"The richest love is that which submits to the arbitration of time”

                                                                                 - - Lawrence Durrell

Historical Background and Its Origin

The mode of settlement of disputes through Arbitration was even used by the rulers to settle their territorial and commercial disputes. Our Country, India has also had a long tradition of Arbitration. Even during the Era of Kind Solomon, the mode of arbitration was used to settle the dispute. History reveals that arbitration was even in place before the times of Christ. However, the first law for arbitration came into force in England in 1967. As per Hindu Law, the earliest known mode of arbitration of settling disputes was known as “Brahadaranayaka Upanishad” which is a kind of Panchayats having three different organs and the disputes between private individuals were used to be placed before Panches and Panchayats and the commercial matters were decided by Mahajans and Chambers. During the Muslim rule, all the Muslim in India were governed by the Islamic laws i.e. The Shariah as contained in the Hedaya and the non-Muslims were continued to be governed by their own personal laws.

The provisions relating to arbitration were found in the Code of Civil Code, 1859 (Act VII of 1859) which was repealed by Act X of 1877. The Code of Civil Procedure again revised in the year 1882 and the provisions containing arbitration in the Code of Civil Procedure Act 1859 mutatis mutandis reproduced in Section 506 to 526 of the Code of Civil Procedure, 1882. Thereafter a full-fledged statute containing law exclusively on Arbitration was enacted known as Indian Arbitration Act, 1899.

The Indian Arbitration Act 1899 was fundamentally based on British Arbitration Act of 1889. The applicability of Indian Arbitration Act was initially confined to the Presidency Towns Viz, Calcutta, Bombay and Madras. Some of the important features of the Indian Arbitration Act 1899 as subsequently highlighted in various judicial pronouncements are as under : 

(I)       The name of the arbitrator(s) to be mentioned in the Agreement.

(II)     The arbitrator can also be a sitting Judge.

(III)    The judgment passed in case title Gajendra Singh V/S Durga Kanwar, the Court held that the award passed by the arbitrator is nothing but a compromise between the parties.

(IV)    The judgment in case titled Dinkarrai Lakshmiprasad V/S Yeshwantri Hariprasad passed by the Hon’ble Bombay High Court observed as under:-

                 “The case in hand is one more illustration of the state of doubt and uncertainty in which the law of arbitration undoubtedly lies. The framers of the Code in dealing with Section 83 observed that the provisions of the Code of 1882 relating to arbitration has been transferred with certain modifications to a separate schedule (Schedule) ‘in the hope that at no distant date they may be transferred into a comprehensive Arbitration Act.’ Unfortunately that hope has not yet been realized. I think it is high time that those responsible for legislation in this Country should seriously consider the advisability of taking early steps to revise law of arbitration”.

It is in this backdrop that the law relating to arbitration was consolidated and amended in the year 1940 and the Act called as Arbitration Act 1940 (Act X of 1940). The purpose of the Act was for speedy disposal of the disputes through the forum selected by the affected parties by themselves. However, due to the intervention of the Courts at each and every stage of the proceedings, starting from the appointment of the Arbitrator through the interim stage till the passing of the award. Any party interested in delaying the proceedings approach the Court during any stage of the proceedings and the Arbitration Act 1940 did not prohibit the parties from raising disputes relating to the proceedings or validity of the arbitration agreement even after passing of the award inspite of the fact that they have participated in the arbitration without demur and even the Arbitration Act 1940 allows that the award can be challenged on large number of grounds including the merits of the award. Due to consistent intervention of the Courts, the Act has almost become otiose and Act has failed to achieve the desired objective.

In addition to this, the Arbitration Act 1940 did not deal with enforcement of Foreign Awards. A separate legislation called Foreign Awards (Recognition & Enforcement) Act 1961 applied to the enforcement of awards under Geneva Convention, 1927 and New York Convention as the India was signatory to these conventions.

Moreover, the United Commission on International Commercial Law adopted Model Law on International Commercial Arbitration and also adopted a set of Conciliation Rules and the Geneva Assembly of the United Nations has recommended that all countries give due consideration to the said Model Law and use the Conciliation Rules where disputes arise in the context of International Commercial relation.

