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New Delhi, Oct 24 (IANS) The Delhi High Court has ruled that an order closing arbitral proceedings due to default by the claimant “does not and cannot amount to an award” as it does not set out the rights or obligations of the parties.
A single-judge bench of Justice Jasmeet Singh made the observation while allowing the petitions filed by Makewell Construction Pvt Ltd. Ltd. against GE Power Systems India Pvt. Ltd., seeking to continue the arbitration proceedings which were terminated due to non-filing of claims and non-payment of arbitration fees.
The dispute arose out of sub-contracting agreements for fabrication, testing and commissioning of turbines and generator auxiliaries in several thermal power projects.
GE Power had terminated Makewell’s contracts in 2022 and 2023, after which the matter was referred to arbitration as per an earlier order of the Delhi High Court. However, the arbitrator closed the proceedings under Section 25(A) of the Arbitration and Conciliation Act after Makewell failed to submit details of claims and pay its share of the fees.
Although the arbitrator left a “window of opportunity” for compliance, the proceedings were later deemed concluded. GE Power argued that the termination order is tantamount to an arbitral award, which can only be challenged under Section 34 of the Act.
Rejecting that argument, Justice Singh said: “An order closing the proceedings for default does not and cannot amount to an award because it does not relate to the rights of the parties before the arbitrator. Such an order merely closes the arbitral proceedings by reason of the claimant’s default in filing the statement of claim and does not involve any decision or determination of the rights or liabilities of the parties.”
The Delhi High Court held that for an order to qualify as an award, it must adjudicate on a final or interim basis on an issue forming part of the actual dispute between the parties.
It said, “An order under Section 25(A), being procedural in nature and not addressing the genuine dispute between the parties, lacks the essential qualities of an arbitral award.” Allowing the petitions, the justice directed that the arbitration proceedings between Makewell and GE Power “shall continue before the arbitrator appointed by this Court by order dated 08.01.2024.”
–IANS
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