Supreme Court

Canara Nidhi Limited Vs. M. Shashikala and Ors.

MANU/SC/1304/2019

23.09.2019

Arbitration

Cross-examination of persons swearing into the affidavits should not be allowed unless absolutely necessary

The question falling for consideration in present appeals is in an application under Section 34 of the Arbitration and Conciliation Act, 1996 (the Act) seeking to set aside the award, whether the parties can adduce evidence to prove the specified grounds in Sub-section (2) to Section 34 of the Act. Present appeals arise out of the judgment passed by the High Court by which the High Court set aside the order passed by the District Judge and directed the District Judge to "recast the issues" and permit Respondent Nos. 1 and 2 to file affidavits of their witnesses and also permitting cross-examination of the witnesses.

Though present Court held that, the applications under Section 34 of the Act are summary proceedings, an opportunity to the aggrieved party has to be afforded to prove existence of any of the grounds under Section 34(2) of the Act. This Court thus permitted the applicant thereon to file affidavits of his witnesses in proof thereof. The legal position is thus clarified that, Section 34 application will not ordinarily require anything beyond the record that was before the arbitrator and that cross-examination of persons swearing in to the affidavits should not be allowed unless absolutely necessary.

The question falling for consideration is whether the present case is such an exceptional circumstance that it was necessary to grant opportunity to Respondent Nos. 1 and 2 to file affidavits and to cross-examine the witnesses is made out. The affidavit filed by the Respondents along with application filed under Section 151 Code of Civil Procedure, 1908 (CPC) does not indicate as to what point the first Respondent intends to adduce except stating that, the first Respondent intends to adduce additional evidence relating to the subject of dispute. The affidavit does not disclose specific documents or evidence required to be produced except stating that, the first Respondent intends to adduce additional evidence or otherwise the first Respondent will be subjected to hardship in the arbitration suit filed by her under Section 34 of the Act. There are no specific averments in the affidavit as to the necessity and relevance of the additional evidence sought to be adduced.

The High Court did not keep in view that, Respondent Nos. 1 and 2 have not made out grounds that, it is an exceptional case to permit them to adduce evidence in the application under Section 34 of the Act. The said directions of the High Court amount to retrial on the merits of the issues decided by the arbitrator. When the order of the District Judge dismissing the application filed by Respondent Nos. 1 and 2 does not suffer from perversity, the High Court, in exercise of its supervisory jurisdiction under Articles 226 and 227 of the Constitution of India, ought not to have interfered with the order passed by the District Judge and the impugned judgment cannot be sustained. In the result, the impugned judgment passed by the High Court is set aside. Appeals allowed.

Tags : Re-cast issues Direction Legality

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