This article is written by Advocate Devshree Dangi. It talks about the scope of Section 27 where the Arbitral Tribunal seeks assistance of the Court in taking evidence. This article focuses on the coordination of both the Arbitral Tribunal and the Court under Section 27 with regard to the execution of orders made by the Arbitral Tribunal by the Court. Further, various judicial pronouncements pertaining to Section 27 have also been explained in detail to understand the practical applicability of the provision.

Table of Contents

Introduction

The Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Act’) was enacted to regulate domestic arbitration and conciliation matters. This Act sets laws to regulate the overall functioning of dealing with matters concerning arbitration and conciliation in the Arbitral Tribunals. These tribunals have their own procedure to deal with such matters. It is applicable on both domestic and international arbitration Awards, both of these are enforceable under the Act. The Judicial Courts have the power to support and supervise the arbitration proceedings but are limited to an extent which is also specifically mentioned under Section 5 (“extent of judicial intervention”) of the said Act. Section 27 of the Arbitration and Conciliation Act, 1996 is among one of such provisions in the Act that allows the involvement of the Judicial Courts in the arbitration proceedings. It details the provisions related to making an application to the Court for seeking its assistance in taking the evidence pertaining to the concerned matter of arbitration proceedings. This article analyses the pivotal role of the Arbitration and Conciliation Act, of 1996 in smoothly regulating the arbitral proceedings and emphasising the provisions for the extent of judicial intervention with a specific focus on Section 27 of the Act.     

Section 27 of Arbitration and Conciliation Act, 1996 : an overview

Section 27 of the Act, as the title of the provision suggests provides a legal framework and thus establishes a mechanism whereby the arbitral tribunal or a party to the dispute (with the approval of the arbitral tribunal) may seek legal assistance for the purpose of obtaining evidence. As stated above, this provision stands as one of the few sections within the Arbitration and Conciliation Act, 1996 that permits judicial intervention or assistance in arbitration proceedings governed by the Act. 

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Let’s have a detailed analysis of Section 27 of the Act.

Provision of taking assistance from the Court

Section 27(1) of the Act comes up with the provision for the arbitral tribunals to seek the assistance of the Court in taking evidence on its own or through a party to dispute after the approval of the arbitral tribunal. It is pertinent to note that the use of the words “May” and “Execute” in the provision under the Section is a significant factor in deciding the extent of the power of the Courts in relation to deciding the application under Section 27 of the Act. In the case of Sime Darby Engg. SDN. BHD. v. Engineers India Ltd. (2009), the issue revolved around the sole arbitrator’s authority to seek the assistance of an expert in arbitral proceedings. The Apex Court in the aforesaid case observed that Section 27 clearly provides that an Arbitral Tribunal has the discretion to seek the assistance and support of the experts when necessary. Whenever it seems essential to the sole arbitrator, they have the right to engage an expert for assistance and therefore, the Court affirmed the same. 

Manner and particulars of the application

Section 27(2) of the Act lays down the provision for what should mandatorily be included in the application made under  Section 27(1). The application shall include the following:

1.  Name and address (Parties to dispute and the arbitrators).

2.  General nature of the claim and the relief being sought.

3.  The evidence which is to be obtained,

  1. Particulars of the person to be heard as witness or expert witness (Specifically the name and address) and the statement specifying the testimony required.
  2. In case of any document to be produced, the description specifying the requirement or in case of a property to be inspected, the description for the same shall be provided in the application.  

The Supreme Court in the case of Delta Distilleries Limited v. United Spirits Ltd. & Anr., (2014) highlighted that the terms ‘any person’ used under Section 27(2)(c) of the Act is inclusive of not only the witnesses but also extends to the parties involved in the dispute before the Arbitral Tribunal.

Competency of the Court and the execution of the request for assistance    

Section 27(3) of the Act specifies the provision for the execution of the request made under Section 27(1) and also the competency of the Court to take the application for assistance.

  • Competency of Court: This Subsection highlights the provisions for the competency of the Court to take the application for its execution. Here the term ‘competency’ refers to the jurisdiction of the Court and its authority. The Court shall be competent in terms of jurisdiction to involve or support the Arbitral Tribunal for its assistance in taking evidence for the arbitral proceedings.
  • Execution of request: The Court, if competent, then after receiving the application may execute the request and may order that the evidence shall be directly provided to the Arbitral Tribunal.  
  • Rules on taking evidence: For the execution of the request made by the Arbitral Tribunal or any person authorised by the Arbitral Tribunal for the Court’s assistance in taking the evidence, the Court shall follow the procedure of taking evidence according to the provisions laid down under the Indian Evidence Act, 1872. Simply, the Court has to follow the same procedure it follows in case of any suit tried before it.

