Section 32 as the Exclusive Source of Termination Power under the Arbitration and Conciliation Act, 1996: A Detailed Commentary on Harshbir Singh Pannu v. Jaswinder Singh, 2025 INSC 1400

1. Introduction

The Supreme Court’s decision in Harshbir Singh Pannu v. Jaswinder Singh (2025 INSC 1400) is a major clarification in Indian arbitration law on when and how arbitral proceedings can be terminated, and what remedies are available against such termination.

Ostensibly, the dispute is a relatively straightforward partnership quarrel referred to arbitration, which was aborted because the claimants did not pay the arbitrator’s fee. But the judgment leverages this fact pattern to settle long-contested questions:

• What is the source of the arbitral tribunal’s power to terminate arbitral proceedings?
• Are terminations under Sections 25, 30 and 38 of the Arbitration and Conciliation Act, 1996 (“the Act”) different in nature from a termination under Section 32?
• Is there any remedy against an order terminating proceedings, and if so, where is it located in the statute?
• What is the role of party consent and the Fourth Schedule after ONGC v. Afcons Gunanusa JV (“Afcons”)?

The case thus sits at the intersection of arbitral autonomy, procedural discipline, and access to justice, with direct implications for drafting arbitration clauses, tribunal practice, and the proposed Arbitration and Conciliation Bill, 2024.

1.1 Factual and Procedural Background

1. Parties and agreement
   • Appellant No. 2 and the respondent formed a partnership “M/s Amritsar Health & Hospitality Services” (2013); Appellant No. 1 joined later (2014).
   • The partnership deed contained an arbitration clause (Clause 13), referring disputes to arbitrators whose award was to be final and binding.
2. Disputes and first Section 11 petition
   • Disputes arose in 2017 relating to capital contribution and management.
   • The appellants issued notice for dissolution and arbitration (13.06.2018), received no response, and filed an application under Section 11 before the Punjab & Haryana High Court.
   • On 02.03.2020, the High Court appointed a Sole Arbitrator (retired High Court judge), directing that fees be as per the Fourth Schedule or as mutually agreed.
3. Arbitral proceedings and fee dispute
   • Claimants (appellants) filed claims of approx. ₹13.65 crore; arbitrator fixed a fee of ₹17,01,655 (shared equally) under the Fourth Schedule.
   • Respondent filed a counterclaim of approximately ₹82.78 crore, taking the total “sum in dispute” to around ₹96.43 crore.
   • On 23.04.2021, the arbitrator revised the total fee to the Fourth Schedule cap of ₹37.5 lakh, i.e., ₹18.75 lakh per side, payable in instalments.
   • Both sides raised objections:
     • Claimants: counterclaim was exaggerated and they could not afford the higher fee.
     • Respondent: argued he should pay only 25% of the total fee, reflecting his 25% partnership share.
   • On 17.07.2021, the arbitrator rejected respondent’s 25% argument, holding that under Section 38 deposits are in equal shares between “claimant” and “respondent”.
   • Claimants repeatedly failed to attend hearings and eventually filed an affidavit saying they could not pay their share of the revised fee for claim and counterclaim.
   • Respondent said he was willing to pay his own share but not the claimants’ share.
4. Termination under Section 38
   • On 28.03.2022, invoking Section 38(2), the Sole Arbitrator terminated the arbitral proceedings, recording that:
     • claimants refused to pay their share of fees (even for their own claims);
     • respondent was unwilling to pay claimants’ share;
     • both parties had failed to pay deposits in respect of claim/counterclaim as directed.
5. First round before the High Court
   • Claimants filed a writ (CWP 6182/2022) under Article 227:
     1. challenging the termination order,
     2. attacking the constitutional validity of the Fourth Schedule, and
     3. challenging the fee determination.
   • During pendency, this Court in Afcons (2022) upheld the Fourth Schedule’s constitutional validity and laid down guidelines on arbitral fees and party consent.
   • On 15.02.2023, the High Court disposed of the writ petition in light of Afcons, upholding the Fourth Schedule and granting liberty to pursue any other remedy in law against the termination.
6. Second Section 11 petition and High Court’s refusal
   • Claimants then filed a second Section 11(5), (6) petition (ARB No. 357 of 2023) seeking appointment of a new arbitrator.
   • On 07.01.2025, the High Court dismissed the petition, holding:
     • Termination under Section 38 does not per se terminate the arbitrator’s mandate under Section 32;
     • Since the arbitrator validly exercised power under Section 38, this was not a case of “withdrawal” or “incapacity” attracting substitution under Sections 11 and 15;
     • Remedy lay either in an application for recall before the arbitrator (per SREI Infrastructure) or a Section 14(2) challenge to termination of mandate (per Lalitkumar Sanghavi).
7. Appeal to Supreme Court
   • Respondent chose not to appear before the Supreme Court.
   • The appeal thus proceeded ex parte, focused on the correctness of the High Court’s view on:
     • nature and source of termination power under the Act; and
     • maintainability of a fresh Section 11 application after termination.

