Case Note & Summary
The petitioner, Archana Bhagwan Jaswani, filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an arbitral award dated October 15, 2016, passed by a learned arbitral tribunal constituted under the bye-laws of Bharat Merchants Chamber. The award directed Archana to pay approximately Rs.27.60 lakhs to the respondent, Empire Silk Weaving Industries, for goods supplied. The arbitration commenced based on an arbitration clause contained in invoices raised by Empire on Archana. The primary ground for challenge was that Archana was denied the opportunity to cross-examine the respondent's witness, and the award was based on documents that were not proved. The court examined the proceedings and found that the arbitral tribunal had fixed a schedule for filing evidence, but the respondent failed to produce any witness for cross-examination. The tribunal then proceeded to pass the award based on the documents filed by the respondent without giving Archana an opportunity to cross-examine. The court held that the denial of the right to cross-examine constitutes a violation of principles of natural justice, rendering the award in conflict with the public policy of India. The court also noted that the bye-laws of the Chamber did not provide for a right to cross-examination, but principles of natural justice require that a party be given an opportunity to test the evidence against it. The court set aside the award and remitted the matter back to the arbitral tribunal for fresh consideration, with a direction to give both parties an opportunity to lead evidence and cross-examine witnesses. The court also directed that the arbitration be concluded within six months from the date of the order.
Headnote
A) Arbitration - Setting Aside Award - Section 34 Arbitration and Conciliation Act, 1996 - Violation of Natural Justice - The petitioner challenged an arbitral award on the ground that she was denied the opportunity to cross-examine the respondent's witness. The court held that the denial of the right to cross-examine constitutes a violation of principles of natural justice and the award is in conflict with the public policy of India. (Paras 1-9) B) Arbitration - Evidence - Section 34 Arbitration and Conciliation Act, 1996 - Lack of Evidence - The court found that the arbitral tribunal relied on documents that were not proved by any witness and the respondent failed to produce any witness for cross-examination. The award was based on no evidence and thus perverse. (Paras 5-9) C) Arbitration - Bye-laws - Section 34 Arbitration and Conciliation Act, 1996 - Procedure - The arbitration was conducted under the bye-laws of Bharat Merchants Chamber. The court noted that the bye-laws did not provide for a right to cross-examination, but the principles of natural justice require that a party be given an opportunity to test the evidence against it. (Paras 2-4)
Issue of Consideration
Whether the Impugned Award is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996 for being in conflict with the public policy of India, particularly on the ground of violation of principles of natural justice and lack of evidence.
Final Decision
The Impugned Award dated October 15, 2016 is set aside. The matter is remitted back to the arbitral tribunal for fresh consideration. The tribunal shall give both parties an opportunity to lead evidence and cross-examine witnesses. The arbitration shall be concluded within six months from the date of the order.
Law Points
- Natural justice
- right to cross-examination
- Section 34 of Arbitration and Conciliation Act
- 1996
- public policy
- evidence in arbitration
- bye-laws of Bharat Merchants Chamber
