This is the compilation of judgments delivered by the Hon'ble Supreme Court and Hon'ble High Courts on Section 34 of the Arbitration and Conciliation Act, 1996

1. 1
Judgments on Section 34 of the Arbitration and
Conciliation Act, 1996.
Permitted Grounds of Challenge for setting aside award and Public
Policy:­
1. Challenge to award can only be permitted on grounds available under S.34 ­
Court does not sit in appeal over award. ­ Plea that claim was based on
fabricated documents ­ Cannot be re­examined.
1.1. P. R. Shah, Shares and Stock Broker (P) Ltd. v/s M/s. B. H. H. Securities
(P) Ltd., reported in AIR 2012 SC 1866.
2. Setting aside of on the ground that award was unreasoned ­ Not available to
petitioner as it has failed to produce relevant records before arbitrator and also
failed to cross examine deponents of affidavit filed by claimants, making it
impossible for arbitrator to give detailed reasons.
2.1. Union of India v/s M/s. Harbans Singh Tuli, reported in AIR 2010 SC 738
(FB).
3. Award ­ Setting aside ­ Award in conflict with public policy ­ Award induced by
fraud or corruption ­ Is against public policy.
3.1. The concept of public policy as given in the Explanation to S. 34(2)(b)(ii)
has virtually adopted the international standard, namely if anything is found
in excess of jurisdiction and depicts a lack of due process, it will be opposed
to public policy of India. When an award is induced or affected by fraud or
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corruption, the same will fall within the aforesaid grounds of excess of
jurisdiction and a lack of due process. Therefore, it can be said that the
Explanation to Section 34 is like 'a stable man in the saddle' on the unruly
horse of public policy.
3.2. Venture Global Engineering v/s Satyam Computer Services Ltd., reported
in AIR 2010 SC 3371.
4. Ex parte award ­ Setting aside of ­ No misconduct alleged against Arbitrator ­
Party against whom award was passed, proved to have deliberately stayed away
from arbitration proceedings in order to frustrate and delay claim of claimant ­
Said party proved to have refused to accept copy of award from Postman ­ Thus,
he was deemed to have been served ­ Application by said party u/S.34 filed
beyond time as permissible for such application ­ Rejection of such application
held to be proper.
4.1. Kailash Rani Dang v/s Rakesh Bala Aneja, reported in AIR 2009 SC 1662.
5. Award ­ Giving of reasons ­ Not empty formality ­ Simply noticing submissions of
parties and referring to some documents ­ Not giving of reasons ­ Award liable to
be set aside.
5.1. State of Kerala v/s M/s. Somdatt Builders Ltd., reported in AIR 2009 SC
(Supp) 2388.
6. Award ­ Interference by Court ­ Court not to interfere unless reasons given are
outrageous in their defiance of logic ­ Or arbitrator has acted beyond jurisdiction
­ Compensation claimed by contractor for 'gains prevented' because of delay in
supplying material by principal ­ Claim allowed by arbitrator on reaching finding
of fact that there was delay in supply of material by principal ­ Award not liable
to be interfered with.
6.1. K.v/s Mohd. Zakir v/s Regional Sports Centre, reported in AIR 2009 SC
(Supp) 2517.
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7. Setting aside of award ­ Award based on wrong basis and perverse conclusions ­
Liable to be set aside ­ No proposition that Courts could be slow to interfere with
arbitrator's Award, even in such cases.
7.1. O. N. G. C. Ltd. v/s Garware Shipping Corporation Ltd., reported in AIR
2008 SC 456.
8. Setting aside of award ­ Contractor raising claims on various accounts ­
Arbitrator passing lump sum award ­ Award is unintelligible ­ Liable to be set
aside.
8.1. M/s. M. B. Patel and Co. v/s Oil and Natural Gas Commission, AIR 2008
SC (Supp) 290.
9. The scope of interference in a non­speaking award is extremely limited. The
Court cannot probe into the mental process of the arbitrator. The Court should
endeavour to support a non­speaking arbitration award provided it adhered to
the parties' agreement and was not invalidated due to arbitrator's misconduct.
Arbitration is a mechanism or a method of resolution of dispute that unlike Court
takes place in private, pursuant to agreement between the parties. The par ties
agree to be bound by the decision rendered by a chosen arbitrator after giving
hearing. The endeavour of the Court should be to honour and support the award
as far as possible.
9.1. M/s. Markfed Vanaspati and Allied Industries v/s Union of India, reported
in AIR 2007 SC (supp) 882.
10. Arbitral Award ­ Setting aside ­ Court's jurisdiction ­ Award contrary to
provisions of substantive law or Act or terms of contract ­ Can be set aside.
10.1. Arbitral Award ­ Setting aside ­ Phrase 'public policy of India' ­ To be given
wider meaning ­ Award could be set aside if it is contrary to fundamental
policy of Indian law, interest of India, justice or morality or is patently illegal.
10.2. Oil and Natural Gas Corporation Ltd. v/s SAW Pipes Ltd., reported in AIR
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2003 SC 2629.
11. Award ­ Setting aside of ­ Ground, non consideration of counter claim ­ No
counter claim made in written statement ­ Counter claim sought to be raised
after lapse of 4 years of reference ­ Refusal by arbitrator to consider it ­ Proper ­
Decree passed as per award ­ Not liable to be set aside.
11.1. State of Rajasthan v/s M/s. Nav Bharat Construction Com., reported in
AIR 2002 SC 258.
12. Award ­ Setting aside ­ Ground, that arbitrator who was appointed by
designation had passed award after retirement ­ Order of appointment of
arbitrator showing that appointment was by name and not by designation ­
Moreover after retirement arbitrator had applied to Court for extension of time ­
No such objection was raised by party at that time ­ Award not liable to be set
aside on grounds that arbitrator had retired when he passed impugned award.
12.1. M/s. Himalayan Construction Co. v/s Executive Engineer, Irrigation
Division, J & K, reported in AIR 2000 SC 3539 (FB).
13. Setting aside of Arbitral Award ­ View of arbitrator on whether agreement
was terminated by natural consent or not ­ Not permissible for Court to interfere
with Arbitrator's view merely because another view of matter is possible ­ It is
not permissible for Court to re­appreciate evidence placed before Arbitrator ­
Arbitrator is the best Judge of quality as well as quantity of evidence and it will
not be for Court to take upon itself the task of being a Judge of evidence before
Arbitrator.
