PCL SUNCON (JV)  Vs NATIONAL HIGHWAY AUTHORITY OF INDIA

O.M.P. (T) (COMM.) 80/2020 Page 1 of 27
IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 12.01.2021
+ O.M.P. (T) (COMM.) 80/2020

PCL SUNCON …..Petitioner

Versus

NATIONAL HIGHWAY AUTHORITY
OF INDIA …..Respondent
Advocates who appeared in this case:
For the Petitioner : Mr Dr Amit George, Mr Swaroop George,
Mr Amol Acharya and Mr Rayadurgam
Bharat, Advocates.
For the Respondent : Ms Madhu Sweta, Advocate.

CORAM
HON’BLE MR JUSTICE VIBHU BAKHRU
JUDGMENT
VIBHU BAKHRU, J
1. The petitioner – a Joint Venture constituted by Progressive
Construction Limited and SUNCON Construction Berhard, Malaysia
– has filed the present petition, inter alia , impugning an order dated
20.04.2020 passed by the two arbitrators terminating the arbit ral
proceedings under Section 32(2)(c) of the Arbitration and Conciliation
Act, 1996 (hereinafter ‗the A&C Act‘).
2. The present application is filed under Section 14(1)(a) read with
Section 15 of the A&C Act. The petitioner further prays for
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substitution of the Arbitrator by an independent arbitrator appointed
by this Court.
3. The arbitral proceedings were terminated because the arbitrator
nominated by the petitioner had resigned and the petitioner had not
taken steps to nominate another arbitrator in his pl ace. Consequently,
the arbitral proceedings could not proceed and the remaining two
arbitrators constituting the Arbitral Tribunal concluded that it was
impossible to continue the proceedings and, accordingly, terminated
the same. The petitioner claims tha t there was a communication gap
and the petitioner was not aware that the arbitrator appointed by it had
resigned. The Arbitral Tribunal had not issued any notice to the
petitioner in this regard prior to terminating the arbitral proceedings.
4. The respond ent (hereinafter ‗NHAI‘) contests the
maintainability of the present petition as well as contends that the
impugned order cannot be faulted.
5. The aforesaid controversy arises in the following context.
6. NHAI had invited bids for “Four laning and Strengthen ing of
the Existing two lanes between Km. 317 and Km . 65 on NH -2, in State
of U.P. and Bihar for construction Package IV -A: Contract Agreement
No. GTRIP/5.” Pursuant to the said notice inviting tenders, the
petitioner submitted its bid on 15.12.2001 and it was opened on the
same day. The petitioner‘s bid was accepted and by a letter dated
23.02.2002, the petitioner was awarded the contract for an amount of
₹3,96,47,78,901/ -. A formal agreement between the parties was
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executed on 28.03.2002. The works were divided into three sections.
The first section was to be completed within a period of eighteen
months from the date of commencement; the second section was to be
completed within a period of twenty four months from the date of
commencement; and the third section was to be completed within a
period of thirty six months from the date of commencement, that is, by
30.03.2005.
7. The petitioner claims that certain d isputes arose between the
parties in respect of the said contract. NHAI claims that the petitioner
did not complete the works within the stipulated time and therefore,
was liable to pay liquidated damages. The petitioner invoked the
arbitration clause. It claimed ₹57,84,00,000/ – towards
overstay/overhead charges; ₹2,50,00,000 as refund of the liquidated
damages deducted by NHAI; and ₹40,04,000/ – for rehabilitation of
Bridge 58/1. The petitioner also claimed waiver of liquidated
damages. In addition, the pe titioner also claimed interest (pre -suit
pendente lite as well as future interest) as well as costs quantified at
₹10 lacs.
8. The petitioner also filed a petition under Section 9 of the A&C
Act (O.M.P. 1019/2013) seeking certain measures of interim
protecti on. The said petition was disposed of by an order dated
09.01.2015 and the recovery of liquidated damages was stayed during
the arbitral proceedings.
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9. The petitioner nominated Justice E. Padmanabhan (Retd.) as its
nominee arbitrator. NHAI appointed Mr. S. R. Pandey as its nominee
and both the nominated arbitrators nominated Mr. B. Majumdar as the
Presiding Arbitrator. With the appointment of the Presiding Arbitrator
on 03.08.2015, the Arbitral Tribunal was constituted. The petitioner
filed its statement o f claims and NHAI also filed counter claims before
the Arbitral Tribunal inter alia claiming ₹37,15,00,000/ – as loss due to
short recovery of liquidated damages; ₹60,55,04,379/ – as loss of toll
revenue from 20.07.2006 to 17.05.2008; and ₹24,59,03,042/ – as loss
of toll revenue from 18.05.2008 to 20.12.2010. In addition, NHAI also
claimed interests (past pendente lite and future interest) in addition to
costs quantified at ₹15 lacs.
