Delhi District Court
Bhairam Hooda And Another vs Shri Ram Transport Finance Company Ltd ... on 17 February, 2026
IN THE COURT OF DISTRICT JUDGE-05,
CENTRAL DISTRICT, TIS HAZARI COURTS, DELHI
Presided by:-
Sh. Abhishek Srivastava, DHJS
Arbt No.207/2018
CNR No:-DLCT01-002358-2018
1. Sh. Bhairam Hooda,
S/o Sh. Suraj Singh,
R/o Village Post Rurkee,
Tehsil Sampla, District, Rohtak,
Haryana.
2. Sh. Surender Singh,
S/o Sh. Maha Singh
R/o H. No. 543, Vill-Bohar,
Tehsil & District, Rohtak,
Haryana-124001. ....Petitioners
Vs.
1. Shri Ram Transport Finance Company Ltd.,
Office Number G-2/S/4-60, New Mahavir Nagar,
Opposite Metro Pillor No. 551, Janak Puri,
New Delhi-1100018.
Also At:-
Shri Ram Transport Finance Company Ltd.,
Through Its Managing Director,
Sri Towers, Plot No. 14A, South-Phase, Industrial
Estate, Guindy, Chennai Tamil Nadu-6000232.
CIN Number is L65191TN1979PLC007874.
Arbt. No. 207/2018
Bhairam Hooda & Another Vs. Shri Ram Transport Finance Company Ltd. & Ors.
Judgment dated 17.02.2026 Page No. 1 of 27
2. Sh. Amrendra Kumar,
Sole Arbitrator,
C-109, C.L. Joseph Block
Tis Hazari Courts, Delhi-54.
3. M/s Shaurya Coal Carries Pvt. Ltd.,
Having its Office At: H. No. 555, VPO
Auchandi, P.S. Bawana, Delhi-110039.
Through its Authorized Representative
4. Captain Sh. Ajay Yadav (Retd.),
Director of Respondent No. 3.
S/o Sh. Bishamber Dayal Yadav
R/o H. No. 578, Sector-14.
Gurgram, Haryana.
5. Lt. Colonel Sh. Yuvraj Yadav (Retd), Directors of
Respondent No. 3
S/o Late Col. Sh. Rampat Yadav,
R/o H. No. 922, Sector-17B
Gurugram Haryana.
6. Col Sh. Ram Kishan Budhwar (Retd)
Director of respondent No. 3
S/o late Sh. Richha Ram,
H.No. 2A-2/605 Florida Estate,
Keshav Nagar, Mundhya Pune-411036. ......Respondents
Date of Institution:-07.03.2018
Date of conclusion
of final arguments:- 04.12.2025
Date of Judgment:- 17.02.2026
JUDGMENT
1. By this judgment, this Court shall dispose of the present petition under Section 34 of the Arbitration & Conciliation Act, 1996 filed by the petitioners against the respondents challenging the award dated 02.12.2013 passed by Sh. Amrendra Kumar, Ld. Sole Arbitrator in Arbitration No. STFC/287/2013 titled Arbt. No. 207/2018 Bhairam Hooda & Another Vs. Shri Ram Transport Finance Company Ltd. & Ors.
Judgment dated 17.02.2026 Page No. 2 of 27 as 'M/s Shriram Transport Finance Company Limited V/s Sh. Bhairam Hooda & Ors.' (hereinafter referred to as the 'impugned award').
2. At the outset, it may be noted that the arbitration proceedings were initiated at the instance of M/s Shriram Transport Finance Company Limited, arrayed as respondent No. 1. Sh. Amrendra Kumar, Ld. Sole Arbitrator has been arrayed as respondent No. 2. As per the record, notices to the remaining respondents have not been issued.
3. Petitioner No. 1 (Sh. Bhairam Hooda) & petitioner No. 2 (Sh. Surender Singh) were the respondents No. 1 & 2, and respondent No. 1 herein (M/s Shri Ram Transport Finance Co. Ltd.) was the claimant before the Ld. Arbitrator. Parties are referred to by this Court in this judgment as per their status/ nomenclature given in the present petition before this Court. Meaning thereby, Sh. Bhairam Hooda as petitioner No. 1, Sh. Surender Singh as petitioner No. 2 and M/s Shri Ram Transport Finance Co. Ltd. as respondent No. 1. BRIEF FACTS OF THE CASE, AND PROCEEDINGS BEFORE THE LEARNED ARBITRATOR
4. The facts of the case, as pleaded by the respondent No. 1 in statement of claim (before the Ld. Arbitrator), in brief, are as under:-
(a) That the respondent No. 1 is a Non Banking Finance company registered with the Reserve Bank of India. The respondent No. 1 is engaged inter alia in the business of financing, leasing and Hire Purchase of vehicle amongst other business.
(b) That the petitioner No. 1 alongwith the petitioner No. 2 approached the respondent No. 1 for vehicle loan. Petitioner No. 1 was principal borrower and the petitioner No. 2 was to stand as a surety.
Accordingly, the respondent No. 1 agreed to lend a loan to the petitioner No. 1 to the tune of Rs. 17,86,514/- (Rupees Seventeen Lakh Eighty Six Thousand Five Hundred Fourteen Only) for purchasing a vehicle AMW-2518FBT bearing registration No. Arbt. No. 207/2018 Bhairam Hooda & Another Vs. Shri Ram Transport Finance Company Ltd. & Ors.
Judgment dated 17.02.2026 Page No. 3 of 27 OR-19G-9240, Chassis No. MBYB232009EA05763 and Engine No. 90D62747902, and a loan cum hypothecation agreement bearing No. DELHIO006280018 dated 29.06.2010 was executed in this regard. As per the 'loan agreement', the total agreement value was Rs. 23,14,876/- (including interest) which was payable by the petitioners in 41 monthly installments.
