ADR NOTES

Section 34: Application for Setting Aside Arbitral Award

1. Scope and Nature of Recourse

The remedy provided under Section 34 is the only recourse available to a party seeking to
challenge an arbitral award.

• Non-Appellate Jurisdiction: The Court exercising power under Section 34 does not
sit in appeal over the arbitral award. Intervention is limited strictly to the grounds
enumerated in Sub-sections (2) and (2A).

• Summary Proceedings: Applications under Section 34 are considered summary

proceedings.

• Court's Power Limited: The Court cannot modify or correct the errors of the
arbitrator. It can only either set aside the award (wholly or partially if separable) or
uphold the award.

2. Grounds for Setting Aside (Section 34(2))

The Court may set aside an arbitral award if the party making the application furnishes proof
(or, post-2015 amendment, establishes based on the record of the arbitral tribunal) of
certain procedural or jurisdictional defects:

A. Defects related to Party Capacity, Agreement, or Procedure (Section 34(2)(a))

The party must furnish proof that:

• Incapacity or Invalid Agreement: A party was under some incapacity, or the

arbitration agreement is invalid under the law to which the parties subjected it.

• Due Process Violation: The applicant was not given proper notice of the arbitrator's
appointment or of the proceedings, or was otherwise unable to present his case.

o Landmark Example: An award was set aside for violation of the principles of
natural justice and lack of full opportunity to present a case, impeding a fair
decision (Narinder Singh & Sons vs. Union of India).
 • Scope of Submission: The award deals with a dispute not contemplated by or not
falling within the terms of submission to arbitration, or contains decisions on
matters beyond the scope of submission.

o Proviso on Severability: If the decisions on matters submitted can be separated

from those not submitted, only that part of the award may be set aside.

• Composition/Procedure Irregularity: The composition of the Arbitral Tribunal or

the procedure followed was not in accordance with the agreement of the parties.

B. Conflict with Law or Public Policy (Section 34(2)(b))

The Court finds that:

• Non-Arbitrable Subject Matter: The subject matter of the dispute is not capable of
settlement by arbitration under the law.

• Conflict with Public Policy of India: The award is in conflict with the public policy
of India.

Definition of "Public Policy of India" (Explanation 1):

An award conflicts with public policy only if:

1. Fraud/Corruption: The making of the award was induced or affected by fraud or

corruption or was in violation of Section 75 or 81.

2. Fundamental Policy of Indian Law: It is in contravention of the fundamental policy

of Indian law.

3. Morality or Justice: It is in conflict with the most basic notions of morality or

justice.

• Key Clarification (Explanation 2): The test for contravention of the fundamental
policy of Indian law shall not entail a review of the merits of the dispute.

• Landmark Case: In Oil and Natural Gas Corporation Ltd. vs. Saw Pipes Ltd. (2003),
the Supreme Court held that the phrase 'public policy of India' must be given a wider
meaning and includes awards that are patently illegal or so unfair and unreasonable
that they shock the conscience of the court.
 • Limiting Interference: In Associate Builders vs. Delhi Development Authority
(2015), the Court emphasized that interference is only justified if the arbitrator's
findings are arbitrary, capricious or perverse, or the illegality goes to the root of the
matter.

3. Patent Illegality (Section 34(2A)) (Post-2015 Amendment)

This ground applies specifically to domestic arbitrations (other than international

commercial arbitrations):

• Ground: The award may be set aside if the Court finds it is vitiated by patent
illegality appearing on the face of the award.

• Limitation: An award shall not be set aside merely on the ground of an erroneous
application of the law or by re-appreciation of evidence.

• Interpretation of Contract: The construction of the terms of a contract is primarily

for the arbitrator; an award can only be set aside if the interpretation is one that no
fair-minded and reasonable person would take.

• Perversity and Evidence: A perverse finding, or one based on no evidence at all, or

one that ignores vital evidence, qualifies as patent illegality.

o Landmark Case: In Ssangyong Engineering & Construction Co. Ltd. vs.

NHAI (2019), the Supreme Court confirmed that a perverse decision amounts
to patent illegality appearing on the face of the award.

4. Limitation for Filing an Application (Section 34(3))

Strict timelines apply to challenging an award:

• Initial Period: The application must be made not later than three months from the
date the party received the arbitral award.

