A Court Deciding ‘Section 34’ Petition Has No Jurisdiction To Remand The Matter To Arbitrator For Fresh Decision, Reiterates SC [Read Order]

The Supreme Court has reiterated that the court while deciding a petition under Section 34 of the Arbitration and Conciliation Act has no jurisdiction to remand the matter to the arbitrator for a fresh decision.

The bench comprising Justice Rohinton Fali Nariman and Justice Navin Sinha set aside a Calcutta High Court order that remanded the matter to the arbitrator in order to decide the point of limitation afresh. The division bench of the high court had affirmed the single bench order of remand.

The apex court bench set aside both the judgments and relegated the matter to the stage of the original Section 34 petition before the single judge. The court said the said petition has to be heard, on its merits in accordance with the parameters laid down by the apex court, including that in Kinnari Mullick vs. Ghanshyam Das Damani.

It observed: “This Court in a series of judgments culminating in Kinnari Mullick and Another vs. Ghanshyam Das Damani, (2018) 11 SCC 328 held that the court while deciding a Section 34 petition has no jurisdiction to remand the matter to the Arbitrator for a fresh decision. It is, therefore, clear that the learned Single Judge’s judgment is contrary to this judgment as a result of which both the judgments of the Single Judge as well as the Division Bench have to be set aside.”

The judgment by a three-judge bench in Kinnari Mullick had also arisen from a Calcutta High Court judgment. It was held that the limited discretion available to the court under Section 34(4) can be exercised only upon a written application made in that behalf by a party to the arbitration proceedings and the court cannot exercise this limited power of deferring the proceedings before it suo motu.

“Moreover, before formally setting aside the award, if the party to the arbitration proceedings fails to request the Court to defer the proceedings pending before it, then it is not open to the party to move an application under Section 34(4) of the Act. For, consequent to disposal of the main proceedings under Section 34 of the Act by the Court, it would become functus officio. In other words, the limited remedy available under Section 34(4) is required to be invoked by the party to the arbitral proceedings before the award is set aside by the Court,” the bench had held.