Madras High Court
M/S.Chennai Metro Rail Limited vs The Joint Venture M.S on 1 June, 2021
Author: N. Sathish Kumar
Bench: N. Sathish Kumar
Original Petition Nos.96 & 97 of 2021
THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on Delivered on
20~10~2021 28 ~10~2021
CORAM:
THE HONOURABLE MR.JUSTICE N. SATHISH KUMAR
ARBITRATION ORIGINAL PETITION Nos.96 & 97 of 2021 &
A.Nos.2868 & 2870 of 2021
M/s.Chennai Metro Rail Limited,
Administration Building,
Chennai Metro Rail Depot,
Poonamallee High Road,
Koyambedu, Chennai – 600 107. ... Petitioner in both O.Ps.
.Vs.
The Joint Venture M.s,Transtonnelstroy – Afcons JV
Comprising of,
1] Transtonnelstroy Limited,
4/1. Luganskaya Str,
Moscow, 115516, Russia.
AND
2] Afcons Infrastructure Limited,
Afcons House, 16, Shah Industrial Estate,
Veera Desai Road, Azad Nagar [P.O.],
Post Box No.11978, Andheri [W],
Mumbai – 400 053. ... Respondents in both O.Ps.
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https://www.mhc.tn.gov.in/judis/
Original Petition Nos.96 & 97 of 2021
Prayer: Petitions filed under section 34 [2] [a] [iv], 34 [2] [b] [ii], 34 [2A] read
with sections 18 and 28 of the Arbitration and Conciliation Act, 1996 [As
Amended] to set aside the impugned Award dated 01.06.2021 passed by the
Arbitral Tribunal and allow these petitions with costs.
For Petitioner : Mr.R.Yashod Vardhan, SC
for Mr.S.Arjun Suresh
For respondents : Mr.G.Masilamani, SC
for Mr.D.Balaraman
COMMON ORDER
Aggrieved over granting extension of time in both the petitions O.P.No.96 of 2021 and 97 of 2021 have been filed challenging the awards.
2. The subject matter of O.P.No.96 of 2021 is the scope of work relating to design and construction of underground stations at Shenoy Nagar, Anna Nagar East, Anna Nagar Tower, Thirumanalam and Associated Tunnels in respect of the Contract No.UAA-05 The date of commencement of the contract was on 07.02.2011 and scheduled date of completion was on 07.01.2015. The total Contract value is Rs.1030.99 crores. However, the revised completion date was Page 2 / 30 https://www.mhc.tn.gov.in/judis/ Original Petition Nos.96 & 97 of 2021 agreed upon between the parties by an addendum dated 29.08.2013 and the completion dated was extended upto 05.07.2015.
3. In respect of subject matter of O.P.No.97 of 2021, the scope of work relate to design and construction of underground stations at Washermanpet, Mannadi, High Court, Chennai Central and Egmore and Associated Tunnels in respect of Contract No.UAA-01. The contract commencement date was on 07.02.2011 and scheduled completion date was on 07.04.2015. The value of the contract was Rs.1556.81 crores. The revised completion date as per the addendum was extended upto 30.03.2016.
4. As the dispute arose between the parties in respect of the contracts, particularly, with regard to the extension of time, the matter has been referred to arbitral tribunal. The claimant herein after called as TTA-JV made the claim in respect of the contract in U.A.A.No.05 [O.P.No.96 of 2021] before the arbitral tribunal. In Claim No.1 extension of time is sought up to 28.12.2017 for the events between 07.02.2011 and 31.12.2012. In Claim No.2, extension was sought upto 26.01.2019 for the events between 16.04.2013 and 31.05.2014. However, the Page 3 / 30 https://www.mhc.tn.gov.in/judis/ Original Petition Nos.96 & 97 of 2021 Arbitral Tribunal had passed the following award :
1] The Claimant is entitled to an Extension of Time for 179 days for overall completion of the works [i.e., KD-17: Achieve issuance of taking Over Certificate] with the revised Key dates as per Annexure – 1 of Addendum No.1, on account of Respondent's delay upto 15.04.2013.