(c) That the petitioners failed to adhere to the terms and conditions of the said Agreement. Despite repeated demands, the petitioners failed to make payment in terms of loan agreement and an amount of Rs. 29,12,443/- was due and payable by the petitioners to the respondent No. 1. Vide a notice dated 30.07.2013, the petitioners were asked to make the due amount which they failed to clear. The respondent No. 1 as such was constrained, in terms of agreement, to initiate arbitration proceedings by appointing a sole arbitrator.
(d) The respondent No. 1 thus filed the statement of the claim before the Ld. Sole arbitrator with following prayers;
a. To pay to the claimant an aggregate sum of outstanding amount of Rs. 29,12,443/- (Rupees Twenty Nine Lacs Twelve Thousand Four Hundred And Forty Three Only) alongwith pendente lite and future interest.
b. Pass any such other order as this Tribunal may deem fit in the interest of justice.
5. Arbitral record shows that the sole arbitrator was appointed vide a letter dated 01.09.2013 issued by the Respondent No. 1 and dispute was referred to him for adjudication.
6. Ld. Arbitrator issued a notice dated 05.09.2013 to the parties for 14.09.2013 directing them to file their Statement of Claims/ Counter Statement of Claims, if any. Ld. Arbitrator in order dated 14.09.2013 inter alia noted that the Claimant filed Statement of Claim with documents. The notices have been Arbt. No. 207/2018 Bhairam Hooda & Another Vs. Shri Ram Transport Finance Company Ltd. & Ors.
Judgment dated 17.02.2026 Page No. 4 of 27 sent to the respondents, but the respondents have failed to appear despite service of notice. Therefore in the interest of justice, default notice be issued to the respondents for 26.10.2013.
7. Ld. Arbitrator in order dated 26.10.2013 recorded as [T]he notices have been sent to respondents, but the respondents have failed to appear despite service of the notice. The respondent failed to appear despite default notice sent to them. The AR of the claimant submitted that the given address is the last known correct address of the respondents. Since respondents failed to appear despite service, hence the respondents are proceeded ex-parte. Finally, the ex- parte award was passed on 02.12.2013.
GROUNDS OF CHALLENGE
8. The aforesaid award has been challenged by the petitioners herein/ respondents No. 1 & 2 before the Ld. Arbitrator in the present petition inter alia on the following grounds:-
(A) That the petitioners did not receive any notice from the respondent No. 1 regarding referring the dispute to the arbitrator. The respondent No. 1 filed the claim petition directly before the Ld. Arbitrator appointed unilaterally by it (without consent of the petitioners) [refer ground (h) of para 27 of the petition].
(B) That the petitioners were never served with the notices/ summons of the claim petition issued by the respondent No. 2/ Ld. sole Arbitrator. (C) That the petitioners are retired Army officers. Respondent No. 1 is a finance company. Respondent No. 2 is the learned Arbitrator, who was unilaterally appointed by Respondent No. 1. Respondent No. 3 is a transport company, and Respondent Nos. 4 to 6 are the Directors of Respondent No. 3. The case of the petitioners is that respondent Nos.
3 to 6, in collusion and connivance with respondent No. 1, induced and deceived the petitioners into purchasing trucks in their names, purportedly for use by respondent No. 3, by availing loans from Arbt. No. 207/2018 Bhairam Hooda & Another Vs. Shri Ram Transport Finance Company Ltd. & Ors.
Judgment dated 17.02.2026 Page No. 5 of 27 respondent No. 1. It was represented to the petitioners that respondent No. 3 would repay the EMIs to Respondent No. 1 and that the petitioners would receive assured and attractive returns. However, respondent No. 3 failed to repay the EMIs, and the promised returns were never paid to the petitioners. It is further the case of the petitioners that respondent Nos. 3 to 6, in connivance with respondent No. 1, subsequently disposed of and destroyed the said vehicles as scrap. The respondent No. 1 got passed the award by concealing the true and correct facts.
(D) That the petitioners never received a copy of the arbitral award from the learned Arbitrator, as mandated under the provisions of the Arbitration and Conciliation Act, 1996. In the month of May 2016, for the first time, some of the investors received summons from the Court of Sh. Krishan Kant, the then learned Additional District Judge, Rohtak. It was only thereafter that it came to light that respondent No. 1 had filed execution petitions seeking enforcement of the award(s) purportedly passed by the learned Sole Arbitrator(s). (E) That the Ld. Arbitrator passed the impugned award without considering the material facts on record and without adhering to the procedure prescribed under law. The award appears to have been rendered merely at the instance of respondent No. 1, which regularly engaged respondent No. 2 for arbitral assignments. The impugned award is arbitrary, violative of the principles of natural justice and fair play, contrary to the settled principles of law, and in conflict with the public policy of India [refer grounds (d), (f), (g), (j) and (l) of para 27 of the petition].
REPLY
9. No reply to that aforesaid petition under Section 34 of the Arbitration & Conciliation Act, 1996 has been filed by the respondent No. 1.
Arbt. No. 207/2018Bhairam Hooda & Another Vs. Shri Ram Transport Finance Company Ltd. & Ors.
Judgment dated 17.02.2026 Page No. 6 of 27 ARGUMENTS
10. Final arguments were thereafter heard on behalf of the parties. Original arbitration proceedings were also received by this Court.
11. Ld. counsel for the petitioner No. 1 during arguments challenged the award passed by the Ld. Arbitrator on the grounds referred above and prayed for its setting aside. Per Contra, Ld. Counsel for the respondent No. 1 submitted that the present petition under Section 34 of the Arbitration & Conciliation Act, 1996 is barred by Limitation. Ld. Counsel for the respondent No. 1 further submitted that Ld. Arbitrator has rightly passed the award after properly appreciating the evidence on record. Ld. Counsel for the respondent further submitted that even otherwise the scope of interference by this Court under Section 34 of the Arbitration & Conciliation Act, 1996 is very limited and the facts of the present case does not warrant any interference by this Court. With these submissions it was prayed that the present petition should be dismissed by this Court.
