LL.B. IV Sem and BA LL.B.

VIII Sem
Subject: ADR & Arbitration

Conduct of Arbitral Proceedings

Sections 24, 25 and 27

Dr. Rajnish Kumar Singh

Faculty of Law, BHU

Section 24: Hearing and Written Proceedings

(1) Unless otherwise agreed by the parties, the arbitral tribunal shall decide whether to
hold oral hearings for the presentation of evidence or for oral argument, or whether the
proceedings shall be conducted on the basis of documents and other materials:
Provided that the arbitral tribunal shall hold oral hearings, at an appropriate stage
of the proceedings, on a request by a party, unless the parties have agreed that no oral
hearing shall be held:

[Provided further that the arbitral tribunal shall, as far as possible, hold oral
hearings for the presentation of evidence or for oral argument on day-to-day basis, and
not grant any adjournments unless sufficient cause is made out, and may impose costs
including exemplary costs on the party seeking adjournment without any sufficient
cause.]

(2) 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.

(3) All statements, documents or other information supplied to, or applications made to
the arbitral tribunal by one party shall be communicated to the other party, and any expert
report or evidentiary document on which the arbitral tribunal may rely in making its
decision shall be communicated to the parties.
 It is relevant to mention that “document only” proceedings are less expensive and
more speedy
 Freedom has been given to the parties to agree to have no oral hearing. Further in
case of oral representation the provision requires that sufficient notice before
hearing must be given.
 The provision contains modalities of communicating statements, documents or
other information between the parties.
 We may also conclude that section 24 restates the requirements already enacted in
sections 18 and 19
o Section 24 (2) and section 24 (3) are covered in section 18 (Tribunal must
treat the parties equally)
o Section 24 (1) is covered in section 19 (3) (determination of rules of
procedure by tribunal)
o Thus sections 18, 19 and 24 put together are different facets of the rules of
natural justice.
 The second proviso inserted in 2015 Amendment requires that oral hearing shall
be held on day to day basis and no adjournment be granted unless there is
sufficient cause is made out in the absence of which heave cost may be imposed.
o A question may be raised as to what shall be consequences of non payment
of cost. Does it lead to termination of proceeding? The answer should be
“no” because the defaulting party may frustrate the object of the Act by
committing non compliance of the order as regards cost passed under
section 24.
o A better solution can be- that any person failing to comply with the order of
the arbitral tribunal under section 24 would be deemed to be “making any
other default” or “guilty of any contempt to the arbitral tribunal during the
conduct of the proceedings” under section 27 (5) of the Act. The remedy of
the aggrieved party would be to apply to the arbitral tribunal for making a
representation to the court to mete out appropriate punishment.- refer to the
 decisions of Delhi High Court in Sri Krishan v. Anand (2009) and
Indiabulls Financial Services v. Jubilee Plots (2009) in which the court has
held the same in relation to the orders of the tribunal under section 17 (as it
existed prior to 2015 Amendment).

Section 25: Default of Party

Unless otherwise agreed by the parties, where, without showing sufficient cause, -
(a) the claimant fails to communicate his statement of claim in accordance with sub-
section (1) of section 23, the arbitral tribunal shall terminate the proceedings;

(b) the respondent fails to communicate his statement of defence in accordance with sub-
section (1) of section 23, the arbitral tribunal shall continue the proceedings without
treating that failure in itself as an admission of the allegations by the claimant 1[and shall
have the discretion to treat the right of the respondent to file such statement of defence as
having been forfeited].

(c) 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.

 In the first situation the default of the claimant leads to termination of proceeding
as there is no claim to be decided.
 In last two instances of default i.e. when the respondent fails to present his defence
and where either of the parties fail either to present for the oral hearing or to
produce documents the consequence is not termination. The proceedings shall
continue subject to two restrictions:
o Opening words of the provision – “unless otherwise….” Which means that
the provision and the requirements are subject to party autonomy and
parties may agree for something other than the requirements of the
provision.
 o The word in the opening statement – “without showing sufficient cause”
indicates that on the basis of sufficient cause the requirements of the
provision may be diluted.
 In a case where a party is undefended, the tribunal is apt to become more
interventionist and may even adopt an inquisitorial role in this situation.
 The function of the tribunal is simply to hold the scales as evenly as it can and to
act fairly and judicially in the conduct of the hearing.

Section 27: Court Assistance in Taking Evidence

(1) The arbitral tribunal, or a party with the approval of the arbitral tribunal, may apply to
the Court for assistance in taking evidence.

