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Setting aside an Award

Arbitrator passed an award ordering the attachment and sale of property of a third party who was not a party to the arbitration proceedings on the belief that the property belonged to one of the party who was party to the proceedings. Certainly the third party would not be in a position to challenge the award u/s 34 of the Arbitration and conciliation act 1996 as he was neither a party to the arbitration proceedings nor a party to the arbitration agreement.

However can not the third party file a civil suit to set aside the arbitration award invoking the provisions of specific relief act for cancellation of instruments????


 2 Replies

Shantibhushan (Advocate)     14 April 2011

How the arbitratior passed the order of attachment and sale which is out of his jurisdiction. The said order are to be made only in execution proceedings before high court u/s. 36.  The said award amounts to creating a right of the award holder and the order of sale will amount ot execution of award which is apparent error committed by arbitrator as no power of execution is given to arbitrator.

The third party can file a civil suit for cancellation of instrument and take out a motice for injunction simultaneously.

On the other hand third party can try out by filing an application for leave to file Petition/appeal against the award before High court on the said grounds. If high court considers it may allow it on the said ground. A ground of fraud on tribunal can also be added too.

swarnam J Rajagopalan (Advocate)     09 July 2011

In my view the Third party can challenge the Award passed by the Arbitrator under the mistake, as per clause (iv) of Sec. 34(2) of the A & C, Act, 1996, since the same may fall in the category of "beyond the referrence to the Arbitrator". Members may kindly enlighten me if im wrong in my opinion.


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