2] The Claimant is entitled to further Extension of Time for 302 days for overall completion of the works with revised date as 02.05.2016 [i.e., KD-17: Achieve issuance of Taming Over Certificate] and with revised key dates for completion of individual Key dates as tabulated in Annexure -9 of this award, on account of respondent's delay upto 31.05.2014.
3] The Claimant is not liable to pay any Liquidated damages till the revised date for achievement of each Key Dates as detailed in Annexue – 9 of this Award and the refund of LD amount under Claim Nos.1 & 2 of this Award shall be made only upon considering the further revision of Kds if any in the final adjudication of all extension of time claims under the Contract. Page 4 / 30 https://www.mhc.tn.gov.in/judis/ Original Petition Nos.96 & 97 of 2021 4] The Parties are directed to equally share the Arbitrators fees and Arbitral proceedings expenses. However, th expenses incurred by each party in connection with the preparations, presentations etc., of its case prior to, during and after the proceedings shall be borne by each party itself.
5. O.P.No.97 of 2021 is in respect of the contract in U.A.A. No.01, wherein the claimant, before the arbitral tribunal in Claim No.1 claimed extension of time is sought up to 28.12.2020 for the events between 07.02.2011 and 28.02.2013. In Claim No.2, extension was sought upto 15.05.2021 for the events between 16.04.2013 and 31.05.2014. However, the Arbitral Tribunal had passed the following award :
1] The Claimant is entitled to an Extension of Time for 357 days for overall completion of the works [i.e., KD-19: Achieve issuance of taking Over Certificate] with the revised Key dates as per Annexure – 1 of Addendum No.1, on account of Respondent's delay upto 15.04.2013.
Page 5 / 30 https://www.mhc.tn.gov.in/judis/ Original Petition Nos.96 & 97 of 2021 2] The Claimant is entitled to further Extension of Time for 851 days for overall completion of the works with revised date as 29.07.2018 [i.e., KD-19: Achieve issuance of Taming Over Certificate] and with revised key dates for completion of individual Key dates as tabulated in Annexure -9 of this award, on account of respondent's delay upto 31.05.2014.
3] The Claimant is not liable to pay any Liquidated damages till the revised date for achievement of each Key Dates as detailed in Annexue – 9 of this Award and the refund of LD amount under Claim Nos.1 & 2 of this Award shall be made only upon considering the further revision of KDs if any in the final adjudication of all extension of time claims under the Contract.
4] The Parties are directed to equally share the Arbitrators fees and Arbitral proceedings expenses. However, th expenses incurred by each party in connection with the preparations, presentations etc., of its case prior to, during and after the proceedings shall be borne by each party itself.
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6. Since both the Original petitions relate to extension of time and the challenge was made on the same grounds, this Court is inclined to dispose both the Original Petitions in a Common Order.
7. Though several grounds have been raised, the main challenge against the award is that no opportunity has been given to the petitioner herein. Besides, unmarked documents have been relied upon by the arbitral tribunal after concluding the arguments of both sides and without giving any opportunity to the petitioner to disprove the data said to have been produced by the respondent herein. The learned Senior Counsel appearing for the petitioner has pressed his arguments mainly on the ground that the very data or particulars relied upon by the respondent were disputed by the petitioner. Such being the position, when the correctness of the entries in the so called software were disputed and without giving an opportunity to produce evidence to show that such particulars were entered by the respondent on their own, the same goes to the root of the matter. Hence, it is his contention that the learned arbitral tribunal have relied upon the unmarked documents without giving an opportunity to the petitioner. Therefore, it Page 7 / 30 https://www.mhc.tn.gov.in/judis/ Original Petition Nos.96 & 97 of 2021 is his contention that such procedure adopted by the trbunal in passing the award in extending the time limit [EOT] cannot be sustained in the eye of law.
