SC: While deciding S.34 petition, Court can’t remand the matter to Arbitrator for fresh decision.

On 10.10.2018, in the matter of Radha Chemicals v. Union of India, the Hon’ble Supreme Court in its order (Order 10-Oct-2018) reiterated that  the court while deciding a petition under Section 34 of the Arbitration and Conciliation Act, 1996 has no jurisdiction to remand the matter to the Arbitrator for a fresh decision. The Hon’ble Court relied upon the decision of the the Hon’ble Supreme Court in the matter of:

Kinnari Mullick and Another versus Ghanshyam Das Damani ((2018) 11 SCC 328)

In this case the question which arose before the Hon’ble Court was

“Whether Section 34 (4) of the Arbitration and Conciliation Act, 1996 empowers the Court to relegate the parties before the Arbitral Tribunal after having set aside the arbitral award in question and more so suo moto in absence of any application made in that behalf by the parties to the arbitration proceedings?”

The Hon’ble Supreme Court made the following observations:

On  a bare   reading   of  this  provision,   it  is amply  clear   that the Court   can   defer  the   hearing   of  the   application   filed  under   Section 34 for setting aside the award on a written request made by a party to   the  arbitration   proceedings   to  facilitate   the   Arbitral  Tribunal  by resuming the arbitral proceedings or to take such other action as in the   opinion  of   Arbitral   Tribunal  will   eliminate   the  grounds   for setting   aside  the   arbitral   award. (Para 13)

The   quintessence   for  exercising power  under  this provision  is that the arbitral  award has  not been set aside. (Para 13)

Further, the challenge to the said award has been set up under Section 34 about the deficiencies in the arbitral award which may  be   curable   by  allowing   the   Arbitral  Tribunal   to   take  such measures   which   can  eliminate   the   grounds  for   setting   aside  the arbitral award. No power has been invested by the Parliament in the Court   to  remand   the   matter  to   the   Arbitral  Tribunal   except   to adjourn  the   proceedings   for  the   limited   purpose  mentioned   in sub-section 4 of Section 34. (Para 13)

In any case, the limited discretion available to the Court under Section 34(4) can be exercised only upon a written application made in that behalf by a party to the arbitration proceedings. It is crystal clear that the Court cannot exercise this limited power of deferring the proceedings before it  suo moto .(Para 14)

Moreover, before formally setting aside   the   award,  if   the   party  to   the   arbitration  proceedings  fails  to request the Court to defer the proceedings pending before it, then it is not open to the party to move an application under Section 34(4) of   the   Act. (Para 14)

For,   consequent  to   disposal   of  the   main   proceedings under Section 34 of the Act by the Court, it would become   functus officio . In   other   words,  the   limited   remedy  available   under   Section 34(4)   is  required   to   be  invoked   by   the  party   to   the  arbitral proceedings before the award is set aside by the Court. (Para 14)

Copy of the Judgement: Judgement 20-04-2017

-Tushar Kaushik

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