2017 Supreme(SC) 1861

SUPREME COURT OF INDIA
Ashok Bhushan, A. K. Sikri, JJ.
Srei Infrastructure Finance Limited – Appellant
Versus
Tuff, Drilling Private Limited — Respondent
Civil Appeal No. 15036 of 2017, (Arising Out Of Slp(C)no.16636 Of 2015)
Decided on : 20-09-2017

The arbitral tribunal has the jurisdiction to recall an order terminating the proceedings under Section 25(a) on sufficient cause being shown by the claimant. The court also highlighted the legislative gap with respect to Sections 25(a), 32, and 34 and suggested that the order under Section 25(a) should be treated as an award to make it amenable under Section 34.

Headnote:

Arbitral Tribunal - Recall of Order - Arbitration and Conciliation Act, 1996, Section 25(a), Section 32(2) - The court held that the arbitral tribunal has the jurisdiction to recall an order terminating the proceedings under Section 25(a) on sufficient cause being shown by the claimant. The termination of proceedings under Section 25(a) and termination of proceedings under Section 32(2) are two different eventualities. The court also highlighted the legislative gap with respect to Sections 25(a), 32, and 34 and suggested that the order under Section 25(a) should be treated as an award to make it amenable under Section 34. The court referred to various judgments and held that the arbitral tribunal can recall an order passed under Section 25(a) on the principles underlying Order 9, Rule 13 C.P.C.

Fact of the Case:

The respondent filed an application under section 11 of the Arbitration and Conciliation Act, 1996 for referring the dispute to an arbitrator. The arbitral tribunal terminated the arbitration proceedings on account of non-filing of the claim by the claimant. The claimant filed an application praying for recall of the order dated 12.12.2011 with further prayer to condone the delay in filing the statement of claim by granting necessary extension of time. The application was rejected by the arbitral tribunal. The claimant approached the Calcutta High Court, which set aside the order of the arbitral tribunal and remitted the matter back to the arbitral tribunal to decide the application filed by the respondent on merits. The appellant appealed against the judgment of Calcutta High Court.

Finding of the Court:

The court held that the arbitral tribunal has the jurisdiction to recall an order terminating the proceedings under Section 25(a) on sufficient cause being shown by the claimant. 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 court directed the arbitral tribunal to consider the application filed by the claimant praying for recall of the order dated 12.12.2011 and to grant an extension for filing the statement of claim.

Issues: 1) Whether arbitral tribunal which has terminated the proceeding under Section 25(a) due to non-filing of claim by claimant has jurisdiction to consider the application for recall of the order terminating the proceedings on sufficient cause being shown by the claimant? 2) Whether the order passed by the arbitral tribunal under Section 25(a) terminating the proceeding is amenable to the jurisdiction of the High Court under Article 227 of the Constitution of India? 3) Whether the Order passed under Section 25(a) terminating the proceeding is an award under the 1996 Act so as to be amenable to the remedy under Section 34 of the Act?

Ratio Decidendi: The arbitral tribunal has the jurisdiction to recall an order terminating the proceedings under Section 25(a) on sufficient cause being shown by the claimant. The termination of proceedings under Section 25(a) and termination of proceedings under Section 32(2) are two different eventualities. The court also highlighted the legislative gap with respect to Sections 25(a), 32, and 34 and suggested that the order under Section 25(a) should be treated as an award to make it amenable under Section 34. The court referred to various judgments and held that the arbitral tribunal can recall an order passed under Section 25(a) on the principles underlying Order 9, Rule 13 C.P.C.

Final Decision: The appeal is dismissed. The interim order granting stay on the operation of the order 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. The parties shall bear their own costs.