TaxTMI 
TaxTMI 
2017 (9) TMI 1865
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....e 1996 Act") for referring the dispute to arbitrator on the strength of contract entered with Appellant. During pendency of the application Under Section 11 with consent of the parties, Sri Baskar Sen, Senior Advocate, Bar-at-Law was appointed as Arbitrator. The application Under Section 11 of the 1996 Act was thus dismissed as not pressed. One-man arbitral tribunal entered into reference and called for the first sitting of the arbitral tribunal on 27.08.2011. Both the parties appeared on 27.08.2011 on which date arbitral tribunal had directed the Respondent to file the statement of claim. 3. Subsequently, 19th November was fixed on which date the claimant was absent. The arbitral tribunal directed for filing statement of claim by 9th December. On 9th December, the claim could not be filed by Respondent and by order dated 12.12.2011, tribunal terminated the proceedings Under Section 25(a) by making the following observations: ....It appears that the claimant is not interested to proceed with the reference. No cause has been shown as to why they have not filed their Statement of Claim in spite of repeated opportunities being given to them. In view of Section 25(a) of the....
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....ication Under Article 227 held that arbitral tribunal has power to recall its own order. The High Court set aside the order of the arbitral tribunal and remitted the matter back to the arbitral tribunal to decide the application dated 20.01.2012 filed by the Respondent on merits. The Appellant aggrieved by the judgment of Calcutta High Court has come up in this appeal. 5. This Court on 07.07.2015 issued notice and in the meantime stayed the operation of the order passed by the Calcutta High Court. Although, the Respondent was served but none appeared on behalf of the Respondent. While hearing the matter on 29.08.2017, this Court noticed that question of law raised in this case is important one and since no one has appeared on behalf of Respondent, this Court requested Shri Rakesh Dwivedi, Senior Advocate, to assist the court in deciding the issue. 6. We have heard Shri Jayant Bhushan, learned senior Counsel, assisted by Shri Santanu Ghosh, learned Counsel for the Appellant. Shri Rakesh Dwivedi, learned senior Counsel assisted by Ms. Sanskriti. Pathak, learned Counsel, has been heard as amicus curiae. 7. Learned Counsel for the Appellant submits that the arbitral tribunal h....
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....lso referred to judgments of Patna High Court, Delhi High Court, Madras High Court & Bombay High Court which shall be referred to while considering the submissions in detail. 9. Referring to this Court's judgment in SPP v. Patel Engineering, it is submitted that the said case has no applicability when Section 34 and 37 of the 1996 Act are not applicable. It was pointed out by learned amicus curiae that Lalit Kumar was a case where proceedings were terminated Under Section 32(2) (c). Learned amicus curiae has lastly submitted that legislative gap as is apparent in context of provisions of Section 25(a), 32 and 34 need to be stitched up in light of the object of the legislation. 10. We have considered the submissions of learned Counsel for the Appellant and learned amicus curiae and have perused the record. From the submissions, following issues arise for consideration in this Civil Appeal: 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? ....
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....nt jurisdiction exercised by ordinary civil court is transferred or entrusted to tribunals such tribunals are entrusted with statutory power. The arbitral tribunals in the statute of 1996 are no different, they decide the lis between the parties, follows Rules and procedure conforming to the principle of natural justice, the adjudication has finality subject to remedy provided under' the 1996 Act. Section 8 of the 1996 Act obliges a judicial authority in a matter which is a subject of an agreement to refer the parties to arbitration. The reference to arbitral tribunal thus can be made by judicial authority or an arbitrator can be appointed in accordance with the arbitration agreement Under Section 11 of the 1996 Act. 13. After noticing the objective of the enactment, we now revert to issues which have arisen in these appeals. Issue No. I 14. Chapter V of the Act deals with the conduct of arbitral proceedings. Section 18 provides "the parties shall be treated with equality and each party shall be given a full opportunity to present his case. Section 18 contains the principle of natural justice to give full opportunity to parties to present their case. 15. Section 19 ....
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....r and the arbitral tribunal recognises a legitimate interest on his part in obtaining a final settlement of the dispute, (b) the parties agree on the termination of the proceedings, or (c) the arbitral tribunal finds that the continuation of the proceedings has for any other reason become unnecessary or impossible. (3) Subject to Section 33 and Sub-section (4) of Section 34, the mandate of the arbitral tribunal shall terminate with the termination of the arbitral proceedings. 19. In the present case, proceedings were terminated vide Order dated 12.12.2011 Under Section 25(a). After termination of proceedings, application to recall the said order was filed by claimant on 20.01.2012, which was rejected by arbitral tribunal on the ground that it has no jurisdiction to re-commence the arbitration proceedings. Section 25 contemplates a situation when the claimant fails to communicate his statement of claim within the time as envisaged by Section 23, the arbitral tribunal has to terminate the proceedings. This Section thus contemplates a situation where arbitration proceeding has not been started. The most important words contained in Section 25 are "where w....
