TMI Blog2022 (5) TMI 975X X X X Extracts X X X X X X X X Extracts X X X X ..... bitrator, in the impugned orders, has lost sight of this position and has referred only to the earlier order passed by her on 16.10.2020. It would be appropriate to allow the Union s alternative prayer for a direction upon the Arbitrator to consider the applications presented by it for recall of the impugned orders dated 19.02.2021. It may be noted that, whether or not the Union is able to show sufficient cause for its delay in submitting the Settlement of Claims, is a matter for the Arbitrator to consider. The Arbitrator is directed to consider the applications presented by the Union for recall of the orders dated 19.02.2021 terminating the arbitral proceedings under Section 25(a) of the Act. As the proceedings have been unduly prolonged, the Arbitrator is directed to dispose of the applications after hearing the parties, within three months from today. It is made clear that this Court has not made any comment on the merits of the said applications - the writ petitions are partly allowed. - CM(M) 425/2021 & CM APPL. Nos. 20315-20317/2021 - - - Dated:- 9-5-2022 - MR. PRATEEK JALAN, J. Mr. Rakesh Kumar, CGSC for the Petitioner. Ms. Anju Bhattacharya, Advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent. The Union sought to claim consequential damages. A chart showing the details of each contract and the damages claimed by the Union has been placed on record, but it is not necessary to reproduce the same here, as the facts relating to the underlying dispute between the parties are not relevant to the adjudication of the issue raised in these petitions. 4. What is relevant for the present purposes is that each of the contracts contains an identical arbitration clause, which is in the following terms:- 15 I. ARBITRATION CLAUSE: (a) In the event of any question, dispute or difference arising under or out of or in connection with the conditions mentioned in this schedule or in annexure thereto or in General Conditions of contract governing contracts placed by the Central Purchase Organisation of the Government of India. (Now under Department. Of Supply.) Form No. DGS D-68 (Revised) or touching or concerning the construction, meaning or operation or effect thereof/or of any matter contained therein or as to the rights, duties or liabilities of the parties in connection with this contract (Except as to any matters the decision of which is specially provided for in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e. President of India, shall be discharged and released of all his liabilities under the contract. (b) The date to completion of the contract shall mean and include: (i) The date when the goods are delivered according to the terms of delivery. (ii) In case of Warranty clause contract, the date when warranty expires, (iii) In case where the contract is cancelled wholly or partly the date when the letter of cancellation is served upon the supplier. 5. On 05.09.2016, the Union received legal notices from DSCCFL for reference of the matters to arbitration. By a letter dated 21.11.2016, all 24 disputes were referred to the arbitration of Mr. Ramesh Chander, Deputy Legal Advisor and Arbitrator (Directorate General of Supplies and Disposals). The Arbitrator entered into the reference and issued his first order more than six months thereafter, on 06.07.2017 1 . By the said order, the Union was directed to file its Statement of Claims by 10.08.2017, and DSCCFL was directed to file its counter Statement of Claims by 31.08.2017. The cases were fixed for hearing on 12.09.2017. 6. By the next order dated 18.09.2017, the Arbitrator noted that neither party had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The venue of the arbitration shall be at Room No. 215, 2nd Floor, Jeevan Tara Building, Sansad Marg, New Delhi -110001. 4. It may be noted that if either of the parties fail to attend the hearing on the date and time fixed, the case will be heard and determined 'ex-parte'. 5. Copy of this Order Sheet be sent to the parties concerned. 10. A similar order was passed on 06.01.2021, fixing the next date of hearing as 22.01.2021. 11. On 11.01.2021, the Union appointed a counsel in these proceedings. However, it is not disputed that the hearing scheduled on 22.01.2021 was not held. 12. Before any further progress could be made in the matter, the Arbitrator terminated the proceedings by the impugned order dated 19.02.2021. The impugned order reads as follows:- The Order u/s 25(a) of the Arbitration Conciliation Act, 1996 is made and published on the 19th February, 2021. 2. Whereas on account of disputes, I, Renu Pandey, Asstt. Legal Advisor to the Govt. of India, Ministry of Law Justice, D/o Legal Affairs was appointed as Sole Arbitrator by the Secretary, Ministry of Law Justice, D/o Legal Affairs vide Office Order No. 47/2018 dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited vs. Tuff Drilling Private Limited [(2018) 11 SCC 470] to contend that an order for termination of proceedings under Section 25 of the Act ought to be preceded by a notice to the concerned party, and that such an order is susceptible to an application for review/recall. 15. Mr. Kumar further submitted that, in the facts and circumstances of the cases, the termination of the proceedings visits an unduly harsh consequence upon the Union. He relied upon various communications addressed by the concerned department to the Ministry of Law and Justice for appointment of the Arbitrator. He further drew my attention to the terms of the very last order passed by the Arbitrator, being the order dated 06.01.2021. The said order required the Union to file the Statement of Claims on the next date of hearing which was fixed for 22.01.2021. However, Mr. Kumar submitted that no hearing was, in fact, conducted on 22.01.2021, and no further communication was received until the impugned orders dated 19.02.2021. Government counsel having been appointed by way of the communication of the Ministry of Law and Justice dated 11.01.2021, Mr. Kumar submitted that it cannot be presumed that the Un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st to the judgment in Srei Infrastructure (Supra), as the present cases arise in very similar circumstances. In Srei Infrastructure, arbitration proceedings between the parties were terminated by the Arbitral Tribunal under Section 25 of the Act as the claimant failed to file the Statement of Claims. The claimant s application for recall of this order was dismissed by the Arbitral Tribunal, following which the High Court was moved under Article 227 of the Constitution. The High Court set aside the order of the Tribunal, and the Supreme Court affirmed this view. 21. The Supreme Court formulated the issues arising in appeal as follows:- 12.1. (i) Whether the Arbitral Tribunal which has terminated the proceeding under Section 25(a) due to non-filing of claim by the claimant has jurisdiction to consider the application for recall of the order terminating the proceedings on sufficient cause being shown by the claimant? 