M/S. CANARA NIDHI LIMITED versus M. SHASHIKALA AND OTHERS on 23 September 2019

M/S. CANARA NIDHI LIMITED

v.

M. SHASHIKALA AND OTHERS

(Civil Appeal Nos.7544-7545 of 2019)

SEPTEMBER 23, 2019

[R. BANUMATHI AND A. S. BOPANNA, JJ.]

Arbitration and Conciliation Act, 1996– s.34 – Scope of –Appellant advanced a loan of Rs.50,00,000/- to respondent no.1– Respondent nos.2, 4 and 5-8 were the guarantors – Loan securedby mortgage with deposit of title deeds and respondent no.1 is alsosaid to have executed a demand promissory note for repayment ofthe loan – Arbitration clause in the agreement to resolve disputebetween the parties – Allegedly, respondent no.1 did not repay theloan – Dispute referred to arbitration to the third respondent-Arbitrator – Arbitrator inter alia directed the respondents to payRs.63,82,802/- with interest – Respondent no.1 filed AS No.1 of2008 u/s.34 in the Court of District Judge – Respondent nos.1 &2 also filed application u/s.151, CPC to permit the respondents toadduce evidence – Dismissed – High Court directed the DistrictJudge inter alia to allow respondent nos.1 & 2 to file affidavits oftheir witnesses and further allow their cross-examination – Onappeal, held: Proceedings u/s.34 are summary in nature and notin the nature of regular suit – Scope of enquiry in the proceedingsu/s.34 is restricted to a consideration whether any of the groundsmentioned in s.34(2) or s.13(5) or s.16(6) are made out to set asidethe award – Grounds for setting aside the award are specific –s.34 application will not ordinarily require anything beyond therecord that was before the arbitrator and cross-examination ofpersons swearing in to the affidavits should not be allowed unlessabsolutely necessary – In the present case, no ground was madeout as to the necessity/relevance of adducing evidence and whatwas the nature of the evidence sought to be led by respondentnos.1 & 2 – In the arbitration proceedings, the parties hadsufficient opportunity to adduce oral and documentary evidence– Grounds urged in the application can very well be consideredby the evidence adduced in the arbitration proceedings andconsidering the arbitral award – High Court did not keep in view

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Athat respondent nos.1 & 2 did not make out grounds that it wasan exceptional case to permit them to adduce evidence in theapplication u/s.34 – Impugned judgment set aside – Order of theDistrict Judge dismissing the application u/s.151, CPC in AS No.1of 2008, affirmed – District Judge to take up AS No.1 of 2008and dispose of expeditiously, in accordance with law – Code ofBCivil Procedure, 1908 – s.151 – High Court of KarnatakaArbitration (Proceedings before the Courts) Rules, 2001 – r.4(b)– Constitution of India – Arts. 226 and 227 – Arbitration andConciliation (Amendment) Act, 2019.

Arbitration and Conciliation Act, 1996 – s.34(5), (6) – Held:CBy adding sub-ss.(5) & (6) to s.34, the Act has specified the timeperiod of one year for disposal of the application u/s.34 – Objectis to avoid delay and to dispose of the application expeditiously –Arbitration and Conciliation (Amendment) Act, 2015.

Allowing the appeals, the CourtD

Conclusion

HELD: 1.1 The proceedings under Section 34 of theArbitration and Conciliation Act, 1996 are summary in nature.The scope of enquiry in the proceedings under Section 34 of theAct is restricted to a consideration whether any of the groundsmentioned in Section 34(2) or Section 13(5) or Section 16(6) areEmade out to set aside the award. The grounds for setting asidethe award are specific. It is imperative for expeditious disposalof cases that the arbitration cases under Section 34 of the Actshould be decided only with reference to the pleadings and theevidence placed before the arbitral tribunal and the groundsFspecified under Section 34(2) of the Act. Rule 4(b) of High Courtof Karnataka Arbitration (Proceedings before the Courts) Rules,2001, providing that all the proceedings of the Civil ProcedureCode shall apply to such proceeding/application filed underSections 14 or 34 of the Act insofar as they could be madeapplicable are only procedural. [Paras 9, 10] [643-E-H; 644-A-GB]

