Eureka Forbes Limited vs Indian Railway Catering And Tourism Corporation
- Court
- Delhi High Court
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 02.02.2026
Judgment pronounced on: 12.05.2026
+ O.M.P. (COMM) 502/2024 & I.A. 46323/2024 (Stay)
EUREKA FORBES LIMITED .....Petitioner
Through: Dr. Amit George, Mr.
Shivankar Sharma and Mr.
Ayush Singh, Advocates.
versus
INDIAN RAILWAY CATERING AND TOURISM
CORPORATION .....Respondent
Through: Mr. Shreyans Jain, Ms. Harshita
Singh and Mr. Harshit
Bhardawaj, Advocates.
CORAM:
HON'BLE MR. JUSTICE HARISH VAIDYANATHAN
SHANKAR
J U D G M E N T
HARISH VAIDYANATHAN SHANKAR, J.
1. The present Petition has been instituted under Section 34 of the
1
Arbitration and Conciliation Act, 1996 , seeking to set aside the
2 3
Order dated 21.08.2024 and Order dated 21.10.2024 [ collectively
referred to as “Impugned Orders” hereinafter ] passed by the learned
Sole Arbitrator in arbitration proceedings bearing Reference No.
DIAC/7248/11-23 titled “Indian Railway Catering and Tourism
1
A&C Act
2
Impugned Order I
3
Impugned Order II
Signature Not Verified
O.M.P. (COMM) 502/2024 Page 1 of 38
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:32:59
Corporation v. Eureka Forbes Limited” .
4
2. It is apposite to note that Eureka Forbes Limited , the
Petitioner herein, was arrayed as the Respondent before the learned
Arbitral Tribunal, whereas Indian Railway Catering and Tourism
5
Corporation , the Respondent herein, was the Claimant before the
learned Arbitral Tribunal. However, for the sake of convenience and
clarity, the parties shall hereinafter be referred to in the same manner
and rank as assigned to them in the present Petition.
3. By way of the Impugned Order I, the learned Arbitrator
proceeded against the Petitioner ex parte and, as a consequence
thereof, rejected the counterclaim preferred by the Petitioner, which is
stated to be amounting to Rs. 2,53,13,571/-. The relevant portion of
the Impugned Order I, which forms the ground for assailing it, reads
as follows:
“ In the circumstances, the Respondent is proceeded Ex parte ..
Hence, the Counter Claim is rejected.”
4. Subsequently, an application dated 28.08.2024 was preferred by
the Petitioner before the learned Arbitrator, seeking the setting aside
of the aforementioned Impugned Order I.
5. By way of Impugned Order II, the learned Arbitrator dismissed
the Petitioner‟s aforesaid application and declined the Petitioner‟s
prayer seeking restoration/revival of its counterclaim. However,
insofar as the Respondent‟s claims were concerned, the learned
Arbitrator observed that the arbitral proceedings had not been formally
closed and that the Statement of Defence filed by the Petitioner
4
Petitioner
5
Respondent
Signature Not Verified
O.M.P. (COMM) 502/2024 Page 2 of 38
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:32:59
continued to remain on record. The learned Arbitrator further noted
that, notwithstanding the earlier order proceeding ex parte against the
Petitioner, the Petitioner would nevertheless remain entitled to
participate in the ongoing arbitral proceedings.
BRIEF FACTS:
6. It is stated that the Petitioner is a portfolio company of Advent
International, a global private equity firm. The Petitioner operates in
the health and hygiene segment and is engaged in the manufacture and
distribution of products such as water purifiers, vacuum cleaners, and
air purifiers. The Respondent, on the other hand, is a Public Sector
Enterprise engaged, inter alia , in providing services and facilities
associated with railway operations.
7. The Respondent invited bids through its Model Bid Document
6
dated 20.06.2015 for the management, operation, and maintenance of
7
Water Vending Machines and for the sale of potable drinking water
at railway stations across designated clusters. Pursuant thereto, the
Petitioner participated in the bidding process and submitted its
financial bids in respect of two clusters, namely , Cluster No. 02 (East
8 9
Zone - Samastipur Division) and Cluster No. 06 (South Zone) .
8. Upon evaluation of the bids submitted by the participating
10
entities, the Respondent issued a Letter of Award dated 04.09.2015
in favour of the Petitioner in respect of Cluster 02, awarding the
licence for the operation and management of WVMs at an annual
licence fee of Rs. 50,88,000/-, exclusive of applicable taxes.
6
Bid Document
7
WVM
8
Cluster 02
9
Cluster 06
10
LOA
Signature Not Verified
O.M.P. (COMM) 502/2024 Page 3 of 38
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:32:59
9. Pursuant to the aforesaid LOA, the parties entered into a
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Licence Agreement dated 14.09.2016 , whereby the licence was
granted to the Petitioner for an initial tenure of five years, with a
provision for extension in accordance with the terms and conditions
stipulated under the License Agreement.
10. Subsequently, disputes arose between the parties, primarily
concerning the alleged non-payment of certain outstanding licence
fees payable under the Licence Agreement.
11. In view of the disputes that had arisen, the Respondent, by
communication dated 20.02.2023, invoked the arbitration clause and
proposed the appointment of an Arbitrator for the adjudication of the
disputes between the parties.
12. As the parties failed to arrive at a consensus regarding the
appointment of an Arbitrator in terms of the arbitration agreement, the
Respondent approached this Court by filing a Petition under Section
11 of the A&C Act, seeking the appointment of an Arbitrator.
13. By way of an Order dated 23.11.2023 passed in ARB.P. No.
521/2023, this Court appointed Mr. B. B. Chaudhary, retired District
and Sessions Judge, as the learned Sole Arbitrator to adjudicate upon
the disputes that had arisen between the parties.
14. Thereafter, the Respondent filed its Statement of Claim before
the learned Arbitrator on 06.05.2024. The Petitioner subsequently
filed its Statement of Defence on 24.06.2024 in response to the claims
raised by the Respondent herein.
15. On 03.07.2024, the learned Arbitrator recorded the appearance
of the counsel appearing on behalf of the Petitioner, Ms. Saumya
11
Licence Agreement
Signature Not Verified
O.M.P. (COMM) 502/2024 Page 4 of 38
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:32:59
Bajpai. During the course of the said proceeding, the learned
Arbitrator observed, inter alia , that in the event the Petitioner
proposed to file a counterclaim, the same could be filed, and that the
Respondent would be at liberty to file its reply to the counterclaim and
a rejoinder to the Statement of Defence before the next date of
hearing.
16. It is an undisputed position on record that, pursuant to the
liberty granted by the learned Arbitrator, the Petitioner herein filed its
counterclaim on 10.07.2024.
17. The matter was thereafter listed for hearing on 31.07.2024. On
the said date, no one appeared on behalf of the Petitioner. As recorded
in the order passed on the aforesaid date, the Deputy Counsel of the
12
Delhi International Arbitration Centre contacted the counsel who
had previously been appearing on behalf of the Petitioner. However,
the said counsel informed that she was no longer representing the
Petitioner in the arbitral proceedings. The order further records that
the learned counsel for the Respondent herein had earlier addressed an
email seeking two weeks‟ time to file its reply to the counterclaim and
rejoinder to the Statement of Defence, which request was reiterated on
that date. In view of the aforesaid circumstances, the proceedings were
adjourned to 21.08.2024, with directions that the order be circulated to
the parties as well as their respective counsel, including the Petitioner
at its official email addresses.