10. The Arbitral Tribunal commenced hearings. In all, the Arbitral
Tribunal held eight sittings. The last hearing was held on 11.10.2017.
The record of the proceedings indicates that the arguments on behalf
of the claimant (the petitioner herein) were heard. However, Ms.
Madhu Sweta, the learned counsel for NHAI submits that the said
arguments were limited to the application regarding production of
additional documents and amendment of claims towards
overstay/overhead charges. The Tribunal had fixed further hearings on
16.01.2018, 17.01.2018 and 18.01.2018. However, the said hearings
were cancelled on account of non -availability of Justice E.
Padmanabhan (Retd.). The Presiding Arbitrator had also sent letters to
Justice E. Padmanabhan (Retd.) requesting him to intimate convenient
dates to fix further hearings. However, it appears that the Tribunal
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was unable to fix further hearings. The Presiding Arbitrator also sent a
communication to the petitioner advising it to find out from Justice E.
Padmanabhan (Retd.) dates convenient to him for scheduling the
hearing. After receipt of the sai d communication, the petitioner
requested Justice E. Padmanabhan (Retd.) to intimate the dates
convenient to him. Apparently, he did not do so.
11. On 19.02.2019, Justice E. Padmanabhan (Retd.) sent a letter to
the petitioner that the last sitting was held o n 11.10.2017 and further
hearings could not take place due to various reasons. He stated that
due to his busy schedule, he was not able to agree on dates, which are
convenient to other learned co -arbitrators and therefore, he was
resigning as an arbitrato r. He requested the petitioner to nominate
another arbitrator in his place. Copies of the resignation letter were
forwarded to the other co -arbitrators as well.
12. The petitioner did not receive any communication from the
remaining two arbitrators informin g it their intention to terminate the
arbitral proceedings. The petitioner claims that it attempted to appoint
a substitute arbitrator but the process was delayed as the persons, who
were approached by the petitioner, did not consent to be appointed as
an arbitrator. In addition, the authorized officer of the petitioner, who
was pursuing with the matter on its behalf, abandoned his assignment
due to serious illness of his wife. It is stated that the officer who was
appointed in his place took some time to r egularize his activities.
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13. On 20.04.2020, the Arbitral Tribunal passed the impugned order
terminating the arbitral proceedings under Section 32(2)(c) of the
A&C Act . The petitioner claims that the said order was not
communicated to it. On 22.05.2020, the petitioner sent a letter to
NHAI and the arbitrators nominating Sh. Subhash I. Patel as its
nominee arbitrator and requested the Presiding Arbitrator to schedule
a hearing. In response to the same, the petitioner was informed about
the impugned order date d 20.04.2020, under a cover of the letter dated
27.05.2020. The petitioner claims that it was for the first time that it
was informed that the arbitral proceedings had been terminated on
20.04.2020.
14. The petitioner sent a letter dated 29.05.2020 requesting the
Presiding Arbitrator to provide the petitioner with a copy of the
impugned order dated 20.04.2020. The petitioner claims that it
received a copy by mail dated 01.06.2020.
15. A plain reading of the impugned order indicates that the
arbitrators had noted that hearings could not be fixed as no response
had been received from Justice E. Padmanabhan (Retd.) to the
communication sent by the Presiding Arbitrator. It was further noted
that there was also lack of initiative on the part of the petitioner as no
proposal had been made for fixing any new dates to proceed with the
adjudication process. The petitioner was accordingly advised to check
the convenience of Justice E. Padmanabhan (Retd.) for further
hearings but while the Arbitral Tribunal was awaiting the petitioner‘s
response, Justice E. Padmanabhan (Retd.) had by a letter dated
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19.02.2019 , resigned as an arbitrator and requested the petitioner to
nominate another arbitrator. The arbitrators noted that more than a
year had elapsed and the petitioner had no t appointed a n arbitrator in
his place. The arbitrators noted that because of the deadlock, the
continuation of proceedings had become impossible and accordingly,
terminated the arbitral proceedings under Section 32(2)(c) of the A&C
Act.
Submissions of counsel
16. Ms. Madhu Sweta, learned counsel appearing for NHAI
contended that the present petition is not maintainable as the entire
arbitral proceedings has been terminated in terms of Section 32(2)(c)
of the A& C Act and this was not a case where arbitrators had
withdrawn from the proceedings or mandate of any arbitrator has been
terminated as contemplated under Section 14(1)(a) of the A&C Act .
She submitted that the petitioner could approach the court under
Section 15 of the A&C Act only in a case where the arbitrator had
withdrawn from the arbitral proceedings or had become de jure or de
facto unable to perform his functions. In such circumstances, a
substitute arbitrator could be appointed. However, in a case w here the
entire arbitral proceedings have been terminated, there is no case for
appointing any arbitrator under Section 15(2) of the A&C Act . She
referred to the decision of the Division Bench of the Calcutta High
Court in The India Trading Company v. Hin dustan Petroleum
Corporation Limited: 2016 SCC OnLine Cal 479 and on the strength
of the said decision contended that the decision of the Arbitral
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Tribunal to put an end to the proceedings is a final award, which can
be challenged only by way of an applica tion for setting aside the same
under Section 34(2) of the A&C Act. She contended that in view of
the said decision, the recourse to an application under Section 14 of
the A&C Act was not available to the petitioner.
