TMI Blog2017 (9) TMI 1865X X X X Extracts X X X X X X X X Extracts X X X X ..... for recall of the order dated 12.12.2011 and to grant extension for filing the statement of claim. Whether the order passed by the arbitral tribunal Under Section 25(a) terminating the proceeding is amenable to jurisdiction of High Court Under Article 227 of the Constitution of India? - Whether the Order passed Under Section 25(a) terminating the proceeding is an award under the 1996 Act so as to amenable to the remedy Under Section 34 of the Act? - HELD THAT:- The arbitral tribunal has jurisdiction to consider an application for recall of order terminating the proceedings Under Section 25(a), it is not necessary for us to enter into these issues for purposes of this case. The interim order granting stay on the operation of order dated 13.02.2015 passed by the High Court stands discharged and the arbitral tribunal shall now proceed to decide the application of claimant-Respondent dated 20.01.2012 expeditiously - appeal dismissed. - Civil Appeal No. 15036 of 2017 (Arising out of SLP (C) No. 16636 of 2015) - - - Dated:- 20-9-2017 - A.K. Sikri and Ashok Bhushan, JJ. For Appellant: Jayant Bhushan, Sr. Adv., Shantanu Ghosh, Raghunath Ghosh and S.K. Verma, Advs. For R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r prayer to condone the delay in filing the statement of claim by granting necessary extension of time. In the application, reasons for non-filing of the statement of the claim and for non-appearance of the claimant on 19.11.2011 and 12.12.2011 were stated in detail. The application filed by the claimant was objected by the Appellant. The Appellant questioned the maintainability of the application dated 20.01.2012 on the ground that arbitral tribunal has become functus officio in view of termination of the proceedings Under Section 25(a), hence the arbitral tribunal cannot recall' its order terminating the proceedings. The arbitral tribunal heard both the parties and by an order dated 26.04.2012 accepted the preliminary objections of the Appellant holding that in view of order terminating the proceedings, he cannot pass an order recommencing the arbitration proceedings. The application of the Respondent claimant was thus rejected. Aggrieved by the order of the arbitral tribunal dated 26.04.2012, the claimant approached the Calcutta. High Court in its revisionary jurisdiction by filing C.O. No. 3190 of 2012. The Appellant before the High Court objected the maintainability of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia was not maintainable. Learned Counsel for the Appellant has relied on judgment of this Court reported in Lalit Kumar V. Sanghavi v. Dharamdas V. Sanghavi and Ors., 2014(7) SCC 255 in support of the submissions that Writ Petition was not maintainable against the order of arbitral tribunal. It is further submitted by the Appellant that remedy if any available to claimant was to file an application Under Section 34 of 1996 Act for setting aside the order dated 12.12.2011. 8. Shri Rakesh Dwivedi, learned amicus curiae, submits that the termination of proceedings Under Section 25(a) and termination of proceedings Under Section 32(2) are two different eventualities. When the proceedings are terminated Under Section 32(2), the mandate of the arbitral tribunal also terminates whereas no such consequence can be read in termination of proceedings Under Section 25(a). Under Section 25(a), proceedings are terminated on default of the claimant to file the statement of claim. Section 32(3) would not apply to case falling Under Section 25(a) of the 1996 Act. The Arbitration Act, 1996 does not provide for remedy against the order Under Section 25(a). He contends the remedy Under Section 34 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... organisations expressed opinion that the 1940 Act needs extensive amendments to make it more responsive to contemporary requirements. In the wake of rise in commercial litigation both at domestic and international level, a need was felt for a comprehensive law to deal the subject. The United Nations Organisation on International Trade Law (UNCILTRAL) adopted a Model Law on International Commercial Arbitration in the year 1985. Taking into consideration domestic arbitration as well as international commercial arbitration, Parliament enacted the Arbitration and Conciliation Act, 1996. Main objective for introducing the legislation was to make provision for an arbitral procedure which is fair, efficient and capable of meeting the needs of the specific arbitration. In Section 2 of the Act, arbitral tribunal has been defined to mean a sole arbitrator or a panel of arbitrators. The arbitral tribunal was entrusted with various statutory functions, obligations by the enactment. 12. The arbitration is a quasi judicial proceeding, equitable in nature or character which differs from a litigation in a Court. The power and functions of arbitral tribunal are statutorily regulated. The tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tribunal is not bound to observe the provisions of Code with all of its rigour. As per Sub-clause (2) of Section 19 the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings. 16. Section 23 deals with claim and defence. Section 24 deals with hearing and written proceedings. 17. Section 25 deals with default of a party which provision is up for interpretation in this case and is as follows: 25. Default of a party.--Unless otherwise agreed by the parties, where, without showing sufficient cause,-- (a) the claimant fails to communicate his statement of claim in accordance with Sub-section (1) of Section 23, the arbitral tribunal shall terminate the proceedings; (b) the Respondent fails to communicate his statement of defence in accordance with Sub-section (1) of Section 23, the arbitral' tribunal shall continue the proceedings without treating that failure in itself as an admission of the allegations by the claimant and shall have the discretion to treat the right of the Respondent to file such statement of defence as having been forfeited ; (c) a party fails to appear at an oral hearing or to produce doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terminate the proceedings. The question of showing sufficient cause will arise only when the claimant is asked to show cause as to why he failed to submit his claim within the time as envisaged Under Section 23(1) or the claimant, on his own, before the order is passed Under Section 25(a) to terminate the proceedings comes before the arbitral tribunal, showing sufficient cause for not being able to submit his claim within the time. In both the circumstances, i.e. when a show-cause notice is issued to the claimant as observed above or claimant