18. On the next date of hearing, i.e. , 21.08.2024, Impugned Order I
was passed, whereby the learned Arbitrator recorded that the Order
dated 31.07.2024 had been circulated to the Petitioner at multiple
12
DIAC
Signature Not Verified
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Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:32:59
email addresses, and that the emails sent to
[email protected] and [email protected] had
not bounced back. In the absence of any appearance on behalf of the
Petitioner on the said date as well, the learned Arbitrator proceeded ex
parte against the Petitioner. Simultaneously, the learned Arbitrator
rejected the counterclaim filed by the Petitioner. The learned
Arbitrator further directed that upon the Respondent herein filing an
affidavit regarding the claim for interest, the DIAC would proceed to
assess the arbitral fees and other charges and call upon the parties to
deposit their respective shares thereof.
19. Thereafter, on 28.08.2024, the Petitioner filed an application
before the learned Arbitrator seeking recall of the Impugned Order I
and restoration of its counterclaim. In the said application, the
Petitioner contended, inter alia , that its non-appearance on the
relevant dates was neither deliberate nor intentional and occurred due
to circumstances beyond its control.
20. The Respondent herein thereafter filed its reply dated
24.09.2024 opposing the said application and contesting the reliefs
sought by the Petitioner.
21. By way of the subsequent Order on 21.10.2024, being
Impugned Order II, the learned Arbitrator observed that the arbitral
proceedings had not been formally closed and that the Statement of
Defence filed by the Petitioner continued to remain on record. The
learned Arbitrator further observed that, notwithstanding the fact that
the Petitioner had earlier been proceeded against ex parte , the
Petitioner would still be entitled to participate in the ongoing arbitral
proceedings. However, the learned Arbitrator ultimately dismissed the
Signature Not Verified
O.M.P. (COMM) 502/2024 Page 6 of 38
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:32:59
Petitioner‟s application seeking recall of the Impugned Order I on
merit and also declined the Petitioner‟s prayer for restoration/revival
of its counterclaim.
22. Aggrieved by the Impugned Order I, whereby the Petitioner‟s
counterclaim was rejected and the proceedings were directed to
continue ex parte , as well as the subsequent Impugned Order II
dismissing the Petitioner‟s application for recall of the said order, the
Petitioner has approached this Court by way of the present Petition
under Section 34 of the A&C Act.
SUBMISSIONS ON BEHALF OF THE PETITIONER:
23. Learned counsel for the Petitioner would submit that the
Impugned Order I, whereby the Petitioner‟s counterclaim came to be
rejected by the learned Arbitrator, constitutes an Interim Award within
the meaning of Sections 2(1)(c) and 31(6) of the A&C Act. It would
be contended that the rejection of the counterclaim amounts to a
conclusive determination of the Petitioner‟s substantive claim raised
before the learned Arbitral Tribunal. Consequently, the said
determination would attain finality in respect of the counterclaim and
would therefore bear the character of an Interim Award, rendering the
same amenable to challenge under Section 34 of the A&C Act.
24. In support of the aforesaid contention, learned counsel for the
Petitioner would place reliance upon the judgment of the Hon‟ble
13
Supreme Court in IFFCO Ltd. v. Bhadra Products , to contend that
where an arbitral tribunal conclusively determines an issue during the
course of arbitral proceedings, such determination would partake the
13
(2018) 2 SCC 534
Signature Not Verified
O.M.P. (COMM) 502/2024 Page 7 of 38
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:32:59
character of an Interim Award. It would thus be submitted that any
order of the arbitral tribunal which finally decides a substantive issue
or claim between the parties would fall within the ambit of an “award”
and would therefore be susceptible to challenge under Section 34 of
the A&C Act.
25. Learned counsel for the Petitioner would further submit that the
rejection of the counterclaim by way of the Impugned Order I is
wholly unreasoned and appears to rest solely upon the non-appearance
of the Petitioner‟s counsel on the said date of hearing.
26. It would be contended that the learned Arbitrator failed to
undertake any examination of the pleadings, documents, or materials
placed on record in support of the counterclaim, thereby resulting in
the Petitioner‟s substantive claim being rejected without any
adjudication on the merits. Such a course of action, according to the
Petitioner, would be contrary to the statutory scheme governing
arbitral proceedings, particularly the mandate of Sections 18, 23, and
25 of the A&C Act, which require the learned arbitral tribunal to
ensure equal treatment of the parties, afford them a full opportunity to
present their case, and adopt an appropriate procedural course even in
the event of non-appearance of a party.
27. In order to bolster the aforesaid submissions, learned counsel
for the Petitioner would further point out several shortcomings,
inconsistencies, and internal contradictions in the subsequent
Impugned Order II, whereby the Petitioner‟s application seeking recall
of the ex parte order and restoration of the counterclaim came to be
dismissed.
28. Learned counsel for the Petitioner would also place reliance
Signature Not Verified
O.M.P. (COMM) 502/2024 Page 8 of 38
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:32:59
upon the judgment of this Court in Mittal Pigments (P) Ltd. v. Gail
14
Gas Ltd to submit that an arbitral tribunal, before proceeding ex
parte against a party, is required to examine whether the absence of
the concerned party is attributable to sufficient cause and to adopt a
fair and reasonable procedural course consistent with the Principles of
Natural Justice. Accordingly, it would be submitted that the present
case falls foul of the legal principles enunciated in the aforesaid
judgment, inasmuch as the Impugned Order I came to be passed
without issuance of any pre-emptory notice indicating that the
proceedings would be conducted ex parte in the event of continued
non-appearance.
29. Further reliance would be placed by the learned counsel for the
Petitioner upon the judgment of this Court in Cinevistaas Ltd. v.
15
Prasar Bharti to contend that an order which results in the final
determination of a claim or counterclaim during the course of arbitral
proceedings would fall within the category of an Interim Award. On
the strength of the said decision, it would be asserted that the
Impugned Order I, having resulted in the rejection of the Petitioner‟s
counterclaim, squarely falls within the ambit of an Interim Award and
is therefore amenable to challenge under Section 34 of the A&C Act.
30. Learned counsel for the Petitioner would also submit that the
learned Arbitrator committed an error in holding that the learned
Arbitral Tribunal lacked jurisdiction to recall an ex parte order. It
would be contended that such a view overlooks the observations of the
Hon‟ble Supreme Court in Srei Infrastructure Finance Ltd. v. Tuff
14
(2023) SCC Online Del 977
15
2019 SCC OnLine Del 7071
Signature Not Verified
O.M.P. (COMM) 502/2024 Page 9 of 38
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:32:59
16
Drilling (P) Ltd. , wherein it has been held that an arbitral tribunal
possesses the inherent power to recall an order proceeding ex parte
against a party, particularly where sufficient cause for the absence of
the party is demonstrated.
SUBMISSIONS ON BEHALF OF THE RESPONDENT:
31. Per contra , learned counsel appearing on behalf of the
Respondent would contest the submissions advanced on behalf of the
Petitioner and would contend that the Impugned Orders passed by the
learned Arbitrator do not suffer from any legal infirmity warranting
interference by this Court. It would be submitted that the orders
impugned in the present proceedings were passed in accordance with
the procedure governing arbitral proceedings and within the
jurisdiction vested in the learned Arbitral Tribunal.
32. Learned counsel for the Respondent would further submit that
the Impugned Orders are a direct consequence of the conduct of the
Petitioner, both during the course of the arbitral proceedings as well as
prior thereto. It would be contended that, despite being afforded
multiple opportunities to participate in the arbitral proceedings and to
pursue its defence and counterclaim, the Petitioner failed to avail itself
of the same. According to the Respondent, the situation that ultimately
culminated in the passing of the Impugned Orders arose solely on
account of the Petitioner‟s own omissions and lack of diligence in
prosecuting the proceedings before the learned Arbitrator.