17. In addition, she also referred to th e decision of a Coordinate
Bench of this Court in Angelique International Limited v. SSJV
Projects Private Limited and Anr.: 2018 SCC OnLine Del 8287 ,
wherein the court had accepted the contention that the termination of
proceedings in respect of the claim filed by the petitioner would
amount to an arbitral award, which can be challenged only by a
petition under Section 34 of the A&C Act. The court had further
reasoned that termination of arbitral proceedings on the ground that
the petitioner was not proce eding with the same would be akin to
dismissal of a suit on the ground of non -prosecution and therefore,
could be challenged only in an application under Section 34 of the
A&C Act and on the limited grounds as available to an aggrieved
party under the said provision.
18. Next, Ms. Sweta submitted that the petitioner was responsible
for the delay in appointment of an arbitrator in place of Justice
Padmanabhan (Retd.) and therefore, the decision of the Arbitral
Tribunal to terminate the arbitral proceedings cann ot be faulted. She
further stated that in the event, the impugned order is set aside and the
arbitral proceedings are commenced, the same ought to be with costs.
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19. Dr. George, learned counsel appearing for the petitioner
countered the aforesaid submission . He submitted that the question
whether a petition under Section 14 of the Act is maintainable against
an order passed by the Arbitral Tribunal in exercise of powers under
Section 32(2)(c) of the A&C Act was settled by the decision of the
Supreme Court i n Lalit kumar V. Sangh avi (Dead) through LRs and
Anr. v. Dharamdas V. Sangh avi and Ors.: (2014) 7 SCC 255 .
20. Dr. George further contended that it was well settled that an
order terminating the proceedings under Section 32(2) of the A&C Act
could not be considered as an award. He submitted that termination of
the arbitral proceedings on account of non -prosecution of claims also
cannot be construed as an award, which can be challenged under
Section 34 of the A&C Act. He relied on the decisions of this Court in
Economic Transport Organisation v. Splendor Buildwell Pvt. Ltd.:
MANU/DE/1755/2018 ; Bridge & Roof Co. (India) Ltd. v. Guru
Gobind Singh Indraprastha University and Anr.: 2017 SCC OnLine
Del 10412 ; Puneet Kumar Jain v. MSTC Limited and Ors .:
MANU/DE/7910/2017 ; Shushila Kumari and Anr. v. Bhayana
Builders Private Limited: 2019 SCC OnLine Del 7243 ; Gangotri
Enterprises Limited v. NTPC Tamil Nadu Energy Company Limited:
(2017) 237 DLT 690 ; Pandit Munshi and Associates Ltd. v. Union of
India a nd Ors.: 2015 (2) ARB LR 40 (Delhi) ; and Ramesh D. Shah v.
Tushar D. Thakkar: 2017 SCC OnLine Bom 9251 in support of his
contentions.
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21. Next, he submitted that the decision of this Court in Angelique
International Limited (supra ) strikes a discordant note in asmuch as it
holds that only a petition under Section 34 of the A&C Act would be
maintainable against an order terminating the arbitral proceedings
under Section 32(2)(c) of the A&C Act. He submitted that the said
decision is per incuriam as it ignores the binding decisions of this
Court in Bridge & Roof Co. (supra ); Puneet Kumar Jain (supra );
Shushila Kumari (supra ); Gangotri Enterprises (supra ) and Pandit
Munshi (supra ).
22. Lastly, he submitted that the impugned order was liable to be
set aside as no preem ptory notice was issued by the Arbitrators before
proceeding to terminate the arbitral proceedings. However, he also
conceded that the petitioner had been remiss in diligently prosecuting
the arbitral proceedings and there was a considerable delay in
nomi nating an arbitrator in place of Justice Padmanabhan (Retd.). He
submitted that one of the reasons for the delay was that the schedule of
fees fixed by NHAI was very low and therefore, it was very difficult
to find qualified arbitrators who would be willin g to accept the
appointment on such fees.
