kartik
ARBITRATION AND CONCILIATION ACT - SECTION 34 JUDGMENTS
kartik mago 27 Feb 2019

ARBITRATION AND CONCILIATION ACT - SECTION 34 JUDGMENTS

Radha Chemicals v. Union of India

The Court contained itself to Section 34 of the 1993 Act, section 34 lays down the parameters and procedure on the basis of which an award passed by the arbitrator can be set aside. Sub-section (4) of Section 34, gives the arbitral tribunal time to restart the proceedings and remove the grounds, as such, for setting aside the arbitral award and that such an application should be made within three (3) months from the date of a party receiving arbitral awards, unless otherwise in the opinion of the Court.

In this case the award was made and published almost ten 10 years ago from the date of the appeal, and the grounds on which the award was questioned was the limitation period, which was basically never raised until the Appeal in 2017.And, while the interference of the Court is expected to be kept minimal therefore, the remedy to set aside arbitral award and the discretion exercised by the Court is limited. Further, as observed by the Court in the Kinnari Mullick's supra, the Court stick to same view that it has no jurisdiction to send the matter for fresh decision. The present order of the Supreme Court has further clarified the stand of jurisdiction and discretion which the Court needs to exercise while remitting a matter for arbitration in lieu of Section 34 in its entirety and not in isolation.

 

The State of Bihar &Ors. Vs. Bihar RajyaBhumiVikas Bank Samiti

A bench of 2 judges including Justices Rohinton Fali Nariman and Indu Malhotra,  gave a judgment that deals with the nature of Sections 34(5) and (6) of the Arbitration and Conciliation Act, 1996.These clauses were added to the Act of 1996 by Amending Act 3 of 2016 (w.e.f. October 23, 2015). The aforementioned judgment stands as a landmark precedent for every lawyer and court to follow when an issue arises as to whether the amended Sections 34(5) and (6) of the Arbitration and Conciliation Act, 1996, are to be treated as mandatory or directory in nature.

For the sake of convenience, the inserted Sections 34 (5) and (6) of the amended provisions of the Arbitration and Conciliation Act, 1996, are reproduced herein:

“34. Application for setting aside arbitral award.—

(5) An application under this section shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement. 

(6) An application under this section shall be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice referred to in sub-section (5) is served upon the other party.” 


M/s Emkay Global Financial Services Ltd. v. GirdharSondhi

The Supreme Court recently ruled in this case that unless absolutely necessary, the courts should not go beyond the record before the arbitrator in deciding an application for setting aside an award. The court also reiterated that “seat” in the context of arbitration proceedings is akin to an exclusive jurisdiction clause and would vest the seat courts with exclusive jurisdiction over the arbitration proceedings.

 


K. Kishan v. Vijay Nirman Company

(Civil Appeal No. 21824 of 2017, decided on August 14, 2018)

This case related to a dispute in which claims arose when a project was referred to an arbitral tribunal. Even as the arbitral tribunal passed an award in favor of the creditor, the award was challenged by the debtor under Section 34 of the Act. The IBC gave him time period of ten days for doing so. But, he filed an application with the NCLT which ruled that under Section 34 o the Act of 1996, the claim being admitted was completely irrelevant. The NCLAT was approached which again ruled that Section 238 of the IBC would override the Arbitration Act.

The matter then came up to Supreme Court. The Court was to decide whether the Insolvency and Bankruptcy Code, 2016 can be invoked in respect of an operational debt where an arbitral award has been passed against the operational debtor, which has not yet been finally adjudicated upon. The holding of the Apex Court was that when an petition under Section 34 is filed against the arbitral award, it implies that there is an existing dispute culminating at the very 1st stage of the proceedings. It continues even after the Award has reached final stage under Sections 34 and 37.

 

BCCI v. Kochi Cricket Pvt. Ltd.

(2018) 6 SCC 287

The question before Supreme Court was that what will happen to the petitions filed under Section 34 of the Act that had been filed before the commencement of the Amendment Act, which were governed by Section 36 of the old Act? Would Section 36, as substituted, apply to such petitions?

The Supreme Court inter alia held:

1.      Section 36 will apply to pending Section 34 applications on the date of commencement of the Amendment Act.

2.      The context of Section 36 would refer to Section 34 petitions filed before the commencement of the Amendment Act and it would be apply , in its substituted form, even to such petitions. 

3.      Looking at the practical aspect and the nature of rights presently involved, and the sheer unfairness of the unamended provision, which granted an automatic stay to execution of an award before the enforcement process of Section 34 was over (and which stay could last for a number of years) without having to look at the facts of each case, it is clear that Section 36 as amended should apply to petitions filed under Section 34 before the commencement of the Amendment Act also for the aforesaid reasons.

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