33. Learned counsel for the Respondent would also submit that due
and sufficient notice of the arbitral proceedings and the dates of
16
(2018) 11 SCC 470
Signature Not Verified
O.M.P. (COMM) 502/2024 Page 10 of 38
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:32:59
hearing had been duly served upon the Petitioner, and that the
Petitioner was fully aware, at all material times, of the hearings
scheduled before the learned Arbitrator. It would be contended that the
Petitioner failed to demonstrate any sufficient or justifiable cause for
its non-appearance on the dates fixed for hearing, i.e. , on 31.07.2024
and 21.08.2024.
34. It would further be urged that the explanation subsequently
sought to be advanced by the Petitioner for its absence does not merit
acceptance. Learned counsel for the Respondent would also seek to
draw the attention of this Court to certain averments made by the
Petitioner, which, according to the Respondent, are incorrect and
misleading.
35. Learned counsel appearing on behalf of the Respondent would
further contend that there exists no statutory provision under the A&C
Act mandating the issuance of a pre-emptory notice before an arbitral
tribunal proceeds ex parte against a party. It would be submitted that
where a party, despite due notice, fails to appear before the learned
tribunal without demonstrating sufficient cause, the learned arbitral
tribunal is well within its jurisdiction to proceed with the matter in the
absence of such party. In the present case, it would be contended that
the learned Arbitrator acted within the bounds of the powers conferred
under the A&C Act and that no violation of the Principles of Natural
Justice can be alleged.
36. Learned counsel for the Respondent would also contend that the
present Petition is not maintainable under Section 34 of the A&C Act.
It would be submitted that the Impugned Orders, insofar as they direct
that the Petitioner be proceeded against ex parte in the arbitral
Signature Not Verified
O.M.P. (COMM) 502/2024 Page 11 of 38
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:32:59
proceedings, are purely procedural in nature and do not amount to an
arbitral award or Interim Award within the meaning of the A&C Act.
Consequently, it would be argued that such procedural directions are
not amenable to challenge under Section 34 of the A&C Act and the
present petition is therefore liable to be dismissed as not maintainable.
ANALYSIS:
37. This Court has heard the learned counsel appearing on behalf of
the parties and has carefully perused the paperbook as well as the
other material documents placed on record.
38. At the outset, this Court finds it apposite to reproduce the
relevant findings of the learned Arbitrator as recorded in both
Impugned Orders:
Order dated 21.08.2024 (Impugned Order I)
“ The Deputy Counsel of DIAC has submitted that order passed on
the previous date, was sent to the Counsel for the parties as well as
to the Respondent at the email ids as available. Following emails,
sent to respondent have bounced back:-
[email protected],
[email protected],
[email protected]
Emails attached with the order sent at the following email ids have
not bounced back:-
[email protected]
[email protected]
The previous order dated 31.07.2024 has been served upon
the Respondent and none has appeared for it. On the last date, it was
informed that the counsel for the Respondent had intimated that he
was no more counsel for the Respondent. On the last date also the
Respondent was not present.
In the circumstances, the Respondent is proceeded Ex parte.
Hence, the Counter Claim is rejected.
The Counsel for the Claimant has submitted that it will take
few more days for the Claimant to assess the amount of interest in
Signature Not Verified
O.M.P. (COMM) 502/2024 Page 12 of 38
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:32:59
respect to the Claim amount and that Claimant will file an affidavit
in respect to the Claim to be made in respect to the interest till the
filling of the Statement of Claim. It is further stated that the affidavit
will be filed within a weeks‟ time.
On filing the affidavit, the DIAC will assess the Arbitration
fee etc. to be deposited by the Claimant of its share as well as that of
the Respondent because the Respondent has been proceeded Ex
parte.
DIAC shall assess the Arbitration fees and other charges and
shall inform the parties to deposit their respective shares. In case the
Respondent does not deposit its share of Arbitration fee etc. then it
shall be deposited by the Claimant. The status report be submitted
on the next date of hearing.
Now come up for further proceedings on 11.09.2024 at 12
Noon through video conferencing.
The order sheet be sent to the Counsel as well as to the
parties through email.”
Order dated 21.10.2024 (Impugned Order II)
“…..
7. I have heard Shri Ayush Singh, Advocate, Counsel for the
applicant/respondent and Mr. V. Siddharth, Advocate, Ld. Counsel
for the claimant and I have gone through the record of the
arbitration proceedings.
8. The facts stated by the claimant about the orders dated
03.07.2024, 31.07.2024 and 21.08.2024 are correct. Mrs. Saumya
Bajpai, Advocate for the respondent was present during the hearing
on 03.07.2024. it was directed that 'in case, the respondent filed the
counter claim than claimant may file rejoinder/reply to the counter
claim before the next date of hearing' i.e. 31.07.2024. On
31.07.2024, none appeared for the respondent. The Dy. Counsel
contacted the Counsel for the respondent on mobile and the
counsel informed that she was no more counsel for the respondent
as such she would not appear. In the circumstances, the matter was
adjourned for 21.08.2024 with the directions to the DIAC that
order be circulated to the counsels of the parties as well as to the
respondent at its officials email IDs.
9. On 21.08.2024, none appeared for the respondent. The Dy.
Counsel for the DIAC informed that the orders sent on three emails
have bounced back but the order sent to the respondent on its email
'[email protected] and [email protected]'
were not bounced back and as such it was presumed that the
respondent had received the order dated 21.07.2024. However, the
Signature Not Verified
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Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:32:59
respondent did not respond nor appeared and as such the
respondent was proceeded with ex-parte. The counter claim filed
was 'rejected'.
10. There is no merit in the facts stated in the application or argued
by the Ld. Counsel for the respondent that the respondent had not
received on the email [email protected] and
[email protected].
*
13. There is no merit in the contention of the claimant that the
Arbitrator has no power to recall its order passed for proceedings
ex-parte against the respondent. Sub Clause B of Section 25 of the
Arbitration and Conciliation Act, 1996 states that if the respondent
fails to communicate his statement of defence in accordance with
sub section (1) of Section 23, the Arbitral Tribunal shall continue
the proceedings without treating that failure in its self as an
admission of the allegations by the claimants and shall have the
discretion to treat the right of the respondent to file such statement
of defence as having being forfeited.
14. In this matter, the arbitration proceedings have not been closed
and the statement of defence is there on the file. The respondent
can continue to participate in the proceedings in spite of the fact
that it has been proceeded exparte. However, there is no merit in
the case of the applicant/ respondent that the respondent had no
information of the proceedings dated 31.07.2024 and 21.08.2024.
The Counsel for the respondent was present in the proceeding
dated 03.07.2024 and it was specifically told that in case the
respondent wanted to file the counter claim than it should be filed
with a copy to the claimant and that claimant should file the reply
to the counter claim before the next date of hearing i.e. 21.07.2024.
On 31.07.2024 neither the counsel nor any representative of the
respondent appeared during the proceedings. The counsel was
contacted by the DIAC for nonappearance but she said that she was
no more counsel for the respondent and as such she would not
appear. In case the counsel was no more representing the
respondent that she should have informed the respondent about the
next date of hearing. It is not the case that such date was informed
by the previous counsel to the respondent. However, it was
specifically ordered that the order be circulated to the counsel of
the parties and to the respondent at its official Email IDs for the
hearing to be scheduled for 21.08.2024. On 21.08.2024, none
appeared for the respondent. The Dy. Counsel for DIAC informed
that the emails sent to the respondent at following email IDs
„[email protected] and [email protected]'
were not bounced back where as the other three emails sent to the
respondent were bounced back. Consequently, it was proper notice
to the respondent to put appearance and participate in the
proceedings fixed for 31-07-2024 and 21.08.2024. Hence, the
Signature Not Verified
O.M.P. (COMM) 502/2024 Page 14 of 38
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:32:59
respondent has proper notice for their appearance but respondent
and the counsel choose not to put appearance on 31- 07-2024 and
2024. The principals of natural justice were duly followed before
the respondent was proceeded with the order of ex-parte on
21.08.2024.
