What is Section 32 of Arbitration and Conciliation Act

What is Section 32 of Arbitration and Conciliation Act, 1996

CHAPTER VI

Making of Arbitral Award and Termination of Proceedings

Section 32. Termination of proceedings 

(1) The arbitral proceedings shall be terminated by the final arbitral award or by an order of the arbitral tribunal under 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 interest 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 impossible.

(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.

Scope of Section 32 of Arbitration and Conciliation Act, 1996

Section 32 of the 1996 Act provides for termination of arbitral proceedings by final arbitration award or an order under Section 32(2) of the Act.

Section 32(2) of the 1996 Act enumerates Three additional grounds on which the arbitral proceedings can be terminated namely:

• the claimant withdraws his claim, unless the respondent objects to the order and the arbitral tribunal recognises a legitimate interest on his part in obtaining a final settlement of the dispute,
• the parties agree on the termination of the proceedings, or
• the arbitral tribunal finds that the continuation of the proceedings has for any other reason become unnecessary or impossible.

While the first 2 (two) grounds relate to consent of the parties, the third ground is at the discretion of the arbitrator.

The said discretionary ground is enumerated in Section 32(2)(c) of the Act empowers the arbitrator to issue an order of termination of arbitral proceedings where it finds that continuation of the said proceedings has for any other reason become ‘unnecessary’ or ‘impossible’.

It is relevant to note that pursuant to Section 32(3) of the Act the mandate of the arbitrator terminates with the termination of the arbitral proceedings (subject of course to Section 33 and Section 34(4) of the Act).

Delhi High Court has in its judgment dated January 12, 2021 in the matter of M/s PCL Suncon v. M/s National Highway Authority of India 2021 Latest Caselaw 102 Del, held that an order terminating arbitration proceedings under Section 32(2)(c) of the Arbitration and Conciliation Act, 1996  is not an award, and can be disputed under Section 14(2) of the ACA.

Important Case Laws on Section 32

In Dakshin Haryana Bijli Vitran Nigam Ltd. v. M/S Navigant Technologies Pvt. Ltd. (2021 Latest Caselaw 111 SC) the Supreme stated that, “Section 32 provides that the arbitral proceedings shall be terminated after the final award is passed. With the termination of the arbitral proceedings, the mandate of the arbitral tribunal terminates, and the tribunal becomes functus officio.”

The Apex Court further stated that, “In an arbitral tribunal comprising of a panel of three members, if one of the members gives a dissenting opinion, it must be delivered contemporaneously on the same date as the final award, and not on a subsequent date, as the tribunal becomes functus officio upon the passing of the final award. The period for rendering the award and dissenting opinion must be within the period prescribed by Section 29A of the Act.”

In Ashok Tubes and Another v. Steel Industries of India (1997) the Supreme Court dealt with the question whether the award which has been re-written by the Arbitrator on a stamp paper can be regarded as a valid award. The Court held that,

“An Arbitrator becomes functus officio after passing the award and he has no power to re-write the award on a stamp paper for the purpose of presenting it in Court or submitting the same for registration. Now the only question that survives is whether it is necessary to set aside the award filed by the sole Arbitrator. In my opinion, the award filed by the Arbitrator is clearly a nullity and therefore, there is no need to set aside the same. The proper course will be to direct the impugned award to be removed from the file of the Court.”

In the case of Orient Transport Co. Gulabra and Another v. Jaya Bharat Credit and Investment Co.(1987 Latest Caselaw 240 SC), the Supreme Court explained the scope of Section 32 in the following words,

“Section 32 of the Act does not contemplate the case suits challenging the validity of a contract because it contains an arbitration clause. If the intention of the legislature were that all documents containing an arbitration clause should come within the purview of sections 32 and 33, the legislature would have said so in appropriate words. These sections have a very limited application, namely, where the existence of validity of an arbitration agreement and not the contract containing the arbitration agreement is challenged.”