Reasons and Conclusion
23. The first and foremost question to be addressed is whether the
impugned order constitutes an award. As noted above, the Arbitrators
had, by the impugned order, terminated the arbitral proceedings under
Section 32(2)(c) of the A&C Act on account of failure on the part of
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the petitioner to nominate an arbitrator to fill the vacancy resulting
from the resignation of Justice E. Padmanabhan (Retd.). Recourse to a
court against an award is available only under Section 34 of the A&C
Act. This is clear from the pl ain language of sub -section (1) of Section
34 of the A&C Act which reads as :― (1) Recourse to a Court against
an arbitral award may be made only by an application for setting
aside such award in accordance with sub -section (2) and sub -section
(3).‖ The use of the word ‗only‘ in Section 34(1) of the A&C Act is
significant and it clearly implies that except under Section 34 of the
A&C Act, no other recourse is available against an arbitral award, to
which Part -I of the A&C Act applies. The contention that the present
petition is not maintainable and the only recourse available to the
petitioner was to file an application under Section 34 of the A& C Act
is founded on the assumption that the impugned order is an award.
24. The term ‗award‘ is defined under Clause ( c) of Sub -section (1)
of Section 2 of the A&C Act, in wide terms: The said Clause defines
‗arbitral award‘ to include an interim award. Section 31 of the A&C
Act provides for the form and the content of an arbitral award. The
question as to the distincti on between an award and an order of an
Arbitral Tribunal has been a subject matter of a number of rulings. It
is now well settled that an award constitutes a final determination of a
particular issue or a claim in arbitration.
25. Section 32 of the A&C Act a lso draws a clear distinction
between a final arbitral award and orders passed by an Arbitral
Tribunal. In terms of Sub -section (1) of Section 32 of the A&C Act,
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arbitral proceedings stand terminated by a final award or by such
orders as are specified unde r Sub -section (2) of the said A&C Act.
26. Section 32 of the A&C Act is relevant and is reproduced below:
―32. Termination of proceedings. —
(1) The arbitral proceedings shall be terminated by
the final arbitral award or by an order of the
arbitral tribunal un der sub -section (2).
2) The arbitral tribunal shall issue an order for the
termination of the arbitral proceedings where —
(a) the claimant withdraws his claim, unless the
respondent objects to the order and the arbitral
tribunal recognises a legitimate int erest on his part
in obtaining a final settlement of the dispute,
(b) the parties agree on the termination of the
proceedings, or
(c) the arbitral tribunal finds that the continuation
of the proceedings has for any other reason
become unnecessary or imposs ible.
(3) Subject to section 33 and sub -section (4) of
section 34, the mandate of the arbitral tribunal
shall terminate with the termination of the arbitral
proceedings.‖

27. In Rhiti Sports Management Pvt. Ltd. v. Power Play Sports &
Events Ltd: 2018 SCC OnLine Del 8678 , this Court had noted various
decisions on the question as to what constitutes an award and had held
as under: –
―15. In terms of Section 32(1) of the Act, the
arbitral proceedings would stand terminated by the
final arbitral award or by an order of the Arbitral
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Tribunal as referred to in Section 32(2) of the Act.
Since the arbitral proceedings terminate on passing of
the final award, it is obvious that the final award would
embody a decision on all or the remaining disputes
(disputes that have not been decided earlier) between
the concerned parties. Section 32(2) of the Act
provides an exception to the rule that arbitral
proceedings would be terminated other than by passing
a final award. A plain reading of Section 32(2) of the
Act indicates that it, essentially, contemplates
situations where it is not necessary to enter an award
for settlement of the disputes or where the same
becomes impossible. In terms of Clause (a) of Section
32(2) of the Act, an arbitral proceeding would come to
an end with a claimant withdrawing his claim unless it
is necessary to enter a final award at the instance of the
respondent. Clause (b) of S ection 32(2) of the Act
contemplates circumstances where parties by consent
seek termination of the arbitral proceedings. This may
arise where the parties have resolved their difference or
no longer seek to obtain an arbitral award. Clause (c)
of Section 3 2(2) of the Act contemplates the situation
where continuing the arbitral proceedings has become
unnecessary or has been rendered impossible.
16. A plain reading of Section 32 of the Act
indicates the fact that the final award would embody
the terms of the final settlement of disputes (either by
adjudication process or otherwise) and would be a final
culmination of the disputes referred to arbitration.
Section 31(6) of the Act expressly provides that an
Arbitral Tribunal may make an interim arbitral award
in any matter in respect of which it may make a final
award. Thus, plainly, before an order or a decision can
be termed as ‗interim award‘, it is necessary that it
qualifies the condition as specified under Section 31(6)
of the Act: that is, it is in respect of which the arbitral
tribunal may make an arbitral award.
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17. As indicated above, a final award would
necessarily entail of (i) all disputes in case no other
award has been rendered earlier in respect of any of the
disputes referred to the arbitral tribu nal, or (ii) all the
remaining disputes in case a partial or interim award(s)
have been entered prior to entering the final award. In
either event, the final award would necessarily (either
through adjudication or otherwise) entail the settlement
of the di spute at which the parties are at issue. It, thus,
necessarily follows that for an order to qualify as an
arbitral award either as final or interim, it must settle a
matter at which the parties are at issue. Further, it
would require to be in the form as s pecified under
Section 31 of the Act.