The Govt. of India taking into account the report of the Public Accounts Committee of the Lok Sabha which contains adverse comments against the working of the Arbitration Act, 1940, referred the matter to the Law Commission of India, presided by Chairman Hon’ble Justice H.R. Khanna and the Law Commission submitted its 76th report to the Govt. of India on 09.11.1978 and the Law Commission strongly recommended to amend the Arbitration Act, 1940 to suit the felt necessities of the time including developing economy of the Country. Besides Law Commission recommendations, several representative bodies of trade, Industry and experts in the field of arbitration proposed amendments to the Arbitration Act, 1996. Like Arbitration, the Conciliation also getting worldwide momentum and recognition as an effective instrument for settlement of disputes. But there was no general law on conciliation in India. Therefore, the Arbitration and Conciliation Act consolidate and improve the previous laws of Arbitration in India namely Arbitration Act, 1940, the Arbitration (Protocol & Convention) Act, 1937, Foreign Awards (Recognition & Enforcement) Act, 1961 and also made provision on the conciliation for which there was no law in India.

Arbitration & Conciliation Act, 1996

The mere perusal of the Preamble of the Arbitration & Conciliation Act, 1996 makes the intentions of the legislators very clear that the Act aims at consolidating the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards and define the law relating to reconciliation. Section 85 of the Arbitration & Conciliation Act, 1996 repeal the Arbitration (Protocol & Convention) Act, 1937, the Arbitration Act 1940 as well as the Foreign Awards (Recognition & Enforcement) Act, 1961 and Section 86 of the Act repeal the Arbitration & Conciliation (Third) Ordinance, 1996.

Objective & Scope of the Act:

The intention of the legislators in enacting the Arbitration & Conciliation Act, 1996 is very much clear from the Preamble of the Act. The Hon’ble Supreme Court in case title Bharat Sewa Sansthan V/s U.P. Electronics Corporation Ltd., reported in 2007 AIR (SC) 2961 observed that the objectives of the Act as under:-

“The main objectives of the Arbitration & Conciliation Act 1996 is to make provisions for an arbitral procedure which is fair, efficient and capable of meeting the needs of the specific arbitration and to minimize the supervisory role of Courts in the arbitral process and to permit an arbitral Tribunal to use mediation, conciliation or other procedures during the arbitration proceedings in settlement of disputes etc. ”

In another case, the Hon’ble Supreme Court in case titled Food Corporation of India V/S Indian Council of Arbitration, AIR 2003 SC 3011 observed that while enacting the Arbitration & Conciliation Act 1996, that the legislative intent is to minimize the supervisory role of the Courts in arbitral process and quick nomination or appointment of Arbitrator, leaving all contentious issues to be decided in arbitration.

Whether the Arbitration & Conciliation Act 1996 is a complete Code:

The question for almost every Act arose whether the Act is a complete Code in itself or not. The same question also arose whether the Arbitration & Conciliation Act 1996 is a complete code in itself for matters arising out of the Arbitration proceedings, the making of the award and enforcement of the award. The Hon’ble Supreme Court in case title Furest Day Lawson Ltd. V/S Jindal Exports Ltd, reported in 2011 AIR (SC) 2649 held that the Arbitration & Conciliation Act 1996 is a complete Code in itself for matters arising out of the Arbitration proceedings, the making of the award and enforcement of the award and consequently held that no letters patent appeal will lie against an order which is not appealable U/S 50 of the Arbitration & Conciliation Act 1996. The Punjab & Haryana Court also dealing in a case title Sudershan Chopra & Others V/S Vijay Kumar Chopra & Others reported in 2003 (117) Comp Cas 660 held that there is no doubt that the Arbitration & Conciliation Act 1996 is, indeed, an exhaustive and comprehensive Code. The benefit of a legislation being complete and exhaustive it that all remedies, from orders passed and actions taken there under must flow from the statute itself.             