8. Whereas, the learned Senior Counsel appearing for the respondent mainly contended that the data and the particulars were maintained from the very inception of the contract and copies have been furnished to the petitioner. The software relied upon by the arbitral award were sought to be maintained as per the contract. In the contract itself, it is specifically agreed that only the software which was produced has been maintained by the parties and various details and data have been entered then and there and copies have been furnished to the other side. Only such data have been relied upon by the learned arbitral tribunal being the technical persons. In such view of the matter, it is his contention that merely because further opportunity has not been provided to the petitioner, it cannot be said that no opportunity has been provided. It is his contention that what was relied upon by the arbitral tribunal is the admitted documents. Therefore, the question of granting further opportunity will not arise. It is his further contention that as per Clause [4.14] CPA [15], Appendix [4] Employer's Requirement – programmes relating to submission of Baseline Programme [BLP] Page 8 / 30 https://www.mhc.tn.gov.in/judis/ Original Petition Nos.96 & 97 of 2021 and updated Baseline Programmes on the monthly basis to the ER with a copy to CMRL in Primavara P6 Software as per the requirement of Contract Clause 3 of Appendix 4 Programme Requirements. It is his further contention that the primary object of the above said programme was to monitor the progress works, through the special computer software [Primavara P6] especially when the monthly updated dated programme running more than 100 printed pages containing 1000s of datas / numbers relating to achievements of Key Datas [KDs] for this complex project with various interface and system wide contractors operating in overlapping works of several kinds.
9. It is the further contention of the learned Senior Counsel that pursuant to the contract clauses TTA-JV submitted the Baseline Programme [BLP] [detailed chart with dates for commencement and completion of each work by the Contractor] to ER and the same was approved on 27.07.2011. It is his contention that the said BLP was submitted before the Tribunal along with SOC. Further, TTA-IV had submitted contemporaneously regular monthly Updated Rolling Programmes to the ER with a copy to CMRL. Moreover, the said programmes were uploaded in the DMS [Document Management System], which were Page 9 / 30 https://www.mhc.tn.gov.in/judis/ Original Petition Nos.96 & 97 of 2021 accessible to the ER / CMRL. Such updated monthly Programmes upto 28.02.2013 and 31.05.2014 were submitted to the respondent /CMRL [Hard & Soft Copy] on 08.03.2013 and 16.06.2014 respectively. The same were received and acknowledged by the ER / CMRL. As per Clause 5.5 of Appendix 4, Programme Requirements of the Contract, the ER shall review and comment on the Programme and information submitted by TTA-JV, within 4 weeks and otherwise issue notices, if any. Having received the programme and information on 08.03.2013 and 16.06.2014, ER did not issue any notice or otherwise on the submission made by TTA-JV. Whereas, for the first time in their memo dated 30.09.2020, the petitioner has denied the contents of the programmes before the tribunal. Before the Tribunal, the petitioner also admitted that the Rolling programme dated 16.06.214 submitted by the claimant is significant to the adjudication of the present issue and the rolling and updated programmes forms integral part of the contemporaneous records to determine the instant dispute.
