Arbitrator Committed No Illegality In Accepting A Claim In Toto When No Written Statement Of Defence Was Filed: Punjab & Haryana High Court

Facts

The respondent (The Haryana State Coop. Supply and Marketing Fed. Limited) invited tenders for leasing out rice mills. The bid of the appellant was accepted and the parties entered into an agreement dated 01.10.2016.

Disputes arose between the parties, accordingly, the respondent invoked arbitration clause and the arbitrator was appointed. Before the arbitrator, the respondent filed its statement of claim and claimed an amount of Rs. 26.01 lakhs as compensation. It also examined a witness to substantiate its case. The appellant did not file any written statement of defence to contest the claim, and only oral submissions were made by the appellant.

The arbitrator allowed the claim made by the respondent. Aggrieved thereby, the appellant challenged the award under Section 34 of the A&C Act. The lower court dismissed the challenge by observing that the appellant did not contest the case before the tribunal and there was no perversity in the award.

Aggrieved thereby, the appellant challenged the award in an appeal under Section 37 of the A&C Act.

Grounds of Challenge

The appellant made the following submissions against the impugned award:

• No opportunity was granted to the appellant to present its case, resulting in failure of justice and principles of fair play.
• The oral submissions made by the appellant before the arbitral tribunal have not been considered by the tribunal in the impugned award.

Analysis by the Court

The Court observed that the appellant did not file any written statement of defence before the arbitrator, neither evidence was led nor any witnesses were examined by it.

The Court reiterated that the award can be set aside as being patently illegal if it is against the public policy of the India and the Court would not do a review of the award on its merit. It held that the arbitrator did not commit any illegality in accepting the claim in toto especially when it was not seriously disputed by the appellant.

The Court also held that the appellant had made oral submissions before the arbitrator, therefore, it cannot be said that no opportunity was given to it to present its case. Accordingly, the Court dismissed the appeal.

Case Title: Gaurav Rice Industries v. The Haryana State Coop. Supply and Marketing Fed. Limited, FAO-CARB No. 58 of 2023

Date: 05.04.2024

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