Salient Features of the Arbitration & Conciliation Act 1996:

The Arbitration and Conciliation Act, 1996, has been divided into three parts. Part I deals with to arbitration and contains Section 2 to Section 43, whereas Part II deals with enforcement of certain foreign awards and includes within its ambit Section 44 to Section 60, whereas Part III deals with conciliation and includes Section 61 to Section 81. Supplementary provisions are contained in Part IV and the sections relating thereto are from Section 82 to Section 86. Any arbitration to be conducted in India would be governed by Part I, irrespective of the nationalities of the parties. Part II provides for enforcement of foreign awards.

Till now, the Arbitration & Conciliation Act, 1996 has been amended on two occasions by the Parliament. Firstly by virtue of Arbitration & Conciliation (Amendment) Act 2015 and secondly by Arbitration & Conciliation (Amendment) Act, 2019. On 23.10.2015, the President of India promulgated an Ordinance (“Arbitration and Conciliation (Amendment) Ordinance, 2015) and finally this ordinance was replaced by Arbitration & Conciliation (Amendment) Act 2015. The amendment was aimed to make arbitration a preferred mode of settlement of commercial disputes and making India a hub of International Commercial Arbitration.

Important Provisions of Part I of the Arbitration & Conciliation Act 1996 as amended as on date:

Sections 2 (1) (e) defines the term Court as under:

                 "Court" means--

(i)       in the case of an arbitration other than international commercial arbitration, the Principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any Civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes;

(ii)      in the case of international commercial arbitration, the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, and in other cases, a High Court having jurisdiction to hear appeals from decrees of courts subordinate to that High Court;

             Accordingly, in an international commercial arbitration, the District Court will have no jurisdiction and the parties can expect speedier and effacious determination of any issue directly by the High Court.

Section 5 of the Act :

provides that inspite of anything contained in any other law for the time being in force, no judicial authority shall intervene in the matters governed by this Part of the Act unless where so provided in this Part. The Hon’ble Bombay High Court while dealing in a case titled M/S Anuptech Equipments Private Ltd. V/S M/S Ganpati Co-op Housing Society Ltd, 1999 AIR (Bombay) 219 observed that unless there is a remedy provided under the Act, it would be impossible to accept the plea that this Court can exercise suo moto powers which in the present case would mean its inherent powers. Once the Act excludes judicial interference, it will be impossible to exercise the powers under Section 151 of the Civil Procedure Code. By holding as above, the Bombay High Court rejected the plea of the petitioner counsel that the Court can suo moto exercise the jurisdiction. However, in this same very case, the Court held that where a remedy is not available to an aggrieved person and considering Section 5 of the Arbitration & Conciliation Act 1996, this Court can exercise its extraordinary jurisdiction under Article 226 of the Constitution and further observed that this exercise had to be undergone in view of non-availability of remedy to the aggrieved parties and also observed that it is a cardinal principle of our jurisprudence that no man should be left without a remedy. Replying upon the aforesaid judgment of the Bombay High Court, the Patna High Court in case title M/S Senbo Engineering Ltd. V/S State of Bihar, 2004 AIR (Patna) 33 held that only remedy available to an aggrieved party against such order against which no remedy is available under the Act is to file a writ petition under Article 226 of the Constitution.

Section 7 of the Act :

provides that an arbitration agreement must be in writing and the same must be signed by the parties. The particular form of Arbitral Agreement is not provided under the Act, but there must be legal, valid and binding agreement between the parties. In Case title India Household & Healthcare Ltd. V/S L.G. Household & Healthcare Ltd., AIR 2007 SC 1376, the Supreme Court held that an arbitration agreement would mean an agreement which is enforceable in law.

Section 8 of the Arbitration Act

mandates that any judicial authority to refer the parties to arbitration in respect of an action brought before it, which is subject matter of arbitration agreement . The sub-section(1) has been amended envisaging that notwithstanding any judgment, decree or order of the Supreme Court or any court, the judicial authority shall refer the parties to the arbitration unless it finds that prima facie no valid arbitration agreement exists. A provision has also been made enabling the party, who applies for reference of the matter to arbitration, to apply to the Court for a direction of production of the arbitration agreement or certified copy thereof in the event the parties applying for reference of the disputes to arbitration is not in the possession of the arbitration agreement and the opposite party has the same.

