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     REPORTABLE IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 15036 OF 2017 (arising out of SLP(C)No.16636 of 2015)

SREI INFRASTRUCTURE FINANCE LIMITED    APPELLANT(s)

VERSUS

TUFF DRILLING PRIVATE LIMITED    RESPONDENT(s)

J U D G M E N T

ASHOK BHUSHAN, J.

Leave granted.

1. This  appeal  has  been  filed  against  the

judgment dated 13.02.2015 of the Calcutta High

Court by which the High Court in exercise of

jurisdiction  under  Article  227  of  the

Constitution of India has set aside the Order

passed  by  the  arbitral  tribunal  by  which  the

arbitral  tribunal  had  refused  to  recall  its

Order  dated  12.12.2011  terminating  the

arbitration proceedings on account of non filing

of the claim by the claimant.

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2. The undisputed facts of the case are: -

The  respondent  filed  an  application  under

Section 11 of the Arbitration and Conciliation

Act, 1996 (hereinafter referred to as “the 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

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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 Arbitration &  Conciliation  Act,  1996  the Arbitrator,  therefore,  has  no alternative but to terminate the proceedings.

The  arbitration  proceedings  in respect of the dispute in which Tuff Drilling Private Limited is the claimant which arose out of the agreement dated 21st January, 2008 pertaining to 1500 HP diesel electric  rig  is  thus terminated...”

4. The  Claimant  filed  an  application  dated

20.01.2012 praying for recall of the order dated

12.12.2011 with further prayer to condone the

delay  in  filing  the  statement  of  claim  by

granting  necessary  extension  of  time.  In  the

application,  reasons  for  non-filing  of  the

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statement of the claim and for non-appearance of

the claimant on 19.11.2011 and 12.12.2011 were

stated in detail. The application filed by the

claimant  was  objected  by  the  appellant.  The

appellant questioned the maintainability of the

application dated 20.01.2012 on the ground that

arbitral tribunal has become functus officio in

view  of  termination  of  the  proceedings  under

Section  25(a),  hence  the  arbitral  tribunal

cannot  recall  its  order  terminating  the

proceedings.  The  arbitral  tribunal  heard  both

the  parties  and  by  an  order  dated  26.04.2012

accepted  the  preliminary  objections  of  the

appellant  holding  that  in  view  of  order

terminating the proceedings, he cannot pass an

order recommencing the arbitration proceedings.

The application of the respondent claimant was

thus  rejected.  Aggrieved  by  the  order  of  the

arbitral tribunal dated 26.04.2012, the claimant

approached  the  Calcutta  High  Court  in  its

revisionary  jurisdiction  by  filing  C.O.No.3190

of  2012.  The  appellant  before  the  High  Court

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objected the maintainability of the application

under Article 227 of the Constitution. It was

further  contended  before  the  High  Court  that

after  terminating  the  proceedings  arbitral

tribunal had become  functus officio  and had no

power to recall the order dated 12.12.2011. The

High Court after considering the submissions of

parties  came  to  the  conclusion  that  arbitral

tribunal  enjoys  the  power  to  recall  its  own

order relying on the Patna High Court judgment

reported in M/s Snebo Engineering Ltd. Vs. State

of Bihar and Ors., AIR 2004 Patna 33. The High

Court also overruled the objections of appellant

that  application  under  Article  227  by  the

claimant challenging the order dated 12.12.2011

was  not  maintainable.  The  High  Court  after

entertaining the application 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

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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.

Sansriti Pathak, learned counsel, has been heard

as amicus curiae.

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7. Learned  Counsel  for  the  appellant  submits

that the arbitral tribunal had terminated the

proceedings on 12.12.2011 due to non-filing of

claim by the claimant in spite of opportunities

having been granted to it. The arbitral tribunal

had  become  functus  officio  and  had  no

jurisdiction  to  recall  the  order  dated

12.12.2011  on  the  application  filed  by  the

respondent claimant to recall the said order. It

is  further  contended  that  against  the  order

dated  12.12.2011  terminating  the  proceeding

application  under  Article  227  of  the

Constitution  of  India  was  not  maintainable.

