The Delhi High Court has clarified that it will not interfere with a reasoned arbitral award merely because a party was denied permission to lead belated evidence, where the tribunal had granted sufficient opportunities earlier and the rejection was based on delay and lack of due justification. Procedural decisions of the arbitral tribunal fall within its power under Section 19 to regulate its own procedure, and such decisions do not amount to violation of party autonomy, natural justice, or public policy unless grave prejudice or patent illegality is shown.
The Court explained that findings of fact by the arbitral tribunal on absence of contractual assurance, absence of breach, and failure to prove loss through reliable evidence are not amenable to re-appreciation in Section 34 proceedings, and where the tribunal’s view is plausible and consistent with the contract, including clauses excluding any obligation to take back goods, the award must be sustained. Accordingly, the Court refused to interfere with the Award passed by the Sole Arbitrator in favour of Bausch and Lomb India.
A Single Judge Bench of Justice Subramonium Prasad observed that the arbitral tribunal had granted sufficient opportunities to the petitioner to file affidavits and supporting documents, and that the application to introduce CA certificates was filed only after closure of the petitioner’s evidence and after the respondent had filed its evidence. The arbitrator’s rejection of that application on the ground of inordinate delay and absence of cogent justification was held to be a plausible and reasonable view based on the procedural history of the case.
The Bench further observed that an arbitral tribunal is empowered to regulate its own procedure and that procedural orders do not warrant interference under Section 34 unless they contravene public policy or result in grave injustice. It rejected the petitioner’s argument that no prejudice would have been caused to the respondent, holding that appreciation of evidence, including the absence of corroborative books of account and relevant witnesses, lies within the exclusive domain of the tribunal and cannot be recast as a violation of natural justice.
On the issue of party autonomy and procedure, the Bench held that Section 19 of the Arbitration Act clearly permits the arbitral tribunal, in the absence of an agreed procedure, to determine its own procedure and that ad hoc arbitration is not treated differently from institutional arbitration under the Act. The Bench also noted that the procedural framework and timelines had been settled at the inception of the proceedings with the consent of both parties, and the petitioner had not objected to the procedure during the arbitral proceedings.
The Bench also observed that Clause 10.3 of the distributorship agreement expressly provided that no products would be taken back by the respondent even if expired or defective, and when read with Clause 2.5 reflecting the arm’s length nature of the arrangement, it supported the tribunal’s conclusion that the respondent could not be held liable for the petitioner’s business losses. It further noted that the tribunal’s findings that there was no contractual assurance and no breach by the respondent were findings of fact based on appreciation of evidence and had not been substantively assailed.
Lastly, the Bench reiterated the narrow scope of interference under Section 34 and held that the award was a well-reasoned one based on the material on record. The petitioner’s self-prepared chart of losses was unsupported by invoices, books of account, ledgers, or other credible evidence, and the tribunal’s refusal to permit belated proof through a Chartered Accountant could not be faulted.
Briefly, the petitioner had challenged an arbitral award dated September 27, 2021, by which the sole arbitrator dismissed its claim for loss of profit, interest, and litigation costs. The petitioner had acted as a non-exclusive distributor/C&F agent of the respondent’s eye care products in Kolkata under a distributorship agreement dated September 24, 2003, and alleged that it had increased its investments in stock on the respondent’s representations regarding projected sales, but the inventory remained unsold, causing financial loss.
Before the arbitral tribunal, the petitioner’s case was that the respondent had assured sales support and required corresponding enhancement of investment, but failed to fulfil this commitment, thereby rendering the petitioner’s investments unprofitable. In the Section 34 petition, the petitioner principally contended that the tribunal wrongly refused to permit proposed witness to adduce evidence and supporting documents at a later stage, and that the arbitrator had adopted a procedure akin to the CPC and the Evidence Act without informing the parties through a declarative procedural order, allegedly violating party autonomy, natural justice, and public policy.
The respondent opposed the petition by contending that no assurance of assured sales had ever been given, that the findings on absence of contractual breach had not been effectively challenged, and that the petitioner had been given repeated opportunities to lead evidence but sought to introduce additional material only after closure of its evidence and after the respondent had filed its affidavit in evidence. The arbitrator had rejected that application by order dated November 05, 2019 on the ground of delay and lack of cogent justification.
Appearances:
Advocates Abhay Chitravanshi and Raghav Awasthi, for the Petitioner
Advocate Mukti Chaudhry, for the Respondent
