Summary
| Category | Data |
|---|---|
| Court | Supreme Court of India |
| Case Number | C.A. No.-014630-014630 – 2025 |
| Diary Number | 17124/2025 |
| Judge Name | HON’BLE MR. JUSTICE J.B. PARDIWALA |
| Bench | HON’BLE MR. JUSTICE J.B. PARDIWALA; HON’BLE MR. JUSTICE ALOK ARADHE |
| Precedent Value | Binding on subordinate courts |
| Overrules / Affirms |
|
| Type of Law | Arbitration & Conciliation (Domestic) |
| Questions of Law |
|
| Ratio Decidendi |
The Act contemplates only two modes of termination: final award or tribunal order under Section 32(2). Grounds in Sections 25, 30 and 38 merely trigger Section 32 powers. Once terminated, the tribunal’s mandate ends. Tribunal may suspend or terminate for non‐payment of deposits, but any such order is traceable to Section 32(2)(c). A party aggrieved by termination must first apply for recall to the tribunal; if that fails, it can challenge legality under Section 14(2). Fourth Schedule fees, once fixed, are binding. |
| Judgments Relied Upon |
|
| Logic / Jurisprudence / Authorities Relied Upon by the Court |
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| Facts as Summarised by the Court |
The parties formed a partnership in 2013–14 with arbitration clause. Disputes arose over capital and management contributions. Appellants sought arbitrator via Section 11, and proceedings commenced. Arbitrator fixed fees per Fourth Schedule and, after counterclaim, revised fees. Parties defaulted on deposit; arbitrator terminated proceedings under Section 38, leading to High Court and Supreme Court challenges. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts interpreting tribunal terminations |
| Persuasive For | High Courts, arbitral tribunals |
| Distinguishes | Earlier splits on Sections 25, 32 and 38 terminations |
| Follows |
|
What’s New / What Lawyers Should Note
- Termination under Section 38 (deposit defaults) must be effected via Section 32(2)(c), not as a standalone power.
- Sections 25(a) (failure to file claim), 30 (settlement) and 38 operate only to trigger Section 32(2).
- A tribunal‐made termination order ends its mandate; no fresh Section 11 petition is maintainable.
- Parties must first seek recall from the tribunal; if refused, challenge validity under Section 14(2).
- Fourth Schedule fees, once fixed, are binding—even if litigation over constitutionality is pending.
Summary of Legal Reasoning
- Sections 25, 30 and 38 only enumerate when proceedings may end; Section 32(2) is the sole basis for tribunal orders of termination.
- “Mandate … terminates” in Section 32(3) highlights that any termination order (from Section 32(2)) ends tribunal jurisdiction.
- Procedural vs. merits review: tribunals can recall flawed procedural orders but have no merits‐review authority.
- Recall remedy: parties aggrieved by improper termination must first ask the tribunal to reopen.
- Failing recall, Section 14(2) empowers courts to set aside termination orders and, if needed, appoint a substitute arbitrator.
- Fourth Schedule fee matrix is binding by default; tribunal can impose it if parties cannot agree.
Arguments by the Parties
Petitioners (Appellants)
- Tribunal’s power to terminate lies only in Section 32(2)(c), not in Section 38; Sections 25 and 38 feed into Section 32.
- Termination orders are challengeable only under Section 14(2), not by fresh Section 11 petitions.
- Fourth Schedule fee decisions require party consent (Afcons); tribunal erred in revising fees without it.
- Tribunal filed termination for non‐payment but was functus officio; remedy lay in recall, not new appointment.
Respondent
- Fees per Fourth Schedule are binding default if no consensus; tribunal properly fixed revised fee on counterclaim.
- Tribunal’s order for termination under Section 38(2) is valid and traceable to Section 32(2)(c) (impossible to proceed).
- No fresh Section 11 petition is maintainable; termination of proceedings ends mandate—only recall or Section 14(2) remedy exists.
Factual Background
Appellants and respondent formed a partnership subject to an arbitration clause. Parties filed statements of claim and counter-claim before a Sole Arbitrator, who fixed and then revised fees under the Fourth Schedule. Both sides defaulted on deposits. Tribunal terminated proceedings under Section 38(2). High Court rejected fresh Section 11 petition. Appeal to Supreme Court ensued.
Statutory Analysis
- Section 25(a): tribunal “shall terminate” if claimant defaults (sufficient cause test).
- Section 30(2): tribunal “shall terminate” if parties settle and may record award on agreed terms.
- Section 38(2): tribunal may suspend/terminate if both fail deposit.
- Section 32(1): “shall be terminated” only by final award or tribunal order under 32(2).
- Section 32(2)(a)–(c): tribunal “shall issue an order” to terminate for withdrawal, party agreement or necessity/impossibility; Section 32(3) ends tribunal mandate.
Procedural Innovations
- Consolidate all termination grounds into one clear provision, as SIAC and LCIA Rules do.
- Prescribe preliminary case-management conference to fix tribunal fees (or decline appointment).
- Require tribunal to specify deposit consequences and offer reinstatement window if payment later made.
- Provide express recall/remedial route in statute for flawed termination orders.
- Introduce limited appeal under Section 37 against tribunal terminations.
- Clarify that defaulting parties cannot re-initiate identical arbitration.
Alert Indicators
- ✔ Precedent Followed – Section 32 is exhaustive for tribunal‐ordered termination.
- 📅 Time-Sensitive – Mandate termination affects window for recall/remedies.