Indian Oil Corporation Ltd And Ors vs M/S Shastri Nagar Gas Service
2021 Latest Caselaw 6080 Raj/2

       HIGH COURT OF JUDICATURE FOR RAJASTHAN
                   BENCH AT JAIPUR

          S.B. Civil Miscellaneous Appeal No.2855/2017

M/s. Shastrinagar Gas Service through Partner Smt. Vandana
Sharma       W/o    Late   Shri     Nagendra          Sharma,      Address   165,
Ramnagar Shopping Center, Shastri Nagar Jaipur Rajasthan at
Present A-104-D-1, AWHO Scheme, Sector No.1, Vidhyadhar
Nagar, Jaipur
                                                     ----Appellant/Objector
                                     Versus
1. Indian Oil Corporation Limited through Director Marketing
Finance and Leasing Company through proprietor deepak vaidh,
R/o 21, Gopinath marg, M.I. road, Jaipur.
2. Senior Area Manager, Indian oil Corporation Limited, Indane
Area office, SPL-1297, Sitapura Industrial Area, goner Road,
Jaipur.
3. General manager (LPG) Indian oil corporation Limited, Ashok
Chowk, Adarsh Nagar, Jaipur 302004.
                                     ----Respondents/Non-Claimants

4. Shri A.V. Rajan, Sole Arbitrator and chief manager (engineering) Indian oil corporation Limited, Ashok Chowk, Adarsh Nagar, Jaipur Rajasthan - Sole Arbitrator.

----Arbitral Tribunal (Performa Party) Connected With S.B. Civil Miscellaneous Appeal No.2467/2017

1. Indian Oil Corporation Limited Through Director Marketing G-9, Ali Yavarjung Marg, Bandra (East) Mumbai-400511.

2. Senior Area Manager, Indian Oil Corporation Ltd. Indane Area Office, SPL 1297, Sitapura Industrial Area, Goner Road, Jaipur.

3. General Manager (L.P.G.) Indian Oil Corporation Limited, Ashok Chowk, Adarsh Nagar, Jaipur.

----Appellants/ Non - Applicants Versus M/s Shastri Nagar Gas Service through Partner Smt. Vandana Sharma W/o Late Sh. Nagendra Sharma, R/o 165, Ram Nagar Shopping Center, Shastri Nagar, Jaipur Presently R/o A-104-D-1 AWHO Scheme, Sector, No.1, Vidhyadhar, Nagar, Jaipur.

----Respondent/Applicant

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Mr.A. V. Rajan, Sole Arbitrator & Chief Manager (Engineering), Indian Oil Corporation, Ashok Chowk, Adarsh Nagar, Jaipur

----Performa Party- Sole Arbitrator

For Appellant(s) : Mr.Devidutt Sharma Mr.Rajesh Maharshi Ms.Aishwarya For Respondent(s) : Mr.Samit Bishnoi

HON'BLE MR. JUSTICE ASHOK KUMAR GAUR

Order REPORTABLE

Reserved on : 02/09/2021 Date of Order : 28/10/2021

These two appeals are decided together by this common

order, as the issues involved in both the appeals are same.

SB CMA No.2855/2017:-

2. The appellant - M/s. Shastarinagar Gas Service has

filed the appeal challenging the order dated 13 th February, 2017

passed under Section 34 of the Arbitration and Conciliation

Act, 1996 (for short "the Act of 1996") rejecting the

application filed by the appellant against the award dated 19 th

February, 2016, passed by the Sole Arbitrator.

3. The appellant was appointed as distributor of Liquefied

Petroleum Gas (LPG) in 1995. The respondents had carried out

surprise inspection and refill audit on 8 th September, 2012. The

respondents, in their inspection, found following major/minor

irregularities at the distributorship:-

a) Out of turn refill delivery to 331 customers.

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     b)      Customer signatures are not being taken on refill

     vouchers.

     c)      103 cylinders were shown delivered in Indsoft but

actually not delivered to the consumers as per their Blue

Book.

4. The appellant filed reply to the show cause notice and

denied the allegations of diversion of cylinders for non-domestic

use and further, affidavits of consumers and documents were also

submitted.