13.1. Himachal Joint Venture v/s Panilpina World Transport (India) Pvt. Ltd.,
reported in AIR 2009 Delhi 80 (DB).
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Period of Limitation provided u/s 34 (3) of the Act
14. Application challenging award ­ Filing of ­ Time limit prescribed under S.
34 ­ Is absolute and not extendable ­ S. 5 of Limitation Act is not applicable to it.
14.1. Union of India v/s M/s. Popular Construction Co., reported in AIR 2001 SC
4010.
15. Facts of the case before the Hon'ble Apex Court were:­ The Arbitral
Awards were received by the appellants on August 26, 2003. No application for
setting aside the Arbitral Awards was made by the appellants before elapse of
three months from the receipt thereof. As a matter of fact, three months from the
date of the receipt of the Arbitral Award by the appellants expired on November
26, 2003. The District Court had Christmas vacation for the period from
December 25, 2003 to January 1, 2004. On reopening of the court, i.e., on
January 2, 2004, admittedly, the appellants made applications for setting aside
those awards under Section 34 of the 1996 Act. If the period during which the
District Court, Kamrup, Guwahati, remained closed during Christmas vacation,
2003 is extended and the appellants get benefit of that period over and above
the cap of thirty days as provided in Section 34(3), then the view of the High
Court and the District Judge cannot be sustained. But this would depend on the
applicability of Section 4 of the 1963 Act. The question, therefore, that fell for
determination was whether the appellants are entitled to extension of time under
Section 4 of the 1963 Act in the above facts.
15.1. It is held in para No.13 that:­ Section 2(j) of the 1963 Act when read in the
context of Section 34(3) of the 1996 Act, it becomes amply clear that the
prescribed period for making an application for setting aside Arbitral Award is
three months. The period of 30 days mentioned in proviso that follows sub­
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section (3) of Section 34 of the 1996 Act is not the 'period of limitation' and,
therefore, not 'prescribed period' for the purposes of making the application
for setting aside the Arbitral Award. The period of 30 days beyond three
months which the court may extend on sufficient cause being shown under
the proviso appended to sub­section (3) of Section 34 of the 1996 Act being
not the 'period of limitation' or, in other words, 'prescribed period', in our
opinion, Section 4 of the 1963 Act is not, at all, attracted to the facts of the
present case. ­ Assam Urban Water Supply and Sew. Board v/s M/s. Subash
Projects, reported in AIR 2012 SCW 1395.
16. Limitation Act, 1963), S.12 ­ General Clauses Act, 1897, S.9 ­ Award ­
Setting aside of ­ Petition for ­ Period of "three months from date on which party
making that application had received Arbitral Award" ­ Computation ­ Day from
which such period is to be reckoned, shall be excluded.
16.1. Date of delivery of award on a holiday could not be construed as 'receipt'
of award ­ Date of receipt should be taken as next working day. ­ State of H. P.
and Anr. v/s M/s. Himachal Techno Engineers, reported in AIR 2010 SCW
5088.
17. Petition for setting aside award ­ Limitation ­ Period of "three months" ­
Does not mean 90 days ­ Means actual period of calendar months ­ Moreover in
proviso to S.34(3) words used are "30 days" ­ Such difference in choice of words
by legislature clearly indicate intention of legislature that 3 months does not
mean 90 days.
17.1. Petition for setting aside award ­ Limitation ­ Award received on 12­11­
2007 ­ Three months would expire on 12­2­2008 ­ 30 days under proviso
would expire on 13­3­2008 ­ Petition filed on 11­3­2008 ­ Sufficient cause for
condonation of delay shown ­ Not barred by limitation. ­ State of H. P. v/s
M/s. Himachal Techno Engineers, reported in AIR 2010 SCW 5950.
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18. Limitation Act, 1963, S.14 ­ Application for setting aside arbitration award
­ Limitation ­ Exclusion of time spent in pursuing remedy in wrong forum ­
Appellant instead of filing application filed appeal u/S.34 before High Court ­ On
realising their mistake appellant demonstrated their diligence and bona fide by
filing application u/S.34 immediately on reopening of court, without waiting for
formal order of withdrawal of 'appeal' before wrong forum ­ Period spent before
wrong forum is excluded and Application u/s 34 of the Act held be not barred by
limitation.
18.1. Coal India Ltd. v/s Ujjal Transport Agency, reported in AIR 2011 SC 503.
M/s. Consolidated Engineering Enterprises v/s Principal Secretary, AIR 2009
SC (Supp) 396 (FB). Gulbarga University v/s Mallikarjun S. Kodagali,
reported in AIR 2009 SC (Supp) 1281. Union of India v/s M/s. Shring
Construction Co. Pvt. Ltd., reported in AIR 2007 SC 318. State of Goa v/s
M/s. Western Builders, reported in AIR 2006 SC 2525.
19. Application for setting aside arbitration award ­ Limitation ­ Starts running
from the date on which signed copy of award is delivered to party making
application for setting it aside.
19.1. State of Maharashtra v/s M/s. Ark Builders Pvt. Ltd., reported in AIR 2011
SC 1374.
20. Whether incorporation of additional grounds by way of amendment in the
application u/S. 34 amounts to filing a fresh application?­ Held­ No. Amendment
in the application for setting aside the award can be allowed to be added even
after the prescribed period of limitation has expired as provided u/s 34(3).
20.1. State of Maharashtra v/s M/s. Hindustan Construction Company Ltd.,
reported in AIR 2010 SC 1299.
21. Setting aside Arbitral Award ­ Application for ­ Delay in filing ­ After
passing of award application moved before arbitrator praying for (i) review of
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award and (ii) a mode of disposal of payment under award ­ Both prayers not in
nature made u/S.33 ­ Prayers made, not maintainable ­ Re ply sent to applicants
does not give fresh cause of action to seek setting aside of award.
21.1. State of Arunachal Pradesh v/s M/s. Damani Construction Com., AIR 2007
SC (supp) 978.