12. This Court has considered the rival submissions and material on record. DISCUSSION (A) WHETHER THE PRESENT PETITION IS BARRED BY THE LIMITATION
13. Before proceeding to examine the challenge made against the ex-parte award dated 02.12.2013, it is imperative to deal with the issue of delay in filing the petition, raised by the respondent No. 1.
14. Learned counsel for respondent no. 1, drawing the attention of this Court to paragraph 24 of the petition, contended that the petitioners admittedly had knowledge of the ex parte award dated 02.12.2013 as early as May 2016, yet filed the present petition only on 16.02.2018. Learned counsel further contended that, as averred by the petitioners themselves in paragraph 26 of the petition, they had earlier preferred a company petition bearing Co. Pet. No. 1006/2016 before the Hon'ble Delhi High Court and, after withdrawing the same with Arbt. No. 207/2018 Bhairam Hooda & Another Vs. Shri Ram Transport Finance Company Ltd. & Ors.
Judgment dated 17.02.2026 Page No. 7 of 27 liberty vide order dated 09.11.2016, instituted the present petition. Ld. counsel for the respondent No. 1 had relied on following decisions of the Hon'ble Delhi High Court; (i) judgment dated 24.03.2022 passed in FAO (Comm.) 34/2022;
(ii) judgment dated 24.03.2014 passed in FAO No. 88/2014; and (iii) judgment dated 20.08.2008 passed in FAO No. 241/2008.
15. Per contra, Learned counsel for petitioners had submitted that the petitioners were never served with the notice of the arbitration proceedings. Ld. counsel for the petitioners further submitted that the petitioners never received a copy of award from the Ld. Arbitrator as mandated under the provisions of the Arbitration and Conciliation Act, 1996. It is accordingly submitted that the period of limitation prescribed under Section 34(3) of the 1996 Act having not commenced, petition cannot be held to be barred by limitation. Ld. counsel for the petitioners had relied on a decision passed by Ld. District Judge (Commercial)-01, Central, Tis Hazari Courts, Delhi passed in OMP No. 129/2019.
16. A plain reading of Section 34(3) of the 1996 Act shows that an application for setting aside an award may not be made after three months have elapsed from the date on which the party making the application has received the arbitral award. In Union of India v. Tecco Trichy Engineers & Contractors, (2005) 4 SCC 239, the question before the Hon'ble Supreme Court was as to what would be the effective date on which an award can be said to be received by the party as that would be the date from which limitation would begin under Sub-Section (3) of Section 34 of the 1996 Act. The Hon'ble Supreme Court held as follows:-
"4. The short question which arises for decision in this appeal is: which is the effective date on which the appellant was delivered with and received the arbitral award as that would be the date wherefrom the limitation within the meaning of sub-section (3) of Section 34 of the Act shall be calculated.Arbt. No. 207/2018
Bhairam Hooda & Another Vs. Shri Ram Transport Finance Company Ltd. & Ors.
Judgment dated 17.02.2026 Page No. 8 of 27
5. Sub-sections (1) and (3) of Section 34 are relevant for our purpose and are reproduced hereunder:
"34. Application for setting aside arbitral award.--(1) Recourse to a court against an arbitral award may be made only by an application for setting aside such award in accordance with sub- section (2) and sub-section (3).
* * * (3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under Section 33, from the date on which that request had been disposed of by the Arbitral Tribunal:
Provided that if the court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter."
6. Form and contents of the arbitral award are provided by Section 31 of the Act. The arbitral award drawn up in the manner prescribed by Section 31 of the Act has to be signed and dated. According to sub-section (5), "after the arbitral award is made, a signed copy shall be delivered to each party". The term "party" is defined by clause (h) of Section 2 of the Act as meaning "a party to an arbitration agreement". The definition is to be read as given unless the context otherwise requires. Under sub-section (3) of Section 34 the limitation of 3 months commences from the date on which "the party making that application" had received the arbitral award. We have to see what is the meaning to be assigned to the term "party" and "party making the application" for setting aside the award in the context of the State or a department of the Government, more so a large organisation like the Railways.
xxx xxx xxx Arbt. No. 207/2018 Bhairam Hooda & Another Vs. Shri Ram Transport Finance Company Ltd. & Ors.
Judgment dated 17.02.2026 Page No. 9 of 27
8. The delivery of an arbitral award under sub-section (5) of Section 31 is not a matter of mere formality. It is a matter of substance. It is only after the stage under Section 31 has passed that the stage of termination of arbitral proceedings within the meaning of Section 32 of the Act arises. The delivery of arbitral award to the party, to be effective, has to be "received" by the party. This delivery by the Arbitral Tribunal and receipt by the party of the award sets in motion several periods of limitation such as an application for correction and interpretation of an award within 30 days under Section 33(1), an application for making an additional award under Section 33(4) and an application for setting aside an award under Section 34(3) and so on. As this delivery of the copy of award has the effect of conferring certain rights on the party as also bringing to an end the right to exercise those rights on expiry of the prescribed period of limitation which would be calculated from that date, the delivery of the copy of award by the Tribunal and the receipt thereof by each party constitutes an important stage in the arbitral proceedings."
(Underlined by me)
17. From a reading of the aforementioned judgment, it is clear that delivery of an arbitral award under Section 31(5) is not an empty formality and as it is only after the stage under Section 31 has passed that the stage of termination of arbitral proceedings under Section 32 arises and receipt by the party of the award then sets in motion several periods of limitation such as for an application for correction under Section 33(1) and application for setting aside an award under Section 34(3) of the 1996 Act etc. Reading of Section 31(5) of the 1996 Act leaves no trace of doubt that a 'signed copy' of the award must be delivered to the 'party' to the arbitration agreement.