15. There is no merit in the application of the respondent to set site
ex-parte proceeding initiated against it.
16. The respondent had filed counter claim. Since, none appeared
for the respondent on 21.08.2024, therefore, the counter claim was
rejected. Although, specifically an award for dismissal of counter
claim for non-prosecution, could have been passed yet the rejection
of the counter claim amounts to dismissal of the award.
17. The Arbitral Tribunal is not empowered to set a site the award
passed or the interim award including rejection of claim or counter
claim, can be challenged in appeal or revision as the case may be
but it cannot be set aside by the Arbitral Tribunal who has passed
the same. Therefore, the order passed in respect to the counter
claim on 21.08.2024 cannot be set aside by this Tribunal.
18. In view of the above discussion, the application for setting as
site the exparte proceedings or in respect to the counter claim are
dismissed.”
39. From a bare perusal of the Impugned Order I, the following
material findings of the learned Arbitrator emerge:
(a) The DIAC Deputy Counsel informed the learned Arbitral
Tribunal that the previous order dated 31.07.2024 had been
circulated to the parties and their counsel through the available
email addresses.
(b) Certain emails sent to the Petitioner herein at
[email protected], [email protected], and
[email protected] had bounced back,
indicating non-delivery.
(c) However, emails sent to [email protected] and
[email protected] had not bounced back, leading
the learned Arbitral Tribunal to treat the previous order as duly
served upon the Petitioner herein.
Signature Not Verified
O.M.P. (COMM) 502/2024 Page 15 of 38
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:32:59
(d) Despite such service, no one appeared on behalf of the
Petitioner herein on the relevant date of hearing before the
learned Arbitrator.
(e) The learned Arbitral Tribunal also recorded that on the previous
date it had been informed that the Petitioner‟s earlier counsel
was no longer representing the Petitioner herein, and even on
that date the Petitioner had remained unrepresented.
(f) In view of the non-appearance of the Petitioner despite service
of the order, the learned Arbitral Tribunal decided to proceed ex
parte against the Petitioner.
(g) Consequent to proceeding ex parte , the learned Arbitral
Tribunal rejected the counterclaim filed by the Petitioner.
40. Further, from a perusal of the Impugned Order II, which came
to be passed upon the Petitioner filing an application seeking recall of
the Impugned Order I, the following material findings of the learned
Arbitrator emerge:
(a) The learned Arbitral Tribunal considered and examined the
factual narration pertaining to the earlier orders dated
03.07.2024, 31.07.2024, and 21.08.2024.
(b) The learned Arbitral Tribunal rejected the Petitioner‟s
contention that it had not received notice of the proceedings
through the aforesaid email addresses, holding that the said
contention lacked merit.
(c) The learned Arbitral Tribunal held that it does possess the
power to recall an order proceeding ex parte , referring to
Section 25(b) of the A&C Act, which permits continuation of
proceedings in case of failure by the Petitioner herein to file or
Signature Not Verified
O.M.P. (COMM) 502/2024 Page 16 of 38
Digitally Signed
By:HARVINDER KAUR
BHATIA
Signing Date:14.05.2026
17:32:59
pursue its defence.
(d) However, the learned Arbitral Tribunal noted that the arbitral
proceedings had not been closed and the Statement of Defence
filed by the Petitioner herein remained on record, meaning that
the Petitioner herein could still participate in the proceedings
notwithstanding the ex parte order.
(e) The learned Arbitral Tribunal concluded that the Petitioner
herein had proper notice of the hearings dated 31.07.2024 and
21.08.2024, since its counsel had appeared earlier on
03.07.2024 and the subsequent orders had been circulated to the
Petitioner‟s official email addresses.
(f) The learned Arbitral Tribunal further held that the Principles of
Natural Justice had been duly followed prior to proceeding ex
parte against the Petitioner herein.
(g) With respect to the counterclaim, the learned Arbitral Tribunal
observed that although a formal award dismissing the
counterclaim for non-prosecution could have been passed, the
rejection of the counterclaim effectively amounted to its
dismissal.
(h) The learned Arbitral Tribunal held that it lacked jurisdiction to
set aside its own award or interim award, including the rejection
of the counterclaim, observing that such orders could only be
challenged before the appropriate court.
(i) Accordingly, the learned Arbitral Tribunal concluded that the
application seeking the recall of the ex parte proceedings and
restoration of the counterclaim lacked merit.
41. A sequential reading of the Impugned Orders reveals that in the
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Impugned Order I, the learned Arbitrator unequivocally recorded that
“ in the circumstances, the Respondent is proceeded ex parte ” and
went on to reject the counterclaim as follows, “ Hence, the Counter
Claim is rejected .”
42. In the Impugned Order II, the learned Arbitrator observed that
the arbitral proceedings had not been formally concluded and that the
Petitioner‟s Statement of Defence continued to remain on record. It
was, therefore, held that despite having been proceeded ex parte , the
Petitioner would remain entitled to participate in the ongoing
proceedings. The learned Arbitrator ultimately found no merit in the
application seeking recall of the ex parte order, thereby maintaining its
earlier decision.
43. On the specific issue of the counterclaim, the learned Arbitrator
further observed that although a formal award dismissing the
counterclaim for non-prosecution could have been rendered, the
rejection already recorded effectively amounted to such dismissal.
Proceeding on this premise, the learned Arbitrator held that it lacked
jurisdiction to set aside or recall its own award, including any interim
award, and that such a determination could only be assailed before a
competent court. Consequently, the learned Arbitrator declined to
recall the order insofar as it pertained to the rejection of the
counterclaim.
44. In substance, the rejection of the Petitioner‟s counterclaim was
treated as having the character of an interim award, on the footing that
it constituted a final determination of those claims, thereby rendering
the learned Arbitral Tribunal functus officio in respect thereof.
Simultaneously, in relation to the claims of the Respondent, the
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learned Arbitrator declined to recall the ex parte order and directed
that the arbitral proceedings should continue and the Petitioner was
entitled to participate in those proceedings.
45. The consequences emanating from the Impugned Order I
operate across two distinct and independent facets.
46. First , insofar as the Respondent‟s claims before the learned
Arbitral Tribunal are concerned, the learned Arbitrator proceeded ex
parte .
47. Second , and more significantly, in relation to the Petitioner‟s
counterclaims, the learned Arbitral Tribunal declined to entertain the
counterclaims altogether, thereby resulting in a complete denial of the
Petitioner‟s substantive right to have those claims adjudicated.
17
48. This Court, in H.S. Nag and Ors vs. Asian Hotel (North) Ltd ,
had the occasion to examine the nature and characteristics of an order
that would qualify as an interim award under the A&C Act. Upon a
consideration of the relevant statutory provisions, as well as the
judgment of the Hon‟ble Supreme Court in IFFCO (supra) and other
binding precedents, the Court undertook a detailed analysis of the
scope of interference under Section 34 of the A&C Act in relation to
arbitral awards, including interim awards. The Court further
delineated the distinction between a purely procedural order and an
interim award, and articulated the governing test for determining when
an order assumes the character of an interim award. The relevant
extract from the judgment in H.S. Nag and Ors. (supra) is reproduced
hereunder:
54. The Respondent asserts that the Impugned Orders are in the
17
2026:DHC:1396
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nature of procedural directions, which do not attract the
interference of this Court under Section 34 of the Act. The
Petitioners, on the other hand, contend that though coloured as
procedural, the Impugned Orders operate with finality, affecting
their substantial rights, thereby assuming the character of interim
awards.
55. In this backdrop, before embarking upon an examination of the
merits, this Court deems it apposite to first address the preliminary
objection as to the maintainability, since the adjudication upon the
merits of the present Petitions necessarily hinges upon whether the
Impugned Orders are amenable to challenge under Section 34 of
the Act.
