Grounds to stay the execution of award challenged Under Section 34 of The Arbitration Act.

Subject :Grounds to stay the execution of award challenged Under Section 34 of The Arbitration Act.

1. Sub Topic : Grounds for setting aside arbitral award u/s 34 of the Arbitration and Conciliation Act 1996 and procedure thereof.

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2.  [I] INTRODUCTION

1. 1. With the rapid growth of globalization and the removal of trade and political barriers, there is an increasing demand in the global economy for greater certainty, accuracy and flexibility in the settlement of disputes,thus creating new challenges for the arbitration institutions.

2. Arbitration is a process of dispute resolution between the parties through arbitral tribunal appointed by parties to the dispute or by the Court at the request by a party. In other words, it is an alternative to litigation as a method of dispute resolution. The law relating to arbitration in India is based on the English Arbitration Law. In 1940 the Indian Law on arbitration was drafted in the form of Arbitration Act, 1940 and remained in force until it was replaced by the new Arbitration and Conciliation Act, 1996.

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3. The Indian arbitration law is based on the United Nations Commission on International Trade Law (UNCITRAL Model Law). The law of arbitration is based on the principle of withdrawing the dispute from the ordinary court and enabling the parties to substitute a domestic tribunal consisting persons of their own choice called as arbitrators. The Parliament enacted the Arbitration and Conciliation Act, 1996 which has not only removed many serious defects of the earlier arbitration law but also incorporated modern concepts of arbitration which are internationally accepted. The arbitral award has been treated at par with the decree of the Court. It is enforceable in the same manner as a decree of a law court.

This change has enabled the reduction of litigation to some extent.

4. An arbitral award or arbitration award refers to a decision made by an arbitration tribunal in an arbitration proceeding. It is analogous to a judgment in a court of law. An arbitral award can be of a nonmonetary nature where the claimant's claims fail and no money needs to be paid by either party. An arbitration award can be made for payment of a sum of money, declaration upon any matter to be determined in the arbitration proceedings, injunctive relief, specific performance of a contract and for rectification, setting aside or cancellation of a deed or other document.

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5. The Hon'ble Supreme Court in Babar Ali Vs. Union of India (2000) 2 SCC 178 has observed that, “the Arbitration and Conciliation Act 1996 is neither unconstitutional nor in any way offends the basic structure of the Constitution of India, as judicial review is available for challenging the award in accordance with the procedure laid down therein. Only because the question of jurisdiction of the arbitrator is required to be considered after the award is passed and not at any penultimate stage by the appropriate court, it cannot be a ground for submitting that such an order is not subject to any judicial scrutiny. The time and manner of judicial scrutiny can legitimately be laid down by the Act passed by the Parliament.”

6. In the Arbitration and Conciliation Act 1996 Part-I relates to Arbitration. In the said part there is Chapter -VII which provides recourse against arbitral award. Section 34 falls under that chapter and provides recourse to Court against an arbitral award by filing an application for setting aside the same.

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[II] SETTING ASIDE ARBITRAL AWARD 

 7. There is no provision for appeal against an arbitral award. However, an aggrieved party may take recourse to law court for setting aside the arbitration award on certain grounds specified in Section 34 of the Arbitration and Conciliation Act, 1996. 

8. The Arbitration Act of 1940 provide three kinds of remedies against arbitral awards namely, rectification, remission and setting aside of the Arbitral Award. The remedies are refined under the 1996 Act. 

 9. Section 34 of the Arbitration and Conciliation Act, 1996 makes provisions for setting aside as well as for remission of arbitral awards. Section 34 adopts the substance of Article 34 of United Nations Commission on International Trade Law (UNCITRAL) Model Law with minor contextual variations. The arbitral award may be set aside by the Court only on one or more of the seven grounds set forth in it. The award of the arbitrator is ordinarily final and conclusive, as long as arbitrator has acted within his authority and according to the principles of fair play. It is not open to the Court to reassess the evidence to find out whether the arbitrator has committed any error or to decide the question of adequacy of evidence. The arbitrator's adjudication is generally considered binding (on the parties and the power of the Court to set aside the award is restricted to the instances set out in section 34 of the Arbitration Act. 

