The commencement of arbitral proceedings is a foundational step in the arbitration process, governed by Section 21 of the Arbitration and Conciliation Act, 1996. This article examines the statutory framework and judicial interpretation of Section 21, with a focus on two significant 2025 judgments of the Delhi High Court. It argues that while no rigid format is prescribed for invoking arbitration, substantial compliance with the statutory requirements is essential. The article also explores how courts have interpreted the sufficiency of notice and the implications of prior knowledge of disputes on the requirement of formal invocation.
Introduction
Arbitration has emerged as a cornerstone of contemporary dispute resolution, particularly in the context of cross-border transactions, technological advancements, and complex commercial arrangements. The Arbitration and Conciliation Act, 1996 (hereinafter “the Act”) has evolved through judicial pronouncements that continue to shape its contours.
Among the various stages of arbitration, the formal initiation of proceedings is governed by Section 21 of the Act, which reads:
> “21. Commencement of arbitral proceedings.—Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent.”
This provision, though seemingly straightforward, has been the subject of judicial scrutiny, particularly regarding what constitutes a valid notice under Section 21. The absence of a prescribed format has led to interpretational challenges, especially when parties dispute whether a communication qualifies as a valid invocation of arbitration.
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Statutory Ambiguity and the Core Issue
Section 21 does not elaborate on the form or content of the notice required to commence arbitration. This lacuna has led to frequent disputes over whether a particular communication satisfies the statutory threshold. The legal significance of this issue lies in the fact that the date of commencement under Section 21 has implications for limitation, jurisdiction, and procedural regularity.
Two judgments of the Hon’ble Delhi High Court delivered in 2025—National Research Development Corporation & Anr. v. M/s. Ardee Hi-Tech Pvt. Ltd. and M/s. Swastika Industries v. M/s. National Research Development Corporation—provide authoritative guidance on this issue.
Judicial Interpretation
- National Research Development Corporation & Anr. v. M/s. Ardee Hi-Tech Pvt. Ltd.
(2025: DHC:3939)
In this case, the respondent contended that a notice dated 05.04.2024 was merely a demand letter and did not constitute a valid invocation under Section 21. The Court, relying on its earlier decision in Prasar Bharati v. Visual Technologies India Pvt. Ltd., ARB.P. 558/2023, clarified that:
– There is no fixed format for a notice invoking arbitration.
– The notice must:
– Identify the disputes between the parties;
– Demand resolution as per the arbitration clause;
– Express an intention to initiate arbitration if disputes remain unresolved; and
– Be communicated to the respondent.
The Court held that the notice in question met these criteria and thus constituted substantial compliance with Section 21. The respondent’s argument was rejected as meritless.
This decision was challenged before the Hon’ble Supreme Court of India via SLP No. 20085/2025, which was dismissed on 1 August 2025, thereby affirming the High Court’s reasoning.
- M/s. Swastika Industries v. M/s. National Research Development Corporation
(2025: DHC:11122-DB)
Here, the appellant argued that the mandatory requirement of Section 21 had not been fulfilled. The Hon’ble High Court, affirming the findings of the learned Additional District Judge, held that:
– The requirement of notice under Section 21 arises only when the opposite party lacks knowledge that arbitration is being invoked.
– In this case, the appellant had itself urged before the trial court that the dispute be referred to arbitration under the relevant clause of the agreement.
– The appellant had also filed a reply and counterclaim before the arbitrator, indicating its awareness and participation in the arbitral process.
The Court concluded that the objection regarding non-compliance with Section 21 was misconceived and that substantial compliance had been achieved.
Key Takeaways
These judgments underscore the following principles:
- No Fixed Format: Section 21 does not mandate a rigid format for invocation. What matters is the substance of the communication.
- Essential Elements: A valid notice must:
– Clearly state the existence of disputes;
– Refer to the arbitration clause;
– Express an intention to arbitrate if disputes are unresolved; and
– Be received by the respondent.
- Substantial Compliance: Courts will uphold the validity of a notice if these elements are substantially met, even if the form is informal.
- Prior Knowledge: If the respondent already has knowledge of the dispute and the intent to arbitrate—through pleadings, judicial proceedings, or its own conduct—formal notice under Section 21 may not be strictly necessary.
Conclusion
The jurisprudence on Section 21 of the Arbitration and Conciliation Act, 1996 reflects a pragmatic approach that prioritizes substance over form. While the provision is foundational to the commencement of arbitral proceedings, courts have clarified that substantial compliance—rather than rigid formalism—is the touchstone. Legal practitioners must ensure that their communications invoking arbitration clearly articulate the dispute, reference the arbitration clause, and express an unequivocal intent to arbitrate. At the same time, parties seeking to challenge the validity of such notices must be mindful that prior knowledge and participation in arbitral proceedings may defeat such objections.
