Reliance on Unverified Evidence is Violation

Arbitrator’s Reliance on UNverified Evidence Violates Fundamental Policy of India Under §34 of the Arbitration Act.

Oriental Insurance Co. Ltd. V Sarada Rani Enterprises[1]  

By Tuli & Co. 

The Calcutta High Court hasset aside an arbitral award on the grounds that the tribunal had awarded an amount on the basis of an unpleaded claim made by the Insured that was unsupported by
verification / affidavit.

Background

A challenge was brought under §34 of the Arbitration Act 1996 seeking to set aside the award of ₹60 lacs in favour of the Insured.

The arbitration concerned water damage to cement bags stored in the Insured’s godowns. The Tribunal had two survey reports before it, one authored by a surveyor appointed by the Insurer and
one authored by a surveyor appointed by the Court. However, the Tribunal ignored these and placed sole reliance on a letter from the Insured asking for ₹60 lacs.

Analysis

The Court found that the reliance on the Insured’s letter was unjustified since it was without any material basis whatsoever and based on a unilateral claim made in a correspondence by the Insured, which had no legal footing.

The Court concluded that the Tribunal’s decision was patently perverse and against the principles of the fundamental policy of Indian law.

The Court held that §34(4) of the Arbitration Act 1996 does not permit remitting matters to the Tribunal to reconsider an award where the defect is not merely technical but substantive and
incurable.

This article is not legal advice. The circumstances of each case differ and legal advice specific to an individual case should always be sought.

For further information on this topic please contact Tuli & Co:
Tel +91 120 693 4000 or

Email lawyers@tuli.co.in
https://www.tuli.co.in

Authors

Aditya Gupte
Partner

Sarthak Behera
Managing Associate

Ishita Thakur
Associate