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10. The Supreme Court has remarked in Indu Engineering and Textiles ltd V/s. Delhi Development Authority (2001) 3 SCR 916, that “an arbitrator is a judge appointed by the parties and as such an award passed by him is not lightly interfered with”. However, since the main aim of the Award is to render legitimate award in the interest of justice, the Court is vested with the power to keep a vigil on the Arbitrator's actions. Keeping this aim in mind, the law provides certain remedies against the Arbitral Awards. 

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[III] GROUNDS FOR SETTING ASIDE  ARBITRAL AWARD 

11. The arbitral award can be set aside if the party proves that; 

(a) a party was under some incapacity. 

(b) the arbitration agreement is not valid in accordance with the Law to which the parties to the Agreement have subjected it. 

(c) no proper notice of the appointment of the arbitrator or the proceeding had been given to it. 

(d) the dispute dealt by the arbitral award does not fall within the terms of the submission to arbitration or the award contains a decision beyond the scope of the submission to arbitration. 

(e) the composition of the tribunal was not in accordance with the agreement of the parties. (In addition to above grounds under Section 34(2) (b) of the Act the Court may set aside the Award if; 

(f) the subject matter of the dispute cannot be settled by means of Arbitration. 

(g) the Arbitral award is in conflict with the public policy of India. All these grounds are now dealt with in necessary details. 

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(a) INCAPACITY OF PARTIES 

12. If a party to the arbitration is not capable of looking after the own interests, and he is not represented by a person who can protect his interests, the award will not be binding on him and may be set aside on his application. If a minor or a person of unsound mind is a party he must be represented by a proper guardian otherwise the award would be liable to be set aside. Such a person is not capable of binding himself by a contract and therefore, an award under a contract does not bind him. Section 9 of the Act enables him to apply to the Court for appointment of a guardian for a minor or a person of unsound mind for the purpose of arbitral proceedings. The ground of incapacity would cease to be available when the incompetent person is represented by a guardian.

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(b) INVALIDITY OF AGREEMENT 

13. The validity of an agreement can be challenged on any of the grounds on which the validity of a contract may be challenged. In cases where the arbitration clause is contained in a contract, the arbitration clause will be invalid if the contract is invalid. 

 14. In the case of State of U. P. Vs. Allied Construction, 2003(7) SCC 396 it is held that, the validity of an agreement has to be tested on the basis of law to which the parties have subjected it. If there is no such indication the validity would be examine according to the law which is in force. 

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(c) NOTICE NOT GIVEN TO PARTIES 

 15. Under Section 23(1) the arbitral tribunal has to determine the time within which the statements must be filed and this determination must be communicated to the parties by a proper notice. Section 24(2) mandates that the parties shall be given sufficient advance notice of any hearing or meeting of the tribunal for the purpose of inspection of documents, goods or other property. If for any good reason a party is prevented from appearing and presenting his case before the tribunal, the award will be liable to be set aside, as the party will be deemed to have been deprived of an opportunity of being heard on the principle of natural justice. It is permitted to challenge an award if the party was not given prior notice of the appointment of arbitrator or the party was not given prior notice of the arbitral proceedings or the party was some reason unable to present his case, as per Section 34(2)(a) (iii) of the Act. 

 16. In the case of Dulal Podda Vs. Executive Engineer, Dona Canal Division, 2004(1) SCC 73 it is held that, if appointment of arbitrator is made at the behest of the appellant without sending notice to the respondent, the exparte award given by the arbitrator is illegal and liable to be set aside. 