2. Summary of the Judgment

2.1 Core Holdings

The Supreme Court lays down the following key principles:

1. Section 32 is exhaustive on termination power

   All terminations of arbitral proceedings under the 1996 Act must be traced to Section 32(1)–(2). Sections 25(a), 30(2) and the second proviso to 38(2) merely list the circumstances in which a tribunal may terminate, but the actual power and legal effect are those of a Section 32(2) order.

2. Nature and effect of termination is uniform

   Whether proceedings are terminated:

   • for failure to file claim (Section 25(a)),
   • on settlement (Section 30),
   • for non-payment of deposits (Section 38), or
   • under the residuary clause (Section 32(2)(c)),

   the legal effect is the same: the arbitral reference ends and, subject only to Sections 33 and 34(4), the mandate of the tribunal stands terminated.

3. “Mandate” is descriptive, not a separate category of termination

   The phrase “the mandate of the arbitral tribunal shall terminate with the termination of the arbitral proceedings” in Section 32(3) does not create a special species of termination. It merely describes that once proceedings are ended (by award or by order under Section 32(2)), the tribunal loses jurisdiction in that reference.

4. Tribunal has limited procedural recall power

   While a tribunal cannot review its awards on merits, it does have inherent procedural review powers to:

   • rectify procedural mistakes; and
   • recall an order terminating proceedings, where sufficient cause is shown (e.g., non-appearance, inadvertent default).

   This power flows from the nature of the tribunal’s quasi-judicial function and general principles recognised in cases like Grindlays Bank.

5. Structured remedial pathway against termination

   The Court fills the statutory gap by prescribing a two-step remedy:

   1. First, the aggrieved party must move the same tribunal with a recall application against the termination order (procedural review).
   2. Only if recall is refused, the party may approach the Court under Section 14(2) for a determination on whether the mandate has lawfully terminated. The Court can then:
      • set aside the termination and remand to the same tribunal; or
      • if circumstances require, appoint a substitute arbitrator under Section 15.

   A fresh Section 11 application is not maintainable merely because earlier proceedings were terminated.

6. No Section 34 remedy; Article 227 extremely limited

   An order terminating proceedings is not an “award” and therefore cannot be challenged under Section 34. Article 227 is available only in the narrow window recognised in Bhaven Construction – where:

   • the party would otherwise be remediless under the Act; or
   • there is clear absence of good faith/jurisdiction.
7. Section 11 cannot be used to restart arbitration after termination

   Arbitration is “not infinite”. A party that allows proceedings to be terminated by its own default cannot ordinarily seek a second bite through another Section 11 petition on the same arbitration agreement and dispute.

8. Afcons, Fourth Schedule and fee fixation

   Where:

   • the parties consent to Fourth Schedule fees; or
   • the tribunal applies the Fourth Schedule as the “default model fee”,

   the parties cannot later challenge the fee solely on that basis. In this case, the arbitrator’s revision of fees upon introduction of a counterclaim, based on the same Fourth Schedule matrix, was held to be consistent with Afcons. Termination for non-payment of such fee was upheld as lawful.