10. It is his further contention that since the Monthly uptated programme was submitted by TTA-JV, the said Rolling programme updated in contemporaneous records. It is his further contention that the petitioner has Page 10 / 30 https://www.mhc.tn.gov.in/judis/ Original Petition Nos.96 & 97 of 2021 neither objected to the direction of the Tribunal to produce the updated programmes which was the same programme submitted in the year 2013, 2014 of TTA-JV to ER and CMRL. Hence, it is his contention that the programmes submitted before the tribunal is not a new one and therefore, it cannot be said that the tribunal has no power to look into the document which is not in dispute. Hence, it is his contention that merely because the number was not given for the documents, it cannot be said that the tribunal has no power to look into the documents. Therefore, the strict procedure of the Evidence Act cannot be expected before the tribunal both in respect of rolling and updated programme. The software was in possession of both the parties since 2013 and 2014. Therefore, the alleged objection is nothing but an empty and useless formality and the same is not maintainable. There is no allegation of misconduct or bias against Arbitral Tribunal. The petitioner is aware of all the above details and it is already spelt out in the affidavit filed in the application filed under section 23 of the Arbitration and Conciliation Act. Therefore, they cannot contend that they have no knowledge about the document. In support of his contentions, he relied on the following judgments :
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https://www.mhc.tn.gov.in/judis/ Original Petition Nos.96 & 97 of 2021 MCDermott International Inc. Vs. Burn Standard Co. Ltd. and others reported in [2006] 11 SCC 181 K.P.Poulose Vs. State of Kerala and another reported in [1975] 2 SCC 236 Ssangayong Engineering Vs. NHAI reported in [2019] 15 SCC 131 Delhi Airport Metro Express Pvt. Ltd. Delhi Metro Rail Corporation Ltd. reported in 2021 SCC OnLine 695 Delta Distilleries Ltd. Vs. United Spirit Ltd. reported in 2014 [1] SCC 113
11. It is not in dispute that the claim and cost related claims are pending before the same tribunal in both the original petitions. The subject matter of the awards is only for extension of time. It is relevant to note that the claimant adopted the Key Dates as per the Addendum No.1 and sequences between Key Dates as per the appendix 2B of the contract to arrive at the time of completion. The learned arbitral tribunal infact has observed in Volume 2 of the impugned award in page No.156 para [o] that apart from the reasons stated by the claimant, Page 12 / 30 https://www.mhc.tn.gov.in/judis/ Original Petition Nos.96 & 97 of 2021 the erroneous logic adopted by the claimant in the Appendix – C might have resulted to discrepancy in days of extension sought under EOT-1 & Claim No.1.
12. In para [q] of the award, the arbitral tribunal has held as follows :
In view of the above, the tribunal arrives at a conclusion that after analyzing/arriving at a decision on individual delay events, the same will be impacted in the respective contemporaneous detailed work programme [CPM network Primavera programme], to assess the effect on times for completion of individual Kds & also on overall complete of works. The impact analysis shall be performed by this Tribunal using the CPM programming software [Primavera software] installed by he Claimant as per our directions. It is relevant to note that the Tribunal themselves analysed using CPM programma primavera installed by the claimant as per the tribunal directions. Such primavera software produced before the tribunal has not been accepted as documents. It is not in dispue that these documents came on record after completion of the arguments by both sides.
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13. Further, the tribunal in para 7.2.4 has held as follows :
“... During the cross examination, the C.W.3 confirmed some of his statements. However, he is unable to reconcile some of the calculatiosn and the quantification of the claims as pointed by the respondent during the arguments. Further, C.W.3 has made some incorrect statements as evident from the deposition that is relied upon the respondent during the course of arguments. The Tribunal observed various arithmetic and computational errors admitted by C.W.3. The Tribunal also observed that there is a flaw in the methodology and logic in quanitifcation of claims. Hence, the quantification part of the claim explained by C.W.3 is not acceptable by the Tribunal. Further, the Tribunal during the internal deliberations decided to adopt Critical Path Method using Primavera Software [P6], used in the project, which was furnished by the parties. In view of the above, the evidence of C.W.3 with reference to quantum analysis for determination of extension of time and quantification of claims and the statements of C.W.3 wherein he Page 14 / 30 https://www.mhc.tn.gov.in/judis/ Original Petition Nos.96 & 97 of 2021 himself admitted errors were not relied on by this Tribunal in the subsequent analysis.” and finally, the tribunal not relied upon the evidence of C.W.3, has analysed the revised data work programme to arrive at a conclusion on EOT. Such documents were unmarked before the tribunal during the course of trial or arguments and the documents came on record only after the arguments and finally, the tribunal passed the award granting extension of time. The entire extension of time is based on the updated programme as on 31.05.2014.
