- A bench of the Hon’ble SC has held that an application filed under section 34(4) of the Arbitration Act does not mandate the Court to refer the matter to the Arbitration Tribunal as the same is within the discretion of the Court.
- As per section 34(4) of the aforementioned Act, the court may, at the request of any party may adjourn the proceedings and may refer the matter to the Arbitration Tribunal to give the same an opportunity to resume arbitral proceedings or to take any other action which will eliminate the grounds for setting aside the Arbitration Award.
- The Court observed that the discretionary power under 34(4) can be exercised only to fill the gaps in the reasoning or there are inadequate reasonings given for the findings which are already in the award.
- In the instant case titled I-Pay Clearing Services Private Limited vs. ICICI Bank Limited, an arbitration award was passed by the arbitrator in a dispute between I-Pay Clearing Services and ICICI Bank. the award was challenged by filing a petition under section 34 of the Arbitration Act on the ground that on the first point of determination which stated whether the Contract was illegally and abruptly terminated by the respondent, an award of Rs.50 crores was ordered to be paid to I-Pay by ICICI Bank, without recording any finding on the same.
- I-Pay filed an application under section 34(4) of the Act for the rectification of any lacunae in the award by taking any appropriate action. The HC held that the defect is not curable and that there is no merit in the application filed under Section 34(4) and dismissed the same.
- An appeal was filed before the Apex Court in which it was contended that the lack of reasoning is a curable defect and thus the award can be remitted to the arbitrator under section 34(4). But according to the contention raised by ICICI Bank, the award suffered from patent illegality as the same was passed without taking into consideration the relevant evidence on record.
- The Hon’ble SC held that under the pretext of filling up gaps in the reasoning offered in the award, it cannot be remitted to the arbitrator when there are no findings or contentious issues in the award. If such a case of no findings arise, then the same is a cogent ground for setting the award aside and not to cure it under section 34(4) of the Arbitration Act as the same is incurable. The Court also held that in the absence of any findings on the contentious issue, the same is liable to be set aside as it prima facie appears that the Award is illegal due to absence of any findings.
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