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2022 Supreme(Del) 1242

IN THE HIGH COURT OF DELHI AT NEW DELHI
C. Hari Shankar, J.
Union Of India - Appellant
Versus
Indian Agro Marketing Co Operative Limited - Respondent
CM(M) 424 of 2021 & CM Appl. 20310-312 of 2021, CM(M) 437 of 2021 & CM Appl. 20771-773 of 2021, CM(M) 439 of 2021 & CM Appl. 20781-783 of 2021, CM(M) 440 of 2021 & CM Appl. 20786-789 of 2021, CM(M) 441 of 2021 & CM Appl. 20867-869 of 2021 and CM(M) 498 of 2021 & CM Appl. 23052-054 of 2021
Decided On : 02-05-2022

Advocates appeared:
Mr. Rakesh Kumar, CGSC, for the Appellant.

The main legal point established is that under Section 25(a) of the Arbitration and Conciliation Act, 1996, the arbitral tribunal cannot terminate proceedings if the claimant shows sufficient cause for failing to file the statement of claim within the stipulated time, and the arbitrator has the power to recall the order terminating the proceedings upon sufficient cause being shown.

Headnote:

Arbitration - Termination of Proceedings - Arbitration and Conciliation Act, 1996 (Section 25(a))

Fact of the Case:

The petitioner challenged the orders of the sole arbitrator terminating the arbitral proceedings due to the petitioner's default in filing statements of claim. The petitioner sought to quash the orders or direct the arbitrator to consider the recall applications.

Finding of the Court:

The court found the petitions maintainable under Article 227 of the Constitution of India as no alternate remedy was available to challenge the orders passed under Section 25(a) of the 1996 Act. The court relied on the judgment in Srei Infrastructure Finance Ltd. v. Tuff Drilling Pvt. Ltd. to direct the arbitrator to consider and decide on the petitioner's recall applications.

Issues: The issues revolved around the maintainability of the petitions, the arbitrator's jurisdiction to consider recall applications, and the interpretation of Section 25(a) of the 1996 Act.

Ratio Decidendi: The court held that where the claimant shows sufficient cause for failing to file the statement of claim within the stipulated time, the arbitral tribunal cannot terminate the proceedings under Section 25(a). Additionally, the court emphasized that the arbitrator has the power to recall the order terminating the proceedings under Section 25(a) upon sufficient cause being shown.

Final Decision: The court partly allowed the writ petitions, directing the arbitrator to consider and decide on the petitioner's recall applications, granting an opportunity of hearing to both sides.

JUDGMENT

1. These petitions assail identical orders dated 19 th February, 2021, passed by the learned sole arbitrator, arbitrating on the dispute between the petitioner and the respondent, in respect of identical contracts bearing different numbers.

2. Despite notice, the respondent has not appeared today.

3. It is seen that there was no appearance on behalf of the respondent on the last date of hearing either.

4. I have heard Mr Rakesh Kumar, learned Counsel for the petitioner-Union of India and applied myself to the facts and the law that applies.

5. The learned sole arbitrator has, exercising her jurisdiction under Section 25(a)[1] of the Arbitration and Conciliation Act, 1996 (the 1996 Act), terminated the arbitral proceedings before her on the ground of default, on the part of the petitioner, in filing statements of claim, allegedly despite repeated opportunities having been granted for the said purpose. The petitioner also filed applications before the learned sole arbitrator for recall of the aforesaid orders, but it appears that the learned arbitrator has not condescended to pass any order on the said applications.

    [1] 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;

    6. It is in these circumstances that the petitioner has moved these petitions before this Court, praying that the orders dated 19th February, 2021, passed by the learned sole arbitrator, be quashed and set aside or, in the alternative, that the learned arbitrator be directed to pass an order on the applications filed by the petitioner in these cases seeking recall of the said orders.

    7. On the last date of hearing, I had queried of Mr. Rakesh Kumar as to how, in view of the judgment of the Supreme Court in Bhaven Construction v. Executive Engineer, Sardar Sarovar Narmada Nigam Ltd2 , the present petitions would not lie under Article 227 of the Constitution of India.

    8. Mr. Rakesh Kumar submits that the present case is distinguishable from Bhaven Construction, (2022) 1 SCC 75 as the impugned orders were passed under Section 25(a) of the 1996 Act, against which there is no alternate remedy available to the petitioner. He submits that Bhaven Construction2 dealt with an order passed under Section 16(5) of the 1996 Act, against which the remedy under Section 34 is provided by Section 16(6) of the 1996 Act. Section 16 of the 1996 Act reads thus:

      '16. Competence of arbitral tribunal to rule on its jurisdiction. -

      (1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose, -

      (a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract; and

      (b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.

      (2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator.

      (3) A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings.

      (4) The arbitral tribunal may, in either of the cases referred to in sub-section (2) or sub-section (3), admit a later plea if it considers the delay justified.

      (5) The arbitral tribunal shall decide on a plea referred to in sub-section (2) or sub-section (3) and, where the arbitral tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an

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