12.2. (ii) Whether the order passed by the Arbitral Tribunal under Section 25(a) terminating the proceeding is amenable to jurisdiction of the High Court under Article 227 of the Constitution of India? 12.3. (iii) Whether the order passed under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 wordings where without showing sufficient cause and the claimant fails to communicate his statement of claim , would indicate that it is a duty of the Arbitral Tribunal to inform the claimant that he has failed to communicate his claim on the date fixed for that and requires him to show cause why the arbitral proceedings should not be terminated? Opportunity to show sufficient cause for his failure to communicate his claim statement can only be given after he has actually failed to do so. Whether in a case where the claimant failed to file a statement of claim and has failed also to show cause before an order of termination of proceedings is passed, the claimant is entitled to show cause subsequent to the termination, is the question which has fallen f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p Industries (Supra) and Bhaven Construction (Supra), and in the judgment of this Court in Surender Kumar Singhal (Supra). 27. In Deep Industries, the Supreme Court upheld the maintainability of petitions under Article 227 of the Constitution against arbitral orders, but cautioned that they should be sparingly entertained. The Court also reiterated that Article 227 is intended to correct jurisdictional errors. 28. In Bhaven Construction, the judgment in Deep Industries was considered. The Court noted that the Act is a code in itself. However, the exercise of jurisdiction under Article 227 of the Constitution was not altogether ruled out, as would be evident from the following observations:- 19. In this context we may observe Deep Industries Ltd. v. ONGC [Deep Industries Ltd. v. ONGC, (2020) 15 SCC 706] , wherein interplay of Section 5 of the Arbitration Act and Article 227 of the Constitution was analysed as under : (SCC p. 714, paras 16-17) 16. Most significant of all is the non obstante clause contained in Section 5 which states that notwithstanding anything contained in any other law, in matters that arise under Part I of the Arbitration Act, no judicial autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion under Section 34. It may be noted that in the present case, the award has already been passed during the pendency of this appeal, and Respondent 1 has already preferred a challenge under Section 34 to the same. Respondent 1 has not been able to show any exceptional circumstance, which mandates the exercise of jurisdiction under Articles 226 and 227 of the Constitution. [ Emphasis supplied ] 29. The aforesaid principles have been considered by this Court in Surender Kumar Singhal (Supra) and summarised by way of the following principles:- 24. A perusal of the above-mentioned decisions, shows that the following principles are well settled, in respect of the scope of interference under Article 226/227 in challenges to orders by an arbitral tribunal including orders passed under Section 16 of the Act. (i) An arbitral tribunal is a tribunal against which a petition under Article 226/227 would be maintainable; (ii) The non-obstante clause in section 5 of the Act does not apply in respect of exercise of powers under Article 227 which is a Constitutional provision; (iii) For interference under Article 226/227, there have to be exceptional circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arbitral proceedings. b) A second crucial distinguishing factor in the present cases is that the Court is being called upon not to interdict the arbitral process, but to aid and support it. The concern of the Supreme Court, as expressed in Deep Industries (Supra) and Bhaven Construction (Supra), to limit judicial interference in arbitral process is to aid the efficiency and ensure fairness of the proceedings under the Act. The exercise of writ jurisdiction to interdict the arbitral process has, therefore, been discouraged. The exercise of jurisdiction in the present cases would, in contrast, give the defaulting claimant an opportunity to explain its conduct to the Arbitrator so that, if the Arbitrator is satisfied with the explanation offered, the process can be recommenced and taken to its logical conclusion. In that sense, these cases present an exceptional circumstance [See Bhaven Construction (Supra note 4) [paragraph 23]], where exercise of jurisdiction would not constitute an interference with the arbitral process, but a step in aid thereof. c) As noted above, the aforesaid conclusion is fortified by the judgment of the Supreme Court in Srei Infrastructure (Supra), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FL 35. Ms. Bhattacharya relied on the judgment of this Court in Awasthi Construction (Supra). However, the said judgment is not, in my view, conclusive of the matter. In the aforesaid judgment, the Division Bench was concerned with a case where the arbitral proceedings were terminated under Section 25(a) of the Act, against which the writ petition had been dismissed by the learned Single Judge of this Court. The writ petition was dismissed on the ground of laches, although the learned Single Judge had also expressed a doubt regarding the maintainability of the writ petition, and regarding the correctness of the view taken by the Patna High Court in Senbo Engineering Limited vs. State of Bihar [AIR 2004 Patna 33]. 36. The Division Bench affirmed the view taken by the learned Single Judge on the question of laches. However, it also held that the proceedings before the Arbitrator can be revived if the claimant shows cause under Section 25 of the Act, even after the proceedings have been terminated. To this extent, the decision actually supports the position of the Union in the present cases. However, Ms. Bhattacharya relies upon the judgment, to the extent that the Division Be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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