Arbitral procedure waiver and limited judicial review: challenge to award failed where cross-examination was knowingly dispensed with.

An arbitral award was challenged on the ground that parties were denied cross-examination and an opportunity to lead evidence, but the record showed consent to a procedure based on affidavits and documents, with closure of evidence recorded in the presence of parties and counsel. The later objection was therefore not enough to justify interference, as no statutory ground for setting aside the award was made out. The challenge that the arbitrator ignored individual claims and construction expenditure was also rejected because the award dealt with the competing claims and gave reasons for disallowing the expenditure claim for want of reliable proof. Judicial review under sections 34 and 37 remained confined to narrow limits.

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Issues: (i) Whether the High Court was justified in remanding the arbitral dispute on the ground that the parties were denied an opportunity to cross-examine witnesses and lead evidence. (ii) Whether the arbitral award could be set aside on the ground that the arbitrator did not consider the individual claims and the claim relating to expenditure on construction.

Issue (i): Whether the High Court was justified in remanding the arbitral dispute on the ground that the parties were denied an opportunity to cross-examine witnesses and lead evidence.

Analysis: The arbitral proceedings showed that the parties had agreed on the procedure and had consented to rely on affidavits and documents without cross-examining the witnesses. The closure of evidence was recorded in the presence of the parties and their counsel. In such circumstances, a later objection that proper opportunity was not granted could not be sustained. A procedural challenge of this kind, in the facts, did not establish any ground under the limited scope of interference available against an arbitral award.

Conclusion: The objection based on denial of opportunity and absence of cross-examination was rejected, and the remand ordered by the High Court on that ground was unsustainable.

Issue (ii): Whether the arbitral award could be set aside on the ground that the arbitrator did not consider the individual claims and the claim relating to expenditure on construction.

Analysis: The award disclosed a sequential consideration of the competing claims, counterclaims, and the factual dispute regarding delay and breach. The claim that construction expenditure of about Rs. 1.22 crore had not been considered was specifically dealt with in the award, and the arbitrator recorded reasons for not accepting the claimed expenditure in the absence of reliable proof. The challenge therefore did not fall within the statutory grounds for setting aside the award, and the appellate interference by the High Court went beyond the permissible scope of review under the arbitration law.

Conclusion: The award was not liable to be disturbed on the ground of non-consideration of claims or expenditure, and the High Court's order of remand was set aside.

Final Conclusion: The arbitral award stood restored, the High Court's remand order was annulled, and limited equitable relief was moulded by directing payment of Rs. 45,00,000 to the respondent with consequential rights over possession in accordance with the order.

Ratio Decidendi: Where parties have expressly agreed to an arbitral procedure and recorded waiver of cross-examination, a later plea of denial of opportunity cannot justify setting aside the award unless actual prejudice and a statutory ground for challenge are established; judicial interference under sections 34 and 37 remains confined to the narrow statutory limits.

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