1.2 After referring to the judgment in Fiza Developers, inthe impugned judgment, the High Court held that respondentNos.1 and 2 are to be afforded an opportunity to file their andtheir witnesses’ affidavits in proof of their case to prove theHgrounds set out in Section 34(2)(a) of the Act. After the decision in Fiza Developers, Section 34 was amended by Act 3 of 2016by which sub-sections (5) and (6) of Section 34 were added tothe Principal Act w.e.f. 23.10.2015. The judgment in FizaDevelopers was considered by Justice B.N. SrikrishnaCommittee which reviewed the institutionalisation of thearbitration mechanism and pointed out that opportunity tofurnish proof in proceedings under Section 34 of the ArbitrationAct has led to inconsistent practices. Based upon Justice B.N.Srikrishna Committee’s report, Section 34 of the Principal Acthas been amended by Arbitration and Conciliation (Amendment)Act, 2019. [Paras 13-16] [645-H; 646-A-B-E; 647-B-C]

1.3 Section 34 application will not ordinarily requireanything beyond the record that was before the arbitrator andthat cross-examination of persons swearing in to the affidavitsshould not be allowed unless absolutely necessary. The affidavitfiled by the respondents along with application filed underSection 151 CPC does not indicate as to what point the firstrespondent intends to adduce except stating that the firstrespondent intends to adduce additional evidence relating to thesubject of dispute. The affidavit does not disclose specificdocuments or evidence required to be produced except statingthat the first respondent intends to adduce additional evidenceor otherwise the first respondent will be subjected to hardshipin the arbitration suit filed by her under Section 34 of the Act.There are no specific averments in the affidavit as to thenecessity and relevance of the additional evidence sought to beadduced. The grounds urged in the application can very well beconsidered by the evidence adduced in the arbitrationproceedings and considering the arbitral award. Further, theapplication filed by respondent Nos.1 and 2 seeking permissionto adduce evidence, no ground was made out as to the necessityof adducing evidence and what was the nature of the evidencesought to be led by respondent Nos.1 and 2. The proceedingsunder Section 34 of the Act are summary proceedings and is notin the nature of a regular suit. By adding sub-sections (5) and(6) to Section 34 of the Act, the Act has specified the time periodof one year for disposal of the application under Section 34 ofthe Act. The object of sub-sections (5) and (6) to Section 34 fixingtime frame to dispose of the matter filed under Section 34 of AB

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Athe Arbitration Act, 1996 is to avoid delay and to dispose of theapplication expeditiously and in any event within a period of oneyear from the date of which the notice referred to in Section 34(5)of the Act is served upon the other party. In the arbitrationproceedings, the parties had sufficient opportunity to adduce oraland documentary evidence. The High Court did not keep in viewBthat respondent Nos.1 and 2 have not made out grounds that itis an exceptional case to permit them to adduce evidence in theapplication under Section 34 of the Act. The said directions ofthe High Court amount to retrial on the merits of the issuesdecided by the arbitrator. When the order of the District JudgeCdismissing the application filed by respondent Nos.1 and 2 doesnot suffer from perversity, the High Court, in exercise of itssupervisory jurisdiction under Articles 226 and 227 of theConstitution of India, ought not to have interfered with the orderpassed by the District Judge and the impugned judgment cannotbe sustained. In the result, the impugned judgment passed byDthe High Court is set aside. The order of the District Judgedismissing the application filed under Section 151 CPC isaffirmed. The District Judge shall take up AS No.1 of 2008 anddispose of the same expeditiously in accordance with law. [Paras17-20] [648-E-H; 649-A-D-H; 650-A-B]EFiza Developers and Inter-Trade Private Limited v.AMCI (India) Private Limited and another (2009) 17SCC 796 : [2009] 12 SCR 1 ; Emkay Global FinancialServices Limited v. Girdhar Sondhi (2018) 9 SCC 49 :[2018] 10 SCR 937 – referred to.F

Case Law Reference

GCIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 7544-7545 of 2019.