5. The respondents, vide order dated 6 th June, 2013,

imposed penalty of Rs.1,42,526/- as violation of 2 nd MDG

(Marketing Discipline Guidelines) during last two years and

adjusted recovery from the current account of the appellant.

6. The appellant invoked arbitration clause and requested

to appoint the Arbitrator as per Clause No.37 of the agreement,

executed between the parties.

7. The respondents appointed their own officer one Shri

A.V. Rajan, Chief Manager (Engineer), IOCL as Arbitrator.

8. The appellant submitted his claim before the Arbitrator

and raised objections with regard to conducting arbitration

proceedings with prejudice attitude.

(4 of 21) [CMA-2855/2017]

9. The respondent - Corporation filed reply to the claim

petition and further rejoinder was filed and the issues were framed

by the Arbitrator on 15th October, 2014.

10. Since, the Arbitrator was not conducting arbitration in

proper and fair manner, the appellant filed petition under Sections

14 & 15 of the Act of 1996 before the High Court to terminate the

mandate of arbitrator and substitute the arbitrator. The matter

was sub-judice before the High Court, however, the Arbitrator

continued the proceedings and pronounced the ex-parte award on

19th February, 2016.

11. The appellant, feeling aggrieved against the ex-parte

award dated 19th February, 2016, filed application under Section

34 of the Act of 1996.

12. The appellant raised various grounds in the application

under Section 34 of the Act of 1996 and following main grounds

were raised :

(a) The Arbitrator did not declare his interest under Section

12 of the Act of 1996, as he was working in the respondent's

office as officer.

(b) The Arbitrator was not independent and he was working

with prejudice mind.

(c) The proceedings were not conducted by the Arbitrator

as per law and no process was drawn with consent of the

parties.

(5 of 21) [CMA-2855/2017]

(d) No opportunity of hearing was given and cross-

examination was not allowed to the witness of the

respondents and award was passed ex-parte.

(e) The award was not containing any reason and the same

was against the law and public policy of India.

13. The Additional District & Session Judge, vide order

dated 13th February, 2017, rejected the application of the

appellant after considering four issues, which were framed during

hearing of the application. The Court below confirmed the award

dated 19th February, 2016.

14. The appellant, in his appeal, has raised following

grounds :

(i) The Court below has failed to consider the legal aspect that

the Arbitrator was required to declare his interest under

Section 12(i) of the Act of 1996 but he failed to do so. The

Arbitrator was under control of the respondents and as such,

he was not free and independent.

(ii) The Arbitrator failed to draw process of conducting

arbitration proceedings as per Sections 13(i)(4) and 19 of

the Act of 1996 nor Manual of the Rajasthan High Court was

followed and as such, the Arbitrator acted against the law

and principles of natural justice.

(iii) The Arbitrator has given the award without proper

consideration of the documents and evidence on record and

the award is a not reasoned award as per Section 31(3) of

the Act of 1996. The Arbitrator failed to pass the award and

(6 of 21) [CMA-2855/2017]

he did not consider the affidavits of the consumers, which

were filed before him.

(iv) The equal treatment was not given to both the parties as per

Sections 18 and 27 of the Act of 1996.

(v) The award is bad in the eyes of law because 1 st MDG was set

aside by the Court on challenge by the appellant and if 1 st

MDG was not sustained then there was no basis to impose

2nd MDG.

15. Counsel appearing for the Distributor-claimant has

placed reliance on the following judgments:-

1. Ayaaubkhan Noorkhan Pathan Vs. State of Maharashtra

and Others, reported in [(2013)4 SCC 465].

2. Nazim H. Kazi Vs. Kokan Merchantile Cooperative Bank

Ltd., reported in [(2013)2 BCR 193].

3. Biwater Penstocks Ltd. Vs. Municipal Corporation of

Greater Bombay & Ors., reported in

MANU/MH/1531/2010.

4. Auto Craft Engineers Vs. Akshar Automobiles Agencies

Private Limited, reported in [(2016) SCC OnLine Bom.

5185].

16. Heard learned counsel for the parties and with their

assistance, perused the material available on record.