22. Application for setting aside award ­ Award against Railways ­ Delay of 27
days in filing application ­ Delay condoned in facts and circumstances of case.
22.1. Union of India v/s Tecco Trichy Engineers and Contractors, reported in AIR
2005 SC 1832 (FB).
23. Setting aside of Arbitral Award ­ Limitation ­ Expression 'Arbitral Award'
u/S.34 does not necessarily mean award engrossed on stamp paper ­ Date of
dispatch of final award engrossed on stamp paper is not of any relevance for
purposes of computation of limitation u/S.34(3) of the Act.
23.1. D. M. Jawhar Merican v/s Engineers India Ltd., reported in AIR 2009
Delhi 104 (DB).
24. S.5, S.34(4), S.11 and S.15 ­ Remission of award ­ Award set aside under
S. 34 (1) and (2) on grounds of procedural irregularity ­ Award can be remitted
back ­ Maxim "Ubi jus ibi remedium" applies ­ Fact that there is no specific
provision in the Act enabling Court to remit award, irrespective ­ However, in
view of fact that arbitrator was not fair and had not treated both parties equally
and has already taken a partisan attitude ­ Held, it will be unfair to send back the
matter to same arbitrator ­ Agreement was only to refer the matter to one
specific arbitrator for resolving dispute ­ Agreement was entered into after the
dispute arose and, therefore, Court cannot enforce any other arbitrator on them ­
Civil remedy is not barred ­ In view of S. 43 (4) time spent for arbitration
proceedings shall be excluded for filing civil suit.
24.1. Sulaikha Clay Mines v/s M/s. Alpha Clays, reported in AIR 2005 Kerala 3
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(DB).
25. Arbitrator ­ Powers of ­ Filing of injunction application for restraining
arbitrator to proceed with Arbitral proceedings ­ Not permissible, since plaintiff
has alternate remedy of challenging award under S. 34 of Act.
25.1. Pappu Rice Mills, Jaitu v/s Punjab State Co­operative Supply and
Marketing Federation Ltd., Chandigarh, reported in AIR 2000 P&H 276.
26. Setting aside award ­ Simply because arbitrator happened to be one of the
witnesses to arbitration agreement ­ That by itself does not attach any
disqualification to his becoming arbitrator ­ In absence of any further allegation
or material about his bias against or in favour of one of parties ­ Award cannot be
set aside on this ground.
26.1. Pukh Raj v/s Magh Raj, reported in AIR 2005 Rajasthan 235.
27. Setting aside of award ­ Order as to Powers of Court ­ Court examining
terms of the contract and interpreting them for purpose of deciding whether
claims were covered by the terms of the contract ­ Court also examining merits of
dispute and further­ more arriving at different conclusion ­ Order of Court illegal.
27.1. M/s. Friends Coal Carbonisation v/s M/s. Hindustan Zinc Ltd. reported in
AIR 2002 Rajasthan 116.
Jurisdiction of the Arbitral Tribunal and Numbers of Arbitrators
28. The issue regarding the jurisdiction of the Arbitral Tribunal to decide an
issue not referred to is no more res integra. It is a settled legal proposition that
special Tribunals like Arbitral Tribunals and Labour Courts get jurisdiction to
proceed with the case only from the reference made to them. Thus, it is not
permissible for such Tribunals/authorities to travel beyond the terms of
reference. Powers cannot be exercised by the Tribunal so as to enlarge materially
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the scope of reference itself.
28.1. If the dispute is within the scope of the arbitration clause, it is no part of
the province of the court to enter into the merits of the dispute on the issue
not referred to it. If the award goes beyond the reference or there is an error
apparent on the face of the award it would certainly be open to the court to
interfere with such an award. (Vide: Grid Corporation of Orissa Ltd. v/s
Balasore Technical School, AIR 1999 SC 2262 : (1999 AIR SCW 2303); and
Delhi Development Authority v/s R.S. Sharma and Company, New Delhi,
(2008) 13 SCC 80) : (AIR 2009 SC (Supp) 717 : 2008 AIR SCW 5735).
28.2. In Associated Engg. Co. v/s Govt. of Andhra Pradesh, AIR 1992 SC 232 :
(1991 AIR SCW 2960), this Court held that an umpire or arbitrator cannot
widen his jurisdiction by deciding a question not referred to him by the
parties. If he exceeded his jurisdiction by so doing, his award would be liable
to be set aside. Thus, an arbitrator cannot be allowed to assume jurisdiction
over a question which has not been referred to him, and similarly, he cannot
widen his jurisdiction by holding contrary to the fact that the matter which he
wants to decide is within the submission of the parties.
28.3. Details of para Nos. 5.1 and 5.2 are taken from para Nos. 6 & 7 of M/s.
MSK Projects (I) (JV) Ltd. v/s State of Rajasthan, reported in AIR 2011 SC
2979. M/s. M. B. Patel and Co. v/s Oil and Natural Gas Commission, AIR
2008 SC (Supp) 290. Delhi Development Authority v/s M/s. R. S. Sharma and
Co., New Delhi, reported in AIR 2009 SC (Supp) 717. Food Corporation of
India v/s Surendra, Devendra and Mahendra Transport Com., reported in AIR
2003 SC 1495 (FB). Oil and Natural Gas Corporation Ltd. v/s SAW Pipes Ltd.,
reported in AIR 2003 SC 2629. State of Karnataka v/s Siddaiah, reported in
AIR 2002 SC 397. Rajinder Krishan Khanna v/s Union of India, reported in
AIR 1999 SC 463. Oil and Natural Gas Corporation Ltd. v/s Off­Shore
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Enterprises Inc., reported in AIR 2012 SCW 428.
29. Jurisdiction of Arbitral Tribunal ­ Plea of lack of jurisdiction ­ Not taken
before Arbitrator as provided in S.16 ­ Cannot be permitted to be raised in
proceedings u/S.34 for setting aside award.
29.1. M/s. Gas Authority of India Ltd. v/s M/s. Keti Construction (I) Ltd.,
reported in AIR 2007 SC (Supp) 378.