From the Judgment and Order dated 12.09.2014 of the HighCourt of Karnataka at Bangalore in Writ Petition Nos. 18374-18375/H2010 (GM-RES)

S. N. Bhat, Priyank Jain, D. P. Chaturvedi and Tarun Thakur,Advs. for the Appellant.

Ms. E. R. Sumathy, Adv. for the Respondents.

The Judgment of the Court was delivered by

R. BANUMATHI, J.

1. Leave granted.

2. In the application under Section 34 of the Arbitration andConciliation Act, 1996 (the Act) seeking to set aside the award, whetherthe parties can adduce evidence to prove the specified grounds in sub-section (2) to Section 34 of the Act, is the question falling forconsideration in these appeals.

3. These appeals arise out of the judgment dated 12.09.2014passed by the High Court of Karnataka at Bangalore in Writ PetitionNos.18374-75 of 2010 (GM-RES) in and by which the High Court setaside the order passed by the District Judge and directed the DistrictJudge to “recast the issues” and permit respondent Nos.1 and 2 to fileaffidavits of their witnesses and also permitting cross-examination ofthe witnesses.

4. Brief facts which led to filing of these appeals are as under:- The appellant is the financial institution and the appellant advanceda loan of Rs.50,00,000/- to respondent No.1 and respondent Nos.2, 4and 5 to 8 were the guarantors in respect of such loan. The loan wassecured by a mortgage with deposit of title deeds and respondent No.1is also said to have executed a demand promissory note for repaymentof the loan. There was an arbitration clause in the agreement to resolvedispute between the parties. It is alleged that the first respondent didnot repay the loan and failed to discharge the liabilities arising out ofthe transaction. The dispute between the appellant and the firstrespondent was referred to arbitration to the third respondent-Arbitrator.Before the arbitrator, both the parties adduced oral and documentaryevidence. The arbitrator passed an award dated 15.12.2007 anddirected the respondents to pay an amount of Rs.63,82,802/- withinterest on Rs.50,00,000/- at 14% per annum from 11.08.2000 and costof Rs.52,959/-.

5. Assailing the award, respondent No.1 filed AS No.1 of 2008under Section 34 of the Act in the Court of District Judge at Mangalore.

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ABefore the District Judge, respondent Nos.1 and 2 filed an applicationunder Section 151 CPC to permit the respondents to adduce evidence.The appellant filed objections to the said application. By the order dated02.06.2010, the learned District Judge dismissed the said application.Holding that the grounds urged in the application can very well be metwith by the records of the arbitration proceedings and by perusing theBarbitral award, the learned District Judge further held that in any event,there is no necessity of adducing fresh evidence in the application filedunder Section 34 of the Act.

6. Aggrieved by the dismissal of their application under Section151 CPC, respondent Nos.1 and 2 filed writ petitions before the HighCCourt under Articles 226 and 227 of the Constitution of India. TheHigh Court by the impugned judgment allowed the writ petitions anddirected the learned District Judge to “recast the issues” and allowrespondent Nos.1 and 2 to file affidavits of their witnesses and furtherallow cross-examination of the witnesses. After referring to theDjudgment in Fiza Developers and Inter-Trade Private Limited v.AMCI (India) Private Limited and another (2009) 17 SCC 796, theHigh Court observed that in order to prove the existence of the groundsunder Section 34(2) of the Act, respondent Nos.1 and 2 are permittedto file affidavits of their witnesses. In the impugned judgment, the HighCourt concluded that the reasoning of the District Judge not permittingErespondent Nos.1 and 2 to file their own affidavits and affidavits ofother witnesses to prove their case is erroneous and opposed to settledprinciples of law. As pointed out earlier, the learned District Judge wasdirected to “recast the issues” and the court below was directed topermit respondent Nos.1 and 2 to file affidavits of their witnesses andextend corresponding opportunity to the appellant to place their evidenceFby affidavit. Being aggrieved, the appellant has preferred these appeals.This Court ordered notice vide order dated 06.01.2015 and furtherordered that there shall be stay of the proceedings in AS No.1 of 2008.

