Arbitral Tribunal Can’t Allow Application U/S 27 Of A&C Act Without Forming A Prima Facie View On The Relevancy Or Admissibility Of The Evidence: Delhi High Court

Justice Sachin Datta, presiding over the case, highlighted that the tribunal, in the exercise of its jurisdiction under Section 27 of the Act, should avoid a mechanical approach. Instead, it is obligated to carefully scrutinize, even on a prima facie basis, the relevance of the intended witness before granting approval for such an application from any party.

The Court held that, while the Arbitral Tribunal isn't bound by the rules of the Code of Civil Procedure or the Evidence Act, it still has a duty to exercise discretion and form an opinion when permitting witnesses to be examined.

Facts of the Case

The petitioner filed a petition under Section 27 of the Arbitration and Conciliation Act, 1996 (A&C Act), seeking directions for a witness to appear before the Arbitral Tribunal and adduce evidence directly.

The petitioner had chartered a vessel named 'MV PEACE GEM' for cargo transport. Disputes arose, and the respondent claimed demurrage against the petitioner for the vessel's stay at Haldia Port, India, between 07.05.2019 and 20.05.2019.

The petitioner argued that infrastructural damages rendered the vessel unfit, leading to the denial of the demurrage claim.

One of the issues framed by the Arbitral Tribunal was whether the vessel could berth and discharge goods with a damaged starboard combined pilot ladder.

An email from the Kolkata Port Trust confirmed the refusal to board the vessel due to the damaged pilot ladder. The petitioner sought approval to move the court for assistance in taking evidence from the concerned officer of Kolkata Port Trust. The Arbitral Tribunal granted permission without scrutinizing the relevancy of the evidence.

Submissions by the Parties

The petitioner made the following submission(s):

• That the Arbitral Tribunal’s order reflected a prima facie examination and application of mind. They emphasized that the tribunal’s discretion under Section 19 of the A&C Act allowed deferring the decision on relevance.

The respondent made the following submissions:

• That the court should not issue orders under Section 27 when the tribunal's order exhibits a misconception of law or a complete non-application of mind.
• The respondent opposed, stating there was no material to determine the evidence's relevancy and emphasized the discretionary nature of the court's power under Section 27.

Analysis and Conclusion by the Court

The court acknowledged the general principle of not disturbing orders of the Arbitral Tribunal under Section 27 but criticized the tribunal's order in this case.

The court emphasized that the Arbitral Tribunal, although not bound by specific procedures, must exercise discretion and scrutinize the prima facie relevance of evidence sought to be produced.

Citing precedents, the court reiterated that the court's role under Section 27 is not adjudicatory, and it cannot determine the admissibility, relevancy, materiality, or weight of evidence. It held that the arbitral tribunal while dealing with a party’s application under Section 27 of the A&C Act, seeking permission of the tribunal to take court’s assistance in taking evidence, it must form a prima facie view on the relevance and admissibility of the evidence.

The court dismissed the petition, directing the Arbitral Tribunal to consider, even on a prima facie basis, the relevancy of the evidence before allowing the petitioner to seek the court's assistance.

The court clarified that disputes over non-payment of arbitral fees were not suitable for consideration under Section 27.

Case Title: SAIL v Uniper Global Commodities, OMP(E)(COMM.) 22 of 2023

Date: 01.12.2023

Counsel for the Petitioner: Mr. Saurabh Seth, Ms. Sonia Dube, Ms. Kanchan Yadav and Ms. Saumya Sharma, Advs.

Counsel for the Respondent: Mr. Amit Agarwal, Mr. Shwetabh Sinha, Mr. Sidhant Pandita & Ms. Vatsala Pandey, Advs.

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