Case Note & Summary
The appeal arose from an order dated 31 January 2014 passed by a learned Single Judge of the Bombay High Court dismissing Arbitration Petition No.841 of 2012 under Section 34 of the Arbitration and Conciliation Act, 1996, thereby upholding an ex-parte arbitral award dated 7 September 2009. The appellant, M/s Shree Sati Travels Pvt. Ltd., was the original respondent in the arbitration, and the respondent, M/s Amadeus India Pvt. Ltd., was the claimant. The dispute pertained to a refund claim of Rs.9,26,975/- along with interest arising from a commercial agreement between the parties. The arbitrator, appointed under the agreement, issued notices to the appellant, who despite service and even paper publication, deliberately chose not to participate in the arbitration proceedings. Instead, the appellant filed a suit in the Bombay City Civil Court seeking a perpetual injunction to restrain the arbitrator from proceeding, which suit was dismissed. The arbitrator proceeded ex-parte and, after considering the uncontroverted statement of claim and supporting documents, passed a reasoned award directing the appellant to refund Rs.9,26,975/- with interest at 15% per annum from 9 January 2008 till realization. The appellant challenged the award under Section 34 of the Act before the High Court, arguing that the ex-parte award violated principles of natural justice and lacked reasons. The Single Judge rejected the petition, leading to the present appeal. The Division Bench held that the arbitrator had followed due procedure under the Act, and the appellant's deliberate default in appearing despite service could not be allowed to frustrate the arbitration. The award was reasoned and based on uncontroverted evidence, and no ground under Section 34 was made out. The appeal was dismissed.
Headnote
A) Arbitration Law - Ex-Parte Award - Natural Justice - Section 34 Arbitration and Conciliation Act, 1996 - Challenge to ex-parte award on ground of breach of natural justice - Held that where the respondent deliberately avoided participation despite due service and paper publication, the arbitrator was justified in proceeding ex-parte and passing a reasoned award based on uncontroverted evidence; such award is not liable to be set aside under Section 34 (Paras 1-3). B) Arbitration Law - Reasoned Award - Sufficiency of Reasons - Section 31(3) Arbitration and Conciliation Act, 1996 - Requirement of reasoned award - Held that the arbitrator gave reasons for awarding principal and interest, and the award is not liable to be interfered with on the ground of inadequacy of reasons (Paras 1-3).
Issue of Consideration
Whether an ex-parte arbitral award passed after due service and deliberate non-participation of the respondent is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996 on grounds of breach of natural justice or lack of reasons.
Final Decision
The Division Bench dismissed the appeal, upholding the order of the Single Judge and the arbitral award. The court found no reason to interfere with the reasoned order of the arbitrator, who had followed due procedure under the Act.
Law Points
- Ex-parte award not per se violative of natural justice if party deliberately avoids participation
- Arbitrator has power to proceed ex-parte under the Act
- Section 34 challenge limited to grounds under the Act
- Reasoned award based on uncontroverted evidence is sustainable