30. Number of arbitrators ­ Composition of Arbitral Tribunal ­ Objection as to ­
Whether and at what stage objection can be waived ­ Section 10 providing that
number of arbitrators shall not be an even number is a derogable provision ­
Parties agreed upon an even number of arbitrators ­ Objection as to composition
of Arbitral Tribunal not taken before Arbitral Tribunal itself or within time
prescribed under S. 16(2) ­ There will be a deemed waiver of objection under S.
4 ­ Award so passed by Arbitral Tribunal cannot be set aside under S. 34(2)(a)(v)
because composition of tribunal was in accordance with agreement between
parties.
30.1. Narayan Prasad Lohia v/s Nikunj Kumar Lohia, reported in AIR 2002 SC
1139 (FB).
31. Venue of arbitration ­ Decision, as to ­ Appeal against such order­ whether
can be filed ­ Parties agreeing for referring dispute to arbitration tribunal ­
Decision as to venue of arbitration however, required to be determined by Joint
Arbitration Committee ­ Such decision of committee ­ Is not a decision of dispute
relating to agreement and therefore not an award or interim award ­ Not
appealable.
31.1. Sanshin Chemicals Industry v/s Oriental Carbons and Chemicals Ltd.,
reported in AIR 2001 SC 1219 (FB).
32. Jurisdiction ­ State Govt. Company awarding contract to build school in
District R ­ Disputes arising ­ Award passed in State capital ­ Application to set it
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aside filed by Govt. Company in City Court of state capital ­ Contractor pending
such application seeking enforcement of award in Court at District 'R' ­
Entertainment of execution application by Court at 'R' on ground that Court in
State capital had no jurisdiction to entertain setting aside application ­ Not
proper ­ In view of S. 20 Civil P.C. it cannot always be said that only one Court
has jurisdiction.
32.1. Khaleel Ahmed Dakhani v/s Hatti Gold Mines Co. Ltd., reported in AIR
2000 SC 1926.
33. Transfer of case ­ Dispute arising between petitioner/Company and
Respondent/Firm its carrying and forwarding agent ­ Jurisdiction of Court to
determine dispute was fixed by agreement at Jhansi ­ Award passed by arbitrator
in favour of Petitioner/Company at Jhansi ­ Application for setting aside award
filed by respondent in Court at Ludhiana ­ Plea by respondent that as Petitioner­
Company has an office in Punjab and Haryana it would not suffer prejudice ­ Not
tenable when parties have opted for Court at Jhansi ­ Direction therefore issued
that case be transferred to District Judge at Jhansi ­ Case filed by distributor
appointed by respondent also directed to be transferred.
33.1. Shree Baidyanath Ayurved Bhawan Pvt. Ltd. v/s Praveen Bhatia, reported
in AIR 2009 SCW 7576.
34. Arbitral Award ­ Setting aside of ­ Jurisdiction of Court ­ On application
filed under S. 11(6) High Court at 'D', appointed an arbitrator to adjudicate upon
disputes between parties ­ All subsequent application arising out of Arbitral
proceedings would be required to be made only High Court at 'D' ­ Bar of
jurisdiction under S. 42 is only intended to apply to 'Court' as defined in S. 2(1)
(e) ­ To activate provisions of S. 42, it has to be shown that application in respect
of Arbitral agreement filed in said Court ­ High Court at 'C' would have no
jurisdiction to entertain application for setting aside Arbitral Award.
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34.1. The bar of jurisdiction under Section 42 of the Act is only intended to
apply to a 'Court' as defined in Section 2(1) (e) of the Act. In order to activate
provisions of Section 42, it has to be shown that an application in respect of
an arbitration agreement has been filed in the said Court.
34.2. In the instant case, it appears to us that the application was filed in Court
and since the Delhi High Court, in the facts and circumstances of this case,
duly exercised its jurisdiction and appointed an arbitrator to adjudicate upon
the disputes between the parties, on an application filed under Section 11(6)
of the said Act. The said order was made after the law was settled by the
Constitutional Bench in S. B. P. and Co. v/s Patel Engineering Ltd., reported in
AIR 2006 SC 450 : (2005 AIR SCW 5932) in the said decision it has been held
that the order appointing an Arbitrator is nothing but power exercised by the
Court judicially under Section 11 and, therefore, it has been held that such
appointment is based on a judicial order. It has been held that the said order
was passed by a 'Court' as defined under Section 2(1)(e) of the said Act.
Accordingly, for the purpose of the provisions of Section 42 of the said Act in
our opinion, it would create a bar on the jurisdiction of this Court to entertain
the present application under Section 34.
34.3. Accordingly, in our considered opinion, this factor has to be taken into
account for the purpose of deciding this appeal. Hence, we accept the
objection raised on behalf of the appellant and we find that this Court has no
jurisdiction to entertain this application under Section 34 of the said Act. In
our considered opinion, since the application has been made under Section 11
of the said Act before the Delhi High Court all subsequent applications arising
out of the Arbitral proceedings are required to be made only in Delhi High
Court.
34.4. Para Nos. 14 to 16 of Steel (Singapore) Trading Pvt. Ltd. v/s Bhushan
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Power and Steel Ltd., reported in AIR 2011 Calcutta 132 (DB).
35. Jurisdiction of arbitrator ­ Question, as to ­ Not raised before arbitrator ­
Cannot be raised for first time before Court under application for setting aside
award.
35.1. M/s. Sarkar Enterprise v/s M/s. Garden Reach Shipbuldersand Engineers
Ltd., reported in AIR 2002 Calcutta 65.
36. Setting aside of arbitration award ­ Final payment received by respondent
contractor upto its full and final satisfaction ­ 'No claim certificate' given by
respondent to that effect of having received contracted money to its full and final
satisfaction ­ 'No claim certificate' not being conclusive ­ Award passed by
arbitrator against other claims which were ignored ­ Not in excess of jurisdiction
­ Not liable to be set aside.
36.1. South Eastern Coalfields Ltd. v/s M/s. Niranjan Sarkar Contractors,
reported in AIR 2011 Chhattisghar 188 (DB).
37. Territorial jurisdiction of Court ­ Arbitration was entered into between
parties at Delhi ­ Objections to award was filed before Court at Delhi ­ As cause
of action itself arose in Delhi ­ Court at Delhi held to have jurisdiction to
entertain the claim.