7. Assailing the impugned judgment, Mr. S.N. Bhat, learnedcounsel appearing for the appellant submitted that it is well-settled thatGproceedings under Section 34 of the Act is summary in nature and thescope of the said proceedings is very limited. It was submitted thatthe validity of the award has to be decided on the basis of the materialsproduced before the arbitrator and there is no scope for adducing freshevidence before the court in the proceedings under Section 34 of theHAct. The learned counsel submitted that the High Court, in the present case, misread the ratio of the decision of the Supreme Court in FizaDevelopers. It was inter alia urged that in any event, in the presentcase, respondent Nos.1 and 2 did not make out any exceptional groundsfor permission to lead fresh evidence in the proceedings under Section34 of the Act and the learned District Judge rightly rejected theapplication filed by respondent Nos.1 and 2 for permission to leadevidence. The learned counsel urged that the High Court erred ininterfering with the order passed by the trial court in interlocutoryapplication.

8. Reiterating the findings of the impugned judgment of the HighCourt, Ms. E.R. Sumathy, learned counsel appearing for respondentNos.1 and 2 submitted that in order to prove the grounds stated in theapplication filed under Section 34 of the Act adducing additionalevidence is necessary. It was submitted that respondent Nos.1 and 2sought to adduce evidence to prove the grounds enumerated underSection 34(2)(a) of the Act. The learned counsel submitted that thegrounds for setting aside the award are specific and therefore,necessarily respondent Nos.1 and 2 will have to plead and prove thegrounds mentioned in Section 34(2) of the Act and prove the same andthe High Court rightly allowed the writ petitions giving an opportunityto respondent Nos.1 and 2 to adduce evidence in the proceedings underSection 34 of the Act.

9. The proceedings under Section 34 of the Act are summary innature. The scope of enquiry in the proceedings under Section 34 ofthe Act is restricted to a consideration whether any of the groundsmentioned in Section 34(2) or Section 13(5) or Section 16(6) are madeout to set aside the award. The grounds for setting aside the awardare specific. It is imperative for expeditious disposal of cases that thearbitration cases under Section 34 of the Act should be decided onlywith reference to the pleadings and the evidence placed before thearbitral tribunal and the grounds specified under Section 34(2) of theAct.

10. The learned counsel for respondent Nos.1 and 2 submittedthat in view of Rule 4(b) of the High Court of Karnataka Arbitration(Proceedings before the Courts) Rules, 2001, (Karnataka High CourtArbitration Rules) all the proceedings of the Civil Procedure Code, 1908shall apply to such proceedings and therefore, the High Court rightlyallowed the writ petitions and permitted respondent Nos.1 and 2 to file AB

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Atheir own affidavits and also the affidavits of the witnesses. Rule 4(b)of the Karnataka High Court Arbitration Rules provides that all theproceedings of the Civil Procedure Code shall apply to such proceeding/application filed under Sections 14 or 34 of the Act insofar as they couldbe made applicable. Rule 4(b) of Karnataka High Court ArbitrationRules, in our view, are only procedural. In Fiza Developers, theBSupreme Court noticed Rule 4(b) of Karnataka High Court ArbitrationRules and made it clear that there is no wholesale or automatic importof all the provisions of Civil Procedure Code into the proceedings underSection 34 of the Act as that will defeat the very purpose and objectof the Arbitration Act, 1996.