• Extension (Condonable Period): The Court may entertain the application within a
further period of thirty days if the applicant shows sufficient cause for the delay,
but not thereafter.

o Strict Rule: Section 5 of the Limitation Act, 1963, is not applicable to condone
delay beyond the 30-day grace period.
 • Effect of Section 33 Request: If a request for correction or interpretation under
Section 33 was made, the limitation period starts from the date that request was
disposed of by the tribunal.

o Caution: If the Section 33 application itself was filed beyond the prescribed 30-
day period under Section 33(1), it will not extend the limitation under Section
34(3).

• Applicability of Limitation Act Sections:

o Section 14 (Exclusion of time): Applies to Section 34 proceedings, allowing the

exclusion of time spent prosecuting proceedings bona fide in a court lacking
jurisdiction.

o Section 4 (Court Closure): Applies to the initial three-month period under

Section 34(3).

▪ Landmark Case: In My Preferred Transformation & Hospitality (P) Ltd.

v. Faridabad Implements (P) Ltd. (2025), the Supreme Court confirmed
that Section 4 of the Limitation Act applies to Section 34(3).

5. Procedural Aspects

A. Application for Remission/Adjournment (Section 34(4))

• The Court may, if appropriate and requested by a party, adjourn the proceedings to
give the arbitral tribunal an opportunity to resume the proceedings or take action to
eliminate the grounds for setting aside the award.

• Limited Scope of Remand: The Court has not been invested with the power to
remand the matter to the arbitral tribunal for a fresh decision, except for this limited
purpose mentioned in Section 34(4).

o Landmark Case: Kinnari Mullick & Anr. vs. Ghanshyam Das Damani
(2018) clarified that the power to remand is limited to adjournment under
Section 34(4) to facilitate the removal of technical grounds.

B. Notice Requirement (Section 34(5))

• An application under Section 34 shall be filed by a party only after issuing a prior
notice to the other party, accompanied by an affidavit confirming compliance.
 • Mandatory vs. Directory: This requirement is considered directory and not
mandatory.

o Landmark Case: State of Bihar & Ors. vs. Bihar Rajya Bhumi Vikas Bank
Samiti (2018) held that the requirement of prior notice and affidavit under
Section 34(5) is directory.

C. Disposal Timeline (Section 34(6))

• An application under Section 34 shall be disposed of expeditiously, and in any

event, within one year from the date on which the notice referred to in sub-section
(5) is served upon the other party.

6. Challenging an Award on Jurisdictional Grounds

• Plea of Jurisdiction: The ground of lack of jurisdiction can be raised in an

application under Section 34 even if no objection was raised under Section 16 before
the Arbitral Tribunal.

• Third Parties: A person who is not a party to the arbitration agreement but is
wrongly impleaded in the arbitral proceedings and is aggrieved by an adverse order
against them in the award, can invoke Section 34.

7. Post-Challenge Enforcement (Section 36)

The filing of an application under Section 34 does not, by itself, render the award
unenforceable (post-2015 amendment).

• Enforcement (Section 36) commences only when the time for setting aside the award
expires, unless the Court grants a stay order under Section 36(3).

• When considering an application for stay, the Court must have due regard to the
provisions for staying a money decree under the Code of Civil Procedure, 1908.

• The Arbitration Act is a self-contained code, and enforcement decisions should not be
influenced by the position (e.g., government vs. private) of the party before it.
I. Party Autonomy (Consent and Freedom of Parties)

Party Autonomy is a central pillar of the Act, which grants parties significant freedom to
structure their dispute resolution process, summarized primarily under Sections 7, 19, and 20.

A. Definition and Scope of Agreement (Section 7)

The arbitration process relies fundamentally on the existence of a valid, written arbitration
agreement:

1. Form and Writing Requirement: An arbitration agreement must be in writing. It

may be contained in an arbitration clause within a contract or in a separate agreement.
It is considered in writing if contained in:

o A document signed by the parties.

o An exchange of letters, telex, telegrams, or other telecommunication means

(including electronic means) which provides a record of the agreement.

o An exchange of statements of claim and defense where the existence of the

agreement is alleged by one party and not denied by the other.