Learned counsel for the appellant has relied on

judgment of this Court reported in  Lalit Kumar

V. Sanghavi Vs. Dharamdas V. Sanghavi & Ors.,

2014(7) SCC 255 in support of the submissions

that Writ Petition was not maintainable against

the order of arbitral tribunal. It is further

submitted by the appellant that remedy if any

available to claimant was to file an application

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under Section 34 of 1996 Act for setting aside

the order dated 12.12.2011.  

8. Shri Rakesh Dwivedi, learned amicus curiae,

submits  that  the  termination  of  proceedings

under  Section  25(a)  and  termination  of

proceedings  under  Section  32(2)  are  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 case

falling under section 25(a) of the 1996 Act. The

Arbitration  Act,  1996  does  not  provide  for

remedy against the order under section 25(a). He

contends  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.

Learned amicus curiae submits that there seems

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to be legislative gap with respect to 25(a) and

32(2)(c). He submits that it is more appropriate

that Order under Section 25(a) be treated as an

award so as to make it amenable under Section

34.  On  the  submissions  that  whether  arbitral

tribunal  can  exercise  the  power  akin  to

principle  underlying  under  Order  IX  Rule  13

C.P.C.  Learned  amicus  curiae  submits  that

arbitral  tribunal  can  recall  an  order  passed

under Section 25(a) on the principles underlying

Order IX Rule 13 C.P.C. Learned amicus curiae in

support of above submissions has also 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

Vs. 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

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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?

2)Whether  the  order  passed  by  the  arbitral

tribunal under Section 25(a) terminating the

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proceeding  is  amenable  to  jurisdiction  of

High  Court  under  Article  227  of  the

Constitution of India?

3)Whether the Order passed under Section 25(a)

terminating the proceeding is an award under

the 1996 Act so as to amenable to the remedy

under Section 34 of the Act?

11. The law of Arbitration was earlier governed

by the Arbitration Act, 1940. The Law Commission

of  India  and  several  other  organisations

expressed  opinion  that  the  1940  Act  needs

extensive amendments to make it more responsive

to  contemporary  requirements.  In  the  wake  of

rise in commercial litigation both at domestic

and international level, a need was felt for a

comprehensive  law  to  deal  the  subject.  The

United  Nations  Organisation  on  International

Trade  Law  (UNCILTRAL)  adopted  a  Model  Law  on

International Commercial Arbitration in the year

1985.  Taking  into  consideration  domestic

arbitration as well as international commercial

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arbitration, Parliament enacted the Arbitration

and Conciliation Act, 1996. Main objective for

introducing  the  legislation  was  to  make

provision  for  an  arbitral  procedure  which  is

fair, efficient and capable of meeting the needs

of the specific arbitration. In Section 2 of the

Act, arbitral tribunal has been defined to mean

a sole arbitrator or a panel of arbitrators. The

arbitral  tribunal  was  entrusted  with  various

statutory  functions,  obligations  by  the

enactment.  

12. The  arbitration  is  a  quasi  judicial

proceeding,  equitable  in  nature  or  character

which differs from a litigation in a Court. The

power  and  functions  of  arbitral  tribunal  are

statutorily regulated. The tribunals are special

arbitration with institutional mechanism brought

into  existence  by  or  under  statute  to  decide

dispute  arising  with  reference  to  that

particular statute or to determine controversy

referred to it. The tribunal may be a statutory

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tribunal  or  tribunal  constituted  under  the

provisions of the Constitution of India. Section

9 of  the Civil  Procedure Code  vests into  the

Civil  Court  jurisdiction  to  entertain  and

determine any civil dispute. The constitution of

tribunals has been with intent and purpose to

take out different categories of litigation into

the  special  tribunal  for  speedy  and  effective

determination of disputes in the interest of the

society.  Whenever,  by  a  legislative  enactment

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

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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  of  the  Act  provides  for

determination of rules of procedure. Sub-clause

(1)  of  Section  19  provides  that  the  arbitral

tribunal shall not be bound by the Code of Civil

Procedure,  1908  or  the  Indian  Evidence  Act,

1872. The words “arbitral tribunal shall not be

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bound” are the words of amplitude and not of a

restriction.  These  words  do  not  prohibit  the

arbitral tribunal from drawing sustenance from

the fundamental principles underling the Civil

Procedure Code or Indian Evidence Act but the

tribunal is not bound to observe the provisions

of  Code  with  all  of  its  rigour.  As  per  sub-

clause (2) of Section 19 the parties are free to

agree on  the procedure  to be  followed by  the

arbitral tribunal in conducting its proceedings.