of his own shows cause for non-filing the claim within the time the arbitral tribunal shall take a call on terminating the proceedings. It is easy to comprehend that in the event, the claimant shows a sufficient cause, the arbitral tribunal can accept the statement of claim even after expiry of the time as envisaged Under Section 23(1) or grant further time to the claimant to file a claim. Thus, on sufficient cause being shown by a claimant even though time has expired Under Section 23(1), it is not obligatory for the arbitral tribunal to terminate the proceedings. The conjunction of the wording where without showing sufficient cause and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) impossible. The eventuality as contemplated Under Section 32 shall arise only when the claim is not terminated Under Section 25(a) and proceeds further. The word 'unnecessary' or 'impossible' as used in clause (c) of Section 32(2) cannot be said to be covering a situation where proceedings are terminated in default of the claimant. The word unnecessary or impossible has been used in different contexts than to one of default as contemplated Under Section 25(a). Sub-section (3) of Section 32 further provides that the mandate of the arbitral tribunal shall terminate with the termination of the arbitral proceedings subject to Section 33 and Sub-section (4) of Section 34. Section 33 is the power of the arbitral tribunal to correct any computation errors, any clerical or typographical errors or any other errors of a similar nature or to give an interpretation of a specific point or part of the award. Section 34(4) reserves the power of the Court to adjourn the proceedings in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting asi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eous order passed under a misapprehension by it, and (2) a review on merits when the error sought to be corrected is one of law and is apparent on the face of the record. It is in the latter sense that the court in Patel Narshi Thakershi case held that no review lies on merits unless a statute specifically provides for it. Obviously when a review is sought due to a procedural defect, the inadvertent error committed by the Tribunal must be corrected ex debito justitiae to prevent the abuse of its process, and such power inheres in every court or Tribunal. 24. In Kapra Mazdoor Ekta Union v. Birla Cotton Spinning and Weaving Mills Ltd. and Anr., (2005) 13 SCC 777, this Court again held that a quasi-judicial authority is vested with the power to invoke procedural review. In Paragraph 19 of the judgment, following was laid down: 19. Applying these principles it is apparent that where a court or quasi-judicial authority having jurisdiction to adjudicate on merit proceeds to do so, its judgment or order can be reviewed on merit only if the court or the quasi-judicial authority is vested with power of review by express provision or by necessary implication. The procedural review belo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in so far as the power of procedural review is concerned. We have already noticed that Section 19 provides that arbitral tribunal shall not be bound by the Rules of procedure as contained in Code of Civil Procedure. Section 19 cannot be read to mean that arbitral tribunal is incapacitated in drawing sustenance from any provisions of Code of Civil Procedure. This was clearly laid down in Nahar Industrial Enterprises Limited v. Hong Kong and Shanghai Banking Corporation, (2009) 8 SCC 646. In Paragraph 98(n), following was stated: (n) It is not bound by the procedure laid down under the Code. It may however be noticed in this regard that just because the Tribunal is not bound by the Code, it does not mean that it would not have jurisdiction to exercise powers of a court as contained in the Code. Rather, the Tribunal can travel beyond the Code of Civil Procedure and the only fetter that is put on its powers is to observe the principles of natural justice, (See Industrial Credit and Investment Corpn. of India Ltd. v. Grapco Industries Ltd.) 26. We thus are of the view that principles underlying Order 9 Rule 13 can very well be invoked by the arbitrator. There is nothing on re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well nigh be possible that the sufficient cause itself is such which prevented the party concerned from showing it before the proceedings terminated. It would be a pedantic reading of the provision to hold that the arbitral tribunal in such cases also stands denuded. Once the legislature has vested the arbitral tribunal with such power, an order of termination cannot be allowed to come in the way of exercise thereof. 18. There is another reason for us to hold so. The emphasis of the Arbitration Act is to provide an alternative dispute resolution mechanism. The provisions of the Act ought to be interpreted in a manner that would make such adjudication effective and not in a manner that would make arbitration proceedings cumbersome. A view that the arbitral tribunal is precluded, even where sufficient cause exists, from reviving the arbitral proceedings and the only remedy available to a party is a writ petition and which remedy is available only in the High Court often situated at a distance from the place where the parties are located, would be a deterrent to arbitration. It is also worth mentioning that Section 19(2) of the Act permits the parties to agree on the procedure to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cing the arbitration proceedings. In view of the above discussions, we are of the view that the arbitral tribunal committed an error in holding that it has no jurisdiction to recall an order terminating the proceedings Under Section 25(a). The arbitral tribunal having not considered the cause shown by the claimant in its application, it is in the ends of justice that the arbitral tribunal be asked to consider the application filed by the claimant dated 20.01.2012 praying for recall of the order dated 12.12.2011 and to grant extension for filing the statement of claim. 34. Coming to Issue No. 2 and 3, in view of what we have said regarding Issue No. 1 that arbitral tribunal has jurisdiction to consider an application for recall of order terminating the proceedings Under Section 25(a), it is not necessary for us to enter into Issue No. 2 and 3 for purposes of this case. For deciding the present Civil Appeal, our answer to Issue No. 1 is sufficient to dispose of the matter. 35. In result, the appeal is dismissed. The interim order dated 07.07.2015, granting stay on the operation of order dated 13.02.2015 passed by the High Court stands discharged and the arbitral tribunal shall ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
