2022 Supreme(SC) 2

SUPREME COURT OF INDIA
(From the High Court of Judicature at Bombay)
R. SUBHASH REDDY, HRISHIKESH ROY, JJ.
I-Pay Clearing Services Private Limited – Appellant
Versus
ICICI Bank Limited – Respondent
Civil Appeal No. 7 of 2022, S.L.P. (C) No. 24278 of 2019
Decided On : 03-01-2022

IMPORTANT POINT
Challenge to Arbitral Award – Under guise of additional reasons and filling up gaps in reasoning, no award can be remitted to Arbitrator, where there are no findings on contentious issues in award – Under guise of either additional reasons or filling up gaps in reasoning, power conferred on Court cannot be relegated to Arbitrator.

Headnote:

(A) Arbitration and Conciliation Act, 1996 – Section 34 – Challenge to Arbitral Award of Sole Arbitrator – Dispute arising for termination of Service Provider Agreement by Respondent – Section 34(4) of Act, can be resorted to record reasons on finding already given in award or to fill up gaps in reasoning of award – There is a difference between ‘finding’ and ‘reasons’ – Finding is a decision on an issue’ – It is discretion vested with Court for remitting matter to Arbitral Tribunal to give an opportunity to resume proceedings or not – When application is filed under Section 34(4) of Act, same is to be considered keeping in mind grounds raised in application under Section 34(1) of Act by party, who has questioned award of Arbitral Tribunal and grounds raised in application filed under Section 34(4) of Act and reply thereto – Merely because an application is filed under Section 34(4) of Act by a party, it is not always obligatory on part of Court to remit the matter to Arbitral Tribunal – Discretionary power conferred under Section 34(4) of the Act, is to be exercised where there is inadequate reasoning or to fill up gaps in reasoning, in support of findings which are already recorded in award – Under guise of additional reasons and filling up gaps in reasoning, no award can be remitted to Arbitrator, where there are no findings on contentious issues in award – If there are no findings on contentious issues in award or if any findings are recorded ignoring material evidence on record, same are acceptable grounds for setting aside award itself – Under guise of either additional reasons or filling up gaps in reasoning, power conferred on Court cannot be relegated to Arbitrator – In absence of any finding on contentious issue, no amount of reasons can cure defect in award. (Paras 20 and 21)

(B) Arbitration and Conciliation Act, 1996 – Sections 31, 34(1), 34(2A) and 34(4) – Challenge to Arbitral Award of Sole Arbitrator – Dispute arising for termination of Service Provider Agreement by Respondent – In appropriate cases, on request made by a party, Court can give an opportunity to Arbitrator to resume arbitral proceedings for giving reasons or to fill up gaps in reasoning in support of a finding, which is already rendered in award – But, when it prima facie appears that there is a patent illegality in award itself, by not recording a finding on a contentious issue, in such cases, Court may not accede to request of a party for giving an opportunity to Arbitral Tribunal to resume arbitral proceedings – On the plea of ‘accord and satisfaction’ on further consideration of evidence, which is ignored earlier, even if arbitral tribunal wants to consciously hold that there was ‘accord and satisfaction’ between parties, it cannot do so by altering award itself, which he has already passed – Impugned order passed by High Court upheld. (Paras 21 and 22)

Facts of the case:

By impugned order, the Notice of Motion moved by appellant for remitting the matter to the Sole Arbitrator under Section 34(4) of the Act, has been rejected. It is the case of the appellant that though Arbitrator has awarded compensation/damages in view of the case of the appellant that the contract between parties was illegally and abruptly terminated by respondent, but he has not recorded detailed reasons on said point. High Court was of the view that the defect in award is not curable, as such, there is no merit in application filed by the appellant under Section 34(4) of the Act and dismissed the same.

Findings of Court:

In absence of any finding on point no.1, as pleaded by the respondent and further, it is their case that relevant material produced before Arbitrator to prove ‘accord and satisfaction’ between parties, is not considered, and the same amounts to patent illegality, such aspects are to be considered by Court itself.

Result : Appeal dismissed.