2. Incorporation by Reference: Reference in a contract to a document containing an

arbitration clause constitutes an arbitration agreement if the contract is in writing and
the reference makes that clause part of the contract.

o Case Law: In a "two-contract case," a specific reference to the arbitration

clause is required for incorporation in the main contract; in a "single contract
case," a general reference to the standard form contract may suffice.

3. Binding Non-Signatories (Group of Companies Doctrine): While formal

signatories are bound, in exceptional cases, non-signatories may also be held bound
by the arbitration agreement. This determination relies on typical principles of
Contract Law and Corporate Law.

o Corporate Veil: The doctrine of "alter ego" or piercing the corporate veil may
be applied where a holding company completely dominates a subsidiary to
avoid liability, treating them as a single entity.

o Conduct/Relationship: A non-signatory may intend to be bound through its

conduct or relationship with the signatory.
 o LLPs: In Limited Liability Partnerships, the LLP itself may be a necessary
party to the arbitration regarding the LLP’s operations and governance, even if
it is not a signatory to the LLP agreement.

B. Procedural Freedom (Unless Otherwise Agreed)

The principle of party autonomy is enshrined by the phrase "unless otherwise agreed by the
parties," which appears throughout the Act:

1. Procedure Determination (Section 19): Parties are free to agree on the procedure
to be followed by the arbitral tribunal in conducting its proceedings.

2. Inapplicability of CPC/Evidence Act: Failing agreement between the parties, the

arbitral tribunal is explicitly not bound by the Code of Civil Procedure, 1908, or
the Indian Evidence Act, 1872. The tribunal determines the admissibility, relevance,
materiality, and weight of evidence.

3. Place and Language (Section 20 & 22): The parties are free to agree on the place
(or seat) of arbitration. They are also free to agree upon the language(s) to be used.

4. Arbitrator Appointment (Section 11): Parties are free to determine the number of
arbitrators (which must not be an even number) and the procedure for their
appointment.

5. Commencement (Section 21): Arbitral proceedings commence on the date the

request for the dispute to be referred to arbitration is received by the respondent,
unless otherwise agreed by the parties.

C. Limits on Autonomy and Waiver (Section 4)

Party autonomy is subject to certain limitations, including the concept of waiver:

1. Waiver of Right to Object (Section 4): A party shall be deemed to have waived
their right to object if they knew that a non-mandatory provision of Part I or a
requirement under the arbitration agreement had not been complied with, yet
proceeded with the arbitration without stating an objection without undue delay.

2. Limits of Waiver: The principle of waiver does not apply if there is an absence of an
arbitration agreement, if the clause is void/voidable, if the tribunal inherently lacked
 jurisdiction (action in rem), or where a mandatory provision of law was not complied
with.

3. Mandatory Rules: Notwithstanding any prior agreement, specific persons falling

under the Seventh Schedule are ineligible to be appointed as arbitrators (Section
12(5)). The party must expressly agree to waive this disqualification in writing
subsequent to the dispute arising.

4. Constitutional Constraint: An arbitration clause must be in consonance with the

Grundnorm (the Constitution), and unilateral appointment clauses in public-private
contracts may violate Article 14.

II. Arbitrability of Disputes

Arbitrability determines whether a dispute can legally be resolved through arbitration rather
than being reserved exclusively for public courts or specialized tribunals.

A. Statutory Basis and General Principles

1. Arbitral Subject Matter: An arbitral award may be set aside by the Court if it finds
that the subject matter of the dispute is not capable of settlement by arbitration
under the law for the time being in force (Section 34(2)(b)(i)).

2. Action in Personam vs. Action in Rem: Arbitrability often hinges on whether the
dispute constitutes an action in personam or an action in rem:

o Action in Personam: Determines the rights and interests of the parties

involved in the dispute (e.g., contractual rights, specific performance of a
contract). These are generally arbitrable.

o Action in Rem: Determines rights exercisable against the world at large and
creates a legal status (e.g., property title, winding up). These are reserved for
Courts or Statutory Tribunals and are generally non-arbitrable.
B. Matters Deemed Non-Arbitrable (Action in Rem or Statutory Protection)

The Supreme Court has enumerated categories of disputes typically considered non-
arbitrable:

• Disputes relating to criminal offense.

