Arbitral Tribunal Cannot Be Faulted For Disallowing Additional Evidence At The Fag End Especially When The Document Was Already In Possession Of The Party: Delhi High Court

The bench of Justice Prateek Jalan also held that arbitral tribunal is not strictly bound by the Indian Evidence Act.

Facts

The respondent, an importer and distributor of mobile phones, entered into an agreement with the petitioner for after-sale services related to mobile phones.

The dispute arose over the cost of spare parts supplied by the respondent to the petitioner for services provided at service centres. Thereafter, the respondent encashed a bank guarantee of ₹1,00,00,000/- furnished by the petitioner and invoked the arbitrator clause.

The respondent filed its statement of claim before the arbitral tribunal It relied on three declaration letters issued by the petitioner wherein it had admitted its liability to pay the respondent. The petitioner also filed its statement of defence along with its counter-claims.

After closing of the evidence and the completion of the final arguments for the respondent, the petitioner preferred an application for introducing additional evidences. The tribunal disallowed the application on the ground that it was moved belatedly to delay the arbitral proceedings.

The tribunal rendered the impugned award wherein the claims of the respondent were partially allowed and the petitioner's counter-claims were dismissed. Aggrieved thereby, the petitioner filed the challenge petition under Section 34 of the A&C Act.

Submissions

The petitioner challenged the award on the following grounds:

• That the Tribunal erred in rejecting the application to file additional evidence without considering that the evidence was a crucial piece of evidence.
• The evidence, in the form of delivery challans, was crucial to their case and it was earlier not produced since the entire record of challans runs into more than 30 thousand pages and only few samples were produced as evidence.
• That the Tribunal neglected crucial secondary evidence in the form of the statement of the petitioner's witness. The witness had deposed that the delivery challans corresponding to the material placed on record did exist. The petitioner contended that this evidence should have been considered as secondary evidence under Section 65(g) of the Indian Evidence Act, 1872.

Analysis by the Court

The Court observed that the application for additional evidence was made more than three years after the petitioner had filed its statement of defense and counter-claim. The Court noted that the application was made only at the stage of arguments, raising questions about why the evidence had not been presented earlier.

The Court emphasised on the need for fair, speedy, and inexpensive trials in arbitration. It noted that allowing the application would have taken the case back to the stage of trial and examination of witnesses, which would have been contrary to this principle.

The Court held that application for additional evidence can be allowed at the fag end also but only in cases where the evidence could not have been produced earlier or there were valid reasons for non-production.The Court concluded that the Tribunal was justified in rejecting the application, as allowing it would have delayed the proceedings and gone against the principles of efficiency and expediency in arbitration.

On merits, the Court upheld the Tribunal's findings on the validity of the declaration letters and the reconciliation of accounts. It noted that the Tribunal had considered the evidence before it and made a reasoned decision based on that evidence.

The Court also rejected the petitioner's argument regarding Section 65(g) of the Evidence Act, stating that the Act is not strictly applicable to arbitral proceedings and that the Tribunal was free to adjudge the weight of any evidence placed before it.

The Court concluded that the Tribunal's decision to not consider this evidence as secondary evidence was justified, as there was no specific mention or detailed examination of the delivery challans in the affidavit.

Accordingly, the Court dismissed the petition.

Case Title: M/s Fortuna Skill Management Pvt Ltd v. M/s Jaina Marketing and Associates

Citation: 2024 LiveLaw (Del) 348

Date: 20.03.2024

Counsel for the Petitioner: Mr. Ramesh Singh, Senior Advocate with Mr. Akshay Ringe, Mr. Ankur Chawla, Ms. Megha Mukherjee, Ms. Prerna Mahajan, Ms. Hage Nanya, Advocates.

Counsel for the Respondent: Mr. Mudit Sharma, Mr. Parvez Alam Khan, Advocates.

Click Here To Read/Download Judgment