Arbitral Tribunal Justifiably Proceeds Ex-Parte if Party Evades Service Despite Sufficient Opportunity.

Ashima Infrastructure Pvt Ltd (Petitioner) is a private limited company involved in advertisement and publicity.

On 19.10.2012, North Delhi Municipal Corporation (Respondent/NDMC) accepted the Petitioner’s application to display advertisements at specified parking sites, leading to a License Agreement and a No Objection Certificate (NOC No. 962) on 30.10.2012, granting permission for 8890 square feet of advertising space.

The Petitioner deposited Rs. 26,67,000/- as security and Rs. 8,89,000/- as advance Monthly License Fees (MLF).

A second License Agreement (NOC No. 1613) on 27.11.2012 granted permission for 9525 square feet, with a security deposit of Rs. 28,57,500/-.

A third License Agreement (NOC No. 4782) was executed on 16.01.2014.

From December 2012 to January 2013, the Petitioner informed the Respondent that operations were hindered by interference from the Public Works Department (PWD).

Despite a Delhi High Court order on 25.02.2014 in W.P. (C) No. 6439/2013 directing a joint survey to identify legal advertising sites and ensure no PWD interference if structures were authorized, the Respondent allegedly failed to conduct the survey, leading to continued obstacles and billing disputes.

Flag signs were removed by PWD and Delhi Metro Rail Corporation, but the Respondent continued to demand the entire MLF amount.

On 08.07.2014, the Respondent agreed to adjust security deposits and charge only for operational media, but these adjustments were not reflected in actual bills.

The Respondent cancelled 11 sites on 26.08.2014, prompting the Petitioner to file Suit CS(OS) No. 2823/2014.

On 16.09.2014, the High Court restrained the Respondent from coercive action, and on 15.05.2015, stayed the Respondent's upholding of the cancellation.

Despite the stay, Respondent officials illegally removed media installations at 18 sites on 16.07.2015.

On 15.06.2016, the Respondent cancelled all 37 sites and demanded Rs. 3.61 crores from the Petitioner.

The Petitioner filed CS (COMM) No. 1413/2016, which was withdrawn on 04.04.2018, with both parties consenting to arbitration.

Initially, the Petitioner failed to file its Statement of Claims (SOC) with the Delhi International Arbitration Centre (DIAC), leading to the closure of the file on 17.07.2018.

Following the Respondent's application (I.A. No. 14236/2021) and subsequent approach to DIAC, the arbitration proceedings were restored.

The Respondent filed its SOC on 04.01.2022, claiming Rs. 12,01,34,424/- for unpaid MLF, interest, and costs.

The learned Sole Arbitrator proceeded ex-parte against the Petitioner due to non-appearance despite multiple attempts at service, including via registered post on directors (marked "refused"), WhatsApp, and affixation at the company's premises.

Service was also attempted on the directors, Mr. Himanshu and Mr. Sanjay Jain, at their residential addresses, with one refusal noted by Mr. Himanshu’s wife.

The Arbitrator ultimately concluded that the Petitioner's Directors were evading service.

The Arbitrator awarded Rs. 4,00,62,199/- for Claim No.1 (after adjusting the forfeited security deposit of Rs. 64,84,500/-), Rs. 7,09,26,623/- for Claim No.2 (interest on MLF), pendente lite and future interest at 14% per annum for Claim No.3, and Rs. 3,00,000/- for arbitral fees.

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

1. Whether the Arbitral Award, passed ex-parte against the Petitioner, is patently illegal, violates the principle of natural justice, and is in conflict with the fundamental policy of Indian law under Section 34(2)(a)(iii) of the Arbitration and Conciliation Act, 1996, on the grounds that the Petitioner was "otherwise unable to present his case" due to ineffective service.

2. Whether the learned Sole Arbitrator erred by holding the Petitioner liable for MLF for the full advertising areas despite documents specifying the actual operational areas, ignoring the Respondent's non-compliant conduct (failure to conduct joint survey, violation of stay orders), and thereby leading to an award "based on no evidence" or ignoring "vital evidence" and resulting in unjust enrichment.

The court primarily applied Section 34 of the Arbitration and Conciliation Act, 1996, concerning the grounds for setting aside an arbitral award, specifically Section 34(2)(a)(iii) which allows setting aside if a party was "otherwise unable to present his case".

It also applied Section 25(c) of the Act, which provides that if a party fails to appear at an oral hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the arbitral award on the evidence before it.

The court referenced Section 25(a) and 25(b) regarding the consequences of a claimant's failure to communicate a statement of claim or a respondent's failure to communicate a statement of defence, respectively.

The court reiterated the principle from *Maharashtra State Electricity Distribution Company Limited v. Datar Switchgear Limited and Others (2018) 3 SCC 133* that the Arbitral Tribunal is the master of evidence, and its findings of fact are not to be scrutinized as if the court were sitting in appeal.

The court also mentioned *Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India (NHAI) (2019) 15 SCC 131* and *Oil Natural Gas Corporation Ltd v. Saw Pipes Ltd (2003) 5 SCC 705* regarding patent illegality and fundamental policy of Indian law.

It referenced *National Highways Authority of India v. P. Nagaraju (2022) 15 SCC 1* on awards "based on no evidence" or ignoring "vital evidence".

And *ONGC v. Western Geco (supra)* on unjust enrichment.

The court analyzed the issue of the ex-parte award by examining the Arbitrator's efforts to ensure service on the Petitioner and its directors.

It noted that the Petitioner initially failed to file its SOC, leading to the closure of arbitration proceedings, which were later restored.

The Arbitrator directed notice for a preliminary hearing, which was duly served on 14.02.2024, but the Petitioner did not appear.

Despite this, the Arbitrator granted four more weeks for the Petitioner to file a reply and directed service via speed-post, email, and dasti.

Further steps were taken to serve the Petitioner at its known address by affixation.

When the Arbitrator felt further efforts were needed, the Respondent traced the residential addresses of the Petitioner’s Directors, Mr. Himanshu and Mr. Sanjay Jain.

Notices were sent via speed-post, and a dasti notice to Mr. Himanshu was refused by his wife.

The court found that these extensive efforts constituted valid service and concluded that the Petitioner’s Directors were evading service.

Applying Section 25(c) of the Act, the court reasoned that sufficient opportunity was afforded to the Petitioner to appear, and its non-appearance for over five months, coupled with the absence of an application to set aside the ex-parte decision or an explanation for non-appearance in the current petition, justified the Arbitrator's decision to proceed ex-parte.

Regarding the Petitioner's other contentions about ignored evidence and unjust enrichment, the court, guided by the principle that the Arbitral Tribunal is the master of evidence, found the Impugned Award to be well-reasoned and to have considered all evidence, thus not shocking the conscience of the Court.

The Court held that sufficient opportunity was provided to the Petitioner, and the Arbitrator's decision to proceed ex-parte was in accordance with Section 25(c) of the Arbitration and Conciliation Act, 1996, given the Petitioner's persistent non-appearance and evasion of service.

The Court also rejected the Petitioner's claims regarding ignorance of vital evidence and unjust enrichment, concluding that the Arbitral Award was well-reasoned and based on the material before the Arbitrator.

The petition, along with any pending applications, was accordingly dismissed.