Proper notice under Section 21 is essential for the commencement of arbitral proceedings, and the lack of such notice can lead to the setting aside of the award.

M.M. Sundresh, J.

1. This appeal has been preferred challenging the judgment rendered in O.P.No.428 of 2009, dated 23.6.2010, by which the learned single Judge by exercising the power under Section 34(2)(iii) of the Arbitration and Conciliation Act, 1996 (for brevity "the Act") was pleased to set aside the award passed.

2. It is seen that there was a Hire Purchase Agreement said to have been entered into between the third respondent, who has been given up in this appeal and the appellant. According to the appellant, respondent No.1 stood as a guarantor. The Hire Purchase Agreement was said to have been cancelled by the appellant due to the noncompliance of the conditions regarding payment and thereafter, a notice under Section 21 of the Act was said to have been issued and served on the respondents 1 and 3. After the alleged compliance, the appellant initiated proceedings by appointing Arbitrator.

3. The learned Arbitrator sent notices to respondents 1 and 3. The third respondent after receipt of notice did not turn up. Insofar as the first respondent is concerned, notices got returned with endorsements in Gujarati language and also as "unserved". Thereafter, a paper publication was effected. Even after the paper publication, the first respondent did not turn up, and accordingly, an ex-parte award was passed. Challenging the same, the first respondent approached this Court invoking the power under Section 34 of the Act.

4. The learned single Judge called for the entire records. After going through the entire records, it was found that Section 21 of the Act has not been complied with, as there is absolutely no material to hold that a notice was served on the first respondent by the appellant to commence the arbitral proceedings. The learned single Judge also found that there are discrepancies in the admitted signatures of the first respondent with that of the signatures found in the Hire Purchase Agreement. Applying Section 21 along with Sections 34 (2)(iii) and 43 of the Act, the learned single Judge was pleased to allow the application filed under Section 34 of the Act by setting aside the award. Challenging the same, the present appeal has been filed by the appellant-Bank.

5. The learned counsel appearing for the appellant would contend that considering the facts and circumstances of the case, the matter will have to be remitted back to the Arbitrator. The learned counsel also submitted that the first respondent has received the award. Therefore, the order of the learned single Judge will have to be set aside. In support of his argument, he relied upon the following judgments:

i) 2005 (5) Bom CR 261 (DB) (Singhal and Brothers and Anr. Vs. Mahanagar Telephones Nigam Ltd., and Ors.)

ii) 2010(1) MLJ 504 (Harish Chand Gupta & Another vs. Ashok Leyland Finance, Chennai & Another).

6. Heard the learned counsel for the appellant, counsel for the first respondent and the learned Arbitrator (Respondent No.2).

7. As discussed above, the learned single Judge called for the entire records. In this connection, it is useful to refer the following factual findings given by the learned single Judge.

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6. A copy of the award is stated to have been communicated to the petitioner only after the counsel for the petitioner herein has written to the Arbitrator. It is true that in the newspaper publication effected by the first respondent herein, the address of the petitioner is shown as "Mr. Mulchand B. Jain, Tripuda Society, Kalikund, P.O. Mattipur, Tal: Dholka, Ahmedabad." While the claim of the petitioner is that he has shifted his residence to Mangaon much earlier. The proceedings of the Arbitrator dated 27.11.2004 sent to the petitioner to Ahmedabad address was returned with an endorsement 'left' as seen in page 75 of the file. Like that, the subsequent proceedings of the Arbitrator dated 11.5.2004 addressed to the Ahmedabad address of the petitioner was also returned with an endorsement 'left'. The lette