The language of Section 8 of the Act is preemptory in nature -- Therefore, in cases where there is an arbitration clause in the agreement, it is obligatory for the Court to refer the parties to arbitration. In P. Anand Gajapathi Raju & Others v. P.V.G. Raju (Dead) and Others (2000) 4 SCC 539, it was held as under:-

"5. The conditions which are required to be satisfied under sub-sections (1) and (2) of Section 8 before the court can exercise its powers are:

(1)   there is an arbitration agreement;

(2)   a party to the agreement brings an action in the     court against the other party;

(3)   subject-matter of the action is the same as the        subject-matter of the arbitration agreement;

(4)   the other party moves the court for referring the parties to arbitration before it submits his first        statement on the substance of the dispute."

 Section 9 Arbitration & Conciliation Act 1996 :

Section 9 of the Act only deals with the interim measures by the Court. Obviously, it is not within the scope of this section to enquire into the claim and the counter-claim made by the parties beyond what has been admitted by the other party. Law provides that if the Court passes an interim measures of protection under this section before the commencement of arbitral proceedings, then the arbitral proceedings shall have to commence within a period of 90 days from the date of such order or within such time as the court may determine. The exercise of power under section 9 after constitution of the tribunal has been made more onerous and the same can be exercised only in circumstances where remedy under section 17 appears to be non-effacious to the court concerned.

The qualification which the person invoking jurisdiction of the Court under Section 9 must possess is of being a 'party' to an arbitration agreement, A person not party to an arbitration agreement cannot enter the Court for protection under Section 9. Thus, remedy under section 9 flows from arbitration agreement, a third party who is not a party to the arbitration agreement or arbitration proceedings, cannot seek any relief in this section, nor he can be pleaded as party in any application under section 9 of the Arbitration and Conciliation Act, 1996. For appreciating the scope of Section 9, and locus standi of the party, the term 'Party' has to be understood, following the definition of the said term in Section 2(1)(h), which states that unless the context otherwise requires 'party' means a party to an arbitration agreement.

The Hon’ble Apex Court in case title Indus Mobile Distribution Private Limited V/S Datawind Innovations Private Limited & Others, 2017 AIR (SC) 2015, held that if the exclusive jurisdiction clause exists in the agreement, all other courts have no jurisdiction to entertain petition for interim relief. The Court further observed that it is well settled that where more than one Court has jurisdiction, it is open for the parties to exclude all other Courts and further held that the provisions of the Act shows that the moment the seat is designated, it is akin to an exclusive jurisdiction clause. In case title Sumer Builders Pvt. Limited V/S Narendra Gorani, 2015 AIR (SCW) 6290, the Hon’ble Supreme Court held that there can be no cavil over the proposition that Section 9 petition can be entertained in the absence of arbitral proceedings.

Section 10 of the Act provides about the arbitrators in the arbitral Tribunal and provides that the parties are free to determine the number of arbitrators, provided that such number shall not be an even number, failing which the arbitral tribunal shall consist of a sole arbitrator.

Section 11 of the Arbitration and Conciliation Act 1996 as we already know, that so far, twice the Arbitration and Conciliation Act 1996 has been amended so far and by both the amendments, drastic changes have been brought by way of amendments in Section 11 of the Act.

Section 11 (1) of the Act provides procedure to appoint an arbitrator or arbitrators with Court assistance. Law provides that a person on any nationality may be an arbitrator unless otherwise agreed by the parties.

Section 11 (2) of the Act provides that the parties are free to agree on a procedure for appointing the arbitrator or arbitrators. As per Section 11 (3), in case the parties do not agree on a procedure for appointment of arbitrators, in an arbitration with three arbitrators, each party shall appoint one arbitrator and the two appointed arbitrators shall appoint the third arbitrator who shall act as a presiding arbitrator.