17. The primary question, for deciding these two appeals,

before this Court is with regard to the scope of Section 34 of the

Act of 1996 and the issue whether adequate opportunity has been

(7 of 21) [CMA-2855/2017]

provided to both the parties in arbitral proceedings and whether

principle of natural justice has been complied with by the

Arbitrator or not.

18. This Court finds that after filing of the statement of claim by

the appellant, the respondent-Corporation had filed its reply and

thereafter rejoinder was filed and the matter was placed for

framing of issues. The issues were framed by the Arbitrator on

15.10.2015 and thereafter parties were directed to submit

affidavits in evidence and the respondent-Corporation filed its

affidavit on 06.11.2015 and the Arbitrator vide order dated

09.11.2015 directed the claimant to file his affidavit and when

despite various dates, given to the counsel of the claimant, neither

affidavit was filed nor counsel for the claimant himself appeared,

the case was fixed for oral arguments on 16.12.2015, however,

the appellant-claimant sought another opportunity to file affidavit

in evidence and finally it came to be filed on 24.12.2015 and both

the parties were directed to submit their written/oral arguments

on 04.01.2016. Thereafter, the claimant filed applications on

04.01.2016, 07.01.2016, 14.01.2016 & 28.01.2016 for staying

proceedings, which was denied as there were no justified reason

to stay the proceedings and final opportunity was fixed for

advancing arguments on 01.02.2016. The counsel for the

appellant-claimant was present on 01.02.2016 but he refused to

continue with the arguments and as such the Arbitrator reserved

the award after hearing counsel for the respondent-Corporation.

19. This Court finds that several opportunities were given

to the counsel for the appellant-claimant not only for filing

(8 of 21) [CMA-2855/2017]

affidavit in evidence but also to submit their written/oral

arguments. This Court further finds that even as per the

proceedings of the Arbitrator, the counsel who was present on

01.02.2016 on behalf of the appellant-claimant also refused to

continue with his arguments.

20. The Arbitrator, after going through the claim, reply to

claim and documents filed by both the parties and also after

perusing the documents and considering the pleadings, gave

reasons for arriving at the conclusion in his award. The

proceedings conducted before the Arbitrator nowhere show that

adequate opportunity was not afforded to the appellant-claimant

to plead his case or to lead evidence. The allegation of not

affording adequate opportunity is not supported and reflected

from the entire proceedings conducted by the Arbitrator.

21. The contention of the appellant that the Arbitrator had

failed to declare his interest under sub-section (1) of Section 12 of

the Act of 1996 and as such, he was not competent to undertake

the arbitral proceedings, this Court finds that the sole Arbitrator

vide his letter dated 10.03.2014, after his appointment as sole

Arbitrator, had declared that there were no circumstances liable to

give rise to justifiable doubts as to his impartiality or

independence. The declaration made by the sole Arbitrator, as per

Section 12(1) of the Act of 1996, does not require much

discussion on the said issue, as raised by the appellant.

(9 of 21) [CMA-2855/2017]

22. The submission of counsel for the appellant that neither

proceedings under Section 19 of the Act of 1996 were undertaken

nor Manual of the Rajasthan High Court was followed, suffice it to

say by this Court that equal opportunity was afforded to both the

parties by the Arbitrator and principle of natural justice was

followed, as adequate opportunity was given to both the parties to

lead their documentary evidence.

23. The submission of learned counsel for the appellant

that the award is not a reasoned award, as per Section 31(3) of

the Act of 1996, suffice it to say by this Court that the Arbitrator,

after taking into account the pleadings and evidence of the

parties, has given cogent reasons for arriving at the conclusion

and as such, it cannot be inferred that proper award has not been

passed.

24. The reliance placed by counsel for the appellant on the

judgment passed by the Apex Court in the case of Ayaaubkhan

Noorkhan Pathan (supra), the Apex Court in the said case was

concerned with the issuance of caste certificate of a candidate.

The Apex Court has considered the scope of cross examination as

a part of principle of natural justice and held that if any serious

allegation is levelled about caste certificate and Scrutiny

Committee conducted the enquiry, then in such an eventuality

such candidate must be given a fair opportunity to cross examine

the witness. This Court finds that the said judgment has no

relevance to the present controversy.

