Judgments and Awards

Section 34(2)(b)(ii)- Mere error of law not to amount to breach of public policy

2003(1) RAJ 408 (Bom)
Union of India Vs Moti Enterprises

There was a petition challenging the arbitration award. In respect of each of the awarded claims, the arbitrator had due regard to the material produced before him and to relevant provisions of the contract. The petitioner was unable to establish that the award by the arbitrator was in any manner contrary to public policy.

It was held that it will be impermissible for the court, having regard to the provisions of Section 34(2)(v)(b) to accept any of the contentions of the petitioner in view of the fact that the petitioner has been unable to sustain the contention that the arbitral award is contrary to public policy. It is a settled principle of law that a mere error of law would not amount to a breach of public policy within the meaning of 34(2)(v)(b). The Supreme Court has held that an arbitral award can be set aside only if the challenge falls under a ground that is contemplated by section 34. Since the arbitrator awarded the claims after careful consideration of all the facts, it would be impermissible for this court to interfere with the award in the absence of the petitioner having demonstrably established that the award is in any manner contrary to public policy.

Section 34(2)(b)(ii) - Interpretation of 'public policy of india'

2003(2) RAJ 1 (SC)
ONGC Ltd Vs Saw Pipes Ltd

While interpreting the meaning of 'public policy' in this case, it was held that the term should be given a wider meaning. It can be stated that the concept of public policy connotes some matter which concerns public good and the public interest. What is good for the public or in public interest or what would be harmful or injurious to the public good or interest varies from time to time. However, an award, which is on the face of it, patently in violation of statutory provisions cannot be said to be in public interest. Such an award is likely to adversely affect the administration of justice.

Hence, the award should be set aside if it is contrary to (i) fundamental policy of Indian Law; (ii) the interest of India; (iii) justice or morality; (iv) in addition, if it is patently illegal. The illegality must go to the root of the matter and if the illegality is of a trivial nature, it cannot be held that the award is against the public policy. An award can also be set aside if it is so unfair and unreasonable that it shocks the conscience of the court.

Section 34(2)(b)(ii) - Public policy and natural justice

2001(1) RAJ 378 (Del)
Kesar Enterprises Vs DCM Sriram Industries Ltd

In the instant case, the arbitrator, a former Chief Justice of India, did not return a finding on every question that was raised. It was contended that the arbitrator did not appreciate and duly consider all the questions raised before him.

It was held that failure of the arbitrator to return a finding on every question raised before him did not amount to infraction of public policy; in such circumstances it would be deemed that the arbitrator rejected the contention. In the present case the arbitrator is a former Chief Justice of India and to predicate that he had not appreciated and duly considered all the questions raised before him would be extremely sanguine.

Section 34 (3) - Application for setting aside an award

2001(4) RAJ 238 (Guj)
Jyoti Motors Vs Industrial Credit & Development Syndicate Ltd

This case discussed the impermissibility of condonation of delay for application for setting aside an award. The petitioner had filed an application for setting aside the award, however, it was not within the stipulated period u/s 34. The petitioner asked for condonation of delay u/Article 5 of the Limitation Act.

It was held that Article 5 of the Limitation Act applies where limitation has been prescribed under the Limitation Act itself and it has no applicability in arbitration cases. Section 34 itself prescribes the period of limitation for making the application for setting aside an award as also the time from which such period starts reckoning. Therefore Article 5 of the Limitation Act has no applicability even on sufficient cause being shown by the applicant.

Section 34(3), 5 & 43 - Delay in application for setting aside award

2003(4) RAJ 517 (Cal)
Union of India Vs Nav Bharat Construction

In the instant case, the award was a unanimous one by three arbitrators and was served on the petitioner on 18.9.2000. The petitioner submitted an application for setting aside the award on 6.2.2001 after a delay of 20 days - the 3 months period had expired on 17.12.2000 and the 30 days extended period expired on 16.1.2001. The issue was whether the delay of 20 days could be condoned in view of the provisions of the 1996 Act.

