Fresh Section 21 Notice Mandatory to Initiate New Arbitration After Award Is Set Aside: Bombay High Court
The Bombay High Court has ruled that once an arbitral award is set aside under Section 34 of the Arbitration and Conciliation Act, parties must issue a fresh notice under Section 21 before commencing a new round of arbitration.
Published on 7 July 2026 • 05:50 am
Background
The dispute arose from a partnership deed executed in December 1985 between the applicants and Respondent Nos. 1 and 2. An arbitral award delivered in April 2016 was subsequently set aside by the Bombay High Court under Section 34 of the Arbitration and Conciliation Act in October 2019.
Following the setting aside of the award, the applicants issued a fresh notice under Section 21 in March 2024 before filing an application under Section 11 seeking appointment of an arbitrator.
Court's Findings
Justice Arun R. Pedneker held that the issuance of a fresh notice under Section 21 is mandatory whenever arbitration is recommenced after an earlier award has been set aside. The Court observed that arbitration legally commences only upon service of such notice unless the parties agree otherwise.
The Bench clarified that limitation for filing a Section 11 application cannot be calculated independently of a valid Section 21 notice. The exclusion of time available under Section 43(4) can also be claimed only after arbitration has been properly reinitiated.
Issue of Non-Signatories
The Court also examined whether Respondent Nos. 3 and 4, who became partners under subsequent partnership deeds, could be compelled to participate in arbitration despite never signing the original arbitration agreement.
Relying upon the Supreme Court decisions in Cox and Kings and Hindustan Petroleum Corporation Limited, the Court held that arbitration cannot be imposed merely on grounds of convenience or fairness. A referral court must first be satisfied that there is prima facie evidence showing an intention to bind such persons to the arbitration agreement.
Decision
The Court held that the fresh Section 21 notice had been issued within the prescribed limitation period after accounting for the Supreme Court's COVID-19 limitation extensions. Consequently, the Section 11 application against the original contracting parties was maintainable.
Justice Sadhana Jadhav (Retd.), former Judge of the Bombay High Court, was appointed as the sole arbitrator. However, the proceedings against Respondent Nos. 3 and 4 were dismissed as they were not parties to the original arbitration agreement.
"A fresh notice under Section 21 is the legal commencement of a new arbitration and cannot be dispensed with merely because an earlier award has been set aside."
— Bombay High Court
Key Takeaways
Fresh Notice Mandatory
A new Section 21 notice must always precede a fresh arbitration after an arbitral award is set aside.
Limitation Begins with Notice
The limitation period for recommencing arbitration is linked to a valid Section 21 notice and not merely the setting aside of the previous award.
Non-Signatories Protected
Persons who are not parties to an arbitration agreement cannot be referred to arbitration without prima facie evidence showing their consent or legal relationship.
Section 43(4)
The statutory exclusion of time is available only where arbitration has been properly recommenced in accordance with the Act.
Legal Significance
The judgment reinforces the procedural safeguards governing arbitration by clarifying that every fresh arbitral proceeding requires a valid invocation under Section 21. It also reiterates that arbitration remains a consensual dispute resolution mechanism and cannot ordinarily bind persons who never agreed to arbitrate.
Case Details
Case
Hemant D. Shah HUF & Anr. v. Chittaranjan D. Shah HUF & Ors.
Court
Bombay High Court
Bench
Justice Arun R. Pedneker
Decision Date
7 July 2026
Case Number
Commercial Arbitration Application No. 184 of 2026
This article is intended for informational purposes only and provides a summary of the Bombay High Court's judgment. Readers should refer to the complete judgment for the full legal reasoning and operative directions.