• Matrimonial disputes (divorce, maintenance).

• Guardianship matters.

• Insolvency and winding up matters.

• Testamentary matters.

• Eviction or tenancy matters.

• Suit for enforcement of mortgage by sale of property.

• Intellectual Property Disputes.

• Disputes relating to trusts, trustees and beneficiaries arising out of the Indian Trusts
Act, 1882.

• Disputes falling exclusively within the jurisdiction of statutory authorities, such as

wages and termination under the Payment of Wages Act, 1936, and the Industrial
Disputes Act, 1947.

• Disputes requiring the determination of tax liability (e.g., excise duty rates).

C. Arbitrability of Fraud

The arbitrability of disputes involving fraud is subject to judicial scrutiny based on the nature
of the allegations:

• Simple Allegations: Claims involving "simple allegations" of fraud, such as

siphoning of funds or relating to the internal affairs of a partnership, are generally
arbitrable.

• Serious Allegations: Arbitration should be rejected only if the allegations of fraud are
so serious and complicated that they:

1. Permeate the entire contract, rendering the arbitration agreement void; or

2. Have implications in the public domain.

D. Arbitrability and Specialized Statutes

The existence of special statutory remedies impacts arbitrability:

• Consumer Protection Act: Disputes under the Consumer Protection Act are
measures of public policy and are generally kept away from a private forum like
arbitration. However, the law gives the consumer a choice to pursue a remedy under
the Consumer Protection Act or opt for arbitration. If the consumer does not opt for
the special remedy, the disputes can proceed to arbitration.

• MSMED Act, 2006: Chapter V of the MSMED Act overrides the provisions of the
Arbitration Act. A party is not precluded from referring disputes regarding amounts
due under the MSMED Act to the Micro and Small Enterprises Facilitation Council,
even if an independent arbitration agreement exists.

E. The Doctrine of Kompetenz-Kompetenz (Tribunal Autonomy)

This German doctrine grants the arbitral tribunal the inherent power to determine its own
jurisdiction, a concept essential to the autonomy of the arbitral process (Section 16).

1. Scope of Ruling (Section 16): The Arbitral Tribunal has the power to rule on its own
jurisdiction, including objections regarding the existence or validity of the
arbitration agreement.

2. Separability: The arbitration clause is treated as an agreement independent of the

other terms of the contract (Principle of Separability). Consequently, a decision that
the main contract is null and void does not automatically invalidate the arbitration
clause.

3. Waiver/Timing of Objection: A party can raise a plea concerning jurisdiction no

later than the submission of the statement of defense, even if that party participated in
the appointment of the arbitrator.

4. Court's Pre-referral Role (Section 11/8): While the tribunal rules on jurisdiction
(Section 16), the Court, at the pre-referral stage (Section 8 or 11), conducts a limited
inquiry confined primarily to the prima facie existence of a valid arbitration
agreement. However, the Court may intervene to reject claims that are ex facie time-
barred and dead. Issues requiring a detailed examination of evidence should be
referred to the arbitrator.
I. Section 2: Definitions

Section 2 provides the critical definitions that govern the interpretation and application of the
entire Act.

1. Key Definitions (Section 2(1))

Definition Provision Details

Means any arbitration whether or not administered by a

"Arbitration" Sec. 2(a)
permanent arbitral institution.

"Arbitral Sec. 2(1)(ca) Means an arbitral institution designated by the Supreme

Institution" (Post-2019) Court or a High Court under the Act.

Includes an interim award. An award must be final,

"Arbitral
Sec. 2(c) certain, consistent and possible and must decide the
Award"
matters submitted.

"Arbitral Means a sole arbitrator or a panel of arbitrators. The

Sec. 2(1)(d)
Tribunal" number of arbitrators shall not be an even number.

"Party" Sec. 2(1)(h) Means a party to an arbitration agreement.

2. Definition of "Court" (Section 2(1)(e))

This definition is crucial as it determines which judicial authority has the power to exercise
supervisory jurisdiction (e.g., under Section 34).

