2025 (1) TMI 413 - HC - Indian Laws

Arbitral tribunal's discretionary power to condone delay in filing Statement of Defence upheld

KELVIN AIR CONDITIONING AND VENTILATION SYSTEM PRIVATE LIMITED Versus TRIUMPH REALITY PRIVATE LIMITED

Delhi HC dismissed petition challenging arbitral tribunal's order condoning delay in filing Statement of Defence. Court held that arbitral tribunals ... Power of Arbitral Tribunal to recall/review its orders - discretion of Hon’ble Tribunal to condone the delay in filing the SOD and CC - whether “sufficient cause” existed or not for the purpose of condoning delay in filing Statement of Defence? - HELD THAT:- Having seen the order passed by learned Sole Arbitrator, this Court does not find any reason to interfere with the impugned order. The aspect whether the ground shown is “sufficient or not” is primarily in the domain of discretionary jurisdiction and even if this Court was to take a contrary view, the impugned order cannot be set aside while exercising supervisory power under Article 227 of Constitution of India, particularly in context of arbitral proceedings where such interference is, to a very large extent, proscribed. There is also nothing which may indicate that exercise of such discretion smacks off any bad faith or demonstrates any perversity, much less of extreme nature. Conclusion - Arbitral Tribunals have the power to recall orders and condone delays upon showing 'sufficient cause,' and that judicial interference in arbitral processes should be minimal. Petition dismissed. 1. ISSUES PRESENTED and CONSIDEREDThe judgment presented the following core legal issues:Issue 1: Whether the Arbitral Tribunal has the power to recall/review its ordersRs.Issue 2: Whether the Arbitral Tribunal has the discretion to condone the delay in filing the Statement of Defence (SOD) and Counter-Claim (CC)Rs.Issue 3: Whether sufficient cause has been shown by the Applicant/Respondent to condone the delay of 134 days in filing the SOD and CCRs.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Power to Recall/Review OrdersRelevant Legal Framework and Precedents: The issue revolves around the powers of an Arbitral Tribunal to recall or review its own orders. The court referenced legal principles that allow such powers upon the demonstration of 'sufficient cause.'Court's Interpretation and Reasoning: The court acknowledged that the Arbitral Tribunal has the power to recall its orders if 'sufficient cause' is demonstrated, aligning with established arbitration principles.Key Evidence and Findings: The Arbitral Tribunal had initially framed this issue and concluded that it possessed such power, subject to the demonstration of 'sufficient cause.'Application of Law to Facts: The Tribunal's decision to recognize its power to recall orders was based on the procedural history and the absence of any statutory prohibition against such action.Treatment of Competing Arguments: The petitioner argued for the Tribunal's power to recall, while the respondent's position was not explicitly detailed in the judgment.Conclusions: The court upheld the Tribunal's finding that it has the power to recall orders upon sufficient cause being shown.Issue 2: Discretion to Condonation of DelayRelevant Legal Framework and Precedents: The ability of an Arbitral Tribunal to condone delays is subject to the presentation of 'sufficient cause.' This principle is grounded in the arbitral process's flexibility and efficiency.Court's Interpretation and Reasoning: The court supported the Tribunal's discretion to condone delays, emphasizing the necessity of 'sufficient cause.'Key Evidence and Findings: The Tribunal had determined that it could condone delays, provided 'sufficient cause' was demonstrated, but ultimately found no such cause in this case.Application of Law to Facts: The Tribunal's discretion was exercised based on the procedural context and the lack of adequate justification for the delay.Treatment of Competing Arguments: The petitioner sought condonation, arguing for flexibility, while the Tribunal found the justification insufficient.Conclusions: The court agreed with the Tribunal's decision to deny condonation, as no sufficient cause was shown.Issue 3: Sufficient Cause for DelayRelevant Legal Framework and Precedents: The concept of 'sufficient cause' is pivotal in determining whether procedural delays can be excused, often requiring a factual and contextual analysis.Court's Interpretation and Reasoning: The court emphasized that the determination of 'sufficient cause' is within the discretionary domain of the Arbitral Tribunal and should not be interfered with lightly.Key Evidence and Findings: The Tribunal found that the petitioner failed to demonstrate any 'sufficient cause' for the delay of 134 days in filing the SOD and CC.Application of Law to Facts: The Tribunal's decision was based on the absence of compelling evidence or justification for the delay.Treatment of Competing Arguments: The petitioner's arguments for delay were considered but found lacking in substance by the Tribunal.Conclusions: The court upheld the Tribunal's decision, finding no merit in the petitioner's claim of sufficient cause.3. SIGNIFICANT HOLDINGSPreserve Verbatim Quotes of Crucial Legal Reasoning: 'While there is no doubt that a remedy under Articles 226 and 227 are available against the orders passed by the Arbitral Tribunal, such challenges are not to be entertained in each and every case and the court has to be 'extremely circumspect'.'Core Principles Established: The judgment reaffirmed the principles that Arbitral Tribunals have the power to recall orders and condone delays upon showing 'sufficient cause,' and that judicial interference in arbitral processes should be minimal.Final Determinations on Each Issue: The court dismissed the petition, upholding the Arbitral Tribunal's findings that it had the power to recall orders and condone delays but found no sufficient cause to do so in this case.