While granting relief to the Chennai Metro Rail Limited (CMRL), the Madras High Court has noted that while an arbitral tribunal, which consists of an expert Arbitrator in the field, is at liberty to apply its own knowledge and understanding to arrive at a conclusion, it should always allow the parties involved to present their case. The bench of Acting Chief Justice T Raja and Justice Bharatha Chakravarthy was adjudicating appeals filed by Transtonnelstroy-Afcons who had entered into an agreement with CMRL for carrying out the construction of the Chennai metro.

Arbitral tribunal (Arbitrator) had ruled in favour of the appellants

The arbitral tribunal (Arbitrator) had ruled in favour of the appellants and performed its own analysis to reach a decision regarding an extension of time for completing the project when the appellant challenged the single judge’s order to set it aside. The arbitral tribunal had requested unmarked records after reserving the issues for orders, and the bench observed that it had not disclosed to either party the reason for gathering the records. Simply emailing both parties to request the records would not constitute giving them a chance if they were unaware of the records’ intended use.

Strong argument for the Court to overturn the arbitral decision

As a result, after determining the necessity of the aforementioned documents, simply requesting the documents without explaining why, after reserving the matter for orders and following their internal deliberation, essentially equates to taking the materials without the parties’ knowledge. The emails from both tribunals are taken from the list above. As can be seen, there is not even the slightest hint as to why the items were required. When the parties are unaware of the reason for the opportunity, simply marking a copy of the mail to both parties does not constitute a grant of the opportunity.

The Tribunal’s (Arbitrator) use of data that was contested by one of the parties to draw a conclusion, the court observed, and the parties’ lack of chance to present their case meant that the party was unable to present its case. According to the court’s view, such an award could be thrown out. Because only the additional materials serve as the foundation for the award’s main reasoning, the mistake made by the Tribunal is thus obvious on the face of the record, significant, and fundamental in this instance. It is therefore a strong argument for the Court to overturn the arbitral decision.

As the order of the learned Single Judge sets aside both awards, we do not see any error in it at all, and the question is therefore answered as such.

Appellants on a daily basis while it is engaged for CMRL

The appellant had contended that being “unable to present the argument” is distinct from “merely not offering an opportunity to respond.” According to the argument, the tribunal (Arbitrator) only issued the award 53 days after requesting the records, and during that period, CMRL made no objections and kept quiet. Additionally, it was claimed that the tribunal did not rely on any new documents and was merely asked to install a piece of software that the parties had been using to analyse the data entered by the appellants on a daily basis while it is engaged for CMRL.

audi altarem partem principle

The tribunal (Arbitrator) issued orders after determining that some reasons for the work’s execution delays were factually accurate and others weren’t. On the other side, CMRL questioned the tribunal’s request for records from one party after reserving the subject for orders and failing to specify its justification. It argued that if new evidence needed to be reviewed, the tribunal should have reopened the case and marked the document through witnesses or as Court records, giving CMRL a chance to voice objections. As a result, it was argued that the audi altarem partem principle was not upheld.

The tribunal (Arbitrator) was required to provide the parties a chance to speak when it opted to depart from the predetermined process for considering the case and use its own expertise to conduct a technical evaluation, the court noted.

M/s Transtonnelstroy-Afcons (JV) v. M/s. Chennai Metro Rail Ltd

The panel’s decision to remand the case back to it for further consideration was also rejected by the court because the tribunal (Arbitrator) was still deliberating over other claims. The court determined that the Supreme Court’s decision in Kinnari Mullick and Others v. Ghanshyam Das Damani clearly established that an exercise of remand can only be used in cases where only a written application is made in accordance with Section 34(4) of the Arbitration Act without setting aside the award. The award was previously thrown out in the current case, thus the parties were free to start de novo proceedings according to the rules of law. M/s Transtonnelstroy-Afcons (JV) v. M/s. Chennai Metro Rail Ltd.