Non-Applicability Of Section 65-B Of The Indian Evidence Act In The Arbitration Proceedings In India

Recently, Hon’ble High Court of Delhi has delivered a judgment on non-applicability of Section 65-B of the Indian Evidence Act on arbitral proceedings. The dispute arose from an agreement entered into between the parties whereby the respondent agreed to provide transport services to the petitioner.

In view of certain deficiencies in services by the respondent, the petitioner terminated the said agreement pursuant to which the disputes were referred to Delhi International Arbitration Centre (DIAC) following the due process of law. The arbitral tribunal partially accepted the claims of the respondent against which the petitioner filed the subject petition before the Hon’ble High Court of Delhi.

The petitioner contended that the Arbitral Tribunal wrongly rejected crucial evidence led by the petitioner including the complaints filed by parents of the students against the respondent on the ground that the Certificate under Section 65-B (4) of the Indian Evidence Act, 1872 (hereinafter ‘Evidence Act’) did not conform to the statutory requirements. However, the Arbitral Tribunal failed to consider that the Evidence Act was not applicable to arbitration proceedings and this finding of the Arbitral Tribunal was contrary to Section 19 of the Arbitration & Conciliation Act and Rule 25.2 of the DIAC Rules, 2018. He further contended that the respondent had admitted to the receipt of various e-mails, which were yet ignored by the Arbitral Tribunal on the ground of insufficiency of certificate under Section 65-B of the Evidence Act.

Section 19 (1) of the Arbitration & Conciliation Act, 1996 is reiterated herein below for ready reference:

“19. Determination of rules of procedure.— (1) The arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 (5 of 1908) or the Indian Evidence Act, 1872 (1 of 1872)…”

Rule 25.2 of the DIAC Rules, 2018 is reiterated herein below for ready reference:

“25.2 The Tribunal shall, while determining the admissibility, relevance, materiality and weight of any evidence, not be bound by the Indian Evidence Act, 1872 or the Code of Civil Procedure, 1908 or by any strict rules of evidence.”

On the basis of the pleadings, the arbitral tribunal framed various issues including the following:

1. Whether the termination of the contract dated 01.04.2012 executed between the Claimant and the Respondent is valid?
2. Whether there was any deficiency in the services provided by the Claimant?”

The issues were decided against the petitioner wherein the Arbitral Tribunal held that the termination of the Agreement was illegal and invalid and accordingly, answered the first issue in the negative. The Arbitral Tribunal further found that the petitioner had failed to prove that there was any deficiency in the services provided by the respondent.

One of the issue relates to whether the decision of the Arbitral Tribunal that the petitioner has failed to prove deficiency of service, is manifestly erroneous or not. The petitioner contended that the Arbitral Tribunal had erred in rejecting the evidence on the ground that requirements under Section 65-B of the Evidence Act were not satisfied. Certain documents were rejected by the arbitral tribunal on the ground that the requirements under Section 65-B of the Evidence Act were not complied with. The Principal of the petitioner school had issued a certificate, in support of the documents. Admittedly, there was no objection to the certificate under Section 65-B of the Evidence Act at the time when the same was produced and the same was also marked and exhibited. However, the Arbitral Tribunal held that the said certificate was inadmissible as it was defective.

The court observed that although the principles of the Evidence Act are usually applied in arbitral proceedings, sensu stricto, the said Act is not applicable. Section 65-B of the Evidence Act is not applicable to arbitral proceedings, yet the Arbitral Tribunal has disregarded the entire evidence led by the petitioner regarding deficiency of service solely on the ground that the certificate under Section 65-B of the Evidence Act was defective.

The Judgment can be accessed from:

http://164.100.69.66/jupload/dhc/VIB/judgement/10-05-2022/VIB10052022OMPCOMM5902020_173118.pdf