14. The documents available on record placed before this Court indicate that the claimant was taking steps to instal primavera software in the Presiding Arbitrator computer tribunal only on 21.04.2021 and the communication also indicate that the claimant is taking necessary steps for instalment of requisite software. The rolling and the updated programme as on May 2014 have been submitted to the ER on 07.06.2014 and the same was not marked before the learned arbitrator.
15. The petitioner has filed an application under Section 23 of the Page 15 / 30 https://www.mhc.tn.gov.in/judis/ Original Petition Nos.96 & 97 of 2021 Arbitration and Conciliation Act before the arbitral tribunal, wherein, a specific stand has been taken stating that the purported impact analysis based on CPM which took into account all events upto 31.05.2014 and the respondent infact specifically disputed the contents of the rolling programme. The entries found were disputed by the respondent namely the petitioner herein. It is their specific case that the claimant has failed to consider any delays that are attributable to it while preparing the aforesaid rolling programme and consequently, the petitioner strongly denied the data and contents of the aforesaid document as well as the alleged analysis of the claimant in preparing the same, in the entirety. In the same application, the petitioner herein has submitted that the rolling programme dated 16.06.2014 to be taken on record to prove their case, besides the affidavit dated 07.07.2020 filed by the claimant. Objections have been filed by the claimant for the above application. In para 6 of the objections, the claimant themselves admitted that they are not relying on the rolling programme which sought to be relied upon by the respondent. The learned arbitral tribunal has passed an Order in the above application on 22.10.2020, wherein it has been held as follows :
“Further, when the respondent is denied the data and contents of the said documents in its entirety and the Claimant is also not Page 16 / 30 https://www.mhc.tn.gov.in/judis/ Original Petition Nos.96 & 97 of 2021 relying the said document, the Tribunal is unable to understand, why such document is to be marked before this Arbitral proceedings and more particularly at the concluding stage of arbitration proceedings.
5. However, the Arbitral Tribunal considered the said application, since the reconstituted Arbitral Tribunal hearing the matters afresh and the Affidavit of the Claimant dated 07.07.2020 being a recent document, the Arbitral Tribunal following the principles of natural justice, decided to provide another and full opportunity to the Respondent. Accordingly, the Rolling Progamme dated 16.06.2014 is taken on record as Exhibit R-301 and the Affidavit dated 07.07.2020 is taken on record as Exhibit R-302. The above said two docuemnts are taken on record subject to relevancy and materiality to the dispute before the Arbitral Tribunal. The Claimant is also given liberty to raise the objections and to make submissions with reference to the above said documents.”
16. It is to be noted that the tribunal had considered the communication by way of an email in both cases on 16.04.2021 and 15.03.2021 directing the Page 17 / 30 https://www.mhc.tn.gov.in/judis/ Original Petition Nos.96 & 97 of 2021 respondents herein to submit primavera software. The rolling programme of the year 2013 was never marked before the arbitral proceedings. The above email indicate that the primavera software was installed in one of the computer of the tribunal which has not been communicated to the petitioner herein. Ultimately, the tribunal extended time only based on the above unmarked rolling programme as on 28.02.2013 and 16.04.2013 and 31.05.2014 respectively. When the parties have raised certain dispute with regard to the data and entries which was stored in the computer and software, merely because the particular software is sought to be followed as per the contract, the contents or data cannot be taken as gospel truth on its face value, particularly, when both sides have raised certain reservations as to the rolling program. The tribunal being a technical member having decided in their internal deliberations to analyse the data stored in the primavera software ought to have given an opportunity to the parties, particularly after embarking such an exercise. Only on such opportunity being given, the parties would have been in a better position to show each of the entries are binding and reliable and which of the entries are not relied and not proved. Only on the proof of such entries or by way of an admission, the documents can be relied upon by the tribunal. No doubt, strict rule of Evidence Act is not required to be followed by Page 18 / 30 https://www.mhc.tn.gov.in/judis/ Original Petition Nos.96 & 97 of 2021 the Tribunal. However, fundamental principles governing the fields of adjudication to prove any document cannot be ignored altogether. In this case, the tribunal has relied upon the software and rolling programmes which was produced after the arguments was over and the tribunal themselves had undertaken such an exercise to analyse the entires and concluded its finding by extending EOT.
