Bombay High Court: Whether recording of evidence of any witness at the place or venue outside the agreed venue would amount to change of venue of arbitration

609231-hc-mumbai-040517

In the case of Stemcor (S.E.A.) Pte Limited and Anr. v. Mideast Integrated Steels Limited (Arb Pet No. 332 of 2018), the Bombay High Court ruled that in case a witness needs to be examined who is located outside the territory of India, then it has the power under the Code of Civil Procedure of India (CPC) read with provisions of the Indian Arbitration Act, 1996 (Act) to issue a Letter of Request to the relevant Court of such jurisdiction in which such witness is located to  issue appropriate directions for the examination of such witness in the manner provided under the Supreme Court of Judicature Act of India. In the instant case, the Court appointed the arbitrator as the Court commissioner for recording the examination of the witness in Singapore directing the petitioner to bear all the incidental cost. Brief case analysis given below:

Factual Matrix

Stemcor (S.E.A.) Pte Limited (Stemcor), a Singaporean company entered into several agreements with an Indian company MESCO Logistics Limited (MESCO). Dispute arose between the parties the matter was referred for arbitration. The seat of arbitration was Mumbai, India and the governing law of arbitration was the Indian law. The witnesses were examined from both the sides. Stemcor wanted to examine Mr.Gerard Craggs’, one of the key managerial person of Stemcor residing in Singapore. Stemcor requested the arbitrator to allow recording of evidence by video conferencing under section 19 of the Act. The Arbitrator held that in the event of Mr.Gerard Craggs’ unavailability to travel to Mumbai for recording his cross examination, it would be conducted in Singapore at Stemcor’s cost. This was opposed by MESCO and therefore, the arbitrator granted a leave to Stemcor to approach Bombay High court for assistance under section 27 of the Act for the issuance of the commission to record the evidence of Mr.Gerard Craggs. It is pertinent to mention that the arbitrator had granted similar permission in favour of the MESCO inter alia praying for permission to approach Bombay High Court for taking assistance of this court and for the appointment of the commission to examine Mr.Mathew Stock who was a resident of another country and was unable to visit India for the purpose of recording evidence before the arbitral tribunal. The arbitrator had approved issuance of the commission in favour of the MESCO to examine a witness outside India on the condition that the entire cost of the commission, if ordered, to be borne by the MESCO alone. But Mr.Mathew Stock ultimately visited India for the purpose of recording his evidence.

Applicable Legal Principle

Section 27 of the Act

“27 Court assistance in taking evidence.—

……

(3) The Court may, within its competence and according to its rules on taking evidence, execute the request by ordering that the evidence be provided directly to the arbitral tribunal.

(4) The Court may, while making an order under sub-section (3), issue the same processes to witnesses as it may issue in suits tried before it.

….

(6) In this section the expression “Processes” includes summonses and commissions for the examination of witnesses and summonses to produce documents.”

Section 20 of the Act

“20 Place of arbitration.—

(1) The parties are free to agree on the place of arbitration.

(2) Failing any agreement referred to in sub-section (1), the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties.

(3) Notwithstanding sub-section (1) or sub-section (2), the arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property.”

Parties Contentions’

MESCO contended that admittedly both parties had agreed that seat and venue of arbitration would be at Mumbai. If this Court appoints commission for recording evidence outside the agreed venue, it would amount to change of venue which is not permissible without consent of both the parties is obtained. MESCO relied on Section 20 (1) and 20(3) of the Act, 1996 in support of its contention that in this case, admittedly the parties had agreed that seat and venue of arbitration would be Mumbai and the arbitrator can decide the seat and venue only if there is no agreement between the parties about such seat and venue of the arbitration. The arbitrator has no discretion to change the seat or venue without consent of the parties.

MESCO also contended that Section 5 of the Act (which deals with the extent of judicial intervention) has no relevance to the consideration of the objection about validity of the order passed by the arbitrator while opposing the application filed by Stemcor under Section 27 of the Act for seeking assistance of the Court or that the judgment of this Court

Stemcor major contention was that the issuance of a commission to Singapore cannot amount to the change of the venue of the arbitration. Further it was contended that filing of an application by the MESCO for seeking the permission of the arbitral tribunal to approach Bombay High Court for assistance of this court under section 27 of Act for the purpose of appointment of commission outside India amounted to waiver on the part of the MESCO with regard to the decided venue i.e. India. MESCO thus cannot be allowed to oppose similar application filed by the Stemcor on the ground that the order passed by the arbitral tribunal would amount to change of the agreed venue of the arbitration.

Stemcor relied on section 20(3) of the Act in support of the submission that the learned arbitrator is empowered to meet at any place it considers appropriate for consultation among its members, for hearing witnesses, experts or the parties, or for inspection of documents, goods or other property, notwithstanding sub-section 1 of section 20 unless otherwise agreed by the parties.

Analysis

With regard to the issue of waiver, the Court held that a perusal of the application filed by the MESCO before the arbitrator for amendment to the application seeking approval of the for making an application before the Bombay High Court under Section 27 of the Act clearly indicates that the said application was made on the ground that Bombay High Court would have power and jurisdiction to issue witness summons to Mr. Mathew Stock who is not the resident of India. Since MESCO themselves have applied for recording of evidence of their witness Mr.Mathew Stock on almost similar ground or in the alternative for permission to apply for recording the evidence on Commission in other country, the MESCO having obtained such order from such arbitrator for granting such assistance of this Court under Section 27 of the Act, have waived their alleged rights, if any, in opposing the application made by Stemcor on the ground that if the evidence of the witness proposed to be examined by the Stemcor was recorded by issuing commission in Singapore, it would amount to change of agreed venue agreed by the parties.

