PART III, ARBITRATION & CONCILIATION ACT, 1996

S. DATE CASE NAME

NO. HC CITATION EXTRACTS
SECTION 30
1 08.03.2018 Bundel Khand Advertising Association 10.2 Section 30 of the Arbitration Act is also important for our purpose, which reads thus:
and Ors. v. State of U.P. and Ors.
Allahabad
2018(5)ADJ784 "30. Settlement.--(1) It is not incompatible with an arbitration agreement for an arbitral
MANU/UP/1199/2018 tribunal to encourage settlement of the dispute and, with the agreement of the parties, the
arbitral tribunal may use mediation, conciliation or other procedures at any time during the
arbitral proceedings to encourage settlement.

(2) If, during arbitral proceedings, the parties settle the dispute, the arbitral tribunal shall
terminate the proceedings and, if requested by the parties and not objected to by the arbitral
tribunal, record the settlement in the form of an arbitral award on agreed terms.

(3) An arbitral award on agreed terms shall be made in accordance with Section 31 and shall
state that it is an arbitral award.

(4) An arbitral award on agreed terms shall have the same status and effect as any other
arbitral award on the substance of the dispute."

10.3 If, during arbitral proceedings, which commences, as contemplated under Section 21,
on the date on which a request for dispute to be referred to arbitration is received by the
respondent, the parties settle the dispute, the arbitration Tribunal, as a matter of fact, gets
terminated or the arbitral tribunal can terminate the proceedings and, if requested by the
parties and not objected to by arbitral tribunal, record the settlement in the form of an
arbitral award on agreed terms. From a plain reading of Section 30, in our opinion, it
deals with a situation where the parties themselves settle the dispute during, may be
upon inducement, the arbitral proceedings.

2 03.01.2017 Takamol Industries Pvt Ltd v. Kundan 36. Though the 1996 Act does not define Arbitral Award but Section 31 specifies the form
Rice Mills Ltd and contents of Arbitral Award and Section 31(3) mandates an Arbitral Award to state the
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 Delhi reasons upon which it is based unless the parties have agreed that no reasons are to be given
or the Award is an Arbitral Award on agreed terms under section 30. Section 30 lays
2017(162)DRJ173
down that it is not incompatible with an Arbitration Agreement for an Arbitral Tribunal to
MANU/DE/0047/2017 encourage settlement of the dispute and the Arbitral Tribunal may with the agreement of the
parties use mediation, conciliation or other proceedings at any time during the arbitral
proceedings to encourage settlement. It further provides that if during arbitral proceedings
the parties settled the dispute, the Arbitral Tribunal shall terminate the proceedings and if
requested by the parties, record the settlement in the form of an Arbitral Award on agreed
terms and which Award shall have the same status and effect as any other Arbitral Award on
the substance of the dispute. It is thus clear that for mediation or conciliation to result in an
Arbitral Award also, the existence of Arbitral Agreement and the constitution of an Arbitral
Tribunal in accordance with law is essential. Mediation or conciliation, resulting in
settlement of disputes in the absence of an Arbitration Agreement, even if with the
assistance of a third party, cannot take the form of an Arbitral Award.

3 09.10.2013 Govt. of NCT of Delhi v. M/S Garg 19. In my view, what the arbitrator has done is simply recorded his conclusions by adopting
Builders the details given in the form of exhibits by the respondent. There are no reasons for
Delhi
205(2013)DLT390 awarding amounts under any of these claims. Reasons, as is often stated, are a link between
2013(138)DRJ691 the material on record and the conclusion arrived at by an adjudicating authority. [See Union
MANU/DE/3628/2013 of India vs Mohan Lal Capoor (1973) 2 SCC 836]. An arbitrator, under the Act, is bound to
give reasons unless the parties have agreed that no reasons are required or the award is one
which is an arbitral award on agreed terms passed under Section 30 of the Act.

