CASE LAW RESEARCH ON SECTION 34 – SUPREME COURT CASES – 2023 ONLY

SECTION 34 - ARBITRATION AND CONCILIATION ACT, 1996

S.NO. CASE PARTICULARS CRUX OF THE CASE STATUS OF THE CASE

01. Hindustan Construction A dispute arose between the contractors/Appellants and the National Highways The issue before the Court in the
Co. Ltd. v. National Authority of India (‘NHAI’) with regard to different areas of contract of the present case was whether the
Highways Authority of Allahabad by-project. Since the appellants were unsatisfied with the decision of the Division Bench of the High Court
India Dispute Resolution Board, the matter was referred to arbitration. The Arbitral was justified in setting aside the
Tribunal consisted of three persons who gave a unanimous award except on a few majority award given the narrow
2023 SCC OnLine SC issues where one of the arbitrators gave a dissenting opinion. The Appellant scope available under Section 37 of
1063 challenged the award under section 34 of the Arbitration Act. The Single Judge the Arbitration Act. The Division
opined that the Tribunal’s majority view was justified and did not warrant Bench had found the Arbitral
interference. However, the Division Bench set aside the Single Judge’s opinion and Tribunal's interpretation of the
held that the Tribunal’s majority view was based on an incorrect interpretation of the contractual terms to be implausible,
contract. and therefore, had set aside the
award. There was a dissenting
The Appellant moved the Supreme Court which held that when technical experts are opinion on the award by one of the
appointed as arbitrators, the role of the Court under section 34 of the Arbitration Act arbitrators.
becomes limited. The Court also held that awards that contain reasons while
interpreting the contractual terms, cannot be lightly interfered with and held that a The Court restored the majority
situation wherein the dissenting opinion is treated as an award arises in some arbitral opinion of the Arbitral Tribunal.
proceedings. Thus, while allowing the appeal the court held that a dissenting opinion
cannot be treated as an award if the majority award is set aside. Appeal allowed.

02. Alpine Housing The Supreme Court held that a party may be allowed to lead evidence for The Supreme Court found that the
Development Corpn. (P) establishing that the arbitral award conflicts with the public policy of India under High Court had not erred in
Ltd. v. Ashok S. Section 34(2)(a) of the Arbitration and Conciliation Act, 1996. However, it may not allowing the respondents to submit
Dhariwal be permitted, if the same can be established from the record before the arbitrator. affidavits and additional evidence
in the proceedings
2023 SCC OnLine SC 55
 Appeal dismissed.
03. Batliboi Environmental Supreme Court of India has held that ‘Public Policy’ under Section 34 of the The Supreme Court dismissed an
Engineers v. Hindustan Arbitration and Conciliation Act 1996 intent is to reject an Arbitral Award if it is in appeal and upheld the High Court's
Petroleum Corporation contravention of provisions of an enactment, since it would be contrary to the basic decision to set aside an arbitral
Limited and Another concept of justice. The concept of ‘public policy’ connotes a matter which concerns award, emphasizing fairness,
public good and public interest. An award which is patently in violation of statutory reasonableness, and due process in
C.A. No. 1968 of 2012 provisions cannot be held to be in public interest. arbitration.

Thus, expanding on the scope and expanse of the jurisdiction of the court under Appeal dismissed.
Section 34 of the A&C Act, it was held that an award can be set aside if it is contrary
to:

1. Fundamental Policy of Indian law; or

2. Interest of India; or
3. Justice or Morality, or
4. If it is Patently Illegal.

04. Bhimashankar Sahakari Section 34 Application Must Be Filed Within 90 Days Limitation to Claim In the present case, the application
Sakkare Karkhane Exclusion of Period When Court Remain Closed. for setting aside the award is filed
Niyamita v. after expiry of prescribed period of
Walchandnagar The Hon'ble Supreme Court has held that an application under Section 34 of the limitation without providing any
Industries Ltd. Arbitration and Conciliation Act, 1996 must be filed within the “prescribed period” sufficient cause for the delay. Thus,
of limitation i.e. 90 days, for seeking the benefit of exclusion of the period during the High Court has not committed
(2023) 8 SCC 453 which the Court remained closed from computation of limitation period. If the any error in refusing to condone the
application is filed by invoking Proviso to Section 34(3) of the Arbitration Act, delay caused in preferring
which extends the limitation period to a further 30 days at the Court's discretion, application under section 34.
then the benefit of such exclusion would not be available to the applicant.
Appeal dismissed.

