10 June 2024


Judgments

Supreme Court

Dani Wooltex Corporation and Ors. vs. Sheil Properties Pvt. Ltd. and Ors. (Neutral Citation: 2024 INSC 433)

MANU/SC/0444/2024

16.05.2024

Arbitration

Abandonment of claim cannot be readily inferred, there must be convincing circumstances on record which lead to an inevitable inference about the abandonment

In present appeal, the issue involved is about the legality and validity of the order of termination of the arbitral proceedings under Clause (c) of Sub-section (2) of Section 32 of the Arbitration and Conciliation Act, 1996 ('the Arbitration Act') passed by the Arbitral Tribunal.

If parties do not agree on the timelines for filing statements of claim and defence, under Sub-section (1) of Section 23, the Arbitral Tribunal has the power to determine the timelines for filing pleadings. Sub-section (4) of Section 23, provides that the filing of pleadings (statements of claim and defence) shall be completed within six months from the date the learned Arbitrator or all the learned Arbitrators, as the case may be, receive notice of their appointment in writing.

The power under Clause (c) of Sub-section (2) of Section 32 of the Arbitration Act can be exercised only if, for some reason, the continuation of proceedings has become unnecessary or impossible. Unless the Arbitral Tribunal records its satisfaction based on the material on record that proceedings have become unnecessary or impossible, the power under Clause (c) of Sub-section (2) of Section 32 cannot be exercised. If the said power is exercised casually, it will defeat the very object of enacting the Arbitration Act;It is the Arbitral Tribunal's duty to fix a meeting for hearing even if parties to the proceedings do not make such a request. The failure of the claimant to request the Arbitral Tribunal to fix a date for hearing, per se, is no ground to conclude that the proceedings have become unnecessary.

The abandonment of the claim by a claimant can be a ground to invoke Clause (c) of Sub-section (2) of Section 32. The abandonment of the claim can be either express or implied. The abandonment cannot be readily inferred. There is an implied abandonment when admitted or proved facts are so clinching that the only inference which can be drawn is of the abandonment. Only if the established conduct of a claimant is such that it leads only to one conclusion that the claimant has given up his/her claim can an inference of abandonment be drawn. Even if it is to be implied, there must be convincing circumstances on record which lead to an inevitable inference about the abandonment. Only because a claimant, after filing his statement of claim, does not move the Arbitral Tribunal to fix a date for the hearing, the failure of the claimant, per se, will not amount to the abandonment of the claim.Therefore, present Court concur with the view taken by the learned Single Judge. Appeal dismissed.

Tags : Arbitral proceedings Termination Legality

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