18. As already noted, petitioners herein were proceeded ex-parte in the arbitration proceedings. I have perused the records of the arbitral proceedings. The learned Arbitrator, in the order dated 02.12.2013, recorded that [A]fter Arbt. No. 207/2018 Bhairam Hooda & Another Vs. Shri Ram Transport Finance Company Ltd. & Ors.
Judgment dated 17.02.2026 Page No. 10 of 27 hearing ex parte arguments, the award has been passed, signed and published vide my separate order. Signed copy of the award be sent to the respondents by speed post. However, a perusal of the record reveals that there are no postal receipts or tracking reports evidencing the dispatch of the arbitral award to the petitioners.
19. The only material available on record is an envelope purportedly containing a copy of the award addressed to petitioner No. 2 herein, which was received back with the remark "Lene Se Inkari" (refusal) and is lying in the file. Under such circumstances, it may be declared that the copy of award had been duly delivered to the petitioner No. 2 herein.
20. There is, however, nothing on record to show that the same, i.e., a signed copy of the award, was dispatched to petitioner no. 1 herein as well. It is an admitted fact that the Loan-cum-Hypothecation Agreement dated 29.06.2010 was executed among petitioner no. 1, in the capacity of 'Borrower' (of the First Part); petitioner no. 2, in the capacity of 'Guarantor' (of the Second Part); and respondent no. 1 company, in the capacity of 'Creditor' (of the Third Part).
21. Hon'ble Delhi High Court in Ministry of Health & Family Welfare & Anr. V/s Hosmac Projects Division of Hosmac India (P) Ltd., 2023 SCC OnLine Del 8296, summarised the law applicable to Section 34(3) of the A&C Act as under;
"14. An analysis of the aforegoing Judgments shows:
(i) A signed copy of Arbitral Award is to be delivered to each party;
(ii) The delivery should be to a party who is competent to take a decision as to whether or not the Award is to be challenged;
(iii) The expression 'party' does not include an agent or a lawyer of such party;
(iv) The limitation under Section 34(3) of the Act commences "when the party making the Application has received the Award";Arbt. No. 207/2018
Bhairam Hooda & Another Vs. Shri Ram Transport Finance Company Ltd. & Ors.
Judgment dated 17.02.2026 Page No. 11 of 27
(v) In the case of an Application for Correction of computational, clerical or typographical errors under Section 33 of the Act, the limitation is to be calculated from the date on which the Application is disposed off."
(Underlined by me)
22. The Hon'ble High Court as such in the Ministry of Health & Family Welfare supra holds that every arbitral award must be served upon all parties in order for it to constitute a valid service under Section 34(3) of the Act (relied on a decision of Hon'ble Delhi High Court in Kristal Vision Projects Private Limited V/s Union of India; Judgment dated 23.05.2025 passed in FAO(OS) (COMM) 206/2024).
23. A 'party' is defined by Clause (h) of sub-section (1) of Section 2 of the Act as a party to an Arbitration Agreement.
24. The Loan-cum-Hypothecation Agreement dated 29.06.2010 was executed amongst three parties, namely, (i) petitioner no. 1, (ii) petitioner no. 2, and (iii) respondent no. 1. There is nothing on record to show that a signed copy of the arbitral award was ever sent or dispatched to petitioner no. 1.
25. Here, I would like to refer to a decision of the Hon'ble Supreme Court passed in State Of Maharashtra & Ors vs M/s Ark Builders Pvt. Ltd; 2011 (4) SCC 616. The issue before the Hon'ble Supreme Court was Whether the period of limitation for making an application under section 34 of the Arbitration and Conciliation Act, 1996 for setting aside an arbitral award is to be reckoned from the date a copy of the award is received by the objector by any means and from any source, or it would start running from the date a signed copy of the award is delivered to him by the arbitrator?
26. The Hon'ble Supreme Court in Ark Builders supra held/ answered (while relying on Tecco Trichy Engineers supra) as under;
15. ...the period of limitation prescribed under section 34(3) of the Act would start running only from the date a signed copy of the award is Arbt. No. 207/2018 Bhairam Hooda & Another Vs. Shri Ram Transport Finance Company Ltd. & Ors.
Judgment dated 17.02.2026 Page No. 12 of 27 delivered to/received by the party making the application for setting it aside under section 34(1) of the Act. The legal position on the issue may be stated thus. If the law prescribes that a copy of the order/award is to be communicated, delivered, dispatched, forwarded, rendered or sent to the parties concerned in a particular way and in case the law also sets a period of limitation for challenging the order/award in question by the aggrieved party, then the period of limitation can only commence from the date on which the order/award was received by the party concerned in the manner prescribed by the law.
17. ...what section 31(5) contemplates is not merely the delivery of any kind of a copy of the award but a copy of the award that is duly signed by the members of the arbitral tribunal.
18. In the facts of the case the appellants would appear to be deriving undue advantage due to the omission of the arbitrator to give them a signed copy of the award coupled with the supply of a copy of the award to them by the claimant-respondent but that would not change the legal position and it would be wrong to tailor the law according to the facts of a particular case.
(Underlined by me)
27. This Court, accordingly, holds that the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 is not barred by limitation in terms of Section 34(3) of the said Act, as the signed copy of the arbitral award was never delivered to petitioner No. 1 by the learned Arbitrator in the manner contemplated under law.
28. While arriving at this conclusion, this Court is in respectful agreement with the view taken by the learned District Judge (Commercial)-01, Central District, Tis Hazari Courts, Delhi, in Bhairam Hooda and Anr. V/s Shri Ram Transport Finance Company Ltd.; OMP No. 129/2019, date of decision 06.05.2024, as relied upon by learned counsel for the petitioners.
Arbt. No. 207/2018Bhairam Hooda & Another Vs. Shri Ram Transport Finance Company Ltd. & Ors.
