Can an Arbitral Tribunal proceed on the basis that in the absence of a para-wise denial, the averments in the Statement of Claim, are admitted?

In a case before the Delhi High Court, an Arbitration Award, passed by the majority of the Arbitral Tribunal, was challenged, on the ground that the majority has failed to consider its statement of defence at all and as such it is a failure of natural justice.  

The Respondents before the Arbitral Tribunal did not file a para wise denial to the Statement of Claims filed by the Claimants. The Arbitral Tribunal proceeded on the basis that  in the absence of a para-wise denial to the SOC in the SOD, the averments in the SOC could be taken to be admitted and held that in the circumstances, all the facts stated in the SOC “stand admitted”.  

It was the case of the Respondents before the High Court, that the majority had ignored the substantive SOD, the oral evidence of its witness [who was cross examined by  Petitioner], as well as the oral and written submissions filed by it.   

The Respondents argued neither any particular form of pleadings is prescribed by the Arbitration and Conciliation Act, nor was any agreed between the parties, or set by the Tribunal therefore such a drastic consequence was not warranted.  

The court observed that there were factors which also support the conclusion that the Respondent was never informed that its SOD was to be treated as defective.  The Tribunal ought to have laid down the rules of procedure with clarity, and enforced them at the appropriate juncture, rather than permitting parties to proceed on the basis of pleadings, which it regarded as fundamentally flawed.  

The court opined that  

“ 60………..if the Court comes to the conclusion that a party has not been given a full opportunity to present its case, the Court is duty bound to exercise its jurisdiction under Section 34 of the Act.”  

The court set aside the Award, with liberty to the parties to re-agitate their claims and counter-claims in accordance with law.   

In  The  High  Court  Of  Delhi  At  New  Delhi  

 O.M.P. (Comm) 538/2020 &  I.A. 10390/2020  

HPCL-Mittal Pipeline Limited  

Versus  

Coastal Marine Construction  And Engineering  

O.M.P. (Comm) 200/2021, Cav 21/2021 & I.A. 8600/2021  

Coastal Marine Construction  And Engineering Limited       

Versus  

HPCL  Mittal Pipelines Limited  

OMP (Enf.) (Comm.) 95/2021,  

Ex.Appl.(Os) 621/2021 & Ex.Appl.(Os) 623/2021  

HPCL-Mittal Pipeline Limited  

Versus   

Coastal Marine Construction  And Engineering  

Dated 5th May 2025