Court Cannot Determine Admissibility, Relevancy, Materiality, And Weight Of Any Evidence Under Section 27 of A&C: Delhi High Court - 2024-02-26

The Delhi High Court single bench of Justice Sachin Datta held that the court under Section 27 of the Arbitration and Conciliation Act, 1996 cannot determine the admissibility, relevancy, materiality, and weight of any evidence, as doing so would amount to impermissible interference with the Tribunal's proceedings.

Thereafter, the Petitioner approached the Delhi High Court (“High Court”) and filed a peitition under Section 27.

The High Court further emphasized that it is not within its purview to determine the relevancy or materiality of evidence sought by the Petitioner in the first instance.

It held that adjudication should be carried out by the Arbitral Tribunal, the chosen forum by the parties.

It drew a distinction between Section 19(4) and Section 27 of the Arbitration Act noting that Section 27 is enacted to assist the Court in taking evidence. The Delhi High Court single bench of Justice Sachin Datta held that the court under Section 27 of the Arbitration and Conciliation Act, 1996 cannot determine the admissibility, relevancy, materiality, and weight of any evidence, as doing so would amount to impermissible interference with the Tribunal's proceedings.

Brief Facts:

Steel Authority Of India Ltd. (“Petitioner”) chartered the vessel "MV PEACE GEM" for transporting cargo from the port of DTA Terminal New Port News, USA, to Vizag and Haldia in India. Uniper Global Commodities (“Respondent”) had the ownership of the vessel. Disputes arose, leading the Respondent to initiate arbitration under the Indian Council of Arbitration's rules. The Respondent alleged for demurrage charges for the vessel at Haldia Port. The Petitioner contested this claim, asserting that the vessel had infrastructural damages, rendering it unfit to berth.

The Petitioner sought the Arbitral Tribunal's approval to approach court for seeking the court's assistance under Section 27 of the Arbitration and Conciliation Act (“Arbitration Act”) to present evidence from the Kolkata Port Trust officer. The Tribunal granted this request. Thereafter, the Petitioner approached the Delhi High Court (“High Court”) and filed a peitition under Section 27. The Petitioner argued that denial of the email's authenticity by the Respondent necessitates the testimony of an independent third party, emphasizing the Tribunal's discretion under Section 19 of the Arbitration Act.

Conversely, the Respondent contended that Section 27 orders should not issue if the Arbitral Tribunal's decision lacks legal understanding or demonstrates a lack of consideration. The Respondent insisted on a reasoned order to allow such a request, claiming the Petitioner failed to establish the evidence's relevance.

Observations by the High Court:

The High Court held that the orders of an Arbitral Tribunal are not ordinarily disturbed in Section 27 petition, emphasizing that the court, in exercising powers under Section 27, is not hearing an appeal over the Tribunal's decision. It Court highlighted that while the Arbitral Tribunal is not bound by the rules of procedure like the Code of Civil Procedure and the Evidence Act, it is still obligated to form an opinion and exercise discretion in permitting the examination of a witness.

The High Court further emphasized that it is not within its purview to determine the relevancy or materiality of evidence sought by the Petitioner in the first instance. The powers of the Court under Section 27 are non-adjudicatory. It held that adjudication should be carried out by the Arbitral Tribunal, the chosen forum by the parties. It drew a distinction between Section 19(4) and Section 27 of the Arbitration Act noting that Section 27 is enacted to assist the Court in taking evidence. It asserted that the Court's role is to ensure compliance with its competence and rules on taking evidence.

Therefore, it held that in the exercise of power under Section 27, the Court cannot determine the admissibility, relevancy, materiality, and weight of any evidence, as doing so would amount to impermissible interference with the Tribunal's proceedings. It dismissed the petition, directing the Arbitral Tribunal to consider, even on a prima facie basis, the relevancy or materiality of the evidence sought by the petitioner before allowing them to approach the Court for assistance.

Case Title: Steel Authority Of India Ltd vs Uniper Global Commodities.

Case Number: O.M.P. (E) (COMM.) 22/2023.

Advocate for the Petitioner: Mr. Saurabh Seth, Ms. Sonia Dube, Ms. Kanchan Yadav and Ms. Saumya Sharma.

Advocate for the Respondent: Mr. Amit Agarwal, Mr. Shwetabh Sinha, Mr. Sidhant Pandita & Ms. Vatsala Pandey.