2001 (10) TMI 1183 - HC - Indian Laws

Arbitration award set aside due to violations of natural justice - case remitted for new decision

Daisy Trading Corporation Versus Union Of India

The court found violations of natural justice in the arbitration proceedings, leading to an ex parte award against the petitioner without a fair ... - Issues involved:1. Violation of principles of natural justice in arbitration proceedings.2. Ex parte award without giving fair opportunity to the petitioner.3. Misconduct by the Arbitrator in proceeding ex parte.4. Setting aside the award and remitting the case to the Arbitrator for re-decision.5. Appointment of a new Arbitrator by the respondent.Issue 1: Violation of principles of natural justice in arbitration proceedings:The judgment highlights that the arbitration proceedings lacked adherence to the principles of natural justice. The petitioner was not given a fair opportunity to present their case, as evidenced by the absence of the petitioner's counsel during crucial proceedings. The Arbitrator proceeded ex parte against the petitioner without ensuring proper notice and hearing, indicating a violation of natural justice principles.Issue 2: Ex parte award without giving fair opportunity to the petitioner:The judgment emphasizes that the Arbitrator's decision to proceed ex parte against the petitioner was based on presumed sufficient service, which was not backed by concrete evidence of proper notice delivery. The petitioner was not adequately heard or given a chance to respond to the claims made by the respondent. The lack of counter-claim by the respondent further underscores the unfairness of the ex parte proceedings.Issue 3: Misconduct by the Arbitrator in proceeding ex parte:The judgment points out that the Arbitrator's actions, influenced by the respondent's insistence, led to a hasty decision-making process that disregarded the petitioner's rights. The Arbitrator's failure to ensure a balanced and just hearing for both parties, especially in the absence of a counter-claim by the respondent, is deemed as misconduct. The award made under such circumstances is considered legally unsound and in violation of natural justice principles.Issue 4: Setting aside the award and remitting the case to the Arbitrator for re-decision:In light of the violations of natural justice and the misconduct by the Arbitrator, the judgment concludes that the award cannot be sustained in the eyes of the law. The decision is made to set aside the award and remit the case to the Arbitrator for re-decision. This step is deemed necessary to ensure a fair and just resolution in accordance with the principles of arbitration and natural justice.Issue 5: Appointment of a new Arbitrator by the respondent:The judgment acknowledges the respondent's request to appoint a new Arbitrator since the previous Arbitrator is no longer on the panel. The court grants the respondent the liberty to appoint a replacement Arbitrator from the panel within a specified timeframe. The parties are directed to appear before the new Arbitrator for further proceedings, ensuring the transmission of all relevant records for a fresh assessment and decision-making process.Conclusion:The judgment ultimately allows the objections, sets aside the award, and remits the case to a new Arbitrator for re-decision. The importance of upholding natural justice principles in arbitration proceedings is emphasized, highlighting the need for fairness, balance, and proper hearing for all parties involved.