18. To put it in the negative, any procedural order
or an order that does not finally settle a matter at which
the parties are at issue, would not qualify to be termed
as ―arbitral award‖.
19. In an arbitral proceeding , there may be several
procedural orders that may be passed by an arbitral
tribunal. Such orders may include a decision on
whether to hold oral hearings for the presentation of
evidence or for oral argument, or whether the arbitral
proceedings are to be co nducted on the basis of
documents and other materials as required to be
decided – unless otherwise agreed between the parties –
in terms of Section 24(1) of the Act. There are also
other matters that the arbitral tribunal may require to
determine such as t ime period for filing statement of
claims, statement of defence, counter claims,
appointment of an expert witness etc. The arbitral
tribunal may also be required to address any of the
procedural objections that may be raised by any party
from time to time. However, none of those orders
would qualify to be termed as an arbitral award since
the same do not decide any matter at which the parties
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are at issue in respect of the disputes referred to the
arbitral tribunal.‖
28. In Indian Farmers Fertilizer Cooperative Limited v. Bhadra
Products: (2018) 2 SCC 534 , the Supreme Court considered the
questions whether an award on the issue of limitation could be
considered to be an interim award and whether the decision on the
point of limitation was a matter of jurisdictio n and therefore, be
covered under Section 16 of the A&C Act. The court referred to the
decision in the case of Exmar BV v. National Iranian Tanker Co.
(The “Trade Fortitude”): [1992] 1 Lloyd’s Rep. 169 and its earlier
decision in Satwant Singh Sodhi v. St ate of Punjab and Ors.: (1999)
3 SCC 487 and held that since the award had finally determined one of
the issues between the parties, the same could be considered as an
interim award inasmuch as it finally determined a claim that could not
be re -adjudicated all over again. The court also noted the provisions
of Section 31(6) of the A&C Act, which made it clear that an Arbitral
Tribunal may make an interim award on any matter with respect to
which it may make a final arbitral award. The Supreme Court
emphasi zed that the power of an arbitral Tribunal to make an interim
award would extend to ― any matter with respect to which it may make
a final arbitral award”. The court explained that the expression
‗matter‘ is of a wide nature and subsumes issues at which the parties
are in dispute. The court reasoned that any point of dispute between
the parties, which has to be answered by an Arbitral Tribunal can be
made subject matter of an interim arbitral award. The court also
referred to its earlier decision in McDermo tt International Inc. v.
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Burn Standard Co. Ltd. and Ors.: (2006) 11 SCC 181 and observed
that ― the aforesaid judgment makes it clear that an interim award or
partial award is a final award on matters covered therein made at an
intermediate stage of the arb itral proceedings. ‖
29. Thus, in order for a decision of the Arbitral Tribunal to qualify
as an award, the same must finally decide a point at which the parties
are at issue. In cases where the same is dispositive of the entire dispute
referred to the Arbitra l Tribunal, the said award would be a final
award, which would result in termination of the arbitral proceedings.
30. Viewed in the aforesaid context, it is clear that an order, which
terminates the arbitral proceedings as the Arbitral Tribunal finds it
impo ssible or unnecessary to continue the arbitral proceedings, would
not be an award. This is so because it does not answer any issue in
dispute in arbitration between the parties; but is an expression of the
decision of the Arbitral Tribunal not to proceed w ith the proceedings.
31. The learned counsel for the NHAI had relied upon Angelique
International Limited (supra ). In that case, a Coordinate Bench of this
Court had, following the decision in The India Trading Company
(supra ), reasoned that an order termina ting the arbitral proceedings on
account of default on the part of the claimant to proceed with the
arbitration would be akin to dismissal of a suit for non -appearance and
therefore, could be impugned as an award under Section 34 of the
A&C Act.
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32. At the cor e of this controversy lies the view that the decision of
an Arbitral Tribunal to terminate the arbitral proceedings would by
virtue of its finality constitute an arbitral award that can be challenged
under Section 34 of the A&C Act.
33. In The India Trading C ompany (supra ), the Division Bench of
the Calcutta High Court had held that an order terminating the arbitral
proceedings under Section 25(a) of the A&C Act is an award since it
is a final decision, which puts an end to the arbitral proceedings. The
court proceeded on the basis that the same would be sufficient to
constitute the said order as an award, which can be challenged under
Section 34 of the A&C Act. The relevant extract of the said decision
is as under:
―12. Termination of proceedings under Sectio n
25(a) is a final decision which puts an end to the
arbitral proceedings. The decision amounts to
rejection of the claim, even though there is no
adjudication on merits. It is, akin to dismissal of a
suit on a technical ground, may be, non
prosecution.
13. There is a difference between a decision which
puts an end to the arbitral proceedings and a
decision whereby the arbitrator withdraws from
the proceedings. Where the arbitrator withdraws
from the proceedings, a substitute arbitrator may
be appointed in accordance with the procedure,
applicable to the appointment of the arbitrator who
is replaced, but where the arbitrator puts an end to
the arbitral proceedings, the claimant cannot
pursue his claim.
