The Delhi High Court clarified that although a notice under Section 21 of the Arbitration and Conciliation Act, 1996 is a mandatory step to initiate arbitration, its defective service or non-service does not automatically oust the arbitral tribunal’s jurisdiction when the parties have a valid arbitration agreement and the dispute arises therefrom. The Court appointed a sole arbitrator to decide the parties’ claims, leaving the merits for arbitral determination.
Background & Facts
The Dispute
The petitioner, Gaurav Saxena, was employed as General Manager (Sales) by Hello Verify India Private Limited under an Employment Agreement dated 04.02.2022. After his last working day on 06.09.2024, he claimed outstanding salary dues, client meeting expenses, interest and damages for the period 01.08.2024 to 06.09.2024, amounting to Rs. 5,87,739/- plus interest and other reliefs.
Key Facts
- Employment Agreement executed on 04.02.2022
- Petitioner’s last working day with the respondent: 06.09.2024
- Claim period for salary dues: 01.08.2024 to 06.09.2024
- First legal demand notice issued by petitioner: 22.03.2025
- Recovery suit filed before Dwarka Court, South-West District, Delhi; suit disposed of on 12.12.2025 with return of the plaint
- Second legal notice alleging forgery and cheating issued by petitioner: 07.09.2025
- Respondent’s response to the second notice: 12.09.2025
- Petitioner invoked arbitration agreement by issuing notice under Section 21 of the A&C Act: 19.12.2025, calling for appointment of a Sole Arbitrator within 15 days
- Respondent failed to respond to the Section 21 notice or to appoint an arbitrator
- Arbitration clause in the Employment Agreement (Clause 21) provides for arbitration in New Delhi by a sole arbitrator appointed by the Company, with a final and binding award
Procedural History
- 19.12.2025: Petitioner issued Section 21 notice to respondent
- Respondent’s counsel objected to service of the notice at a wrong address (para 9)
- Petitioner filed the present petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 seeking appointment of a Sole Arbitrator
- Judgment pronounced: 16.10.2026
Relief Sought
The petitioner sought appointment of a Sole Arbitrator to adjudicate the disputes arising out of the Employment Agreement dated 04.02.2022, including claims for salary dues, client meeting expenses, interest and damages.
The Legal Issue
The central question was whether defective service or non-service of a notice under Section 21 of the Arbitration and Conciliation Act, 1996 defeats the jurisdiction of the arbitral tribunal where an arbitration agreement exists and the dispute arises out of that agreement.
Arguments Presented
For the Petitioner
The petitioner contended that the purpose of a Section 21 notice is to fix the date of commencement of arbitration for limitation purposes and to inform the other party of the claims; it is a precondition for filing an application under Section 11 but does not go to the root of the tribunal’s jurisdiction. Reliance was placed on Adavya Projects (P) Ltd. v. Vishal Structurals (P) Ltd., (2025) 9 SCC 686 and the Supreme Court’s observations in Alupro Building Systems (P) Ltd. v. Ozone Overseas (P) Ltd. [2017 SCC OnLine Del 7228] that the notice is mandatory but not jurisdictional.
For the Respondent
The respondent, through its counsel, objected that the Section 21 notice dated 19.12.2025 was served at an incorrect address, thereby rendering the notice ineffective and contended that without a valid notice the arbitral tribunal could not be constituted. The respondent relied on the High Court’s earlier reliance on Alupro Building Systems to argue that notice is a mandatory prerequisite.
The Court's Analysis
The Court first noted that the existence of an arbitration agreement is undisputed (para 10). It then examined the Supreme Court’s decision in Adavya Projects which held that a defect in service of a Section 21 notice does not impede constitution of the arbitral tribunal. The Court quoted the Alupro Building Systems observation that a Section 21 notice serves six purposes, including informing the other party of claims, enabling objections to limitation or maintainability, facilitating consensus on arbitrator appointment, and fixing the date of commencement of arbitration for limitation under Section 43(1).
"The purpose of the Section 21 notice is clear - by fixing the date of commencement of arbitration, it enables the calculation of limitation and it is a necessary precondition for filing an application under Section 11 ACA."
The Court emphasized that while the notice is mandatory, its non-service does not nullify the tribunal’s jurisdiction because the ACA provides alternative mechanisms to raise objections regarding limitation, maintainability, and arbitrator qualification before the tribunal itself. The Court further noted that the parties had agreed to arbitration and the dispute clearly arose out of the Employment Agreement, thus there was no impediment to constituting a tribunal. Accordingly, the Court appointed Mr. Divyansh Rathi, 2019 SCC OnLine SC 547, as the Sole Arbitrator and directed that the arbitration proceed under the aegis of the Delhi International Arbitration Centre (DIAC), with all rights and contentions left open for the arbitrator to decide on merits.
The Verdict
The petitioner succeeded in part. The Court appointed Mr. Divyansh Rathi, 2019 SCC OnLine SC 547 as the Sole Arbitrator to adjudicate the disputes arising out of the Employment Agreement dated 04.02.2022. The arbitration shall be conducted under the rules of the Delhi International Arbitration Centre (DIAC). The claim for salary dues of Rs. 5,87,739/- plus interest and other reliefs for the period 01.08.2024 to 06.09.2024 is to be determined by the arbitrator. No costs were awarded in this order.
What This Means For Similar Cases
Section 21 Notice Is Mandatory But Not Jurisdictional
- A notice under Section 21 of the ACA is a mandatory step before invoking Section 11, but defective service does not oust the arbitral tribunal’s jurisdiction.
- Parties may still challenge limitation, maintainability, or arbitrator qualifications before the tribunal itself.
Arbitration Agreement Survives Defective Notice
- Where a valid arbitration agreement exists and the dispute arises therefrom, the tribunal can be constituted despite notice defects.
- The Court will appoint an arbitrator under Section 11(6) if the agreed appointment procedure fails.
Limitation Period Starts From Date Fixed in Notice
- The primary function of the Section 21 notice is to fix the date of commencement of arbitration for limitation purposes under Section 43(1).
- Practitioners must ensure the notice contains a clear commencement date to avoid limitation disputes.
