IS THE CIVIL PROCEDURE CODE, 1908 AND THE INDIAN EVIDENCE ACT, 1872 APPLICABLE IN THE ARBITRATION & CONCILATION ACT, 1996

The Arbitration & Conciliation Act, 1996 springs from the foundation of minimal judicial intervention and one of the most vital principle to attribute this foundation is the autonomy that the code has envisaged with respect to the procedure to conduct the arbitration proceedings. Since most arbitration proceeding are conducted as similar to that of court proceedings, Section 19 of the act envisages that the Arbitral tribunal shall not be bound by the CPC, 1908 or the Indian Evidence Act,1872.

It also does not mandate any specific rules to be followed to conduct arbitration proceedings under the realms of the Act.

It is a well known principle in the interpretation of statutes that where the situation and the context warrants it, the word ‘shall’ used in a section or rule of a statute has to be construed as ‘may’ (Ammal Chandra Dutt v. IInd Addl. Dist Judge AIR 1989 SC 255).

The major intent of section 19 was to give the parties the liberty to decide on a procedure they deem fit and right for an effective and successful adjudication.

In Girnar Traders v. State of Maharashtra (2011) 3 SCC 1 a Constitution Bench of the Supreme Court observed that a self-contained code is a complete legislation with regard to the purpose for which it is enacted. Such a self-contained code provides for a complete machinery to deal with the purpose sought to be achieved by that law and its dependence on other legislation is either absent or minimal

In Fuerst Day Lawson Ltd. v. Jindal Exports Ltd (2011) 8 SCC 333 the Supreme Court had held that ‘the Arbitration and Conciliation Act, 1996 consolidates, amends and designs the law relating to arbitration as much as possible bring in harmony with the UNCITRAL Model. Once it is held that the Arbitration Act is a self-contained code and exhaustive, then it must also be held, using the lucid expression of Tulzapurkar, J., that it carries with it “a negative import that only such acts as are mentioned in the Act are permissible to be done and acts or things not mentioned therein are not permissible to be done”. In other words, a letters patent appeal would be excluded by the application of one of the general principles that where the special Act sets out a self-contained code the applicability of the general law procedure would be impliedly excluded.’

In the changing times as Arbitration which was supposed to be simple has become more complex, the issue of the applicability of CPC and the Indian evidence act have often arisen and as such has been a major factor that has led to challenges under section 34 of the Act.

IS THE CIVIL PROCEDURE CODE 1908 AND THE INDIAN EVIDENCE ACT, 1872 APPLICABLE?

The Section 19 of the act clearly provides that the Arbitral Tribunal shall not be bound by the Code of Civil Procedure, 1908 or the Evidence Act, 1872 but the judicial precedents over the years have clarified on this legal issue at length and have opined that the words "Arbitral Tribunal shall not be bound" are the words of amplitude and not of a restriction and these words do not prohibit the Arbitral Tribunal from drawing sustenance from the fundamental principles underlying the Civil Procedure Code or the Evidence Act but the Tribunal is not bound to observe the provisions of Code with all of its rigour.

The Hon’ble Supreme Court in ITI vs. Siemens Public Communications Network Ltd. (2002) 5 SCC 510 opined that there is no specific exclusion of civil procedure code and evidence act in the arbitration & conciliation act, 1996, when there is no specific exclusion, it cannot be held that they are not applicable .

The Apex court in Nahar Industrial Enterprises Ltd. v. Hong Kong and Shanghai Banking Corp 2009 8 SCC 646 further affirmed that the procedures stipulated under CPC by the arbitrator and held that Section 19 cannot be read to mean that the Arbitral Tribunal is incapacitated in drawing sustenance from any provisions of the Code of Civil Procedure. 

Reiterating the same, the Supreme court in SREI Infrastructure Finance Limited vs. Tuff Drilling Private Limited, 2018 11 SCC 470 opined that the Tribunal can travel beyond the Code of Civil Procedure and the only fetter that is put on its powers is to observe the principles of natural justice.

The arbitrator can draw sustenance from the fundamental principles of the CPC and the Indian Evidence Act.

The Bombay High Court in Maharashtra State Electricity Board vs. Datar Switchgear Ltd., 2002 SCC Online Bom 983 held that “the sub-section (1) of section 19, the Act has prescribed that the Arbitral Tribunal shall not be bound by the Code of Civil Procedure, 1908 or by the Evidence Act, 1872. These are words of amplitude and not of restriction. These words do not prohibit the Arbitral Tribunal from drawing sustenance from the fundamental principles underlying the Civil Procedure Code or Evidence Act, but free the Tribunal from being bound, as would a Civil Court, by the requirement of observing the provisions of the Code and the law relating to evidence with all its rigour. Sub-section (2) of section 19 preserves the consensual nature of the Arbitral proceeding by laying down that subject to the provisions of Part-1, the parties are free to agree on the procedure to be followed by the Arbitral Tribunal in conducting its proceedings.”
The High court of Delhi in Arupri Logistics Pvt. Ltd. vs Vilas Gupta and Others, 2023 SCC OnLine Del 4297 while dealing with the power of the Arbitral tribunal to implead parties under the ambit of Order 1 Rule 10 CPC held that the the Arbitral Tribunal may not be bound by the provisions of the Civil Procedure Code, 1908 but that would not detract from the its right to otherwise draw sustenance from the various provisions of the CPC in order to effectively resolve the disputes which arise. Although, the principles of the Evidence Act are usually applied in Arbitral proceedings, sensu stricto, the said Act is not applicable but there have been some restriction to its applicability as well. The Delhi High Court in Millennium School v. Pawan Dawar, O.M.P. (COMM) 590/2020 when the arbitrator disregarded the entire evidence solely on the non-compliance of certificate under section 65-B of the Indian Evidence Act,1872, it was held that the Section 65-B of Indian Evidence act does not apply to Arbitral proceedings.

Thus, the legal footing with respect to the applicability of CPC and the Evidence Act has been made amicably clear. The Arbitral tribunal can decide matters it thinks best and he may or may not draw inference from CPC or the Indian Evidence Act but the only restriction that confers on it is that it should not violate the principles of natural justice.