The Delhi High Court has held that an arbitral tribunal’s order closing proceedings for non-filing of a statement of claim under Section 25(a) of the Arbitration and Conciliation Act, 1996 does not constitute an “award” and is therefore not subject to challenge under Section 34.
The petitions were filed under Sections 14 and 15 of the Act seeking substitution or continuation of the arbitral proceedings after the arbitrator had terminated them for the petitioner’s failure to file its statement of claim and pay arbitral fees. The respondent argued that the arbitrator’s termination order amounted to an “award,” and that the petitioner’s only remedy was under Section 34.
Rejecting this argument, the Court held that an order under Section 25(a) does not and cannot amount to an award, as it does not deal with the rights of the parties before the arbitrator. Such an order merely terminates the proceedings on account of the claimant’s default in filing the statement of claim and does not involve any adjudication or determination of the parties’ rights or obligations. Justice Jasmeet Singh further observed that for an order to qualify as an award, it must decide, either finally or on an interim basis, an issue forming part of the dispute referred to arbitration. An order under Section 25(a), being procedural in nature and not addressing the substantive lis between the parties, lacks the essential attributes of an arbitral award.
The Court emphasised that “an award can only be considered to be an award once it adjudicates the rights of the parties,” adding that an order terminating proceedings for non-filing of a statement of claim cannot be treated as an award under Section 32(2). Referring to precedents such as Lalitkumar V. Sanghavi v. Dharamdas V. Sanghavi (2014) 7 SCC 255 and Indian Farmers Fertilizer Cooperative Ltd. v. Bhadra Products (2018) 2 SCC 534, the Court reiterated that procedural defaults do not extinguish substantive rights and that arbitral mandates can be restored under Section 14(2) where continuation of proceedings remains possible.
The Court directed that the arbitration should continue before the same arbitrator appointed earlier subject to the petitioner’s compliance with fee requirements.
Appearances:
Petitioner: Dr. Amit George, Adv , Mr. Shashwat Kabi, Adv , Ms. Ibansara Syiemlieh. Adv, Mr. Adhishwar Suri Adv and Mr. Vaibhav Gandhi Adv and Mr. Kartikay Puneesh Adv
Respondent: Mr. Akshay Sapre, Mr. Abhijeet Swaroop, Mr. Vinam Gupta, Ms. Shivani Karmakar, Advs.