• Domestic Arbitration (Other than International Commercial Arbitration): The

"Court" means the Principal Civil Court of original jurisdiction in a district,
including the High Court exercising its ordinary original civil jurisdiction. It does
not include any Civil Court of a grade inferior to the principal Civil Court, or any
Court of Small Causes.

o Case Law: The Bombay High Court held that the Court of Civil Judge, Senior
Division, cannot be considered a Court under Section 2(1)(e) to entertain
and decide proceedings under Section 34 of the 1996 Act (Prakash Askram
Jain vs. State of Maharashtra).
 • International Commercial Arbitration: The "Court" means the High Court in
exercise of its ordinary original civil jurisdiction, or a High Court having jurisdiction
to hear appeals from decrees of courts subordinate to that High Court.

• Jurisdiction based on Seat: If the parties have chosen a seat of arbitration, that
location grants exclusive jurisdiction to the courts there. Merely because a part of the
cause of action arose elsewhere is irrelevant. For instance, if the venue is fixed in
New Delhi/Faridabad, and the proceedings were finally held and awards signed in
New Delhi, New Delhi is the seat and has exclusive jurisdiction (BGS, SGS Soma JV
vs. NHPC Ltd.).

II. Section 3: Receipt of Written Communications

Section 3 governs how written communications are delivered and deemed received, ensuring
proper notice throughout the arbitral process.

1. Deemed Receipt: A written communication is deemed to have been received on the

day it is delivered to the addressee personally, or at their place of business, habitual
residence, or mailing address.

2. Unsuccessful Delivery: If the addressee is not found after reasonable inquiry, the
communication is deemed received if it is sent to the addressee's last known place of
business, habitual residence, or mailing address by registered letter or by any other
means which provides a record of the attempt to deliver it.

3. Electronic Service: The Delhi High Court held that service of a petition delivered via
a WhatsApp number and email address specified in the agreement between the
parties constitutes valid service of the petition, especially when confirmed by an
affidavit of service (Lease Plan India Pvt Ltd v. Rudraksh Pharma Distributor).

III. Section 5: Extent of Judicial Intervention

Section 5 embodies one of the most critical principles of the 1996 Act: minimizing court
interference in arbitration proceedings.

1. The Core Principle: Section 5 states that "Notwithstanding anything contained in

any other law for the time being in force, in matters governed by this part, no
judicial authority shall intervene except where so provided in this part".

2. Purpose: This provision is a salient feature of the Act, deliberately restricting the
exercise of judicial power to maintain a balance between restricting the judiciary
and achieving speedy justice.

3. Specific Intervention Points: Judicial intervention is permitted only when

specifically provided for in Part I, such as under Sections 8, 9, 11, 14, 15, 27, 29-A,
34, 36, 37, 39, 41, and 43.

4. Judicial Authority: The term "judicial authority" refers to Courts as defined under
Section 2(1)(e), and may include separate tribunals like the Consumer forum (S.P.B&
Co Vs. Patel Engineering).

5. Limits of Application: The Supreme Court noted that this section is inapplicable in
the absence of the arbitration agreement itself (Municipal Corporation of Greater
Mumbai vs. Pratibha Industries Limited). Courts generally ought not to interfere with
arbitral proceedings, especially until an award is passed (Narsi Creation Pvt Ltd vs.
State of Uttar Pradesh).

IV. Section 8: Power to Refer Parties to Arbitration (First Statement)

Section 8 governs the authority of a judicial body to compel parties in a pending action to
resort to their arbitration agreement.

1. Mandatory Referral Obligation (Section 8(1))

The judicial authority shall refer the parties to arbitration if the following conditions are met:

• Action Brought: An action is brought before a judicial authority concerning a matter

that is the subject of an arbitration agreement.

• Party Application: A party applies for referral (or any person claiming through or
under them).
 • Mandatory Timing: The application must be made not later than the date of
submitting his first statement on the substance of the dispute.

• Prima Facie Existence: The referral is mandatory unless the judicial authority finds
that prima facie no valid arbitration agreement exists.

2. Interpretation of "First Statement on the Substance of the Dispute"

• The phrase "first statement on the substance of the dispute" must be distinguished
from a mere "written statement".

• It implies a submission by the party to the jurisdiction of the judicial authority.

• If this first statement is filed, the application under Section 8 is wholly

unmaintainable.

• For example, merely moving an application seeking time to file a written statement
would not constitute the first statement on the substance of the dispute, nor would
filing a reply to an interim injunction application.

