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Sec 34 of Arbitration and conciliation Act

(Querist) 22 July 2008 This query is : Resolved 
Respected All,
Please guide me about grounds under sec 34 of Arbitration Act.

With Regards,
Amit Choubey
KamalNayanSaxena (Expert) 22 July 2008
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 S. 34. However, such failure of procedure should be patent affecting the rights of the parties.

Section 24 provides for hearing of the parties. Under sub-section (1)(a) of S. 28 there is a mandate to the arbitral Tribunal to decide the dispute in accordance with the substantive law for the time being in force in India. Admittedly, substantive law would include the Indian Contract Act, the Transfer of Property Act and other such laws in force. Under sub-section (3), arbitral Tribunal is directed to decide the dispute in accordance with the terms of the contract and also after taking into account the usage of the trade applicable to the transaction.

Under S. 31(3) the award has to be reasoned. The question is whether the award could be set aside, if the arbitral Tribunal has not followed the mandatory procedure prescribed under Ss. 24, 28 or 31(3), which affects the rights of the parties. If the arbitral Tribunal has not followed the mandatory procedure prescribed under the Act, it would mean that it has acted beyond its jurisdiction and thereby the award would be patently illegal which could be set aside under S. 34.
amit kumar choubey (Querist) 23 July 2008
Respected sir,
Thanks for providing me valuable information.Is there any specific grounds under sec 34 under which the order of the tribunal can be challenged.

With Regards,
Amit Choubey
H. S. Thukral (Expert) 23 July 2008
The specifics of a good award are that it should remain confined to terms of reference, the Arbitrator should have jurisdiction to decide the issues/disputes, Arbitrator should not travel beyond terms of the contract, equal opportunity be given to the parties. it should be in accordance with substantive law of land, it should not be against Public Policy , The Arbitrator should not be biased against one party etc.
KamalNayanSaxena (Expert) 23 July 2008
Amit, what specific ground do you mean? Have you another gronds, if yes, post them, I will try to fit them into the context.
anantha krishna n.v. Advocate (Expert) 24 July 2008
Application for setting aside arbitral award.

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

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

(a) the party making the application furnishes proof 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.

Explanation : Without prejudice to the generality of sub-clause (ii), it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced/ or affected by fraud or corruption or was in violation of section 75 or section 81.

YOU may notice that incapacity, invalid agreement, Lack of notice, award being beyond scope of reference, constitution of tribunal not according to agreement

are the only permitted situations to set aside the award.
Please note that it is SETTING ASIDE THE AWARD, it is NOT APPEAL AGAINST AWARD.

Arbitration award is final and binding, provided it is within the scope and arrangement.

anantha krishna n.v.( Advocate, AP High Court, 9246531895)
adv.ranchi (Expert) 26 July 2008
Hi.

An arbitral Award is final and binding.
However, it can be challenged only under S. 34 of the A&C Act, 1996.

S. 34 lays down grounds for setting aside arbitral award, viz


-incapacity of a party,
-arbitration agreement is not valid under the law in force
-no notice upon the party of the appointment of an arbitrator or of the arbitral proceedings.
- party unable to present his case
- the arbitral award deals with dispute not contemplated under the terms of the submission / reference.
- Arbitral Award is beyond the scope of the submission to arbitration.
- composition of arbitral Tribunal or the arbitral procedure was not in accordance with the agreement (unless such agreement was in conflict with a provision of the Act from which the parties cannot derogate, or, failing such agreement, was not in accordance with the Act)
-the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force.
- the arbitral award is in conflict with the public policy of India. (conflict with the public policy of India means if the Arbitral Tribunal / Arbitrator while making the award was induced/ or affected by fraud or corruption or was in violation of section 75 or section 81).

hope this satisfies your query.

Regards,

Adv. Ashutosh
adv.ranchi@gmail.com


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