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17. In Vijay Kumar v. Bathinda Central Cooperative Bank and ors.  the court observed “it is a typical case where the arbitrator misconducted the proceedings and also misconducted himself. Arbitrator held the first and only hearing on May 17, 2010. No points for settlement or issues were framed. The bank filed affidavits of four employees. Appellant was not given opportunity to cross examine them. He was denied the opportunity to produce evidence. A complete go bye was given to the provisions of law, procedure and rules of justice. It would thus be seen that appellant was unable to present his case”. In the result the award was set aside.

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(d) AWARD BEYOND SCOPE OF REFERENCE 

18. The reference of a dispute under an agreement defines the limits of the authority and jurisdiction of the arbitrator. If the arbitrator had assumed jurisdiction not possessed by him, the award to the extent to which it is beyond the arbitrator’s jurisdiction would be invalid and liable to be set aside.

 19. Section 34(2)(a)(iv) of the Act provides that an arbitral award is liable to be set aside if it deals with a dispute not contemplated by the reference, or not falling within the terms of the reference, or it contains a decision in matters beyond the reference. 

 20. In Rajinder Kishan Kumar v. Union of India AIR 1999 SC 463 a matter under a writ petition was referred to arbitration. The writ petition contained no claim of compensation for damage to potentiality of the land because of the opposing party discharging effluents and slurry on the land. The award of such compensation was held to be outside the scope of reference hence liable to be set aside.

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21. Section 16 of the Arbitration and Conciliation Act, 1996 provides that the initial decision as to jurisdiction lies with the Tribunal. The party should immediately object as to excess of jurisdiction. If the Tribunal rejects the objection, the aggrieved party may apply under Section 34(2)(a)(iv) for setting aside on the ground of excess of jurisdiction. 

 22. An arbitrator cannot go contrary to the terms of the contract. Where the terms of the contract are not clear or ambiguous, the arbitrator gets the power to interpret them. In State of Rajasthan v. Nav Bharat Construction Co. AIR 2005 SC 4430 a majority of claims allowed were against the terms of the contract. It is therefore the Apex Court set aside the award and referred the matter back to independent arbitrator (Umpire) appointed by the court. 

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23. So far as legal proposition as enunciated by the Supreme Court in various decisions is that courts shall not ordinarily substitute its interpretation for that of the arbitrator. It is also true that if the parties with their eyes wide open have consented to refer the matter to the arbitration, then normally the finding of the arbitrator should be accepted without demur. But in a case where it is found that the arbitrator has acted without jurisdiction and has put an interpretation of the clause of the agreement which is wholly contrary to law then in that case, there is no prohibition for the courts to set things right. 

(Numaligarh Refinery Ltd. v. Daelim Industrial Company Ltd., (2007) 6 Supreme 128 : JT 2007 (11) (e) ILLEGALITY IN ARBITRAL PROCEDURE

24. Section 34(2)(a)(v) provide that an award can be challenged if the composition of the Tribunal was not in accordance with the agreement, or the procedure agreed to by the parties was not followed in the conduct of proceedings, or in the absence of agreement as to procedure, the procedure prescribed by the Act was not followed. 

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25. Failure to follow the agreed procedure or the procedure prescribed by the Act is procedural misconduct. If the arbitral tribunal takes the matter which is clearly beyond the scope of its authority, it would tantamount to misconduct of arbitrator. An award in which the arbitrator has deliberately deviated from the terms of reference and arbitration agreement will amount to misconduct of the arbitrator. 

 26. Section 12(3)(a) provides that appointment of an arbitrator may be challenged if there is justifiable doubt as to his independence or impartiality. Section 13 says that if the challenge is not successful and the award is made, the party challenging the arbitrator may apply to the court under Section 34 for setting aside the award. 

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 27. In State Trading Corp. v. Molasses Co., the Bengal Chamber of Commerce AIR 1981 Calcutta 440, a permanent arbitral institution, did not allow a company to be represented by its Law Officer, who was full time employee of the company. The Court held that it was not only misconduct of the arbitrator but also misconduct of the arbitration proceedings. 

