THE INTERPLAY BETWEEN SECTION 34 AND 37 OF ARBITRATION AND CONCILLATION, ACT 1996
Arbitration is one among serval other alternative methods for dispute resolution. Arbitration can be described as process where the aggrieved parties comes together to reconcile their differences through an independent arbitrator which are appointed by the parties or by the courts as per the arbitration and conciliation act ,1996. After the completion of arbitral proceeding as per the act and procedure followed. Any of the aggrieved parties’ senses that there has been a jeopardy and prejudice done during the arbitral proceeding, so, what can the parties do? This article emphasis and encompass on the when can the arbitral award can be stayed by the higher judicial authorities and the limitation of the time limit given to the aggrieved party for filling such a suit under section 37 of arbitration and conciliation act, 1996, the interplay between section 34 and 37 of the arbitration and conciliation act, 1996.
Keywords: arbitral proceedings, arbitration, section 34, section 36, limitation, public policy.
SECTION 34 OF ARBITRATION AND CONCILLITION ACT, 1996.
As per the section 34 of the arbitration and conciliation act, 1996 which provides an invincible parachute to prejudice caused to the party or parties, against the specific order passed by the arbitrator during the arbitral proceeding. Section 34 provides the aggrieved party recourse against such award passed and subject to the furnishing of proof which would be at sufficient to proof ahead of reasonable doubt by such following way – (a) the arbitration agreement was invalid, (b) the subject matter of arbitration was non arbitrable as stated under section 9 of the arbitration and conciliation act,1996, (c) the parties where incompetent to arbitration, (d)the procedure followed for the arbitration was contrary to the public law and procedure, the arbitral award does not fall under ambit of subject matter of arbitration,(e) any award passed by the arbitrator which oppose the public policy of India.
As per the point (e) the term public policy which are stated under section 34 which have bought tremendous amount burden on the courts to literally interpret ‘public policy’. There are various judicial precedent which included the term and interpreted public policy, which was the Renusagar case , where the hon’ble court held that the term public policy had been interpreted as, any policy which is contrary to the, fundamental laws of the nation, violating the principle of natural justice of law and morality and the interest of India
the term ‘public policy’ became wider which was been observed in the case of Saw Mills, which amplified the term public policy into a new term patent illegality which could be understand any error of the awards which oppose to the law, the ground of patent illegality condition can also be used stay domestic award, but this led to various criticism as section 34 would trivialize the objective of the act ,as well, as arbitral proceeding and raises doubt on competency and the role of arbitral tribunal.
The judicial decision of Renusagar and saw mill case which laid down the guidelines were implemented under 246th law recommendation and subsequently led to the amendment of arbitration and conciliation act in 2015, which was amended on the sole objective, to minimize the judicial intervention by giving the primary focus that award can be set aside only basis of” fraud’ , otherwise not merely by passing merely an application under section 34.The amendment of arbitration act, 1996 in 2020 which also made the subject that any award which is obtained by the means of fraud can be stayed indefinitely.
The application of setting aside the award does generally come with limitation of time which is stated under section 34 is three months from the date of receipt of the award by the arbitrator, with the grace period of 30 days.
But the contradiction comes where it states the delivery and receipts could be termed as one?
While it has to be observed that the term ‘deemed receipt’ isn’t mentioned when the arbitral proceeding is been ‘rescinded’, but only stated hen the award receipt has been passed. Does this stipulate ‘deemed receipt’, is something when the amount or the appropriate direction given. The delivery of the copy of the award has the effect of conferring rights on one party and the said entitlement to exercise those rights ends with the expiry of the prescribed period of limitation which would be computed from that date. Hence, the delivery of the award is imperative in the arbitral proceedings, so the word delivered plays a very dynamic and vital importance in arbitration, so it also has to be focused that whether that word delivery has to be taken as date of receipt. This query was answered in the case of Union of India v. Tecco Trichy Engineers and Contractors where the court held that the limitation period shall only commence when the award receipt is delivered, but mere delivery won’t constitute the receipt of award.
When an award is delivered in the office on a non-working day, that would not constitute an that as period from limitation date.
But do section 34 jeopardizes the whole objective of the act which delays the completion of arbitration proceeding? it almost has been observed that after receipt of award which have been passed, majority of the stakeholder do file an appeal under section 34, as well as the judiciary has liberally interpreted section 34, than strict interpretation. Which subsequently delay the arbitration process and the finality reached for enforcing the award for arbitration.
Section 37 vis a vis section 34 of arbitration and conciliation act
The section 37 of the arbitration act states that any order passed under section 9,34,16 and 17 shall be appealable orders as per the section 37 of the arbitration and there shall not be any second appeal of the same order.
Wishlist which have been stated as any recourse undertaken under section 34, a party has to file within 30 days, after getting past that the appealable days, discretion confers to the court for condoning the delay with the appropriate reasonable reason given by party for such condonation. So, if the court does not permit the party for such condonation, what can shall the party can do?
As in the case of State of Himachal Pradesh v. Himachal Techno Engineers and Anr where the hon’ble court had observed that section 34 falls within the ambit of section 37 1(c)of arbitration act, as well as the section 37 language states that within the section 34 and does specify 34 subsection, which shows that the legislature intention towards the drafting of it.
Even in the case of Mafizuddin Bhuyan v. Alimuddin Bhuyan, where the court held that “any award which is dismissed on merits or filled beyond time shall be, and the courts refusing them to entertain, such awards are appealable under section 39 of the act.
From the foresaid precedents the supreme court eventually decided that refusal of condonation of delay would also become an appealable order section 37 and 39 of the arbitration acts, 1996
But what’s the limitation time under section 37for filling an appeal under arbitration act?
While the section 37 of the arbitration act have not prescribed by the limitation period of filling the suit under section on 37 but the judiciary subsequently developed in the recent judgement which overruled the Nv international, where it stated the limitation time was 90 days with grace of 30 days(120 days).
But recently which the hon’ble supreme court which had held that, the appeals filled under the commercial act is 60 days, which is not 90 days and was unnecessary for 90 days to file, as per the judgement the hon’ble court held the imperativeness of establishment of commercial courts act and arbitration act was for expeditious delivery of disposal of cases. So, the precedent set by the court is a delay beyond 90 days, 30 days or 60 days, respectively, is to be condoned by the exception.
Even though purpose of enactment of arbitration act was for less judicial intervention and expeditious disposal of cases, but pragmatically the judicial intervention via section 34 , which trivializes the arbitral proceedings and raises the question upon the competency of the arbitral tribunal which is constituted, by unnecessary delay of enforcing the final receipt of award by giving various interpretation to the section till the extent and has encompass over the judicial proceeding, while the ruling of Nv international was the optimistic move by hon’ble court towards the process of arbitration, as well as in the current situation with the ongoing pandemic which and reopening of the economy ,which would definitely would bring numerous of cases and majority of cases would be pragmatically disposed through arbitration and other various methods but those methods can be only achieved by minimal judicial intervention.