On January 18, 2023, the High Court of Delhi in the case of, Monika Oli v. Messrs. CL Educate Limited, reiterated that the delivery of an Arbitral Award is to be affected upon such persons who have direct knowledge of the arbitral proceedings and the subject matter in hand. It also held that the Notice of Invocation of Arbitration under Section 21 of the Arbitration and Conciliation Act, 1996 (“Act”) should unequivocally state the claims against the other party and the name of the proposed Arbitrator, which would grant the other party, the right to object the name of the Arbitrator and dispute the claims, as raised in the Notice of Invocation of Arbitration under Section 21 of Act.

Issues:

1. Whether the delivery of the Arbitral Award to an employee of an entity, who has no connection with the arbitral proceedings, can be taken as a receipt of the Award to a party in view of the provisions of the Act?
2. Whether the various correspondences between the parties and the Arbitral Tribunal constitute as a valid notice under Section 21 of the Act?

Decision:

1. The High Court of Delhi has held that the word ‘party’ in Section 34(3) of the Act meant a party to the arbitration proceedings and does not include an agent of the party as well.
2. The delivery of the Arbitral Award would be deemed to be effective, in terms of the Act, when affected upon the person who has direct knowledge of the arbitral proceedings and who would be the person to understand and appreciate the Arbitral Award, being connected with the dispute at hand.
3. Delivery to an employee in an entity, in which a party is shareholder, though the arbitrable dispute did not pertain to such entity, would not constitute a proper delivery in terms of the Act.
4. The Notice of Invocation of Arbitration under Section 21 of the Act should unequivocally propose the name of the Arbitrator and by merely stating that the party has a right to initiate arbitration proceedings would not be deemed to be a Notice invoking Arbitration under Section 21 of the Act.
5. The Notice of Invocation of Arbitration should also contain the claims of the aggrieved party in order to provide an opportunity to the other party to respond to such claims.
6. The Notice of Invocation of Arbitration under Section 21 of the Act empowers the party to file an Application under Section 11(6) of the Act to seek an appointment of the Arbitrator, if the other party fails to respond to such Notice of Invoking Arbitration notice under Section 21 of the Act.  
7. A pre-arbitration legal notice does not constitute a valid Notice of Invoking Arbitration under Section 21 of the Act.

Comment:

This Judgment has thrown light on the ‘effective delivery of an Arbitral Award’, which would determine the period of limitation under Section 34(3) of the Act. It has categorically made it clear that a Notice of Invocation of Arbitration under Section 21 of the Act should comply with the strict requirements, failing which, the Notice of Invocation of Arbitration under Section 21 of the Act would not be deemed to be served on the party.

Please find attached a copy of the judgment.

This update has been contributed by Namitha Mathews (Partner) and Poorva Pant (Senior Associate).

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