An Arbitral Tribunal has the Inherent Power to Recall Its Order of Termination in the Event of Default in Filing the Statement of Claim under Section 25(A) of the Arbitration and Conciliation Act, 1996

Mini Summary

Appeal to the Supreme Court arose against the order of the High Court which had held that the Arbitral Tribunal can recall its own order given under Section 25(a) of the Arbitration and Conciliation Act 1996,-The Arbitral Tribunal had terminated the Arbitration proceedings after the Claimant failed to submit the Statement of Claim on the decided date —Issue was whether the Arbitral Tribunal has the power to recall its own order, after it has been rendered functus offico- The Hon’ble Supreme Court held that if sufficient cause was shown, the arbitral tribunal can withdraw its own order passed under Section 25(a) of the Arbitration Act.

News Update

In the recent case of “Srei Infrastructure vs Tuff Drilling Pvt Ltd”, the Hon’ble Supreme Court has held that in the situation wherein the arbitral tribunal has terminated the arbitration proceedings under Section 25(a) of the Arbitration Act, which deals with the default in filing the Statement of Claim, the arbitral tribunal has the inherent power to recall its own order and recommence the arbitral proceedings even though it had been rendered functus offico. The Supreme Court clarified that the recall can be done only if sufficient cause is shown by the claimant for committing default in the filing of the statement of claim.

In the present case, the Sole Arbitrator had directed Tuff Drilling to file its Statement of Claim by 19 November 2011, however the Claimant failed to submit the same on that date. Upon request by the Claimant, the date for submission was further extended to 9 December 2011, however once again the Claimant did not submit the SOC. The Arbitrator, on 12 December 2011 terminated the arbitration proceedings as per the procedure under Section 25(a) of the Arbitration Act.  Subsequently the Claimant filed an application for the condonation of delay in filing the SOC which was rejected by the tribunal on the ground that it had become functus officio and thereby it could not recall its order of termination.

This was challenged by the Claimant before the Calcutta High Court, under Article 227, wherein the Hon’ble High Court held that the tribunal can recall it’s own order under Section 25(a) of the Arbitration Act. This was further appealed by the Respondent, in the Supreme Court, wherein the Supreme Court, upheld the judgment of the High Court.  The Hon’ble Supreme Court examined the scheme of Section 25 and held that the Statement of Claim can be permitted to be filed even after the time as fixed by Section 23(1) has expired. Hence, it did not matter if the cause was shown before or after termination of the proceedings under Section 25(a). The Court held that an arbitral tribunal is not denuded from accepting the cause and allowing the submission of SOC after an order under Section 25(a).

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