The Bombay High Court in the case of Dilip s/o. Bhavanji Shah versus Errol Moraes (2022) interpreted Section 27 of the Act. The simple reading of Section 27 of the Act is when the Arbitral Tribunal or any person approved by it approaches the Court to seek its assistance in taking evidence then the Court must ensure that all the necessary conditions mentioned under the Section are fulfilled. Once the Court is satisfied with the same, it is obligated to exercise its jurisdiction under Section 27 of the Act. The provision clarifies that the Court doesn’t have adjudicatory powers in such a process. The role of the Court is limited to facilitating the assistance to the Tribunal on its request under Section 27. The Court cannot make substantive decisions but rather ensure that the procedure is carried out smoothly and in line with the regulations on request of the Tribunal. 

Provision for the issuance of processes to the witnesses

Section 27(4) of the Act outlines the procedure to be followed by the Court when making an order under Section 27(3). According to this provision, the Court is obligated to follow a process as to summoning witnesses in civil suits for executing a request. This simply means that the Court will follow the standard procedure it follows when summoning witnesses to appear before it in cases being tried.  It ensures the involvement of the Court in arbitral proceedings remains consistent with its procedure to maintain clarity and coherence in the application of the law.  

Default and the contravention of any order made by the Court under this Section

Section 27(5) of the Act laid down the provision for the penalties, punishments or disadvantages in case of any default and the contravention of an order made by the Court under Section 27 of the Act in the following cases:

  • When any individual does not attend the proceedings when required by the Arbitral Tribunal or makes any other default during the processes under this Section, or
  • refuse to produce the evidence required by the Arbitral Tribunal, or 
  • is guilty of contempt of the Arbitral tribunal when the proceedings are taking place.
  • If any person is found guilty of any of the abovementioned defaults and contraventions, then he shall be subject to the punishment or the penalty as given by the Court in case of any suit tried before it. In simple words, the consequences of any default or contravention will be the same as the consequences of such acts in case of suits tried before the Courts. 

The Supreme Court in the case of Alka Chandewar v. Shamshul Ishrar Khan (2017) regarding the interpretation of Section 27(5) of the Act, declared the interpretation by the Bombay High Court to be incorrect. The Bombay High Court had previously construed this provision to mean that the Arbitral Tribunal has no authority to refer the matters of contempt of its orders to the Court of law. The Supreme Court held that the provisions of Section 27(5) don’t preclude the Arbitral Tribunal from referring the matters of violation of contempt of its order including the interim orders to the Court. 

Interpretation of the expression “processes” under the Section

Section 27(6) of the Act gives an explanation of the use of the expression “Processes”. This expression refers to the summons and commissions for the examination of witnesses and summons to produce the required documents.

Scope of Section 27 of Arbitration and Conciliation Act, 1996 

This Section ensures the effectiveness of the orders of the Arbitral Tribunal by involving the Court in taking evidence. When the Arbitral Tribunal finds it necessary to seek the assistance of the Court it can make it through this Section. The provision highlights the responsibility of the Arbitral Tribunal while making such applications. It specifies the necessary particulars that should be considered while presenting such an application under Section 27 before the Court. The provision puts an obligation on Courts to decide their competency or the ability to accept such requests. Here the term competency refers to the jurisdiction of such Court where the application is made for taking the assistance. It highlights that the procedure of the Court for making orders under this Section is similar to that of the normal suits. The penalties for contraventions by any person under this Section attract similar consequences as of the normal suits before the Court.

Who can file an application under Section 27 of the Act

According to Section 27(1) of the Act, the Arbitral Tribunal can apply to seek judicial assistance from the Court for the purpose of taking evidence. Further, any party to the dispute can also file an application under Section 27 to the Court, provided it is first approved by the Arbitration Tribunal. 

It is pertinent to note that the statutory mandate of Section 27(1) requires the Arbitration Tribunal’s prior approval to seek the court’s assistance, and for that, it is significant that the party provides adequate and legitimate justification. Upon being satisfied with the merits of such assistance, the Arbitral Tribunal may grant its approval to the party’s request. Subsequent to receiving the Tribunal’s sanction, the party is entitled to proceed with an application under Section 27. 

In the case of Psa Nitrogen Limited vs Company Secretary Gail (India) Lyd (2022) the Delhi High Court dismissed the petition filed under Section 27 of the Arbitration and Conciliation Act, 1996 by the petitioner in the aforesaid case, for the reason that it was not filed by taking approval from the Arbitral Tribunal. The Court held that the Petitioner’s action doesn’t align with the provisions of Section 27 hence, this led to the dismissal of the Petition.  

Further, in case the Tribunal is making an application under Section 27, it should determine sufficient grounds for seeking the assistance of the Court. However, the Tribunal doesn’t need to explain in detail the reasons for taking assistance to the Court. In case the Tribunal is making an application under Section 27, it should determine sufficient grounds for seeking the assistance of the Court. However, the Tribunal doesn’t need to explain in detail the reasons for taking assistance to the Court.