16. Section  23  deals  with  claim  and  defence.

Section  24  deals  with  hearing  and  written

proceedings.

17. Section  25  deals  with  default  of  a  party

which provision is up for interpretation in this

case and is as follows:

“25.  Default  of  a  party.—Unless otherwise  agreed  by  the  parties, where,  without  showing  sufficient cause,—

(a) the  claimant  fails  to

communicate his statement of claim

in accordance with sub-section (1)

of  section  23,  the  arbitral

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“32.  Termination  of  proceedings.—

(1) The arbitral proceedings shall

be terminated by the final arbitral

award  or  by  an  order  of  the

arbitral  tribunal  under  sub-

section (2).  

(2)  The  arbitral  tribunal  shall

issue an order for the termination

of the arbitral proceedings where—  

(a) the claimant withdraws his

claim,  unless  the  respondent

objects  to  the  order  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

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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

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contemplates  a  situation  where  arbitration

proceeding  has  not  been  started.   The  most

important  words  contained  in  Section  25  are

“where without showing sufficient cause – the

claimant fails to communicate his statement of

claim”. Under Section 23(1), the claimant is to

state the facts supporting his claim within the

period of time agreed upon by the parties or

determined  by  the  arbitral  tribunal.   The

question  of  termination  of  proceedings  thus

arises only after the time agreed upon between

the  parties  or  determined  by  the  arbitral

tribunal  comes  to  an  end.  When  the  time  as

contemplated under Section 23(1) expires and no

sufficient cause is shown by the claimant the

arbitral  tribunal  shall  terminate  the

proceedings. The question of showing sufficient

cause will arise only when the claimant is asked

to show cause as to why he failed to submit his

claim within the time as envisaged under Section

23(1) or the claimant, on his own, before the

order is passed under Section 25(a) to terminate

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the  proceedings  comes  before  the  arbitral

tribunal showing sufficient cause for not being

able to submit his claim within the time. In

both the circumstances, i.e. when a show-cause

notice  is  issued  to  the  claimant  as  observed

above or claimant of his own shows cause for

non-filing  the  claim  within  the  time  the

arbitral  tribunal  shall  take  a  call  on

terminating  the  proceedings.  It  is  easy  to

comprehend that in the event, the claimant shows

a sufficient cause, the arbitral tribunal can

accept the statement of claim even after expiry

of the time as envisaged under Section 23(1) or

grant further time to the claimant to file a

claim.  Thus, on sufficient cause being shown by

a claimant even though time has expired under

Section  23(1),  it  is  not  obligatory  for  the

arbitral tribunal to terminate the proceedings.

The conjunction of the wording “where without

showing  sufficient  cause”  and  “the  claimant

fails  to  communicate  his  statement  of  claim”

would indicate that it is a duty of the arbitral

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tribunal  to  inform  the  claimant  that  he  has

failed  to  communicate  his  claim  on  the  date

fixed for that and requires him to show-cause

why  the  arbitral  proceedings  should  not  be

terminated?   Opportunity  to  show  sufficient

cause for his failure to communicate his claim

statement  can  only  be  given  after  he  has

actually failed to do so.  Whether in a case

where  claimant  failed  to  file  a  statement  of

claim and has failed also to show-cause before

an  order  of  termination  of  proceedings  is

passed,  claimant  is  entitled  to  show-cause

subsequent 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

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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) enumerates the circumstances when the

arbitral tribunal shall issue an order for the

termination of the arbitral proceedings.  The

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situation as contemplated under Section 32(2)(a)

and 32(2)(b) are not attracted in the facts of

this case.  Whether termination of proceedings

in the present case can be treated to be covered

by  Section  32(2)(c)  is  the  question  to  be

considered.   Sub-clause(c)  contemplates  two

grounds for termination, i.e.; (i) the arbitral

tribunal  finds  that  the  continuation  of  the

proceedings  has  for  any  other  reason  become

unnecessary or (ii) impossible. The eventuality

as  contemplated  under  Section  32  shall  arise

only  when  the  claim  is  not  terminated  under

Section 25(a) and proceeds further.  The word

‘unnecessary’ or ‘impossible’ as used in clause

(c)  of  Section  32(2)  cannot  be  said  to  be

covering  a  situation  where  proceedings  are

terminated in default of the claimant. The word

unnecessary  or  impossible  has  been  used  in

different  contexts  than  to  one  of  default  as

contemplated  under  Section  25(a).  Sub-section

(3)  of  Section  32  further  provides  that  the

mandate of the arbitral tribunal shall terminate

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with the termination of the arbitral proceedings

