the Act, 1996, parties are
empowered to refer their disputes to an arbitral
tribunal. The arbitral tribunal which in turn is in seisin of
the dispute, has a positive duty to adjudicate and
resolve the dispute that has arisen between the parties.
254. This reference however, is singular, not perpetual.
It ordains one arbitral process, not an indefinite series
of retry attempts. Once the arbitral tribunal is seized of
a dispute, the mechanism contemplated under the Act,
1996 cannot be again reinvoked to refer the same
dispute to another tribunal.
255. Likewise, once the proceedings before the arbitral
tribunal, come to an end, either by way of a final award
or an order for termination of the proceedings in the
situations envisaged under the Act, 1996, the reference
also comes to an end, and attains finality."
19. Thus, it is settled law that the arbitral tribunal will no
longer have any authority or function under the Act, 1996, with
the exception of exercising the limited powers granted to it by
Sections 33 and 34(4), respectively, upon the conclusion of the
arbitral proceedings, either by a final award or an order to that
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effect, as the case may be. After the proceedings are
terminated, the arbitral tribunal loses all other authority and
jurisdiction over the issue. Arbitral proceedings may end for a
variety of reasons, but the outcome is always the same: the
arbitral reference is closed and the tribunal's authority is
extinguished subject to the restricted powers granted to it by
Sections 33 and 34(4).
20. Section 43(4) of the Act deals with exclusion of the
period between the commencement of arbitration and the date
of the order of the court when an arbitral award is set aside by
the court, in computing the time prescribed by the Limitation
Act, for the 'commencement of the proceedings' with respect to
the dispute. The words employed - 'commencement of the
proceedings' in Section 43(4) has great significance. As held by
Hon'ble Supreme Court in Adavya Projects Pvt. Ltd. (supra),
prime object of the request contemplated under Section 21 of
the Act is to mark a point of time for calculation of limitation. As
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A.R.Nos.131 & 138 of 2025
provided under Section 43(4) of the Act, exclusion of the period
spent in an arbitral proceeding culminated with an award which
was set aside is for computing the time prescribed by the
Limitation Act for the commencement of the de novo
proceedings. Therefore, marking the point of time of
commencement of the subsequent arbitral proceedings is
absolutely necessary. Hence, conjoint appraisal and analysis of
the provisions of Sections 21, 32 and 43(4) of the Act shows
that issuing a fresh notice/making another request is
indispensable to initiate fresh arbitral proceedings, once an
award is set aside by the court.
21. The Bombay High Court in Kirloskar Pneumatic
Company Ltd. (supra) held as under;
"15. In the sequence of events mentioned
above, when the arbitration mechanism is
already triggered and the proceedings have
commenced upon the issuance of the notice
by the petitioner to the respondent on
30/10/2018, and therefore when the
petitioner now seek appointment of an
independent and impartial arbitrator, through
the mechanism of sub-section (6) of Section
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11, I do not deem it necessary that it should
be preceded by a fresh notice under Section
21, though the respondent preferred to call it
as 'invocation notice', as the arbitration
proceedings are already commenced and the
respondent is aware about the existence of a
dispute and also of the fact, that this dispute
in terms of the agreement between the
parties deserve to be resolved through an
independent arbitrator.
For the above, the submission of Mr. Dalal do
not deserve any consideration and is
rejected."
However impact of S.32 and also of S.43 (4) in the scheme of
the Act was not brought to the notice of the Court. Hence, I
respectfully refrain from following the above judgment of the
Bombay High Court.
22. In these cases, arbitral awards were passed, though
they were subsequently set aside and declared as nullity. Once
an order is declared by a competent court as nullity, it has no
effect in the eye of law. A doubt may arise as to whether
passing of such an award would amount to termination of the
arbitral proceedings. But, in the scheme of the Act, as held by
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the Hon'ble Supreme Court in Harshbir Singh Pannu (supra),
with the passing of an award the arbitrator ceases to have
jurisdiction over the dispute. He can act further in the matter
only in the limited circumstances delineated under the Act. That
being so, when an award was passed and the arbitral tribunal
ceased to have jurisdiction, whether the award was
subsequently set aside or declared as nullity is immaterial in the
context of Section 32 of the Act. Passing of the award by the
Arbitral Tribunal is the vital aspect. Hence, the arbitral
proceedings, as far as these cases are concerned, were
undoubtedly terminated with the passing of awards. Therefore,
to commence fresh arbitral proceedings, making fresh requests
were required. I therefore hold that these arbitration requests
are premature for want of any request for fresh arbitration from
the applicant, addressed to the respondents.
In conclusion, these Arbitration Requests are rejected as
premature. Nonetheless, the rejection would not preclude the
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applicant from approaching this Court again after complying
with the requirement of issuing notice to the respondents.
Sd/-
S.MANU
skj JUDGE
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A.R.Nos.131 & 138 of 2025
APPENDIX OF AR NO. 131 OF 2025
PETITIONER'S ANNEXURES
Annexure 1 SECURED LOAN AGREEMENT BETWEEN THE
APPLICANT AND THE RESPONDENT IN FAVOUR
OF THE APPLICANT DATED 18/09/2018.
2025:KER:97789
A.R.Nos.131 & 138 of 2025
APPENDIX OF AR NO. 138 OF 2025
PETITIONER'S ANNEXURES
Annexure 1 SECURED LOAN AGREEMENT BETWEEN THE
APPLICANT AND THE RESPONDENT IN FAVOUR
OF THE APPLICANT DATED ON 17/07/2018