Section 11 (3A) of the Act empower the Supreme Court and High Court to designate arbitral institutions from time to time which have been graded by the Council constituted under Section 43-I for the purpose of his Act. This section further provides that where in respect of a High Court no graded arbitral institutions are available, then Chief Justice of the concerned High Court may maintain a panel of arbitrators for discharging the functions and duties of arbitral institution and any reference to the arbitrator shall be deemed to be an arbitral institution for the purpose of this section and the arbitrator appointed by a party shall be entitled to such fee at the rate as specified in the Furth Schedule. The Chief Justice is also empowered to review the panel of arbitrators from time to time.

Provision contained in Section 11 (4) further provides that in a situation where provisions Contained in Section 11 (3) applies and a party fails to appoint an arbitrator with 30 days from the date of receipt of a request to do so from the other party or the two appointed arbitrators fail to agree on the third arbitrator within thirty days from the date of their appointment, the appointment shall be made on request of a party by the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court. Section 11 (3A) empower the Supreme Court and High Court to designate arbitral institutions from time to time which have been graded by the Council constituted under Section 43-I for the purpose of his Act. This section further provides that where in respect of a High Court no graded arbitral institutions are available, then Chief Justice of the concerned High Court may maintain a panel of arbitrators for discharging the functions and duties of arbitral institution and any reference to the arbitrator shall be deemed to be an arbitral institution for the purpose of this section and the arbitrator appointed by a party shall be entitled to such fee at the rate as specified in the Furth Schedule. The Chief Justice is also empowered to review the panel of arbitrators from time to time.

Section 11 (5) of the Act provides that failing any agreement referred to in sub-section (2) in an arbitration with a sole arbitrator and if the parties fail to agree on the arbitrator within 30 days from receipt of a request by one party from the other party, the appointment shall be made on an application of a party by the arbitral institution designated by the Supreme Court in case of international commercial arbitration or by the High Court in case of arbitrations other than international commercial arbitrations.

Section 11 (6) of the Act provides than where the appointment of arbitrator or arbitrators procedure agreed upon by the parties but a party fails to act as required under that procedure or the parties or the two appointed arbitrators fail to reach an agreement expected of them under the procedure or a person including an institution, fails to perform any function entrusted to him or it under that procedure, the appointment shall be made on a application of the party by the arbitral tribunal designated by the Supreme Court in case of an international commercial arbitration or by the High Court in case of arbitrations other than international commercial arbitration unless the agreement on the appointment procedure provides other means for securing the appointment.

Sections 11(6A) and 11 (7) stands repealed by the Arbitration and Conciliation Act, 2019.

Section 11 (6B) provides that the designation of any person or institution by the Supreme Court or as the case may be, by the High Court for the purpose of this section, shall not be regarded as a delegation of judicial powers by the Supreme Court of High Court.

Section 11 (8) of the Act provides that the arbitral institution referred to in sub-section 4, 5 & 6 before appointing an arbitrator, shall seek a disclosure in writing from the prospective arbitrators in terms of Section 12 (1) of the Act to have due regard to any qualifications required for the arbitrator by the agreement of the parties and the contents of the disclosure and other considerations as are likely to secure the appointment of an independent and impartial arbitrator.

Section 11 (9) of the Act provides that in case of appointment of a sole arbitrator or third arbitrator in case of an international commercial arbitration, the arbitral institution designated by the Supreme Court may appoint an arbitrator of a nationality other than the nationalities of the parties where parties belong to different nationalities.

Section 11 (11) of the Act provides that where more than one request has been made under section 4, 5 & 6 to different arbitral institutions, the arbitral institution to which the request has been first made shall be competent to appoint the arbitrator.

Section 11 (13) of the Act provides that provides that an application made under this section for appointment of an arbitrator or arbitrators shall be disposed of by the arbitral institution within a period of thirty days from the date of service of notice on the opposite party.

Section 11 (14) of the Act provides that the arbitral institution shall determine the fees of the arbitral tribunal and the manner of its payment to the arbitral tribunal subject to the rates specified in the Fourth Schedule.

The explanation appended to this section further make it crystal clear that Section 11 (14) shall not apply to international commercial arbitration.

The Hon’ble Supreme Court in case titled Perkins Eastman Arvhitects DPC & Anr vs.  HSCC (India) Ltd. , 2020 AIR (SC) 59, the Court has held that the party or official having interest in dispute or in outcome of decision not only ineligible to act as arbitrator but must also not be eligible to appoint anyone else as arbitrator.