(2) The application shall specify—

(a) the names and addresses of the parties and the arbitrators;

(b) the general nature of the claim and the relief sought;

(c) the evidence to be obtained, in particular, —

(i) the name and address of any person to be heard as witness or expert
witness and a statement of the subject-matter of the testimony required;

(ii) the description of any document to be produced or property to be

inspected.

(3) The Court may, within its competence and according to its rules on taking evidence,
execute the request by ordering that the evidence be provided directly to the arbitral
tribunal.

(4) The Court may, while making an order under sub-section (3), issue the same
processes to witnesses as it may issue in suits tried before it.
(5) Persons failing to attend in accordance with such process, or making any other
default, or refusing to give their evidence, or guilty of any contempt to the arbitral
tribunal during the conduct of arbitral proceedings, shall be subject to the like
disadvantages, penalties and punishments by order of the Court on the representation of
the arbitral tribunal as they would incur for the like offences in suits tried before the
Court.

(6) In this section the expression "Processes" includes summonses and commissions for
the examination of witnesses and summonses to produce documents.

 The provision was required because the arbitral tribunal does not itself possess
powers of compulsion.
 It provides a safe minimum.
 Court in the provision means court as defined in section 2(e) of the Act: It means a
civil court having jurisdiction in case of an arbitration between Indians and High
court in case of international commercial arbitration. (refer to section 2(f) for the
meaning of international commercial arbitration – the important point is that one
of the parties has an international character.)
 Ingredients of the provision:
o Section 27 (1) – application
o Section 27 (2) – particulars to be furnished in the application
o Section 27 (3) – uses the word “may” which suggests that the court has the
discretion to execute the request according to its rules.
o Where on one hand sub-section (1) uses the word “apply”, sub-section (3)
uses the word “request” – the use of different words may create confusion.
Article 27 of the Model law which has been adopted in section 27 of the
Indian Act uses “request” at both the places.
 It is relevant to note that the court has to execute the request according to its rules.
This makes the provisions of Code of Civil Procedure applicable to section 27of
 the Act. Some of the important provisions include: Sections 27, 30, 31, 32; Order
5, order 26, order 11, Provision related to inspection and discoveries etc.
o Further provisions related to restriction on discoveries are also important:
Sections 122, 123, 124 and 126 of the Evidence Act and Article 20(3) of
the Constitution of India.
 Students are advised to revise the relevant provisions of CPC. The
above list of provision of CPC is only indicative it is not exhaustive.

 An important question in relation to section 27 and the role of the court

emerges because of the use of the words ‘may’ and ‘execute’ in the provision.
That is as to what is the extent of power courts can exercise while deciding
applications under section 27.
o In Montana Developers v. Aditya Developers, the Bombay High Court
observed that the court does not have adjudicatory power to go behind the
decision of the arbitral tribunal, but can exercise some discretionary power.
If there is no legal infirmity the court would be duty bound to execute the
request of the tribunal without interfering on the merits of the evidence.
o In Ennore Port Ltd. V. Hindustan Construction Co Ltd. (2006), the Madras
High Court while dismissing an application under section 27 held thata
close perusal of section 27 conferred discretion on the court and that the
court was not expected to pass an order automatically. (Students are
advised to read the case)
o The Delhi High Court also in Hindustan Petroleum Corporation v. Ashok
Kumar Garg (2006) declined a request made under section 27 on the
ground that the arbitral tribunal failed to apply its mind on whether the
evidence to be produced was relevant or not.
o In 2016, the issue of section 27 once again came up for consideration
before the Delhi High Court in the matter of Thiess Iviinecs v. NTPC Ltd.
 The court observed that the nature of power under s. 27 is limited to
executing the request of the tribunal and there is nothing in s. 27 whereby
the court can determine the admissibility, relevance, materiality, and weight
of any evidence. If a party is prejudiced by the order under s. 27, it can only
challenge the same under section 34.
 To sum up, the position of law appears to be: 1) the power of the court under s.
27 is not ‘adjudicatory’ and the court cannot second – guess the arbitral
tribunal on the admissibility, relevance, materiality, and weight of any evidence.
2) However, the court retain some discretionary power and can decline the
request of the tribunal. (e.g. if the request is beyond the competence of the court,
where the tribunal has passed order without application of mind etc.). 3) But
where no such infirmity exists that calls for the exercise of court’s discretionary
power, the court must necessarily execute the request of the tribunal.