Arbitral Tribunal’s responsibility to determine sufficient grounds

In the case of Hindustan Petroleum Corporation Ltd. v. Ashok Kumar Garg (2007), an appeal was made before the Delhi High Court against an order passed by the Additional District Court Judge who rejected the application made by the Arbitral Tribunal under Section 27 on the grounds that it didn’t have the sufficient reasons that necessitated the assistance of the Court. The Delhi High Court in this case stated that before approving the request for making an application under Section 27 the Arbitral Tribunal should determine the sufficient reasons. The High Court in the aforesaid case observed that “detailed reasons may not be specified by the tribunal, but at least application of mind must be available from the order passed by the tribunals”.

Responsibility of the party to dispute when seeking approval of the Arbitral Tribunal for making an application under Section 27 of the Act

In a petition filed before the High Court of Judicature for Orissa in the case of National Aluminium Company Ltd. v. Indo Power Projects Ltd. (2019) against an order passed by the Arbitral Tribunal where an application was filed before the Arbitral Tribunal for seeking its approval for taking the Court’s assistance. However, the same was rejected on the ground that the applicant had furnished a list of five witnesses and only two of those were examined by the applicant. The other party to the dispute contended that there were no sufficient grounds provided by the other party (the applicant) as to how the examinations of those two witnesses are required for the adjudication of the case. The High Court of Judicature for Orissa held that the applicant had clearly mentioned the reasons for taking the approval of the Arbitral Tribunal for making an application to the Court for seeking its assistance. Further, the Court highlighted that if any party seeking the assistance has submitted the list of witnesses it doesn’t prevent the Arbitral Tribunal from approving that party to make an application for seeking the court’s assistance. However, the party seeking approval of the Arbitral Tribunal shall provide satisfactory reasons for the same. The Arbitral Tribunal has the discretion to allow such a party when sufficient and convincing grounds are presented, even when any prior list of witnesses has been submitted.  

When the witness is residing outside the jurisdiction of the Court

There may occur a situation when the witness to be produced resides outside the jurisdiction of the Court. There are certain judicial pronouncements which clarify the scope of Section 27 in such cases. In the case of Reliance Polycrete Ltd. v. National Agricultural Cooperative Marketing Federation of India (2008), the Delhi High Court analysed the entire situation and, considering the relevant provisions held that the Courts are deprived of the authority to issue process (summons and commissions) to the foreign witness. The Delhi High Court further pointed out that there may occur logistical difficulties as to how the attendance of such foreign witnesses will be obtained. In simple words, this judgement highlighted the practical challenges in such a situation. But with a contrary approach the Bombay High Court in the case of Stemcor (S.E.A.) Pte Limited and Anr. vs. Mideast Integrated Steels Limited (2018), while adjudicating an application under Section 27 where a foreign witness residing in Singapore refused to visit India, then in response to this the Bombay High Court after considering the evidence of the key witness to be material and crucial has appointed an arbitrator as the Commissioner of Court. The Bombay High Court directed a team of lawyers to go to Singapore to collect and record the evidence of the witness. The Bombay High Court highlighted the importance of recording the evidence in person to be more authentic than collecting them through video conferencing. This judgement not only provided the solution to the challenges in the concerned case but also directed the Courts to adopt such measures to tackle the practical challenges in such circumstances.

Conditions for granting assistance in taking evidence  

The Court under Section 27 has the power to assist the Arbitral Tribunal in taking evidence. However, there are certain conditions for the Court to provide assistance in such cases, which are mentioned as under:

Competency of the court 

The Court while considering the application shall determine its ability to accept the request for its assistance required by the Arbitral Tribunal. Here the competency of the Court means that the Court must have jurisdiction to accept such application. There may be situations where the application made under Section 27 is for taking the assistance of the Court for issuing processes to the foreign witnesses, in such cases the Court has the power to find alternate solutions considering the significance of the requirement. But this power is also limited to only the execution of the request of the Tribunal.

Assistance by the Court must be in accordance with the rule

arbitration

Firstly, the Court shall determine whether or not the request made under Section 27 of the Act by the Arbitral Tribunal or any aggrieved party approved by the Tribunal is in accordance with the rules of the Court. This simply means that the Court shall have the rules to execute such a request. If the request made by the Tribunal restricts the Courts to commit such action as required by the Tribunal or if the Courts do not have the rules to execute the same then the Court can reject the request. The Court shall follow the same procedure for assisting the Tribunal in taking evidence as it follows for taking evidence in suits tried before it. The overall impression of this condition is to ensure that every order made under this Section has the same effect as it has in the normal cases before the Court.  

