Say the ratio out loud before you open Reasoning — recalling it unprompted is exactly what the exam pays for.
Why it matters
Natural justice in arbitration reduces, in practice, to a handful of rules, and the sharpest is this one: nothing may reach the arbitrator behind a party's back. This case supplies the rule and the statutory hook for it.
Facts
The arbitrator accepted documents from one party in the absence of the other.
Held
An arbitrator who accepts a document from one party at the back of the other is guilty of misconducting the proceedings. The same applies to any information obtained from one side, oral or in writing, which is not disclosed to the other.
Reasoning
Step one — the statutory command. Section 24(3) requires that all statements, documents or other information supplied to, or applications made to, the arbitral tribunal by one party shall be communicated to the other party, and that any expert report or evidentiary document on which the tribunal may rely in making its decision shall be communicated to the parties.
Step two — the vice is the opportunity, not the proof of harm. What vitiates the proceeding is that the tribunal's mind may have been influenced by material the other side never saw. Non-observance of natural justice is itself the prejudice; a party need not prove, in addition, that the outcome would have been different.
Step three — the remedy. The award is liable to be set aside, the ground in the modern statute being the party's inability to present its case.
Exam use
It opens: What amounts to misconduct by an arbitrator? and Discuss the duties of an arbitrator.
Cite it with Rudramani Devaru, which lists the minimum requirements of a proper hearing, including that each party be supplied with the statements, documents and evidence adduced by the other side, and that the tribunal hear neither evidence nor argument from one party in the absence of the other unless that other, having had the opportunity, stays away.
Add K.P. Poulose for the opposite failure — not receiving material one side supplied, but ignoring material documents already there.
It does not decide that every procedural irregularity is misconduct; the vice here is one-sided communication touching the merits.