Arbitration & Conciliation Act| Tribunal Is Not Competent To Revive Proceedings Once They Are Terminated: Telangana HC

While stating that the parties cannot confer jurisdiction contrary to statutory mandate, the Telangana High Court held that when proceedings stood terminated and when the Arbitral Tribunal has no competence to revive the Arbitral proceedings, then merely because the parties participated in the subsequent proceedings has no legal consequence.

Highlighting that when statute operates the field, the understanding of the parties has no relevance, the Division Bench of Justice P. Naveen Rao and Justice Nagesh Bheemapaka observed that “Once proceedings are terminated traceable to Section 38(2) read with Section 32(1)(c), the Arbitral Tribunal has no competence to revive the arbitral proceedings on the assumption that parties have never taken seriously the issue of termination of Arbitral proceedings”.

Advocate Raji Shankar Dvivedi appeared on behalf of the Petitioners, whereas, Advocate D. Prakash Reddy appeared on behalf of the Respondents.

In the background of the case, the Petitioners and Respondents entered into an agreement of work relating to designing, construction etc. According to the Respondents, the Petitioner owed 12 crores and thus he resorted to the arbitration process to settle the dispute. While passing an order regarding payment of fees to the Arbitrators, the Arbitral Tribunal adjourned the proceedings for two months on the ground that the parties were negotiating for settlement. However, such order was subject to the condition that the parties shall pay the fee, otherwise the proceedings shall stand terminated. Although the Tribunal continued with the proceedings. Hence, present revision challenging the Arbitral Tribunal’s Order.

Upon perusal of the submission, the Bench noted that the condition of termination mentioned under Order 9 of the Tribunal show that it was impossible to continue with the proceedings and hence, it satisfies requirement of unnecessary and impossible clause as given under Section 32(2)(c).

Thus, the Bench held that once proceedings are terminated as per these clauses, it is no more permissible for the Arbitral Tribunal to commence or continue the Arbitral proceedings.

Thus, while observing that the Arbitral Tribunal grossly erred in ordering continuation of arbitral proceedings when the arbitral proceedings stood terminated by virtue of Order No.9 dated Sep 10, 2022 of the Arbitral Tribunal itself, the Bench concluded that upon such termination, the Arbitral Tribunal is rendered functus officio.

Cause Title: M/s. Hyderabad Metropolitan Development Authority v. M/s. Ramky Elsamex Hyderabad Ring Road Limited

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