(10 of 21) [CMA-2855/2017]

25. The reliance placed by learned counsel for the appellant

on the judgment passed by the Bombay High Court in the case of

Nazim H. Kazi (supra), this Court finds from the facts of the case

that both the parties in the said case had not agreed before the

Arbitral Tribunal that no evidence was to be led by both the parties

and the proceedings were to be conducted on the basis of the

documents and other material, while record of the Arbitrator

indicated that the petitioner filed affidavit in lieu of examination-

in-chief and he had offered himself for cross examination in

support of his deposition on various disputed facts and he had also

asked for permission to cross examine the respondents' witness.

The Bombay High Court after considering the fact situation of that

case found that Arbitrator could not have conducted the matter

only on the basis of documents and other materials when the

petitioner himself had asked for an opportunity to lead overall

evidence and had made himself available for cross examination.

26. The reliance placed by learned counsel for the appellant

on the judgment passed by the Bombay High Court in the case of

Biwater Penstocks Ltd. (supra), the Court has considered the fact

of admitting certain documents in evidence by the Arbitrator

without the same being proved and it was treated as an act of

legal misconduct and blatant breach of principles of natural justice

and accordingly the award was set-aside. The Bombay High Court

has further held that even if the award is a non speaking order,

however, the same must be in accordance with law and in

consonance with the principles of natural justice. The said

judgment is of little help to learned counsel for the appellant.

(11 of 21) [CMA-2855/2017]

27. The reliance placed by counsel for the appellant on the

judgment passed by the Bombay High Court in the case of M/s

Auto Craft Engineers (supra), this Court finds that the Bombay

High Court after considering the proceedings of Arbitrator has held

that a person cannot be prevented from participating in the

arbitral proceedings only on the ground that the he has not

complied with the payment of cost awarded by the Arbitrator and

as such the award was found to be harsh, unjust, unreasonable

and arbitrary and the award was also found to be against the

principles of natural justice as defence was struck out by the

Arbitrator.

28. The reliance placed by counsel for the appellant on the

judgment passed by the Apex Court in the case of Bareilly

Electricity Supply Co. Ltd. (supra), the issue before the Apex Court

was with regard to payment of bonus to the workmen and the

award was passed by the Labour Court to the same effect. This

Court finds that the said judgment does not have any bearing on

the facts of the present matter.

29. The reliance placed by counsel for the appellant on the

judgment passed by the Madras High Court in the case of Indian

Oil Corporation and Anr. (supra), the Madras High Court has held

that the Arbitrator has all the powers to decide all the disputes

and differences arising between the parties and the dealership of a

claimant can be restored.

30. This Court, accordingly, finds that this misc. appeal deserves

to be dismissed and is hereby dismissed and the order passed by

the Additional District and Sessions Judge No.18, Jaipur

(12 of 21) [CMA-2855/2017]

Metropolitan dated 13.02.2017 so also the award passed by the

Arbitrator dated, 19.02.2016 are upheld.

Facts of SB CMA No.2467/2017:-

31. The appellant - Indian Oil Corporation has challenged the

order dated 1st April, 2017, whereby the application filed by the

respondent - M/s. Shastarinagar Gas Service under Section 34 of

the Act of 1996 has been accepted and the award dated 16 th

August, 2016, passed by the Sole Arbitrator has been set aside.

32. The appellants, during investigation of the respondent-

claimant, had carried out the investigation on 24 th June, 2013 and

during inspection, major/minor irregularities were observed at the

distributorship and irregularities were in the nature of, are as

follows:-

(i) Deliverymen were not carrying weighing scale, leak detector

& identity cards of distributorship,

(ii) Customers reported that they are getting refill delivery

confirmation message without booking for refills.

(iii) During refill delivery verification 5 customers confirmed non-

receipt of 26 no. of refills.

33. The appellant-Corporation sought distributor's explanation

and reply submitted by the respondent-claimant was not found

satisfactory and the appellant, vide letter dated 31 st October,

2013, imposed penalty as violation of 3 rd MDG on the ground that

(13 of 21) [CMA-2855/2017]

reply of the claimant was not found tenable and satisfactory. Due

to dispute between the parties, the sole Arbitrator was appointed.

