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In , the Supreme Court held that the absence of a notice under section 21 of the Arbitration and Conciliation Act, 1996 (act) does not, of itself, vitiate an arbitral award. Such a failure to issue the notice marking the beginning of an arbitration is not a fatal procedural defect where the claims are otherwise valid and arbitrable.

Adopting a substance-over-form approach, the court held that procedural requirements under the act may be waived by party conduct. The scope of arbitration is not confined rigidly to that which is expressly set out in the notice invoking arbitration. The ruling reinforces the principle that technical lapses should not defeat arbitral proceedings when parties have, in substance, submitted to arbitration and contested the claims on their merits.

The dispute concerned four road maintenance contracts awarded by the state of Kerala to Bhagheeratha Engineering. The contract contained a multi-tiered dispute resolution mechanism under which unresolved issues were first referred to an adjudicator. Their decision could then be referred to arbitration within 28 days.

State’s challenge reopens all disputes

Bhagheeratha referred four disputes to the adjudicator, who ruled in its favour on two and against it on the remaining two. Aggrieved by the decision on the first dispute involving the valuation of work for the purpose of price adjustments, the state issued a notice invoking arbitration in respect of that dispute alone, albeit outside the stipulated 28-day contractual period. Before the arbitrator, however, the state expanded the scope of its challenge and applied for a declaration that the adjudicator’s decision, in its entirety, was void.

The arbitrator assumed jurisdiction over all disputes between the parties, holding that the state’s conduct had effectively reopened the entire range of issues. The arbitrator ultimately made an award in favour of Bhagheeratha on all four disputes. This award was set aside by the district court. The high court affirmed that decision, holding that the arbitrator lacked jurisdiction to adjudicate any of the four disputes because Bhagheeratha had failed to issue a notice under section 21 in respect of them.

Section 21 notice not jurisdictional

The Supreme Court overturned the high court’s decision, holding that the absence of a section 21 notice did not operate as a jurisdictional bar following the facts of the case. The court based its reasons on the conduct of the parties; the object and purpose of the section, and the wide-ranging reference of claims and counterclaims under the arbitration agreement.

Considering the breach by the state of the contractual timeline for invoking arbitration, together with its attempt to have the adjudicator’s decision declared null and void, the court held that the state had waived its right to insist on compliance with strict procedure. Having challenged the entire decision of the adjudicator, the state expanded the scope of the dispute, throwing open all four issues before the arbitrator. The state could not take advantage of its own default to contend to the contrary.

The court held that section 21 of the act is relevant in determining the date of commencement for limitation purposes. It does not, however, confer jurisdiction on the arbitrator. Relying on its previous decisions, the court held that section 21 of the act is merely procedural. The absence of a formal notice of commencement is not fatal to the arbitration, particularly when parties are aware of the dispute and participate in the process.

Broadly worded clauses allow expanded claims

Relying on , the court restated that, when an arbitration clause is widely worded, the arbitrator’s jurisdiction is not restricted to claims in the notice and that unless the arbitration agreement states otherwise, the claimant may add to its claims and the respondent file counterclaims. By appealing the adjudicator’s decision in its entirety, the state expanded the scope of reference, entitling Bhagheeratha to pursue its claims.

The Supreme Court sends a clear message that courts should not allow hyper-technical procedural objections to defeat awards, particularly in the light of an objecting party’s own inconsistent conduct. The decision underlines the need for parties to be wary when raising procedural objections, lest they undermine wider arbitral or litigation strategies.

Sneha Jaisingh is a partner and Asha Anandkumar is an associate at Bharucha & Partners