subject  to  Section  33  and  sub-section  (4)  of

Section  34.  Section  33  is  the  power  of  the

arbitral  tribunal  to  correct  any  computation

errors, any clerical or typographical errors or

any other errors of a similar nature or to give

an interpretation of a specific point or part of

the award.  Section 34(4) reserves the power of

the Court to adjourn the proceedings in order to

give  the  arbitral  tribunal  an  opportunity  to

resume the arbitral proceedings or to take such

other  action  as  in  the  opinion  of  arbitral

tribunal will eliminate the grounds for setting

aside the arbitral award.  On the termination of

proceedings  under  Sections  32(2)  and  33(1),

Section  33(3)  further  contemplates  termination

of the mandate of the arbitral tribunal, whereas

the aforesaid words are missing in Section 25.

When the legislature has used the phrase “the

mandate  of  the  arbitral  tribunal  shall

terminate”  in  Section  32(3),  non-use  of  such

phrase in Section 25(a) has to be treated with a

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purpose and object.  The purpose and object can

only be that if the claimant shows sufficient

cause, the proceedings can be re-commenced.

22. Learned  amicus  curiae  has  referred  to

judgment of this Court in  Grindlays Bank Ltd.

Vs.  Central  Government  Industrial  Tribunal  &

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

26

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, there  are  indications  to  the contrary.”

23. It is true that power of review has to be

expressly conferred by a Statute. This Court in

Paragraph  13  has  also  stated  that  the  word

review is used in two distinct senses.  This

Court further held that when a review is sought

due to a procedural defect, such power inheres

in every tribunal.  In Paragraph 13, following

was observed:-

13. .... The expression “review” is used  in  the  two  distinct  senses, namely  (1)  a  procedural  review which is either inherent or implied in a court or Tribunal to set aside a palpably erroneous order passed under a misapprehension by it, and (2)  a  review  on  merits  when  the error sought to be corrected is one of law and is apparent on the face of the record. It is in the latter

27

sense  that  the  court  in  Patel Narshi Thakershi case held that no review  lies  on  merits  unless  a statute  specifically  provides  for it.  Obviously  when  a  review  is sought due to a procedural defect, the inadvertent error committed by the Tribunal must be corrected  ex debito  justitiae to  prevent  the abuse  of  its  process,  and  such power  inheres  in  every  court  or Tribunal.”

24. In Kapra Mazdoor Ekta Union Vs. Birla Cotton

Spinning and Weaving Mills Ltd. & Anr., (2005)

13 SCC 777, this Court again held that a quasi-

judicial authority is vested with the power to

invoke procedural review.  In Paragraph 19 of

the judgment, following was laid down:-

“19. Applying these principles it is apparent that where a court or quasi-judicial  authority  having jurisdiction to adjudicate on merit proceeds to do so, its judgment or order can be reviewed on merit only if the court or the quasi-judicial authority is vested with power of review by express provision or by necessary  implication.  The procedural  review  belongs  to  a different  category.  In  such  a review, the court or quasi-judicial authority  having  jurisdiction  to adjudicate proceeds to do so, but in doing so commits (sic ascertains whether  it  has  committed)  a procedural illegality which goes to

28

the  root  of  the  matter  and invalidates the proceeding itself, and consequently the order passed therein. Cases where a decision is rendered  by  the  court  or  quasi- judicial  authority  without  notice to the opposite party or under a mistaken impression that the notice had been served upon the opposite party, or where a matter is taken up for hearing and decision on a date other than 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

29

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.  Central  Govt. Industrial  Tribunal5 it  was  held that  once  it  is  established  that the respondents were prevented from appearing  at  the  hearing  due  to sufficient cause, it followed that the  matter  must  be  reheard  and decided again.”

