(MENAFN- KNN India) Chennai, Dec 1 (KNN) The Madras High Court has set aside an arbitral award after finding that the sole arbitrator failed to follow fundamental evidentiary principles, resulting in what the Court termed 'perverse' and 'patently illegal' findings.

Justice N Anand Venkatesh held that while arbitral tribunals are not strictly bound by the Evidence Act, they must still adhere to its core principles to avoid violating the fundamental policy of Indian law.

The Court said that ignoring these principles could invite judicial scrutiny and render an award unsustainable.

The ruling came in a dispute over a 2018 registered sale agreement for a 2,400 sq ft plot in Chennai. Buyer H Sunil Kumar had paid Rs 50 lakh to sellers M Deepak Kumar Samdariya and B Rasheetha, alleging they later refused to complete the sale.

The arbitrator, however, accepted the sellers' claim that the agreement was executed only as security for a hand loan, despite lack of proof that the alleged cash repayments were ever made.

The High Court noted several flaws in the arbitrator's approach, including reliance on oral assertions contradicting a registered document, overlooking the sellers' burden of proof, and relying on irrelevant material.

It also found fault in the arbitrator's method of analysing case law before examining the facts, which the Court said had led to distorted conclusions.

Justice Venkatesh observed that the key seller, Samdariya, did not testify, undermining the defence that the transaction was merely a loan. The Court concluded that the award was unintelligible and suffered from errors going to the root of the matter.

The High Court annulled the award in its entirety, directed the parties to undergo arbitration afresh, and imposed costs of Rs 5 lakh on the defendants payable to Kumar.
(KNN Bureau)

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