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14. The decision of the arbitral tribunal to put an
end to the proceedings is a final award which can
only challenged by way of an application for
setting aside under Section 34 Sub -section (2) of
the 1996 Act. Once the arbitral proceedings are
terminated, the claimant cannot re -agitate the
same claim by initiation of fresh proceedings since
the claim would be hit by principles of
constructive res judicata.‖
34. In Joginder Singh Dhaiya v. M.A. Tarde Thr. LRs: O.M.P.
370 of 2014, decided on 27.12.2014 , a Coordi nate Bench of this Court
took a similar view. In that case, the Arbitral Tribunal had rejected the
application of the petitioner for substitution of the legal
representatives as being barred by limitation. The arbitration
proceedings had consequently abate d. The said decision of the Arbitral
Tribunal was impugned as an award by filing an application under
Section 34 of the A&C Act. The court reasoned that since the
arbitrator had held that the arbitration proceedings stand abated, the
same had the effect of bringing about an end to the litigation and the
claims raised therein. The court also noted that the impugned award
had an effect of debarring the petitioner from instituting fresh
proceedings on the same cause of action and therefore, would be an
arbitra l award in terms of Section 2(1)(c) of the A&C Act. A similar
reasoning is also found in Angelique International Limited (supra ).
35. The said reasoning runs contrary to the decision of the Supreme
Court in Indian Farmers Fertilizer Cooperative Limited (supra ). As
noticed above, in that case, the Supreme Court had held that an award
must finally decide a point at which the parties are at issue in
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arbitration. Thus, the award (whether final or interim) must finally
decide an issue for which the parties are in ar bitration.
36. It is also difficult to reconcile the said reasoning in The India
Trading Company (supra ) and Joginder Singh Dhaiya (supra) with
the view of the Supreme Court in Lalit Kumar V. Sanghvi (Dead)
through LRs and Anr. (supra ). In that case, the Supreme Court was
concerned with an order passed by Arbitral Tribunal terminating the
arbitral proceedings, which read as under:
―The matter is pending since June 2003 and though the
meeting was called in between June 2004 and 11 -4-
2007, the claimant took no interest in the matter. Even
the fees directed to be given is not paid. In these
circumstances please note that the arbitration
proceedings stand terminated. All interim orders
passed by the Tribunal stand vacated.‖

37. The Supreme Co urt held the said order to be one terminating the
arbitral proceedings under Section 32(2)(c) of the A&C Act as the said
order would not qualify as an order under Clauses (a) or (b) of Section
32(2) of the A&C Act. The court proceeded on the basis that Sec tion
32 of the A&C Act is exhaustive and covers all cases of termination of
arbitral proceedings. This is implicit in paragraphs nos. 11 and 12 of
the said decision, which read as under:
―11. Section 32 of the Act on the other hand deals
with the terminati on of arbitral proceedings. From the
language of Section 32, it can be seen that arbitral
proceedings get terminated either in the making of the
final arbitral award or by an order of the Arbitral
Tribunal under sub -section (2). Sub -section (2)
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provides th at the Arbitral Tribunal shall issue an order
for the termination of the arbitral proceedings in the
three contingencies mentioned in clauses (a) to (c)
thereof.
12. On the facts of the present case, the
applicability of clauses ( a) and ( b) of Section 32 (2) is
clearly ruled out and we are of the opinion that the
order dated 29 -10-2007 by which the Tribunal
terminated the arbitral proceedings could only fall
within the scope of Section 32, sub -section (2), clause
(c) i.e. the continuation of the proceeding s has become
impossible. By virtue of Section 32(3), on the
termination of the arbitral proceedings, the mandate of
the Arbitral Tribunal also comes to an end. Having
regard to the scheme of the Act and more particularly
on a cumulative reading of Section 32 and Section 14,
the question whether the mandate of the arbitrator stood
legally terminated or not can be examined by the court
―as provided under Section 14(2)‖.
38. As noticed above, Section 32 of the A&C Act makes a clear
distinction between an award and an order under Sub -section (2) of
Section 32 of the A&C Act. Indisputably, an order under Sub -Section
(2) of Section 32 of the A&C Act is not an award. It is relevant to note
that that this position is accepted in The India Trading Company
(supra ) as well . In paragraph 8 of the said decision, the court has held
in unambiguous terms that “an order under Section 32(2) would not
be an award.”
39. An order terminating the proceedings on failure of the claimant
to file its Statement of Claims within the stipulated time, is also in the
nature of an order under Sub -section (2) of Section 32 of the A&C Act
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and not an arbitral award because such an order does not decide any of
the points on which the parties are in issue in the arbitration.
