LI Network
Published on: 04 September 2023 at 13:14 IST
The Delhi High Court has affirmed that the principles of natural justice are not breached when an opportunity to make oral submissions on an issue is granted but not exercised by a party.
The court emphasized that no party possesses an absolute entitlement to insist on their convenience in all aspects.
The bench, comprised of Justices Suresh Kumar Kait and Neena Bansal Krishna, asserted that an Arbitrator holds the authority to manage proceedings and issue directives for the parties to appear on a specific date, time, and location, which would sufficiently comply with the principles of natural justice.
The Court stated that when the dispute between parties is rooted in documents, the mere absence of oral arguments from one party does not automatically result in a violation of the principles of natural justice unless it can be demonstrated that a relevant aspect was overlooked.
Case Background:
The case pertains to a contract between the appellant, “Fab Hotels,” engaged in the hospitality industry, and the respondent, an advertising company. The agreement, dated 26.04.2018, involved the provision of advertising services by the respondent to the appellant, with a contract term from 19.03.2018 to 18.06.2018. An advance payment of Rs. 91,45,000/- was made, and the remaining amount of Rs. 91,45,000/- was invoiced, with Rs. 69,60,000/- paid.
Disputes subsequently arose, including delays in work, changes in scope, and cost-related issues. The respondent filed claims before an arbitrator, resulting in an award of Rs. 33,70,182/-. The appellant objected to this award, but the objection was ultimately dismissed by the Commercial Judge on 19.02.2022. Dissatisfied with the rejection of its application under Section 34, the appellant filed an appeal under Section 37 of the Arbitration and Conciliation Act.
Grounds of Appeal:
The appellant raised objections regarding the opportunity to present oral arguments under Section 24 of the Act, 1996. They contended that the denial of this opportunity constituted a breach of the principle of natural justice and led to a miscarriage of justice.
Court’s Analysis:
The Court scrutinized the appellant’s objection regarding ‘audi alteram partem’ in arbitration. Under Section 34(2)(a)(iii) of the Arbitration and Conciliation Act, 1996, an award can be set aside if a party was not adequately notified of the arbitrator’s appointment or the proceedings.
The Court observed that dates were scheduled for oral arguments by the parties. However, on one occasion, the appellant’s counsel sought an adjournment due to illness, which the arbitrator granted. Nevertheless, on the alternative date, another adjournment was requested as the appellant’s counsel was occupied with other professional commitments.
The tribunal concluded the oral arguments and allowed the appellant to submit written submissions. Despite an extension granted by the arbitrator, the appellant did not submit its written submissions.
The Court noted that the arbitrator adhered to the principles of natural justice by providing multiple opportunities to the appellant, first for oral submissions and later for written submissions, which the appellant did not utilize.
The Court emphasized that since the dispute between the parties was based on documents, the mere absence of oral arguments from the appellant did not automatically result in a violation of the principles of natural justice. The appellant could not demonstrate that a relevant aspect had been overlooked.
As a result, the Court dismissed the appeal.
Case Title: CASA2 STAYS PVT LTD v. BBH COMMUNICATIONS INDIA PVT LTD, FAO(COMM) 48 of 2022