Arbitral Tribunal Cannot Recall The Order Terminating The Arbitral Proceedings: Delhi High Court

The bench of Justice C. Hari Shankar held that once the arbitral proceedings are terminated, the arbitral tribunal becomes Functus Officio and it cannot entertain an application recalling its earlier order by which it terminated the arbitral proceedings.

The Court further held that after the termination of arbitral proceedings, the tribunal would be coram non judice and any order passed by it would be without any jurisdiction.

Facts

An arbitration was pending between the parties. The respondent was the original claimant in the arbitral proceedings. On 21.09.2019, the claimant/respondent withdrew its claim and the tribunal terminated the arbitral proceedings.

Subsequently, the respondent/original claimant filed an application before the tribunal seeking recall of the order dated 21.09.2019 on the ground that the 'proxy counsel' who was present on behalf of the respondent had inadvertently signed the order sheet, as her instructions, from her senior were to withdraw another petition pending before the same arbitrator.

The tribunal allowed the petition and restored the arbitral proceedings on the ground that a party cannot be deprived of its right for a fault of the counsel. Aggrieved by the order of restored, the petitioner filed a writ petition against it.

Grounds of Challenge

The petitioner challenged the order on the following grounds:

• The tribunal could not entertain the application for restoration of arbitration proceedings once it had terminated the arbitral proceedings.
• The tribunal becomes functus officio after the termination of arbitral proceedings, therefore, it could not have entertained any application and restored the arbitration proceedings.

Analysis by the Court

The Court first examined the aspect of maintainability of the writ petition. It held that ordinarily the court would not entertain a writ petition against an order of the tribunal as the same grounds can be taken to challenge the arbitral award under Section 34 of the A&C Act, however, the present case is a different one as the petitioner does not have the option of taking recourse to either Section 33 or 34 of the Act.

Next, the Court examined the issue whether the tribunal could entertain the application for restoring the arbitral proceedings once the order of termination was passed. The Court held that once an order of termination on account of withdraw of claim is passed by the arbitrator, it becomes functus officio, therefore, it could not have allowed the application calling for recall of its order dated 25.09.2019.

The Court further held that the tribunal was coram non judice at the time of passing of the impugned order as its mandated stood terminate by the order of termination, therefore, the impugned order has been passed without jurisdiction and liable to be set aside.

Accordingly, the Court allowed the writ petition.

Case Title: Vag Educational Services v. Aakash Educational Services Ltd.

Citation: 2022 LiveLaw (Del) 990

Date: 12.10.2022

Counsel for the Petitioner: Ms. Tanya Agarwal, Adv.

Counsel for the Respondent: Ms. Qausar Khan, Adv.

Click Here To Read/Download Order