9. Exceptional relief: substitute arbitrator allowed

   Even while upholding the termination, the Supreme Court, given:

   • the age of the dispute,
   • previous legal uncertainty on fees and termination, and
   • the need to avoid extinguishing the lis entirely,

   granted an exceptional one-time indulgence: it remanded the matter to the High Court to appoint a substitute arbitrator to hear both claim and counterclaim de novo.

3. Statutory Framework on Termination of Arbitral Proceedings

3.1 Sections 25, 30, 32 and 38 – The Architecture

• Section 25 – Default of a party
  • 25(a): If the claimant fails to communicate the statement of claim “without sufficient cause”, the tribunal “shall terminate the proceedings”.
  • 25(b): If respondent fails to file defence, tribunal “shall continue” the proceedings; it may forfeit defence but cannot terminate.
  • 25(c): If any party fails to appear or produce documents, tribunal may continue and make an award on the evidence before it.
• Section 30 – Settlement
  • 30(1): Tribunal may encourage settlement using mediation/conciliation or other procedures.
  • 30(2): If parties settle during proceedings, tribunal “shall terminate the proceedings” and may, if requested and agreeable, record settlement as an award.
• Section 38 – Deposits
  • 38(1): Tribunal may fix deposits towards “costs” (including arbitrators’ fees) expected to be incurred.
  • 38(2): Deposits are payable in equal shares by parties; if one defaults, the other may pay that share; if both fail to pay in respect of a claim/counterclaim, tribunal “may suspend or terminate the arbitral proceedings in respect of such claim/counterclaim”.
  • 38(3): Upon termination, tribunal must account for deposits and return any unexpended balance.
• Section 32 – Termination of proceedings
  • 32(1): Arbitral proceedings “shall be terminated by the final arbitral award or by an order of the tribunal under 32(2).
  • 32(2):
    • (a): Claimant withdraws claim, unless respondent objects and tribunal finds respondent has a “legitimate interest” in final determination;
    • (b): Parties agree to termination;
    • (c): Tribunal finds that continuation has for any other reason become “unnecessary or impossible”.
  • 32(3): Subject to Sections 33 and 34(4), the mandate of the tribunal terminates with termination of proceedings.

3.2 Other Relevant Provisions

• Section 14: Deals with termination of the mandate of an arbitrator (e.g., de jure/de facto inability or undue delay). Section 14(2) allows a party to apply to “the Court to decide on the termination of the mandate”.
• Section 15: Provides for appointment of a substitute arbitrator where mandate terminates.
• Section 31A & 31(8): Define “costs” and the factors for their determination.
• Section 37: Enumerates appealable orders (termination orders are not included).
• Section 21: Arbitral proceedings commence when a request for reference is received by the respondent.

4. Precedents Cited and Reconciled

The judgment surveys and systematises a large body of case law that had produced two conflicting lines of authority on termination.

4.1 Line 1: Terminations under Sections 25, 30, 38 are effectively Section 32(2) terminations

4.1.1 MSEB v. Datar Switchgear Ltd. (Bom HC, 2002)

The Bombay High Court (D.Y. Chandrachud J., as he then was) in Datar Switchgear held:

• Chapter V (including Section 25) deals with conduct of proceedings; termination power lies in Chapter VI, i.e. Section 32.
• Sections 25, 30 and 38 identify situations where proceedings may be terminated, but actual termination is by:
  • final award; or
  • order under Section 32(2).
• Section 32(2)(c) is a residuary clause allowing termination where continuation becomes unnecessary or impossible.

The Supreme Court in Harshbir Singh Pannu explicitly approves this structural reading and extends it across the Act.

4.1.2 Lalitkumar V. Sanghavi v. Dharamdas Sanghvi (2014) 7 SCC 255

Facts: the tribunal terminated proceedings because:

• for four years the claimant showed no interest; and
• failed to pay arbitrator’s fees.