Effect and enforceability

The order passed by the Arbitral Tribunal under Section 27 allows a person to seek the assistance of the Court in compelling the production of any documents as evidence or the appearance of any person before the Tribunal holds validity and is completely enforceable. If any person fails to adhere to such an order would be subject to penalties and legal consequences for non-compliance with a Court order. The consequences are similar to the consequences faced for non-compliance when the Court issues processes to witnesses or any person to produce any document or to appear before the Court as per the provisions of the Code of Civil Procedure,1908 and Indian Evidence Act, 1872.

Role of the Court in evidentiary processes and witness examination in arbitral proceedings     

The Arbitration and Conciliation Act enumerates the provisions for the functioning of arbitration and conciliation matters in the Arbitral Tribunals. The provisions cover the appointment of the arbitrators in the Arbitral Tribunal, arbitration agreement, making of awards, terminating the proceedings, recourse against arbitral awards etc. However, it does not provide any procedure for issuing summons to the witnesses or the examination of witnesses when required. Many times the parties to dispute do not cooperate with the Tribunal’s proceedings, especially when any document is required as evidence or any witness is required to appear before the Tribunal and they do not cooperate. This makes the Arbitral Tribunal to seek the Court’s assistance for taking evidence or the examination of witnesses and the issuance of processes to the witnesses. It ensures fairness in the smooth functioning of the proceedings in the Arbitral Tribunal. However, the role of the Court is limited to assisting the Arbitral Tribunal in taking evidence, issuing processes to witnesses and for the examination of the witnesses through an order under Section 27 of the Act. The rest of the responsibilities regarding the same lies with the Arbitral Tribunal. The Arbitral Tribunals are responsible for the execution of such orders made by the Court.       

Limitation of Court’s jurisdiction  

Section 5 of the Act highlights the provision for limited interference of the Courts. The scope of Section 27(1) where the Arbitral Tribunal can request a Court to assist it in taking evidence is limited to the extent that the Court can only accept or reject the application. Further, to decide the admissibility, relevancy, materiality and weight of any evidence is the part of the Arbitral Tribunal. The Court has no power to determine the same. So, the responsibility of the Court is just to ensure that it should be in accordance with its Rules on taking evidence. Also, the Court doesn’t have adjudicating powers under any order made by the Arbitral Tribunal. No such order is appealable in the Courts. Thus, the Courts are not an appellate forum for any order made by the Arbitral Tribunal under Section 27. However, with respect to the relevance of any evidence sought and the legality of the directions of the Arbitral Tribunal under Section 27 to produce it can exclusively be challenged only during the stage when the arbitral award is challenged under Section 34 of the Act. This Section serves as an avenue available to a party of dispute in the proceedings of the Arbitral Tribunal for ventilating its grievances against the award including interim orders issued by the Arbitral Tribunal during the proceedings. 

Power of Court in relation to taking assistance

The power of a Court under Section 27 is limited as the main role of the Court is just to assist the Arbitral Tribunal in taking evidence. After accepting the request by the Arbitral Tribunals the Court can make orders for issuance of processes to the witnesses, examination of the witnesses and for the appearance of any witness before the Tribunal during the proceedings. The main powers of the Court to make orders for;

  • Issuance of processes to the witnesses to appear before the Arbitral Tribunal,
  • Summons and commissions for the examination of witnesses and,
  • Summons to produce the required documents.

The Court follows the same procedure for issuing of summons under this Section which is laid down under the Code of Civil Procedure, 1908. The power is limited to assist the Arbitral Tribunals but the responsibility of execution of all the orders made under Section 27 lies with the Court.

Limitation on judicial intervention under this Section

The Arbitration and Conciliation Act, 1996 sets out the provisions for putting limitations on judicial interference of the Court in arbitral proceedings. Section 5 of the Act put an obligation on the Courts not to intervene in any matter before the Arbitral Tribunals except when required to an extent specified under the Act.

Interconnection of Section 5 and Section 27 of Arbitration and Conciliation Act, 1996

Section 27 says that the Arbitral Tribunal or any aggrieved person approved by the Tribunal can make an application for the assistance of the Court in taking evidence. Now, Section 5 of the Act decides the extent to which the Court can be involved in the proceedings. The role of the Court under Section 27 is executory and not adjudicatory. This simply means that the Court can only execute the request of the Arbitral Tribunal and assist it in taking evidence. The Court follows its rules for the execution of such requests and ensures that such requests are in accordance with its rules. Again, the concept of accepting the request of the Arbitral Tribunals in such a case shall not be based on the Court’s decision to determine the admissibility, relevancy, materiality and weight of any evidence which is to be sought. It is all on the part of the Arbitral Tribunal. The Court can only accept or reject the request made by the Arbitral Tribunal on the basis of its competency and rules. The Court’s powers under Section 27 are limited to the execution of the request made by the Arbitral Tribunal and nothing more than that. The Court, by no means, can interfere in the proceedings of the Arbitral Tribunal except for the execution of the request. The Court can only issue processes to the witnesses following its own rules as specified under Section 27(3). This is what a limitation is with regard to the provisions of Section 27 in connection with Section 5 of the Act. 