4 09.11.2016 State of Punjab v. Tata Robins Fraser Ltd. Upheld the ratio of RSG Share and Stock Brokers Ltd. v. Dr. Anju Gupta and Ors., 2002
and Ors. ArbLR 641.
Punjab and
Haryana MANU/PH/2113/2016
2016 SCC OnLine P&H 12750
5 13.08.2015 R. Velusamy v. The Union of India and 13. In the instant case, the Arbitrator passed the award on 25.09.2013, terminating the
Ors. arbitral proceedings, the reason being the petitioner, who was the claimant therein had not
Madras
MANU/TN/2542/2015 attended the second hearing as well as not submitted the statement of claims before the date
fixed. In the case of Chemical Sales Corporation (supra), High Court of Delhi also
considered Sections 25, 30, 32, 33 & 34 of the Act except in cases where the Sections 33
and 34(4) of the Act are attracted. It was held that the Arbitral Tribunal has power to
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1 03.01.2017 Takamol Industries Pvt. Ltd. v. Kundan
Rice Mills Ltd.
Delhi
2017(162)DRJ173
MANU/DE/0047/2017
2 05.02.2013 Nazim H. Kazi, of Bombay Indian
Inhabitant, Residing at 1202, Fortune
Bombay
Tower, 12th Floor, 337, Sir J.J. Road,
Byculla, Mumbai-400003 v. Kokan
Mercantile Cooperative Bank Ltd. a
Cooperative Bank, having its Head office
at Harbour Crest, Mazgaon T.T.,
Mumbai-400010
terminate the arbitral proceedings under Section 25(1) upon default of the claimant to
communicate his statement of claim; under Section 30(2) upon settlement of dispute by the
parties and under Section 38(2) upon failure of the parties to pay the amount of deposit fixed
by the Arbitral Tribunal
SECTION 24
12. The counsel for TIPL, besides referring to Section 7(4)(b) of the Arbitration and
Conciliation Act, 1996 (1996 Act) has also referred to Section 24 holding that the Arbitrator,
unless otherwise agreed to by the parties, is entitled to decide on oral hearings and to Section
30 providing that it is not incompatible with an Arbitration Agreement for an Arbitral
Tribunal to encourage settlement of the dispute.
13. I am however of the view that before Section 24 and Section 30 can be invoked, it is
essential that there has to be an Arbitration Agreement in as much as without an Arbitration
Agreement there can be no Arbitration and Arbitral Award.
The discretionary power under Section 24 must be exercised in consonance with the
principles of Natural Justice.
18. It is the case of the petitioner that during the proceedings before the learned arbitrator, it
was enquired from the petitioner that in the event the petitioner forgoes his right to cross
examine the respondent bank, the respondent would forgo their right to cross examine the
petitioner and proceed with the argument. The petitioner conveyed that he would like to
cross examine the witness of the bank and that he too was ready to be cross examined by the
bank. It is the case of the petitioner that the respondent thereafter made an oral application
before the learned arbitrator that no cross examination was required to be led and the matter
should be directly kept for arguments. The petitioner made an oral application to permit the
petitioner to cross examine the witness of the respondent who had filed affidavit in lieu of
examination of chief. By an order dated 19th January, 2011, the learned arbitrator rejected
the request of the petitioner for cross examination of the witness of the respondent and
directed that the proceedings shall be conducted on the basis of the documents and other
material on record and kept the matter for final argument.
The learned arbitrator held that it was for the arbitrator to see under which option section 24
of the Act, the present proceedings shall be conducted.
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36. In my view, the learned arbitrator has relied upon disputed documents and more
particularly contents of report of Chartered Accountants which were disputed by the
petitioner by addressing a letter to the Chartered Accountants which was forming part of the
record before the learned arbitrator and thereafter by challenging the said report in the
affidavit in lieu of examination in chief filed by the petitioner. The learned arbitrator
rendered finding on the issue that the procedure was validly followed by the respondent
while expelling the petitioner and that the petitioner could not prove any illegalities in the
procedure followed by the respondent. The learned arbitrator in my view did not give an
opportunity to the petitioner to prove his case by taking the said affidavit in lieu of
examination in chief filed by the petitioner on record and by giving an opportunity to the
petitioner to cross examine the respondent's witness if his affidavit was to be taken on record
of evidence. In any event, since there was no cross examination of the petitioner's witness on
any part of deposition made in the affidavit in lieu of examination in chief, such statement
remained uncontroverted and thus have deemed to have been proved. In my view merely
because the Chartered Accountants' report was taken on record, the contents thereof could
not be considered as proved by the learned arbitrator. In my view, the learned arbitrator has
relied upon the disputed documents and that also without giving the proper opportunity of
leading evidence to the petitioner. The learned arbitrator in my view has committed gross
violation of principles of natural justice.
37. In my view, the learned arbitrator is bound to follow principles of natural justice and fair
play. Though section 19 of the Arbitration and Conciliation Act provides that Arbitral
Tribunal shall not be bound by the Code of Civil Procedure, 1908 and/or Indian Evidence
Act, 1872, the practice and principles of Code of Civil Procedure and evidence are required
to be considered by the arbitrator for taking any decision. Learned arbitrator cannot consider
disputed documents in evidence without it being proved. Perusal of the record indicates that
both parties had not agreed before the Arbitral Tribunal that no oral evidence would be led
by both the parties and the proceedings shall be conducted on the basis of the documents and
other material. On the contrary, the record indicates that the petitioner filed affidavit in lieu
of examination in chief and had offered himself for cross examination in support of his
deposition on various disputed facts. The petitioner had also asked for permission to cross
examine the respondent's witness but was rejected by the arbitrator for the patently illegal
and irrelevant reasons. The learned arbitrator therefore could not have conducted the matter
only on the basis of documents and other material when the petitioner had asked for an
opportunity to lead oral evidence and had made himself available for cross examination.

