"Award Patently Erroneous": Madras High Court Orders Fresh Arbitration In BSNL's Claim Against ISHA Foundation

The respondent ISHA foundation had applied for service connection called Global System of Mobile Communications Primary Rate Interface (GSM PRI). Such connection was provided initially with 100 Direct Inward Dialing (DID) numbers and subsequently 400 numbers were added. While so, the respondents raised dispute for the bills issued for the month of December 2018 and January 2019 stating that there were technical problems with the connectivity and that even though complaints were raised, these complaints were not attended to.

Upon receiving these complaints, the petitioners said it found no technical problem with the BSNL connectivity to the PBX and therefore advised the respondent to contact the PBX vendor. Since the respondent did not pay the bills citing a fault in the petitioners' connection, a committee was constituted to visit the site and examine the equipment. Upon such examination, the petitioners' discovered that the respondent had extended net connectivity and enabled Voice Over Internet Protocol (VOIP) to the IP-PBX and consequently, the GSM PRI circuit became vulnerable.

Meanwhile, the respondent foundation approached the High Court for a direction to prevent the petitioners herein from demanding amounts due under the bills. The High Court appointed Mr.Justice E.Padmanabhan as the Sole Arbitrator to resolve the dispute. The arbitral proceedings were concluded by rejecting the claim made by the petitioners herein for the sum of Rs.2,50,47,462/- and, instead, directing the respondent to pay a sum of Rs.44,000/- with interest at 15% per annum from 15.04.2019 till the date of payment.

Senior Counsel P Wilson, assisted by Mr.R.Priyakumar appearing for the petitioners submitted that the Arbitral Tribunal had erroneously recorded that the respondents denied that calls were made. The respondents had in fact contended that the e system had been hacked by fraudsters and not that the calls were not registered in the CDR from the respondent's GSM PRI.

It was further submitted that the expert committee appointed by the petitioners had concluded that there was no abnormality in the GMSC switch and that the billing could be due to abnormality in the customer's premises. However, this report was disregarded by the Arbitral Tribunal. At the same time, the findings recorded in the arbitral tribunal are merely speculative. He also pointed out that an adverse inference was drawn merely because the petitioners could not get the concurrence from the management for referring the matter for the expert opinion of the Telecom Enforcement Resource and Monitoring Cell(TERM). He submitted that it was unreasonable to expect a PSU to obtain a concurrence within a limited time of 20 minutes.

Mr. Rajendrakumar, appearing for the respondents submitted that they were charged for calls that were not made by the respondents. Further, he contended that the bills were received belatedly. He also submitted that even though the bills indicate a credit limit, the petitioners did not provide any warning to the respondent even when this credit limit was breached by huge margins. Even though the petitioners had the ability to bar the ISD facility upon noticing abnormal call volumes, they failed to do the same. He further submitted that all the equipment were within the control of the petitioners and not the respondent as it was located in the property of the respondent which had been taken on lease by the petitioners.

The court, after going through the averments observed that the matter between the parties was something that required expert opinion. The Arbitration Act under Section 26 empowers the Tribunal to call for expert evidence unless otherwise agreed by the parties. "Unless otherwise agreed by the parties" means a situation where the parties to the dispute have agreed that expert evidence would not be relied on. In the present case, such a situation did not exist. Thus, in the absence of an agreement between the parties, the arbitral tribunal did not require the consent of the parties to call for expert evidence.

Thus, the court concluded that although the Arbitral Tribunal did consider the CDRs, the tribunal had recorded that the matter required further investigation. At the same time, the arbitral tribunal concluded that the petitioner's were entitled to Rs. 22,000 without appointing such expert.

Although the Arbitral Tribunal did consider the CDRs, the Tribunal recorded findings that the matter required further investigation. Strangely, without undertaking such further investigation by appointing an expert, the Arbitral Tribunal proceeded to record that the CDRs are incorrect. These conclusions are patently erroneous, qualify as perverse as instructed by the Hon'ble Supreme Court in decisions referred to above, and resulted in the rejection of the petitioners' claims. Therefore, interference with the Award is warranted.

Observing that the award of the tribunal was patently erroneous, the court therefore set aside the award and gave liberty to the petitioners to institute de novo arbitration proceedings. The petitioners were also given the benefit of limitation under the Arbitration and Conciliation Act.

Case Title: The Principal General Manager, BSNL and another v. The Administrator, ISHA Foundation

Case No: Arb.O.P.(Comm.Div)No.20 of 2022

Citation: 2022 LiveLaw (Mad) 351

Counsel for the Petitioners: Mr.P.Wilson, Senior Advocate, Assisted by Mr.R.Priyakumar

Counsel for the Respondents: Mr.S.Rajendrakumar for M/s.Norton & Grant