56. In view of the apparent divergence in approach, discernible
from various precedents and the consequent uncertainty
surrounding the question as to what constitutes an “interim award”,
this Court deems it apposite to examine the statutory scheme, the
governing jurisprudence as established by various judicial
precedents, with some degree of clarity.
57. Accordingly, the discussion that follows is organised along
three distinct yet interrelated facets, viz., first, the scope and limits
of judicial interference permissible under Section 34 of the Act vis-
à-vis an Order passed in the course of arbitral proceedings; second,
the legal contours and attributes of what constitutes an “Interim
Award”; and third, whether the Impugned Orders, when examined
on the touchstone of the settled principles, satisfy the parameters so
as to fall within the ambit of an “Interim Award” amenable to
challenge under Section 34 of the Act.
Interference under Section 34 of the Act extends to an Arbitral
Award, including an „Interim Award‟
58. It is well settled that the jurisdiction under Section 34 of the Act
is neither appellate nor supervisory in the conventional sense. The
Court does not sit in appeal over the findings of the Arbitral
Tribunal, nor does it re-appreciate evidence or correct errors of fact
or law, save where such errors fall within the narrowly tailored
grounds statutorily prescribed. The provision thus reflects a
conscious legislative departure from expansive judicial review and
is rooted in the principle of party autonomy and finality of arbitral
adjudication.
*
60. Further, Section 2(1)(c) of the Act defines the expression
“Arbitral award”, which expressly includes interim awards. Section
2 of the Act is reproduced herein under for the sake of clarity:
“2. Definitions. — (1) In this Part, unless the context
otherwise requires, —
(c) “arbitral award” includes an interim award;”
61. A conjoint reading of Section 2(1)(c) and Section 34 of the Act
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makes it abundantly clear that the jurisdiction of the Court under
Section 34 extends to the setting aside of an interim award as well,
provided such interim award satisfies the statutory requirements
and falls within the limited grounds expressly enumerated under
Section 34 of the Act and their consistent interpretations by the
Courts.
62. To complete the scheme of the Act, Section 31(6) of the Act is
also material. It empowers an Arbitral Tribunal to render an interim
award at any stage of the arbitral proceedings, prior to the
pronouncement of the final award, in respect of any matter on
which it may make a final determination. The same is reproduced
herein under for the sake of completeness:
“ 31. Form and contents of arbitral award. —
*
(6) The arbitral tribunal may, at any time during the
arbitral proceedings, make an interim arbitral award on
any matter with respect to which it may make a final
arbitral award.”
63. A holistic reading of the aforesaid statutory provisions leads to
two clear and inescapable conclusions. First, that an Arbitral
Tribunal is vested with the authority to render an interim award
during the pendency of the arbitral proceedings, prior to the
culmination of final adjudication. Second, that such interim awards,
being statutorily subsumed within the definition of an arbitral
award, are amenable to judicial scrutiny under Section 34 of the
Act, subject to the same limited and well-settled grounds on which
a final arbitral award may be interfered with.
64. At the same time, it must be underscored that though the statute
includes an “interim award” within the ambit of an arbitral award,
it does not follow that every interlocutory or procedural order
passed during arbitral proceedings partakes such character.
65. However, this statutory inclusion does not efface the
fundamental distinction between a determination that conclusively
adjudicates an issue and, a direction that merely regulates the
conduct of proceedings. It is this nuanced yet decisive distinction
that now warrants closer judicial scrutiny.
Distinction between a Procedural Order and an Interim Award
passed by an Arbitral Tribunal
66. Having thus established that the jurisdiction of this Court under
Section 34 of the Act extends, in principle, to an interim arbitral
award, the enquiry must now turn to the equally significant
question, namely, what, in law, qualifies as an “interim award”.
67. Further, since the Act does not expressly define what
constitutes an “interim award”, this Court deems it necessary to
advert to the judicially evolved principles which illuminate its
nature, attributes and legal contours. The classification of an order
cannot depend upon nomenclature alone but must be determined by
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its substance and legal effect.
68. The Hon‟ble Supreme Court in IFFCO (supra), while
authoritatively interpreting the expression “interim award”, held
that an Arbitral Tribunal is empowered under Section 31(6) of the
Act to render an interim award on any matter in respect of which it
is competent to make a final award. The Court clarified that the
expression “any matter” is of wide import and encompasses any
point of dispute between the parties that calls for a definitive
adjudication.
69. At the same time, the decision underscores that such a
determination must possess the element of finality in respect of the
issue decided, so as to qualify as an interim award within the
statutory framework. The relevant observations of IFFCO (supra)
are extracted herein under for ready reference:
“ 8. The language of Section 31(6) is advisedly wide in
nature. A reading of the said sub-section makes it clear
that the jurisdiction to make an interim arbitral award is
left to the good sense of the arbitral tribunal, and that it
extends to “any matter” with respect to which it may make
a final arbitral award. The expression “matter” is wide in
nature, and subsumes issues at which the parties are in
dispute. It is clear, therefore, that any point of dispute
between the parties which has to be answered by the
arbitral tribunal can be the subject matter of an interim
arbitral award. However, it is important to add a note of
caution. In an appropriate case, the issue of more than one
award may be necessitated on the facts of that case.
However, by dealing with the matter in a piecemeal
fashion, what must be borne in mind is that the resolution
of the dispute as a whole will be delayed and parties will
be put to additional expense. The arbitral tribunal should,
therefore, consider whether there is any real advantage in
delivering interim awards or in proceeding with the matter
as a whole and delivering one final award, bearing in mind
the avoidance of delay and additional expense. Ultimately,
a fair means for resolution of all disputes should be
uppermost in the mind of the arbitral tribunal.
9. To complete the scheme of the Act, Section 32(1) is
also material. This section goes on to state that the arbitral
proceedings would be terminated only by the final arbitral
award, as opposed to an interim award, thus making it
clear that there can be one or more interim awards, prior to
a final award, which conclusively determine some of the
issues between the parties, culminating in a final arbitral
award which ultimately decides all remaining issues
between the parties.”
70. The Hon‟ble Supreme Court, in the aforesaid judgment,
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underscored that although arbitral proceedings culminate only upon
the pronouncement of the final award, the statutory scheme
unmistakably contemplates rendering of one or more interim
awards during their pendency. Such interim awards are not mere
procedural directions, rather they are determinations that finally
and conclusively adjudicate specific issues or claims between the
parties. The interim orders decisively settle the discrete facets of
the dispute, and thus, progressively narrow the field of controversy
and pave the way toward the final award.
*
75. The common thread running through the aforesaid decisions is
that the twin pillars of „finality‟ and „substantive issue
determination‟ form the bedrock of the test. An order that merely
regulates procedure, even if it affects a valuable right, does not
cross the statutory threshold unless it conclusively determines a
substantive component of the arbitral reference.
76. In view of the foregoing discussion, it stands well settled that
an interim award must bear the hallmark of finality in respect of the
issue it addresses. The determinative consideration is whether the
arbitral tribunal has conclusively adjudicated a substantive
component of the dispute and rendered itself functus officio qua
that issue. If nothing further remains to be decided on that aspect
within the arbitral proceedings, such a determination would fall
within the ambit of an interim award and would be amenable to
challenge under Section 34 of the Act, notwithstanding that the
arbitration continues in respect of other matters.
77. Therefore, the question as to whether an order constitutes an
“interim award” is no longer res integra. The determination does
not hinge upon the nomenclature employed by the Arbitral
Tribunal, but upon the substance, effect, and legal consequences of
the order in question. The Court must examine whether the order
conclusively adjudicates a substantive issue between the parties at
an intermediate stage of the proceedings, thereby leaving nothing
further to be decided on that issue.