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11. In Fiza Developers, the question which arose forconsideration by the court was whether issues as contemplated underOrder XIV Rule 1 of Civil Procedure Code should be framed in theapplication under Section 34 of the Act. The court held that framing ofissues as contemplated under Order XIV Rule 1 CPC is not requiredDin an application under Section 34 of the Act which proceeding issummary in nature. In paras (14), (17), (21) and (24) of FizaDevelopers, it was held as under:- “14. In a summary proceeding, the respondent is given anopportunity to file his objections or written statement. Thereafter,Ethe court will permit the parties to file affidavits in proof of theirrespective stands, and if necessary permit cross-examination bythe other side, before hearing arguments. Framing of issues insuch proceedings is not necessary. We hasten to add that whenit is said issues are not necessary, it does not mean that evidenceis not necessary.

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17. The scheme and provisions of the Act disclose two significantaspects relating to courts vis-à-vis arbitration. The first is thatthere should be minimal interference by courts in matters relatingto arbitration. Second is the sense of urgency shown withreference to arbitration matters brought to court, requiringpromptness in disposal.

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21. We may therefore examine the question for considerationby bearing three factors in mind. The first is that the Act is a H

special enactment and Section 34 provides for a special remedy.The second is that an arbitration award can be set aside onlyupon one of the grounds mentioned in sub-section (2) of Section34 exists. The third is that proceedings under Section 34 requiresto be dealt with expeditiously.

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24. In other words, an application under Section 34 of the Actis a single issue proceeding, where the very fact that theapplication has been instituted under that particular provisiondeclares the issue involved. Any further exercise to frame issueswill only delay the proceedings. It is thus clear that issues neednot be framed in applications under Section 34 of the Act.”

12. Though this Court held that the applications under Section34 of the Act are summary proceedings, an opportunity to the aggrievedparty has to be afforded to prove existence of any of the grounds underSection 34(2) of the Act. This court thus permitted the applicant thereonto file affidavits of his witnesses in proof thereof. In para (31) of FizaDevelopers, this Court held as under:-

31. Applications under Section 34 of the Act are summaryproceedings with provision for objections by the respondent-defendant, followed by an opportunity to the applicant to “prove”the existence of any ground under Section 34(2). The applicantis permitted to file affidavits of his witnesses in proof. Acorresponding opportunity is given to the respondent-defendantto place his evidence by affidavit. Where the case so warrants,the court permits cross-examination of the persons swearing tothe affidavit. Thereafter, the court hears arguments and/orreceives written submissions and decides the matter. This is ofcourse the routine procedure. The court may vary the saidprocedure, depending upon the facts of any particular case orthe local rules. What is however clear is that framing of issuesas contemplated under Rule 1 of Order 14 of the Code is not anintegral part of the process of a proceedings under Section 34of the Act.”

13. After referring to the judgment in Fiza Developers, in theimpugned judgment, the High Court held that respondent Nos.1 and 2are to be afforded an opportunity to file their and their witnesses’

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Aaffidavits in proof of their case to prove the grounds set out in Section34(2)(a) of the Act.

14. After the decision in Fiza Developers, Section 34 wasamended by Act 3 of 2016 by which sub-sections (5) and (6) of Section34 were added to the Principal Act w.e.f. 23.10.2015. Sub-sectionsB(5) and (6) to Section 34 of the Act read as under:- “34. Application for setting aside arbitral award.—

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(5) An application under this section shall be filed by a party onlyafter issuing a prior notice to the other party and such applicationshall be accompanied by an affidavit by the applicant endorsingcompliance with the said requirement.

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(6) An application under this section shall be disposed ofexpeditiously, and in any event, within a period of one year fromthe date on which the notice referred to in sub-section (5) isserved upon the other party.”

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15. The judgment in Fiza Developers was considered by JusticeB.N. Srikrishna Committee which reviewed the institutionalisation ofthe arbitration mechanism and pointed out that opportunity to furnishproof in proceedings under Section 34 of the Arbitration Act has led toEinconsistent practices. The said Committee reported as under:-

“5. Amendment to Section 34(2)(a) of the ACA: Sub-section(2)(a) of Section 34 of the ACA provides for the setting asideof arbitral awards by the court in certain circumstances. Theparty applying for setting aside the arbitral award has to furnishproof to the court. This requirement to furnish proof has led toinconsistent practices in some High Courts, where they haveinsisted on Section 34 proceedings being conducted in the manneras a regular civil suit. This is despite the Supreme Court rulingin Fiza Developers & Inter-Trade (P) Ltd. v. AMCI (India)(P) Ltd. (2009) 17 SCC 796 that proceedings under Section 34should not be conducted in the same manner as civil suits, withframing of issues under Rule 1 of Order 14 of the CPC.