Section 12 of the Act makes the provision pertaining to declaration on the part of the arbitrator about his independence and impartiality more onerous vide amendment in Section 12 by virtue of 2015 Amendment Act. In order to ensure independence and impartiality of the arbitrator, the grounds that would give rise to justifiable doubt has been given in Fifth Schedule of the Act and any person not falling under any of the grounds mentioned in Fifth Schedule is likely to be independent and impartial in all respects. Schedule Seventh provides that notwithstanding any prior agreement of the parties, if the arbitrator’s relationship with the parties or the counsel or the subject matter mentioned in the seventh Schedule, it would act as an ineligibility to act as an arbitrator. The provisions make it clear that the arbitrator must be impartial and independent.

Section 12 (3) of the Act further provides that the arbitrator can be challenged if the circumstances exist that give rise to justifiable doubts as to his independence or impartiality or he does not possess the qualification agreed to by the parties.

 Section 13 of the Act provides the procedure of challenge to an appointed arbitrator if the parties do not agree on a procedure for challenge, the party who wants to challenge the arbitral tribunal within 15 days from the day the party become aware of the constitution of arbitral tribunal or after becoming aware of any circumstances provided in Section 12 (3), filed a written statement of the reason for the challenge to the arbitral tribunal.

Section 17 of the Act empowers to the arbitral tribunals to pass interim orders during the arbitration proceedings or at any time after the making of the award but before it is enforced. Section 9 of the Act contains the powers of a Court to grant interim measures and Section 17 is a similar powers conferred to an arbitral tribunal. Interim measures are generally granted to preserve the status of the property in dispute or to prevent prejudice to any party before the commencement or during the pendency of the arbitration. Section 17 of the Principal Act amended initially by Arbitration and Conciliation (Amendment) Ordinance, 2015 and finally by Arbitration & Conciliation (Amendment) Act, 2015. The old section has lacunae where the interim orders of the Tribunal were not enforceable. The Law Commission in its 246th report strongly recommended that Section 17 of the Act deserves to be amended and the orders passed by the arbitral tribunal under section 17 be made enforceable so as to give teeth to the orders of the arbitral tribunal. The amendment carried out in the year 2015 removes that lacunae and stipulates that an arbitral tribunal under section 17 of the Act shall have the same powers that are available to a court under section 9 and that the interim orders passed by the arbitral tribunal would be enforced as if it is an order of a Court. The amendment also clarifies that if an arbitral tribunal is constituted, the Court should not entertain applications under section 9 barring exceptional circumstances. Relying upon the amended Section 17 of the Act, the Hon’ble Apex Court in case titled Alka Chandewar V/S Shamshul Ishrar Khan, 2017 (6) SCC 119 held that orders passed by the arbitral tribunal under section 17 of the Act would now be deemed to be orders of the Court for all purposes and would be enforced under the Civil Procedure Code in the same manner as if they were orders of the Court.

Section 27 of the Act makes a provision for an arbitral tribunal to seek the assistance of the country in taking evidence. Such assistance can be sought by the tribunal on its own accord or by a party to the dispute, with the approval of the Court. Section 27 (2) sets out the particulars that are to be specified in the application to be made to the Court for assistance in taking evidence. An order rejecting an application for taking evidence of certain documents was held to be neither an interim nor a final award and the Court held that it was passed in the course of a continuing proceedings. Such an order can only be challenged at the time of challenging final award. The Court is of the view that every order passed is not an arbitral award. The Bombay High in Montana Developers Pvt. Ltd. V/S Aditya Developers, 2017 (3) Civil J 735 held that Courts are not empowered to adjudicate upon the validity of an order passed by an arbitral tribunal under section 27 of the Act. The Court further held that when an arbitral tribunal or a party to the arbitral proceedings files an application seeking assistance under section 27 in pursuance of an order passed by an arbitral tribunal, the Court cannot go into the merits of such an application and/or the order itself.

