Conduct of Arbitral Proceeding: Section 25 of Arbitration and Conciliation Act | Law Optional Notes for UPSC PDF Download

Conduct of Arbitral Proceeding: Section 25 of Arbitration and Conciliation Act-Default of a party

Statement

Unless otherwise agreed by the parties, where, without showing sufficient cause
(a) The claimant fails to communicate his statement of claim in accordance with subsection (1) of section (2), the arbitral tribunal shall terminate the proceedings;
(b) The respondent fails to communicate his statement of defence in accordance with sub-section (1) of section 23, the arbitral tribunal shall continue the proceedings without treating that failure in itself as an admission of the allegations by the claimant;
(c) A party fails to appear at an oral hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the arbitral award on the evidence before it.

Arbitrator Power to Proceed

• Where a party did not appear on the adjourned date despite a note by the arbitrator in the minutes of the hearing that if the party doesn't appear on the appointed date and time, the hearing would proceed ex parte and no separate notice is given, the ex parte award, in such a case, is legal as stated in the case of Nagasirinivasulu vs. GLADA Finance Ltd. (2009).
• A party who, though repeatedly written to, doesn't appear before the arbitrator and allows the proceedings to go ex parte, cannot later say that he was not given the opportunity of being heard.
• If a party shows sufficient cause for his non-appearance before the arbitrator, the court will set aside the award passed ex-parte as stated in the case of H.C. Whitehouse vs. Kahn Kahn and Co. (1914).
• In the case of State of U.P. vs. Combined Chemicals (2011), the appellant sought adjournment on the ground that he had filed an appeal against the order of the trial court on the question of maintainability of the petition, the arbitrator granted adjournment but the appellant failed to obtain a stay order from the appellant court and continued to abstain from the arbitral proceedings. It was held that the arbitrator was justified in proceeding ex parte against such a party.
• In the case of Mordue vs. Parmer (1871), it was held that an arbitrator having signed his award is functus officio and cannot alter his award or even the slightest error in it, even if such error has arisen from the mistake of a clerk in copying the draft. The proper course in such a case is to obtain an order to refer the award back to the arbitrator.

Termination of Proceeding

• Section 25(a) and 32(2)(c) are read conjointly, it would lead to the irresistible conclusion that the arbitrator can terminate the proceeding if the claimant fails to communicate his statement of claim.
• In the case of Mohan Singh vs. International Authority of India (1997), the Supreme Court observed that the word "shall," though prima facie gives the impression of being of mandatory character, it requires to be considered in the light of the intention of the legislature by carefully attending to the scope of the statute, its nature and design, and the consequences that would flow from the construction thereof one way or the other.
• The basic principle of the settlement of the dispute is that the arbitrator should know what is the claim of the claimant and what is the stand of the respondent and what are the factual and legal issues involved in the matter.
• An arbitral tribunal can also recall the order of termination of the proceeding if done with due cause and found merit in the case.