The requirement for fresh notice to initiate arbitration is essential after an award has been annulled, as it marks the commencement of valid proceedings under the Arbitration and Conciliation Act, 1996.

ORDER :

1. The legal question to be resolved in this arbitration request pertains to whether a new notice or request must be issued to the respondents to initiate a subsequent arbitral proceeding, in light of the fact that the previous arbitral award was annulled on the rationale that the appointment of the arbitrator was legally untenable.

2. Applicant is a non-banking finance company. The respondents availed two loans of Rs.95,00,000/- and Rs.55,00,000/- from the applicant. An agreement was executed on 17.7.2018 with respect to the loan of Rs.55,00,000/-. Another agreement was executed on 18.9.2018 for availing the loan of Rs.95,00,000/-. Respondents agreed to repay the loans within a period of 36 months’ time. It was also agreed to pay interest at the rate of 20% per annum with monthly rest agreeing to service interest at every month. For securing the loan, they executed demand promissory notes in favour of the applicant. They also executed security delivering letters in favour of the applicant. However, they allegedly failed to pay off the entire outstanding amounts even after expiry of 36 months. According to the applicant, though several requests were made, they did not care to repay the amounts.

3. The applicant invoked the arbitration clauses in the loan agreements and an Arbitrator was appointed. The respondents raised objection, disagreeing with the appointment of an inhouse arbitrator. The Arbitrator however proceeded further and passed awards on 30.12.2019. Applicant filed E.P.Nos.1046/2021 and 1031/2021 in the Commercial Court, Thiruvananthapuram for executing the awards. The respondents approached the Commercial Court, Ernakulam in AOP Nos.11/2021 and 116/2021 challenging the awards. The Commercial Court, Ernakulam found that the appointment of the Arbitrator itself was bad and the entire arbitration proceedings were null and void as the appointment of the Arbitrator was unilateral. The awards were declared as nullity. AOPs were allowed by setting aside the awards. Thus, the first round of arbitration proceedings failed to yield any results as far as the applicant is concerned. Hence, the applicant filed the above Arbitration Requests for appointment of an Arbitrator by this Court to determine the disputes between the applicant and the respondents.

4. Respondents entered appearance through counsel and raised objection regarding the maintainability of the arbitration request. They contended that no notice as contemplated under Section 21 of the Arbitration and Conciliation Act, 1996 (henceforth mentioned as ‘the Act’] was issued before filing the instant Arbitration Request and therefore the requirements under Section 11 of the Act are not satisfied for invoking the jurisdiction of this Court. They contended that the said issue may be considered before proceeding further.

5. Heard Sri.Thoshin.V.S., learned counsel for the petitioners and Sri.K.Saneesh Kumar, learned counsel for the respondents.

6. Sri.Thoshin submitted that this is the second round of proceedings and in the first round of arbitral proceedings, notice was issued under Section 21 of the Act, an Arbitrator was appointed and awards were passed. Respondents challenged the awards by approaching the Commercial Court and the court set aside the awards only for the reason that the appointment of the Arbitrator was unilateral. He contended that since the arbitral proceedings commenced as provided under of the Act when the respondents received the initial notice, no fresh notice is required. The learned counsel relied on a judgment of a learned Single Judge of the Bombay High Court