Bombay High Court Appoints Arbitrator In GE Power-Unistar Dispute Despite Defective Section 21 Notice

The Bombay High Court on 14 July held that a defective notice invoking arbitration does not invalidate the commencement of arbitral proceedings where the arbitration agreement has been invoked and the disputes between the parties are clearly identified.

Justice Arun R. Pedneker appointed former Bombay High Court Judge Justice Anuja Prabhudessai as the sole arbitrator to adjudicate the dispute between Unistar Metals Private Limited and GE Power Limited under Section 11(6) of the Arbitration and Conciliation Act, 1996. He observed:

“There is no objection to the notice under Section 21 to the name of sole arbitrator on the ground that the agreement specifies arbitral tribunal should be of three arbitrators. Names of three arbitrators are not suggested by the Respondent. The dispute persists, and the notice under Section 21 has not resulted in the appointment of the arbitral tribunal. On the failure of constitution of the arbitral tribunal, this Court gets jurisdiction to appoint an arbitrator under Section 11(6). The purpose of notice under Section 21 is time-related and if the arbitral tribunal is not constituted as per the agreed procedure, this Court gets jurisdiction to appoint an 'Arbitral Tribunal' under Section 11(6).”

The dispute arose from a purchase order dated 25 March 2019, under which GE Power engaged Unistar Metals to supply 2,52,926.62 kilograms of ESP Cold Roof materials valued at Rs. 2.15 crore.

The purchase order incorporated GE Power's General Terms of Purchase, including Clause 20.2, which provided for disputes to be finally settled under the Delhi International Arbitration Centre (DIAC) Rules by a three-member arbitral tribunal.

Following disputes regarding the supply of goods and fabrication work, Unistar issued a notice under Section 21 of the Arbitration Act (which marks the commencement of arbitral proceedings) on 9 September 2024, proposing appointment of a sole arbitrator. GE Power, in its reply dated 17 October 2024, declined to concur with the appointment and contended that the claims were barred by limitation.

After GE Power raised an objection to the jurisdiction of the Delhi High Court, Unistar withdrew its Section 11 application filed before that Court on 20 January 2026 and approached the Bombay High Court, relying on the contractual clause conferring jurisdiction on courts where the buyer's registered office was situated. Unistar argued that GE Power's refusal to participate in the appointment process resulted in failure to constitute the arbitral tribunal, thereby empowering the Court to appoint an arbitrator under Section 11. It submitted that compliance with the DIAC Rules could be considered during the arbitral proceedings.

GE Power opposed the application, arguing that the arbitration notice was invalid as it proposed a sole arbitrator instead of the three-member tribunal contemplated under the agreement and did not follow the appointment procedure under the DIAC Rules. It further contended that the claims were barred by limitation and that no arbitrable dispute existed since the goods supplied had been rejected and no invoices had been raised.

Rejecting the objections, the Court held that the purpose of a Section 21 notice is to determine the commencement of arbitration for limitation purposes and not to invalidate arbitration proceedings due to procedural defects. It noted that GE Power had objected to the appointment primarily on limitation grounds and had not disputed the invocation of arbitration for failure to comply with the DIAC Rules.

Further, the Bench held that a Section 21 notice does not restrict the claims that may be raised during arbitration and that objections relating to limitation and maintainability are matters for the arbitral tribunal to decide. It observed:

“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.”

The Bench also held that the failure of the agreed appointment process triggered its jurisdiction under Section 11(6) of the Arbitration Act, and that Unistar was not required to first approach the Delhi International Arbitration Centre before issuing the Section 21 notice.

Accordingly, the High Court allowed the application. It further clarified that the venue and arbitral procedure would be governed by the parties' agreement and the Arbitration Act.

Appearances for petitioner (Unistar Metals Private Limited): Advocates Pranit Bag (Bar at Law), Chetan Arvind Alai, Rahul Poddar and Pranit Pawar.

Appearances for respondent (GE Power Limited): Advocate Lizum C. Wangdi, instructed by Advocate Aniket Mokashi.