S.25, THE ARBITRATION AND CONCILIATION ACT, 1996.-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 defense according to the sub-section (1) of section 23, the tribunal will continue the proceedings without treating that failure in itself as an admission of the alienations by the claimant;
(c) A party fails to appear for an oral hearing or to produce documentary evidence, the tribunal can continue the proceedings and make the arbitral award on the evidence earlier to it.
ARBITRATORS 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 has been stated in 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 on, 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 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 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 and cannot alter the slightest error in it, even though such an error arose from a mistake of a clerk in the copying of the draft. The proper course in such was to obtain an order to refer the award back to the arbitrator.
TERMINATION OF PROCEEDING: Section 25(a) and 32(2) (c) is 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 view of the intention of the legislative by carefully attending to the scope of the statute, its design, nature, and consequences that would flow from the construction thereby one way or the other. It must be constrained by the combination of the essential ingredients of public and general convenience and the provisions thus be interpreted harmoniously to suppress public mischief and promote public justice.
The basic principle of the settlement of the dispute is that the arbitrator should know as to what is the claim of the claimant and as to what is the standoff 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 a due cause and found merit in the case.