3. Limited Judicial Inquiry and Scope

• Scope is Narrow: Under the amended Section 8(1), a judicial authority must confine
its scope to the existence of a valid arbitration agreement. It is not allowed to go
into the merits of the dispute.

• Entire Subject Matter: The suit must be in respect of "a matter" which the parties
have agreed to refer. If the suit relates to matters outside the arbitration agreement
or involves parties not subject to the arbitration agreement, Section 8 is
inapplicable.

• Appealability: An order passed by a Judicial Authority under Section 8 refusing to

refer the parties to arbitration is appealable under Section 37(1)(a). Conversely, an
order referring the parties to arbitration under Section 8 is not appealable under
Section 37.

4. Non-Mandatory Requirement
The judicial authority or the Court has no suo moto jurisdiction to refer the disputes to
arbitration; an application under Section 8 is mandatory.

I. Section 9: Interim Measures by Court

Section 9 grants the Court the power to provide interim measures of protection related to the
arbitration agreement.

1. Timing and Applicability

A party may apply to the Court for interim measures:

• Before or during the arbitral proceedings.

• Any time after the making of the arbitral award, but before it is enforced in
accordance with Section 36.

2. Scope of Interim Measures

The Court may grant various interim measures of protection, including orders for:

• Appointment of a guardian for a minor or person of unsound mind.

• Preservation, interim custody, or sale of any goods which are the subject-matter of
the arbitration agreement.

• Securing the amount in dispute in the arbitration.

• Detention, preservation, or inspection of any property or thing which is the subject-

matter of the arbitration agreement.

• Interim injunction or the appointment of a receiver.

• Such other interim measure as may appear to the Court to be just and convenient.

3. Standards for Granting Relief

The grant of interim measures is typically based on fulfilling the conditions of:

• Existence of a prima facie case.

• The balance of convenience.

• Potential for irreparable loss or injury.

4. Limitation on Court Power (Section 9(3))

• Once the Arbitral Tribunal has been constituted, the Court shall not entertain an
application under Section 9(1).

• Exception: This prohibition is lifted if the Court finds that circumstances exist which
may not render the remedy provided under Section 17 (interim measures by the
Tribunal) efficacious.

5. Judicial Interpretation

• Wider Powers: The powers of the Court under Section 9 are considered wider than
the powers exercised under the Code of Civil Procedure, 1908 (CPC), and
technicalities of the CPC cannot prevent securing the ends of justice. However,
principles like those under Order 38 Rule 5 of the CPC serve as guides but not fetters
on the court's discretion.

• Third Parties: There is no bar against the Court granting Section 9 interim measures
against a party who is not a party to the Arbitration Agreement, provided the
reliefs fall under the specified categories of Section 9(1)(ii)(a) to (e). The court can
direct a third party to deposit an amount admittedly payable to a party to the
arbitration.

• Arbitration Intent: Interim relief is intended to be in aid of final relief, thus a party
who has no intention to ultimately refer the dispute to arbitration cannot be permitted
to seek interim relief.

• Stamp Duty: An inadequately/insufficiently stamped instrument/document shall

not preclude the party from seeking interim measures under Section 9 of the Act.

II. Section 11: Appointment of Arbitrators

Section 11 outlines the procedure for appointing arbitrators, emphasizing party autonomy
first, followed by judicial intervention when the agreed procedure fails.

1. Party Autonomy and Procedure

• A person of any nationality may be an arbitrator, unless the parties agree otherwise.

• The parties are free to agree on a procedure for appointing the arbitrator(s).
 • If the procedure involves three arbitrators, generally, each party appoints one, and the
two appointed arbitrators appoint the third (presiding arbitrator).

2. Judicial Intervention (Default Mechanism)

If the agreed procedure fails (e.g., a party fails to appoint an arbitrator within thirty days of a
request, or the two appointed arbitrators fail to agree on the third within thirty days), the
appointment shall be made, upon request of a party, by the Supreme Court or the High
Court (or any designated person or institution).

3. Role of the Court/Referral Authority

The Court's power while dealing with an application under Section 11 is confined to the
examination of the existence of an arbitration agreement.

• Limited Inquiry: The judicial authority must restrict its inquiry to whether there
prima facie exists a valid arbitration agreement.

