The freedom to determine the rules of procedure in an arbitration, unfettered by the technicalities involved in court proceedings, is generally understood as one of the reasons that proceedings before an Arbitral Tribunal tend to be time-bound. However, while considering arbitration as a preferred remedy, and keeping in mind the limited scope of challenging an arbitral award, the question arises as to whether such procedural freedom is truly unfettered.
Any dispute resolution mechanism revolves around two parties presenting their respective cases before an adjudicating body, who after considering the material put forth by the parties comes to a conclusion on the dispute issues. Rules of procedure and evidence are a necessity in order to remove uncertainty and ensure that the proceedings are not only fair, but are perceived to be fair by the parties to the dispute. The civil courts in India are governed by the provisions of the Civil Procedure Code and Indian Evidence Act, both of which, in comprehensive terms, outline the rules under which parties are to present and prove their case. While the provisions thereof certainly ensure fairness, both the CPC and the Evidence Act, require extensive time consuming compliances. Accordingly section 19 of the Arbitration and Conciliation Act, 1996 (“the Act”) seeks to relax such procedural requirements in order to expedite the arbitration proceedings.
Section 19: Determination of Rules of Procedure
The Delhi High Court in UoI v. Reliance Industries Ltd.  has categorically held that the powers in respect of collection of evidence and other such procedural matters, falls within the powers granted under section 19. A perusal of the said provision shows that right at the outset, subsection (1) provides that an arbitral tribunal shall not be bound by the Code of Civil Procedure or the Indian Evidence Act. Subsection (2) permits the parties to agree on the rules of procedure, and failing such agreement, Subsection (3) permits the Arbitral Tribunal to conduct the proceedings in the manner it considers appropriate. Subsection (4), somewhat in an innocuous manner, provides that the power of the arbitral tribunal shall include the power to determine the admissibility, relevance, materiality and weight of any evidence. While sub-section (4) can be understood as providing a discretionary power, it also casts an obligation on the Arbitral Tribunal to sift through the evidence and to ascertain the quality of such evidence.
Agreement is King
Since the foundation of arbitration itself lies in agreements, the rules of procedure to be adopted for the arbitration are also governed by any agreement that the parties may have entered into between them on this aspect. This is perhaps best explained in the following extract from Russel on Arbitration:
“It cannot be too clearly or too often emphasised that, subject only to matters contrary to the public policy of the system of law, which has the power and duty to police the arbitration, the parties have, potentially, the ability to control every aspect of arbitration procedure. If they simply agree to “arbitrate” then of course they will be opting for the usual procedure which governs when nothing special has been agreed”.
More and more parties, having experienced the unpredictability of ad-hoc arbitrations, are leaning towards prescribed rules of arbitration in the arbitration agreements itself, mainly by submitting the dispute to institutional arbitration under the aegis of bodies like the Delhi International Arbitration Centre, which have their own standard rules of procedure. Even if the parties do not seek institutional arbitration, they can provide for their own procedure. For example, an arbitration agreement which provides for arbitration to be dealt with on written submissions only (thus without cross-examination of witnesses) are valid as long as the parties agree to it. However, such agreement is not mandatorily required to be in written form. The parties can agree to procedure even by their conduct. In one recent case before the Supreme Court of India,  it was argued that although the parties had during the course of proceedings agreed that cross-examination of witnesses would not be necessary, the failure on part of the arbitral tribunal to insist on cross-examination would still amount to a fundamental illegality. Rejecting the argument, the Court observed that since section 19 provides for parties to agree on the procedure in arbitration, the conduct of the parties in refusing the opportunity during the course of proceedings was an agreement on procedure and accordingly, lack of cross-examination would not vitiate the proceedings. As such, estoppel, waiver and acquiescence can be determinative while ascertaining agreement to procedure.