Nature of the Impugned Orders: Procedural or Interim Award
78. Having delineated the statutory framework and crystallised the
principles as to what constitutes an “interim award” within the
meaning of Sections 2(1)(c) and 31(6) of the Act, this Court now
proceeds to examine whether the Impugned Orders, in substance
and effect, meet the settled parameters so as to attract the
jurisdiction of this Court under Section 34 of the Act.
*
104. The judicial precedents cited and analysed hereinabove yield a
clear and consistent position in law, i.e., an order disposing of an
application for amendment of pleadings does not, by that
circumstance alone, acquire the status of an interim award. The
determinative consideration is not the nature of the application, but
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the legal effect of its rejection.
105. The position may thus be summarised as first, not every order
passed by an Arbitral Tribunal qualifies as an interim award;
second, there exists no straight-jacket rule that an order rejecting an
amendment application necessarily constitutes an interim award;
and third, it is the element of finality in respect of a substantive
issue, resulting in crystallisation of a right, that determines whether
an order crosses the threshold into the domain of an interim award.
Governing Test for determining what constitutes an “Interim
Award”
106. In light of the foregoing discussion and the judicial precedents
noticed hereinabove, the governing test for determining whether an
order qualifies as an “interim award” may now be articulated.
(a) Whether the Order finally adjudicates a substantive dispute or
claims between the parties;
(b) Whether such adjudication attains finality and has a binding
effect insofar as that issue is concerned; and
(c) Whether, upon such determination, the Arbitral Tribunal
becomes functus officio qua that issue and retains no further
adjudicatory discretion thereon.
107. Therefore, if an order answers to all the aforesaid three
elements in affirmative, the order transcends the realm of a mere
procedural order and assumes the character of an Interim Award
within the meaning of Sections 2(1)(c) and 31(6) of the Act, and
consequently becomes susceptible to scrutiny under Section 34,
subject to its limited and circumscribed scope.
108. Tested on this anvil, this Court is of the considered view that
the Impugned Orders do not satisfy the essential indicia of an
interim award. It would be observed as under:
(a). First , the rejection of the amendment applications does not
decide any substantive dispute or independent claim between
the parties, it merely preserves the pleadings in the form in
which they already stood.
(b). Second , the determination lacks finality in respect of any issue
forming part of the arbitral reference, inasmuch as the Points
of Determination framed by the learned Arbitral Tribunal
expressly leave open the questions of entitlement, quantum,
rate and period of compensation to be adjudicated on the basis
of evidence.
(c). Third , the Arbitral Tribunal has not rendered itself functus
officio in respect of any such issue, nor has it exhausted its
adjudicatory discretion thereon.”
49. Thus, in the aforesaid judgment, this Court, inter alia , held that
the governing test for determining whether an order qualifies as an
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“ interim award ” rests upon three essential elements. First , whether the
order finally adjudicates a substantive dispute or claim between the
parties; second , whether such adjudication attains finality and has a
binding effect in respect of the issue so determined; and third ,
whether, consequent upon such determination, the arbitral tribunal
becomes functus officio qua that issue, thereby retaining no further
adjudicatory discretion in relation thereto.
50. Applying the aforesaid triple test to the Impugned Order I,
insofar as it pertains to the Respondent‟s claims, namely, the order
directing that the Petitioner be proceeded against ex parte , it becomes
evident that the said order does not satisfy the parameters necessary to
qualify as an interim award under the A&C Act. An order directing
that proceedings continue ex parte is essentially procedural in nature
and is intended to regulate the conduct and progression of arbitral
proceedings. An order, by itself, neither adjudicates the substantive
disputes between the parties nor determines any rights or liabilities
finally and conclusively.
51. An order proceeding ex parte does not extinguish the rights of
the defaulting party, nor does it conclusively determine the claims
pending before the arbitral tribunal. The claims themselves remain
subject to adjudication on the merits. Such a procedural direction
merely enables the arbitral tribunal to ensure discipline in the conduct
of proceedings and to advance the objective of expeditious disposal
underlying the arbitral framework.
52. In appropriate circumstances, arbitral tribunals may be
constrained to invoke such procedural powers in order to prevent
obstruction or delay in the proceedings. Equally, however, the arbitral
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tribunal retains the authority to revisit, recall, or set aside such an
order if sufficient cause or appropriate circumstances are subsequently
demonstrated. Any grievance arising from such a procedural order
may ordinarily be urged at the stage of challenge to the final award
and, in exceptional circumstances, may also be amenable to scrutiny
in exercise of the extraordinary jurisdiction of the Constitutional
Courts.
53. In the present case, although the Impugned Order I may have a
bearing on the Petitioner‟s ability to effectively participate in the
proceedings, particularly in relation to leading evidence and advancing
its defence, it does not finally adjudicate or conclusively determine the
Respondent‟s claims. The adjudicatory process in respect of those
claims continues.
54. Importantly, the learned Arbitral Tribunal has not rendered itself
functus officio in relation to the Respondent‟s claims; rather, it
continues to remain in seisin of the issues raised before it and to
examine the evidence, assess the merits, and render a final
determination thereof. The learned Arbitral Tribunal also retains the
discretion to regulate and, if necessary, revisit procedural aspects of the
proceedings, as is evident from the Impugned Order II. The ultimate
determination of rights and liabilities, which alone would attain finality
and binding effect, is yet to be rendered.
55. In this backdrop, the continuation of arbitral proceedings on an
ex parte basis, qua the Petitioner, cannot be construed as a final or
substantive adjudication of rights. The Impugned Order I, to the extent
that it merely directs continuation of proceedings ex parte in relation
to the Respondent‟s claims, does not partake the character of an
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interim award within the meaning of the A&C Act. Consequently, the
said procedural direction is not amenable to challenge under Section
34 of the A&C Act at this stage. This Court, therefore, lacks
jurisdiction under the limited statutory framework of Section 34 of the
A&C Act to examine the validity of the said procedural order
independently of the final award.
56. However, the position stands on an entirely different footing
insofar as the Petitioner‟s counterclaims are concerned. Applying the
same governing test, this Court finds that the triple test as set out in
H.S. Nag and Ors ( supra ) is entirely fulfilled in the present case. The
rejection of the counterclaim by the Impugned Order I effectively
results in a final determination of the Petitioner‟s counterclaims,
leaving no scope for their further consideration by the learned Arbitral
Tribunal. The order thus possesses the essential attributes of finality
and binding effect in respect of the counterclaims. Significantly, the
learned Arbitrator thereafter proceeded on the basis that he lacked
jurisdiction to revisit or recall the said determination, thereby treating
himself as functus officio, qua the counterclaims. Consequently, the
Impugned Order I, to this limited respect, would constitute an interim
award.
57. In the present case, it is not in dispute that the Petitioner had filed
its counterclaims pursuant to the liberty granted by the learned
Arbitrator during the course of the arbitral proceedings. By the
Impugned Order I, those counterclaims came to be rejected. Thereafter,
by the Impugned Order II, the learned Arbitrator declined to set aside or
recall such rejection, holding that the learned Arbitral Tribunal lacked
jurisdiction to revisit what was treated as an interim award. In these
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circumstances, this Court is of the considered view that the Impugned
Orders, taken in conjunction, insofar as they relate to the Petitioner‟s
counterclaims, constitute an interim award and would be amenable to
challenge under Section 34 of the A&C Act.
58. The only issue that now remains for consideration is whether
the Interim Award, insofar as it relates to the Petitioner‟s
counterclaims and being amenable to challenge under Section 34 of
the A&C Act, falls within the narrow and well-defined grounds for
judicial interference under the said provision, and consequently,
whether the impugned determination can be sustained on that
touchstone.
