Published on: May, 13, 2022 at 12:04 IST
The Two Judge Bench of Justice Sanjiv Khanna and Justice Bela M. Trivedi of the Supreme Court overturned an impugned Judgment of the High Court, where-in High Court affirmed the trial court’s view that during the pendency of the suit, the matter was referred to arbitration in terms of Section 21 of the Arbitration Act. S.K. Mantri, Chartered Accountant, was appointed as an arbitrator with the parties’ consent.
The Supreme Court recently ruled that Experts appointed by courts for arbitral proceedings do not have the right to adjudicate the matter.
The Apex Court stated that the issue at hand was whether the parties had agreed that the subject matter of the suit or a part thereof should be referred to arbitration under Section 21 of the Arbitration Act, 1940.
The Apex Court stated that there must be an arbitration agreement or an agreement in terms of Section 21 of the Act that the difference or dispute between the parties for which they intend to be determined quasi-judicially.
When Commissioners are appointed by the Court, appointment may be with the consent of the parties or even when there is an objection to the appointment. Preexisting agreement or the requirement that the parties agree before the Court, as is mandatory in arbitration, is not necessary when a court directs the appointment of a Commissioner.
The parties should only expect valuation/ examination of the subject matter referred from the commissioner, which he would do according to his skill, knowledge and experience, which may be without taking any evidence or hearing argument.
The Apex Court stated that as a matter of law, the Court introduced the concept of a ‘facilitator’, whom the Court can appoint for a specific purpose and cause for ascertaining a fact even if it is disputed. There are cases in which the commissioner might hear the parties and give his professional opinion based on the evidence presented by the parties.
“We would like to introduce the principle of a ‘facilitator’ which a court may appoint, be it a commissioner or an expert, for a specific purpose and cause for ascertainment of a fact which may be even disputed. In some cases, the commissioner may even hear the parties and give his expert opinion based on the material or evidence produced by the parties before the commissioner.”, the Court said.
The Apex Court stated that Order XXVI Rule 9 of the Code gives wide powers to the Court to appoint a commissioner to make local investigations which may be requisite or proper for elucidating any matter in dispute, ascertaining the market value of any property, account of mesne profit or damages or annual net profits.
That Commissioner’s report does not strictly carry out ‘judicial acts’ that are binding but rather ‘ministerial acts’ only. A Commissioner is not given any discretion, and there is no occasion for the Commissioner to use his judgment or make a decision on the issue involved; the report is only an opinion or note, depending on the case, with details and/or a statement of the situation to the Court.
“The commissioner so appointed does not strictly perform a ‘judicial act’ which is binding’ but only a ‘ministerial act’. Nothing is left to the commissioner’s discretion, and there is no occasion to use his judgment or permitting the commissioner to adjudicate and decide the issue involved; the commissioner’s report is only an opinion or noting, as the case may be with the details and/or statement to the Court the actual state of affairs.”, the Court said.
The Apex Court further stated that nothing is left to the Commissioner’s discretion, the Commissioner’s report is only an opinion or noting, as the case may be with the details and/or statement to the Court the actual state of affairs. Such a report does not automatically form part of the Court’s opinion, as the Court has the power to confirm, vary or set aside the report or, in a given case, issue a new commission.
Even if the Court relies on the Commissioner’s report, it will only merely serve as a guideline and not bind the Court. Commissioner’s reports are strictly non-judgmental, and only the Courts can decide the rights of the parties.
“Even if the Court relies upon the same, it will merely aid and not bind the Court. In strict sense, the commissioners’ reports are ‘non-adjudicatory in nature’, and the courts adjudicate upon the rights of the parties.”, the Court said.
As a result, the Apex Court overturned the impugned Judgment of the High Court by stating that the Chartered Accountant’s report is not an award and is to be treated as a report of a Commissioner appointed by the Court under Order XXVI Rule 11 of the Code.
Edited By: Advocate Ramsha Shaikh, Associate Editor at Law Insider