Case Title: Vag Educational Services v. Aakash Educational Services Ltd.
The Delhi High Court has ruled that once the arbitral tribunal terminates the arbitration proceedings due to the claimant withdrawing its claims, it cannot reverse the termination order.
The bench of Justice C. Hari Shankar ruled that once the arbitral proceedings are terminated, the arbitral tribunal becomes Functus Officio and cannot hear an application to rescind its earlier order terminating the arbitral proceedings. The parties were involved in an arbitration proceeding. In the arbitral proceedings, the respondent was the original claimant. The claimant/respondent withdrew its claim on September 21, 2019, and the tribunal terminated the arbitral proceedings.
Following that, the respondent/original claimant applied with the tribunal seeking recall of the order dated 21.09.2019 because the 'proxy counsel' who was present on the respondent's behalf had inadvertently signed the order sheet, despite her senior's instructions to withdraw another petition pending before the same arbitrator.
The tribunal granted the petition and reinstated the arbitral proceedings because a party's right cannot be denied due to the fault of the council. The petitioner filed a writ petition against the restored order because he was dissatisfied with it.
The petitioner challenged the order on the following grounds:
The tribunal could not entertain the application for restoration of arbitration proceedings once it had terminated the arbitral proceedings.
The tribunal becomes functus officio after the termination of arbitral proceedings, therefore, it could not have entertained any application and restored the arbitration proceedings.
The Court first considered the writ petition's maintainability. It held that, ordinarily, the court would not entertain a writ petition against a tribunal order because the same grounds could be used to challenge the arbitral award under Section 34 of the A&C Act; however, the present case is different because the petitioner does not have the option of using either Section 33 or 34 of the Act.
Following that, the Court considered whether the tribunal could hear an application to restore the arbitral proceedings after the order of termination was issued. The Court held that once the arbitrator issues an order of termination for withdrawal of the claim, it becomes functus officio, and thus it could not have granted the application for recall of its order dated September 25, 2019.
The Court also held that the tribunal was Coram non-judice at the time of the impugned order's issuance because its mandate had been terminated by the order of termination; thus, the impugned order was issued without jurisdiction and is liable to be set aside. Accordingly, the Court allowed the writ petition.