Summary
The Court restored a majority arbitral award for damages arising from MMTC’s failure to lift contracted coal. Applying the pre-2015 review standard, it held that the tribunal’s findings on breach, availability of coal and market-price loss were possible views supported by oral evidence and the correspondence as a whole. The Division Bench improperly isolated three emails and treated contextual inferences as unsupported. Evidence-law principles did not require the correspondence to be read without its commercial setting.
Issues
- Whether the majority award was perverse or unsupported by evidence, permitting interference under sections 34 and 37.
- Whether the Evidence Act prevented contextual interpretation of the parties’ correspondence and consideration of explanatory evidence.
Provisions considered
- Sections 34(2)(b)(ii) and 37, Arbitration and Conciliation Act, 1996Under the pre-2015 law applied to this award, public-policy and perversity review did not permit appellate reassessment of a possible factual view supported by evidence. (¶ 41–50)
- Section 1, Indian Evidence Act, 1872The Act does not apply directly to proceedings before an arbitrator; the Court additionally examined the relevant interpretive principles on the assumed footing that they reflected fundamental jurisprudence. (¶ 24–25)
- Section 92 proviso (6), illustration (f), and sections 94–95, Indian Evidence Act, 1872The correspondence must be related to existing facts and read as a connected whole; explanatory evidence may resolve latent ambiguity without contradicting clear terms. (¶¶ 26–34, 36–37)
- Section 3: definition of fact, Indian Evidence Act, 1872Existing facts include the particular sense in which words were used, informing the contextual reading of the emails. (¶ 30–32)
Held
- The majority tribunal considered the whole correspondence and oral evidence and reached a possible view that the seller could supply at the agreed price while the buyer sought discounted supplies after a market slump. Selecting three emails in isolation did not establish that the award rested on no evidence. (¶¶ 16–21, 37, 44, 50)
- Arbitration was outside the direct application of the Evidence Act. Even applying its interpretive principles, documents exchanged in performance must be read together in their factual setting. Because the emails did not state the price contemplated, the tribunal could consider explanatory evidence that they concerned discounted or mixed-price supplies. This did not contradict a clear contractual price term. (¶¶ 24–34, 36–37)
- Evidence of actual sales, contemporaneous correspondence and renegotiated contracts supported the market-price assessment at breach and the resulting difference from the contract price. The tribunal remained the judge of the quantity and quality of evidence; the absence-of-proof objection failed. (¶¶ 20, 38–40)
- The case was decided under the law before the 2015 amendment. A possible view supported by the record was neither perverse nor patently illegal, and section 37 did not authorise an independent merits assessment beyond section 34 restrictions. (¶ 41–50)
Result
Appeal allowed; Division Bench judgment set aside, restoring the majority award dated 12 May 2014 and the Single Judge judgment rejecting the section 34 challenge.