It was held that the delay could not be condoned. Section 34(3) is a special law providing for a period of limitation different from the Limitation Act, thus the Limitation Act would not apply. In the 1996 Act, keeping in view the objective of Section 5 therein, the Legislature has made its intention clear in Section 34 which is in two parts, viz. (2) and (3). Section 34(1) provides that an award can be set aside only by an application in accordance with Section 34 (2) and (3), so both have to be complied with.

Section 34 (2) deals with the grounds for setting aside the award and section 34(3) deals with the procedural part. The same intention of restricting Court's interference beyond a maximum time fixed by the statute is expressed by the words 'but not thereafter'. So there is no doubt as to the Legislature's intention in categorically excluding the provisions of the Limitation Act.

Section 34(3) - Limitation for setting aside an award

2001(4) RAJ 139 (Bom)
Pushpa P Mulchandani Vs Admiral Rakhakrishin Tahilani

This case discussed the impermissibility of the applicability of the Limitation Act to proceedings under the 1996 Act.

It was held that notwithstanding that the 1996 Act contains no specific words of exclusion, an examination of the scheme of the Act would suggest that the intention is to exclude the application of sections 4 to 24 of the Limitation Act, which is clearly evidenced by the words 'but not thereafter' used at the end of the proviso to Section 34 (3). It is, therefore, not permitted for the court to permit an amendment of the petition, that too after the expiry of the period of limitation prescribed in the Arbitration Act.

Section 34(3) - Computation of period of limitation

2003(4) RAJ 678 (HP)
Union of India Vs Punjab Communications Ltd

This case discussed the computation of the limitation period for a petition for setting aside an award. A signed copy of the award was received by the objector on 31.1.2000 and he filed the objection petition on 28.4.2000. It was held that the time was not to run from the date of delivery of the award to the party, but from the date of receipt of the award by the party intending to file objection.

Section 31(5) makes it obligatory for the arbitrator to deliver a signed copy of the award to each party. The time shall start running against a party for the purpose of section 34(3) from the date of receipt of such copy. In this case the arbitrator faxed a copy of the award to the parties and a photocopy was send through post on the date of making the award. Thus, the arbitrator had sent unauthentic copies of the award to the parties and for the purpose of filing the application, the time shall not run from the date of delivery of such copy. Since the signed copy was received by the objector on 31.1.2000, the limitation will start from then on. Therefore, the objection petition was within the prescribed time limit.

2003(1) RAJ 625 (Del)
Vindhya Telelinks Limited Vs Bharat Sanchar Nigam Ltd

The issue that was raised in this case was whether in the situation where an application was filed u/s 33 the period for filing a petition to set aside the award would commence on the disposal of the application u/s 33.

It was held that in view of section 34(3), an application for setting aside an award should be filed within 3 months from the date of receipt of the award. However, in case of any application filed u/s 33, the application for setting aside of the award was to be filed within 3 months from the disposal of the application u/s 33. Such disposal has to be in the manner similar to that of an arbitral award - it has to be in writing signed by the members of the arbitral tribunal, stating the reason on which it is based. Further, it must be delivered to each of the parties in the form of a signed copy.

Section 36, 34, 7 & 35 - Power of the executing court

2003(2) RAJ 236 (Bom)
RK Textiles Mumbai Vs Sulabh Textiles Pvt Ltd

In the instant case, an execution application for enforcement of an arbitral award was filed. The issue that arose was whether the executing court could enter into an investigation of facts relating to existence of arbitration agreement.

It was held that the executing court is not expected nor warranted to enter into an investigation of the facts whether there is absence of arbitration agreement or not; and if not, whether the alleged incorporation of the term in the bills amount to a valid arbitration agreement or not, etc. These questions clearly fall out of the jurisdiction of the executing court which need not and cannot record its findings on these factual aspects.

If the executing court goes beyond its limits and takes upon itself to examine the validity of the decree or factual details, then it ceases to be an executing court and usurps the jurisdiction or assumes the role of an Appellate Court. Therefore, the plea that there was not arbitration agreement or that it was not within the ambit of Section 7 cannot be entertained in the execution proceedings.