37.1. A. P. Nirman Ltd. v/s Sindhu Trade Links Ltd., reported in AIR 2011 Delhi
136 (DB).
38. Setting aside of Arbitral Award ­ Petition for ­ Limitation ­ Award passed by
Multi­member Arbitral tribunal ­ Refusal of minority arbitrator to sign award will
not affect its validity ­ It is enough if award is signed by majority arbitrators ­
Limitation shall begin to run from date award signed by majority arbitrators is
received by appellant ­ Bona fide mistake of legal advisor not liable to be
condoned u/S.5 of Limitation Act, 1963 inasmuch as provision of S.5 Limitation
Act, 1963 are not applicable to petition u/S.34 of Arbitration Act.
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38.1. Government of India v/s M/s. Acome, reported in AIR 2009 Delhi 102
(DB).
39. Jurisdiction of Court ­ Dispute arising between parties out of contract
relating to transportation of coal ­ Cause of action substantially arose within
Bokaro ­ Further, not only respondent carried on business within Bokaro,
appellant has also area office in that jurisdiction ­ Merely because tendering
process was done at registered office of appellant at Ranchi, claims were raised
at Ranchi and arbitration clause was invoked before CMD sitting at Ranchi and
arbitration clause was invoked before CMD sitting at Ranchi ­ It cannot be said
that only Ranchi Court has jurisdiction to entertain applications.
39.1. Central Coalfields Ltd. v/s A. B. Singh, reported in AIR 2010 Jharkhand 96.
40. Award ­ Setting aside ­ Defect in composition of Arbitral Tribunal ­ Tribunal
composed of 5 members ­ Two arbitrators resigning ­ Vacancies not filled ­
Remaining arbitrators hearing matter and passing award ­ Award liable to be set
aside ­ Plea that resignation by arbitrators was of no consequence as they had
already given opinion ­ Not tenable ­ Moreover Tribunal was deprived of essence
of joint deliberations amongst all members.
40.1. Conduct of proceedings ­ Multi­membered Arbitral Tribunal ­ Joint
deliberation amongst members is of essence ­ All members should participate
on all material dates of enquiry.
40.2. When Arbitral tribunal is a Multi­member body what is of importance and
need is the joint deliberation from amongst all the members of the Arbitral
tribunal. There is a sound rationale behind the insistence that in a Multi­
member body all the members should participate on all the material dates of
enquiry. That insistence helps the members of the Arbitral tribunal to
influence/pursue each other, to appreciate each other's view point and
ultimately to arrive at a conscious and unanimous opinion, if that is possible
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or to accept the opinion of the majority with respect and perfect
understanding.
40.3. Rudramuni Devaru v/s Shrimad Maharaj Niranjan Jagadguru, reported in
AIR 2009 Kranataka 13.
Interest and Rate of Interest
41. Interest pendente lite ­ Parties had agreed that no interest will be payable
upon the earnest money or the security deposit or amounts payable to the
Contractor under the Contract ­ Arbitral Tribunal cannot award interest from
date of cause of action to date of award, on amount awarded to contractor under
contract in terms of which there was specific bar on payment of interest.
41.1. M/s. Sree Kamatchi Amman Constructions v/s Divisional Railway Manager
(Works), Palghat, reported in AIR 2010 SC 3337. Union of India v/s Saraswat
Trading Agency, reported in AIR 2010 SC (Supp) 839.
42. Award ­ Post decree interest ­ Party aggrieved by award of future interest at
rate of 11% per annum from date of decree till realization ­ Seeking reduction of
rate to 6% per annum ­ In view of reval submissions and by considering
circumstances of case and transaction in question in light of correspondence
between parties post decree interest reduced to rate of 7% per annum.
42.1. M/s. Mukund Ltd. v/s Hindustan Petroleum Corporation Ltd., reported in
AIR 2007 SC (Supp) 914.
43. Award ­ Interest ­ Grant of @ 18% p.a. for pre­reference, pendente lite and
post award period ­ Validity ­ Arbitration agreement did not provide for payment
of interest ­ S. 34 CPC also had no application to arbitration proceedings ­
However, it was within power of arbitrator to award interest for all three stages ­
Rate fixed on ground that advance was given to BOL by HCL at 18% ­ Award
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deserved no interference ­ High Court was not right in reducing rate of interest
to 6% ­ Award restored.
43.1. Bhagawati Oxygen Ltd. v/s Hindustan Copper Ltd., reported in AIR 2005
SC 2071.
44. Award ­ Interest ­ Power to grant ­ Neither arbitrator nor the Court dealing
with the validity of the award can award a higher rate than the mutually agreed
rate.
44.1. M/s. Gautam Constructions and Fisheries Ltd. v/s National Bank for
Agriculture and Rural Development,reported in AIR SC 3018.
45. Award of interest on damages, would not fall within ambit of said
provision to interfere with award.
45.1. Section 31(7) specifically contemplates that, in a situation where the
parties have not agreed upon a rate of interest, the Arbitral Tribunal when
awarding payment of money may include in the sum for which the award is
made interest at such rate as it deems reasonable on the whole or any part of
the money, for whole or any part of the period between the date on which
cause of action arose and the date on which the award is made. Thus, under
the 1996 Act the matter of interest is left entirely to the discretion of the
Arbitral Tribunal.
45.2. M/s. Susaka Pvt. Ltd. , Appellant v/s Union of India, reported in AIR 2005
Bombay 257 (DB).
Severance of invalid part award from valid part of award.
46. Award ­ Arbitrator disallowing some of claims made by contractor ­ Valid
part of Award can be saved by severance from invalid part.
46.1. M/s. Rashtriya Chemicals and Fertilizers Ltd. v/s M/s. Chowgule Brothers,
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reported in AIR 2010 SC 3543. M/s. J. G. Engineers Pvt. Ltd. v/s Union of
India, reported in AIR 2011 SC 2477.
International Commercial Agreement
47. The provisions of Part I of the Act would apply to all arbitrations including
international commercial arbitrations and to all proceedings relating thereto.
Where such arbitration is held in India, the provisions of Part­I would
compulsorily apply and parties are free to deviate to the extent permitted by the
provisions of Part­I. Even in the case of international commercial arbitrations
held out of India provisions of Part­I would apply unless the parties by
agreement, express or implied, exclude all or any of its provisions. Such an
interpretation does not lead to any conflict between any of the provisions of the
Act and there is no lacuna as such. 2002 AIR SCW 1285 followed.