The Court held:

• Termination could only fall under Section 32(2)(c) (continuation has become “impossible”).
• By virtue of Section 32(3), the mandate ended; Section 14(2) was the correct remedy to question legality of termination.
• Fresh Section 11 petitions are not the proper route where proceedings have been terminated.

This case is read in the present judgment as correctly identifying Section 32(2)(c) as the source of termination in default situations (including non-payment of fees), but its reasoning is now integrated into a broader Section 32-centric framework.

4.1.3 High Court decisions following this approach

• Neeta Lalitkumar Sanghavi v. Bakulaben Dharmadas Sanghavi (Bom HC, 2019): Reiterated that all arbitral proceedings terminate either by final award or by order under Section 32(2); orders terminating proceedings are not “awards”.
• PCL Suncon v. NHAI (Del HC, 2021):
  • Held that Section 32 is “exhaustive” on termination.
  • Even an order under Section 25(a) (failure to file claim) is, in substance, an order under Section 32(2), and thus not an “award”.
• Gangotri Enterprises v. NTPC Tamil Nadu Energy (Del HC, 2017): Treated closure of claimant’s right to file claim under Section 25(a) as termination under Section 32(2)(c) qua that claim, amenable to Section 14 challenge.

The Supreme Court endorses this “unified” approach to termination woven around Section 32(2).

4.2 Line 2: Terminations under Section 25(a) are distinct from Section 32(2)

4.2.1 SREI Infrastructure Finance Ltd. v. Tuff Drilling Pvt. Ltd. (2018) 11 SCC 470

SREI held that:

• Section 25(a) deals with failure to file claims at the threshold, before proceedings “really start”.
• The words “without showing sufficient cause” mean tribunal must consider sufficient cause before terminating.
• Section 25(a) termination is different from Section 32(2)(c) termination; the latter triggers Section 32(3) (end of mandate), while Section 25(a) does not mention mandate termination.
• Hence, tribunal can recall an order under Section 25(a) on sufficient cause being shown even after termination; no such recall is possible under Section 32(2)(c).

4.2.2 Sai Babu v. Clariya Steels Pvt. Ltd. (2019, short order)

Relying on SREI, the Court reiterated that:

• there is a distinction between Section 25(a) (revivable) and Section 32(2)(c) (not revivable) termination; and
• no recall application lies in cases covered by Section 32(3).

4.3 Later clarifications: abandonment and Section 32(2)(c)

4.3.1 Dani Wooltex Corp. v. Sheil Properties Pvt. Ltd. (2024) 7 SCC 1

Dani Wooltex clarified the ambit of “unnecessary or impossible” in Section 32(2)(c):

• Section 25(a) is the only other termination power besides Section 32.
• Claimant’s failure to attend hearings after filing claims does not by itself make continuation “unnecessary” – Section 25(c) expects the tribunal to continue and make an award.
• Abandonment of claims can justify termination under 32(2)(c), but only if abandonment is clearly proven (express or implied by clinching conduct).
• Tribunal must fix hearings itself; cannot insist that parties must first request hearings and treat silence as abandonment.

This case is heavily relied on in Harshbir Singh Pannu to constrict the meaning of “unnecessary or impossible” and to ensure tribunals do not casually resort to Section 32(2)(c).

4.4 Non-payment of fees and Section 38: Hyderabad Metropolitan Development Authority

In HMDA v. Ramky Elsamex (TS HC, 2023), the High Court held:

• Non-payment of deposits under Section 38(2) leading to an order of termination falls under Section 32(2)(c) (“impossible to continue”).
• Unlike Section 25(a), there is no revival contemplated under Sections 32 and 38.

The Supreme Court adopts this logic but plugs it into a more nuanced, layered scheme of recall + Section 14 remedy.

