Serosoft Solutions Pvt Ltd vs Dexter Capital Advisors Pvt Ltd

REPORTABLE 2025 INSC 26 IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NOS. 51-52 OF 2025 Arising out of SLP (C) Nos. 26441-26442/2024

SEROSOFT SOLUTIONS PVT. LTD. ...APPELLANT(S)

VERSUS

DEXTER CAPITAL ADVISORS PVT. LTD. …RESPONDENT(S)

JUDGMENT

PAMIDIGHANTAM SRI NARASIMHA, J.

1. Leave granted.

2. The appellant and the respondent are parties in a pending

arbitration. The question for consideration is whether the High Court

has correctly exercised its supervisory jurisdiction under Article 227 in

granting the respondent/claimant one more opportunity to cross-

examine appellant/respondent’s witness, despite the Arbitral Tribunal

rejecting such a prayer.

Signature Not Verified

3. Digitally signed by KAPIL TANDON Date: 2025.01.03 The brief facts leading to the present appeals are as follows. The 18:02:47 IST Reason:

appellant/respondent, a startup company providing educational

1 software and related services, and the respondent/claimant, a provider

of capital advisory services to various companies, entered into a Client

Service Agreement. Under this agreement, the respondent/claimant

was to provide advisory services to the appellant/respondent. Disputes

arose between the parties with respect to non-payment of fee for the

services rendered by respondent/claimant to appellant/respondent

company, prompting respondent/claimant to invoke dispute resolution

mechanism through arbitration.

4. Following the constitution of the Arbitral Tribunal, proceedings

commenced, and parties submitted their respective statements of claim

and defence. The Tribunal, by its order dated 06.09.2023 formulated

the specific issues for consideration that needed to be addressed, by

the parties to proceedings. Following the said order,

respondent/claimant side produced two witnesses CW-1 and CW-2.

The counsel for the appellant/respondent cross-examined CW-1 on

17.11.2023 and asked about 22 questions on that day. However, due

to time constraints, the cross-examination was deferred and

rescheduled for 21.11.2023. On that date, the cross-examination of

CW-1 was completed. On that very day cross of CW-2 was taken up

and completed over the course of two sessions.

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5. After the cross-examination of respondent/claimant’s witnesses

got concluded, cross-examination of appellant/respondent’s witness

RW-1 commenced. This is where the trouble began.

6. On 09.12.2023 a total of 9 questions were put to RW-1, as is

evident from the record of proceedings of the Tribunal. The cross-

examination of RW-1 was then deferred to 10.02.2024.

6.1 On 10.02.2024, though the cross commenced at 11 am and

continued till 07:00 p.m., respondent/claimant’s counsel sought

permission of the Tribunal to defer the cross-examination of RW-1 to

some other day and sought an additional hour for completing the cross-

examination of RW-1. By its order dated 10.02.2024 the Tribunal

acceded to respondent/claimant’s request for additional one hour of

cross-examination. The Tribunal’s order notes that the case was

reluctantly adjourned to 06.04.2024 for conclusion of the cross.

7. It is alleged that, due to various applications for discoveries and

interrogatories filed by the respondent/claimant, the cross-

examination of RW-1 was cancelled on 06.04.2024. The proceedings

kept on being delayed and the parties consensually extended the

mandate of the Tribunal by 6 months which was due to expire on

16.05.2024 as per Section 29A of the Act. Ultimately, the proceedings

resumed with cross-examination of RW-1 on 01.10.2024, where a total

3 28 questions were put to him. The Tribunal in the record of proceedings

noted that the cross-examination of RW-1 stands concluded and

accordingly, the witness was discharged.

8. After two days, i.e. on 03.10.2024, respondent/claimant moved

an Interlocutory Application before the Tribunal seeking extension of

time for cross-examination of RW-1. Tribunal heard the parties on the

said application and by its order dated 09.10.2024 noted that arbitral

proceedings were time bound and in fact the extended mandate was

also to expire soon. The Tribunal also noted that despite exhausting

twice the allotted time for cross-examination of RW-1, the

respondent/claimant’s approach reflected lack of preparedness and a

non-serious attitude. With this view of the matter the Tribunal rejected

the application and directed that final arguments should conclude by

November 2024, so that there is sufficient time for preparation and

making of the award. Respondent/claimant challenged the above

referred order of the Arbitral Tribunal by filing a petition under Article

227 of the Constitution and sought a direction to the Tribunal for

providing further opportunity to cross-examine RW-1. By the order

impugned before us the High Court noted that judicial interference in

such type of matter was least warranted, but came to the conclusion

that in view of the exceptional circumstances there can be a direction

to the Tribunal to grant further opportunity to the 4 respondent/claimant to cross-examine RW-1 on the date and time fixed

by the Tribunal. Questioning the above referred order the

appellant/respondent is before us.

