Arbitral Tribunal Is Master Of Evidence; Findings Of Arbitrators U/S 34 A&C Act Not To Be Scrutinized As If Court Is Sitting In Appeal: Chhattisgarh HC
The Chhattisgarh High Court reiterated that an Arbitral Tribunal is a master of evidence and that the findings of Arbitrators under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act) are not to be scrutinized as if the Court is sitting in Appeal.
The Court reiterated thus in an Appeal under Section 37 of A&C Act preferred against the Order of the Judge, Commercial Court by which an Application filed by South Eastern Coalfields Ltd. (SECL) was allowed.
A Division Bench comprising Justice Rajani Dubey and Justice Bibhu Datta Guru observed, “The finding of the Commercial Court about the observation made by the Sole Arbitrator on the point of limitation is also not sufficient and hence the act of the Commercial Court in scrutinizing the finding of fact by the Sole Arbitrator on evidence is contrary to the well settled proposition of law as laid down by the Supreme Court in the matter of Maharashtra State Electricity Distribution Company Limited v Datar Swithgear Limited and Others wherein it has been held that the Arbitral Tribunal is the master of evidence and the findings of fact which are arrived at by the arbitrators on the basis of evidence on record are not to be scrutinized, as if the Court was sitting in appeal. Thus, the order impugned about the finding of limitation is perverse and contrary to Section 34 of the Act, 1996.”
Advocate Manoj Paranjape appeared for the Appellant while Senior Advocate H.B. Agrawal appeared for the Respondent.
In this case, the Appeal was related to a dispute between the Claimant, a partnership firm and registered contractor, and SECL regarding a construction project. The Claimant was awarded a contract for Rs. 22,44,046.88 to construct an approach road to the Kapildhara Project in Hasdeo Area. The project commencement date was February 1, 1994, with a completion date of July 31, 1994. Due to delays, a provisional extension of time was granted until April 30, 1995. The Claimant completed the work on April 30, 1995, but SECL didn't make the payments.
The Claimant served a 30-day notice for arbitration in 2008, which was initially rejected due to improper notice and thereafter, a fresh notice was served in 2012, leading to the constitution of an Arbitral Tribunal. The Claimant raised a claim of Rs. 1,99,22,914/- with an 18% interest and arbitration costs and SECL contested the claim, citing limitation and failure to submit mandatory documents. The Arbitral Tribunal passed an Award in favour of the Claimant and this was challenged by SECL under Section 34(2)(b)(ii) of A&C Act. The Commercial Court allowed SECL's Application and set aside the Arbitral Award due to patent illegality and conflict with public policy. Being aggrieved, the Claimant approached the High Court.
The High Court in the above context of the case, said, “… it is necessary to mention here that though the claimant asserted his claim on 18-7-2006, but the respondent did not made payment nor denied. Thereafter, the claimant invoked the arbitration clause 9 of the general terms and conditions.”
The Court noted that as per Section 21 of A&C Act, arbitral proceeding in respect of a particular dispute commences on the date on which a request for that dispute to be referred to arbitration received by the Respondent.
“Clause 9 has been involved on 20-4-2008. As per Section 43(2) of the Act, 1996 arbitration shall be deemed to have commenced on the date referred in Section 21. In the case at hand, the cause of action has arose on 18-7-2006 and arbitration commenced for limitation from 20-4-2008 and, as such, the claimant’s claim is not barred by limitation”, it added.
Furthermore, the Court observed that the delay in preparation of final bill is attributable to the Respondent and the same cannot be a ground to reject the claim of the Appellant.
“Though a public authority is not prohibited from raising such a plea and the Court is duty bound to decide such plea when if it is raised but such a plea should not ordinarily be taken up by the public authority unless the claim of the plaintiff is not well founded and by raising of delay of filing a suit the evidence for the purpose of resisting such claim has become unavoidable”, it concluded.
Accordingly, the High Court allowed the Appeal, set aside the Commercial Court’s Order, and maintained the Arbitral Award.
Cause Title- M/s. S.K. Minerals Through its Partner v. South Eastern Coalfields Ltd. (Neutral Citation: 2024:CGHC:48980-DB)
Appearance:
Appellant: Advocates Manoj Paranjape and Amit Soni.
Respondent: Senior Advocate H.B. Agrawal, Advocates Swati Agrawal, Anumeh Shrivastava, and Akash Shrivastava.
