The Delhi High Court ruled that a judge‑made cancellation of an arbitration case because a party did not file a claim or pay fees is not an “award.” The court said such a cancellation only stops the arbitration; it does not decide the rights or obligations of the parties.
The decision was handed down by Justice Jasmeet Singh on a single‑judge panel that looked at petitions from Mecwel Constructions Pvt. Ltd. against GE Power Systems India Pvt. Ltd. Mecwel asked the court to let its arbitration continue after the case had been shut for default.
The dispute began when GE Power ended several subcontracting contracts with Mecwel in 2022 and 2023. The contracts covered the erection, testing and commissioning of turbine and generator auxiliaries on multiple thermal‑power projects. After the contracts were terminated, the parties were ordered by the Delhi High Court to go to arbitration.
The appointed arbitrator, following Section 25(a) of the Arbitration and Conciliation Act, closed the proceedings because Mecwel did not submit a statement of claim and did not pay its share of arbitration fees. Although the arbitrator had offered a “window of opportunity” to comply, the case was later declared terminated.
GE Power argued that the termination order was an arbitral award that could only be challenged under Section 34 of the Act. Justice Singh disagreed. He said:
> “An order closing the proceedings for default does not and cannot amount to an award as it does not deal with the rights of the parties before the Arbitrator. Such an order merely terminates the arbitral proceedings on account of the claimant’s default in filing the statement of claim and does not involve any adjudication or determination of the rights or obligations of the parties.”
The court added that for an order to be an award, it must resolve a substantive issue in the dispute—either fully or partially. A procedural stop‑order under Section 25(a) does not meet these criteria.
On the day the petitions were accepted on a 24‑hour rule, the Delhi High Court directed that the arbitration between Mecwel and GE Power continue before the arbitrator appointed by the court on 8 January 2024. This decision clarifies that default‑based cancellations are not subject to Section 34 challenges and can be reversed to keep arbitration alive.
Source: ianslive
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