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In light of this, the Committee is of the view that a suitableamendment may be made to Section 34(2)(a) to ensure thatproceedings under Section 34 are conducted expeditiously.

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M/S. CANARA NIDHI LIMITED v. M. SHASHIKALAAND OTHERS [R. BANUMATHI, J.]

Recommendation: An amendment may be made to Section34(2)(a) of the Arbitration and Conciliation Act, 1996, substitutingthe words ‘furnishes proof that’ with the words ‘establishes onthe basis of the Arbitral Tribunal’s record that’.”

[Report of Justice B.N. Srikrishna Committee quoted inEmkay Global Financial Services Ltd. v. Girdhar Sondhi (2018)9 SCC 49]

16. Based upon Justice B.N. Srikrishna Committee’s report,Section 34 of the Principal Act has been amended by Arbitration andConciliation (Amendment) Act, 2019 as under:- “7. Amendment of Section 34.—In Section 34 of the principalAct, in sub-section (2), in clause (a), for the words “furnishesproof that”, the words “establishes on the basis of therecord of the Arbitral Tribunal that” shall be substituted.”

17. After referring to Justice B.N. Srikrishna Committee’s reportand other judgments and observing that the decision in Fiza Developersmust be read in the light of the amendment made in Section 34(5) andSection 34(6) of the Act and amendment to Section 34 of the ArbitrationAct, 1996, in Emkay Global Financial Services Limited v. GirdharSondhi (2018) 9 SCC 49, it was held as under:- “21. It will thus be seen that speedy resolution of arbitral disputeshas been the reason for enacting the 1996 Act, and continues tobe the reason for adding amendments to the said Act tostrengthen the aforesaid object. Quite obviously, if issues are tobe framed and oral evidence taken in a summary proceedingunder Section 34, this object will be defeated. It is also on thecards that if Bill No. 100 of 2018 is passed, then evidence at thestage of a Section 34 application will be dispensed with altogether.Given the current state of the law, we are of the view that thetwo early Delhi High Court judgments in Sandeep Kumar v.Ashok Hans 2004 SCC OnLine Del 106, Sial Bioenergie v.SBEC Systems 2004 SCC OnLine Del 863, cited by ushereinabove, correctly reflect the position in law as to furnishingproof under Section 34(2)(a). So does the Calcutta High Courtjudgment in WEB Techniques and Net Solutions (P) Ltd. v. GatiLtd. 2012 SCC OnLine Cal 4271. We may hasten to add that ifthe procedure followed by the Punjab and Haryana High Court A

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Ajudgment in Punjab SIDC Ltd. v. Sunil K. Kansal 2012 SCCOnline P&H 19641 is to be adhered to, the time-limit of one yearwould only be observed in most cases in the breach. We thereforeoverrule the said decision. We are constrained to observe thatFiza Developers was a step in the right direction as its ultimateratio is that issues need not be struck at the stage of hearing aBSection 34 application, which is a summary procedure. However,this judgment must now be read in the light of the amendmentmade in Sections 34(5) and 34(6). So read, we clarify the legalposition by stating that an application for setting aside an arbitralaward will not ordinarily require anything beyond the record thatCwas before the arbitrator. However, if there are matters notcontained in such record, and are relevant to the determinationof issues arising under Section 34(2)(a), they may be brought tothe notice of the Court by way of affidavits filed by both parties.Cross-examination of persons swearing to the affidavits shouldnot be allowed unless absolutely necessary, as the truth willDemerge on a reading of the affidavits filed by both parties.We,therefore, set aside the judgment in Girdhar Sondhi v. EmkayGlobal Financial Services Ltd. 2017 SCC OnLine Del 12758of the Delhi High Court and reinstate that of the learnedAdditional District Judge dated 22-9-2016. The appeal isEaccordingly allowed with no order as to costs.”