With regard to change of venue issue, the Court relied and applied the dictum of Vithaldas Damodar Vs. Lakhmidas Harjiwan & Anr. (1942) Indian Law Reports, 680 wherein it was held that evidence taken under a commission shall not be read as evidence in the suit without consent of the party against whom the same is offered until the conditions laid down in clause (a) of that rule are satisfied. Under Rule 7 of Order XXVI of CPC, the evidence taken on commission forms part of the record in the same way as pleadings, affidavits and other documents of a suit from part of the record of that suit. It is held that the Commissioner who takes evidence on commission has no authority to reject any evidence. All that he can do is to note the objections taken by counsel appearing on behalf of the party while commission evidence is being taken, and after having noted the objections he has got to record the evidence given by the witnesses. It is only when the evidence is read before the Court and tendered as evidence that the questions of admissibility and relevancy are considered. The Court further held that as and when such evidence would be tendered by the Stemcor of their witness whose evidence is recorded on commission, if allowed by High Court, before the arbitrator in Mumbai, at that stage, the evidence would be tendered in Mumbai and may be considered by the learned arbitrator

In respect of examination by video conferencing, the Court relied and applied the Delhi High Court case of International Planned Parenthood Federation (IPPF) vs.Madhu Bala Nath (delivered on 7th January 2016 in FAO (OS) No.416 of 2015) where Delhi High Court had adverted to the judgment of the Supreme Court of India in the case of State of Maharashtra Vs. Dr.Praful B. Desai -AIR 2003 (4) SCC 601 and several other judgments. Supreme Court in the said judgment in the case of State of Maharashtra Vs. Dr.Praful B. Desai (supra) held that video conferencing is an advancement in science and technology which permits one to see, hear and talk with someone far away, with the same facility and ease as if he is present before you i.e. in your presence on a screen. Recording of evidence by video-conferencing also satisfies the object provided in Section 273 of the Code of Criminal Procedure, 1973. It is held that the accused would be able to instruct his pleader immediately and thus cross-examination of the witness is as effective, if not better. The witness can be confronted with documents or other material or statement in the same manner as if he/she was in court. All these objects would be fully met when evidence is recorded by video-conferencing. No prejudice whatsoever nature would be caused to the accused.

In so far as the recording of evidence on Commission is concerned, Supreme Court has held that an officer would have to be deputed, either from India or from the Consulate/Embassy in the country where the evidence is being recorded who would remain present when the evidence is being recorded and who will ensure that there is no other person in the room where the witness is sitting whilst the evidence is being recorded. That officer will ensure that the witness is not coached/tutored/prompted. As the evidence is being recorded on commission that evidence will subsequently be read in court, if on reading the evidence the court finds that the witness has perjured himself, just like in any other evidence on commission, the court will ignore or disbelieve the evidence.

Citing the relevance of Section 27 of the Act, the Court noticed that the purpose of the said provision is to provide assistance to the arbitral tribunal or to a party in taking evidence with a view to expedite the arbitral proceedings. The legislature has inserted the Section 27 of the Act to obviate the inconvenience to the parties to the arbitral proceedings and has thus empowered the arbitral tribunal as well as the parties to take assistance of the Court. The Court is empowered to issue direction to a party or even third party to produce documents or witnesses by summoning the party or even third party if the arbitral tribunal has granted permission and is of the opinion that production of such documents or evidence of such party including third party would be necessary for proper and effective adjudication of the dispute before it.

With regard to section 5 of the Act, the Court noticed that there is a clear bar for a Court to intervene in any proceedings except the proceedings specifically provided under the provisions of the Act. There is no proceeding provided under the Act for challenging an order passed by the arbitral tribunal granting permission to a party to seek assistance of a Court under section 27 of the Act during the pendency of the arbitral proceedings. Therefore, MESCO cannot oppose the application filed by Stemcor under Section 27 of the Act. If MESCO is aggrieved by the award as may be rendered by the arbitrator, then they would be at liberty to challenge the award under Section 34 of the Act. Further the Court commented that Section 27 (6) of the Act clarifies that the expression “Processes” includes summonses and commissions for the examination of witnesses and summonses to produce documents. Under Section 27(6) of the Act, the Bombay High Court has powers to consider and allow the application for seeking assistance to record evidence for the examination of witnesses and summonses to produce documents.

The Court noticed that it has power to issue a Letter of Request (under Sections 77 and 75 of CPC along with Order XXVI Rules 7 and 8 of the CPC and also read with Section 27(6) of the Act through the Singaporean Court to any person other than the Court to examine witnesses residing at any place not within India.

Conclusions

In the light of above, the Court described the following manner to serve Letter of Request and commission in following manner:

  • Appointed the arbitrator (subject to his approval) as a Court Commissioner for recording the cross-examination and re-examination of Mr.Gerard Craggs in Singapore.
  • Directed the Prothonotary and Senior Master of the Bombay High Court to issue a Letter of Request to the High Court of Singapore to issue appropriate directions for the examination of Mr.Gerard Craggs in the manner provided under the Supreme Court of Judicature Act. The High Court of Singapore was also requested to transmit the testimony of the witness along with report, if any, to the Bombay High Court.
  • In case the arbitrator declines to be appointment as a Court Commissioner, the High Court of Singapore was requested to for appointing a fit and proper person as the commission as it may deem fit for the aforesaid commission.
  • Directed Stemcor to bear all cost of recording the evidence of Mr. Craggs.

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