17. In McDemott International Inc. Vs. Burn Standard Co. Ltd. and others reported in [[2006] 11 SCC 181], the Apex Court has held that the quantification of claim computed by taking recourse to one other formula, having regard to the facts and circumstances of the case, would eminently fall within the domain of the arbitrator and if the arbitrator, applied a particular formula in assessing the amount of damages, he cannot be set to have committed an error warranting interference by the Court. Absolutely, there is no dispute with regard to the above judgment.
Though adopting the well known formula fall within the domain of the tribunal, such a principle cannot be imported in relying any documents, which is, in fact, not admitted by the other side.
18. In K.P.Poulose Vs. State of Kerala and another reported in [[1975] 2 Page 19 / 30 https://www.mhc.tn.gov.in/judis/ Original Petition Nos.96 & 97 of 2021 SCC 236, the Honourable Apex Court has held that if the materials required to arrive at just and fair decision to resolve the controversy between the parties, even if one party did not produce the documents before the arbitrator, it was incumbent pon him to get hold of relevant documents for the purpose of just decision.
19. In Ssangayong Engineering Vs. NHAI reported in [[2019] 15 SCC 131, the Hounourable Apex Court has held that the power of the Courts under Section 34 of the Arbitration and Conciliation Act to interfere with the arbitral award is further restricted after 2015 Amendment of Arbitration and Conciliation Act. It is not a case of drawing adverse inference. Whereas, the tribunal has relied upon the documents which were unmarked, particularly, when both sides have not relied upon the same during the adjudication process, without providing an opportunity to the parties.
20. It is relevant to note that in the judgment of the Honourable Apex Court in Ssangayong Engineering Vs. NHAI, it has been held as follows :
50. Section 24(3) is a verbatim reproduction of Article 24(3) of the UNCITRAL Model Law on International Commercial Arbitration Page 20 / 30 https://www.mhc.tn.gov.in/judis/ Original Petition Nos.96 & 97 of 2021 [“UNCITRAL Model Law”]. Similarly, Section 26(1) and (2) is a verbatim reproduction of Article 26 of the UNCITRAL Model Law.
Sub-section (3) of Section 26 has been added by the Indian Parliament in enacting the 1996 Act.
54. In Fouchard, Gaillard, Goldman on International Commercial Arbitration (Kluwer Law International, 1999) [“Fouchard”] it is stated:
“In some rare cases, recognition or enforcement of an award has been refused on the grounds of a breach of due process. One example is the award made in a quality arbitration where the defendant was never informed of the identity of the arbitrators hearing the dispute [Danish buyer v German (F.R.) seller, IV Y.B. Comm. Arb. 258 (1979) (Oberlandesgericht Cologne)]. It also occurred in a case where various documents were submitted by one party to the arbitral tribunal but not to the other party [G.W.I. Kersten & Co. B.V. v. Société Commerciale Raoul Duval et Co., XIX Y.B. Comm. Arb.708 (Amsterdam Court of Appeals) (1992)], in another case where the defendant was not given the opportunity to comment Page 21 / 30 https://www.mhc.tn.gov.in/judis/ Original Petition Nos.96 & 97 of 2021 on the report produced by the expert appointed by the tribunal [Paklito Inv. Ltd. v. Klockner East Asia Ltd., XIX Y.B. Comm. Arb. 664, 671 (Supreme Court of Hong Kong) (1994)], and again where the arbitral tribunal criticized a party for having employed a method of presenting evidence which the tribunal itself had suggested [Iran Aircraft Indus. v Avco Corp., 980 F.2d 141 (2nd Cir. 1992)].” (at p.
