Case Note & Summary
The appellant, M/s Kamal Constructions, was the original claimant in an arbitration against the Union of India and another respondent. The Arbitrator had awarded certain claims, including Claim No.3 for underutilization of resources (Rs.2,43,750/-) and Claim No.4 for extra expenses on overheads during prolonged period (Rs.1,00,000/-). The respondents challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996 before a learned single Judge of the Bombay High Court, who set aside the award in respect of Claim Nos.3 and 4 on the ground that the Arbitrator had recorded findings without considering any evidence on record. The appellant appealed against that order. The Division Bench noted that the appellant had not led any oral or supporting evidence in support of these claims. For Claim No.3, the respondents specifically denied that any resources were mobilized, yet the Arbitrator awarded the claim without giving any finding on the proof of mobilization. For Claim No.4, there was no specific evidence led, and the documentary evidence was not proved as required, with no admission by the respondents. The learned single Judge had observed that the award did not show what resources were mobilized or what material was considered. The Division Bench agreed, holding that the findings were perverse as they were based on no evidence. The appeal was dismissed, and the order of the learned single Judge setting aside Claim Nos.3 and 4 was upheld.
Headnote
A) Arbitration Law - Setting Aside of Arbitral Award - Perversity - Claim for Underutilization of Resources - The Arbitrator awarded Rs.2,43,750/- for Claim No.3 without any finding on proof of mobilization of resources, despite specific denial by the respondent. The learned single Judge set aside the award as the finding was without considering evidence. Held that an award based on no evidence is perverse and liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996 (Paras 2-4). B) Arbitration Law - Setting Aside of Arbitral Award - Perversity - Claim for Extra Overheads - Claim No.4 for extra expenses on overheads during prolonged period was awarded without any specific evidence led by the claimant. The documentary evidence was not proved as required and there was no admission by the respondents. Held that the award for Claim No.4 was also without any material and hence perverse (Paras 3-4). C) Arbitration Law - Evidence - Burden of Proof - In arbitration proceedings, the claimant must lead oral and/or supporting evidence to prove its claims. Mere filing of documents without proof is insufficient, especially when the claim is specifically denied. The Arbitrator cannot base findings on unproved documents (Paras 2-4).
Issue of Consideration
Whether the learned single Judge was justified in setting aside the Arbitral Award in respect of Claim Nos.3 and 4 on the ground that the Arbitrator recorded findings without considering any evidence on record.
Final Decision
The Division Bench dismissed the appeal and upheld the order of the learned single Judge setting aside Claim Nos.3 and 4 of the Arbitral Award.
Law Points
- Arbitral award can be set aside if findings are without evidence
- perverse
- or based on no material
- claimant must prove claims even in arbitration
- documentary evidence must be proved as required
- no admission of documents by opposing party does not dispense with proof.