47.1. Venture Global Engineering v/s Satyam Computer Services Ltd., reported
in AIR 2008 SC 456.
Applicability of CPC to the Act
48. Whether the provisions of Order XXI, Rules 18 and 19 of the C.P.C. are
applicable in case of adjustment of the cross­awards?­ Held­ No.
48.1. Hon'ble Apex Court observed in para No.9 that :­ “From a bare reading of
the Rules, extracted supra, it is clear that Rule 18 is applicable in the case
where the applications are made to the Court for execution of the cross­
decrees in separate suits for payment of two sums of money passed between
the same parties and Rule 19 is applicable in the case where the application is
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made to the Court for the execution of a decree under which two parties are
entitled to recover sums of money. As rightly observed by the High Court, in
the case on hand, neither the application has been made for execution of
cross­decrees in separate suits for the payment of money in between the
parties nor the application is for execution of a decree in which the parties are
entitled to recover sums of money from each other. In our opinion, in the
instant case, the particulars furnished clearly show that the applications were
in respect of two awards in the same arbitration case and as such the
provisions of Rules 18 and 19 of Order XXI of C.P.C. are not applicable. It is
also relevant to mention that in the Objection Petition under Section 34 of the
Act the issue regarding interim award and final award came up for
consideration before the subordinate Court, Bokaro. The said objection
petition was dismissed on 27.6.2003 and the appeal preferred also met the
same result at the hands of the High Court of Jharkhand. This Court also
confirmed the order of the High Court except in the rate of interest. In the
light of these materials and earlier orders including this Court and various
clauses in the awards dated 19.04.1997 and 25.11.2000, learned subordinate
Judge rejected the petition filed by the appellant herein. The High Court by
the impugned order accepted the said factual conclusion and dismissed the
Revision”. ­ N. R. Constructions Pvt. Ltd. v/s Sri Ram Badan Singh, reported
in AIR 2007 SC (Supp) 1653.
49. Civil P.C. 1908, O.14, R.1 ­ Award ­ Setting aside of ­ S.34 application can
be disposed of without framing any issues ­ Phrase 'in so far as they can be made
applicable' used in R.4 does not mean that rule mandates applicability of O.14,
CPC to application for setting aside award.
49.1. Fiza Developers and Inter­Trade Pvt. Ltd. v/s AMCI (India) Private Limited,
reported in AIR 2009 Kranataka 20.
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Statutory Arbitrations provided under the Special Act, Electricity
Ombudsman etc.
50. Whether in case of statutory arbitrations provided under the Special Act,
the provisions of S. 34 of the Act are excluded?­Held­ No.
50.1. Sub­sec. (4) of S. 2 of the Arbitration and Conciliation Act, 1996 only
excludes sub­sec. (1) of Ss. 40, 41 and 43. The other provisions of the
Arbitration and Conciliation Act, 1996 are applicable even to the statutory
arbitrations except insofar as the provisions of Part I of the Arbitration and
Conciliation Act, 1995 are inconsistent, with any other enactment or with any
rules made thereunder. There is no inconsistency between the Act of 1993 as
amended in 1998 and the Arbitration and Conciliation Act, 1996. The award
of the Arbitral Tribunal is not confined to the width of its jurisdiction and
there is no impediment in contending before the Arbitral Tribunal that it has
been wrongly constituted. Such plea must be raised at the threshold so that
the Arbitral measures may be immediately taken and time and expense
involved in the hearing of the matter may be avoided. Where the Arbitral
Tribunal decides the question, the writ petition would not be maintainable at
that stage or even after the award is made as sub­section (6) of Section 16
provides to make an application for setting aside such an Arbitral Award,
which has been made after rejecting the plea under Section 16, in accordance
with Section 34. The Court thus held that sub­section (4) of S. 2 of the
Arbitration and Conciliation Act, 1996 makes the Arbitration and Conciliation
Act, 1996 except sub­section (1) of Ss. 40, 41 and 43 of the Act applicable to
the statutory arbitration provided under the Interest on Delayed Payments to
the Small Scale and Ancillary Undertaking Act, 1993 as amended by Act No.
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21. 21
23 of 1998. Decision of the Facilitation Council on its own jurisdiction is
subject to challenge only under Section 34 of the Arbitration and Conciliation
Act, 1996.
50.2. Krishi Utpadan Mandi Samiti, Sikandra Rao v/s U. P. Industry Felicitation
Council, Kanpur, reported in AIR 2009 Allahabad 14.
51. Award by Electricity Ombudsman ­ Challenge as to ­ Maintainable only on
grounds available u/S.34 of Arbitration and Conciliation Act.
51.1. Purvanchal Vidyut Vitran Nigam Ltd., Bhikaripur v/s Vidyut Lokpal
(Electricity Ombudsman), reported in AIR 2008 Allahabad 127.
Appeal u/s 37 of the Act
52. Whether adjudication of a counter claim by Arbitrator, simultaneously
while passing the award can be challenged by way of appeal u/S.37? Held ­ No ­
Remedy is to file application for setting aside award u/S.34 of Act.
52.1. The arbitrator is required to examine the plea of a matter being outside his
jurisdiction and to decide the same before proceeding to make the award.
When such order is passed before the award is made, an appeal under S. 37
(2) of Act, 1996 has been provided. But in case where the award is made
simultaneously while adjudicating upon the issue of a particular matter being
outside the scope of the Arbitral proceedings, or when the appeal is not filed
against the order and final award is made, then the remedy made available to
the person aggrieved is under S. 16 (6) i.e. by way of an application for
setting aside the awards as per S. 34 of Act, 1996.
52.2. Thus, if an issue with regard to the matter being within or outside the
dispute of Arbitral proceedings is decided before making of the award by the
Arbitrator then such order to that extent can be challenged under S. 37 (2) by
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way of Appeal by the person aggrieved. But in case the Arbitral proceedings
are continued even after the issue decided and or the award is made
subsequently or simultaneously then the remedy available to the person
aggrieved in respect of the aforesaid issue also would be by challenging the
award as a whole under S. 34 of Act, 1996. In that circumstance appeal
against part of the award, whereunder particular issue with regard to the
jurisdiction of the arbitrator to examine a particular issue, cannot be
independently challenged under S. 37 of Act, 1996. In as much as what is
contemplated by S. 16 (6) is that once is made, all issues decided therein can
be challenged by making an application under S. 34 of Act, 1996 as a whole.