59. In order to appreciate this aspect in its proper perspective, it
becomes necessary to advert to the earlier orders passed during the
course of the arbitral proceedings, prior to the issuance of the Impugned
Order I, particularly the orders dated 03.07.2024 and 31.07.2024. For
the sake of completeness, the order dated 03.07.2024 is reproduced
hereunder:
“ ARBITRATION PROCEEDING DATED 03.07.2024
(THROUGH VIDEO CONFERENCING)
Present:
For the Claimant: Mr. V. Siddharth, Advocate
Email Ids: [email protected]
[email protected]
Mob. No: 8800473474
Ms. Gunjan Arora, Advocate
For the Respondent: Ms. Saumya Bajpai, Adv. for Respondent
Mob: 8826576220, Email:
[email protected]
[email protected]
For the DIAC: Ms. Parina Katyal, Deputy Counsel
ORDER
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BHATIA
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The Claimant made available a physical copy of the Statement of
Claim alongwith the true copies of the documents etc. I received it
yesterday at about 08:00 PM. The soft copy was sent at my email id
on 06.05.2024.
The Counsel for the Respondent has submitted that the Respondent
has already received the copy of the Statement of Claim etc. A
reply to the Claim petition and any other application/ Counter
Claim, if any, have not yet been received by me. The Counsel for
the Respondent has submitted that the soft copy of the application
and the Statement of Claim was sent at my email id. The Counsel
for the Respondent has again noted down my residential address to
send the reply to the Statement of Defence etc. within one week
from today. In case, the Respondent filed the Counter Claim and
the Claimant may file Rejoinder/Reply to the Counter Claim before
the next date of hearing.
The DIAC to assess the Arbitration fee etc. and intimate the same
to the Counsel for the parties to deposit the same so that Arbitration
proceedings can commence.
Now to come up on 31.07.2024 at 03:00 PM through VC. Copy of
the order be made available to the Counsel for the parties.”
60. The arbitral record unequivocally reflects that there is no
dispute on behalf of the Respondent that, insofar as its claims were
concerned, the Petitioner had already filed its Statement of Defence
concerning the Respondent‟s claim, prior to the relevant date. On that
occasion, when learned counsel for the Petitioner was present, the
principal direction issued by the learned Arbitrator was confined to
permitting the Petitioner to file its counterclaim before the next date of
hearing, with a corresponding liberty granted to the Respondent to file
its reply thereto thereafter.
61. It is also an admitted and undisputed position that, in
compliance with the aforesaid direction, the Petitioner duly filed its
counterclaim within the stipulated time, i.e. , on 10.07.2024.
62. The controversy assumes significance when the subsequent
Order dated 31.07.2024 is examined. For the sake of ready reference,
the said order is reproduced hereunder:
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BHATIA
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“ ARBITRATION PROCEEDING DATED 31.07.2024
(THROUGH VIDEO CONFERENCING)
Present :
For the Claimant: Mr. V. Siddharth, Advocate
Email Ids: [email protected]
[email protected]
Mob. No: 8800473474
Ms. Gunjan Arora, Advocate
For the Respondent: None.
For the DIAC: Ms. Parina Katyal, Deputy Counsel
ORDER
The Deputy Counsel DIAC has contacted the Counsel Saumya
Bajpai,
Advocate, on her mobile. The Counsel has told the Deputy Counsel
that she is no more the Counsel for the Respondent and as such she
will not appear today.
None has appeared for the Respondent-Company.
The Counsel for the Claimant earlier had sent an email to seek two
weeks‟ time to file reply to the Counter-Claim and rejoinder to
Statement of Defence. The same request has been reiterated today.
In the circumstances, the matter is adjourned. Put up on 21.08.2024
at 03:00 Pm through VC.
The order be circulated to the Counsels for the parties, including
the Counsel who filed the Statement of Defence as well as Counter-
Claim on behalf of the Defendant. The order be also sent to the
Respondent at its official email id.”
(emphasis supplied)
63. A perusal of the said order indicates that, although none
appeared on behalf of the Petitioner on that date, the material
circumstance is that the Respondent itself sought time to file its reply
to the counterclaim. The request for adjournment was reiterated before
the learned Arbitrator and was acceded to, resulting in the matter
being adjourned to 21.08.2024.
64. Significantly, therefore, the adjournment on 31.07.2024 was not
occasioned solely on account of the absence of the Petitioner. On the
contrary, it was, in substantial measure, attributable to the request made
by the Respondent itself for time to complete its pleadings.
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65. In this light, it becomes evident that although the Petitioner may
not have been represented on that particular date, no meaningful delay
in the progress of the arbitral proceedings can be attributed exclusively
to the Petitioner. Rather, the record demonstrates that the Respondent
itself sought time to respond to the counterclaim.
66. The matter was accordingly adjourned to 21.08.2024. On that
date, the learned Arbitrator proceeded to pass the ex parte order, noting
that the Petitioner had been informed of the previous order through its
official email addresses and that none had appeared on its behalf. On
that basis, the learned Arbitrator recorded that the Petitioner be
proceeded ex parte and, in the same breath, rejected the counterclaim.
67. However, in adopting this course, the learned Arbitrator appears
not to have taken into account the material circumstance that, on the
immediately preceding date, i.e. , 31.07.2024, the adjournment had been
sought by the Respondent itself. Consequently, the delay at that stage
could not have been attributed solely to the Petitioner.
68. Furthermore, the learned Arbitrator failed to appreciate that the
proceedings, insofar as the Petitioner‟s counterclaim was concerned,
were still at the stage of completion of pleadings. There is also no
indication in the Impugned Order I as to whether such pleadings qua
counterclaim had, in fact, been filed in the interregnum , which was the
very purpose for which the adjournment had been granted.
69. This Court further takes note of the fact that the learned Arbitral
Tribunal premises the rejection of the counterclaim on the party being
proceeded against ex parte . This Court is of the considered view that
the learned Arbitrator, while proceeding ex parte against the Petitioner,
erred in rejecting the counterclaim on that basis. Even considering non-
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appearance on behalf of the Petitioner on 21.08.2024, the rejection of a
duly filed counterclaim, without regard to the stage of proceedings and
the surrounding circumstances, cannot be sustained.
70. It is also important to note that the mere fact that a party has
been proceeded ex parte , as in the present case in relation to the
counterclaims, does not, ipso facto , justify the striking off or rejection
of counterclaims that have already been duly filed and form part of the
record. Such counterclaims do not stand extinguished merely on
account of the absence or non-participation of the party concerned.
This Court is of the view that the rejection of the counterclaims solely
on the ground that the learned Arbitral Tribunal had decided to
proceed ex parte discloses no valid reason whatsoever. Consequently,
the interim award rejecting the counterclaims is liable to be set aside.
71. As noted earlier, the Impugned Order I does not record any
substantive default on the part of the Petitioner, apart from its non-
appearance on that particular date. In the absence of any finding
indicating deliberate delay, contumacious conduct, or any attempt to
obstruct the proceedings, the decision to proceed ex parte in relation
to the counterclaim, and contemporaneously rejecting the Petitioner‟s
counterclaim, appears arbitrary and legally untenable. Such an
approach is inconsistent with Section 18 of the A&C Act, which
embodies the Principles of Natural Justice by mandating equal
treatment of parties and ensuring that each party is afforded a full and
fair opportunity to present its case. The said provision reads as
follows:
“ 18. Equal treatment of parties.- The parties shall be treated with
equality and each party shall be given a full opportunity to present
this case.”
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72. While it is undoubtedly true that an arbitral tribunal is vested
with the discretion under Section 19 of the A&C Act to determine the
procedure governing the proceedings, such discretion is not
unfettered. It must be exercised in a manner consistent with the
principles of fairness, equality, and natural justice embodied in
Section 18 of the A&C Act. In the present case, the manner in which
the proceedings were conducted in respect of the rejection of the
Petitioner‟s counterclaim, as borne out from the record, falls short of
these foundational requirements.
