Commencement of Arbitration:: Deepdharshan Builders (P) LTD Saroj & Ors

Commencement of Arbitration:
1. The general principle is that arbitration is deemed to be commenced when one party
serves a notice on the other party intimating that he proposes to invoke the arbitration
agreement and calls upon the other party to take some steps towards setting the arbitration
process in motion.
2. Unless and until a notice is served on the opposite party calling upon them to appoint an
arbitrator in terms of the arbitration agreement, it cannot be expected of the opposite party to
know that the party invoking the arbitration agreement is desirous of getting the disputes
resolved through arbitration.
3. Another object of the notice of invocation of arbitration is that it serves as a record, for
limitation purposes, to indicate the date when the notice was sent. In the matter
of: Deepdharshan Builders (P) Ltd V/s Saroj & Ors, 2018 SCC
Online Bom 4885, it was observed that:
“… In my view, since the proceedings under Section 11 (6) or Section 11 (9) of the
Arbitration Act for seeking appointment of arbitral tribunal are also now required
to be filed before the High Court or the Hon’ble Supreme Court, as the case may be.
Article 137 of the Schedule to the Limitation Act, 1963 would apply. It is not in
dispute that no other Article of Schedule to the Limitation Act, 1963 provides for
any other period of limitation for filing an arbitration application filed under
Section 11 (6) or Section 11 (9) of the Arbitration Act respectively… It is not in
dispute that Article 137 of the Schedule to the Limitation Act, 1963, such application
has to be filed within three years from the date when the right to apply accrues. In
my view, under Article 137 of the Limitation Act, 1963, application for appointment
of an arbitrator under Section 11 (6) or Section 11 (9) of the Arbitration Act before
the High Court or the Hon’ble Supreme Court would apply from the date when a
notice invoking an arbitration agreement is received by other side and other side
refuses to the name suggested by the opponent or refusing to suggest any other
name in accordance with the provisions of Section 11 or the agreed procedure
prescribed in the arbitration agreement within the time contemplated therein or
specifically refuses to appoint any arbitrator in the event of such other party being
an appointing authority… In my view, the limitation prescribed under Article 137 of
the Schedule to the Limitation Act, 1963 which applies to an application under
Section 11 (6) or Section 11 (9) of the Arbitration Act filed before the High Court or
before the Hon’ble Supreme Court cannot be mixed up with the period of limitation
applicable to the claims prescribed in various other Articles of the Schedule to the
Limitation Act, 1963. Both these periods of limitation i.e. one applicable to the
claims being made and another being applicable to the application under Section 11
(6) or Section 11 (9) of the Arbitration Act to which Article 137 of the Schedule to the
Limitation Act, 1963 applies, are two different periods of limitation and cannot be
made applicable to each other…” (underlining added)
4. In absence of agreement to the contrary, an arbitration is treated as being commenced

when a notice in writing is served on the other party requiring him to agree to the
appointment of an arbitrator or, if the parties are each to make an appointment, requiring him
to appoint an arbitrator.
5. Where, however, the arbitration agreement specifies the person to be appointed as
arbitrator, the arbitration is treated as being commenced when a notice in writing is served on
the other party requiring him to submit the dispute to that person.[1]
6. Finally, if the arbitrator is to be appointed by someone other than a party to the
arbitration proceedings, such as an arbitration institution, the arbitration is treated as being
commenced when notice in writing is given to that other person requesting him to make the
appointment.[2]
Notice of arbitration or the commencement of arbitration may not

bear the same meaning:
A notice of arbitration or the commencement of arbitration may not bear the same meaning,
as different dates may be specified for commencement of arbitration for different purposes.
What matters is the context in which the expressions are used. The date on which the request
for the dispute to be referred to arbitration is received by the respondent from the claimant is
the date on which arbitration commences in respect of that particular dispute. (Milk
Food Ltd V/s GMC Ice Cream (P) Ltd, AIR 2004 SC 3145)
Institutional Arbitration:
Whether communication claiming disputed amount and contemplating arbitration in the
alternative is a valid notice of invocation of arbitration under Section 21 of the A&C Act?
In the matter of: Badri Singh Vinimay (P) Ltd V/s MMTC Ltd, O.M.P.