28. In ONGC Ltd v. Saw Pipe Ltd AIR 2003 SC 2629, the Supreme Court held that in exercising jurisdiction, the Arbitral Tribunal cannot act in breach of provisions of substantive law or the provision of the Act. In Section 34(2)(a)(v) of the Act, the composition of the Arbitral Tribunal should be in accordance with the agreement. The procedure which is required to be followed by the arbitrator should also be accordance with the agreement. If there is no such agreement then it should be in accordance with the procedure prescribed in Part 1 of the Act. In the above case, the losses caused by delay were deducted from the supplier’s bill. The direction of the Arbitral Tribunal that such deduction should be refunded with interest was held to be neither in accordance with law, nor contract. The award was set aside to that extent. 

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29. Section 12(3)(a) provides that an arbitrator may be challenged if there justifiable doubt as to his independence or impartiality. Section 13 says that if the challenge is not successful and the award is made, the party challenging the arbitrator may apply to the Court under Section 34 for setting aside the award. 

 30. In Union of India v. Om Prakash Baldev Krishna AIR 2000 J & K 79,

it was held that a nonreasoned award is liable to be set aside by the court as contemplated by Section 31(3) which requires that arbitral award shall State reasons upon which it is based, unless the parties have mutually agreed that no reasons are to be given.

 31. Some other examples of misconduct of proceedings are proceeding ex parte without sufficient cause; denial of opportunity to parties; acting against the mandate given to the arbitrator under the agreement; failure or refusal to consider counterclaim of the respondent etc. 

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(f) DISPUTE NOT ARBITRABLE 

32. The existence of an arbitral dispute is a condition precedent for exercise of power by an arbitrator. Only matters of indifference between the parties to litigation which affect their private rights can be referred to arbitration. Therefore, matters of criminal nature, insolvency proceedings, and matters of public rights cannot be decided by arbitration. If the Court itself finds under Section 34(2)(b)(i) that, the subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, then it may set aside the arbitral award. 

33. The Delhi High Court, held in PNB Finance ltd v. Shital Prasad Jain AIR 1991 Del 13, that specific performance of an act cannot be granted in an arbitration proceeding. The Supreme Court did not approve the view of the Delhi High Court. The Court held that the right to specific performance of an agreement of sale deals with contractual rights and it is certainly open to the parties to agree to refer the issue relating to specific performance to arbitration. 

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(g) AWARD AGAINST PUBLIC POLICY 

34. Section 34(2)(b)(ii) provides that an application for setting aside an arbitral award can be made if the arbitral award is in conflict with the public policy of India. The explanation to clause (b) clarifies that an award obtained by fraud or corruption would also be an award against the public policy of India. An award obtained by suppressing facts, by misleading or deceiving the arbitrator, by bribing the arbitrator, by exerting pressure on the arbitrator, etc. would be liable to be set aside. 

 35. The concept of public policy connotes some matter which concerns public good and public interest. In Venture Global Engg v. Satyam Computer Service Ltd 2008 (4) SCC 190, it was held that an award could be set aside if it is contrary to fundamental policy of Indian law, or the interest of India, or justice or morality, or it is patently illegal. If the award is contrary to the substantive provisions of law or the provisions of the Act or against the terms of the contract, it would be patently illegal, which could be interfered under Section 34. Award could also be set aside if it is as unfair and unreasonable as to shock the conscience of the court as it is against public policy. Public Policy.

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36. The term “Public Policy” found no definition in the Arbitration and Conciliation Act, 1996. Due to the nonprecise definition of the term public policy, the term had a wide meaning thereby giving the Courts the liberty to interpret it according to their understanding. The expression is taken to imply larger public interest or public good. However, this gives an abstract explanation of the term without giving a precise meaning to it. Hence, the explanation appended to sub clause. (ii) by means of the amendment Act 2005 has defined the scope and meaning of the expression where the arbitration award shall be contemplated to be against public policy if the award was persuaded by fraud or corruption or in violation of the fundamental policy of India Law or the basic notions of the policy morality and justice. 