Case laws on Section 27 of Arbitration and Conciliation Act, 1996

Ennore Port Ltd. vs. Hindustan Construction Co. Ltd (2006)

Facts of the case

In this case, the applicant invoked the arbitration to pursue the recovery of a substantial sum of INR 12,93,92,982 from the respondent. The dispute came out from the contract between the parties involving the quarrying and transportation of rocks essential for constructing breakwaters at Ennore from Karaikal to the Ennore port. The dispute revolved around the discrepancies in payments made to the respondent by the applicant which exceeded the stipulated terms of the contract. This dispute led to the initiation of a criminal investigation with an FIR and also the involvement of CBI with regard to the investigation. During the arbitral proceedings, the applicant requested the Arbitral Tribunal to direct the Respondent to produce a copy of the documents that the CBI had filed before the Criminal Court. However, the respondent failed to do so and filed a statement for its inability to produce such documents. This led the applicant to seek approval from the Arbitral Tribunal for taking assistance of the Court under Section 27. The Tribunal allowed the applicant to file the application before the Madras High Court. 

Issue 

  • Whether or not the Court has discretion under Section 27 to make an order for the production of any document as evidence?
  • Whether or not the documents related to criminal proceedings can be produced on requirement of the Arbitral Tribunal?
  • Whether or not the failure on the part of the respondent to adhere to the order of the Tribunal’s direction warrants Court intervention under Section 27?
  • Whether or not the documents required by the Tribunal are essential for the requested documents are essential for proving the case of fraudulent acts committed by the respondent. 

Judgment 

The Madras High Court dismissed the petition filed by the applicant under Section 27 of the Act which required the Court to direct the Superintendent of Police, CBI to produce the Charge sheet and the other documents. The Court Highlighted that it does not have the power to pass an order automatically when an application is filed under Section 27. The Arbitral Tribunal didn’t pass any order directing the Superintendent of Police, CBI to produce the required document. With regard to the application filed by the applicant for seeking the assistance of the Court, the Court highlighted the distinction between the cases before the Arbitral Tribunal and the cases before the CBI Court. Additionally, the Court questioned the evidentiary value of the documents to be produced before the Arbitral Tribunal and stated that it could jeopardise the interests of the respondent in this case before the Criminal Court. Further, the Madras High Court referred a judgement of the Hon’ble Supreme Court in the case of Virender vs The State Of Nct Of Delhi (2009) which held that the statements made before the Police officer during the investigation cannot be used for any other purpose unless it attracts the provisions of Section 27 which is about the discovery of a fact occurred out of the information obtained from a person who is accused of any offence while they are in police custody to be submitted as evidence before the Court and Section 32(1) which is about the admissibility of the statements made by the deceased, unavailable or person incapable of giving evidence in Court, of the Indian Evidence Act,1872. Thus, the Court dismissed the petition saying that it was not satisfied with the applicant’s case to exercise its discretion under Section 27 of the said Act. 

Delta Distilleries Limited vs. United Spirits Limited (2013)

Facts

This case involves an appeal through Special Leave against the order of the Single Judge of the Bombay High Court. Respondent no. 1 filed an arbitration petition before the Court to seek assistance under Section 27 of the Arbitration and Conciliation Act. The Arbitral Tribunal had permitted the Respondent to file such an application. Subsequently, the Court accepted the said application by the Respondent and directed the Petitioner to produce the documents as evidence. The appeal before the Supreme Court challenged the order of the Bombay High Court. The appeal questioned the scope of Section 27 with regard to the circumstances that necessitate the application under Section 27 for seeking the assistance of the Court.

Issue 

The issues raised in the present case are as follows:

  • What is the Scope of Section 27 with respect to making an application before the Court for seeking assistance in taking evidence?
  • In what circumstances can the Arbitral Tribunal apply to the Court for seeking its assistance in taking evidence?

Judgment

The Supreme Court, in this case, rejected the objection against an order passed by the Arbitral Tribunal allowing the Respondent to apply to the Court for taking its assistance under Section 27 of the Act. The Supreme Court emphasised that an Arbitral Tribunal is mandated to make an award based on the merits of claims. If the Tribunal finds it necessary to consider any evidence for making an award, it has the inherent power to procure such evidence.

The Supreme Court didn’t delve into the powers specifically given to the Court under Section 27 and focused on affirming the authority of the Tribunal to invoke the provisions of Section 27 for evidence collection.

