Nexa Engineering Private Ltd ("Nexa"), a company specializing in the manufacture of prefabricated steel structures and heavy engineering components, and Harbor Constructions Ltd ("Harbor"), a major infrastructure develop

The facts of the given situation are similar of the case of Dani Wooltex Corporation & Ors. versus Sheil Properties Pvt. Ltd. & Anr. decided by Supreme Court on 16th May, 2024. In this case, it was laid down that under clause 32(2) (c) of Arbitration and Conciliation Act, 1996, the mere existence of a reason for terminating the proceedings is not sufficient. The reason must be such that the continuation of the proceedings has become unnecessary or impossible. In this case, the issue was about the legality and validity of the order of termination of the arbitral proceedings under clause (c) of sub-section (2) of Section 32 of the Arbitration and Conciliation Act, 1996. Section 32 provides for the termination of the arbitral proceedings in the following contingencies: On making final arbitral award; On the Claimant withdrawing his claim as provided under clause (a) of subsection (2) of Section 32; Parties agreeing on termination of arbitral proceedings as provided under clause (b) of subsection (2) of Section 32; or When the Arbitral Tribunal finds that the continuation of proceedings has become unnecessary or impossible for any other reason, as provided under clause (c) of subsection (2) of Section 32. Therefore, clause (c) of subsection (2) of Section 32 can be invoked for reasons other than those mentioned in subsection (1) of Section 32 and clauses (a) and (b) of subsection (2) of Section 32. Under clause (c), the mere existence of a reason for terminating the proceedings is not sufficient. The reason must be such that the continuation of the proceedings has become unnecessary or impossible. If the party fails to appear for a hearing after filing a claim, the learned Arbitrator cannot say that continuing the arbitral proceedings has become unnecessary. Abandonment by the claimant of his claim may be grounds for saying that the arbitral proceedings have become unnecessary. However, the abandonment must be established. Abandonment can be either express or implied. Abandonment cannot be readily inferred. One can say that there is an implied abandonment when admitted or proved facts are so clinching and convincing that the only inference which can be drawn is of the abandonment. Mere absence in proceedings or failure to participate does not, per se, amount to abandonment. Only if the established conduct of a claimant is such that it leads only to one conclusion that the claimant has given up, his/her claim can an inference of abandonment be drawn. Merely because a claimant, after filing his statement of claim, does not move the Arbitral Tribunal to fix a date for the hearing, it cannot be said that the claimant has abandoned his claim. The reason is that the Arbitral Tribunal has a duty to fix a date for a hearing. If the parties remain absent, the Arbitral Tribunal can take recourse to Section 25 which gives the arbitral tribunals the power to continue hearing arguments if the respondent does not provide a statement of defence. The arbitral tribunal may also decide to treat the respondent's failure to submit the Statement of Defence as a forfeiture or waiver of their claim under this Section. Hence, failing to submit a statement of claim or statement of defence would negatively affect any party's standing before the arbitral tribunal.