Arbitration and Conciliation Act, 1996 – s.34 and s.37 – An award was passed by the Tribunal – Appellant filed a petition u/s. 34 of the Arbitration Act before the High Court to challenge the award – The Single Judge of the High Court allowed the petition u/s. 34 and proceeded to set aside the award on various grounds, such as perversity, patent illegality, etc. – Appeal by the respondent u/s. 37 of the Arbitration Act challenging the judgment of the single Judge of the High Court –The Division Bench of the High Court passed an order of remand to the single Judge on the ground that the single Judge of the High Court did not consider several issues – Correctness: Held: In the facts of the case in hand, while deciding the petition under Section 34 of the Arbitration Act, the Single Judge has made a very elaborate consideration of the submissions made across the Bar, the findings recorded by the Arbitral Tribunal and the issue of illegality or perversity of the award – Detailed reasons while dealing with the alleged patent illegalities associated with the directions issued under the arbitral award have been recorded – Considering the nature of the findings recorded by the Single Judge, the job of the Appellate Court was to scrutinise the said findings and to decide, one way or the other, on merits – In this case, the finding of the Appellate Bench that the impugned judgment of the Single Judge does not address several issues raised by the parties cannot be sustained at all – As far as the power of the Appellate Court under Section 37(1)(c) to pass an order of remand is concerned, the Appellate Court can exercise the power of remand only when exceptional circumstances make an order of remand unavoidable – Some of the exceptional cases can be stated by way of illustration: a) Summary disposal of a petition under Section 34 of the Arbitration Act is made without consideration of merits; b) Without service of notice to the respondent in a petition under Section 34, interference is made with the award; and c) Decision in proceedings under Section 34 is rendered when one or more contesting parties are dead, and their legal representatives have not been brought on record – In the facts of the case, the remand was completely unwarranted – The reason is that the Single Judge has elaborately dealt with the merits of the challenge in the Section 34 petition – This Court should benefit from reasoned judgment rendered by the Court under Section 37 – In the instant case, this Court does not have the benefit of a decision of the Appellate Court dealing with all the issues dealt with by the Single Judge while deciding the petition under Section 34 of the Arbitration Act – Therefore, the impugned judgment of the Division Bench of the High Court is set aside and the Divison Bench of the High Court is directed to decide the appeal on merits after considering the arbitral award and the decision under section 34. [Paras 17, 18, 20 ] Arbitration and Conciliation Act, 1996 – s. 34 and s.37 – Jurisdiction of the Appellate Court dealing with an appeal u/s.
37 against the judgment in a petition u/s. 34: Held: The jurisdiction of the Appellate Court dealing with an appeal under Section 37 against the judgment in a petition under Section
34 is more constrained than the jurisdiction of the Court dealing with a petition under Section 34 – It is the duty of the Appellate Court to consider whether Section 34 Court has remained confined to the grounds of challenge that are available in a petition under Section 34 – The ultimate function of the Appellate Court under Section 37 is to decide whether the jurisdiction under Section
34 has been exercised rightly or wrongly – While doing so, the Appellate Court can exercise the same power and jurisdiction that Section 34 Court possesses with the same constraints. [Para 16] Arbitration and Conciliation Act, 1996 – s. 34, s.37 and s.19 – Code of Civil Procedure, 1908 – Applicability of the provisions of CPC to the proceedings before the Arbitrator and the Court under Sections 34 and 37 of the Arbitration Act: Held: The provisions of the CPC have not been made applicable to the proceedings before the learned Arbitrator and the Court under Sections 34 and 37 of the Arbitration Act – The legislature’s intention is reflected in Section 19(1) of the Arbitration Act, which provides that an Arbitral Tribunal is not bound by the provision of the CPC – That is why the provisions of the CPC have not been made applicable to the proceedings under Sections 34 and 37(1) (c). [Para 18]
Arbitration and Conciliation Act, 1996 – Object of: Held: The object of the Arbitration Act is to provide an arbitral procedure that is fair, efficient, and capable of meeting the needs of specific arbitration – The object is to ensure that the arbitral proceedings and proceedings filed for challenging the award are concluded expeditiously – The proceedings have to be costeffective – The supervisory role of the Courts is very restricted – Moreover, one cannot ignore that arbitration is one of the modes of Alternative Disputes Redressal Mechanism provided in Section
89 of the CPC. [Para 19]
Arbitration and Conciliation Act, 1996 – s.37 – Consequences of passing routinely order of remand:
Held: If the Courts dealing with appeals under Section 37 of the Arbitration Act start routinely passing the orders of remand, the arbitral procedure will cease to be efficient – It will cease to be cost-effective – Such orders will delay the conclusion of the proceedings, thereby defeating the very object of the Arbitration Act – Therefore, an order of remand by Section 37 Court can be made only in exceptional cases where remand is unavoidable. [Para 19]
Constitution of India – Art.136 – Arbitration and Conciliation Act, 1996 – s. 34 and s.37:
Held: An order of remand by Section 37 Court can be made only in exceptional cases where remand is unavoidable – The scope of interference in a petition under Section 34 is very narrow – The jurisdiction under Section 37 of the Arbitration Act is narrower – Looking to the objects of the Arbitration Act and the limited scope available to the Courts to interfere with the award of the Arbitral Tribunal, this Court, while dealing with the decisions under Sections
34 and 37 of the Arbitration Act, in its jurisdiction under Article 136 of the Constitution of India, has to be circumspect – By their own volition, the parties choose to go before the Arbitral Tribunal instead of availing remedy before the traditional civil courts – Therefore, the Courts must be very conservative when dealing with arbitral awards and confine themselves to the grounds strictly available under Section 34 of the Arbitration Act. [Para 19] Arbitration and Conciliation Act, 1996 – Bulky pleadings – Time-consuming submissions, leading to very lengthy awards – Bar to show restraint:
Held: The arbitral proceedings have become synonymous with very bulky pleadings and evidence and very long, time-consuming submissions, leading to very lengthy awards – Moreover, there is a tendency to rely upon a large number of precedents, relevant or irrelevant – The result of all this is that there are very long hearings before the Courts in Sections 34 and 37 proceedings – In many cases, the proceedings under Sections 34 and 37 are being treated as if the same are appeals under Section 96 of the CPC – When members of the bar take up so many grounds in petitions under Section 34, which are not covered by Section 34, there is a tendency to urge all those grounds which are not available in law and waste the Court’s time – The members of the Bar should show restraint by incorporating only legally permissible grounds in petitions under Section 34 and the appeals under Section 37 – Brevity will make the arbitral proceedings and the proceedings under Sections 34 and 37 more effective – Arbitration must become a tool for expeditious, effective, and cost-effective dispute resolution. [Para 23]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Ankit Gyan. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
This page is for informational and research purposes only and does not constitute legal advice. Consult a qualified advocate for advice specific to your situation.