The Supreme Court didn’t interfere with the order of the Bombay High Court directing Respondent no. 1 to produce documents. This judgement of the Supreme Court underscores the authority of the Arbitral Tribunal to invoke the provisions of Section 27 for taking the evidence while highlighting the significance of the discretionary approach of the Court when responding to such applications. It emphasised a nuanced consideration of the application under Section 27 rather than an automatic or uniform response to it by the Courts.  

Silor Associates vs. Bharat Heavy Electrical Limited, (2014) 

Facts of the case

In the present case, the Petitioner and the Respondent were engaged in arbitral proceedings where a dispute occurred out of a Service Provider Agreement, in which the Petitioner was the claimant of its services charges from the Respondent. The Petitioner requested the Arbitral Tribunal to direct the Respondent to produce the two specific documents as evidence. The Arbitral Tribunal found the documents to be relevant and crucial for the case and held that the disclosure of these documents is necessary for the case and is, prima facie, relevant. However, the Arbitral Tribunal asserted that it lacked the authority to compel document production and hence it sought the assistance of the Court under Section 27 of the Act. Thus, it allowed the Petitioner to make an application to the High Court of Delhi to seek assistance. The Delhi High Court on receiving the Application came up with a question for learned counsel for the Petitioner as to how the petition is maintainable in the Court. The order of the Arbitral Tribunal is about its findings of the relevancy of the documents required to be produced and no witness is required to be summoned. The Tribunal has not passed any order directing the respondent to produce any document as evidence.

Issue 

The issues raised in the present case are as follows:

  • Whether or not the Arbitral Tribunal has the authority to make an order for the production of documents by a party to dispute or any witness in the absence of an agreed procedure between the parties.
  • Whether or not the Court should provide the assistance under Section 27 based on the order of the Arbitral Tribunal?
  • Whether or not the reasoning provided by the Arbitral Tribunal for rejecting the provisions of Uncitral Model Law was appropriate?

Judgement

The High Court of Delhi has held in this case that the Arbitral Tribunal is empowered to direct any party to dispute to produce any document when required by the Arbitral Tribunal during the proceedings. And if any party denies or fails to do so then the Arbitral Tribunal may choose to invoke the provisions of Section 27 in taking assistance of the Court. The Court based on the order made by the Arbitral Tribunal is empowered to execute the request of its assistance under Section 27. With regard to the rejection of the provisions of the Uncitral Model Law the Delhi High Court further by taking reference to the verdicts of the Supreme Court has stated that the Uncitral Model Law reinforces the powers of the Arbitral Tribunal with regard to its own procedure for directing the parties to produce documents.  Also, the grounds for rejections by the Arbitral Tribunal were found erroneous by the Court, which made it clear that the procedure for regulatory powers for the procedure is a statutory right of the Tribunal. 

Montana Developers Pvt. Ltd vs. Aditya Developers (2016)

Facts of the case

In this case, arbitral proceedings were initiated by Montana Developers Private Limited in the year 2013 against Aditya Developers and Others presided over by the former Chief Justice of India who acted as a sole arbitrator in these proceedings. The arbitrator, once done with the completion of the production of evidence and examination of witnesses from the Petitioner’s side, proceeded further with the review of the evidence and witnesses presented by the Respondents. At this stage, the Petitioners filed an application before the Arbitral Tribunal for further production of documents and the examination of some additional witnesses. This request by the Petitioner was opposed by the Respondent. However, the application was allowed by the Arbitrator. Subsequently, the Petitioner approached the Court and applied under Section 27 for its assistance which was again opposed by the Respondent.

Issues

  • Whether or not the Court has adjudicatory powers with regard to any order made by the Arbitral Tribunal under Section 27 of the Act.
  • Whether or not the Court has the power to question the validity of any order made by the Arbitral Tribunal under Section 27 of the Act?

Judgment

The Bombay High Court in this case has clarified that Section 27 of the Act serves to facilitate the assistance of the Court to the Arbitral Tribunal for the requirements of its proceedings with regard to the production of documents as evidence or examination of any witness. The Court highlighted that Section 19 of the Act clarifies that the Arbitral Tribunals are absolved from being bound by the Code of Civil Procedure 1908 and the Indian Evidence Act,1872. The Court pointed out that the Arbitral Tribunals lacked the authority to issue processes to the witnesses to appear before the Tribunal during the proceedings or to compel any document production. If it appears necessary to the Tribunal for the production of specific witnesses or any document to be produced, it can permit the concerned party to seek the assistance of the Court under Section 27.

The Court made it clear that unlike in a civil suit, the Respondent need not be heard by the Court in cases of arbitration. The Court asserted that once the Arbitral Tribunal determined that the production of certain documents is warranted then the Respondent has no right to object it before the Court. The BHC further highlighted that the Courts are barred from intervening in the proceedings of the Arbitral Tribunal under Section 5 of the Act. Thus, the Court cannot challenge an order of the Arbitral Tribunal granting permission to seek Court’s assistance under Section 27. The powers of the Court under Section 27 are non-adjudicatory and the challenge to such order can only be made at the stage of final award under Section 34 of the said Act.