34. The sole Arbitrator conducted the arbitration

proceedings and vide award dated 22 nd February, 2016, the claim

petition of the respondent-claimant was dismissed.

35. The award dated 22nd February, 2016 was put to

challenge by the respondent by filing an application under Section

34 of the Act of 1996.

36. The said application was allowed vide order dated 4 th

June, 2016 and the award dated 22nd February, 2016 was set

aside. The Court directed the Arbitrator to pass a reasoned order

on the objection of claimant to get an opportunity of cross-

examination and further, after affording proper opportunity to both

the parties and by following ADR Rules, as framed by High Court,

the Arbitrator was to pass the award, as per the procedure

prescribed under Section 19 of the Act of 1996.

37. The Sole Arbitrator, after remand of the matter, passed

an award on 16th August, 2016 and claim of the respondent-

claimant was dismissed.

38. The respondent-claimant, feeling aggrieved against the

award dated 16th August, 2016, filed an application under Section

34 of the Act of 1996.

(14 of 21) [CMA-2855/2017]

39. The Court below, vide order dated 1st April, 2017, has

accepted the application of the respondent-claimant and has set

aside the award dated 16th August, 2016.

40. The appellant challenges the order dated 1 st April, 2017

on the following grounds:-

(i) The Court below has failed to consider the scope of

jurisdiction of the Court under Section 34 of the Act of 1996.

(ii) The Court below has wrongly interpreted Section 19 of the

Act of 1996 and has erroneously held that the Arbitrator was

bound to permit the respondent-distributor to cross examine

the Officials of the Corporation.

(iii) The Court below could not have gone into the merits of the

matter and the same is not permissible as per the scope of

Section 34 of the Act of 1996.

(iv) The Court below misinterpreted and misunderstood the

direction passed in the previous order dated 04th June, 2016.

(v) The Court below, under Section 34 of the Act of 1996,

cannot sit as a court of appeal over the award and cannot re-

appreciate the evidence or go into the merits of the arbitral

award or interfere with the finding of fact and reappraisal of

material and substituting its own view, in place of

Arbitrator's view, is not permissible.

(vi) The Court below has failed to consider that as per Section 19

of the Act of 1996 dealing with the determination of rules of

procedure, the Arbitral Tribunal is not bound by Code of Civil

Procedure or the Indian Evidence Act, 1872 and it is for the

(15 of 21) [CMA-2855/2017]

Arbitrator to decide whether in the facts of the case, there

was requirement of cross-examination of evidence or not?

(vii) The scope of Section 19 of the Act of 1996 is only for the

compliance of natural justice and if ample opportunity has

been given to both the parties to decide the matter, the

same cannot result into violation of principles of natural

justice when reasonable time and opportunity was afforded

to substantiate the respective claims of the parties.

(viii) The Court below has failed to look into the conduct of the

respondent-claimant as there was a willful motive to

frustrate the purpose of arbitration proceedings by refusing

to advance the arguments on merits of the matter.

41. This Court finds that the Arbitrator, during arbitral

proceedings, after giving opportunities to the Distributor-claimant,

took the affidavit in evidence on record vide order dated

29.12.2015. The Arbitrator had also directed the parties to remain

present on 04.01.2016 for their oral arguments. The Arbitrator

vide his order dated 22.01.2016 found that evidence submitted by

the appellant-Corporation before the Arbitrator was based on the

documentary evidence and as such, he declined the request for

cross-examination and both the parties were directed to submit

their written arguments on 01.02.2016 and present their oral

arguments on the same day.

42. This Court finds that since counsel for the claimant had

refused to participate in the arbitration proceedings, award was

passed on 22.02.2016.

(16 of 21) [CMA-2855/2017]

43. This Court finds, from the perusal of award, that request was

made by filing an application for cross-examination of the witness

on 15.07.2016 and on 26.07.2016 and the Arbitrator passed an

order that the evidence submitted by the respondent-Corporation

was based on documentary evidence available with him and the

same was also submitted in the arbitral proceedings and as such,

there was no need for cross-examination of the witness and as

such, the request for cross-examination was denied and both the

parties were requested to be present on 03.08.2016 for final

arguments.

