Matters cannot be remanded to arbitrator for fresh decision

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The Supreme Court recently held that a court, while deciding a section 34 petition under the Arbitration and Conciliation Act, 1996, has no jurisdiction to remand the matter to an arbitrator for a fresh decision.

In Radha Chemicals v Union of India, an award was passed by a sole arbitrator against which an application under section 34 of the 1996 act was filed before Calcutta High Court to set aside the award. After examining the facts, the single judge of the high court held that the point of limitation had been decided incorrectly and therefore remanded the matter to the sole arbitrator to decide the point of limitation afresh. Because the whereabouts of the original arbitrator was unknown, the high court directed the appointment of a new arbitrator to decide the matter afresh. An appeal against the order was dismissed by the division bench of the high court.

While hearing the appeal, the Supreme Court set aside judgments of the single bench and division bench, and held that a challenge to the award was set up under section 34 of the act regarding the deficiencies in an arbitral award, which may be cured by allowing the arbitral tribunal to take measures for eliminating the grounds for setting aside an arbitral award. No power has been invested by the Parliament in the court to refer the matter to the arbitral tribunal except to adjourn proceedings for the limited purpose mentioned in sub-section 4 of section 34 of the act.

The court relegated the matter to the original stage of the section 34 petition and referred the matter to a single judge to decide on limitation as per the provisions of the act.

The dispute digest is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.