9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (1) TMI 154 - SC - Indian LawsValidity of Arbitration Award - amicable settlement between the parties - It is the case of the appellant that though the Arbitrator has awarded compensation/damages in view of the case of the appellant that the contract between the parties was illegally and abruptly terminated by the respondent - detailed reasons for settlement also not provided - HELD THAT - Section 31 of the Act deals with form and contents of arbitral award . As per the same, an arbitral award shall be made in writing and shall be signed by the members of the Arbitral Tribunal. The arbitral award shall state the reasons, upon which it is based, unless parties agree that no reasons are to be given, or the award is an arbitral award on agreed terms under Section 30 of the Act. Chapter VII of the Act provides recourse against arbitral award. The recourse to a Court against an arbitral award is to be in terms of Section 34(1) of the Act. As per Section 34(2A) of the Act, if the arbitral award arising out of arbitrations other than international commercial arbitrations, is vitiated by patent illegality, same is a ground for setting aside the award - From a reading of Section 34(4) of the Act, it is clear that on receipt of an application under subsection (1), in appropriate cases on a request by a party, Court may adjourn the proceedings for a period determined by it in the order to give the Arbitral Tribunal an opportunity to resume 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. Reliance is placed on the documentary evidence i.e. letters dated 01.06.2010, 17.06.2010, email dated 02.08.2010 and letters dated 08.11.2010 20.01.2011. It is the specific case of the respondent that learned Arbitrator failed to appreciate such evidence, which would establish their case that there was accord and satisfaction between the parties and there was no abrupt termination or any breach on their part. It is their case that in view of such omission to consider vital evidence on record, findings recorded by the Arbitrator are perverse and constitute patent illegality within the meaning of Section 34(2A) of the Act. The Notice of Motion filed under Section 34(4) of the Act by the appellant, clearly states that the said Motion was moved as an abundant precaution and they are seeking remission to the Arbitrator to provide detail and express reasons in addition to reasons already stated in the arbitral award dated 13.11.2017. A harmonious reading of Section 31, 34(1), 34(2A) and 34(4) of the Arbitration and Conciliation Act, 1996, 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. But at the same time, when it prima facie appears that there is a patent illegality in the award itself, by not recording a finding on a contentious issue, in such cases, Court may not accede to the request of a party for giving an opportunity to the Arbitral Tribunal to resume the arbitral proceedings - as rightly contended by the learned counsel appearing for the respondent, that on the plea of accord and satisfaction on further consideration of evidence, which is ignored earlier, even if the arbitral tribunal wants to consciously hold that there was accord and satisfaction between the parties, it cannot do so by altering the award itself, which he has already passed. Civil appeal dismissed.
Issues Involved:
1. Legality of the arbitral award dated 13.11.2017. 2. Application under Section 34(1) of the Arbitration and Conciliation Act, 1996. 3. Application under Section 34(4) of the Arbitration and Conciliation Act, 1996. 4. Accord and satisfaction between the parties. 5. Jurisdictional error by the Arbitrator. 6. Discretionary power under Section 34(4) of the Act. Detailed Analysis: 1. Legality of the Arbitral Award: The arbitral award dated 13.11.2017 directed ICICI Bank to pay ?50 crores with interest and ?50,000 towards costs to I-Pay. The award was challenged by ICICI Bank under Section 34(1) of the Arbitration and Conciliation Act, 1996, alleging patent illegality and lack of findings on whether the contract was illegally and abruptly terminated by ICICI Bank. 2. Application under Section 34(1) of the Arbitration and Conciliation Act, 1996: ICICI Bank filed an application under Section 34(1) seeking to set aside the arbitral award. The main contention was that the Arbitrator did not record any finding on the crucial issue of illegal and abrupt termination of the contract. ICICI Bank argued that the award was patently illegal as it lacked a finding on this vital issue and did not consider evidence indicating accord and satisfaction between the parties. 3. Application under Section 34(4) of the Arbitration and Conciliation Act, 1996: I-Pay filed a Notice of Motion under Section 34(4) seeking to adjourn proceedings and remit the matter to the Arbitrator to provide additional reasons or instructions. The High Court dismissed this application, stating that the defect in the award was not curable under Section 34(4) as there was no finding on the key issue of contract termination. 4. Accord and Satisfaction Between the Parties: ICICI Bank claimed that there was accord and satisfaction between the parties, supported by several communications, including a letter dated 01.06.2010. They argued that the Arbitrator failed to consider this evidence, leading to a perverse and patently illegal award. I-Pay contended that the Arbitrator had resolved the issue but omitted to provide detailed reasons. 5. Jurisdictional Error by the Arbitrator: The High Court found that the Arbitrator committed a jurisdictional error by not recording a finding on whether the contract was illegally and abruptly terminated. This omission was deemed a significant defect that could not be remedied by remitting the matter to the Arbitrator under Section 34(4). 6. Discretionary Power under Section 34(4) of the Act: The Supreme Court emphasized that the discretionary power under Section 34(4) is to be exercised to provide additional reasons or fill gaps in reasoning for findings already recorded in the award. It cannot be used to address the absence of findings on contentious issues. The Court held that the High Court correctly exercised its discretion in dismissing I-Pay's application under Section 34(4). Conclusion: The Supreme Court upheld the High Court's decision, dismissing I-Pay's appeal and ruling that the arbitral award's defect was not curable under Section 34(4). The Court emphasized that Section 34(4) could not be used to address the absence of findings on key issues, and the Arbitrator could not alter the award to include new findings. The appeal was dismissed with no order as to costs.
|
