A Single Judge bench of the Bombay High Court, in a recent judgment in Montana Developers Private Limited v Aditya Developers and Ors.1 has explained the role of the Court in dealing with an application under §27 of the Arbitration and Conciliation Act 1996 ['Act'] for issuance of witness summons and production of documents.

In this case, the question before the Court was whether under §27 of the Act, the Court has the power to determine the validity of the orders passed by an Arbitral Tribunal, granting permission to a party to move an Application before the Court, seeking its assistance in recording evidence. In summary, whether the Court's powers under §27 were judicial or merely procedural.

Facts

The Montana Developers Private Limited ['Montana'] and Aditya Developers and others ['Aditya'] were the Claimant and Respondents respectively, in the arbitration proceedings. The evidence of the Montana was closed and the cross examination of Aditya's witness was being conducted. At this stage, Montana filed an application before the Arbitrator, seeking permission to examine more witnesses and production of various documents. Aditya opposed the said application, but the Arbitrator granted permission to Montana for filing an application under section §27 of the Act for issuance of witness summons and production of documents.

Contentions

In proceedings before the Court, Aditya argued that the Court's powers under §27 were adjudicatory and it can examine the merits of the orders passed by the Tribunal allowing Montana to file an Application under §27. In support of its case, Aditya relied upon judgments passed by the Delhi High Court, namely Reliance Polycrete Limited v National Agricultural Co-operative Marketing Federation of India2.

Montana on the other hand, argued that §27 only provided for a mechanism through which the Tribunal could record evidence. The Act provided for no challenge to an order passed by the Tribunal under §27 and therefore §5 of the Act was an effective bar against any such challenge.

Decision

The Court in its decision allowed the petition under §27 for the following reasons:

  1. The Court noted that in proceedings under §27 of the Act, the Court could not examine the merits of the order passed by the Tribunal allowing a party to approach the Court to assist in recording evidence. The Court agreed with Montana's contention that §27 of the Act only provided a mechanism for recording of evidence and no further.
  2. In its judgment, the Court ruled that even in the case of an ordinary Suit, in an application for issuance of witness summons or for production of document, the Respondent was not required to be heard by the Court on merits. These principles would not change in the context of an Arbitral Tribunal, particularly when the Tribunal was not bound to follow the rigour of the Civil Procedure Code 1908 and the Indian Evidence Act 1872. In the circumstances, Aditya now cannot raise objections on the merits of the order passed.
  3. The Court further held that §5 of the Act does not permit a challenge to an order passed by the Arbitral Tribunal under §27 of the Act. Therefore, the question of challenging the validity of the order passed by the Tribunal under §27 does not arise. The Court refused to consider the order of the Delhi High Court in Reliance Polycrete as it failed to take in to account §5 of the Act which effectively bars such a challenge. The Court ruled that such an order could be challenged under §34 of the Act only, at the time when the final award was being challenged.

The decision of the Bombay High Court is in a long line of cases where the Court has thwarted attempts to increase judicial interference in arbitration. The judgment is likely to act as an effective guideline for Courts while dealing with §27 Applications.

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Footnotes

[1] Arbitration Petition (L) No. 680 of 2016 pronounced on 22 July 2016

[2] 2008 SCC OnLine Delhi 837

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