Denial of fair opportunity in arbitration can justify setting aside an award for breach of natural justice and public policy.
An arbitral award may be set aside where a party is denied a real and reasonable opportunity to present its case, because such procedural unfairness violates the equality and full-opportunity mandate of Section 18 of the Arbitration and Conciliation Act, 1996. On the facts described, insufficient time for evidence and cross-examination, along with rejection of the request to waive costs, prevented the respondent from completing its case and amounted to denial of natural justice. That defect attracted interference under Section 34(2)(a)(iii) and Section 34(2)(b)(ii), and the disputes were directed to be heard afresh by a newly appointed arbitrator, with interest left open in the fresh proceedings.
Issues: Whether the arbitral award was liable to be set aside for denial of a full and fair opportunity to the respondent and consequent violation of natural justice and public policy; and whether the disputes required fresh adjudication by a newly appointed arbitrator.
Analysis: The respondent was given insufficient opportunity to complete its evidence and cross-examination, as the affidavit evidence tendered by it was not taken on record after rejection of its request for waiver of costs, even though the proceedings had already moved at a rapid pace. The resulting conduct deprived the respondent of a reasonable chance to present its case. Such procedural haste, in the facts of the case, offended the equality and full-opportunity mandate of Section 18 and brought the award within the grounds for setting aside under Section 34(2)(a)(iii) and Section 34(2)(b)(ii) of the Arbitration and Conciliation Act, 1996.
Conclusion: The award was rightly set aside for violation of natural justice and public policy, and the disputes were directed to be adjudicated afresh by a newly appointed arbitrator.
Final Conclusion: The appeal was disposed of by sustaining the setting aside of the award while providing for fresh arbitration before a new arbitrator, with the question of interest left open for decision in the fresh proceedings.
Ratio Decidendi: An arbitral award is liable to be set aside where a party is denied a real and reasonable opportunity to present its case, since such denial violates Section 18 and attracts the statutory grounds of interference under Section 34.
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