Question

According to Section 25(b) of the Arbitration and Conciliation Act, 1996, where the respondent fails to submit his statement of defence without sufficient cause, the arbitral tribunal shall:

• A. Terminate the proceedings.
• B. Proceed to decide the dispute treating the claimant's case as uncontroverted.
• C. Continue the proceedings without treating such failure as admission.
• D. Treat the claimant's allegations as admitted.

Hint:

Remember: Default in arbitration does not equal admission. The tribunal must "continue the proceedings" and the claimant must still prove their claim on its own merits!

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
Section 25 of the Arbitration and Conciliation Act deals with "Default of a Party." It provides the arbitral tribunal with the power to continue proceedings despite a party's non-participation, ensuring that the process is not unduly stalled.

Step 2: Detailed Explanation:
- Section 25(b) specifically states that if the respondent fails to communicate his statement of defence without sufficient cause, the arbitral tribunal shall continue the proceedings.
- Crucially, it clarifies that this continuation must be done without treating the failure to submit a defence as an admission of the claimant's allegations.
- This protects the integrity of the arbitral process, as the claimant still holds the burden of proving their case despite the respondent's absence of response.

Step 3: Final Answer:
The tribunal shall continue the proceedings without treating the failure as an admission. Thus, (C) is correct.

Answer 2

The question asks what the arbitral tribunal must do under Section 25(b) of the Arbitration and Conciliation Act, 1996, when a respondent fails, without sufficient cause, to submit a statement of defence. Each option can be checked against the balance the section strikes between efficiency and fairness.

1. Terminate the proceedings: Ending the arbitration altogether would reward a respondent for simply staying silent, since silence would then have the same effect as winning by default. Arbitration is meant to reach a decision on the merits, so terminating the case for the respondent's inaction defeats that purpose and is not what the section provides.
2. Proceed to decide the dispute treating the claimant's case as uncontroverted: This would mean the claimant automatically wins merely because the respondent did not file a defence, without the tribunal examining whether the claimant's allegations are actually supported by evidence. The law is careful not to let a respondent's silence convert into an automatic victory for the claimant, so this outcome goes further than the section allows.
3. Continue the proceedings without treating such failure as admission: This preserves the claimant's ordinary burden of proving the case on its merits while still allowing the arbitration to move forward instead of being stalled indefinitely by one side's non-participation. It reflects the precise balance Section 25(b) strikes between not letting a defaulting respondent block the process and not letting default alone decide the outcome.
4. Treat the claimant's allegations as admitted: Automatically deeming the claimant's allegations true simply because the respondent did not respond would strip the tribunal of its adjudicatory role and effectively hand victory to one side by default. Section 25(b) expressly guards against this by requiring the tribunal to continue on the merits rather than treat the omission as an admission.

Only continuing the proceedings while withholding any inference of admission matches the wording and the underlying policy of Section 25(b).

Therefore, the correct answer is Continue the proceedings without treating such failure as admission.