19 April 2021, Monday

5 months ago

1. Bifurcating arbitration suo moto and allowing parties to lead further evidence is patently illegal (Bombay High Court)

19 April 2021 | Maharashtra State Road Development v. PLUS BKSP Toll Ltd. |  BP Colabawalla J | 2021 SCC OnLine Bom 607

Disputes between the parties arose out of a concession agreement and its termination. The tribunal conducted the arbitration trial over a few days. It heard the final arguments and gave the parties time to file written submissions. It made clear there would be no more hearings unless it required clarifications.

But the tribunal rendered in PLUS’ favour what it styled an “interim award” in which it decided on the validity of the termination and MSRDC’s liability to pay. Then, it deferred to a second phase of the arbitration, the issue of quantum in which PLUS was allowed to make a fresh claim on the quantum. It also deferred to the second round a decision on MSRDC’s counterclaims. Also, the tribunal specifically rejected some of PLUS’ claims and expressed inability to decide on the others for lack of evidence.

The court ruled that there was a breach of Section 19 (2) ACA, legal misconduct, and failure to decide MSRDC’s counterclaim:-

  1. A bifurcation of the arbitration was never in the contemplation of the parties.
  2. There would have been no objection to the bifurcation had the tribunal simply wanted to hear further arguments on the quantum. But it could not have suo motu allowed either party to lead further evidence to accommodate a party to improve its case. This was against all norms of fair play in any adversarial litigation and violation of Section 18 ACA (equal treatment of parties).
  3. If the tribunal was not satisfied with either party’s evidence, the corresponding claims should have been rejected.

Therefore, the interim award was set aside to the extent that it had allowed parties to file fresh pleadings and lead further evidence.

Access the judgement here.

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