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I-Pay Clearing Services Private Limited vs. ICICI Bank Limited - (Supreme Court) (03 Jan 2022)

Merely because an application is filed under Section 34(4) of the Arbitration Act by a party, it is not always obligatory on the part of the Court to remit the matter to Arbitral Tribunal

MANU/SC/0005/2022

Arbitration

Present appeal is filed, aggrieved by the order passed by the High Court of in Commercial Arbitration Petition. The High Court was of the view that the defect in the award is not curable, as such, there is no merit in the application filed by the Appellant under Section 34(4) of the Arbitration and Conciliation Act, 1996 and dismissed the same.

Section 34(4) of the Arbitration Act itself makes it clear that it is the discretion vested with the Court for remitting the matter to Arbitral Tribunal to give an opportunity to resume the proceedings or not. The words “where it is appropriate” itself indicate that it is the discretion to be exercised by the Court, to remit the matter when requested by a party. When application is filed under Section 34(4) of the Arbitration Act, the same is to be considered keeping in mind the grounds raised in the application under Section 34(1) of the Arbitration Act by the party, who has questioned the award of the Arbitral Tribunal and the grounds raised in the application filed under Section 34(4) of the Arbitration Act and the reply thereto. Merely because an application is filed under Section 34(4) of the Arbitration Act by a party, it is not always obligatory on the part of the Court to remit the matter to Arbitral Tribunal. The discretionary power conferred under Section 34(4) of the Arbitration Act, is to be exercised where there is inadequate reasoning or to fill up the gaps in the reasoning, in support of the findings which are already recorded in the award.

Under guise of additional reasons and filling up the gaps in the reasoning, no award can be remitted to the Arbitrator, where there are no findings on the contentious issues in the award. If there are no findings on the contentious issues in the award or if any findings are recorded ignoring the material evidence on record, the same are acceptable grounds for setting aside the award itself. Under guise of either additional reasons or filling up the gaps in the reasoning, the power conferred on the Court cannot be relegated to the Arbitrator. In absence of any finding on contentious issue, no amount of reasons can cure the defect in the award. A harmonious reading of Sections 31, 34(1), 34(2A) and 34(4) of the Arbitration Act, make it clear that in appropriate cases, on the request made by a party, Court can give an opportunity to the arbitrator to resume the arbitral proceedings for giving reasons or to fill up the gaps in the reasoning in support of a finding, which is already rendered in the award.

There is no merit in this appeal so as to interfere with the impugned order passed by the High Court. Appeal dismissed.

Tags : SECTION 34(4) OF THE ARBITRATION ACT   ARBITRAL TRIBUNAL  

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