Section 36 - Execution application

2003(2) RAJ 42 (Gau)
M.Banerjee and Sons, Shillong Vs M.N. Bhagabati

The application for execution of award filed by the petitioner was dismissed by the District Judge on the ground that no decree had been filed and enclosed with the execution petition.

It was held that the District Judge had wrongly dismissed the execution petition as the decree need not be filed and enclosed with the execution application. As per section 36, an arbitral award may be enforced in the same manner as if it were a decree of the court. Hence, for the purpose of execution, an award is to be treated as a decree of the Court.

Section 36 - Execution petition with certified copy of award

2002(4) RAJ 158 (Ker)
Ramaswamy Vs Principal Subordinate Judge

The petitioner had filed an execution petition with a certified copy of the award. The execution petition was returned by the court directing the petitioner to file a decree.

It was held that section 17 of the old Arbitration Act 1940 provided for a decree to be drawn by the court concerned. But section 36 of the New Act of 1996 provides that the award shall be considered as a decree and shall be enforced under the Code of Civil Procedure in the same manner as if it were a decree of the court. In such case, the court cannot insist for a decree to receive the execution application it its file. U/s 36, the executing court is duty bound to accept the execution petition with a certified copy of the award.

Section 36 & 34 - Limitation for implementation of award

2003(4) RAJ 678 (HP)
Union of India Vs Punjab Communications Ltd

In the instant case, the arbitrator gave directions that the impugned award be implemented within 60 days from the date on which it was made.

It was held that the objector has a right to prefer objection against the award within 3 months of making of the award and even within one more extended month if he showed sufficient cause for doing so. Further, as per section 36, an award can be enforced only after the time for making an application for setting aside the award u/s 34 has expired. Thus in view of sections 34 & 36, the directions given by the arbitrator to implement the award within 2 months of making of the award is contrary to the provisions of law and thus illegal and liable to be set aside.

However, this breach of law is not of the nature on the basis of which the award as a whole can be set aside.

Section 36, 34(3), 33(2), (5), (6) & (7) - Execution petition - premature

2003(1) RAJ 625 (Del)
Vindhya Telelinks Limited Vs Bharat Sanchar Nigam Ltd

In the instant case, the respondent had filed an application u/s 33 for interpretation of the award and for an additional award, which was pending before the arbitrator. In the meanwhile, the petitioner filed an execution application.

It was held that the execution application was premature. The time for filing objections to the award expires after 3 months from the date of disposal of an application u/s 33. Therefore in this case, the period of 3 months within which the respondent could file objections for setting aside the award cannot be said to have expired until a period of 3 months from the date of communication by the arbitrator after direction of this court rejecting the application u/s 33. Since the award can be enforced only after expiry of the time for making application to set aside the award, the execution proceedings are premature and not maintainable.

Section 36 & 34 - Proper time to enforce an award

2003(2) RAJ 161 (Del)
S. Kumar Vs Delhi Development Authority

This case clarified the point as to what is the proper time to enforce an award. It was held that in terms of the provisions of section 36, the award becomes enforceable in two eventualities; firstly where the time for making an application to set aside the award u/s 34 has expired and secondly if such application having been made, is refused.

Section 37 & 34 - Maintainability of appeal

2003(2) RAJ 498 (All)
Uttar Pradesh Co-operative Sugar Factories Federation Ltd, Lucknow Vs PS Misra

In the instant case, the petition u/s 34 was dismissed on ground of jurisdiction. The question that arose was whether an appeal was maintainable.

It was held that Section 37(1)(b) specifically makes such an order appealable, which either set aside or refused to set aside the award u/s 34. The rejection of the appellant's application u/s 34 would fall within the aforesaid clause and it would be immaterial as to whether the application u/s 34 has been rejected for want of jurisdiction or otherwise on merit. The said provision does not clarify anywhere that if an application u/s 34 is rejected on grounds of merit alone, only then the appeal would lie. The grounds of rejection may be multifarious but it is only the rejection of application which would give a right to the appellant to file an appeal.