No. 225/ 2015, High Court of Delhi (Date of Decision: 06.01.2020), it was held that:
1. Section 21 of the A&C Act requires a party to send a request to the counter-party for the
dispute to be referred to arbitration.
2. Notice (of invocation of arbitration) under Section 21 of the A&C Act must state/
disclose:
(a) The facts leading to the dispute;

(b) The nature of the claim of the claimant; and,
(c) The legal recourse that the claimant would take if its claim is not satisfied by the
counter-party.
3. That in the matter of Badri Singh Vinimay (P) Ltd (Supra), the arbitration clause in
the agreement stated as follows:
“Any dispute or difference in respect of any matter relating to or arising out of the
Contract will be settled in accordance with the Rules of Arbitration of Indian
Council of Arbitration, Delhi and the award made in pursuance thereof shall be
final and binding on the parties. The venue of the Arbitration will be New Delhi.”
However, the notice of invocation of arbitration issued by the claimant to the respondent/
counter-party stated as follows:
“… Under the facts and circumstances stated herein above, I by way of this notice to
pay a sum of Rs. 88,08,932/- along with interest @ 18% p.a. w.e.f. 05.10.2011 till
the date of payment/ realization; to my client within a period of 15 days from the
receipt of this notice, failing which my client shall be constrained to initiate
appropriate legal action against you for recovery of the said amounts and interest
thereon including initiation of arbitration proceedings entirely at your risk, costs
and consequences. Copy of this notice is retained in my office for taking further
action in the matter.”
That the Hon’ble High Court of Delhi observed that the notice of invocation/ commencement
of arbitration issued by the claimant to the respondent/ counter-party was valid as it fulfilled
all the requisites of Section 21 of the A&C Act.
4. Section 21 of the A&C Act commences with the words, “unless otherwise agreed by
the parties”. This indicates that the parties to an agreement are governed by the mechanism
for commencement of arbitration that is contained in the arbitration clause of the agreement.
5. In the matter of: RIICO Ltd. Jaipur & Ors V/s Manoj Ajmera &
Anr, (2008) 2 Arb LR 388, the Hon’ble High Court of Rajasthan held that a
communication claiming a disputed amount and contemplating arbitration in the alternative is
sufficient notice of a request for arbitration.
6. In the matter of: Alupro Building Systems (P) Ltd V/s Ozone
Overseas (P) Ltd, 2017 SCC Online Del 7228, it was held that:
(a) The parties to an agreement having an arbitration clause can agree to waive the
requirements of Section 21 of the A&C Act.
(b) The provisions of Section 21 of the A&C Act are derogable, and it is possible in a given
case that agreement on the rules to be followed for invoking arbitration clause may involve
waiver of the statutory requirement contained in Section 21 of the A&C Act.
7. Whether communication claiming disputed amount and contemplating arbitration in the

alternative is a valid notice of invocation of arbitration under Section 21 of the A&C
Act? Yes.
Excursus:
i. The courts have been reluctant to require too much technicality in a notice of
arbitration.
ii. If the notice of invocation simply says that a party requires the dispute to be
submitted to arbitration that may be sufficient to commence the arbitration because it is by
implication a request to the other to agree to the appointment of an arbitrator or to appoint his
arbitrator.
iii. It is preferable, however, that the notice should make clear what is required of
other party and it is not unusual to impose a time limit for compliance, failing which, if
appropriate, an application can be made to court to have the arbitrator appointed.[3]
iv. In the matter of: ABB ABL Ltd V/s Cement Corporation of
India, (1999) 78 DLT 132, it was observed that, if the communication states, “… we
hereby submit our claim for Rs. 118.87 crores, on account of non-completion of
erection and commissioning of contracts; non-fulfillment of performance
guarantee; supply of defective equipment; delay in execution of the job and non-
performance of the plant in accordance with the contract”, then it definitely indicates
that there is a request for entering on the reference of dispute to the arbitration.
Further, in the matter of ABB ABL Ltd (Supra) it was observed that:
“… It may further be mentioned that Section 21 does not require that request
should be made expressly in writing. This was a request by conduct of the parties
and it has to be understood in that manner. Had it been essential that request
should be in writing to the petitioner, then the word "written" should have found
place in Section 21 before the word "request" …”
v. It cannot be said that report in the matter of Badri Singh Vinimay (P)
Ltd (Supra) is in contrast to the report in the matter of Alupro Building Systems (P)
Ltd (Supra), because unlike in the former, in the latter there was no notice issued by the
claimant to the counter-party, informing the counter-party about: the facts leading to the
dispute; the nature of the claim of the claimant; and, the legal recourse that the claimant seeks
to initiate if its claims are not satisfied by the counter-party.

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Commencement of Arbitration:

4. In absence of agreement to the contrary, an arbitration is treated as being commenced

Notice of arbitration or the commencement of arbitration may not

In the matter of: Badri Singh Vinimay (P) Ltd V/s MMTC Ltd, O.M.P.

(a) The facts leading to the dispute;

7. Whether communication claiming disputed amount and contemplating arbitration in the

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