 37. Hence, to quote Rail India Technical And Economic Services Ltd V/s. Ravi Constructions, (2003) 4 RAJ 394 the Court opined that the enforcement of an arbitral Award is to be declined as being against public policy if it is against the fundamental policy of India Law, country's interests and it's sense of justice and morality. 

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 38. The scope of public policy was enumerated in Renusagar Power Co.Ltd V/s. General Electric Co.” 1994 SCC Supl (1) 644, where the Court gave a restricted meaning to the expression public policy in an international Commercial arbitration case where an award could be refused only when the award is against (1) fundamental policy of India (2) interest of India (3) justice or morality.

39. In Municipal Corporation of Greater Mumbai v. Prestress Products (India), [(2003)4 RAJ 363 (Bom)], it was held that the amendment was made with the object of reducing judicial intervention. The term “Public policy” found no definition in the Arbitration and Conciliation Act, 1996 and hence the term remained ambiguous. Due to the non precise definition of the term public policy, the term had a wide meaning thereby giving the courts the liberty to interpret it according to their understanding. The expression is taken to imply larger public interest or public good. However, this gives an abstract explanation of the term without giving a precise meaning to it. Hence, the explanation appended to sub clause (ii) by means of the amendment Act has defined the scope and meaning of the expression where the arbitration award shall be contemplated to be against public policy if the award was persuaded by fraud or corruption or in violation of the fundamental policy of India Law or the basic notions of the policy morality and justice. 

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40. The Supreme Court giving a broader meaning to the term “public policy” in ONGC Ltd V/s. Saw Pipes Ltd”, (2003) 5 SCC 705 explaining the concept “public policy of India” said that it has not been defined in the Act and is vague and is likely to be interpreted widely or narrowly depending on the context in which it is being used. Patently Illegal.

 41. Section 34 (2A) which provides for patent illegality which is an additional a ground for setting aside an arbitral award. This ground will be applicable only to arbitrations taking place in India and not to International Commercial Arbitrations. “Error of Law apparent on the face of record” in Administrative Law has been regarded as one of the grounds for invalidating a judicial or quasi judicial matter under the writ of certiorari. In Arbitration, if an arbitral award is inconsistent with any of the provisions of the Arbitration and Conciliation Act, 1996, then it would amount to a patent error on its face. Such decision or an award is nullity and would not have any effect on law and hence, can be declared as void, incapable of being enforced. Such award according to Lord RadCliff as held in Smith V East Elloe” (1956) 1 ALL E.R. 855 CRL, bears a brand of invalidity on its forehead. 

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42. The concept of public policy implies matters which are of common, good to the people and in the interest of the people. An award that is patently in violation of a statute or a statutory provision and can be inferred on the face of the award, such award cannot be said to be in the interest of the common people or for the good of the people. Moreover, such an award would apparently have negative impact on the administration of justice and hence it can set aside a patently illegal if it is contrary to: i. fundamental policy of India ii.the interest of India iii. justice or morality iv. if it is patently illegal. 

 43. Where the credibility of an award has been questioned on ground of “public policy of India” a broader meaning is to be appended so that the award passed by the Tribunal which is patently illegal could be set aside as held in Natural Gas Corp Ltd V/s. SAW Pipes Ltd,IR 2003 SC 2629 (264). 

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The Supreme Court in Associate Builder's V. Delhi Development Authority” 2014(4) ARBLR 307(SC) has elaborated as to what constitutes patent illegality. According to the Court patent illegality shall include--

i. fraud or corruption 

ii. contravention of substantive law 

iii. error of law by the arbitrator 

iv. contravention of the Arbitration and Conciliation Act itself 

v. the arbitrator fails to give consideration to the terms of the contract and usages of trade under Section 28(3) of the Act 

vi. arbitrator fails to give a reason for his decision. 