Steel Authority of India vs. Uniper Global Commodities  (2023) 

Facts of the Case

The case has come up with a situation where the Petitioner and the Respondent were engaged in a Charter Party agreement based on the carriage of the Petitioner’s cargo from the ports of the United States to the ports of Haldia and Vizag in India. The dispute occurred when the Petitioner found them in a situation of demurrage claims concerning the vessel ‘MV Peace Gem’. So, the Respondent brought into effect the arbitration. During the arbitral proceedings, the Petitioner filed an application before the Arbitral Tribunal to seek its approval to approach the Court for its assistance in taking the evidence of a third-party witness. The Arbitral Tribunal allowed the application by the Petitioner without taking note of the relevancy and materiality of the evidence. The Arbitral Tribunal accepted the application of the Petitioner with a view that every party to the dispute has the right to present their case and the Tribunal should not get into the relevancy and materiality of the evidence sought by the parties to dispute.

Issue

  • Whether the Arbitral Tribunals should determine the relevancy or materiality of any evidence sought by any party to dispute when applying for the approval of the Arbitral Tribunal for seeking assistance of the Court in taking evidence?
  • Whether or not the Courts have the power to scrutinise such matters and to what extent can interfere in such matters?

Judgment

The Delhi High Court in this case dismissed the Petition under Section 27 of the Arbitration and Conciliation Act, 1996 on the ground that the Arbitral Tribunal shall consider the significance of the evidence while accepting an application under Section 27 by the parties to seek assistance of the Court. The order of the Arbitral Tribunal was based on the misconception of law that the Arbitral Tribunal is not under the obligation of considering the relevance and materiality of the evidence which are to be sought. However, the Court didn’t intervene in the proceedings of the Arbitral Tribunal and directed it to consider the relevance and materiality of the evidence sought by the parties while accepting the application under Section 27. The overall impression of this case is that the Court cannot interfere in the proceedings of the Arbitral Tribunal but can direct it when it makes an order under a misconception of law.  

Right to appeal 

Section 37 of the Act enumerates provisions for the orders of the Arbitral Tribunal that are appealable before the Court of law. It clearly indicates that no order under Section 27 is appealable. The Gujarat High Court in the case of Aepl Infrastructure Pvt. Ltd. Vs Tehran Jonoob Technical And Construction Company (2023) highlighted that the Court doesn’t have jurisdiction to review or appeal the procedural decisions during arbitration proceedings. The Court verified the very nature of the Court’s role under Section 27 of the Act to not act as an appellate body over the procedural decisions of the Arbitral Tribunal. The Courts are limited to facilitating the arbitration process with their assistance when required by the Tribunal under Section 27 of the Act. 

However, if any party to the dispute before the Arbitral Tribunal, if not satisfied with the final Award, it can appeal before the Court. Section 5 of the Act limits the interference of the Court in Arbitration Proceedings. Any order including the orders made under Section 27 cannot be appealed before the Court of Law. 

Critical analysis of Section 27 of Arbitration and Conciliation Act, 1996

The legal provisions enumerated under Section 27 provide a well-structured legal framework for the smooth functioning of the proceedings before the Arbitral Tribunal in the context of admissibility of evidence, appearance of any witness or the examination of any witness. The Arbitration and Conciliation Act, 1996 lacks in providing any legal procedure of the Arbitral Tribunal in such cases. It requires the Arbitral Tribunal to seek the assistance of the Court in taking evidence so that every order made by the Arbitral Tribunal under Section 27 could be enforceable by law. However, this coordination of the Court and the Arbitral Tribunal gives rise to controversies with regard to the limitation of judicial intervention in arbitral proceedings.

The Arbitration and Conciliation Act provides the provisions and the extent to which the Court can interfere in the arbitration proceedings. Section 5 of the Act limits the judicial intervention in all the provisions where the Court can get involved in the arbitral proceedings.  It emphasises that the role of the Court is limited to performing the actions as given under the provisions of the Act. It ensures the Court’s intervention remains aligned with the objectives of the provisions of the Act and prevents any undue interference in the arbitration procedure..In the context of Section 27 where the Arbitration Tribunal can seek the assistance of the Court in taking evidence, the role of the Court is to execute the request of the  Tribunal. Here the word “Execute” simply indicates the executory powers of the Court under Section 27. This simply means that the Courts are empowered only for the execution of the request made by the Arbitral Tribunal or any aggrieved party approved by the Tribunal. The Court cannot further adjudicate in the same matters. The main responsibility of the Court is to make sure that every request it receives under Section 27 shall be in accordance with its rules in taking evidence.

