AWARD RELYING ON EVIDENCE FILED AFTER CONCLUSION OF ARGUMENTS IS PATENTLY ILLEGAL: SECRETARY TO THE GOVERNMENT OF INDIA, MINISTRY OF SHIPPING, ROAD TRANSPORT AND HIGHWAYS v THE ADDITIONAL COMMISSIONER, NAGPUR1

The Bombay High Court has ruled that an award that relies on documents produced after the conclusion of arguments is patently illegal.

Facts

Land owned by Mr Gupta (the Claimant) was acquired by the National Highways Authority of India (NHAI) under the provisions of the National Highways Act 1956 (NH Act). Dissatisfied with the quantum of compensation awarded, the Claimant filed an application under §3G(5) of the NH Act for an arbitrator to determine the compensation to be paid. The Arbitrator passed an award enhancing the compensation amount.

The award was challenged before the Principal District Judge, Nagpur by NHAI under §34 of the Arbitration & Conciliation Act 1996 (Act) on the ground that the basis of the award was 2 sale deeds that were produced after the proceedings were closed and the award reserved. The §34 application was rejected and NHAI appealed to the Bombay High Court under §37 of the Act.

Decision

The Court held:

  1. The Arbitrator heard the Claimant's and NHAI's arguments on 22 April 2015 and then closed the proceedings for rendering the award.

  2. Photocopies of 2 sale deeds were placed on record by the Claimant on 6 May 2015, despite there being no record of any hearing on that date.

  3. The award was passed on 20 May 2015. The sale deeds formed the basis of the compensation awarded by the Arbitrator.

The Court thus held that the award was liable to be set aside on account of:

  1. The violation of §24 of the Act which mandates that every statement, document or information supplied to the Tribunal by one party shall be communicated to the other party.

  2. The award contravened the principles of natural justice and shocked judicial conscience, since the only document relied on was placed on record surreptitiously and after the conclusion of the arguments hearing.

  3. The award was vitiated on account of patent illegality and also contravened the fundamental policy of Indian law.

  4. The clandestine manner in which documents were taken on record compromised the integrity of the arbitral proceedings and thus, this was not an appropriate case for exercising discretion under §34(4) of the Act to remand the matter to the Arbitrator.

Conclusion

This decision emphasizes that whilst strict rules of evidence may not apply to arbitration proceedings, an arbitrator cannot act in contravention of the basic principles of natural justice.

Footnote

1. Decision dated 12 August 2022 passed by the Bombay High Court in Arbitration Appeal 34 of 2019

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