Therefore, it is only when during Arbitral proceedings, an issue referable to S.
16 (2) and (3) of Act, 1996 is decided before making of the award that it can
be challenged independently by way of appeal under S. 37 of Act, 1996. In
the instant case, it was an admitted position that the award has been made
simultaneously, while deciding the issue, qua the counter claim being outside
the scope of the Arbitral proceedings.
52.3. Therefore no remedy under S. 37 of Act, 1996 is available in the facts of
the case.
52.4. Therefore, it can be said that a remedy under the provisions of Act, by way
of an application under S. 34 for setting aside the award was available. ­ M/s.
B. H. P. Engineers Pvt. Ltd. v/s Director, Industries, U. P. (Facilitation Council),
Kanpur, reported in AIR 2009 Allahabad 155.
Engrossment of Arbitral Award
53. Arbitral Award ­ Setting aside of ­ Question as to whether award is
required to be stamped and registered ­ Would be relevant at time of filing of
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award for enforcement under S. 36 ­ At that stage parties can raise objections
regarding its admissibility on account of non registration and non stamping ­
Said question cannot be gone into at stage of proceeding under S. 34.
53.1. M/s. A. and A. Restaurant and Hotel Pvt. Ltd., Kanpur v/s M/s.
Dwarikajeet Restaurant Pvt. Ltd., Kanpur, reported in AIR 2005 Allahabad 60.
Challenge under Sections 12(3), 13 and 16 of the Act
54. Whether a decision of arbitrator against whom allegations made, attracting
the challenge of the nature as indicated in S. 12 (3) of the Act have been
negatived by Arbitrators is final and not open to challenge in proceedings under
S. 34? Held­ Yes.
54.1. It may be noticed that under the scheme underlying the various provisions
of the Arbitration and Conciliation Act, 1996 in cases where the plea about
the competence of Arbitral Tribunal on the ground that it had no jurisdiction
to enter upon the arbitration, if raised, the Arbitral Tribunal has to decide
such plea. The Arbitral Tribunal is also bound to decide the question if raised,
regarding its exceeding the scope of its authority. The decisions of the Arbitral
Tribunal in cases where such pleas are accepted, have been made appealable
under Section 37(2) of the Act. But in case the pleas are not accepted, in that
event, party aggrieved by the Arbitral Award may make an application for
setting aside such an Arbitral Award in accordance with Section 34 of the Act
only. The remedy is of a very limited scope of interference. This position is
clear from the provisions of Sections 16 and 37 of the aforesaid Act.
54.2. It is, therefore, obvious that the decision of the arbitrator contemplated
under Section 13(3) of the Act or a decision of the Arbitrators about the
competence of the Arbitral Tribunal upholding its jurisdiction as contemplated
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under Section 16(5) of the Act has to be taken to be final which cannot be re­
opened in the proceedings under Section 34 of the Act except on limited
grounds as envisaged thereunder.
54.3. This indicates that the legislative intent underlying the provisions of the
Act is that the decision of the arbitrator against whom allegations have been
made attracting the challenge of the nature as indicated in Section 12(3) of
the Act if negatived by the Arbitrators has to be taken to be final and not open
to challenge in the proceedings under Section 34.
54.4. Para Nos.32 to 34 of Vipul Agarwal v/s M/s. Atul Kanodia, reported in AIR
2003 Allahabad 280 (DB).
55. Setting aside of ­ Arbitrability of issues relating to jurisdiction of Arbitrator
­ No objection was raised by filing application under S. 16 or even in counter
statement ­ Appellant would be deemed to have waived its objection ­
Deliberation of these disputes before Arbitrator and his award on same cannot be
held to be a nullity.
55.1. Union of India , Petitioner v/s M/s. Pam Development Pvt. Ltd., reported
in AIR 2005 Calcutta 332.
56. S.34(2)(v), S.12(3)(b), S.13(2) ­ Setting aside of Arbitral Award ­ Ground
that arbitrator is not a practicing lawyer of Delhi High Court as agreed between
parties ­ Said objection had to be raised within 15 days from date when objector
became aware of appointment of arbitrator
56.1. Vikesh Chugh v/s B. L. B. Ltd., reported in AIR 2009 Delhi 80.
57. Scope ­ Decision by arbitrator that it has jurisdiction to entertain dispute ­
Appeal against ­ Does not lie ­ His decision under S. 16(5) is not interim award.
57.1. Where the Arbitral tribunal decides the issue of jurisdiction in its favour
under S. 16(5) of the Act and rules that the disputes raised in the claim
petition are arbitrable, the petition under S. 34(2) (iv) of the Act is not
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maintainable as no appeal is provided under the Act against such order and
the order is not an interim award and thus not challengeable under Section
34 of the Act.
57.2. The scheme of the Act is in clear terms. Provisions of Section 37 appear to
have been consciously enacted not to provide relief to the aggrieved party at
that stage of the Arbitral proceedings where the Arbitral tribunal decides the
issue of jurisdiction in its favour. Otherwise, Section 37 of the Act would have
been enacted differently. Section 37 had been enacted in that manner only to
minimise the supervisory role of Courts in the Arbitral process at that stage.
57.3. From the scheme of the Act, it is apparent that the legislature did not
provide appeal against the order under Section 16(5) where the Arbitral
tribunal takes a decision rejecting the plea that the Arbitral tribunal has no
jurisdiction. The intention appears to be that in such case the Arbitral tribunal
shall continue with the Arbitral proceedings and make an award without
delay and without being interfered in the Arbitral process at that stage by any
Court in their supervisory role.
57.4. Section 5 of the Act categorically provides that no judicial authority shall
intervene except where so provided in Part I of the Act. On perusal of the
provisions of Part I of the Act it is apparent that no where it is provided that a
Court may intervene and entertain a petition challenging the order passed by
Arbitral tribunal under Section 16(5) taking a decision that the Arbitral
tribunal has jurisdiction to proceed with the arbitration case.