Discretion of the Arbitral Tribunal and the Principles of Natural Justice
Where parties fail to arrive at an agreement on the procedure to be followed, wide discretion is given to the Arbitral Tribunals so that the proceedings can be conducted in a time-bound manner. If an arbitral tribunal so chooses, it may dispense with technical requirements such as framing of issues, filing formal list of witnesses and other inconsequential forms and certificates. However, such discretion does not amount to complete freedom, and must be necessarily read along with other provisions of the Act, especially section 18 which provides for equal and fair treatment of parties and section 34(2)(a)(iii) which provides that an award would be set aside if a party has not been able to present its case. The Supreme Court in Ssangyong Engineering, has reiterated that violation of the principles of natural justice, as contained in section 18, continues to be a ground to vitiate an arbitral award.
Settled principles of Procedure and Evidence
The rules of procedure provided under the CPC and the rules of evidence enumerated in the Indian Evidence Act are statutory safeguards to ensure adherence to the principles of natural justice. The provisions therein envisage a process of presenting and proving a case which is fair and gives equal opportunity to both sides. Accordingly, although the provisions are not binding in arbitration, the settled principles of procedure and evidence would definitely be applicable. These principles apply both to pleadings, as also evidence produced by the parties during the course of arbitration.
For instance, the Delhi High Court in DDA v. Krishna Constructions  was examining whether a party in arbitration could prove in variance to its pleadings. The Court held that the principle that there cannot be variance between pleading and proof is not expressly provided in any provision of the Code of Civil Procedure, but has been evolved by Courts with reference to Order 6 Rule 2 and Rule 4 thereof as a general principle of law. The Court further went on to hold that where an arbitrator adjudicates upon a claim on proof entirely different than the pleading, it would amount to springing a surprise upon the opposite party which would amount to a material irregularity vitiating the award.
In another instance, the principle under Order 6 Rule 4, that material particulars are required to be pleaded in cases where parties allege fraud or undue influence or coercion, has also been held to be applicable in arbitration proceedings. 
Accordingly, while an arbitral tribunal is not bound by the provisions of the CPC, the principles thereof would apply to the extent that they ensure fairness.
With respect to settled principles of evidence, in Bareilly Electricty Supply Co. Ltd. v. Workmen,  the Supreme Court while dealing with arbitrations under the Industrial Disputes Act, held that even if all technicalities of the Evidence Act are not strictly applicable, it is inconceivable that the Tribunal can act on what is not evidence such as hearsay, nor can it justify the Tribunal in basing its award on copies of documents when the originals which are in existence are not produced and proved either by affidavit or by a witness who has executed them. The Court had further held that if a letter or other document is produced to establish some fact which is relevant to the enquiry, the writer must be produced or his affidavit in respect thereof be filed and opportunity afforded to the opposite party to challenge this fact. It was held that such procedure is both in accord with principles of natural justice as also with the procedure under Order 19 of the Civil Procedure Code and the Evidence Act, both of which incorporate these general principles. The above judgment in Bareilly was relied upon by the Bombay High Court in Nazim H Kazi v. Kikan Mercantiles Cooperative Bank  while dealing with a petition under section 34 of the Arbitration and Conciliation Act, 1996. In the said case, an award had been passed against the Petitioner on the basis of a report of a Chartered Accountant, produced by the Respondent. Although the said document was contested by the Petitioner, the Arbitral Tribunal did not permit the Petitioner to test the veracity of the said document through trial. The Bombay High Court, reiterating the principles in Bareilly (supra), held such action of the Arbitral Tribunal to be in non-compliance of sections 19 and 24 of the Act, and further to be in violation of the principles of natural justice and accordingly set aside the award. As such, the power of the arbitral tribunal under section 19(4) to determine the admissibility, relevance, materiality and weight of evidence would also be governed by the principles of natural justice. Accordingly, while sifting through evidence, an arbitral tribunal is mandatorily required to arrive at a conclusion only after appreciating the quality of evidence produced by both parties.