05. Konkan Railway Corpn. The Supreme Court clarified that when reviewing an arbitration award under The Court noted that the Division
Ltd. v. Chenab Bridge Section 34 of the Act, the court's role is limited to assessing if the Arbitral Tribunal's Bench of the High Court committed
Project decision is perverse or manifestly arbitrary. This principle restricts the court from an error by reinterpreting a
 reinterpreting the contract based on an alternative view. Importantly, the same contractual clause while exercising
(2023) 9 SCC 85 grounds for challenge under Section 34 apply to appeals under Section 37. jurisdiction under Section 37 of the
Act.
The Court underscored that the jurisdiction under Section 37 does not resemble
ordinary appellate jurisdiction. Thus, a Division Bench cannot reverse an award or a Appeal allowed.
Single Judge's decision solely because they believe that certain contractual clauses
were not adequately considered. Reinterpreting contractual clauses falls outside the
purview of Section 37, as it does under Section 34.

06. Larsen Air Conditioning Supreme Court of India has held that Section 34 of the Arbitration and Conciliation The Court resolved to interfere with
& Refrigration Co. v. Act, 1996 provides for extremely limited judicial interference only on the grounds the impugned judgment and set
Union of India of patent illegality with either to set aside an award or remand the matter under the aside the same to the extent of
circumstances as mentioned in said Section of the Act. modification of rate of interest and
2023 SCC OnLine SC 982 reinstated the interest @18% p.a. as
awarded by the arbitrator on 21-01-
1999. The Court accordingly
directed the Union to pay the dues
within 8 weeks.

Appeal allowed.

07. Reliance Infrastructure The Supreme Court of India set aside the impugned High Court order and restored The submissions essentially were of
Ltd. v. State of Goa the award in its entirety. The bench consisting of Justices Dinesh Maheshwari and indicating some alleged errors on
Sanjay Kumar held that the High Court had made an erroneous decision while the merits of the case which, as
2023 SCC OnLine SC 604 calculating the merits of the award. The court cited Delhi Airport Metro Express noticed, do not fall within the
Pvt. Ltd. v. Delhi Metro Rail Corporation Ltd [(2022) 1 SCC 131], where it was parameters of Section 34 of the Act
held that while examining the validity of the arbitral award the courts must show of 1996. Hence, that part of the
restraint. If not, the interference with the award caused after reassessing the factual impugned judgment and order
aspects will be against the 1996 Act's object. The court also ruled that the limited dated 08.03.2021 as passed by the
scope of “patent illegality” cannot be breached by the usage of expressions that do High Court, which modifies the
not refer to “patent illegality” and only to an "error." The bench noted that nothing award dated 16.02.2018 and the
related to “patent illegality” had been discovered in the face of the award, and the order of the Commercial Court
alleged errors in the case do not fall within the ambit of Section 34 of the Act of dated 12.09.2019, is set aside and
1996. consequently, the award in question
is restored in its entirety.
The Arbitration and Conciliation Act, 1996 is an Act of the Parliament of India. It
consolidates and amends the law relating to domestic arbitration, international Appeal allowed.
commercial arbitration, and enforcement of foreign arbitral awards and related
matters. The present case dealt with many provisions of this act, especially section
34. Section 34 of the act provides for the application for setting aside arbitral
awards. The respondent urged that the award in question be set aside for patent
illegality under Section 34(2A). This submission was rejected by the court. The
Supreme Court of India in the present case pronounced valuable findings regarding
“patent illegality.” The court reiterated the findings of the case Delhi Airport Metro
Express (supra) and stated that if restraint isn’t exercised while examining arbitral
awards, several judicial decisions would be set aside and categorized as “patently
illegal” without appreciating the contours of these expressions.

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