When deciding an application under Section 27 which requires the Court to assist the Arbitral Tribunal in issuing processes to foreign witnesses and the Court doesn’t have the authority to do so, then the Court can find an alternative solution considering the weight of the evidence which is to be obtained. Basically, the Court, while determining its ability to consider the request of the Arbitral Tribunal in such cases should also determine the demand of the circumstances of the requirement. If the request is beyond the jurisdiction of the Court or not in accordance with its rules, the Court should determine whether or not the situation can be handled with an alternate solution. For instance, the Court can appoint a team and direct them to go to the place from where the evidence has to be collected.

Section 27 of the Act ensures the legality of the orders of Arbitral Tribunals in cases when it requires any documents to be produced by any party to dispute as evidence and also the examination of witnesses or the appearance of the witnesses before it. But lacking any provision under the Act that provides the procedure of the same makes the situation difficult. So, the involvement of the Courts in such cases supports the Arbitral Tribunal to a great extent and stands out as a legal base for the smooth functioning of the proceedings of the Arbitral Tribunal. 

Conclusion

Section 27 of the Act underscores the limited but significant role of the Courts in assisting or supporting the Arbitral Tribunal. The role of the Court under this Section is strictly executory.

The involvement of the Court in arbitral proceedings under Section 27 is limited to the extent that it can assist or support the Arbitral Tribunals in taking evidence in accordance with its rules. The Court can only execute the request by the Arbitral Tribunal but cannot adjudicate against any order made by the Arbitral Tribunal under this Section. The Court lacks the authority to pass any judgement or interfere in the proceedings of the Arbitral Tribunal. The provisions led down under the Act to limit judicial intervention are just to ensure the autonomy and integrity of the arbitral procedure. It maintains the independence of the Arbitral Tribunal in the arbitral proceedings. It further ensures the balance between judicial support and the self-legislation of the Arbitral Tribunal.  Section 27 of the Act is all about the coordination of the Court and the Arbitral Tribunal to strengthen the legality of every order made by the Arbitral Tribunal under Section 27 which limits the Courts to provide the legal support only and not to adjudicate against it.

Frequently Asked Questions (FAQs)

What are the requirements of the aggrieved party to apply for the Court’s Assistance?

  • The aggrieved party who wants to apply for the assistance of the Court shall first obtain the approval of the Arbitral Tribunal. 
  • The aggrieved party shall have sufficient reasons to apply for the assistance of the Court. 
  • For the approval of the Arbitral Tribunal, the Aggrieved party shall furnish the list of the witnesses before the Tribunal and also sufficient reasons to believe that the assistance of the Court is necessary. 
  • The Tribunal, after examining the details provided by the aggrieved party if satisfied, can approve the request of the aggrieved party and allow it to make an application to the Court for its assistance.

Can foreign witnesses be summoned under Section 27?

No, foreign witnesses can’t be summoned under Section 27 as the Courts do not have rules for issuing summons to foreign witnesses. However, the Court, while determining its ability to execute such requests made by the Arbitral Tribunal for issuing processes to the foreign witnesses, also considers the significance of such evidence in arbitral proceedings, and in such circumstances, the Court can make order in accordance with its rules as a possible solution to execute such a request. For instance, the Bombay High Court in a case considering the weight of the evidence appointed an arbitrator as the commissioner of the Court and a team of lawyers and sent them to the place of the foreign witness to record the evidence.

Do the Courts have adjudicatory powers for any order made by the Arbitral Tribunal under Section 27?

The Courts do not have adjudicatory powers against any order made by the Arbitral Tribunal under Section 27. The Courts do not have any power to determine the admissibility, relevancy, materiality and weight of any evidence or any witness which is to be produced or to have appeared before the Arbitral Tribunal. The role of the Courts is limited to the execution of the request made by the Arbitral Tribunal. All required by a Court after receiving the application under Section 27 is to ensure that it should be in accordance with the rules of the Court in taking evidence and the Court is competent to execute such request. 

What is the interpretation of the term “Competency” under Section 27?

The term “Competency” under Section 27 refers to the Court’s ability to execute the request made by the Arbitral Tribunal or any aggrieved party approved by the tribunal. When a Court receives an application under Section 27, it should determine its ability in terms of jurisdiction and the relevancy of the request with its rules on taking evidence. Also, the Court if found itself deprived of any action which is necessary to execute such a request of the Tribunal then it can find any possible way to tackle the challenges but it should be in accordance with its rules. 

Is any order made under Section 27 appealable? 

No, the Courts are not an appellate forum for any order made under Section 27 by the Arbitral Tribunal. Section 37 of the Arbitration and Conciliation Act makes it clear which orders are appealable in the Courts under this Act. Section 27 doesn’t fall under the orders mentioned under Section 37 of the Act which are appealable.

References 

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