57.5. Para Nos.16, 19 &20 of Union of India v/s M/s. East Coast Boat Builders
and Engineers Ltd., reported in AIR 1999 Delhi 44.
58. S.16 ­ Arbitral Tribunal ­ Is competent to rule on its own jurisdiction ­
Principle of Kompetenz­Kompetenz applies ­ Empowerment of such power on
Arbitral Tribunal is with an intention and objective to set Arbitral proceedings in
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motion without any hurdles in future.
58.1. Appeal ­ Plea as to want of jurisdiction of Arbitrator ­ Not raised by party
within time limit set by S. 16(2) ­ Not raised before any of Court below or
Arbitrator ­ Party having acquiesced in jurisdiction of Arbitral Tribunal
without demur and protest ­ Appellant party should be deemed to have
waived his right to object ­ Plea cannot be entertained at appellate stage ­ Else
the object in enacting Act qua "Uncitral Modern Law" which entails early
completion of proceedings and minimising role of Court, will stand defeated ­
Doctrine of waiver/estoppel also attracted ­ And question raised in appeal is
not question of law.
58.2. Karnataka State Road Transport Corporation v/s M. Keshava Raju,
reported in AIR 2004 Kranataka 109 (DB).
Orders passed u/s 27 of the Act
59. Whether an order rejecting application under S. 27 for taking assistance of
the Court for taking evidence amounts to award, interim or final? ­ Held ­ No ­ It
is an order passed in course of continuing proceedings ­ It can be challenged only
at time when final award is challenged ­ Every order passed by Arbitral Tribunal
is not an award.
59.1. Harinarayan G. Bajaj v/s Sharedeal Financial Consultants Pvt. Ltd.,
reported in AIR 2003 Bombay 296.
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Dismiss for Default of application preferred u/s 34 and Ex­parte
Awards
60. Setting aside award ­ Application for ­ Dismissal in default ­ Validity ­ Since
power to entertain an application under S. 34 is only available to the Civil Court
all the powers necessary for disposal of such application under CPC would be
available to such a Court ­ Plea that dismissal is not proper since provisions of
CPC are not applicable to proceedings under Act ­ Not tenable.
60.1. B. Rama Swamy v/s B. Ranga Swamy, reported in AIR 2004 A.P. 280 (DB).
61. Ex parte award ­ Setting aside of ­ Powers of arbitrator ­ Arbitrator
becomes functus officio, once he signed award ­ Arbitrator has no power to set
aside award be it an ex parte one ­ It is Court which can set aside an award
u/S.34(2)(i) of Act.
61.1. Section 25 of Act empowers Arbitrator to make award in absence of
opposite party. But Act does not provide for an Arbitrator setting aside his
award once it is made, be it on ground that it was passed ex parte. On other
hand Legislature was anxious to confer that power on 'Court' under Section
34 of Act. Section 34 (2)(i) of Act enables Court to set aside an award if "a
party was under some incapacity" and under sub­section (iii), "if party making
application was not given proper notice of appointment of an Arbitrator or of
Arbitral proceedings or was otherwise unable to present his case". Thus power
to set aside an award be it on ground that party concerned was under some
incapacity or that he was not given proper notice of appointment of Arbitrator
or of Arbitral proceedings or was otherwise unable to present his case. There
is no reason to think that concurrent power to set aside an ex parte award on
similar grounds has been given to Arbitrator.
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61.2. Except for limited purpose of correction of errors referred to in Section 33
(1)(a) of Act, an Arbitrator appointed under Act becomes functus officio once
he has signed award. Arbitrator can refuse to set aside ex parte award.
61.3. Ex parte award ­ Appeal against ­ Order passed by Arbitrator refusing to
set aside ex parte award ­ S.34 does not enable Court to entertain an appeal
against such order passed by Arbitrator ­ Thus, no appeal would lie against
order of Arbitrator refusing to set aside ex parte award, not even u/S.37 of
Act.
61.4. P. M. A. Shukkoor v/s Muthoot Vehicle and Asset Finance Ltd., Ernakulam,
reported in AIR 2011 Kerala 31.
Court Fees
62. Bombay Court­fees Act, 1959, Schedule I, Art.3 ­ Court fees ­
Determination ­ Petition u/S.34 challenging arbitration award filed before any
Principal Civil Court of original jurisdiction which is not High Court ­ No Court­
fee under Bombay Court Fees Act would be payable.
62.1. When a petition under Section 34 is to be filed before a Principal Civil
Court of original jurisdiction which is not a High Court, the question arises
which Article of either First Schedule or Second Schedule would apply, In so
far as the challenge to an Award made under the 1940 Act is concerned, an
application under Section 33 of that Act could be made to a Civil Court and
therefore, payment of Court­fee was governed by Article 1(a) of Schedule II.
This was so because the application was to be presented to the Court of Civil
Judge which was not a principal Civil Court of original jurisdiction. But now
because of change of definition of term "Court" in the 1996 Act, a petition has
to be presented, challenging an Award made under the 1996 Act in terms of
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the provisions of Section 34 thereof, before the Principal Civil Court of
original jurisdiction. No entry either in the first Schedule or in the Second
Schedule was pointed out which applies to an application or petition to be
made before the Principal Civil Court of original jurisdiction, and therefore,
when a litigant wants to file petition before a Principal Civil Court having
original jurisdiction which is not High Court, challenging an Award made
under the 1996 Act, no Court fee under Bombay Court Fees Act is payable
because of absence of a general or specific provision. Therefore, it can be said
that No Court­fee under the Bombay Court­fees Act is payable when a petition
under Section 34 challenging an Award is filed before any Principal Civil
Court of original jurisdiction which is not High Court.
62.2. On an appeal filed in this Court under Section 37 of the 1996 Act
challenging an order passed in a petition filed under Section 34 of the 1996
Act Court­fee is payable according to Article 13 of Schedule II of the Bombay
Court Fees Act.
62.3. Puneet Malhotra v/s R. S. Gai, reported in AIR 2009 Bombay 42 (Full
Bench).
Judgments on Section 34 of Arbitration Act