 44. A proviso to subsection 2A states that if the Court believes that there is an erroneous application of Law this cannot be a sole basis for setting aside the award. An award can only be questions under Section 34 of the Act. Mere erroneous finding by itself cannot be the subject matter to the award passed, as held in Shanska Cementation India Ltd Mumbai V/s. Bajranglal Agarwal 2003 AIH 3735(3741) (Bom). Similar are the observations in the case of Tarapore & Co. V. Cochin Shipyard Ltd., Cochin AIR 1984 SC 1072.

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[IV] PROCEDURE FOR SETTING ASIDE ARBITRAL AWARD 

45. It is necessary for the aggrieved party to make an application as per Section 34 of the Arbitration and Conciliation Act, 1996 stating the grounds of challenging an arbitral award. As per section 34 of the Arbitration and Conciliation Act 1996 for setting aside any arbitral award the only mode is by filing an application to the Court. In Emkay Global Financial Services Ltd. Vs. Girdhar Sondhi AIR 2018 SC 3894 Hon'ble Supreme Court held that, “in an application for setting aside arbitral award, furnishing proof of one of grounds in section 34 (2) (a) by applicant party should only be by way of affidavit of facts not contained in record of arbitration. 

 46. An application for setting aside the award has to be made by a party to the arbitration agreement. But, a legal representative can also file an application challenging an arbitral award, as he is the person claiming under them. There is no special form prescribed for making an application under Section 34 except it has to be a written application filed within the period of limitation. 

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 47. Section 34 Sub Section (5) provides that 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. Sub Section (6) provides that an application under this section shall be disposed of expeditiously and in any event, within a period of one year from the date of which the notice referred to in subsection (5) is served upon other party. 

 48. In National Aluminum Co. Ltd. V. Presteel Fabrication (P) Ltd. (2004) 1 SCC 540 proceedings were instituted before the Hon'ble Supreme Court under the wrong belief that it had jurisdiction in the matter of setting aside. Time spent on a bona fide prosecution of an application in a wrong forum was held by the Hon'ble Supreme Court to be a sufficient cause for condonation of delay. 

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49. An application for setting aside an arbitral award must be made within three months of receiving the award or disposition of application by the Arbitral Tribunal, as provided in Section 34(3) of the Act. The proviso of Section 34(3) allows the party a further period of 30 days after the expiry of three months, if the Court is satisfied that, the party was prevented by sufficient from making the application. However, no application for setting aside the award can be entertained by the Court after the expiry of the additional 30 days. 

 50. When an application for setting aside an arbitral award has been made, the court may, instead of adjudicating upon the grounds raised, adjourn the proceedings for a determined period of time to enable the tribunal to deal with the grounds on which objection have been raised and to eliminate them. 

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51. Upon such adjournment the Arbitral Tribunal shall resume the arbitral proceedings and take such action as will eliminate the grounds. The resumed proceedings can only be relating to the grounds raised in the application under Section 34. It may become necessary to record fresh findings and to amend the award. Thereafter, the court would consider whether the grounds raised have been eliminated and whether the award is liable to be set aside. 

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52. Briefly, the procedure for setting aside Arbitral Award is as under. 

1] An application has to be made by the aggrieved party. 

 2] Application must be made within 3 months from the date party has received award or within 3 months from date of disposing request u/s 33.

 3] Additional time of 30 days for making application if court is satisfied for sufficient cause for delay & not thereafter. Time limit to challenge award u/s.34 can not be extended beyond prescribed limit by invoking limitation Act. 

 4] On receipt of application, court may if requested by party, adjourn the proceeding to give an opportunity to tribunal to resume proceeding or take action that will eliminate ground for setting aside an award. 

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53. Jurisdiction of court to entertain application u/s 34 : 

 1] The place of subject matter of arbitration is the court that is competent to entertain application u/s. 34. 

 2] Where the properties in dispute are located within two courts at different places, either of two courts will have Jurisdiction, but the only court which initiates first has jurisdiction. 

 3] In case of international commercial arbitration, the court of the country in which or under the law of which the award was made, would have jurisdiction. 

