Denial of opportunity to cross-examine on oral evidence constitutes a violation of natural justice and public policy.

The Respondent (claimant) filed for arbitration seeking recovery of ₹7,64,526/- for paper supplied to the Appellant between 05.07.2009 and 16.11.2009

The Appellant contested the claim, alleging that the Respondent failed to honor an oral agreement to provide discounts for poor quality/damaged goods, totaling ₹8,09,147/-

During the arbitral proceedings, the Appellant moved an application on 05.09.2012 seeking to cross-examine the Respondent, which the Arbitrator rejected on 14.09.2012, stating it was "not necessary" after examining documents and C-Forms

An award was passed in favor of the Respondent on 10.10.2012

The Appellant’s objections under Section 34 of the Arbitration & Conciliation Act, 1996, were dismissed by the learned ADJ on 28.02.2015

The Appellant then challenged the order before the High Court specifically on the denial of the right to cross-examine

1. Whether the Arbitrator’s denial of the request to cross-examine the claimant, in light of a defense based on an oral agreement, constitutes a violation of natural justice and public policy

2. Whether the Court possesses the power to remit the matter under Section 34(4) of the Act in the absence of a written application

The Court applied Section 34(2)(b)(ii) of the Arbitration & Conciliation Act, 1996, which allows setting aside an award in conflict with the "public policy of India"

It relied on Larsen Air Conditioning and Refrigeration Co. v. Union of India, establishing that a denial of natural justice is a ground for interference

It cited ONGC v. Western Geco International Ltd., refining "public policy" to include following the principles of natural justice

Per Sohan Lal Gupta v. Asha Devi Gupta, a reasonable opportunity includes the right to test an opponent’s case through cross-examination

Furthermore, the proviso to Section 24 of the Act mandates oral hearings if requested by a party

Regarding remand, it cited Gayatri Balasamy v. M/s ISG Novasoft Technologies Ltd., affirming that Section 34(4) can be invoked via oral request

The Court observed that the Appellant’s defense rested on an alleged oral understanding regarding price adjustments, which necessitated the examination of witnesses to prove or disprove

By rejecting the cross-examination application on the sole ground that the documentary evidence (bills/C-Forms) appeared sufficient, the Arbitrator failed to address the core of the Appellant's defense

The Court reasoned that Section 24 of the Act uses the mandatory term "shall" regarding oral hearings upon request

Consequently, the denial of the opportunity to test the claimant's testimony through cross-examination was held to be a procedural vitiation that rendered the award contrary to the fundamental policy of Indian law and natural justice

The High Court allowed the appeal and set aside the impugned order dated 28.02.2015. Exercising the power under Section 34(4) as requested by the Appellant's counsel, the Court remitted the matter to the lower court to consider the submission for eliminating the grounds of setting aside the award in accordance with the law