44. The perusal of the award further shows that after

declining the request for cross-examination of witness of the

respondent-Corporation, the claimant made another application

for giving the opportunity and the same was also declined and

finally the Arbitrator had fixed the matter for arguments, however,

counsel for the claimant refused to argue the matter and as such,

the award was reserved.

45. The perusal of award shows that all the issues were

decided by the Arbitrator and the charge levelled against the

Distributor was found to be proved of committing major

irregularities and as such, the decision of the Corporation was

upheld.

Scope of Sections 18, 19 & 34 of the Act of 1996

46. The scope of Sections 34 and 37 of the Act of 1996 has

been dilated by the Apex Court in the case of MMTC Limited Vs.

(17 of 21) [CMA-2855/2017]

Vedanta Limited reported in (2019) 4 SCC 163. The relevant

portions of the judgment are quoted hereunder:-

"10. Before proceeding further, we find it necessary to briefly revisit the existing position of law with respect to the scope of interference with an arbitral award in India, though we do not wish to burden this judgment by discussing the principles regarding the same in detail. Such interference may be undertaken in terms of Section 34 or Section 37 of the Arbitration and Conciliation Act, 1996 (for short, "the 1996 Act"). While the former deals with challenges to an arbitral award itself, the latter, inter alia, deals with appeals against an order made under Section 34 setting aside or refusing to set aside an arbitral award.

11. As far as Section 34 is concerned, the position is well- settled by now that the Court does not sit in appeal over the arbitral award and may interfere on merits on the limited ground provided under Section 34(2)(b)(ii), i.e. if the award is against the public policy of India. As per the legal position clarified through decisions of this Court prior to the amendments to the 1996 Act in 2015, a violation of Indian public policy, in turn, includes a violation of the fundamental policy of Indian law, a violation of the interest of India, conflict with justice or morality, and the existence of patent illegality in the arbitral award. Additionally, the concept of the "fundamental policy of Indian law" would cover compliance with statutes and judicial precedents, adopting a judicial approach, compliance with the principles of natural justice, and Wednesbury reasonableness. Furthermore, "patent illegality" itself has been held to mean contravention of the substantive law of India, contravention of the 1996 Act, and contravention of the terms of the contract.

12. It is only if one of these conditions is met that the Court may interfere with an arbitral award in terms of Section 34(2)(b)(ii), but such interference does not entail a review of the merits of the dispute, and is limited to situations where the findings of the arbitrator are arbitrary, capricious or perverse, or when the conscience of the Court is shocked, or when the illegality is not trivial but goes to the root of the matter. An arbitral award may not be interfered with if the view taken by the arbitrator is a possible view based on facts. (See Associate Builders v. DDA, (2015) 3 SCC 49). Also see ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705; Hindustan Zinc Ltd. v. Friends Coal Carbonisation, (2006) 4 SCC 445; and McDermott International v. Burn Standard Co. Ltd., (2006) 11 SCC 181).

(18 of 21) [CMA-2855/2017]

13. It is relevant to note that after the 2015 amendments to Section 34, the above position stands somewhat modified. Pursuant to the insertion of Explanation 1 to Section 34(2), the scope of contravention of Indian public policy has been modified to the extent that it now means fraud or corruption in the making of the award, violation of Section 75 or Section 81 of the Act, contravention of the fundamental policy of Indian law, and conflict with the most basic notions of justice or morality. Additionally, subsection (2A) has been inserted in Section 34, which provides that in case of domestic arbitrations, violation of Indian public policy also includes patent illegality appearing on the face of the award. The proviso to the same states that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.

14. As far as interference with an order made under Section 34, as per Section 37, is concerned, it cannot be disputed that such interference under Section 37 cannot travel beyond the restrictions laid down under Section 34. In other words, the Court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the Court under Section 34 has not exceeded the scope of the provision. Thus, it is evident that in case an arbitral award has been confirmed by the Court under Section 34 and by the Court in an appeal under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings.