987) 55. Gary Born (supra) states:
“German courts have adopted similar reasoning, holding that the right to be heard entails two related sets of rights: (a) a party is entitled to present its position on disputed issues of fact and law, to be informed about the position of the other parties and to a decision based on evidence or materials known to the parties [See, e.g., Judgment of 5 July 2011, 34 SCH 09/11, II(5)(c)(bb) (Oberlandesgericht Munchen)]; and (b) a party is entitled to a decision by the arbitral tribunal that takes its position into account insofar as relevant [See, e.g., Judgment of 5 October 2009, 34 Sch 12/09 (Oberlandesgericht Munchen)]. Other authorities provide comparable formulations of the content of the right to be heard [See, Page 22 / 30 https://www.mhc.tn.gov.in/judis/ Original Petition Nos.96 & 97 of 2021 e.g., Slaney v. Int’l Amateur Athletic Foundation, 244 F.3d 580, 592 (7th Cir. 2001)].” (at p. 3225)
56. Similarly, in Redfern and Hunter (supra):
“11.73. The national court at the place of enforcement thus has a limited role. Its function is not to decide whether or not the award is correct, as a matter of fact and law. Its function is simply to decide whether there has been a fair hearing. One mistake in the course of the proceedings may be sufficient to lead the court to conclude that there was a denial of justice. For example, in a case to which reference has already been made, a US corporation, which had been told that there was no need to submit detailed invoices, had its claim rejected by the Iran-US Claims Tribunal, for failure to submit detailed invoices! The US court, rightly it is suggested, refused to enforce the award against the US company [Iran Aircraft Ind v Avco Corp. 980 F.2d. 141 (2nd Cir. 1992)]. In different circumstances, a German court held that an award that was motivated by arguments that had not been raised by the parties or the tribunal during the arbitral proceedings, and thus on which the parties had not had an Page 23 / 30 https://www.mhc.tn.gov.in/judis/ Original Petition Nos.96 & 97 of 2021 opportunity to comment, violated due process and the right to be heard [See the decision of the Stuttgart Court of Appeal dated 6 October 2001 referred to in Liebscher, The Healthy Award, Challenge in International Commercial Arbitration (Kluwer law International, 2003), 406]. Similarly, in Kanoria v Guinness, [2006] EWCA Civ. 222, the English Court of Appeal decided that the respondent had not been afforded the chance to present its case when critical legal arguments were made by the claimant at the hearing, which the respondent could not attend due to a serious illness. In the circumstances, the court decided that ‘this is an extreme case of potential injustice’ and resolved not to enforce the arbitral award.
11.74. Examples of unsuccessful ‘due process’ defences to enforcement are, however, more numerous. In Minmetals Germany v Ferco Steel, [1999] CLC 647, the losing respondent in an arbitration in China opposed enforcement in England on the grounds that the award was founded on evidence that the arbitral tribunal had obtained through its own investigation. An English court rejected this defence on the basis that the respondent was eventually given an opportunity Page 24 / 30 https://www.mhc.tn.gov.in/judis/ Original Petition Nos.96 & 97 of 2021 to ask for the disclosure of evidence at issue and comment on it, but declined to do so. The court held that the due process defence to enforcement was not intended to accommodate circumstances in which a party had failed to take advantage of an opportunity duly accorded to it.
