Court Does Not Have Adjudicatory Powers Under Section 27 Of The A&C Act: Bombay High Court

The Single Bench of Justice G.S. Kulkarni ruled that once the arbitral tribunal had formed a prima facie opinion that a particular witness is required to be examined by a party in the arbitral proceedings, the reasons laid down by the tribunal in its order cannot be revisited and scrutinized by the Court, since proceeding under Section 27 of the A&C Act are not in the nature of an appeal and the Court does not have any adjudicatory powers under Section 27.

The petitioner Dilip filed an application before the Arbitral Tribunal to examine a witness in the arbitral proceedings. The application of the petitioner was opposed by the respondent Errol Moraes. The arbitral tribunal passed an order allowing the petitioner's application to examine the witness in the arbitral proceedings. The Tribunal observed that the evidence of the witness intended to be examined by the petitioner was material and not altogether a waste of time, as contended by the respondent. The petitioner thereafter filed a petition under Section 27 of the Arbitration and Conciliation Act, 1996 before the Bombay High Court to issue summons to the witness.

The Counsel for the petitioner submitted before the High Court that the Arbitral Tribunal had considered the merits of the contentions made by both the petitioner and the respondent, and therefore the petitioner's petition must be allowed by issuing summons to the said witness.

The Counsel for the respondent submitted that although the Arbitral Tribunal had permitted the examination of the said witness, the High Court also needed to consider whether the tribunal was correct in coming to the conclusion that the said witness ought to be examined. The Counsel placed reliance on the judgment of Delhi High Court in the case of Hindustan Petroleum Corporation Ltd versus Ashok Kumar Garg (2006) and contended that after the arbitral tribunal took a prima facie view that a witness could be examined by a party, even then a final decision was required to be taken by the Court as to whether a witness summons ought to be issued to the concerned witness, by applying the provisions of Rule 1 Order 16 of the Code of Civil Procedure, 1908 (CPC). The Counsel added that the correctness of the reasons set out by the Arbitral Tribunal in its order could be scrutinized by the Court, akin to the Civil Court in the trial of a civil suit, by applying the provisions of Rule 1 Order 16 of the CPC. The Counsel thus submitted that the petitioner's petition must be dismissed.

Section 27(1) of the Arbitration and Conciliation Act, 1996 provides that the arbitral tribunal, or a party with the approval of the arbitral tribunal, may apply to the Court for assistance in taking evidence. Section 27(3) provides that the Court may, within its competence and according to its rules on taking evidence, execute the request by ordering that the evidence be provided directly to the arbitral tribunal.

The High Court ruled that once the Court was satisfied that the requirements of Section 27(1) of the A&C Act are satisfied, it would be necessary for the Court to exercise its jurisdiction under Section 27. The Court added that it has not been attributed any adjudicatory function in providing assistance to the arbitral tribunal in taking evidence.

The Court ruled that the approach of the arbitral tribunal was extremely fair in passing the order allowing the examination of the witness.

The High Court held that the Court does not have the jurisdiction under Section 27 of the A&C Act to consider the legality of the reasons set out by the arbitral tribunal in its order permitting the examination of a witness by the petitioner.

"Considering such seal of approval granted by the tribunal to permit the petitioner to examine such witness, in my opinion, it would be certainly not the jurisdiction of this Court under Section 27 to sit in appeal over such findings as rendered by the tribunal which is a procedural decision taken during the course of the arbitral proceedings. The arbitral tribunal, being the master of the proceedings before it, has the ultimate jurisdiction to come to a conclusion, in the course of the adjudication, to form an opinion as to who are the appropriate and relevant witness to be examined by the parties"

The High Court observed that Section 5 of the A&C Act provides that notwithstanding anything contained in any other law for the time being in force, in matters governed by Part-I of the A&C Act, no judicial authority shall intervene except where so provided. Also, as per Section 19 of the A&C Act the arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872.

The Court held that in view of Section 5 and Section 19, the Court does not have any adjudicatory powers under Section 27 of the A&C Act.

"In my opinion, Section 27 needs to be read on the touchstone of Section 5 read with Section 19 of the Act, which clearly brings about a legal consequence that under section 27 of the Act, the Court has not been conferred with any adjudicatory powers, being a provision merely intended to enable the parties to seek assistance of the Court in taking evidence, which is particularly clear from the provisions of sub-section (1) of Section 27."

The Court ruled that if Section 27 was read so as to contain an element of adjudication, it would be counterproductive to the efficacy and efficiency of the arbitral proceedings, and would delay the expeditious determination of disputes.The Court held that once the arbitral tribunal has formed a prima facie opinion that a particular witness is required to be examined by a party in the arbitral proceedings, the reasons laid down by the tribunal in its order cannot be revisited and scrutinized by the Court since the proceeding under Section 27 of the A&C Act are not in the nature of an appeal over the decision of the arbitral tribunal.

"However, I do not agree with Mr. Rebello's contention that once the tribunal has formed a prima facie opinion, that a particular witness is required to be examined, by a party to the arbitral proceedings, such reason ought to be revisited and/or scrutinized by the Court, as if the proceeding under section 27, is in the nature of an appeal over such decision of the arbitral tribunal, as noted above. This is certainly not the jurisdiction of the Court under section 27 as clear from its plain language."

The Court thus allowed the petition filed by the petitioner and issued witness summons to the witness.

Case Title: Dilip s/o. Bhavanji Shah versus Errol Moraes

Citation: 2022 LiveLaw (Bom) 130

Dated: 17.01.2022 (Bombay High Court)

Counsel for the Petitioner: Mr. Ashok M. Saraogi

Counsel for the Respondent: Mr. Akash Rebello, Mr. Anil D'souza

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