15. XX XX XX

16. It is equally important to observe at this juncture that while interpreting the terms of a contract, the conduct of parties and correspondences exchanged would also be relevant factors and it is within the arbitrator's jurisdiction to consider the same. (See McDermott International Inc. v. Burn Standard Co. Ltd. (supra); Pure Helium India (P) Ltd. v. ONGC, (2003) 8 SCC 593, D.D. Sharma v. Union of India, (2004) 5 SCC 325)."

47. This Court will also be required to consider Chapter-V of

the Act of 1996 where procedure for conducting arbitral

proceedings has been provided. Sections 18 and 19 of the Act of

1996, being relevant for the present controversy, are quoted

hereunder:-

(19 of 21) [CMA-2855/2017]

"18. Equal treatment of parties.--The parties shall be treated with equality and each party shall be given a full opportunity to present his case.

19. Determination of rules of procedure.--

1. The arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 (5 of 1908) or the Indian Evidence Act, 1872 (1 of 1872).

2. Subject to this Part, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings.

3. Failing any agreement referred to in sub-section (2), the arbitral tribunal may, subject to this Part, conduct the proceedings in the manner it considers appropriate.

4. The power of the arbitral tribunal under sub-section (3) includes the power to determine the admissibility, relevance, materiality and weight of any evidence."

48. The bare reading of Section 18 of the Act of 1996

shows that parties to the arbitral proceedings shall be treated with

equality and each party shall be given full opportunity to present

his case and the Arbitrator cannot make any discrimination

between two parties as far as procedural part is concerned and

further full opportunity is required to be given to each of the party

to present his case.

49. The facts which have come on record in the present

appeals clearly reflect that both the parties were treated equally

and full opportunity was given to them to present their case. The

non-cooperation of claimant by any means, either to argue the

matter or to place document on record, cannot result into denial of

full opportunity to both the parties to present their case.

50. This Court further finds that as per Section 19 of the

Act of 1996, the arbitral proceedings are not bound by the Code of

(20 of 21) [CMA-2855/2017]

Civil Procedure, 1908 or the Indian Evidence Act, 1872. This Court

finds that sub-section (2) of Section 19 provides that parties are

free to agree on the procedure to be followed in conducting the

arbitral proceedings and sub-section (3) of Section 19 provides

that in absence of any agreement, as provided under Section

19(2) of the Act of 1996, the arbitral proceedings will be

conducted in the manner, the Arbitrator considers it appropriate.

Sub-section (4) of Section 19 of the Act of 1996 gives power to

the Arbitral Tribunal to determine the admissibility, relevance,

materiality and weight of any evidence.

51. The Arbitrator, in the present facts of the case, if found that

since documentary evidence was enough to consider the issue

which was referred to him, the same could not have resulted into

giving any right to the claimant to say that oral evidence was

required or cross-examination of any of the employees of the

Corporation was required.

52. This Court finds that the power given under Section 34 of the

Act of 1996 to set aside the award, is limited and if the arbitral

award is in conflict with the public policy of India, it can be one of

the grounds to set aside the arbitral award. Explanation-1 added

to Section 34 of the Act of 1996 also makes it clear that an award

is said to be in conflict with the public policy of India only if it is in

contravention with the fundamental policy of Indian law or in

conflict with the most basic notions of morality or justice.

Explanation-2 appended to Section 34 of the Act of 1996 makes it

very clear that test as to whether there is a contravention with the

(21 of 21) [CMA-2855/2017]

fundamental policy of Indian law, shall not entail a review on the

merits of the dispute.

53. This Court, considering the scope of interference, as

provided under Section 34 of the Act of 1996, finds that the award

which has been passed by the Arbitrator cannot be reviewed by

this Court by re-appreciating the evidence or giving any finding on

the merits of the matter.

54. For the reasons stated in the foregoing paragraphs, the

present appeal is allowed and the order dated 01.04.2017, passed

by the Additional District & Sessions Judge No.14, Jaipur

Metropolitan, allowing the application of the respondent filed

under Section 34 of the Act of 1996, is quashed and set aside and

the award dated 16.08.2016 passed by the Arbitrator is upheld.

(ASHOK KUMAR GAUR),J

Preeti Asopa /Himanshu Soni

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