M/S BHAGHEERATHA ENGINEERING LTD. versus STATE OF KERALA

Citation: [2026] 1 S.C.R. 303 · Decided: 05-01-2026 · Supreme Court of India · Bench: J.B. PARDIWALA · Disposal: Appeal(s) allowed

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Judgment (excerpt)

[2026] 1 S.C.R. 303 : 2026 INSC 4
M/s Bhagheeratha Engineering Ltd.  
v.  
State of Kerala
(Civil Appeal No. 39 of 2026)
05 January 2026
[J.B. Pardiwala and K.V. Vishwanathan,* JJ.]
Issue for Consideration
Whether the High Court by the impugned order was justified in 
holding that the Arbitral Tribunal was appointed at the request of 
the State to adjudicate dispute No.1 only; was the non-issuance 
of a notice u/s.21, Arbitration and Conciliation Act, 1996 by the 
appellant fatal for it to pursue its claim before the Arbitrator.
Headnotes†
Arbitration and Conciliation Act, 1996 – Four packages of 
Road Maintenance Contract were awarded to the appellant – 
Appellant quantified the amounts due and submitted the same 
for decision by the Executive Engineer – As per the appellant, 
since the Executive Engineer/Superintending Engineer failed 
to take any decision, the appellant approached the Adjudicator 
under Clause 25.1 of the General Conditions of Contract, who 
ruled in favour of the appellant on dispute Nos.1 and 3 and 
against it on dispute Nos.2 and 4 – Respondent issued letter 
referring to arbitration Clause 25.3 expressing intention to 
refer only dispute No.1 to arbitration – Eventually, co-arbitrator 
nominated – By its award, the Arbitral tribunal answered all 
four disputes in favour of the appellant – Award challenged 
by the Respondent u/s.34 – Petition allowed by District Judge, 
award was set aside and the decision of the Adjudicator 
restored – Order upheld by High Court – Interference with:
Held: High Court erred in setting aside the award on the basis 
that the appointment of the Tribunal was only to adjudicate dispute 
No.1 – On facts, conduct of the respondent precluded it from 
relying on the mandate of clause 24, 24.1 and 25 to contend 
that the appellant was foreclosed from raising the entire dispute 
* Author
304
[2026] 1 S.C.R.
Supreme Court Reports
before the Arbitrator – The party at fault cannot be permitted to 
take advantage of the same – High Court also erred in holding that 
the non-issuance of notice u/s.21, A&C Act by the appellant with 
regard to dispute no.2 to 4 was fatal for it to pursue its claim before 
the arbitrator – There is no mandatory prerequisite for issuance 
of a s.21 notice prior to the commencement of Arbitration – Also, 
High Court erred in holding that the Arbitral Tribunal exceeded its 
jurisdiction in deciding the entire dispute – Arbitration Clause 25.3 
is widely worded and any dispute or difference arising between the 
parties relating to any matter arising out of or concerned with the 
agreement are to be settled in accordance with the A&C Act by the 
Arbitral Tribunal – Judgment of High Court set aside – Award of 
the arbitrator upheld in its entirety – Contract Act, 1872 – s.28(b). 
[Paras 14-16, 18, 22]
Arbitration and Conciliation Act, 1996 – s. 21 – Object of – Was 
the non-issuance of a notice u/s.21 by the appellant fatal for 
it to pursue its claim before the Arbitrator:
Held: No – The object of s.21 is only for the purpose of 
commencement of arbitral proceedings – s.21 is concerned only 
with determining the commencement of the dispute for the purpose 
of reckoning limitation – There is no mandatory prerequisite for 
issuance of a s.21 notice prior to the commencement of Arbitration 
– Issuance of a s.21 notice may come to the aid of parties and 
the arbitrator in determining the limitation for the claim – Failure 
to issue a s.21 notice would not be fatal to a party in Arbitration 
if the claim is otherwise valid and the disputes arbitrable – High 
Court erred in holding that the non-issuance of notice u/s.21 by 
the appellant with regard to dispute no.2 to 4 was fatal for it to 
pursue its claim before the arbitrator. [Paras 14, 16]
Arbitration and Conciliation Act, 1996 – s.2(9), 23:
Held: Once the Arbitral Tribunal is constituted claims, defence 
and, counter claims are filed – Party which normally files the claim 
first is, for convenience, referred to as the ‘claimant’ and the party 
which responds is called the ‘respondent’ – The said respondent 
is also along with the defence statement entitled to file its counter 
claim – Hence, to contend that the appellant cannot be referred 
to as a claimant because no notice u/s.21 has been issued is 
completely untenable. [Para 21]
[2026] 1 S.C.R. 
305
M/s Bhagheeratha Engineering Ltd. v. State of Kerala
Case Law Cited
State of Goa v. Praveen Enterprises [2011] 10 SCR 1026 : (2012) 
12 SCC 581; M.K. 

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