Arbitral award set aside for perverse evidentiary appreciation and denial of opportunity to examine material witnesses.

The Petitioner, a proprietor of an export firm, entered into an Agreement dated 31.07.1996 with an Area Sales Representative of the Respondent for vacation ownership units and assured rental returns

The Petitioner paid a total of Rs. 17,97,000/- through cheques and drafts

When the Respondent failed to allot the units, the Petitioner was informed by the Respondent's General Manager (Finance) that the sales representative lacked the authority to enter into such an agreement

Following a winding-up petition (Co. Pet. 46/2000), the High Court appointed a sole Arbitrator in 2004

On 11.08.2008, the Arbitrator dismissed the Petitioner's claims, favoring the Respondent's version of the agreement which contained a "supersession clause"

The Petitioner challenged this award under Section 34 of the Arbitration and Conciliation Act, 1996

1. Whether the Arbitrator's rejection of the Petitioner’s version of the Agreement based on a "supersession clause" in the Respondent’s version constituted circular and perverse reasoning

2. Whether the Arbitrator’s refusal to summon material witnesses (former employees of the Respondent) and documents deprived the Petitioner of a full opportunity to present his case under Section 18 of the Act

3. Whether the Impugned Award is liable to be set aside for perversity and violation of the fundamental policy of Indian law

Section 34 of the Arbitration and Conciliation Act, 1996, regarding the grounds for setting aside an award, specifically focusing on "patent illegality" and conflict with the "public policy of India"

OPG Power Generation (P) Ltd. v. Enexio Power Cooling Solutions (India) (P) Ltd. (2025) and Associate Builders v. DDA (2015) to establish that an award is perverse if it ignores vital evidence or is based on no evidence

Section 18 was applied to mandate equal treatment and a "full opportunity" for parties to present their cases

Doctrine of Indoor Management, which protects third parties from a company’s internal irregularities or lack of agent authorization

The Court determined that the Arbitrator’s reasoning in Paragraph 18 of the award was logically flawed.

The Arbitrator rejected the Petitioner’s document for being incomplete while accepting the Respondent’s document as binding solely because it contained a clause (Clause 7G) stating it superseded all other agreements

The Court characterized this as "circular determination," as the Arbitrator assumed the Respondent’s document was valid to use its clauses to invalidate the Petitioner's document

The Arbitrator’s summary dismissal of the Petitioner’s application to summon the signatories of the 1996 Agreement—on the ground that they were no longer employees—deprived the Petitioner of the ability to prove the circumstances of the contract

Since cross-examination had been dispensed with by consent, the Arbitrator’s selective reliance on one untested document over another, without cogent reasoning, was deemed arbitrary and a violation of natural justice

The Arbitrator’s refusal to permit the examination of material witnesses and the failure to independently evaluate the authenticity of rival agreements resulted in a negation of the Petitioner’s right to present his case under Section 34(2)(a)(iii)

The award was found to be perverse and in violation of the fundamental policy of Indian law

No order as to costs was issued