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3 14.03.2013 Pradyuman Kumar Sharma v. Shri 37. The record indicates that the petitioner was in habit of delaying arbitration proceedings
Jaysagar M. Sancheti
Bombay
MANU / MH / 0244 / 2013
2014 ( 7 ) BomCR 322
2013 ( 4 ) ALLMR 286
2013 ( 3 ) ABR 315
2013 ( 5 ) MhLj 86
though the learned arbitrator had shown all indulgence to the petitioner and had granted full
opportunity to present his case including permission to lead oral evidence. In my view, no
party has an unfettered right to adduce evidence and/or make oral submissions at any
stage of the proceedings. Under Section 24(1) of the Act, arbitrator is empowered to decide
whether to hold his hearings for the presentation of evidence or for oral arguments or
whether proceedings shall be conducted on the basis of documents and other material unless
otherwise agreed by the parties. In this case, both the parties were given opportunity to lead
its evidence and to make oral arguments.
In so far as opportunity to lead his evidence is concerned, the petitioner had examined two
witnesses and had closed his evidence. The petitioner had filed Asmita 31/39 .. 32 .. ARBP-
300-303/12 petition in this Court for issuance of witness summons against the handwriting
expert and withdrew the said petition. The expression used in proviso to Section 24 (1) of
the Act that the arbitrator shall hold oral hearing at appropriate stage of the
proceedings on a request by a party, unless the parties have agreed that no oral
hearing shall be held, would not mean that a party can apply for oral hearing which
would include leading of oral evidence at any stage as desired by that party. In my
view, making an application for leading oral evidence or for permission for issuance of
writ of summons at the stage of conclusion of final arguments by the respondents here
in, would not be an appropriate stage of the proceedings when such application could
be made by the petitioner. In my view, application was made not at appropriate stage
but was made at inappropriate stage and time with a view to further delay the
proceedings which was pending for quite some time. The learned arbitrator therefore,
was justified, in my view, to reject the said application made by the petitioner at
belated stage. If the petitioner would have been granted such opportunity, petitioner
would have cured the lacuna in his evidence already led which would have been
pointed out in the oral arguments of the respondents herein which had commenced
after conclusion of oral evidence and had almost completed. The learned arbitrator has to
be fair to both the parties and thus to prevent any injustice to the respondents, in my view,
the learned arbitrator was justified in rejecting the said Asmita 32/39 .. 33 .. ARBP-300-
303/12 application made at belated stage. In my view, Section 19(3) and (4) has to be read
with Section 18 and with proviso to Section 24 of the Act on the aspect of procedure,
hearing and compliance of natural justice by an arbitrator.
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4 23.03.2015 Rajnikant B. Vora v. Fincruise Credit 11.............A perusal of the award indicates that the learned arbitrator has referred to and
Services Pvt. Ltd. relied upon the alleged affidavit filed by one Mr.Sanjay Kadam dated 30 th April 2014.
Bombay
2015(6)ALLMR211
No roznama of the learned arbitrator taking any such alleged affidavit of evidence dated
2015(6)MhLJ515 14th December 2014 taken on record had been served upon the petitioner. It is clear that the
MANU/MH/0489/2015 learned arbitrator has considered the alleged affidavit dated 30th April 2014 which was not
served upon the petitioner.

