Court U/Sec 34 Arbitration Act Can Remand Matter To Arbitrator For Fresh Decision If Both Parties Consented: Supreme Court

The Supreme Court observed that the principle that a 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 is applicable only when the said petition is decided on merits.

This principle is inapplicable when both the parties agreed to set aside the award and to remit the matter to the Arbitrator for fresh reasoned Award, the bench comprising Justice MR Shah and BV Nagarathna observed. The court added that even in a case where the award is set aside on whatever the grounds, the parties can still agree for the fresh arbitration may be by the same arbitrator. 

A party challenged an Arbitration award before the single bench of the Bombay High Court under Section 34 of the Arbitration and Conciliation Act, 1996. The court, by consent set aside the award and remanded the matter to the Sole Arbitrator to pass a fresh reasoned award. The court later dismissed the application seeking modification of the said order in which the party contended that the consent had not been accorded for the matter being sent to the same Sole Arbitrator. Later, the single bench dismissed the review petition in which the petitioner raised the same contention. The Division bench upheld these orders.

In appeal before the Apex Court, the party relied on decisions viz Kinnari Mullick and Anr. vs. Ghanshyam Das Damani, (2018) 11 SCC 328; Dyna Technologies Private Limited vs. Crompton Greaves Limited, 2019 SCC OnLine SC 1656; IPay Clearing Services Private Limited Versus ICICI Bank Limited, 2022 SCC OnLine SC 4 : 2022 LiveLaw (SC) 2 to contend that in exercise of powers under Section 34 of the Act the Appellate Court cannot set aside the award on the ground that no reasons have been assigned and the matter cannot be remanded to the same Arbitrator to give reasons.

The Apex Court bench noted that the single judge had passed a consent order and the parties had agreed to set aside the award and remand the matter to the Sole Arbitrator for a fresh reasoned award. Therefore, the decisions relied upon shall not be applicable and/or be of any assistance, the court said. While dismissing the appeal, the bench observed:

"The principle of law laid down by this Court in the aforesaid decisions would be applicable where the Appellate Court decides the application under Section 34 of the Act on merits. It is to be noted that even in a case where the award is set aside under Section 34 of the Act on whatever the grounds which may be available under Section 34 of the Act, in that case the parties can still agree for the fresh arbitration may be by the same arbitrator. In the present case both the parties agreed to set aside the award and to remit the matter to the learned Sole Arbitrator for fresh reasoned Award. Therefore, once the order was passed by the learned Single Judge on consent, thereafter it was not open for the petitioner to contend that the matter may not be and/or ought not to have been remanded to the same sole arbitrator."

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