Once an order is passed under section 27 by the Court, any deviance from the same during the arbitral proceedings will be held to be as contempt of Court.

Section 34 of the Arbitration & Conciliation Act provides for setting aside of an arbitral award by making an application to the Court. This Section deals with the procedure for the application and also the grounds for setting aside the arbitral award. The limitation period has also been set in this section within which the application has to be filed in the Court seeking setting aside of the award.

Section 34(2) (a) of the Arbitration and Conciliation Act, 1996 mentions certain grounds on account of which the Court can set aside the arbitral award, if the party proves that:

(I)           A party was under some incapacity,

(II)     The arbitration agreement is not valid in accordance with the Law to which the parties to the Agreement have subjected it.

(III)    No proper notice of the appointment of the arbitrator or the proceeding had been given to it.

(IV)    The dispute dealt by the arbitral award does not fall within the terms of the submission to arbitration, or the award contains a decision beyond the scope of the submission to arbitration.\

(V)      The composition of the tribunal was not in accordance with the agreement of the parties.

 Under section 34 (2) (b) of the Act the court may set aside the Award if:

(I)       The subject matter of the dispute cannot be settled by means of Arbitration.

(II)     The Arbitral award is in conflict with the public policy of India.

             Public Policy

The Supreme Court discussed the scope of term Public Policy in case titled Renusagar Power Co. Ltd v. General Electric Co., 1994 AIR SC 860, and in this case, the Court gave a restricted meaning to the expression public policy in an international Commercial arbitration case where an award could be refused only when the award is against (1) fundamental policy of India (2) interest of India (3) justice or morality. Later on in another case titled ONGC Ltd v. Saw Pipes Ltd. (2003) 5 SCC 705, the Supreme Court giving a broader meaning to the term “public policy” explaining the concept of “public policy of India” said that it has not been defined in the Act and is vague and is likely to be interpreted widely or narrowly depending on the context in which it is being use.

The Amendment to the Arbitration and Conciliation Act, 1996 has also included Section 2A which provides for patent illegality which is an additional ground for setting aside an arbitral award. The concept of public policy implies matters which are of common good to the people and in the interest of people. The notion as to what constitutes common good for people or what is in interest of people and what is harmful or injurious to the common people has been a matter of debate and has differed at different times. But an award that is patently in violation of a statute or a statutory provision and can be inferred on the face of the award, such award cannot be said to be in the interest of the common people or for the good of the people. Moreover such an award would apparently have negative impact on the administration of justice and hence it can set aside as patently illegal if it is contrary to:

(I)       Fundamental policy of India

(II)     The interest of India.

(III)    Justice or morality.

(IV)    If it is patently illegal.

 The Supreme Court in Associate Builder’s v. Delhi Development Authority, 2015 AIR SC 620 has elaborated as to what constitutes patent illegality. According to the Court patent illegality shall include:

(I)       Fraud or corruption,

(II)     Contravention of substantive law.

(III)    Error of law by the arbitrator.

(IV)    Contravention of the Arbitration and Conciliation Act, 1996 itself.

(V)      The arbitrator fails to give consideration to the terms of the contract and usages of trade under section 28(3) of the Act.

(VI)    Arbitrator fails to give a reason for his decision.

Section 36 of the Arbitration Act deals with the enforcement of the arbitral award. By virtue of amendment in Section 36 carried vide Arbitration and Conciliation (Amendment) Act, 2015, the lacunae of automatic stay on presentation of application seeking setting aside of the award under section 34 has been removed by the amendment. Now, even during pendency of the petition under section 34 of the Act, application under section 36 will proceed until the Court in which application under section 34 specifically stay the award.

The Hon’ble Supreme Court in case title Sundaram Finance Limited V/S Abdul Samad & Anr., held that the enforcement of an award through its execution can be filed anywhere in the country where such decree can be executed and there is no requirement for obtaining a transfer of the decree from the Court, which would have jurisdiction over the arbitral proceedings.

Section 37 of the Act provides the remedy of appeal against certain orders passed by the Court or by the arbitral tribunal. Section 37 (3) further provides that 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.

The author is a practicing Advocate at Jammu.

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