Shruti Desai

 

The above issue is sub-judice in the matter of GAYATRI BALASAMY Versus M/S ISG NOVASOFT TECHNOLOGIES LIMITED| SLP(C) No. 15336-15337/2021

While writing this blog there is no intention  to impress upon views but this is just a small educational analysis. I am not in possession of the reference papers but expressing my views on Section. 33 of the Act. This I am writing solely on basis on press reports available.

Let us first see the concerned provisions of the Indian Arbitration Act 1996.

Once the Award is made affecting party has remedy under Section 34 of the said 1996 for setting aside the Award. It reads as under:

CHAPTER VII

Recourse against arbitral award

  1. (1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and sub-section (3).

(2) An arbitral award may be set aside by the Court only if–

(a) the party making the application 1[establishes on the basis of the record of the arbitral tribunal that]–

(i) a party was under some incapacity, or

(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or

(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:

Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set

aside; or

(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or

(b) the Court finds that–

(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or

(ii) the arbitral award is in conflict with the public policy of India.

1[Explanation 1.–For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,–

(i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or

(ii) it is in contravention with the fundamental policy of Indian law; or

(iii) it is in conflict with the most basic notions of morality or justice.

Explanation 2.–For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.]

2[(2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:

Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.]

(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal:

Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.

(4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in 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.

3[(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.]

STATE AMENDMENTS

Jammu and Kashmir and Ladakh (UTs).–

Amendment of section 34.–

(i) after sub-section (2), insert the following sub-section, namely:–

“(2A) An arbitral award may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award:

Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by re-appreciation of evidence.”;

(ii) in sub-section (3),–

(i) for “three months” substitute, “six months”;

(ii) in proviso thereto, for, “three months” and “thirty days” substitute respectively “six months” and “sixty days”.

[Vide the Jammu and Kashmir Reorganization (Adaptation of Central Laws) Order, 2020, notification No. S.O. 1123(E) dated (18-3-2020) and Vide Union Territory of Ladakh Reorganisation (Adaptation of Central Laws) Order, 2020, notification No. S.O. 3774(E), dated (23-10-2020).]

Under Section 37 Certain Orders are appealable

They are :

(1) 1[Notwithstanding anything contained in any other law for the time being in force, an appeal] shall lie from the following orders (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order, namely:–

2[(a) refusing to refer the parties to arbitration under section 8;

(b) granting or refusing to grant any measure under section 9;

(c) setting aside or refusing to set aside an arbitral award under section 34.]

(2) Appeal shall also lie to a court from an order of the arbitral tribunal–

(a) accepting the plea referred to in sub-section (2) or sub-section (3) of section 16; or

(b) granting or refusing to grant an interim measure under section 17.

(3) No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.

There is provision of correction of award under Section 33

 Correction and interpretation of award; additional award.

 (1) Within thirty days from the receipt of the arbitral award, unless another period of time has been agreed upon by the parties—

(a) a party, with notice to the other party, may request the arbitral tribunal to correct any computation errors, any clerical or typographical errors or any other errors of a similar nature occurring in the award;

(b) if so agreed by the parties, a party, with notice to the other party, may request the arbitral tribunal to give an interpretation of a specific point or part of the award.

(2) If the arbitral tribunal considers the request made under sub-section (1) to be justified, it shall make the correction or give the interpretation within thirty days from the receipt of the request and the interpretation shall form part of the arbitral award.

(3) The arbitral tribunal may correct any error of the type referred to in clause (a) of sub-section (1), on its own initiative, within thirty days from the date of the arbitral award.

(4) Unless otherwise agreed by the parties, a party with notice to the other party, may request, within thirty days from the receipt of the arbitral award, the arbitral tribunal to make an additional arbitral award as to claims presented in the arbitral proceedings but omitted from the arbitral award.

(5) If the arbitral tribunal considers the request made under sub-section (4) to be justified, it shall make the additional arbitral award within sixty days from the receipt of such request.

(6) The arbitral tribunal may extend, if necessary, the period of time within which it shall make a correction, give an interpretation or make an additional arbitral award under sub-section (2) or sub-section (5).

(7) Section 31 shall apply to a correction or interpretation of the arbitral award or to an additional arbitral award made under this section.

However, there is no provision that if Arbitral Tribunal fails to correct or modify under this section what is the remedy?

The probabilities are not provided in the Act of inability of an Arbitrator or Tribunal on various grounds like passing away or change in circumstances or migration of an arbitrator or change in parties structure or existence or … anything can happen. The scope of challenge of arbitral awards is limited under the Act. The Act does not permit review of the order/ award of the arbitrator in itself and in fact, disallows review on merits of a dispute. Similarly, the remedy provided under Section 33 of the Act i.e., correction and interpretation of award or additional award is limited to correcting errors of similar nature as that of computation, clerical or typographical errors, just like Speaking to Minutes of the Order in High Court.

However, if Tribunal fails to correct it for whatever reasons the award cannot be recalled or modified. This is because the Act does not give the tribunal the power to do so.

Case: As per my experience in one of such cases parties went under Section 34 for modification of an Award on a legal point. The issue was of cross examination of witnesses and point was urged before the High Court that the Ld Arbitrator erred in closing cross examination. Matter was remanded back. When I read the minutes, I found that the Respondents had applied for closure of evidence. The submission in Appeal under Section 34 was false. Then matter was once again argued and payment was made by Insurance company. Imagine the Insurance company pulled matter for 10 years.

Now this could have done by Court if there was a provision to modify the award. Because there was a prima- facie error.

Meaning of Setting-aside in general parlance:

Setting aside or overturning a decision.

To save something for a special purpose

To overturn a decision

Other definitions

Modification of an award means to change or alter an award in a way that doesn’t change the award’s general purpose. It can involve adding new elements, removing some, or correcting errors.

When can an award be modified?

How is modification different from setting aside an award?

CONCLUSION:

With citing my own experience about error of not reading Minutes and Roznama of Arbitration proceeding advertently or inadvertently a litigant suffered for 10 years.

Under International Chamber of Commerce Rules 2021 No 34 modification is allowed: 1

 Before signing any award, the arbitral tribunal shall submit it in draft form to the Court. The Court may lay down modifications as to the form of the award and, without affecting the arbitral tribunal’s liberty of decision, may also draw its attention to points of substance. No award shall be rendered by the arbitral tribunal until it has been approved by the Court as to its form.

A similar provision is there under Swiss Laws for correction of the Award. But no law provides the casualties which may occur after award is signed and application for modification or correction.

POINTS: WHY SHOULD THE COURT BE PERMITTED TO MODIFY THE AWARD?

  1. Time saving and multiplicity of litigation
  2. It is now internationally accepted to permit modification (ICC Rules referred above) 1
  3. No provision in law for adversities like permanent non availability of the Arbitrator say disability or death.

There may be more points to this but main purpose of an Arbitration is to give fastest remedy and not multiple litigation. Hope Court either directs government to amend the Indian Arbitration Act 1996 or passes favourable reference order.

 

These are my Without Prejudice and personal views with no intention of influencing the Judgment.

Shruti Desai

20th February 2025.

 

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