4.5 Procedural review and recall: Bharat Heavy Electricals Ltd. v. Jyothi Turbopower

In this Madras High Court decision (authored by Mahadevan J., who is also part of the present Bench), the Court held:

• There is a conceptual distinction between:
  • substantive review of merits (not available to tribunals), and
  • procedural review to correct procedural errors (inherent power).
• Tribunals can recall orders terminating proceedings under Section 25(a) on sufficient cause being shown.
• Writ jurisdiction under Article 226/227 should not be routinely invoked; the Act is a complete code.

The Supreme Court now generalises this principle to all terminations, integrating it with Section 14(2).

4.6 Article 227 and interlocutory orders: SBP & Co., Bhaven Construction, Future Coupons & VAG Educational Services

• SBP & Co. v. Patel Engg. (2005):
  • Held that orders of tribunals are, in general, not amenable to writ/supervisory jurisdiction save in narrow exceptions.
  • Scheme of the Act requires parties to await the final award unless Section 37 explicitly provides an appeal.
• Bhaven Construction v. Sardar Sarovar (2022):
  • Reaffirmed that the Act is a self-contained code.
  • Article 227 remains available only where:
    • the party would otherwise be remediless under the Act; or
    • there is clear “bad faith”.
• VAG Educational Services v. Aakash Educational (Del HC, 2022):
  • Held that after termination under Section 32(2), tribunal becomes functus officio and cannot recall its order.
  • Allowed Article 227 challenge where tribunal improperly revived proceedings after valid termination.
• Future Coupons v. Amazon NV (Del HC, 2022):
  • Held that rejection of an application under Section 32(2)(c) (i.e., non-termination) is not amenable to Article 227 since the party can always raise the same grounds in a Section 34 challenge to the final award.
  • Suggested that only where an order actually terminates proceedings, and no internal remedy exists, might Article 227 be theoretically invoked.

The Supreme Court in Harshbir Singh Pannu harmonises these strands, but prefers a Section 14(2)-centric remedy rather than routinely using Article 227.

5. The Court’s Legal Reasoning

5.1 Section 32 as the exclusive termination power

Relying heavily on the travaux préparatoires of the UNCITRAL Model Law, the Court shows:

• Article 32 (mirrored by Section 32) was consciously introduced to:
  • avoid automatic termination merely because some condition in another provision was met; and
  • require a formal order of the tribunal for termination, thereby creating certainty as to when proceedings end and what consequences follow.
• Articles 25, 30 and the (model-law-equivalent of) Section 38 are primarily about:
  • conduct of proceedings and handling defaults;
  • settlement; and
  • cost deposits, respectively;
  not about defining termination power.
  • Thus, all routes to termination must be channelled through:
    • final award; or
    • order under Section 32(2).

  The Court expressly endorses decisions like Datar Switchgear and PCL Suncon which treated Section 32 as exhaustive on termination.

  5.2 The role of “mandate” and why Section 25/38 terminations are not different

  The Court rejects the idea that omission of the “mandate” phrase in Sections 25 and 38 implies a different nature of termination:

  • “Mandate of the tribunal” simply denotes its authority to act in a particular reference.
  • Whenever proceedings are terminated (regardless of section), that authority necessarily ends, except for:
    • correction/interpretation/additional award under Section 33; and
    • resumption under Section 34(4), if so directed.
  • Sections 25, 30, 38 do not themselves deal with mandate; they are embedded in Chapters on conduct, settlement, and miscellaneous matters, not conclusion of proceedings.
  • Section 38(3) explicitly assumes that “upon termination of arbitral proceedings” (however caused), the tribunal must account for and refund unexpended deposits – reinforcing that termination is a single legal event, not many species.

  Therefore, the Court “cannot agree” with SREI and Sai Babu insofar as they treat Section 25(a) terminations as qualitatively distinct from those under Section 32(2). In effect, that part of their reasoning is disapproved.

