2009 (7) TMI 795 - SC - Indian Laws

Whether the award requires to be set aside on any of the specified grounds in sub-section (2) of section 34 thereof? Held that - Appeal dismissed. It is difficult to envisage proceedings under section 34 of the Act as full-fledged regular civil suits under Code. Applications under section 34 of the Act are summary proceedings with provision for objections by the defendant/respondent followed by an opportunity to the applicant to prove the existence of any ground under section 34(2). The applicant is permitted to file affidavits of his witnesses in proof. A corresponding opportunity is given to the defendant/respondent to place his evidence by affidavit. Where the case so warrants the court permits cross-examination of the persons swearing to the affidavit. Thereafter court hears arguments and/or receives written submissions and decides the matter. This is of course the routine procedure. The court may vary the said procedure depending upon the facts of any particular case or the local rules. What is however clear is that framing of issues as contemplated under rule 1 of order 14 of the Code is not an integral part of the process of a proceedings under section 34 of the Act. No reason to interfere with the impugned order of the High Court

Summary

Issues Involved:
1. Whether issues as contemplated under Order 14, Rule 1 of the Code of Civil Procedure, 1908, should be framed in applications under Section 34 of the Arbitration and Conciliation Act, 1996.
2. The effect of Rule 4(b) of the High Court of Karnataka Arbitration (Proceedings before the Courts) Rules, 2001 on the requirement of framing issues.

Issue-wise Detailed Analysis:

1. Framing of Issues in Applications under Section 34 of the Arbitration and Conciliation Act, 1996:

The primary question was whether issues should be framed in applications under Section 34 of the Arbitration and Conciliation Act, 1996. The court emphasized that the object of framing issues is to focus on the questions on which evidence has to be led and to indicate the party on whom the burden of proof lies. Rule 1 of Order 14 of the Code of Civil Procedure, 1908, outlines the procedure for framing issues, which are necessary in every contested regular civil suit. However, in proceedings intended to be summary in nature, such as setting aside ex parte decrees, restitution, execution, and permission to sue as an indigent person, issues are not framed. These proceedings allow the respondent to file objections or a written statement, and the court permits the parties to file affidavits and, if necessary, permits cross-examination before hearing arguments.

The court noted that Section 34 of the Act deals with applications for setting aside arbitral awards and provides specific grounds for such actions. The scheme and provisions of the Act highlight minimal court interference and the need for expeditious disposal of arbitration-related matters. The court concluded that the scope of inquiry under Section 34 is restricted to whether any of the grounds mentioned in sub-section (2) exist for setting aside the award. The burden of proof is on the applicant to plead and prove the existence of such grounds. Thus, the need for framing issues is obviated as the statute already specifies the questions for adjudication and the burden of proof.

2. Effect of Rule 4(b) of the High Court of Karnataka Arbitration (Proceedings before the Courts) Rules, 2001:

The court examined whether Rule 4(b) of the High Court of Karnataka Arbitration (Proceedings before the Courts) Rules, 2001, requires framing of issues. Rule 4(b) states that an application under Section 34 should be registered as an 'arbitration suit' and conducted as in the case of a suit, with all provisions of the Code of Civil Procedure applying to such proceedings as far as applicable. However, Rule 12 of the same Rules clarifies that the provisions of the Code will apply only to the extent considered necessary or appropriate by the court. Therefore, there is no wholesale import of all provisions of the Code into proceedings under Section 34, as this would defeat the purpose and object of the Act. The court reiterated that applications under Section 34 are summary proceedings, and framing issues is not integral to such proceedings.

Conclusions:

The court clarified that while proceedings under Section 34 are adversarial, they differ from regular civil suits as the applicant must prove one of the grounds set out in Section 34(2)(a) and (b), regardless of whether there is contest or not. The court emphasized that applications under Section 34 are summary proceedings with provision for objections, affidavits, cross-examination if necessary, and arguments. Framing issues, as under Order 14, Rule 1 of the Code, is not necessary for such proceedings.

The appeal was dismissed, and the court requested the city civil court to dispose of the application expeditiously, considering the award was from 2005.