Section 24 of Arbitration and Conciliation Act, 1996, regulates hearing and written proceedings in arbitration. It provides fairness and transparency by providing parties with the right to ask for an oral hearing while enabling proceedings to take place on a written submission basis when agreed between parties. The provision calls for notice prior to hearings and makes sure that all documents and evidence should be brought forth prior to both sides. Through guaranteeing natural justice principles, Section 24 is to make arbitration a seamless, impartial, and efficient means of resolving disputes in India.
Key Provisions of Section 24 of Arbitration & Conciliation Act
Section 24 lays down the method of conducting hearings in arbitral proceedings. The section ensures integrity, transparency, and effectiveness of the arbitral process with due flexibility to let parties determine in what manner and how hearings should be conducted.
Sub-Section (1): Decision on Conducting Oral Hearings
Tribunal's Discretion: The arbitral tribunal can decide whether oral hearings for the submission of evidence or oral submissions are to be held or whether the proceedings are to be conducted on documents and other materials alone. This is subject to any agreement to the contrary between the parties.
Party's Right to Request Oral Hearings: Even if the tribunal decides to adopt a document-only procedure, it shall conduct oral hearings at a suitable stage on a party's request unless the parties have agreed to dispense with oral hearings. This provision protects a party's right to be heard.
Expedited Proceedings: An amendment introduced by the Arbitration and Conciliation (Amendment) Act 2015 emphasises that oral hearings should, as far as possible, be conducted on a day-to-day basis. Adjournments are discouraged and should only be granted for sufficient cause. The tribunal may impose costs, including exemplary costs, on parties seeking adjournments without adequate justification. This aims to prevent delays and promote efficient resolution of disputes.
Sub-Section (2): Advance Notice of Hearings and Meetings
Sufficient Notice: The parties should be provided with sufficient notice prior to any hearings or consultations convened by the arbitral body, in particular consultations or hearings for documents, goods, or other property inspection. This guarantees that there is enough time for the parties to be properly prepared and effective during their intervention as per the principle of parity.
Sub-Section (3): Communication and Sharing of Information
Transparency and Equal Treatment: All statements, documents, or other information provided to the arbitral tribunal by a party shall be communicated to the other party. Also, any expert reports or evidentiary documents that the tribunal wishes to base its decision on must be disclosed to both parties. This promotes transparency and enables each party to react accordingly so that the proceedings are carried out in an impartial manner.
Judicial Interpretation of Section 24
Section 24 of Arbitration and Conciliation Act 1996 prescribes the rules for hearings and written proceedings in arbitration. Although there is limited case law directly interpreting Section 24, a number of judgements have touched upon its principles, especially with regard to the conduct of hearings, the requirement of oral proceedings, and the need to follow agreed procedures. The following are summaries of some important cases that clarify these points:
1. Faze Three Exports Ltd. v. Pankaj Trading Co. & Ors.
Facts: In an arbitration case involving Faze Three Exports Ltd., the arbitral tribunal chose to move forward without holding oral hearings and only considered documentary evidence. Faze Three Exports said that they were not given a fair chance to make their case because of this strategy.
Issues:
Whether the arbitral tribunal's choice to be dependent solely on documents and not hold oral hearings breached the doctrines of natural justice and the parties' Section 24 rights.
Judgment: The Bombay High Court held that although Section 24 provides for the arbitral tribunal to determine the manner in which the proceedings are to be conducted, it has to afford an opportunity for the parties to put forward their case. The Court stressed that denial of oral hearings, particularly when a party has opted for the same, would fall short of satisfying natural justice principles.
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2. Union of India v. Bharat Builders and Contractors
Facts: In this instance, the arbitral tribunal made use of a key report which was not presented to one of the parties during the hearing. The outraged party objected to the award, contending that the non-disclosure denied them a chance to object to the report's conclusions.
Issues:
Does the arbitral tribunal's reliance on undisclosed evidence violate Section 24(3) and the principles of fair hearing?
Judgment: The Kerala High Court held that failure to disclose material evidence to a party violates Section 24(3), which requires that all statements, documents, or other information furnished to the tribunal by a party should be brought to the notice of the other party. The Court set aside the award, emphasising the need for disclosure and fairness in arbitration proceedings.
3. Sarat Kumar Dash and Ors. v. Biswajit Patnaik and Ors.
Facts: During the arbitration, one party was not given adequate notice of the hearings, leading to their absence during critical stages of the proceedings. The award was challenged on the grounds of insufficient notice.
Issues:
Does the failure to provide sufficient advance notice of hearings violate Section 24(2) and justify setting aside the arbitral award?
Judgment: The Supreme Court articulated that, fundamentally, sufficient notification constitutes an essential requirement for a fair hearing to be granted. The Court stressed that Section 24(2) provisions require the arbitral tribunal to notify the parties of the hearing or meeting well in advance. The failure to do so constitutes an infringement of the principles of natural justice, and therefore, the award should be set aside.
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In a nutshell,
For arbitration hearings to be transparent and equitable, Section 24 of Arbitration and Conciliation Act, 1996, is essential. In keeping with ideas of natural fairness, requiring comments from both parties to be delivered in a straightforward manner creates an environment of justice and impartiality. This promotes arbitration as a more effective and reliable method of settling disputes inside India. In the meantime, its requirements for open and honest verbal and written presentations support arbitration's legitimacy as a conflict resolution method as opposed to litigation.
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Section 24 of Arbitration and Conciliation Act, 1996: FAQs
Q1. What does Section 24 of Arbitration and Conciliation Act 1996 address?
Section 24 addresses the conduct of oral hearings and written proceedings in arbitration, making it fair and transparent.
Q2. Can arbitration be held solely in written form?
Yes, unless a party asks for an oral hearing, the tribunal is then obliged to conduct one.
Q3. Is notice prior to an arbitration hearing necessary?
Yes, all parties should be given adequate notice prior to any hearing or meeting for evidence gathering.
Q4. Do parties have to exchange documents and evidence with one another?
Yes, all written evidence and documents used in arbitration must be shared with both parties.
Q5. Why is Section 24 significant in arbitration?
It ensures procedural justice, keeps away from surprise at hearings, and upholds the natural justice principles.