Judgment dated 17.02.2026 Page No. 13 of 27
29. Ld. counsel for the respondent No. 1 had relied on following judgments of the Hon'ble Delhi High Court viz. (i) Vaibhav Bhatia & Anr. V/s M/s L & T Finance Ltd. & Anr.; FAO No. 88/2014, date of decision 24.03.2014 (ii) Union of India V/s M/s Mittal Steels; FAO No. 241/2008, date of decision 20.08.2008, and (iii) M/s Singhal Credit Management LLP V/s M/s Religare Securities Ltd. & Anr.; FAO (COMM) 34/2022, date of decision 24.03.2022) in order to support his contention that the present petition is barred by limitation. A close scrutiny of the facts and the controversy involved in the Vaibhav Bhatia supra, Singhal Credit Management LLP supra, and Mittal Steels supra would show that they were decided on different factual matrices and are distinguishable on facts.
30. In Vaibhav Bhatia (supra), the Hon'ble High Court observed that a copy of the impugned award had been duly dispatched by the learned Arbitrator to all the parties, and copies of the postal receipts as well as the registered A.D. cards were placed on record. In Singhal Credit Management LLP (supra), it was noted that the petitioner had admittedly received a copy of the arbitral award. In Mittal Steels (supra), admittedly there was delay in filing the petition under Section 34 of the Arbitration and Conciliation Act, 1996. An extension of time was sought by placing reliance on the provisions of Order VIII Rule 1 CPC. The Hon'ble High Court, held that the period of limitation prescribed under Section 34(3) of the Act of 1996 is mandatory in nature and cannot be extended beyond the statutory limit.
(B) WHETHER THE ARBITRATION PROCEEDINGS HELD WITHOUT A NOTICE BY THE RESPONDENT NO. 1 TO THE PETITIONERS UNDER SECTION 21 OF THE ACT
31. As contended on behalf of the petitioners that they did not receive any notice from the respondent No. 1 regarding referring the dispute to arbitrator [refer ground (h) of para 27 of the petition], next issue which is to be examined is whether the respondent No. 1 issued any notice to the petitioners under Arbt. No. 207/2018 Bhairam Hooda & Another Vs. Shri Ram Transport Finance Company Ltd. & Ors.
Judgment dated 17.02.2026 Page No. 14 of 27 Section 21 of the Act or filed claims directly before the Ld. Arbitrator appointed unilaterally by it ?
32. It is relevant to reiterate here that no reply to the present petition under Section 34 of the Arbitration & Conciliation Act, 1996 has been filed by the respondent No. 1.
33. So, in order to examine this aspect, it would be necessary to refer to certain paragraphs of the Statement of Claim filed by Respondent No. 1 herein before the learned Sole Arbitrator;
"9. The Claimant states that the Respondents failed to adhere to the terms and conditions of the said Agreement and the First Respondent had been irregular in making payments of the installments of the said loan and interest due thereon under the said Agreement. The Claimant had repeatedly demanded the payment of the outstanding amount and made all efforts to recover the dues from the Respondents by sending various demand notices. However the Respondents failed and neglected to make the payments to the Claimant. Therefore an amount of Rs. 29,12,443/- (Rupees Twenty Nine Lacs Twelve Thousand Four Hundred and Forty Three Only) is still due against the respondent. That vide their notice dated 30.07.2013 the Respondents were called upon to clear the all arrear amounts. The copy of notice dated 30.07.2013 is annexed as Annexure-C.
10. That despite the service of the said notice the Respondent did not clear the arrear against the vehicle in question and therefore the Claimant was constrained to initiate Arbitration proceeding by appointing sole Arbitrator in terms of agreement.
11. That both the Respondents are jointly and severally liable to pay a total sum of Rs. 29,12,443/- (Rupees Twenty Nine Lacs Twelve Thousand Four Hundred and Forty Three Only) which is outstanding against the loan in question as on August 2013. The Copy of the statement of account is annexed as Annexure-D. Arbt. No. 207/2018 Bhairam Hooda & Another Vs. Shri Ram Transport Finance Company Ltd. & Ors.
Judgment dated 17.02.2026 Page No. 15 of 27
12. The Claimant states that, the Respondents despite receiving the said notice, they have failed to make the payment to the Claimant due under the said agreement against the said loan.
13. Accordingly, since the Respondents have failed and neglected to make payments, the dispute was referred by the Claimant to the Sole Arbitrator, SH. AMRENDRA KUMAR, The Ld. Sole Arbitrator agreed to act as an arbitrator to arbitrate the dispute between the Claimant and Respondents."
34. As per the claim petition, a notice dated 30.07.2013 (styled as 'demand notice') was sent to the respondents to clear all arrear amounts. As per the arbitral records, the arbitrator was appointed vide a letter dated 01.09.2013 delivered by the respondent No. 1 (by hand) to the Ld. Arbitrator.
35. The relevant para of notice dated 30.07.2013 is reproduced herein below;
"I, therefore call upon you to, in any event not later than 3 days from the receipt hereof, pay my client, an amount of Rs. 1624106/- Only due as on 18/06/2013 excluding overdue, thereon as per the agreement and also pay Rs. 1,500/- on account of cost of this notice failing which my client will invoke the arbitration clause as per the terms of the agreement and arbitration proceedings shall be initiated against you the addressees under the provision of Arbitration and Reconciliation Act, 1996 as per the terms of above said agreement..."
36. In the next place, I reproduce the contents of the letter dated 01.09.2013 sent by respondent No. 1 to the Ld. arbitrator;
BY HAND DATED: 01.09.2013 To, SH. AMRENDRA KUMAR (ADVOCATE) ...
SUB: APPOINTMENT OF SOLE ARBITRATOR Dear Sir, Our Company M/s Shriram Transport Finance Company Limited had given a vehicle loan to Sh. Bhairam Hooda, S/o SH.
Arbt. No. 207/2018Bhairam Hooda & Another Vs. Shri Ram Transport Finance Company Ltd. & Ors.
