SC – Section 21 Arbitration is directory, Not Mandatory

Four projects of road maintenance were given to the appellant for development of roads in Kerala.  Clause 24 of the GCC provided for the dispute adjudication mechanism in the first instance by the Adjudicator and then by Arbitration.  Clause 25.3(a) provided the arbitration procedure.

The appellant approached the Adjudicature for pending payments and decision on four disputes

The Adjudicator accepted disputes no.1 and 3 in favour of the appellant and nos.2 and 4 against the appellant.

The respondent did not accept the finding on dispute no.1 and did not settle the bill. 

Ultimately, on 11.1.2005, the Arbitral Tribunal was constituted.

By the Arbitral Award, the total claim on all four issues was awarded to the appellant.

The District Judge allowed section 34 petition, set aside the award and restored the decision of the Adjudicator.

HELD that There is no mandatory pre-requisite for issuance of a Section 21 notice prior to the commencement of Arbitration. Issuance of a Section 21 notice may come to the aid of parties and the arbitrator in determining the limitation for the claim. Failure to issue a Section 21 notice would not be fatal to a party in Arbitration if the claim is otherwise valid and the disputes arbitrable.

Section 21 Arbitration is directory, Not Mandatory

SC Judgment of 5.1.2026 – Arbitral Award cannot be set aside on mere technicalities if disputes are otherwise valid and arbitrable.