No Fresh Notice Needed After Award Is Set Aside If Arbitration Was Already Invoked: Delhi High Court

The Delhi High Court on 16 July held that a party need not issue a fresh notice under Section 21 of the Arbitration and Conciliation Act, 1996 (which marks commencement of arbitral proceedings) before seeking appointment of a new arbitrator after an arbitral award is set aside, if arbitration had already commenced through a valid notice.

A Single-Judge Bench of Justice Subramonium Prasad rejected the objection raised by Sumant Aggarwal and others and appointed Mr. Kapil Sankhla as the sole arbitrator to adjudicate the dispute between the parties. He observed:

“Once the disputes stands commenced, there is no need to recommence the same dispute again just because the Award has been set aside. The purport of notice under Section 21 is to intimate one party that there are disputes between the parties and the matter has been referred to arbitration. Simultaneously, the purport of notice under Section 21 of the A&C Act is also to freeze the period of limitation. Once this mandate of Section 21 has been achieved, in the opinion of this Court, the requirement of a fresh notice under Section 21 of the A&C Act is not necessary merely because the award has been set aside.”

The dispute arose from Agreements to Sell under which Sumant Aggarwal, Anamika Aggarwal and Kshirodh Aggarwal agreed to transfer their rights in Flat No. A-1201 and Plot No. B-45 in the Gold Souk Golf Links project at Sohna, Haryana to Cosmo Retail Solutions Private Limited. Clause 11 of the Agreements contained an arbitration clause designating Delhi as the seat of arbitration.

Cosmo Retail alleged that although the allottees had received the entire sale consideration, they failed to execute the required documents. It invoked arbitration through a Section 21 notice issued on 27 February 2024 and unilaterally appointed an arbitrator, who passed an award on 13 February 2025.

The Commercial Court at Dwarka set aside the award through an order dated 5 January 2026 after holding that the unilateral appointment of the arbitrator was contrary to the law laid down by the Supreme Court in Perkins Eastman. Cosmo Retail thereafter approached the High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of an independent arbitrator.

It argued that the earlier Section 21 notice had already commenced arbitration and stopped limitation from running. The allottees, however, relied on decisions of the Kerala High Court and the Bombay High Court to contend that the arbitral proceedings stood terminated after the award was passed and fresh arbitration could begin only after issuance of another Section 21 notice.

Rejecting the objection, the Bench held that Section 43(4) of the Arbitration and Conciliation Act, 1996 (which excludes the time spent in arbitration while calculating limitation) does not require a party to restart arbitration proceedings with a fresh Section 21 notice after an award is set aside. It observed:

“The words 'including arbitration' is of significance. Section 43(4) does not prescribe that the fresh proceedings should only be an arbitration proceeding. It could well be a Suit or any other proceeding. Section 43(4) cannot be read to understand that the effect of Section 43(4) is that once an Award is set aside then there has to be a re-initiation of arbitration proceedings.”

Accordingly, the High Court appointed Mr. Kapil Sankhla as the sole arbitrator and directed that the proceedings be conducted under the aegis of the Delhi International Arbitration Centre (DIAC). It also directed the arbitrator to furnish the statutory disclosure under Section 12(2) and clarified that all claims and counterclaims would remain open for adjudication on merits.

Appearances for Petitioner: Advocates Mr. Navin Kumar, Ms. Prakriti Priya and Ms. Nitika.

Appearances for Respondent Nos. 1 to 3: Advocates Mr. Satyajit Sarna, Mr. Sudev Singh Juneja, Ms. Rukmani Banka and Mr. Ritik Raj.