Delhi High Court Clarifies: Arbitrators Can Summon Witnesses Without Detailed Justifications

The Delhi High Court bench of Justice C. Hari Shankar has clarified that arbitrators do not need to provide detailed reasons when granting a request to summon witnesses under Section 27(1) of the Arbitration and Conciliation Act, 1996. This ruling highlights the arbitrator’s discretion and the importance of maintaining efficiency in arbitration proceedings.

Section 27(1) of the Arbitration and Conciliation Act, 1996, permits the arbitral tribunal or a party with the tribunal's approval to apply to the court for assistance in taking evidence. This provision is designed to aid the arbitration process by allowing judicial intervention for the collection of evidence when necessary.

BPT Infra Project Pvt. Ltd. (Petitioner) was awarded a construction contract by Indraprastha Ice And Cold Storage Pvt. Ltd. (Respondent) for setting up a CA (Control Atmosphere Storage) Plant at Kullu, Himachal Pradesh. The contract cost was increased from ₹10 crores to ₹20 crores, allegedly to hinder the Petitioner's ability to perform the contract. Claiming this action was mala fide and resulted in the contract's termination for unjustified reasons, the Petitioner sought compensation for expected loss of profits in the arbitral proceedings.

During these proceedings, the Petitioner filed an application under Section 27 of the Arbitration and Conciliation Act, 1996, to summon witnesses D.P. Singh and S.C. Jain, or any authorized person from M/s Architect Bureau, which was engaged by the Respondent as an architect consultant. The witnesses were needed to provide evidence regarding project changes directed by the Respondent. The Arbitral Tribunal agreed the witnesses' testimony was relevant and directed the Petitioner to seek the High Court's assistance to summon them. Consequently, the Petitioner approached the High Court with the application.

The Respondent argued that an arbitral order alone does not fulfill the approval requirements under Section 27(1). They contended that approval must reflect a deliberate consideration of the evidence's relevance.

The High Court noted that Section 27(1) does not explicitly require detailed reasons from the arbitral tribunal when granting such requests. The rationale is that detailed reasoning could pre-judge the evidence's relevance and lead to future objections. Instead, the tribunal must demonstrate an application of mind, without necessarily providing elaborate reasons.

The Court referenced its decision in Hindustan Petroleum Corporation Ltd v. Ashok Kumar Garg [AIR 2006 DEL 365] , which stated that while detailed reasons aren't necessary, the tribunal’s order should indicate thoughtful consideration. Additionally, in Steel Authority of India Ltd v. Uniper Global Commodities [2024 SCC DEL 213] , the importance of examining the evidence’s relevance was emphasized.

Ultimately, the High Court ruled that requiring detailed reasoning could exceed the statutory requirements of Section 27, which only necessitates the tribunal's approval. The arbitral tribunal had properly exercised its discretion, and judicial interference would contradict the principles of arbitral autonomy and minimal judicial intervention. The High Court allowed the petition, directing the witnesses to appear before the arbitral tribunal. This decision underscores the balance between the tribunal's discretion and the necessity of ensuring relevance in evidence collection without burdening the process with exhaustive reasoning requirements.

Case Details:

Case Title: BPT Infra Project Pvt. Ltd. Vs Indraprastha Ice And Cold Storage Pvt. Ltd.

Case Number: O.M.P. (E) (COMM.) 20/2024 & I.A. 32811/2024

Advocates for the Petitioner: Mr. Akshu Jain, Ms. Stuti Jain, and Ms. Vishwa Bharti

Advocates for the Respondent: Mr. Naman Joshi with Mr. Aryan Verma

Date of Judgment: 10.07.2024