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

Hint:

In Arbitration Law: Failure to file Defence \(\neq\) Admission of Claim. The claimant must still prove the case before the arbitral tribunal even when the respondent defaults.

Answer 1

The Correct Option is C

Section 25(b) protects the arbitral process from being decided by default. Its underlying idea is that an award should rest on evidence, not on one side's absence.

1. Treating the claim as admitted: this would let a claimant win by default alone, which defeats the purpose of a fact-finding tribunal.
2. Deciding the claim as uncontroverted: this understates the tribunal's continuing duty to check the claimant's case on its merits, not merely note the absence of denial.
3. Continuing the proceedings without treating the default as admission: this is the balance the Act strikes, arbitration goes on, but the claimant still carries the burden of proof.
4. Terminating the proceedings: termination under Section 25 is tied to the claimant's own default, not the respondent failing to answer.

The correct answer is continue the proceedings without treating such failure as admission.

Answer 2

Section 25 of the Act separately addresses default by the claimant, default by the respondent, and failure of a party to appear or produce evidence, and comparing these three limbs makes clear what result clause (b) commands.

1. Option (A): Equating a missing defence with an admission would make Section 25(b) redundant with a default judgment procedure, which the Act does not create for arbitration, since the tribunal must still weigh the claimant's evidence.
2. Option (B): Describing the case as simply uncontroverted ignores that the tribunal's obligation to test the claim on the record survives the respondent's silence, this option softens the requirement more than the text allows.
3. Option (C): Placed next to Section 25(a), which permits termination when the claimant defaults, clause (b) instead directs the tribunal to keep going and expressly withholds the effect of admission from the respondent's failure. This contrast confirms that continuation without admission is the specific consequence for a defaulting respondent.
4. Option (D): Termination is the consequence tied to the claimant's default under clause (a), applying it to the respondent's failure under clause (b) would blur a distinction the Act draws deliberately.

Reading clause (b) against the rest of Section 25 confirms that the tribunal must continue the proceedings while not treating the respondent's silence as an admission.

The correct answer is continue the proceedings without treating such failure as admission.