The petitioner in this case filed a petition under section34 of the Arbitration Act, praying for the setting aside of an award passed by a sole arbitrator on 2nd December 2014 awarding an amount of Rs. 1,12,27,431 along with interest and costs on the same to the respondent.

The dispute is regarding a contract for the sale of 1500 metric tonnes of imported lentils. The respondent contends that the petitioner failed to lift the goods upon acceptance of his bid for 250 metric tonnes of lentils that led the respondent to sell the material to third parties at the petitioners' risk. Thereafter, the respondent invoked arbitration under the rules of ICA and claimed the losses incurred in the sale.

Aggrieved by the plea for arbitration, the petitioner approached the City Civil Court of Calcutta to challenge the validity of the arbitration agreement between the parties. The respondents filed an application to refer the parties to arbitration under section 8 and section 21 of the Arbitration Act. The City Civil Court did not grant any stay on the arbitration. Thereafter, the respondent proceeded with the arbitral proceedings. The petitioner repeatedly requested the arbitrator to adjourn the proceedings, only to have the requests refused. Here onwards, the petitioner did not participate in the arbitral proceedings while the arbitrator recorded evidence from the respondent and passed the impugned award.

The petitioner contended that the arbitral proceedings were vitiated on account of the invocation of arbitration and improper procedure having been adopted. The petitioners alleged that there was no notice invoking arbitration according to Rule 15 of ICA Rules and section 21 of the Arbitration Act. Thus the present petition to determine whether a proper notice invoking arbitral proceedings was sent by the respondents to the petitioner in this case.

Issues

The main issue in the present case was whether a proper notice invoking arbitral proceedings was sent by the respondents to the petitioner in this case

Judgment

The Delhi High Court while determining the essentials of a notice invoking arbitration under section 21 of the Arbitration Act and the Rules of Indian Council of Arbitration held that communication narrating a set of facts, claiming a disputed amount, and contemplating arbitration in the alternative is enough to qualify as a notice of a request for arbitration.

The Delhi High Court also reiterated the judgment in RIICO Ltd. Jaipur & Ors. v. Manoj Ajmera & Anr. and upheld that section 21 of the Arbitration Act required a party to send a request to the counter-party for the dispute to be referred to arbitration and the communication from the respondent meets this requirement. Hence, the initiation of arbitration proceedings in such a condition was expressly contemplated.

For the reasons aforesaid, the petitioner has failed to make out any grounds for interference with the impugned award under Section 34 of the Act. The petition is dismissed with costs assessed at ?50,000/-. However, the respondent is bound to its affidavit dated 26.11.2019 and its statement that the award would be executed only to the extent mentioned in the affidavit. It is made clear that this Court has not adjudicated upon the righteousness of the sum stated by the respondent, and this order is without prejudice to the petitioner's right, if any, in this respect.