  5.3 Procedural vs merits review and tribunal’s recall power

  Drawing on Grindlays Bank, Kapra Mazdoor Ekta Union and Bharat Heavy Electricals, the Court reiterates:

  • There is:
    • Merits review – re-examining substantive findings on law/fact – which tribunals cannot undertake; and
    • Procedural review – correcting errors that go to the conduct of proceedings – which is inherent in any adjudicatory body.
  • An order terminating proceedings because:
    • a party was absent due to misunderstanding; or
    • a genuine error occurred in computing deadlines or communicating directions,
    can be reconsidered in procedural review.
  • This applies equally to terminations arising under:
    • Section 25(a) (default to file claim),
    • Section 38 (non-payment of deposits),
    • or Section 32(2)(c) (other reasons).

  The Court thus extends the recall logic of SREI and Bharat Heavy Electricals beyond Section 25(a), but without accepting the premise that Section 25(a) termination does not attract Section 32(3).

  5.4 The remedial scheme: recall → Section 14(2) → Section 15

  The Court responds to the long-standing “remedial gap” complaint by creating a structured pathway:

  1. Stage 1: Application to the same arbitral tribunal
     • Party aggrieved by termination must file an application for recall before the tribunal itself.
     • Tribunal considers if “sufficient cause” exists (in line with Section 25’s chapeau and general fairness).
     • If satisfied, tribunal can recall termination and resume arbitration.
     • If the other side is unhappy with recall, its remedy is to:
       • participate in the resumed arbitration; and
       • raise its objections later in a Section 34 challenge to the final award.
  2. Stage 2: Application under Section 14(2)
     • If tribunal refuses to recall termination, the aggrieved party may invoke Section 14(2) before the competent Court.
     • Section 14(2) allows the Court to “decide on the termination of the mandate” – which the Supreme Court now interprets purposively to include:
       • an inquiry into whether termination of proceedings (and, by consequence, mandate) was lawful.
     • If the Court finds termination improper, it can:
       • set aside the termination and remand the matter to the same tribunal; or
       • where appropriate (e.g., long time lapse, loss of confidence), appoint a substitute arbitrator under Section 15.
     • If termination is upheld, the arbitration ends, subject to the Court’s further directions (if any) and any legislative reforms that may provide a second route.

  The Court emphasises that a second application under Section 11 to restart arbitration is impermissible in ordinary cases.

  5.5 Application to the facts: fees, Afcons and Section 38

  On the merits of this case, the Court holds:

  • Fee fixation was consistent with Afcons
    • Initial fee fixation and subsequent revision after counterclaim were both based on the Fourth Schedule.
    • Per Afcons, the Fourth Schedule is a model fee which is binding as default if there is no consensus to the contrary.
    • Once the parties had accepted Fourth Schedule as the fee model (and never objected at the outset), they could not later resist payment on the ground that counterclaims inflated the fee.
  • Section 38 compliance
    • Deposits were fixed in compliance with Section 38 and Fourth Schedule.
    • Appellants refused to deposit even their share for their own claims; respondent refused to fund appellants’ share.
    • Under the second proviso to Section 38(2), tribunal was justified in terminating proceedings qua claim and counterclaim, and such termination is, by construction, an order under Section 32(2)(c).
  • No fault with tribunal’s conduct
    • Tribunal held several hearings, including during the pandemic.
    • Claimants repeatedly remained absent and refused to pay despite opportunities.
    • Tribunal’s reliance on Section 38 to terminate was within the statutory framework.

  5.6 Yet, exceptional indulgence: one more arbitration

  Despite upholding the termination, the Court recognises:

  • dispute is pending since 2020;
  • when the tribunal terminated in 2022, the law on:
    • fee fixation after Afcons; and
    • the precise nature and remedy for terminations
    was fluid and contested; and
  • denying any forum at all may be unduly harsh.

  In these “peculiar facts”, the Court:

  • partly allows the appeal; and
  • remands to the Punjab & Haryana High Court to appoint a substitute arbitrator within two weeks to hear both claim and counterclaim de novo.

  However, this is explicitly framed as an exception, not a general rule.

  6. Comparative and International Law Analysis

  A particularly valuable part of the judgment is its comparative survey of:

  • the UNCITRAL Model Law drafting history; and
  • institutional rules of:
    • Singapore International Arbitration Centre (SIAC 2025 Rules),
    • London Court of International Arbitration (LCIA 2020 Rules), and
    • Hong Kong International Arbitration Centre (HKIAC 2024 Rules).