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....ent to the termination is the question which has fallen for consideration. 20. When the' arbitral tribunal without sufficient cause being shown by the claimant to file the claim statement can terminate the proceedings, subsequent to termination of proceedings, if the sufficient cause is shown, we see no impediment in the power of the arbitral tribunal to accept the show-cause and permit the claimant to file the claim. The Scheme of Section 25 of the Act clearly indicates that on sufficient cause being shown, the statement of claim can be permitted to be filed even after the time as fixed by Section 23(1) has expired. Thus, even after passing the order of terminating the proceedings, if sufficient cause is shown, the claims of statement can be accepted by the arbitral tribunal by accepting the show-cause and there is no lack of the jurisdiction in the arbitral tribunal to recall the earlier order on sufficient cause being shown. 21. Section 32 contains a heading "Termination of Proceedings". Sub-section (1) provides that the arbitral proceedings shall be terminated by the final arbitral award or by an order of the arbitral tribunal Under Sub-section (2). Sub-section (2) en....
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..... Central Government Industrial Tribunal and Ors., 1980 (Supp) SCC 420. In that case this Court was considering the power of industrial tribunal to set aside its ex-parte award on being satisfied that there was sufficient cause. The Court also noticed that there was no specific express provision in the Act or the Rules giving the tribunal jurisdiction to do so. In Para 6, following was held: 6. We are of the opinion that the Tribunal, had the power to pass the impugned order if it thought fit in the interest of justice. It. is true that there is no express provision in the Act or the Rules framed thereunder giving the Tribunal jurisdiction to do so. But it is a well known Rule of statutory construction that a Tribunal or body should be considered to be endowed with such ancillary or incidental powers as are necessary to discharge its functions effectively for the purpose of doing justice between the parties. In a case of this nature, we are of the view that the Tribunal should be considered as invested with such incidental or ancillary powers unless there is any indication in the statute to the contrary. We do not find any such statutory prohibition. On the other hand, the....
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.... the date fixed for its hearing, are some illustrative cases in which the power of procedural review may be invoked. In such a case the party seeking review or recall of the order does not have to substantiate the ground that the order passed suffers from an error apparent on the face of the record or any other ground which may justify a review. He has to establish that the procedure followed by the court or the quasi-judicial authority suffered from such illegality that it vitiated the proceeding and invalidated the order made therein, inasmuch as the opposite party concerned was not heard for no fault of his, or that the matter was heard and decided on a date other than the one fixed for hearing of the matter which he could not attend for no fault of his. In such cases, therefore, the matter has to be reheard in accordance with law without going into the merit of the order passed. The order passed is liable to be recalled and reviewed not because it is found to be erroneous, but because it was passed in a proceeding which was itself vitiated by an error of procedure or mistake which went to the root of the matter and invalidated the entire proceeding. In Grindlays Bank Ltd. v. Ce....
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.... relied upon the provisions of the Act itself (that is to say, the internal aids to interpretation) in support of the point that on sufficient cause being shown, the arbitral tribunal has full authority and power to recall an order Under Section 25(a) of the Act. I think that one would arrive at the same conclusion on the basis of some external aids to interpretation. 27. Referring to judgment of this Court in Grindlays Bank Ltd. (supra) and Anil Sood v. Presiding Officer, Labour Court II, (2001) 10 SCC 534, Patna High Court further laid down in Paragraph 39 as given below: 39. The two Supreme Court decisions under the Industrial Disputes Act are also a pointer in the direction that the arbitral tribunal must be held to have the power of procedural review and the authority to recall, on sufficient cause being shown, an order terminating the proceeding Under Section 25(a) of the Act. The second question too is, thus, answered in the affirmative and in favour of the Petitioner. 28. Delhi High Court in Awasthi Construction Co. v. Govt. of NCT of Delhi and Anr., 2013 (1) Arb. LR 70 (Delhi)(DB) has elaborately considered this issue. In Paragraph 17 and 18, following has b....
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....ould not be competent to set aside an order Under Section 25(b) also, compelling the Respondent against whom proceedings have been continued, to file a writ petition, making the continuation of proceedings before the arbitral tribunal a useless exercise. 29. The Delhi High Court again reiterated the same principle in ATV Projects India Ltd. v. Indian Oil Corporation Ltd. and Anr., 200(2013) Delhi Law Times 553 (DB). 30. The Madras High Court in Bharat Heavy Electricals Limited v. Jyothi Turbopower Services Private Limited and Ors., 2017(1) Article LR 289 (Madras) again took the view that after terminating the proceedings Under Section 25(a), the arbitral tribunal can recall the said order on sufficient cause being shown and the arbitral tribunal does not become functus officio after passing an order Under Section 25(a). The Madras High Court has agreed with the view expressed by the Division Bench of the Delhi High Court as noticed above. 31. A contrary view has also been expressed by certain High Courts. The Kerala High Court in PMA Shukkur v. Muthoot Vehicle, (2010) Arb. LR 121 (Kerala), held that the power to set aside an ex-parte award vests in the Court, and the arbit....