- Bench: Justice A K Sikri
- Appellant: SREI Infrastructure Finance
- Respondent: Truff Drilling Pvt. Ltd
Issue
· Whether arbitral tribunal, which has terminated the proceeding under Section 25(a) due to non-filing of a claim by the claimant, has jurisdiction to consider the application for recall of the order terminating the proceedings on sufficient cause being shown by the claimant?
· Whether the order passed by the arbitral tribunal under Section 25(a) terminating the proceeding is amenable to the jurisdiction of High Court under Article 227 of the Constitution of India?
Facts
· As per the first preliminary meeting between the Sole Arbitrator and the parties on August 27, 2011, the Tuff Drilling was required to file its Statement of Claim by November 19, 2011. The Claimant failed to submit the SOC. The date for submission was extended to December 9, 2011. The Claimant failed again in making its submission. On December 12, 2011, the tribunal terminated the proceedings in view of Section 25(a) of the A&C Act
· On January 20, 2012, the Claimant filed an application stating reasons for the delay in detail, praying for condonation of delay in filing the SOC and recall of the order of termination. On April 26, 2012, the Tribunal rejected the Claimant's application on the ground that it had become functus officio and consequently could not recall its order of termination.
· Aggrieved by the Tribunal's order, the Claimant filed a revision application under Article 227 of the Constitution before the Calcutta High Court. The High Court held that tribunal has the power to recall its order. The High Court set aside the order of the arbitral tribunal and remitted the matter back to the arbitral tribunal to decide the Claimant's application on merits. Aggrieved by the Calcutta High Court judgment, the Original Respondent approached the Supreme Court in appeal.
Appellant's Contentions
· The counsel submitted that the arbitral tribunal had terminated the proceedings due to non-filing of claim and thereby the arbitral tribunal had become functus officio and had no jurisdiction to recall the order on the application filed by the respondent claimant to recall the said order.
· It was contended that the termination of proceeding application was not maintainable under Article 227 of the Constitution.
· It was further submitted by the appellant that remedy if any available to the claimant was to file an application under Section 34 of the 1996 Act for setting aside the order.
Respondent's Contentions
· The counsel submitted that the termination of proceedings under Section 25(a) and termination under Section 32(a) were two different eventualities. When the proceedings are terminated under Section 32(2), the mandate of the arbitral tribunal also terminates whereas no such consequence can be read in termination of proceedings under section 25(a). Under section 25(a), proceedings are terminated on default of the claimant to file the statement of claim. Section 32(3) would not apply to a case falling under section 25(a) of the 1996 Act.
· He contended that the remedy under Section 34 is not available against such an order unless the order under Section 25(a) is also treated as an award.
Judgement
The Court upheld the decision of the Calcutta High Court and held that the arbitral tribunal can recall the order and re-commence the proceedings after the termination of proceedings under Section 25(a) on sufficient cause being shown by the Claimant. It directed the tribunal to proceed to decide the Claimant's application expeditiously.
Relevant paragraph
"We endorse the views of Patna High Court, Delhi High Court and Madras High Court as noted above, in so far as they have held that the arbitral tribunal after the termination of proceedings under Section 25(a) on sufficient cause being shown can recall the order and re-commence the proceedings.
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. In view of the above discussions, we are of the view that 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 is 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 an extension for filing the statement of claim. The arbitral tribunal has jurisdiction to consider an application for recall of order terminating the proceedings under Section 25(a), it is not for purposes of this case."
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