Judgment dated 17.02.2026 Page No. 16 of 27 Surajmal, R/O Vill-Post: Rurkee, The: Sampla, Distt: Rohtak, Haryana-124001 under Loan Agreement, details of which are given below:
Agreement No - DELHIO006280019 Date of Agmt. - 29.06.2010 Agmt. Value Rs. 17,86,514/-
Vehicle Reg. No- OR-19G-9240 SURENDER SINGH, S/O Sh.MAHA SINGH, stood as guarantor for Sh. BHAIRAM HOODA, and is jointly and separately liable to ensure and pay timely and punctually all EMI and keep the vehicle fully secured in all respects.
As the aforesaid Sh.BHAIRAM HOODA, defaulted in payment of EMI, as per the terms and conditions of the loan agreement in spite of the oral as well as written notices, a dispute has arisen between the parties. That the loan agreement bears an Arbitration clause according to which in case of dispute, the matter is to be settled through Arbitration.
I, being empowered to do so, do hereby appoint you as Sole Arbitrator to adjudicate the dispute and difference as has arisen between M/s Shriram Transport Finance Company Limited, and Sh. Bhairam Hooda, and pass the award as per law.
You are requested here by to hold the Arbitration proceedings so as to enable us to submit our claim.
Thanking you, Your Sincerely, Authorised Signatory Shriram Transport Finance Company Limited
37. A reading of the contents of the claim petition, as reproduced hereinbelow, makes it apparent that respondent No. 1 herein had issued a legal notice dated 30.07.2013 to the petitioners herein. Upon the petitioners' failure to Arbt. No. 207/2018 Bhairam Hooda & Another Vs. Shri Ram Transport Finance Company Ltd. & Ors.
Judgment dated 17.02.2026 Page No. 17 of 27 make payment, respondent No. 1, vide letter dated 01.09.2013, unilaterally appointed the learned Sole Arbitrator by delivering the said letter by hand to the learned Arbitrator and proceeded to refer the dispute to him. There is absolutely nothing on record to indicate that a copy of the letter dated 01.09.2013 was sent to the petitioners (there is not even the pleadings to this effect in the claim petition).
38. Hon'ble High Court of Delhi in M/s Supreme Infrastructure India Limited V/s Freyssinet Memard India Pvt. Ltd.; O.M.P. (COMM) 395/2024 (date of decision 05.05.2025), held;
17. It is no longer res integra that arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the Respondent, unless otherwise agreed by the parties. In Bharat Chugh v. MC Agrawal HUF, 2021 SCC OnLine Del 5373, this Court held in view of Section 21 which specifically deals with commencement of arbitral proceedings, if no notice sent by one party is received by the other party, arbitral proceedings cannot be stated to have commenced and obviously, something that has not commenced, cannot continue. In Alupro Building Systems Pvt. Ltd. v. Ozone Overseas Pvt. Ltd., 2017 SCC OnLine Del 7228, this Court emphasised on the importance and mandate of issuing a notice under Section 21 of the 1996 Act. It was held that a plain reading of Section 21 indicates that except where parties have agreed to the contrary, the date of commencement of arbitration proceedings would be the date on which the recipient of the notice receives from the claimant a request for referring the dispute to arbitration. The object behind the provision is not difficult to discern. Party to the arbitration agreement against whom a claim is made should know what the claims are and it is possible that in response to the notice, the recipient of the notice may accept some claims either wholly or in part and disputes may get narrowed down. This may help in even resolving the disputes and reference to arbitration could be avoided. The Arbt. No. 207/2018 Bhairam Hooda & Another Vs. Shri Ram Transport Finance Company Ltd. & Ors.
Judgment dated 17.02.2026 Page No. 18 of 27 Court has enumerated multiple objectives of a notice under Section 21 in the judgment and I quote the relevant paragraphs hereunder:-
"25. A plain reading of the above provision indicates that except where the parties have agreed to the contrary, the date of commencement of arbitration proceedings would be the date on which the recipient of the notice (the Petitioner herein) receives from the claimant a request for referring the dispute to arbitration. The object behind the provision is not difficult to discern. The party to the arbitration agreement against whom a claim is made, should know what the claims are. It is possible that in response to the notice, the recipient of the notice may accept some of the claims either wholly or in part, and the disputes between the parties may thus get narrowed down. That is one aspect of the matter. The other is that such a notice provides an opportunity to the recipient of the notice to point out if some of the claims are time barred, or barred by any law or untenable in fact and/or that there are counter-claims and so on.
26. Thirdly, and importantly, where the parties have agreed on a procedure for the appointment of an arbitrator, unless there is such a notice invoking the arbitration clause, it will not be possible to know whether the procedure as envisaged in the arbitration clause has been followed. Invariably, arbitration clauses do not contemplate the unilateral appointment of an arbitrator by one of the parties. There has to be a consensus. The notice under Section 21 serves an important purpose of facilitating a consensus on the appointment of an arbitrator.
27. Fourthly, even assuming that the clause permits one of the parties to choose the arbitrator, even then it is necessary for the party making such appointment to let the other party know in advance the name of the person it proposes to appoint. It is quite possible that such person may be 'disqualified' to act an arbitrator Arbt. No. 207/2018 Bhairam Hooda & Another Vs. Shri Ram Transport Finance Company Ltd. & Ors.
Judgment dated 17.02.2026 Page No. 19 of 27 for various reasons. On receiving such notice, the recipient of the notice may be able to point out this defect and the claimant may be persuaded to appoint a qualified person. This will avoid needless wastage of time in arbitration proceedings being conducted by a person not qualified to do so. The second, third and fourth reasons outlined above are consistent with the requirements of natural justice which, in any event, govern arbitral proceedings.
