Delhi HC: Termination of Arbitration for Non-Filing of Claim Not an Arbitral Award
The Delhi High Court has clarified that an order ending arbitration proceedings because a party failed to file its statement of claim cannot be treated as an arbitral award.
Justice Jasmeet Singh, while deciding Mecwel Constructions Pvt Ltd v GE Power Systems India Pvt Ltd, observed that such an order under Section 25(a) of the Arbitration and Conciliation Act, 1996, is procedural in nature and does not determine the rights or obligations of the parties.
The Court explained that for an order to qualify as an arbitral award, it must decide, either fully or partly, a dispute that was referred to arbitration.
“An order under Section 25(a) merely terminates the proceedings due to the claimant’s default in filing the statement of claim. It does not adjudicate any issue between the parties and, therefore, cannot be termed as an arbitral award,” the judge said.
The bench further noted that only when the arbitral tribunal gives a decision on the rights and liabilities of the parties can it be called an award under Section 32(2) of the Act.
In this case, Mecwel Constructions and GE Power Systems India had entered into an agreement related to thermal power projects. Disputes arose between them and the matter went to arbitration. However, in November 2024, the arbitrator ended the proceedings after Mecwel failed to file its statement of claim and did not pay its share of the arbitral fees.
Mecwel then approached the High Court under Sections 14 and 15 of the Act, which deal with the termination of an arbitrator’s mandate and the appointment of a substitute arbitrator.
GE Power argued that the arbitrator’s order was a final award and could only be challenged under Section 34 of the Act. The High Court, however, rejected this argument.
Justice Singh held that the order was not an award since it did not involve any decision on the dispute itself. He allowed Mecwel’s plea and directed that the arbitration continue before the arbitrator.
Advocates Amit George, Shashwat Kabi, Ibansara Syiemlieh, Adhishwar Suri, Vaibhav Gandhi, and Kartikay Puneesh appeared for Mecwel Constructions, while advocates Akshay Sapre, Abhijeet Swaroop, Vinam Gupta, and Shivani Karmakar represented GE Power Systems India.
