In the case of M/s. Hyderabad Metropolitan Development Authority v. M/s. Ramky Elsamex Hyderabad Ring Road Limited, the Telangana High Court clarified that an Arbitral Tribunal does not possess the authority to revive terminated arbitration proceedings. The Court emphasized that parties cannot confer jurisdiction contrary to the statutory mandate and held that the participation of parties in subsequent proceedings holds no legal consequence when the proceedings have already been terminated. The Division Bench stressed that statutory provisions take precedence over the understanding of the parties in such matters.
Background of the Case
The dispute arose from an agreement between the Petitioners and Respondents regarding work related to designing and construction. The Respondents claimed that the Petitioner owed them 12 crores and initiated the arbitration process to resolve the dispute. The Arbitral Tribunal, while ordering the payment of fees to the Arbitrators, adjourned the proceedings for two months, citing ongoing negotiations for settlement. However, the adjournment order specified that failure to pay the fee would result in the termination of the proceedings. Despite this, the Tribunal continued with the proceedings, leading to the revision petition challenging the Tribunal’s order.
The Court’s Decision
Upon considering the submissions, the Bench observed that the conditions mentioned under Order 9 of the Tribunal made it impossible to continue with the proceedings. This satisfied the requirement of the “unnecessary and impossible” clause stated in Section 32(2)(c) of the Arbitration and Conciliation Act.
The Bench concluded that once the proceedings were terminated as per the aforementioned clauses, it was not permissible for the Arbitral Tribunal to initiate or continue the arbitration proceedings. The Court emphasized that the Tribunal had grossly erred in ordering the continuation of the proceedings when the proceedings had already been terminated by the Tribunal itself through Order No. 9 dated September 10, 2022. As a result, the Bench held that the Arbitral Tribunal became functus officio upon the termination of the proceedings.
This ruling reinforces the importance of adhering to the termination conditions specified in the arbitral orders and upholds the integrity of the statutory framework governing arbitration proceedings.