Home » I-Pay Clearing Services Private Limited v. ICICI Bank Limited

I-Pay Clearing Services Private Limited v. ICICI Bank Limited

Arbitration and Conciliation Act, 1996 – Section 34 (4) of the Act, can be resorted to record reasons on the finding already given in the award or to fill up the gaps in the reasoning of the award.

Section 34(4) of the Act itself makes it clear that it is the discretion vested with the Court for remitting the matter to Arbitral Tribunal to give an opportunity to resume the proceedings or not. The words “where it is appropriate” itself indicate that it is the discretion to be exercised by the Court, to remit the matter when requested by a party. When application is filed under Section 34(4) of the Act, the same is to be considered keeping in mind the grounds raised in the application under Section 34(1) of the Act by the party, who has questioned the award of the Arbitral Tribunal and the grounds raised in the application filed under Section 34(4) of the Act and the reply thereto. Merely because an application is filed under Section 34(4) of the Act by a party, it is not always obligatory on the part of the Court to remit the matter to Arbitral Tribunal. The discretionary power conferred under Section 34(4) of the Act, is to be exercised where there is inadequate reasoning or to fill up the gaps in the reasoning, in support of the findings which are already recorded in the award.

Arbitration and Conciliation Act, 1996 – Section 34 (4) – Under guise of additional reasons and filling up the gaps in the reasoning, no award can be remitted to the Arbitrator, where there are no findings on the contentious issues in the award.

If there are no findings on the contentious issues in the award or if any findings are recorded ignoring the material evidence on record, the same are acceptable grounds for setting aside the award itself. Under guise of either additional reasons or filling up the gaps in the reasoning, the power conferred on the Court cannot be relegated to the Arbitrator. In absence of any finding on contentious issue, no amount of reasons can cure the defect in the award. A harmonious reading of Section 31, 34(1), 34(2A) and 34(4) of the Arbitration and Conciliation Act, 1996, make it clear that in appropriate cases, on the request made by a party, Court can give an opportunity to the arbitrator to resume the arbitral proceedings for giving reasons or to fill up the gaps in the reasoning in support of a finding, which is already rendered in the award. But at the same time, when it prima facie appears that there is a patent illegality in the award itself, by not recording a finding on a contentious issue, in such cases, Court may not accede to the request of a party for giving an opportunity to the Arbitral Tribunal to resume the arbitral proceedings.

Arbitration and Conciliation Act, 1996 – On the plea of ‘accord and satisfaction’ on further consideration of evidence, which is ignored earlier, even if the arbitral tribunal wants to consciously hold that there was ‘accord and satisfaction’ between the parties, it cannot do so by altering the award itself, which he has already passed.

The learned Arbitrator has framed five points for determination and Point No.1 was, “Whether the contract was illegally and abruptly terminated by the respondent?”. It is the case of the appellant that though the Arbitrator has awarded compensation/damages in view of the case of the appellant that the contract between the parties was illegally and abruptly terminated by the respondent, but he has not recorded detailed reasons on the said point. It is the case of the respondent that there was accord and satisfaction between the parties and the contractual obligations between the parties was closed mutually and amicably. In the impugned order, the High Court has prima facie found that unless and until a finding is recorded on point no.1 first, the learned Arbitrator could not have proceeded to record findings on the claims made by the appellant, as such, the learned Arbitrator has committed jurisdictional error. The High Court was of the view that the defect in the award is not curable, as such, there is no merit in the application filed by the appellant under Section 34(4) of the Act and dismissed the same. Court does not find any merit in this appeal so as to interfere with the impugned order passed by the High Court. Accordingly, this Civil Appeal is dismissed, with no order as to costs.

Differentiate between ‘findings’ and ‘reasons’. 

Finding is a decision on an issue. Reasons are the links between the materials on which certain conclusions are based and the actual conclusions.

Case Law Reference

  1. Dyna Technologies Pvt. Ltd. v. Crompton Greaves Ltd., (2019) SCC Online SC 1656
  2. Kinnari Mullick v. Ghanshyam Das Damani, (2018) 11 SCC 328
  3. J. Ashoka v. University of Agricultural Sciences, (2017) 2 SCC 609
  4. AKN v. ALC, (2015) SGCA 63
  5. Som Datt Builders Ltd. v. State of Kerala, (2009) 10 SCC 259
  6. Permasteelisa Pacific Holdings Ltd. v. Hyundai Engineering & Construction Co. Ltd., (2005) SGHC 33
  7. Income Tax Officer, A Ward, Sitapur v. Murlidhar Bhagwan Das, AIR 1965 SC 342

Case Number : CIVIL APPEAL NO. 7 OF 2022 [arising out of S.L.P.(C) No.24278 of 2019]

Hon’ble Mr. Justice R. Subhash Reddy pronounced the reportable Judgment of the Bench comprising His Lordship and Hon’ble Mr. Justice Hrishikesh Roy.

For Petitioner(s) Mr. Yudhveer Singh Rawal, Adv. Mr. Prithu Garg, AOR For Respondent(s) Mr. K. V. Vishwanathan, Sr. Adv. Mr. Sameer Parekh, AOR Mr. Sumit Goel, Adv. Ms. Sonal Gupta, Adv. Ms. Sreepama Basak, Adv. Mr. Raghav Bansal, Adv. Mr. R. Venkataraman, Adv. Mr. Chanakya Dwivedi, Adv. M/S. Parekh & Co., AOR

Case Link : https://pdf.caselaw.in/sc/2022/01/1091/

Click to rate this post!
[Total: 0 Average: 0]