28. Lastly, for the purposes of Section 11(6) of the Act, without the notice under Section 21 of the Act, a party seeking reference of disputes to arbitration will be unable to demonstrate that there was a failure by one party to adhere to the procedure and accede to the request for the appointment of an arbitrator. The trigger for the Court's jurisdiction under Section 11 of the Act is such failure by one party to respond.
29. Of course, as noticed earlier, parties may agree to waive the requirement of such notice under Section 21. However, in the absence of such express waiver, the provision must be given full effect to. The legislature should not be presumed to have inserted a provision that serves a limited purpose of only determining, for the purposes of limitation, when arbitration proceedings commenced. For a moment, even assuming that the provision serves only that purpose viz. fixing the date of commencement of arbitration proceedings for the purpose of Section 43(1) of the Act, how is such date of commencement to be fixed if the notice under Section 21 is not issued? The provision talks of the 'Respondent' receiving a notice containing a request for the dispute "to be referred to arbitration". Those words have been carefully chosen. They indicate an event that is yet to happen viz. the reference of the disputes to arbitration. By overlooking this important step, and straightaway filing claims before an arbitrator appointed by it, a party would be violating the requirement of Section 21, thus frustrating an Arbt. No. 207/2018 Bhairam Hooda & Another Vs. Shri Ram Transport Finance Company Ltd. & Ors.
Judgment dated 17.02.2026 Page No. 20 of 27 important element of the parties consenting to the appointment of an arbitrator.
30. Considering that the running theme of the Act is the consent or agreement between the parties at every stage, Section 21 performs an important function of forging such consensus on several aspects viz. the scope of the disputes, the determination of which disputes remain unresolved; of which disputes are time-barred; of identification of the claims and counter-claims and most importantly, on the choice of arbitrator. Thus, the inescapable conclusion on a proper interpretation of Section 21 of the Act is that in the absence of an agreement to the contrary, the notice under Section 21 of the Act by the claimant invoking the arbitration clause, preceding the reference of disputes to arbitration, is mandatory. In other words, without such notice, the arbitration proceedings that are commenced would be unsustainable in law."
18. It would be relevant to refer to another judgment of the Division Bench of this Court in Shriram Transport Finance Company Limited v. Narender Singh, 2022 SCC OnLine Del 3412, in this context, wherein the Court was dealing with an appeal under Section 37(1)(b) of the 1996 Act and agreeing with the principles laid down in Alupro Building Systems Pvt. Ltd. (supra), it was held that if no notice is received under Section 21 by the recipient, there is no commencement of arbitral proceedings and relevant paragraphs are as follows:-
"30. A plain reading of this section shows that arbitral proceedings commence on the date on which the request for the dispute to be referred to arbitration is received by the respondent concerned. Therefore, the commencement of arbitral proceedings is incumbent on the "receipt of such request or notice". If no notice is received by the respondent concerned, there is no commencement of arbitral proceedings at all. Emphasis here is Arbt. No. 207/2018 Bhairam Hooda & Another Vs. Shri Ram Transport Finance Company Ltd. & Ors.
Judgment dated 17.02.2026 Page No. 21 of 27 also made to the fact that the notice should not only be "sent" but also that the notice should be "received" for such request for commencement.
31. Section 21 will have to be read with Section 34 of the Act. Section 34(2)(iii) provides that an award may be set aside, in the event, where the party appointing the arbitrator has not given proper notice of the appointment of an arbitrator or the arbitral proceedings.
32. The judgment in Alupro Building case [Alupro Building Systems (P) Ltd. v. Ozone Overseas (P) Ltd.2017 SCC OnLine Del 7228] has aptly explained the relevance of a notice under Section 21 of the Act. It was held that the Act does not contemplate unilateral appointment of an arbitrator by one of the parties, there has to be a consensus for such appointment and as such, the notice under Section 21 of the Act serves an important purpose of facilitating such a consensus on the appointment of an arbitrator. It was further held in Alupro Building case [Alupro Building Systems (P) Ltd. v. Ozone Overseas (P) Ltd.2017 SCC OnLine Del 7228] that the parties may opt to waive the requirement of notice under Section 21 of the Act. However, in the absence of such a waiver, this provision must be given full effect to.
33. We are in agreement with the principles as expressed in the decision of Alupro Building case [Alupro Building Systems (P) Ltd. v. Ozone Overseas (P) Ltd.2017 SCC OnLine Del 7228] , which are enunciated below:
(i) The party to the arbitration agreement against whom a claim is made should know what the claims are. The notice under Section 21 of the Act provides an opportunity to such party to point out if some of the claims are time-barred or Arbt. No. 207/2018 Bhairam Hooda & Another Vs. Shri Ram Transport Finance Company Ltd. & Ors.
Judgment dated 17.02.2026 Page No. 22 of 27
barred by law or untenable in fact or if there are
counterclaims.
(ii) Where the parties have agreed on a procedure for appointment, whether or not such procedure has been followed, will not be known to the other party unless such a notice is received.
(iii) It is necessary for the party making an appointment to let the other party know in advance the name of the person who it proposes to appoint as an arbitrator. This will ensure that the suitability of the person is known to the opposite party including whether or not the person is qualified or disqualified to act as an arbitrator for the various reasons set forth in the Act. Thus, the notice facilitates the parties in arriving at a consensus for appointing an arbitrator.
(iv) Unless such notice of commencement of arbitral proceedings is issued, a party seeking reference of disputes to arbitration upon failure of the other party to adhere to such request will be unable to proceed under Section 11(6) of the Act. Further, the party sending the notice of commencement may be able to proceed under the provisions of sub-section 5 of Section 11 of the Act for the appointment of an arbitrator if such notice does not evoke any response.
34. The appellant Company has relied on the letters dated 20-9- 2018 and 27-9-2018 to show compliance with Section 21 of the Act. This reliance by the appellant Company is completely misconceived. The letter of 20-9- 2018 was a unilateral communication sent by the appellant Company to the respondent. As discussed above, the letter did not set forth any details about who was being appointed as an arbitrator or the procedure being followed. The appellant Company merely stated that they have a right to initiate arbitral proceedings and so they Arbt. No. 207/2018 Bhairam Hooda & Another Vs. Shri Ram Transport Finance Company Ltd. & Ors.