The legal position is thus clarified that Section 34 application willnot ordinarily require anything beyond the record that was before thearbitrator and that cross-examination of persons swearing in to theaffidavits should not be allowed unless absolutely necessary.

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18. The question falling for consideration is whether the presentcase is such an exceptional circumstance that it was necessary to grantopportunity to respondent Nos.1 and 2 to file affidavits and to cross-examine the witnesses is made out. The affidavit filed by therespondents along with application filed under Section 151 CPC doesGnot indicate as to what point the first respondent intends to adduce exceptstating that the first respondent intends to adduce additional evidencerelating to the subject of dispute. The affidavit does not disclose specificdocuments or evidence required to be produced except stating that thefirst respondent intends to adduce additional evidence or otherwise theHfirst respondent will be subjected to hardship in the arbitration suit filed by her under Section 34 of the Act. As rightly contended by the learnedcounsel appearing for the appellant that there are no specific avermentsin the affidavit as to the necessity and relevance of the additionalevidence sought to be adduced.

19. By perusal of the award, it is seen that before the arbitrator,respondent No.1 filed her written statement and other respondents alsofiled separate written statements. It was contended that the documentswere forged. Both parties adduced oral and documentary evidence.The appellant led evidence by examining two witnesses BalakrishnaNayak (PW-1) and B.A. Baliga (PW-2) and exhibited documents P1to P47. Respondent Nos.1 and 2 also examined five witnesses viz. M.Shashikala (RW-1), Mamatha @ Mumtaz Hameed (RW-2), Latha (RW-3), Chitralekha Umesh (RW-4) and B.R. Nagesh (RW-5). RespondentNos.1 and 2 also produced documentary evidence Ex.-R1 to R13. Asheld by the District Judge, the grounds urged in the application can verywell be considered by the evidence adduced in the arbitrationproceedings and considering the arbitral award. Further, the applicationfiled by respondent Nos.1 and 2 seeking permission to adduce evidence,no ground was made out as to the necessity of adducing evidence andwhat was the nature of the evidence sought to be led by respondentNos.1 and 2. The proceedings under Section 34 of the Act are summaryproceedings and is not in the nature of a regular suit. By adding sub-sections (5) and (6) to Section 34 of the Act, the Act has specified thetime period of one year for disposal of the application under Section34 of the Act. The object of sub-sections (5) and (6) to Section 34 fixingtime frame to dispose of the matter filed under Section 34 of theArbitration Act, 1996 is to avoid delay and to dispose of the applicationexpeditiously and in any event within a period of one year from thedate of which the notice referred to in Section 34(5) of the Act is servedupon the other party. In the arbitration proceedings, the parties hadsufficient opportunity to adduce oral and documentary evidence. TheHigh Court did not keep in view that respondent Nos.1 and 2 have notmade out grounds that it is an exceptional case to permit them toadduce evidence in the application under Section 34 of the Act. Thesaid directions of the High Court amount to retrial on the merits of theissues decided by the arbitrator. When the order of the District Judgedismissing the application filed by respondent Nos.1 and 2 does notsuffer from perversity, the High Court, in exercise of its supervisoryjurisdiction under Articles 226 and 227 of the Constitution of India, ought A

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Anot to have interfered with the order passed by the District Judge andthe impugned judgment cannot be sustained.

20. In the result, the impugned judgment dated 12.09.2014 passedby the High Court of Karnataka at Bangalore in Writ PetitionNos.18374-75 of 2010 (GM-RES) is set aside and these appeals areBallowed. The order of the District Judge dismissing the application filedunder Section 151 CPC in AS No.1 of 2008 is affirmed. The learnedDistrict Judge shall take up AS No.1 of 2008 and dispose of the sameexpeditiously in accordance with law. No costs.

CDivya Pandey

Appeals allowed.

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