Section 25 of the Arbitration and Conciliation Act, 1996 - Default of a Party
Section 25 explains what an arbitral tribunal may or must do when a claimant or respondent fails to take a required procedural step, or when a party does not appear at a hearing or produce documentary evidence. The provision operates unless the parties have agreed otherwise and applies where the defaulting party has not shown sufficient cause.
Text and meaning of Section 25
Section 25 - Default of a party. Unless otherwise agreed by the parties, where, without showing sufficient cause:
(a) if the claimant fails to communicate the statement of claim in accordance with Section 23(1), the arbitral tribunal shall terminate the proceedings;
(b) if the respondent fails to communicate the statement of defence in accordance with Section 23(1), the tribunal shall continue the proceedings without treating the failure itself as an admission of the claimant's allegations, and the tribunal has discretion to treat the respondent's right to file the statement of defence as forfeited;
(c) if a party fails to appear at an oral hearing or to produce documentary evidence, the tribunal may continue the proceedings and make the arbitral award on the evidence before it.
The words added to clause (b), giving the tribunal discretion to treat the respondent's right to file the statement of defence as forfeited, were inserted with effect from 23 October 2015.
How Section 25 works
Claimant defaults
If the claimant does not submit the statement of claim required by Section 23(1) and does not show sufficient cause, termination of the arbitral proceedings is mandatory under Section 25(a).
Respondent defaults
If the respondent fails to file the statement of defence, the tribunal does not automatically accept the claimant's allegations as admitted. It may continue the case and may, in its discretion, treat the right to file the defence as forfeited.
Hearing or evidence default
If either party does not appear at an oral hearing or does not produce documentary evidence, the tribunal may continue and decide the matter on the evidence available before it.
What does "sufficient cause" mean in Section 25?
Section 25 does not define the expression "sufficient cause". In practical terms, the tribunal must consider whether the party has shown an adequate reason for the default before applying the consequences stated in the section. The assessment depends on the facts, the procedural directions already given, the opportunity available to comply and the explanation offered by the defaulting party.
Section 25(a): failure by claimant to file statement of claim
Section 25(a) is linked directly with Section 23(1), which deals with statements of claim and defence. Where the claimant fails to communicate the statement of claim and does not establish sufficient cause, the tribunal shall terminate the arbitral proceedings.
Section 25(b): failure by respondent to file statement of defence
The consequence of a respondent's default is different. The tribunal continues the proceedings, but the respondent's failure cannot by itself be treated as an admission of the claimant's allegations. The tribunal must still consider the material and evidence placed before it. Since the 2015 amendment, the tribunal also has discretion to treat the respondent's right to file the statement of defence as forfeited.
Section 25(c): non-appearance or failure to produce documents
Where a party fails to appear at an oral hearing or does not produce documentary evidence, Section 25(c) allows the tribunal to continue the proceedings and make an award on the evidence available. This provision should be read with Section 24, which governs hearings and written proceedings and requires appropriate notice of hearings.
Difference between claimant and respondent default
| Type of default | Provision | Consequence |
|---|---|---|
| Claimant fails to file statement of claim | Section 25(a) | Tribunal shall terminate the proceedings if sufficient cause is not shown. |
| Respondent fails to file statement of defence | Section 25(b) | Proceedings continue; default is not itself an admission. Tribunal may treat the right to file the defence as forfeited. |
| Party fails to appear or produce documentary evidence | Section 25(c) | Tribunal may continue and make an award on the evidence before it. |
Related provisions
Section 23 governs statements of claim and defence. Section 24 concerns hearings and written proceedings. Section 25 provides the procedural consequences when a party defaults in the situations described above.
Official text of the Arbitration and Conciliation Act, 1996
The current central Act can be checked on the official India Code portal:
Official India Code - Arbitration and Conciliation Act, 1996
This page reflects the current central text of Section 25, including the amendment effective from 23 October 2015.