57. In Minmetals Germany GmbH v. Ferco Steel Ltd., [1999] CLC 647, the Queen’s Bench Division referred to this ground under the New York Convention, and held as follows:
“The inability to present a case issue Although many of those states who are parties to the New York Convention are civil law jurisdictions or are those which like China derive the whole or part of their procedural rules from the civil law and therefore have essentially an inquisitorial system, art. V of the Convention protects the requirements of natural justice reflected in the audi alteram partem rule. Therefore, where the tribunal is procedurally entitled to conduct its own investigations into the facts, the effect of this provision will be to avoid enforcement of an award based on findings of fact derived from such investigations if the enforcee has not been Page 25 / 30 https://www.mhc.tn.gov.in/judis/ Original Petition Nos.96 & 97 of 2021 given any reasonable opportunity to present its case in relation to the results of such investigations. Article 26 of the CIETAC rules by reference to which the parties had agreed to arbitrate provided: ‘Article 26 – The parties shall give evidence for the facts on which their claim or defence is based. The arbitration tribunal may, if it deems it necessary, make investigations and collect evidence on its own initiative.’ That, however, was not treated by the Beijing court as permitting the tribunal to reach its conclusions and make an award without first disclosing to both parties the materials which it had derived from its own investigations. That quite distinctly appears from the grounds of the court’s decision – that Ferco was, for reasons for which it was not responsible, unable ‘to state its view’. Those reasons could only have been its lack of prior access to the sub-sale award and the evidence which underlay it. I conclude that it was to give Ferco’s lawyer an opportunity to refute this material that the Beijing court ordered a ‘resumed’ arbitration.” (at pp. 656-657) Page 26 / 30 https://www.mhc.tn.gov.in/judis/ Original Petition Nos.96 & 97 of 2021
21. The tribunal has relied upon the documents which has been disputed by the other side without giving an opportunity to substantiate or disprove certain entries made in the software and the conclusion of the tribunal is merely on the basis of such documents, without an opportunity being granted and the same certainly violates the procedure contemplated under section 34[2] [a] of the Arbitration and Conciliation Act. Since the petitioner was not given an opportunity to present their case, besides, the statements and documents not being communicated to the petitioner and the same has been relied upon by the tribunal and no opportunity has been given to disprove the contents of the documents, particularly when the data and the entries have been denied by the petitioner herein, this Court is of the view that the award of the arbitral tribunal extending time without proper opportunity is liable to be interfered.
22. It is relevant to note that the dispute with regard to the other claims, cost related claims are still pending before the arbitral tribunal. Though these awards have been passed separately in respect of extension of time, since, the main dispute in respect of various monetary claims are pending before the arbitral Page 27 / 30 https://www.mhc.tn.gov.in/judis/ Original Petition Nos.96 & 97 of 2021 tribunal, the learned Arbitral Tribunal ought to have decided all the disputes in the same proceedings instead of passing separate award for extension of time alone.
Since, the main dispute is still pending before the Arbitral Tribunal, it is well open to the claimant to prove the documents and claim extension of time in the existing proceedings. The learned arbitral tribunal can very well give an opportunity to the parties in respect of extension of time sought by the claimant. After affording proper opportunity to both sides, extension of time can be decided in the existing claim itself which are pending before the arbitral tribunal in both the contracts viz., UAA 05 and UAA 01. In such view of the matter, this Court is of the view that the claimant instead of going for mere extension of time before the tribunal, they ought to have referred the entire dispute including extension of time. As this Court has found that no opportunity has been given and unmarked documents have been relied upon by the tribunal, the award passed by the tribunal in both the matters are liable to be set aside.
23. Accordingly, these Original Petitions are allowed and the award passed by the arbitral tribunal in both the matters are set aside. The parties are at liberty Page 28 / 30 https://www.mhc.tn.gov.in/judis/ Original Petition Nos.96 & 97 of 2021 to claim extension of time in the existing proceedings pending before the arbitral tribunal. Consequently, connected applications are closed.
28.10.2021 vrc Page 29 / 30 https://www.mhc.tn.gov.in/judis/ Original Petition Nos.96 & 97 of 2021 N. SATHISH KUMAR, J.
vrc Common Order in:
ARBITRATION ORIGINAL PETITION Nos.96 & 97 of 2021 28.10.2021 Page 30 / 30 https://www.mhc.tn.gov.in/judis/