Court affirms jurisdiction and resolves procedural objections to arbitration notice
In a significant ruling, the Bombay High Court has appointed an arbitrator to resolve the disputes between Unistar Metals Private Limited and GE Power Limited, arising from a purchase order issued in March 2019. The court's decision, presided over by Justice Arun R. Pedneker, addresses key procedural objections raised by GE Power regarding the arbitration notice and confirms the court's jurisdiction to appoint an arbitrator.
The disputes stem from a purchase order involving the supply of ESP Cold Roof materials valued at over Rs. 2.15 crore. Unistar Metals invoked the arbitration clause under Section 21 of the Arbitration and Conciliation Act, 1996, following disagreements over the supply quality and quantity. GE Power challenged the invocation, citing procedural deficiencies and jurisdictional issues, including the non-compliance with the Delhi International Arbitration Centre (DIAC) rules.
Justice Pedneker, however, clarified that the Section 21 notice primarily serves to determine the commencement of arbitral proceedings for reckoning limitation periods. The court emphasized that non-compliance with DIAC procedural rules does not invalidate the arbitration notice if disputes persist and the arbitral tribunal is not constituted. The judgment highlighted that the contents of the Section 21 notice do not restrict claims or counterclaims, and failing to issue such notice is not fatal if disputes are otherwise arbitrable.
The court also addressed the objections regarding the appointment procedure, asserting that the court holds jurisdiction under Section 11(6) of the Act to appoint an arbitrator when institutional mechanisms fail. In light of procedural resistance from GE Power, the court appointed Smt. Anuja Prabhudessai, a former judge of the Bombay High Court, as the sole arbitrator to adjudicate the disputes.
Justice Pedneker's ruling underscores the procedural flexibility afforded by arbitration laws, emphasizing the primacy of resolving substantive disputes over procedural technicalities. The parties have been directed to comply with the arbitral process under the appointed arbitrator, with all contentions kept open for consideration during the arbitration proceedings.
The decision is expected to streamline the resolution of the commercial dispute, reaffirming the court's role in facilitating arbitration when parties encounter procedural impasses.
Bottom line:-
Arbitration, Section 21 notice under Arbitration and Conciliation Act, 1996 is primarily for determining the commencement of arbitral proceedings and reckoning limitation - Non-compliance with procedural aspects of institutional rules, such as DIAC Rules, does not invalidate the notice if disputes persist and arbitral tribunal is not constituted.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Sections 11, 21, 23
Unistar Metals Private Limited v. GE Power Limited, (Bombay) : Law Finder Doc id # 2940701
