2025 (1) TMI 259 - SC - Indian Laws

Supreme Court overturns order granting additional cross-examination opportunity after extensive twelve-hour witness examination in arbitration

SEROSOFT SOLUTIONS PVT. LTD. Versus DEXTER CAPITAL ADVISORS PVT. LTD.

SC allowed appeal challenging HC's order granting additional cross-examination opportunity to claimant under Article 227. Arbitral Tribunal had rejected ... Principles of natural justice - whether the High Court has correctly exercised its supervisory jurisdiction under Article 227 in granting the respondent/claimant one more opportunity to crossexamine appellant/respondent’s witness, despite the Arbitral Tribunal rejecting such a prayer? - HELD THAT:- Section 11 application was allowed by the High Court on 08.05.2023 leading to the constitution of the Tribunal which held the first hearing on 19.05.2023. It is evident that the cross-examination of the appellant/respondent’s witness RW-1 commenced on 09.12.2023 when the respondent/claimant’s counsel asked 9 questions on that very day and the cross was adjourned for 10.02.2024. On 10.02.2024, the record shows that the crossexamination commenced at 11 am and concluded by 7 pm during which time the respondent/claimant’s counsel asked as many as 104 questions to the said witness. After a long lapse of almost 8 months, during which period the mandate of the Arbitral Tribunal was exhausted, the cross-examination commenced on 01.10.2024. Even on that day the cross-examination was commenced at 5.35 pm and concluded at 7.40 pm, which is more than two hours. The Arbitral Tribunal seems to have given full opportunity to all parties, which is amply evident from the record. On the other hand, the unrestrained cross-examination of RW-1 by the respondent/claimant has already exceeded 12 hours, but the respondent/claimant does not seem to be satisfied with it. Even as per the quote hereinabove interference under Article 226/227 is ‘permissible only if the order is completely perverse i.e. that the perversity must stare in the face.’ Condition (vi) to (x) underscores the reason why High Courts ought not to interfere with orders passed by the Arbitral Tribunals for more than one reason. Conclusion - There are no justification in the order passed by the High Court in interfering with the directions of the Arbitral Tribunal holding that full and sufficient opportunity to cross-examine RW-1 has already been given and no further extension of time is warranted. Appeal allowed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions addressed in this judgment are:Whether the High Court correctly exercised its supervisory jurisdiction under Article 227 of the Constitution in directing the Arbitral Tribunal to grant the respondent/claimant additional time to cross-examine the appellant/respondent's witness, RW-1, despite the Tribunal's decision to the contrary.Whether the respondent/claimant was denied an adequate opportunity to cross-examine RW-1, thereby justifying judicial intervention.What are the limits of judicial interference in arbitral proceedings under Articles 226 and 227 of the ConstitutionRs.2. ISSUE-WISE DETAILED ANALYSISIssue 1: High Court's Exercise of Supervisory JurisdictionRelevant Legal Framework and Precedents: Article 227 of the Constitution empowers High Courts to supervise subordinate courts and tribunals. The principle of judicial restraint in arbitration, as outlined in relevant case law, discourages excessive interference in arbitral proceedings.Court's Interpretation and Reasoning: The Supreme Court emphasized that judicial interference should be minimal and only in cases of clear perversity. The High Court's decision to allow further cross-examination was deemed unnecessary, given the ample opportunity already provided.Key Evidence and Findings: The Tribunal's records showed extensive cross-examination of RW-1, totaling over 12 hours. The Tribunal had already extended time for cross-examination twice, indicating sufficient opportunity was given.Application of Law to Facts: The Supreme Court found no evidence of denial of opportunity for effective cross-examination. The High Court's intervention lacked justification as no exceptional circumstances or bad faith were demonstrated.Treatment of Competing Arguments: The respondent/claimant argued for additional time citing inadequate opportunity, while the appellant/respondent maintained that sufficient time had been provided. The Supreme Court sided with the appellant/respondent, emphasizing the Tribunal's discretion and the need for judicial restraint.Conclusions: The High Court's order was set aside, reinforcing the principle of minimal judicial interference in arbitration.Issue 2: Adequacy of Opportunity for Cross-ExaminationRelevant Legal Framework and Precedents: Section 18 of the Arbitration Act mandates equal treatment of parties and full opportunity to present their case. However, this must be balanced with the need for efficiency and finality in arbitration.Court's Interpretation and Reasoning: The Supreme Court noted that the Tribunal had adhered to its obligations under Section 18 by providing multiple opportunities for cross-examination.Key Evidence and Findings: The record showed that RW-1 was cross-examined extensively over multiple sessions, and the Tribunal had exercised its discretion judiciously.Application of Law to Facts: The Tribunal's decision to conclude cross-examination was consistent with its mandate to conduct proceedings efficiently. The Supreme Court found no breach of the right to a fair hearing.Treatment of Competing Arguments: The respondent/claimant's request for further cross-examination was viewed as excessive, lacking substantive justification.Conclusions: The Tribunal's decision was upheld, affirming the adequacy of the opportunity provided for cross-examination.Issue 3: Limits of Judicial Interference in Arbitral ProceedingsRelevant Legal Framework and Precedents: Judicial restraint in arbitration is a well-established principle, with interference permissible only in cases of clear perversity or bad faith.Court's Interpretation and Reasoning: The Supreme Court reiterated that interference under Articles 226/227 should be rare and justified only by exceptional circumstances.Key Evidence and Findings: The High Court's reliance on a precedent was misplaced, as the conditions for interference were not met.Application of Law to Facts: The Supreme Court found no evidence of perversity or exceptional circumstances warranting interference.Treatment of Competing Arguments: The appellant/respondent's argument for non-interference was supported by the principle of arbitral autonomy and efficiency.Conclusions: The Supreme Court reinforced the principle of limited judicial interference, setting aside the High Court's order.3. SIGNIFICANT HOLDINGSVerbatim Quotes of Crucial Legal Reasoning: The Supreme Court stated, 'Interference is permissible only if the order is completely perverse i.e. that the perversity must stare in the face.'Core Principles Established: The judgment underscores the principles of minimal judicial interference in arbitration, the adequacy of opportunity for cross-examination, and the importance of arbitral efficiency.Final Determinations on Each Issue: The appeals were allowed, the High Court's order was set aside, and the Arbitral Tribunal was directed to resume and conclude proceedings expeditiously.