2017 (9) TMI 1865 - SC - Indian Laws

Arbitral Tribunal Jurisdiction to Recall Order under Arbitration Act

Srei Infrastructure Finance Limited Versus Tuff Drilling Private Limited

The Supreme Court upheld the High Court's decision, affirming that an arbitral tribunal has the jurisdiction to recall an order terminating proceedings ... Termination of arbitration proceedings - non filing of the claim by the claimant - sufficient cause or not - 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? - HELD THAT:- In the present case, the arbitral tribunal has rejected the application of the claimant by order dated 26.04.2012 taking the view that after an order is passed by him terminating the proceedings, he cannot pass the order recommencing the arbitration proceedings - 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. 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. Issues Involved:1. Jurisdiction of the arbitral tribunal to recall an order terminating proceedings under Section 25(a) of the Arbitration and Conciliation Act, 1996.2. Amenability of the order passed by the arbitral tribunal under Section 25(a) 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 proceedings is an award under the 1996 Act, making it amenable to the remedy under Section 34 of the Act.Detailed Analysis:Issue 1: Jurisdiction of the Arbitral Tribunal to Recall an Order Terminating Proceedings under Section 25(a)The Supreme Court examined whether an arbitral tribunal, which has terminated proceedings under Section 25(a) due to the claimant's failure to file a statement of claim, has the jurisdiction to recall such an order if sufficient cause is shown. Section 25(a) stipulates that the arbitral tribunal shall terminate proceedings if the claimant fails to communicate their statement of claim without showing sufficient cause. The Court emphasized that the arbitral tribunal should allow the claimant to show sufficient cause before terminating the proceedings. If sufficient cause is shown even after the termination, the tribunal can recall its earlier order and permit the claimant to file the statement of claim. This interpretation aligns with the principles of natural justice and ensures that arbitration remains an effective dispute resolution mechanism. The Court endorsed the views of the Patna, Delhi, and Madras High Courts, which had held that the arbitral tribunal could recall an order terminating proceedings under Section 25(a) on sufficient cause being shown.Issue 2: Amenability of the Order to the Jurisdiction of the High Court under Article 227Given the conclusion on Issue 1, the Supreme Court found it unnecessary to address whether the order passed by the arbitral tribunal under Section 25(a) is amenable to the jurisdiction of the High Court under Article 227 of the Constitution of India. The High Court had earlier entertained the application under Article 227, holding that the arbitral tribunal has the power to recall its own order. The Supreme Court's decision that the arbitral tribunal has jurisdiction to consider an application for recall of the order terminating proceedings under Section 25(a) rendered further discussion on this issue redundant for the purposes of this case.Issue 3: Whether the Order Terminating Proceedings is an Award under the 1996 ActSimilarly, the Supreme Court found it unnecessary to delve into whether the order passed under Section 25(a) terminating the proceedings constitutes an award under the 1996 Act, making it amenable to the remedy under Section 34. The Court's conclusion on Issue 1, which allows the arbitral tribunal to recall its termination order upon sufficient cause being shown, sufficiently addressed the matter at hand. Therefore, the need to classify the termination order as an award for the purposes of Section 34 did not arise in this context.Conclusion:The Supreme Court dismissed the appeal, upholding the High Court's decision that the arbitral tribunal has the jurisdiction to recall an order terminating proceedings under Section 25(a) if sufficient cause is shown. The arbitral tribunal was directed to consider the claimant's application for recall of the termination order and to grant an extension for filing the statement of claim. The Court appreciated the assistance provided by the amicus curiae, Mr. Rakesh Dwivedi, Sr. Advocate.