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Time limit for disposal of application-

54. Subsection 5 and 6 to Section 34 provides the time limit for disposal of the application as expeditiously as possible before the expiry of one year from the date on which a notice was given to the other party, arising in commercial arbitration. Court has to dispose of the application before the expiry of one year. Hence, the maximum delay which the Court can make in disposing the application is one year. 

 55. In National Aluminum Co Ltd v. Presteel Fabrication (P) Ltd (2004) 1 SCC 540 proceedings were instituted before the Supreme Court under the wrong belief that it had jurisdiction in the matter of setting aside. Time spent on a bona fide prosecution of an application in a wrong forum was held by the Supreme Court to be a sufficient cause for condonation of delay.

 56. A bare reading of Section 34(3) read with the proviso makes it abundantly clear that the application for setting aside the award will have to be made within three months. The period can further be extended, on sufficient cause being shown, by another period of thirty days but not thereafter. Section 29 (2) of the Limitation Act, provides that when any special statute prescribes certain period of limitation as well as provision for extension upto specified time limit, on sufficient cause being shown, then the period of limitation prescribed under the special law shall prevail and to that extent the provisions of the Limitation Act shall stand excluded. The provisions of Section 5 of the Limitation Act would not be applicable because of the provisions of Section 29 (2) of the Limitation Act. ( Union of India V. Popular Construction Company, AIR 2001 SC 4010). 

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57. In Union of India v. Shring Construction Co (P) Ltd, (2006) 8 SCC 18 some time was lost in challenging the award in a writ court which was declared to be not maintainable because the petitioner had his remedy under Section 34 by the proceeding before the District Judge. The District Judge was then approached along with an application for condonation of delay. He rejected it as time barred. The Hon'ble Supreme Court held that the District Judge should have decided whether the application was within time after excluding the period lost in a wrong court. 

 58. Proceedings under Section 34 are summary proceedings and framing of issues was not an integral process of the proceedings. 

 59. An application for setting aside an Arbitral Award will not ordinarily require anything beyond the record that was report the Arbitrator however, if there are matters not contained in such record and are relevant to the determination of issues arising under Section 34(2) (a), they may be brought to the notice of the Court by way of an affidavit filed by both the parties. Cross-examination of the persons swearing to the affidavits should not be allowed, unless absolutely necessary as the truth will emerge on a reading of the affidavits filed by both the parties.

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 60. If the issues are framed and oral evidence is led in Summary Proceedings under Section 34, then quite obviously the object of legislation would be defeated. 

 61. After receiving an application for setting aside arbitral award the Court may in appropriate cases or upon request by a party adjourned the proceeding for specified period for giving an opportunity to arbitration tribunal to resume arbitral proceedings or to take necessary actions which will eliminate the grounds for setting aside arbitral award. A party can file such application only after issuing prior notice to the other party and the application should be supported by affidavit contending that such notice was issued. The court has to dispose of such applications expeditiously and preferably within one year from the date of service of aforesaid notice on other party. In IFIN Commodities Limited, Chennai Vs. Ayesha Madgavkar and others 2018 (6) ABR 82 Hon'ble Bombay High Court, Goa Bench held that, “court cannot correct errors of arbitrator. It can only quash and set aside award leaving parties to begin arbitration again. Court after setting aside award cannot substitute it by granting claim of party.” In Titagarh Wagons Limited, Kolkata Vs. Chowgule and company Pvt. Ltd., Goa 2018 (4) ABR 186 (Goa Bench) laid down that “defence not raised before arbitrator cannot be considered by court under sections 34, 37.”

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62. Consequences of an award being set aside :

1] The award no longer remains enforceable by law.

2] parties are relegated to their former position on to their rights in the subject matter of the disputes.

3] Setting aside of an award acts as a bar to subsequent arbitral proceeding on the same dispute. Principle of resjurisdiction would apply. The same dispute cannot be referred for arbitration to another tribunal or same tribunal.

4] Arbitration agreement does not get effected and it remains operative.

5] Where only part of award is set aside & other part is severable & if valid, then that much is binding & enforceable.

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