73. In this context, it also becomes necessary to examine the
provisions of Section 25 of the A&C Act, which deal with the
consequences of default by a party in arbitral proceedings. The said
provision reads as follows:
“ 25. Default of a party.- Unless otherwise agreed by the parties,
where, without showing sufficient cause,-
(a) the claimant fails to communicate his statement of claim in
accordance with sub-section (1) of section 23, the arbitral
tribunal shall terminate the proceedings;
(b) the respondent fails to communicate his statement of defence in
accordance with sub-section (1) of section 23, the arbitral
tribunal shall continue the proceedings without treating that
failure in itself as an admission of the allegations by the
claimant and shall have the discretion to treat the right of the
respondent to file such statement of defence as having been
forfeited.
(c) a party fails to appear at an oral hearing or to produce
documentary evidence, the arbitral tribunal may continue the
proceedings and make the arbitral award on the evidence before
it.”
74. A plain reading of the aforesaid provision makes it clear that
Section 25 of the A&C Act is intended to regulate situations where a
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party fails to participate in the arbitral proceedings in the manner
contemplated under that Act.
75. Insofar as Section 25(a) of the A&C Act is concerned, it
provides that where the claimant fails to file its statement of claim, the
arbitral tribunal is empowered to terminate the proceedings, since in
the absence of such a claim, there would be nothing to adjudicate.
This principle would, by necessary implication, extend to a
counterclaim as well, in a case where such a counterclaim is not filed
at all.
76. However, the present case does not fall within the ambit of
Section 25(a) of the A&C Act, as the Petitioner had duly filed its
counterclaims on 10.07.2024, in compliance with the earlier directions
issued by the learned Arbitrator. In any event, the statute contemplates
termination of the proceedings and not rejection of the claims
themselves.
77. Equally, Section 25(b) of the A&C Act, which deals with a
failure on the part of the Respondent to file its Statement of Defence,
has no application in the present factual matrix. The said provision
permits the arbitral tribunal to proceed with the arbitration without
treating such failure as an admission of the claimant‟s allegations. In
the present case, it is not the case of any party that the Petitioner‟s
alleged default falls within the scope of this provision, in any manner.
78. Section 25(c) of the A&C Act, on the other hand, contemplates
a situation where a party fails to appear at an oral hearing or fails to
produce documentary evidence. In such circumstances, the arbitral
tribunal is empowered to continue the proceedings and render an
award on the basis of the material available on record.
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79. The underlying object of this provision is to ensure that arbitral
proceedings are neither frustrated nor indefinitely delayed due to the
non-participation of a party. Although the power to proceed ex parte
may arguably be traceable to this provision, this Court is not called
upon to adjudicate that issue in the present case. Significantly,
however, the provision does not contemplate rejection or dismissal of
a substantive claim solely on account of non-appearance. On the
contrary, it mandates continuation of the proceedings and adjudication
on merits on the basis of the material available before the arbitral
tribunal.
80. In the present case, the non-appearance of counsel for the
Petitioner on a particular date, especially on a date when no effective
hearing could, in any event, have been undertaken since the
proceedings concerning the counterclaims were still at the stage of
completion of pleadings, could not have justified the imposition of a
consequence as drastic as the outright rejection of the counterclaims
themselves.
81. Having regard to the facts and circumstances of the present
case, this Court is of the considered opinion that no occasion had
arisen for the learned Arbitrator to visit the Petitioner with the extreme
consequence of extinguishing its counterclaims. The statutory scheme
of the A&C Act does not contemplate dismissal or rejection of
substantive claims solely on account of non-appearance, particularly
where the pleadings in relation to such claims had not even been
completed. Consequently, the rejection of the counterclaims merely
because the Petitioner was proceeded against ex parte cannot be
sustained in law.
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82. The Impugned Order I, insofar as it rejects the Petitioner‟s
counterclaims, clearly possesses the attributes and characteristics of an
interim award, since it conclusively determines and finally
extinguishes the Petitioner‟s independent substantive claims. The said
determination is, therefore, amenable to judicial scrutiny under
Section 34 of the A&C Act on the same footing as a final arbitral
award. Furthermore, in light of the detailed discussion and analysis
undertaken in the preceding paragraphs, this Court is of the considered
view that the said interim award is rendered unsustainable on multiple
grounds contemplated under Section 34 of the A&C Act.
83. The impugned determination is vitiated by serious legal
infirmities, including a manifest violation of the Principles of Natural
Justice, thereby bringing the same within the ambit of “ conflict with
the public policy of India ” under Section 34(2)(b)(ii) of the A&C Act.
The approach adopted by the learned Arbitrator effectively denied the
Petitioner any meaningful opportunity to have its counterclaims
adjudicated on the merits, despite the same having already been duly
filed and taken on record. Further, in the peculiar facts of the present
case, the rejection of the counterclaims discloses clear elements of
perversity and patent illegality apparent on the face of the record,
thereby additionally attracting the ground for interference
contemplated under Section 34(2A) of the A&C Act.
84. Furthermore, the facts and circumstances of the present case
squarely attract the ground contained in Section 34(2)(a)(iii) of the
A&C Act, inasmuch as the Petitioner can legitimately be said to have
been “ otherwise unable to present his case ”. The course adopted by
the learned Arbitrator undermines the fundamental principles of
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procedural fairness inherent in arbitral proceedings and has resulted in
a manifest miscarriage of justice.
85. Consequently, the Impugned Orders, insofar as they reject the
Petitioner‟s counterclaims and thereby partake the character of an
interim award, cannot be sustained in law and are liable to be set
aside. The decision of the learned Arbitrator to reject the
counterclaims solely on the ground that the Petitioner had been
proceeded against ex parte in relation to the Respondent‟s claims is
particularly untenable, especially when the arbitral proceedings
concerning the counterclaims had not progressed beyond the stage of
pleadings. Significantly, as specifically recorded in the Order dated
31.07.2024, even the Respondent had admittedly not filed its reply to
the counterclaims.
DECISION:
86. In view of the foregoing discussion, this Court is of the
considered opinion that the present Petition under Section 34 of the
A&C Act is allowed in part.
87. Accordingly, the Impugned Order dated 21.08.2024, i.e. ,
Impugned Award I, insofar as it proceeds ex parte as against the
Petitioner and goes on to hold that as the reason for rejecting the
counterclaims of the Petitioner, is set aside. The counterclaims are
restored to their original position and the learned Arbitral Tribunal is
directed to accord its consideration in accordance with law to the
same.
88. Insofar as the direction contained in the Impugned Order dated
21.08.2024, i.e. , Impugned Award I, whereby the Petitioner was
proceeded ex parte in respect of the claims advanced by the
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Respondent before the learned Arbitral Tribunal, is concerned, this
Court is of the considered view that the same is purely procedural in
nature, and would not, therefore, qualify as an “ interim award ”
making it vulnerable to challenge at this stage.
89. This position would equally extend to the non-interference with
the learned Arbitral Tribunal in the subsequent Impugned Order dated
21.10.2024, i.e. , Impugned Order II, which, to that limited extent, also
remains outside the scope of interference under Section 34 of the
A&C Act.
90. It is, however, clarified that, in view of the absence of
jurisdiction to examine such procedural directions, this Court has
neither undertaken nor expressed any opinion on the sustainability or
correctness of the Impugned Orders insofar as they pertain to the
Respondent‟s claims. The adjudication herein is strictly confined to
the rejection of the Petitioner‟s counterclaims. Accordingly, it shall
remain open to the Petitioner to avail of such other remedies as may
be available in law to redress its grievance in relation to the aforesaid
procedural directions.
91. The present Petition, along with pending Application(s), if any,
stands disposed of in the above terms.
92. No order as to costs.
HARISH VAIDYANATHAN SHANKAR, J.
MAY 12, 2026/sm/dj
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