40. In Neeta Lalitkumar Sanghavi and Another v. Bakulaben
Dharmadas Sanghavi and Others: 2019 SCC OnLine Bom 250, the
Bombay High Court considered the challenge to an ord er passed by
Arbitral Tribunal rejecting the application filed by the petitioners for
substitution as the legal heirs of the original claimant, under Section
14 of the A&C Act. It was contended on behalf of the respondents that
the petition under Section 1 4 of the A& C Act was not maintainable as
such an order would constitute an arbitral award. The respondents
relied upon the decision of the Coordinate Bench of this Court in
Joginder Singh Dhaiya (supra ), wherein the court had held a similar
order to be an award. However, the Bombay High Court, did not
accept the said view and found the same to be inconsistent with the
decision in the case of Lalit kumar V. Sang ahvi (supra ). The relevant
extract of the said decision is set out below:
―24. To counter this argument, Mr. Dave submitted that
the impugned order passed by the sole Arbitrator was in
the nature of an Award and therefore could only be
challenged under Section 34 of the Act. I am unable to
agree with this submission. To my mind, an Award is
passed by the Arbitral Tribunal, interim or final, when
it decides the lis between the parties. There has to be
some adjudication on the merits of the claim or part
thereof (which may include limitation) for the order
passed by the Tribunal to be termed as an Award. It is
not as if every order passed by the Tribunal and which
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terminates the Arbitral proceedings can be termed as an
Award. This is quite clear on reading Section 32 itself
which contemplates that the arbitral proceedings shall
be terminated by the final arbitral award or by an order
of the arbitral tribunal under sub -section (2) of Section
32. This would clearly indicate that merely because the
arbitral proceedings are terminated by an order of the
Arbitral Tribunal would not necess arily make it an
award. It would partake the character of an award if the
lis between the parties on any issue is finally decided by
the Arbitral Tribunal. In the facts of the present case,
admittedly, the lis between the parties has not been
decided at al l. In fact, as mentioned from the narration
of facts set out earlier, this litigation has a very
checkered history. The impugned order rejected the
application of the claimant to be formally brought on
record. Having passed such an order, naturally the sol e
Arbitrator could not proceed any further with the
arbitral proceedings, especially considering that the
original claimant had expired on 7th August, 2012 and
his heirs were not brought on record. There was no one
to prosecute the arbitral proceedings. Th is order can
never be termed as an arbitral award as understood
under Section 34 of the Act. I must mention that the
Delhi High Court in the case of Joginder Singh Dhaiya
(supra) appears to have taken a view that where the
arbitrator holds that the proceed ings have abated
because of not bringing the legal heirs on record, the
same would amount to an arbitral award which can be
challenged under Section 34 of the Act. With great
respect, I am unable to agree with the reasons of the
learned Single Judge of the Delhi High Court. Though
the decision of the Supreme Court in the case of
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Lalitkumar v. Sanghavi (supra) was brought to the
attention of the Delhi High Court, it was sought to be
distinguished by stating that in the facts of that case the
Tribunal had ter minated the arbitration proceedings as
the claimant had taken no interest in the matter and it is
in these circumstances that the Supreme Court held that
such an order would be falling under Section 14 and
32(2)(c) of the Act and hence the remedy would be
under Section 14(2). The Delhi High Court proceeded
on the basis that the apparent distinction between an
order and an award lies in the fact whether the decision
of the Arbitral Tribunal affects the rights of the parties,
concluding the dispute as to the specific issue and has
finality attached to the same. The Delhi High Court
held that since the order of the Tribunal had resulted in
termination of the arbitration proceedings and would
bar the petitioners from re -agitating the same in any
other proceeding s, the said order would partake the
character of an award since it has finality attached to it
and determined the vital rights of the parties. I am
unable to agree with the reasoning given by the Delhi
High Court for the simple reason that Section 32 of th e
Act provides for the termination of arbitral proceedings.
It provides that the arbitral proceedings shall stand
terminated by pronouncement of the final arbitral award
or by an order of the arbitrator under sub -section (2) of
Section 32. In the facts of the present case, the Arbitral
Tribunal has terminated the proceedings by virtue of
not bringing the petitioners on record in the arbitral
proceedings. There is no pronouncement of a final
arbitral award in the facts of the present case as
stipulated under Section 32(1). Every order of the
Tribunal terminating the arbitral proceedings can never
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be terms as an award. This is clear from an ex -facie
reading of section 32.
25. Furthermore, Section 34 of the Act provides for an
application to be made to the Cour t for setting aside the
arbitral award. The very heading of the above provision
reflects that recourse to Section 34 is permissible only
for setting aside the arbitral award on the grounds
mentioned therein. It is not applicable where there is no
award. As mentioned earlier, every order that
terminates the arbitral proceedings would not amount to
an award. There may be several situations and which
are difficult to exhaustively set out, under which the
Arbitral Tribunal may terminate the arbitration
proceedi ngs, as well as its mandate for reasons that this
is impossible to continue with the arbitral proceedings.
