JUDGMENT
K.C. Sood, J.
1. The question raised in this objection petition is:
Whether the award made under the Arbitration and Conciliation Act, 1996, is liable to be set aside, if oral hearing is denied to one of the parties ?
2. In order to appreciate the controversy, few facts may be noticed.
3. In a dispute between the petitioner regarding execution of the work “Shimla By-Pass Phase II and Retaining Wall and Breast Wall (Agreement No. 101 of 1994-95)” the Superintending Engineer, Arbitration, Solan, was appointed as the sole arbitrator by the Chief Engineer (NH), HP PWD on 05.02.2004.
4. It so happened the arbitrator who was earlier seized of the dispute and had entered into arbitration was transferred and his successor took over the charge from him. The impugned award was made by the successor on 24.06.2004. The arbitrator made this award without hearing oral arguments. Even though the petitioner moved an application before the arbitrator on 7th April, 2004, saying that when the case was fixed on 5th April, 2004 at Solan, the petitioner along with his counsel appeared on that date and requested for an adjournment for addressing oral arguments in terms of Section 24 of the Act. This request was declined and, therefore, the application, for hearing oral arguments was made, so that the applicant may address the arbitrator along with the law supporting his claim. This application too was rejected by the arbitrator on the ground that he was not obliged to grant oral hearing unless agreed by both the parties. He also took a view that pleadings were finally closed on 9th May, 2002, with the consent of both the parties, 5th April, 2004 was fixed to confirm the said proceedings. Therefore, no such oral hearing could be granted.
5. The arbitrator clearly erred in law.
Section 24 of the Act reads:
“24. Hearings and written proceedings–
(1) Unless otherwise agreed by the parties, the arbitral tribunal shall decide whether to hold oral hearings for the presentation of evidence or for oral argument, or whether the proceedings shall be conducted on the basis of documents and other materials:
Provided that the arbitral tribunal shall hold oral hearings, at an appropriate stage of the proceedings, on a request by a party, unless the parties have agreed that no oral hearing shall be held.
(2) The parties shall be given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal for the purposes of inspection of documents, goods or other property.
(3) All statements, documents or other information supplied to, or applications made to the arbitral tribunal by one party shall be communicated to the other party, and any expert report or evidentiary document on which the arbitral tribunal may rely in making its decision shall be communicated to the parties.”
6. A plain reading of proviso to Section 24 of the Act would show that the arbitral tribunal is obliged to grant oral hearing, at an appropriate stage of the proceedings, if the request is made by either of the party, unless the parties had agreed that no oral hearing shall be held.
7. In the present case, there is nothing on record to show that the parties had agreed that no oral hearing shall be held.
8. Now the question arises whether the award can be set aside on this ground ? The question is no longer res integra. The Apex Court in Oil & Natural Gas Corporation Ltd. v. Saw Pipes Ltd., , held that the jurisdiction or the power of the arbitral tribunal is prescribed under the Act and if the award is de hors the said provisions, it would be, on the face of it, illegal. As the tribunal cannot make the award in breach of any provision of substantive law under which such arbitral tribunal exercise its jurisdiction, Their Lordships in para 13 observed:
“In our view, reading Section 34 conjointly with other provisions of the Act, it appears that the legislative intent could not be that if the award is in contravention of the provisions of the Act, still however, it could not be set aside by the Court. If it is held that such award could not be interfered, it would be contrary to the basic concept of justice. If the arbitral tribunal has not followed the mandatory procedure prescribed under the Act, it would mean that it has acted beyond its jurisdiction and thereby the award would be patently illegal which could be set aside under Section 34.”
9. In the present case, the arbitral tribunal travelled beyond its jurisdiction when it declined oral hearing to the petitioner-claimant in disregard to the proviso to Section 24 of the Act. The award, being without jurisdiction, is liable to be set aside under Section 34 of the Act.
10. In result, the petition is allowed. The impugned award dated 24th June, 2004 is set aside. The award is remitted back to the arbitrator. The arbitrator is directed to grant oral hearing to the parties to enable them to address oral arguments and thereafter make the award in accordance with law. No costs.