9. Heard learned counsel for both the parties.

10. We may recapitulate that the Section 11 application was allowed

by the High Court on 08.05.2023 leading to the constitution of the

Tribunal which held the first hearing on 19.05.2023. It is evident that

the cross-examination of the appellant/respondent’s witness RW-1

commenced on 09.12.2023 when the respondent/claimant’s counsel

asked 9 questions on that very day and the cross was adjourned for

10.02.2024. On 10.02.2024, the record shows that the cross-

examination commenced at 11 am and concluded by 7 pm during

which time the respondent/claimant’s counsel asked as many as 104

questions to the said witness. After a long lapse of almost 8 months,

during which period the mandate of the Arbitral Tribunal was

exhausted, the cross-examination commenced on 01.10.2024. Even

on that day the cross-examination was commenced at 5.35 pm and

concluded at 7.40 pm, which is more than two hours.

11. It is in the above referred background that the legality and the

propriety of the respondent/claimant’s application for further time to

cross-examine RW-1 was to be considered by the Arbitral Tribunal.

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12. The first principle that governs ‘conduct of arbitral proceedings’

under Chapter V of the Act is the obligation of equal treatment of

parties. Under Section 18 of the Act, it is the statutory duty of the

Arbitral Tribunal to ensure that the parties are treated with equality

and each party is given full opportunity to present its case. At the same

time, there is yet another statutory obligation, which is imposed on the

judicial authorities. That is the statutory incorporation of judicial

restraint in interfering with matters governed under

Part I of the Act relating to arbitration agreement, composition and

jurisdiction of Arbitral Tribunal, coupled with the conduct of the

proceedings and making, challenge and enforcement of the award. This

objection of restraint on the judicial authority is overriding and

notwithstanding anything contained in any other law for the time being

in force.

13. Having looked into the matter, we are of the opinion that the

Arbitral Tribunal seems to have given full opportunity to all parties,

which is amply evident from the record. On the other hand, the

unrestrained cross-examination of RW-1 by the respondent/claimant

has already exceeded 12 hours, but the respondent/claimant does not

seem to be satisfied with it.

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14. In any event of the matter when the Arbitral Tribunal by its order

dated 09.10.2024 held - ‘that far and no further’, to the

respondent/claimant’s endeavour to cross-examine RW-1, the High

Court should have restrained itself from interfering. In order to justify

its interference and extension of time, the High Court has referred to

and relied on a judgment of the same Court1. Certain conditions for

exercising jurisdiction under Articles 226/227 are mentioned in the

judgment. Conditions (v) and (vi) of the said judgment could have

provided sufficient guidance for the High Court to consider whether

interference is warranted or not. The relevant portion of the said order

is as under:-

“(v) Interference is permissible only if the order is completely perverse i.e. that the perversity must stare in the face.

(vi) High Courts ought to discourage litigation which necessarily interfere with the arbitral process.

(vii) Excessive judicial interference in the arbitral process is not encouraged.

(viii) It is prudent not to exercise jurisdiction under Articles 226/227.

(ix) The power should be exercised in ‘exceptional rarity’ or if there is ‘bad faith’ which is shown.

(x) Efficiency of the arbitral process ought not to be allowed to diminish and hence interdicting the arbitral process should be completely avoided.”

15. It is evident from the above that even as per the quote hereinabove

interference under Article 226/227 is ‘permissible only if the order is

1 Kelvin.Air.Conditioning.and.Ventilation.System.Pvt¡.Ltd¡.v. Triumph.Reality.Pvt¡.Ltd¡·.2024 SCC Online Del 7137. 7 completely perverse i.e. that the perversity must stare in the face.’

Condition (vi) to (x) underscores the reason why High Courts ought not

to interfere with orders passed by the Arbitral Tribunals for more than

one reason.

16. We looked into the other parts to see if the High Court has in fact

found any perversity in the decision of the Tribunal. We found none.

The High Court has not bothered to indicate under what circumstances

the order passed by the Tribunal is perverse. All that the High Court

has said is that cross-examination is one of the most valuable and

effective means of discovering the truth. This is a normative statement,

and nobody disputes the said principle. The only enquiry required was

whether there is denial of opportunity for an effective cross-

examination of the witness. There is absolutely no discretion about

this aspect of the matter, except to say that in the facts and

circumstances of the case and as an exceptional circumstance as well,

the request of the respondent/claimant is excessive.

17. Having considered the matter in detail, we find no justification in

the order passed by the High Court in interfering with the directions of

the Arbitral Tribunal holding that full and sufficient opportunity to

cross-examine RW-1 has already been given and no further extension

of time is warranted. For the reasons stated, we allow the appeals and

8 set aside the orders passed by the High Court in CM(M) 3711/2004

and CM Appl. 63047/2024 dated 25.10.2024.

18. In the facts and circumstances, we further direct that the Arbitral

Tribunal shall resume the proceedings and conclude the same as

expeditiously as possible.

………………………………....J. [PAMIDIGHANTAM SRI NARASIMHA]

………………………………....J. [MANOJ MISRA]

NEW DELHI;

JANUARY 03, 2025

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