  6.1 UNCITRAL travaux: why Article 32 was created

  From the Working Group reports, the Court extracts that:

  • Initially, the Model Law only contemplated default and ex parte procedure (Article 25) and settlement (Article 30).
  • Repeated references to “termination” in those drafts raised fears of:
    • automatic termination without any formal decision by the tribunal; and
    • uncertainty about limitation periods, court proceedings, and tribunal mandate.
  • Article 32 was then crafted to:
    • centralise termination power in one provision;
    • require a procedural order to that effect; and
    • define consequences, particularly end of mandate.

  This historical background robustly supports the Court’s conclusion that Section 32 is the canonical termination provision in the Indian Act.

  6.2 SIAC Rules 2025

  Rule 43 of the SIAC Rules provides a consolidated regime for suspension, settlement, and termination of arbitration:

  • Rule 43(3) enumerates grounds for termination, including:
    • withdrawal of claim (with respondent’s legitimate interest safeguard);
    • parties’ agreement; and
    • non-payment of deposits (via cross-reference to Rule 56.5).
  • Every other rule that allows termination (e.g., default in filing claim) expressly cross-refers to Rule 43.

  The Court notes that this design:

  • avoids the multiplicity of scattered termination references; and
  • removes ambiguity about the legal effect of particular terminations.

  6.3 LCIA Rules 2020

  • Article 22(xi) empowers the tribunal to discontinue arbitration if it appears abandoned or all claims/counterclaims are withdrawn.
  • Article 24 provides for advance payments for costs and expressly allows:
    • deeming claims/counterclaims withdrawn for non-payment; and
    • stipulating conditions for their reinstatement.

  Two notable features:

  • LCIA openly recognises that default in fee payment may lead to withdrawal of claims/counterclaims, with a restoration mechanism defined upfront.
  • The same core provision (Article 22) governs discontinuance irrespective of the factual trigger.

  6.4 HKIAC Rules 2024

  The HKIAC Rules come closest to replicating the Model Law structure:

  • Article 37 mirrors Articles 30 & 32:
    • termination on settlement or where continuation is unnecessary/impossible.
  • Article 41 (deposits) allows the tribunal to suspend/terminate if deposits are not paid.
  • Article 26 (default) similarly allows termination where the claimant fails, without sufficient cause, to submit its written statement.

  However, HKIAC avoids the Indian/UNCITRAL drafting quirk:

  • It does not reserve the “mandate terminates” language to any one termination article.
  • It does not attempt to distinguish different kinds of terminations by subtle textual variation.

  The Court uses this comparative material to critique the Indian text and the proposed Bill 2024, urging consolidation and clarification.

  7. Impact and Implications

  7.1 For arbitrators and arbitral practice

  • Tribunals must:
    • recognise that any termination order they pass is, in substance, a Section 32(2) order; and
    • explicitly consider whether continuation has become “unnecessary or impossible” (for 32(2)(c) cases) in light of Dani Wooltex.
  • Before terminating under Section 25(a) or 38(2), tribunals should:
    • give clear notice;
    • allow parties to show “sufficient cause” for default; and
    • record reasons why enough cause was not made out.
  • Tribunals should be prepared to entertain a recall application as part of their procedural powers – but timely and bona fide applications are critical.

  7.2 For parties (claimants and respondents)

  • Parties must appreciate that:
    • default in filing claims;
    • non-appearance; or
    • non-payment of deposits
    can lead to final termination of their arbitration reference, not a mere adjournment.
  • A party who allows proceedings to terminate by sustained default and then seeks a fresh Section 11 will not be indulged, save in extremely unusual circumstances, as here.
  • Where termination does occur:
    • move the tribunal promptly with a reasoned recall application explaining sufficient cause;
    • if recall is refused, approach court under Section 14(2) – not Section 11 – to test the legality of termination.
  • On arbitrators’ fees:
    • the time to negotiate or object to fee is at or before the preliminary hearing, as underscored in Afcons;
    • once the Fourth Schedule model has been adopted and applied consistently, parties cannot refuse payment mid-stream.

