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Judicial Pronouncements and Sec. 27 of Arbitration and Conciliation Act, 1996
Introduction: The arbitral tribunal or party to the dispute can approach the court’s assistance in taking evidence. This provision is given under Sec. 27 of the Arbitration and Conciliation Act, 1996. This is the singular proviso that allows the parties to seek the court’s assistance or interference. But to what extent the courts can intervene in these matters are still under question. Various judicial pronouncements have attempted to clear the uncertainty in this area. Some of the landmark judgments on this area is given below:
Ennore Port Limited v. Hindustan Construction Co. Limited[1]: While acknowledging (and exercising) the court's discretion to rule on an application under Section 27 of the Arbitration Act, the High Court of Judicature at Madras opined that such exercise of discretion should not be automatic and that a balance should be struck between such discretion and the relevance of limited judicial interference enshrined in Section 5 of the Arbitration Act.
Delta Distilleries Ltd. v. United Spirits Ltd[2]: The Supreme Court of India found no merit in the argument that the arbitral tribunal's ruling allowing the respondent to apply under Section 27 could not have been made. It was decided that an arbitral tribunal must render an award based on the merits of the claim presented before it. If any evidence is required for that purpose, the arbitral tribunal should have the authority to get it, and if it is unable to do so on its own, it should be able to do so via the use of an enabling clause, Section 27, by requesting the court's help in obtaining the evidence. However, the Supreme Court did not address the court's authority under Section 27 in its decision, nor did it interfere with the learned Single Judge's ruling. This follows the view set forth in Ennore Ports, namely, that once an application under Section 27 is filed, the court should use its discretion in deciding whether to order or reject the application.
Silor Associates SA v. Bharat Heavy Electrical Ltd[3]: The High Court of Delhi, while determining a request under Section 27 of the Arbitration Act, concluded that if it seems that the arbitral tribunal's ruling using Section 27 is based on an incorrect legal premise, the court would not only be allowed to, but also obligated to remedy the error. The Delhi High Court examined the arbitral order's correctness and emphasized the arbitral tribunal's position as master of the matter. The court also cited Section 5 of the Arbitration Act to reaffirm the policy of minimal court involvement. The Delhi HC also held that there would be no reason to seek court assistance under Section 27 of the Arbitration Act before even issuing a direction to the concerned party to produce the document, and that only if the concerned party refuse to follow with such a direction would the arbitral tribunal be justified in pursuing court assistance if the aggrieved/non-defaulting party so desired.
At the same time, the courts have also taken a different stand in some judicial pronouncements. The Delhi HC refused to assess the correctness of the arbitral order under Section 27 of the Arbitration Act in National Insurance Company Limited v. M/S S.A[4], Enterprises Thiess Iviinecs India vs NTPC Limited & Anr. and the High Court of Judicature at Bombay ("BHC") in Montana Developers Pvt. Ltd v. Aditya Developers And Ors.[5] These rulings emphasized the significance of Section 5 of the Arbitration Act and emphasized that judicial intervention in such instances should be limited, as the Arbitration Act has no provision for appealing an arbitral tribunal order made under Section 27 of the Arbitration Act.
Conclusions: A review of the aforementioned judgments by various High Courts, as well as the Supreme Court's decision in Delta Distilleries, reveals that courts have very little discretion when evaluating applications under Section 27 of the Arbitration Act. The above-mentioned cases expressly state that courts cannot intervene with an arbitral tribunal's ruling giving authorization to a party to file an application under Section 27 of the Arbitration Act since it is outside the court's jurisdiction. When dealing with Section 27 applications, the courts must use the utmost care.
[1] AIR 2007 Mad 73.
[2] AIR 2014 SC 113
[3] 210 (2014) DLT 312
[4] 2015 SCC OnLine Bom 5063.
[5] Montana Developers Pvt. Ltd vs Aditya Developers And Ors, 2016 (6) MhLJ 660.
(This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, or Religion, Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts made to ensure the accuracy and correctness of the information published, White Code VIA Mediation and Arbitration Centre Foundation shall not be responsible for any errors caused due to human error or otherwise.)
- Introduction
- Judicial Pronouncements
- Conclusion