Section 34(3), 5 & 43 - Delay in application for setting aside award

2002(2) RAJ 380 (SC)
ITI Ltd Vs Siemens Public Communications Network Ltd

The arbitration proceedings had started in 2001 and the parties instead of getting the arbitration concluded, had been litigating on interim applications till date. The question was whether a direct appeal to Supreme Court (SC) was maintainable.

It was held that a direct appeal to SC was maintainable in an appropriate case however, SC should not encourage litigants to reach SC directly either for reason that the remedy from this court would be more efficacious or quick.

In this case, the parties carried on with litigation instead of preferring to conclude the arbitration. If indeed urgency was there, then the party requiring or needing the quick disposal should have concentrated more on completing the arbitral proceedings rather than spending its time in court chasing various interlocutory applications in High Court. Thus, this court feels that there was no real urgency to approach SC.

Sections 37 & 34 - Consideration of only some grounds by appellate court improper

2003(1) RAJ 162 (SC)
Narayan Prasad Lohia Vs Nikunj Kumar Lohia

An award was held void and unenforceable by the single judge on various grounds. The Division Bench, while affirming the findings of the single judge, considered only two of the grounds on which the award was set aside by the single judge. Apart from these two grounds, there were other grounds also on which the single judge had held the award as void and ineffective.

It was held that the Division Bench should have also considered the other grounds on which the single judge set aside the award. Since there are more grounds available to the respondents to challenge the award apart from the two grounds on which the appellate Bench disposed of the appeals before it, it is only appropriate that the Division Bench should consider the other grounds also on which the award has been set aside by the single judge. This is necessary, in the event the court holds in favour of the appellant on the 2nd ground, the court will be deprived of the view of the High Court on other grounds on which the award was invalidated by the single judge.

Accordingly the HC Division Bench is directed to consider the other grounds on which the single judge had set aside the award.

Section 37(1)(a) & 9 - Appeal against order not granting ex-parte injunction

2000(4) RAJ 72 (MP)
Jabalpur Cable Network Pvt Ltd Vs ESPN Software India Pvt Ltd

In this particular case, the court below had expressed its opinion for not granting ex parte injunction. It was an order indicating the reason for not exercising the jurisdiction. Therefore it was a formal expression of an adjudication.

It was further held that it cannot be disputed that u/s 9 the court has the power to grant interim injunction or to take such other interim measure of protection as may appeal to the court to be just and convenient. Section 9(ii)(d) would cover the case of the appellant and in case does not cover the case by the clause (d), the width and amplitude of clause (e) gave the court below sufficiently wide power to issue an ex parte mandatory injunction to the respondents to provide star sports services to the appellants.

In view of this matter, if the conclusion of this court is correct then an order passed u/s 9 would be appealable u/s 37 (1)(a).

Section 37(1)(a) & 9 - Maintainability of appeal

2002(4) RAJ 670 (Gau)
Paradise Hotels & Restaurant Vs Airport Authority of India

In the present case, the appeal was filed u/s 37 (1) (a), which provides for an appeal against an order granting or refusing to grant any measure u/s 9. The Ex-parte injunction was granted without recording satisfaction about the existence of an arbitration agreement.

It was held that for granting interim measure u/s 9, the court first has to be satisfied that there exists a valid arbitration agreement. An ex parte injunction granted without recording satisfaction about the existence of an arbitration agreement, although the order is not final and is only interim in nature, yet it affects the substantive right of the appellant. Therefore the appeal is maintainable.

Section 37(1)(a) & 9 - Scope of Section 37(1)(a)

1998(3) RAJ 389 (Cal)
Harbhajan Singh Kaur Vs Unimode Finance (P) Ltd

While discussing the scope of section 37(1)(a) in this matter, it was held that this section provides for granting or refusing to grant any measure u/s 9. Section 37(1)(a) does not reflect the projection of a truncated portion of section 9 but it tends to cover section 9 in its entirety. There is no doubt that section 9 (ii) (c) is very much within the ambit of section 9 and if section 9 is not capable of being split up or fragmented or if it is to be viewed as a comprehensive genus then any species of orders coming u/s 9 becomes appealable