  7.3 For courts and the Arbitration & Conciliation Bill, 2024

  The Court directly addresses the legislature, suggesting that the Bill should:

  • Consolidate termination provisions or at least eliminate drafting inconsistencies between Sections 25, 30, 32 and 38.
  • Expressly recognise the tribunal’s limited procedural recall power.
  • Provide a clear remedy against termination orders – possibly:
    • a specific Section 37 appeal; or
    • a clarified Section 14(2) route.
  • Define the effect of termination on the ability to re-initiate arbitration on the same cause – including whether constructive res judicata principles (akin to CPC’s bar on fresh suits after dismissal for default) should apply.
  • Consider whether parties who default and suffer termination should ever be allowed a second arbitration on identical claims, and if so, under what strict conditions.

  In short, the judgment functions not only as adjudication but also as a detailed legislative roadmap.

  8. Simplifying Complex Concepts

  8.1 “Termination of proceedings” vs “Termination of mandate”

  • Termination of proceedings: the arbitration itself ends – no further hearings, pleadings, or merits adjudication in that reference.
  • Termination of mandate: the authority of that tribunal to act in that arbitration ends.
  • These are closely linked:
    • termination of proceedings almost always entails termination of mandate; but
    • mandate may also terminate for other reasons (e.g., resignation, bias) without proceedings being terminated – in such cases a substitute arbitrator can be appointed and proceedings continue.

  8.2 Section 38 deposits and their consequences

  Section 38 is about advance deposits of arbitration costs:

  • Tribunal estimates upcoming costs and asks parties to deposit in equal shares.
  • If one party does not pay, the other party may pay the defaulter’s share as well, to keep the arbitration alive.
  • If the other party declines to do so, the tribunal may suspend or terminate proceedings in respect of the concerned claim/counterclaim.
  • Deposits are not “fees” alone; they cover all costs, but fees are a central component.

  The Supreme Court’s reading means: a Section 38 termination is effectively a Section 32(2)(c) termination – continuation has become “impossible” because the tribunal cannot function without funding.

  8.3 Procedural review vs merits review

  • Merits review: reconsidering findings like “X is liable to pay ₹Y” – tribunals cannot do this after issuing an award.
  • Procedural review: correcting errors such as:
    • wrongly assuming a party was served;
    • terminating for default despite a justifiable reason (e.g., hospitalisation);
    • computational or clerical mistakes.
  • Tribunals are expected to exercise procedural review sparingly but effectively, to prevent injustice caused by procedural missteps.

  9. Concluding Remarks

  Harshbir Singh Pannu v. Jaswinder Singh is a landmark in Indian arbitration law because it:

  • settles the structural question that Section 32 is the exclusive source of the tribunal’s termination power;
  • harmonises conflicting case law on Section 25, 30, 32 and 38, and curtails the earlier notion that Section 25(a) terminations were a different species;
  • recognises and legitimises the tribunal’s inherent procedural recall power;
  • creates a coherent remedial pathway via recall → Section 14(2) → Section 15, while generally excluding fresh Section 11 petitions and Section 34 challenges against termination orders; and
  • issues thoughtful legislative guidance to refine the Arbitration and Conciliation Bill, 2024, aligning Indian practice with robust international models like SIAC and LCIA, without sacrificing party responsibility or finality.

  At a deeper level, the judgment reinforces the twin pillars of arbitration:

  • Party autonomy, particularly in fee arrangements and choice of tribunal; and
  • Procedural self-responsibility, making clear that parties cannot treat arbitration as an endlessly resettable process.

  Even as it offers exceptional relief to the appellants in this specific case, the Court sends a clear systemic message: termination orders are serious, final events, and parties must engage with arbitral proceedings – including fee directions – with diligence, clarity, and foresight.