On similar lines, the Delhi High Court in Sukhbir Singh v. Hindustan Petroleum Corp. Ltd.  has held that the procedure determined by a tribunal under section 19 and any exercise of discretion in procedural matters must fulfil the requirements of section 18. In the said case, the Delhi High Court has traced a party’s request for conducting cross-examination on the opposite party’s witness to section 24 of the Act. Subsection (1) of section 24 provides that the Arbitral Tribunal shall decide on whether or not to hold oral hearings for presentation of evidence or for oral arguments, or whether the proceedings shall be conducted on the basis of documents and other materials. The first proviso to sub-section (1) reads as follows:
“Provided that the arbitral tribunal shall hold oral hearings, at an appropriate stage of the proceedings, on a request by a party, unless the parties have agreed that no oral hearing shall be held”
The wordings of subsection (1) and its proviso had been subject to various interpretations, including by the Hon’ble High Court of Madras in Anand Viswanathan v. Kotak Mahindra Bank Ltd.  wherein it was held that it was ultimately the discretion of the arbitral tribunal as to whether or not oral hearings are required. However, the Delhi High Court in Sukhbir Singh disagreed with this interpretation and held that unless there were exceptional circumstances, or there was a prior agreement between the parties to the contrary, a request on behalf of a party for oral hearings or for cross-examination of witnesses, was to be mandatorily allowed.
Even in respect of section 26 of the Act, governing expert witnesses in arbitration proceedings, subject to prior agreement between the parties, it is mandatory to provide a party with the opportunity to put questions to the expert if such a request is made. Failure to do so has been held to vitiate the proceedings. 
Therefore, what can be ascertained is that the principles of natural justice, as applicable to procedure in arbitrations, mandate that parties to the arbitration should be aware of the case against them and should have the necessary opportunity to put forth its own case. It can further be stated that no material should be brought on record behind a party’s back and, if requested, such party must be allowed to test the veracity of the material relied upon by the other side through trial. As such, the settled principles of evidence and procedure would continue to apply in arbitration proceedings. 
As may be seen, the discretion afforded to arbitral tribunals in determining the rules of procedure, while prima facie appearing to be unfettered, is still subject to section 18 of the Act which demands fair and equal opportunity being given to parties to present their case. The underlying principle to be kept in mind, while ascertaining the rules of procedure and evidence is that each party is to be given full opportunity to present its own case, as also to comment upon the material relied upon by the other party. The application of the principles of natural justice, to formulation of procedure, ensures that parties to the arbitration are assured of the fairness of the proceedings. However, since the agreement of the parties is of paramount importance, parties must remain vigilant and raise objections as soon as they are faced with an adverse procedural decision, even if such objections are decided against them during the course of the arbitration proceedings, since remaining silent during the proceedings may, in all likelihood, be considered as an agreement to the procedure adopted. It would also be advisable that parties and their lawyers should reconsider the standard arbitration clauses present in their agreements and ideally provide for the rules of procedure to be followed in the arbitrations. That being said, the arbitral tribunals themselves should ensure adherence to the settled principles of procedure and evidence while determining their procedure as it only takes one questionable exercise of discretion, however innocent, to erode the faith of parties in the arbitration proceedings.
 2018 SCC OnLine Del 13018  Jagjeet Singh Lyalipuri v. Unitop Apartments & Builders Ltd. (2020) 2 SCC 279  Ssangyong Engg. & Construction Co. Ltd. v. NHAI (2019) 15 SCC 131  2011 SCC OnLine Del 4134  Double Dot Finance Ltd. v. Goyal MG Gases 2005 SCC OnLine Del 118  (1971) 2 SCC 617  2013 SCC OnLine Bom 209  2020 SCC OnLine Del 228  O.P. No. 726/2011  Ssangyong Engg. (supra)  Sahyadri Earthmovers v. L&T Finance Ltd. & Anr. 2011 SCC OnLine Bom 434