In a pivotal ruling, the Court affirms that a fresh Section 21 notice is not mandatory for recommencing arbitration proceedings if an initial notice had already initiated the disputes.
In a landmark judgment pronounced on July 16, 2026, the Delhi High Court addressed a significant procedural aspect concerning arbitration proceedings under the Arbitration and Conciliation Act, 1996. The Court ruled that once an arbitral award is set aside, it is not necessary to issue a fresh notice under Section 21 of the Act to recommence arbitration if the disputes had already been initiated with an initial notice.
The case, titled "Cosmo Retail Solutions Private Limited v. Sumant Agarwal and Others," revolved around a dispute concerning the purchase of rights in immovable properties. The petitioner, Cosmo Retail Solutions, had initially commenced arbitration based on a notice under Section 21 of the Arbitration and Conciliation Act, 1996, issued on February 27, 2024. The arbitration culminated in an award on February 13, 2025, which was later set aside by the District Judge (Commercial Courts) on January 5, 2026, due to the unilateral appointment of the arbitrator, contravening settled legal principles.
The petitioner subsequently approached the Delhi High Court, seeking the appointment of a new arbitrator. The respondents objected, arguing that a fresh notice under Section 21 was required to recommence the arbitration. The Court, however, rejected this contention, emphasizing that the initial notice had already served its purpose of commencing the arbitration and marking the limitation period.
Justice Subramonium Prasad, who presided over the case, referred to precedents including the Supreme Court's decision in Adavya Projects Pvt. Ltd. v. Vishal Structurals Pvt. Ltd. and M/s Bhaghreeratha Engineering Ltd v. State of Kerala. The Court clarified that the purpose of Section 21 is to initiate arbitration and freeze the limitation period, and once this is achieved, a fresh notice is unnecessary merely because the award has been set aside.
The ruling also highlighted the application of Section 43(4) of the Arbitration and Conciliation Act, which excludes the time spent during arbitration when computing the limitation period for recommencing proceedings. The Court appointed Mr. Kapil Sankhla as the Sole Arbitrator to adjudicate the disputes under the aegis of the Delhi International Arbitration Centre (DIAC), ensuring compliance with the DIAC's rules and the Act's disclosure requirements under Section 12(2).
This judgment is expected to streamline arbitration proceedings, preventing unnecessary procedural delays and reaffirming the efficiency of arbitration as a dispute resolution mechanism.
Bottom line:-
Arbitration and Conciliation Act, 1996 - Issuance of a fresh notice under Section 21 of the A&C Act is not required for recommencement of arbitration when an arbitral award is set aside, provided disputes were already initiated with the initial notice under Section 21.
Statutory provision(s):
Arbitration and Conciliation Act, 1996 Sections 11, 21, 43(4)
Cosmo Retail Solutions Private Limited v. Sumant Agarwal, (Delhi) : Law Finder Doc id # 2943870