That would not mean that every such order would
partake the character of an award. An award to my
mind would be one which would decide the lis betwee n
the parties and which would have finality attached to it
(subject, of course, to challenge under Section 34 of the
Act). I am of the considered view, that the decision of
the Supreme Court in the case of Lalitkumar v.
Sanghavi (supra) would clearly cover the issue raised
before me. I am therefore unable to agree with the
reasoning of the Delhi High Court and therefore
overrule the preliminary objection.‖
41. This court concurs with the aforesaid view. The decision in case
of Joginder Singh Dhaiya (supra ) is contrary to the decision of the
Supreme Court in Lalit kumar V. Sangh avi (supra ).
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42. It is also relevant to note that in Angelique International
Limited (supra ), the court referred to the decision in The India
Trading (supra ) as a decision rendered by the Division Bench of this
Court. However, the said decision was rendered by the Division Bench
of Calcutta High Court. The said decision holding that an order
terminating the arbitral proceedings under Section 25(a) of the A&C
Act is an award, is also contrary to several decisions of this Court as
noted hereinafter. In Bridge & Roof Co. (supra) , a Coordinate Bench
of this Court had held that an application under Section 34 of the A&C
Act would not maintainable against an order terminat ing the
proceedings on account of failure of the claimant to file the statement
of claim in time. The court proceeded to convert the said application
to one under Section 14 of the A&C Act. Similarly, in Puneet Kumar
Jain (supra ), a Coordinate Bench of th is Court held that the remedy
available to the petitioner to challenge an order terminating the arbitral
proceedings on account of failure on the part of the claimant to appear
at the hearings and produ ce documentary evidence, would be to
challenge the sam e under Section 14 of the A&C Act and not under
Section 34 of the A&C Act. In a later decision in Economic
Transport Organisation (supra ), this Court had held that an order
terminating the arbitral proceedings under Section 25(a) of the A&C
Act was not an award and an application under Section 34 of the A&C
Act to set aside the said order , is not , maintainable.
43. In this case, the impugned order passed by the arbitrators
expressly states that the arbitral proceedings are terminated under
Section 32(2)(c) of the A&C Act as in their view, it has become
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impossible to continue the said proceedings. Indisputably, an order
terminating the proceedings under Section 32(2)(c) of the A&C Act
can be impugned under Section 14(2) of the A&C Act. It was
contended on behal f of NHAI that even though an application under
Section 14(2) of the A&C Act may be filed, the present application
which is under Section 14(1)(a) and Section 15 of the A&C Act is not
maintainable. This contention is unpersuasive. A plain reading of Sub-
section (2) of Section 14 of the A&C Act indicates that unless
otherwise agreed by parties, a party could apply to a court to decide on
the question of termination of the mandate, if a controversy remains
concerning any of the grounds referred to in Sub-section 14(1)(a) of
the A&C Act.
44. It is also relevant to note that the impugned order has been
passed by two arbitrators, as the functioning of the Arbitral Tribunal
had been stalled due to the vacancy caused by resignation of the
petitioner‘s nominated arbitr ator. The impugned order is an expression
of the view of the arbitrators that they are unable to continue with the
proceedings on account of the default on the part of the petitioner to
fill the vacancy caused by the resignation of Justice E. Padmanabhan
(Retd.) . It is also important to note that even though NHAI has
preferred certain counter claims, it too did not take any steps to ensure
that the said vacancy is filled. It was also open for NHAI to apply to
the Court for the appointment of an arbitrator, however, NHAI also
chose not to do so.
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45. Although the arbitrators had passed the impugned order, it is not
disputed that a notice that they were contemplating terminating of the
proceedings was not issued to the petitioner, pr ior to passing of the
impugned order.
46. Having stated the above, it cannot be denied that the petitioner
is responsible for the delay in the proceedings as it had inordinately
delayed the appointment of an arbitrator. Whilst this Court is of the
view that th e petitioner ought not be rendered remediless to urge its
claims, NHAI‘s contention that the petitioner must be visited with
costs is merited.
47. In view of the above, this Court considers it apposite to set aside
the impugned order, albeit, subject to payme nt of costs of ₹25,000/ -. It
is so directed.
48. The petitioner has already nominated an arbitrator (Sh. Subhash
I. Patel). The Arbitral Tribunal will resume the arbitration
proceedings at the stage obtaining on 20.04.2020 – the date on which
the arbitral pr oceedings were terminated. The Arbitral Tribunal shall
conclude the arbitral proceedings as expeditiously as possible and
preferably within one year from date. This said order is also subject to
the petitioner paying NHAI the costs of ₹25,000/ -, within a period of
one week from today.
49. The petition is disposed of in the aforesaid terms .

VIBHU BAKHRU, J
JANUARY 12, 2021 /RK
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