12. Be that as it may, the learned arbitrator, in my view, could not have considered the
alleged affidavit of evidence without affecting the service of such affidavit upon the
petitioner by the respondent no.1. Learned arbitrator could not have proceeded with the
matter without affecting any service of notice of hearing. Under Section 24 (2) of
the Arbitration Act, the learned arbitrator has to give sufficient advance ppn 6 38.arbp-
1399.14(j).doc notice of any hearing and of any meeting of the arbitral tribunal to the
parties. Under Section 24 (3) of the Arbitration Act, all statements, documents or other
information supplied to, or applications made to the arbitral tribunal by one party have to be
communicated to the other party. Similarly any expert report or evidentiary document on
which the arbitral tribunal may rely in making its decision has to be communicated to the
parties. It is clear that the learned arbitrator has relied upon the statement of claim and
documents and also the affidavit of evidence which were not served upon the petitioner. The
impugned award is thus contrary to Section 24 of the Arbitration and Conciliation Act, 1996
and is in gross violation of the principles of natural justice.

5 04.03.2015 Krishnabhagwan Rajaram Sharma v. 45. A perusal of the record indicates that the matter was adjourned from 28th July, 2012 to
M/S. Tata Motors Finance Ltd. 1st September, 2012, from 1st September, 2012 to 6th October, 2012, from 6th October,
Bombay 2012 to 19th January, 2013 and 19th January, 2013 to 18th May, 2013. Neither the petitioner
MANU / MH / 0341 / 2015
nor his advocate chose to remain present before the learned arbitrator.

46. On 18th May, 2013, the learned arbitrator therefore, proceeded with the hearing of the
application under section 13(2) of the Arbitration & Conciliation Act, 1996 filed by the
petitioner and rejected the said application. In the said meeting, the learned arbitrator
directed that the arbitral proceedings be proceeded with on 22nd June, 2013. The learned
arbitrator thereafter issued the notice dated 31st May, 2013 to the advocates representing the
parties for the hearing of the arbitral proceedings on 22nd June, 2013. A perusal of the copy
of the notice as well as the postal receipt clearly indicates that the said notice was dispatched

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at the address of both the advocates, who were representing the parties. The said notices
were never returned unserved. A perusal of the said notice also indicates that the learned
arbitrator had made it clear that the matter shall be dismissed / proceeded ex-parte if the
parties remain absent on 22nd June, 2013. Since none appeared for the petitioner on 22nd
June, 2013, the learned arbitrator granted further opportunity and adjourned the hearing of
the arbitral proceedings to 6th July, 2013, 22nd July, 2013, 16th August, 2013 and finally on
28th September, 2013. The learned arbitrator ultimately made an award on 7th October,
2013 by proceeding with the matter ex- parte and after considering evidence available on
record allowed the claims made by the respondents.

48. Section 24(2) of the Arbitration & Conciliation Act, 1996, provides that the parties shall
be given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal
for the purposes of inspection of documents, goods or other property. Under section 25(c) of
the Arbitration & Conciliation Act, 1996, if a party fails to appear at an oral hearing or to
produce documentary evidence, the arbitral tribunal may continue the proceedings and make
the arbitral award on the evidence before it. Neither section 24 nor section 25 or any other
provisions of the Arbitration & Conciliation Act, 1996 makes it mandatory for an
arbitrator to issue a caution notice to a party for every meeting stating that in absence
of such party, the learned arbitrator would proceed with the proceedings ex-parte.

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