A division bench of the Madras High Court comprising of Honourable Justice T. Raja (Acting Chief Justice) and Honourable Justice D. Bharatha Chakravarty noted that while an arbitral tribunal, which is made up of subject-matter experts, is free to use its own knowledge and understanding to reach a conclusion, it should always give the parties involved the opportunity to present their case.
This was done in order to provide relief to the Chennai Metro Rail Limited (CMRL).
Brief Facts:
The Court was adjudicating upon a matter between Transtonnelstroy-Afcons and CMRL regarding the execution of an agreement for the construction of the Chennai metro. The arbitral tribunal had ruled in favour of the appellants and performed its own study to reach a decision on an extension of time for finishing the project when the appellant challenged the sole judge's order to set it aside.
Contentions of the Appellant:
The appellant had contended that "unable to present the argument" is distinct from "merely not offering an opportunity to respond." According to the argument, the tribunal only issued the award 53 days after requesting the records, and during that period, CMRL made no objections and kept quiet. It was further argued that the tribunal did not depend on any fresh evidence but rather merely requested the installation of a piece of software that the parties had been using to routinely analyse the data entered by the appellants while it was employed by CMRL. The tribunal had determined that some reasons for the work's execution delays were factually accurate and others were not.
Contentions of the Respondent:
On the other side, CMRL questioned the tribunal's request for records from one party after reserving the subject for orders and failing to specify its justification. It argued that if new evidence needed to be reviewed, the tribunal should have reopened the case and marked the document through witnesses or as Court records, giving CMRL a chance to voice objections. As a result, it was argued that the audi altarem partem principle was not upheld.
Observations of the Court:
The Court observed that the arbitral panel had requested unmarked records after reserving the issues for orders, and the bench emphasized that it had not disclosed to either party the reason for collecting the data. Just emailing both parties to request the records would not constitute giving them an opportunity if they were unaware of the records' intended use.
The Tribunal's use of data that was contested by one of the parties to draw a conclusion, the court observed, and the parties' lack of chance to submit their case meant that the party was unable to present its case. According to the court's opinion, such an award could be set aside.
The Court held that the tribunal was required to provide the parties a chance to speak when it opted to depart from the predetermined process for considering the case and use its own expertise to conduct a technical evaluation, the court noted.
The panel's decision to remand the case back to it for further consideration was also rejected by the court because the tribunal was still deliberating over other claims. The court determined that the Supreme Court's decision in Kinnari Mullick and Others v. Ghanshyam Das Damani 2018) 11 SCC 328 clearly established that an exercise of remand can only be used in cases where only a written application is made in accordance with Section 34(4) of the Arbitration Act without setting aside the award.
Decision of the Court:
The appeals from 2021 were dismissed and the common order was confirmed by the High Court whereas the appeals from 2022 were allowed by the High Court, dismissing the common order. The parties were also given the choice of commencing de novo proceedings if they wish for the same.
Case Title: Transtonnelstroy Afcons vs Chennai Metro Rail Ltd.
Coram: Honourable Justice T. Raja (Acting Chief Justice); Honourable Justice D. Bharatha Chakravarty
Case No.: O.SA. (CAD) No. 147 and 148 of 2021, 85 and 79 of 2022 ; C.M.P. No. 21000, 21003, 21008, 21010 of 2021
Advocate for the Appellant: Mr. G. Masilamani [O.SA. (CAD) No. 147 of 2021];Mr. N. Venkataraman [O.SA. (CAD) No. 85 of 2022]; Mr. Yashodvaradhan [O.SA. (CAD) No. 79 of 2022]; Mr. Vijay Narayan [O.SA. (CAD) No. 148 of 2021]
Advocate for the Respondent:
Mr. N. Venkataraman [O.SA. (CAD) No. 147 of 2021]
Mr. G. Masilamani [O.SA. (CAD) No. 85 of 2022]
Mr. Vijay Narayan [O.SA. (CAD) No. 79 of 2022]
Mr. Yashodvaradhan [O.SA. (CAD) No. 148 of 2021]
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