25. There  cannot  be  a  dispute  that  the  power

exercised by the arbitral tribunal is a quasi-

judicial.  In view of the provisions of the 1996

Act, which confers various statutory powers and

obligations on the arbitral tribunal, we do not

find any such distinction between the statutory

tribunal  constituted  under  the  statutory

provisions  or  Constitution  in  so  far  as  the

power of procedural review is concerned. We have

already  noticed  that  Section  19  provides  that

arbitral  tribunal  shall  not  be  bound  by  the

rules  of  procedure  as  contained  in  Civil

Procedure  Code.  Section  19  cannot  be  read  to

mean that arbitral tribunal is incapacitated in

drawing sustenance from any provisions of Code

30

of Civil Procedure.  This was clearly laid down

in Nahar Industrial Enterprises Limited Vs. Hong

Kong and Shanghai Banking Corporation, (2009) 8

SCC  646.   In  Paragraph  98(n),  following  was

stated:-

“(n)  It  is  not  bound  by  the procedure laid down under the Code. It may however be noticed in this regard  that  just  because  the Tribunal is not bound by the Code, it does not mean that it would not have  jurisdiction  to  exercise powers of a court as contained in the Code. “Rather, the Tribunal can travel  beyond  the  Code  of  Civil Procedure and the only fetter that is put on its powers is to observe the principles of natural justice.” (See  Industrial  Credit  and Investment Corpn. of India Ltd. v. Grapco Industries Ltd.)”

26. We  thus  are  of  the  view  that  principles

underlying  Order  9  Rule  13  can  very  well  be

invoked by the arbitrator. There is nothing on

record to indicate that parties have agreed to

the contrary. The issue, which has arisen for

consideration has engaged attention of different

High Courts from time to time.  Patna High Court

in  M/s.  Senbo  Engineering  Ltd.  Vs.  State  of

35

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 Vs. Muthoot Vehicle, (2010) Arb. LR

121 (Kerala), held that the power to set aside

an ex-parte award vests in the Court, and the

arbitrator does not have any concurrent power to

set aside an ex-parte award.

32. 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  termination  of

proceedings  under  Section  25(a)  on  sufficient

36

cause being shown can recall the order and re-

commence the proceedings.

33. 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 be 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

extension for filing the statement of claim.

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34.Coming to Issue No. 2 and 3, in view of what

we have said regarding Issue No. 1 that arbitral

tribunal  has  jurisdiction  to  consider  an

application for recall of order terminating the

proceedings  under  Section  25(a),  it  is  not

necessary for us to enter into Issue No. 2 and 3

for purposes of this case.  For deciding the

present Civil Appeal, our answer to Issue No.1

is sufficient to dispose of the matter.  

35. In  result,  the  appeal  is  dismissed.   The

interim order dated 07.07.2015, granting stay on

the operation of order dated 13.02.2015 passed

by  the  High  Court  stands  discharged  and  the

arbitral  tribunal  shall  now  proceed  to  decide

the  application  of  claimant-respondent  dated

20.01.2012 expeditiously. The parties shall bear

their own costs.

36. We place on record our appreciations for the

valuable  assistance  rendered  by  Mr.  Rakesh

Dwivedi, Sr. Advocate appearing as amicus.

38

………………………………………J. ( A.K. Sikri )

………………………………………J.                                ( Ashok Bhushan )

NEW DELHI; SEPTEMBER 20, 2017

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ITEM NO.1502               COURT NO.6                SECTION XVI

              S U P R E M E  C O U R T  O F  I N D I A                        RECORD OF PROCEEDINGS

Civil Appeal No. 15036/2017 (Arising out of SLP (C)No. 16636/2015)

SREI INFRASTRUCTURE FINANCE LIMITED        Appellant(s)

VERSUS

TUFF DRILLING PRIVATE LIMITED              Respondent(s)

Date : 20-09-2017  This matter was called on for pronouncement of

judgment today.

For Appellant(s) Mr. Santanu Ghosh, Adv. Mr. Kaushik Dey, Adv. Ms. Manpreet, Adv. Mr. S. K. Verma, AOR

                   For Respondent(s)

Ms. Sansriti Pathak, AOR

                    Hon'ble Mr. Justice Ashok Bhushan pronounced

the judgment of the Bench comprising Hon'ble Mr.

Justice A. K. Sikri and His Lordship.

Leave granted.

The  appeal  is  dismissed  in  terms  of  the

signed reportable judgment.

 (NIDHI AHUJA)        (MALA KUMARI SHARMA) COURT MASTER  COURT MASTER

[Signed reportable judgment is placed on the file.]