Judgment dated 17.02.2026 Page No. 23 of 27 will initiate arbitral proceedings. There was no person named as an arbitrator therein nor was any consensus sought in such appointment. There is no evidence of this letter ever being received by the respondent on record either. As such, the letter dated 20-9-2018 would not qualify as notice under Section 21 of the Act.
35. The letter dated 27-9-2018, was never sent to the respondent so there was no question of this letter being received by the respondent. It was only sent to the arbitrator. This letter could not qualify to be the notice of commencement of proceedings either.
36. The record also shows that the parties had no agreement for a waiver of the requisite notice under Section 21 of the Act.
37. Hence, we hold that the arbitral appointment made by the appellant Company was not made in accordance with the provisions of Section 21 of the Act."
19. Another important objective of the notice under Section 21 that needs to be underscored is in the context of unilateral appointment of the Arbitrator. This question also came up for consideration before this Court in Alupro Building Systems Pvt. Ltd. (supra), while dealing with objections under Section 34 of the 1996 Act. One of the issues arising before the Court was whether the non-receipt of notice under Section 21 of the 1996 Act by the Petitioner therein was itself sufficient to invalidate the impugned award and the Court also proceeded to examine a connected issue as to whether the Respondent could have, without invoking the arbitration clause and issuing notice to the Petitioner under Section 21 of the 1996 Act and assuring its delivery, filed claims directly before the Arbitrator appointed unilaterally by the Respondent. The second issue touches upon the next ground raised by the Petitioner herein relating to unilateral appointment of the Arbitrator, to which I shall advert in the later part of the judgment.
Arbt. No. 207/2018Bhairam Hooda & Another Vs. Shri Ram Transport Finance Company Ltd. & Ors.
Judgment dated 17.02.2026 Page No. 24 of 27
20. The Court held that in the absence of an express waiver as agreed between the parties, provisions of Section 21 must be given full effect to as the Legislature should not be presumed to have inserted a provision that serves a limited purpose of only determining, for the purpose of limitation, when arbitration proceedings commenced. Court elaborated that the provision talks of 'Respondent' receiving a notice containing a request for the dispute to be referred to arbitration and these words have been carefully chosen and therefore by overlooking this important step and straightaway filing claims before an Arbitrator appointed by the party, the party would violate provisions of Section 21 and frustrate an important element of the parties consenting to the appointment of an Arbitrator. From a conjoint reading of Section 21 and the aforementioned judgments, the inevitable conclusion, to my mind, is that in the absence of an agreement to the contrary, notice under Section 21, invoking the arbitration clause, preceding the reference of disputes, is mandatory and as held in Alupro Building Systems Pvt. Ltd. (supra), without such notice, arbitration proceedings that are commenced would be unsustainable in law."
(Underlined by me)
39. Returning to the facts of the case, a notice dated 30.07.2013 (styled as 'demand notice') sent by respondent No. 1 to the petitioners could not be considered as compliance with Section 21 of the 1996 Act as the letter did not set forth any details about who was being appointed as an arbitrator or the procedure being followed. The respondent No. 1 vide notice dated 30.07.2013 merely demanded the amount from the petitioners and notified them that in case they failed to repay, the respondent No. 1 will refer the dispute to Arbitration by way of appointment of a sole arbitrator as per terms and conditions of the agreement. There was no person named as an arbitrator therein nor was any consensus sought in such appointment.
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Judgment dated 17.02.2026 Page No. 25 of 27
40. So far as the letter dated 01.09.2013 is concerned, the same is sent only to the Ld. Arbitrator. The letter is not addressed to petitioners. It is not even the case of the respondent No. 1 that they sent the copy of the same to the petitioners.
41. For the aforesaid reason, this Court is of the view that the present arbitration proceedings, being held without a notice by the respondent No. 1 under Section 21 of the Act invoking the arbitration clause being received by the petitioners, are invalid. The only exception to this would have been an agreement to the contrary between the parties. There is no such agreement by which the petitioners could be said to have waived the requirement of notice under Section 21 of the Act. The arbitral proceedings can not be sustained in law and consequently, the ex-parte award dated 02.12.2013 deserves to be set aside. (C) ADDITIONAL GROUNDS
42. As already noted, the petitioners have challenged the award dated 02.12.2023 on the grounds that it is arbitrary, violative of the principles of natural justice and fair play, contrary to the settled principles of law, and in conflict with the public policy of India. However, the petitioners have neither furnished particulars nor elaborated the factual basis in support of the aforesaid grounds, nor have they led or placed on record any evidence to substantiate the same.
CONCLUSION
43. In view of the foregoing discussion, and in light of the finding that respondent No. 1 failed to issue a notice to the petitioners as mandated under Section 21 of the Arbitration and Conciliation Act, 1996, and instead proceeded to file the claim petition directly before the learned Arbitrator unilaterally appointed by it, the impugned arbitral award dated 02.12.2023 cannot be sustained in law and is accordingly set aside.
44. Consequently, the petition under Section 34 of the Arbitration and Conciliation Act, 1996 stands allowed.
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45. Parties to bear their own costs.
46. File be consigned to record room after due compliance.
(Announced in the open court on this 17th day of February, 2026 This Judgment consists of Twenty Seven signed pages).
(Abhishek Srivastava) District Judge-05, Central, THC, Delhi Digitally signed by ABHISHEK ABHISHEK SRIVASTAVA SRIVASTAVA Date:
2026.02.17 16:28:51 +0530 Arbt. No. 207/2018 Bhairam Hooda & Another Vs. Shri Ram Transport Finance Company Ltd. & Ors.
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