• Non-Arbitrability/Limitation: The referral Court may intervene to reject claims

that are ex facie time-barred and dead. However, the determination of whether a
claim is barred by limitation typically falls within the domain of the Arbitral
Tribunal.

• Disclosure and Impartiality: When appointing an arbitrator, the Court must give due
regard to any qualifications required by the agreement and the contents of the
disclosure (to secure the appointment of an independent and impartial arbitrator).

4. Judicial Pronouncements

• Limitation: The limitation period for filing an application under Section 11(6) is
three years (governed by Article 137 of the Limitation Act) from the date the "right
to apply" accrues (i.e., failure to appoint).

• Unilateral Appointment: In cases where only one party has a right to appoint a sole
arbitrator, that party's choice is seen as having an element of exclusivity. This violates
the essence of the 2015 amendments, and therefore, a person who has an interest in
the outcome must not have the power to appoint a sole arbitrator.
 • Stamping Objections: Objections related to non-stamping or inadequate stamping
of the agreement do not fall for determination under Section 11 of the Act, as this is
a curable defect and falls within the ambit of the Arbitral Tribunal.

• Finality: The decision of the High Court/Supreme Court (or designated authority)
under Section 11 is final, and no appeal lies against such decision.

III. Section 16: Competence of Arbitral Tribunal to Rule on its Jurisdiction

(Kompetenz-Kompetenz)

Section 16 is crucial as it grants the Arbitral Tribunal the authority to define its own powers,
based on the internationally recognized doctrine of Kompetenz-Kompetenz.

1. Tribunal’s Authority (Kompetenz-Kompetenz)

• The Arbitral Tribunal is empowered to rule on its own jurisdiction, including

objections regarding the existence or validity of the arbitration agreement.

• This power is an improvement in the competence of arbitrators to rule.

2. Doctrine of Separability

• The arbitration clause is treated as an agreement independent of the other terms of

the contract.

• Therefore, a decision by the Arbitral Tribunal that the main contract is null and void
shall not entail ipso jure (by the law itself) the invalidity of the arbitration clause.

3. Raising Objections

• A plea that the Arbitral Tribunal lacks jurisdiction must be raised not later than the
submission of the statement of defense.

• A party is not precluded from raising a plea merely because they participated in the
appointment of an arbitrator.

• A plea that the tribunal is exceeding the scope of its authority shall be raised as soon
as the matter alleged to be beyond scope is raised during proceedings.

4. Consequence of Ruling

• Rejection of Plea: If the Tribunal rejects the jurisdictional plea, it must continue
with the arbitral proceedings and make an arbitral award. The party challenging
 the jurisdiction can then raise this objection along with the challenge to the final
award under Section 34.

• Acceptance of Plea: If the Tribunal accepts the plea and rules it lacks jurisdiction, the
aggrieved party may file an appeal under Section 37.

IV. Section 17: Interim Measures Ordered by Arbitral Tribunal

Section 17 grants substantive power to the Arbitral Tribunal itself to issue interim protective
orders during the proceedings.

1. Tribunal’s Enhanced Powers

• Section 17 empowers the Arbitral Tribunal with identical powers to that of the
Court to order interim measures.

• This is part of the overall enhancement of powers granted to arbitrators under the Act.

2. Scope and Timing

A party may apply to the Arbitral Tribunal for interim measures during the arbitral
proceedings or at any time after the making of the arbitral award but before it is
enforced in accordance with Section 36.

The interim measures the Tribunal can grant cover similar grounds to Section 9, including:

• Preservation, interim custody, or sale of goods.

• Securing the amount in dispute.

• Interim injunction or appointment of a receiver.

• Any other interim measure of protection that appears just and convenient.

3. Enforcement

• Any order issued by the Arbitral Tribunal under Section 17(1) shall be deemed to be
an order of the Court for all purposes.

• Such orders are enforceable under the Code of Civil Procedure, 1908, in the same
manner as if they were orders of the Court.
4. Judicial Review

• An order granting or refusing to grant an interim measure under Section 17 is

appealable under Section 37 to a Court authorized to hear appeals from original
decrees.

• Interference with orders passed under Section 17 is typically limited to cases where
the orders are perverse or manifestly arbitrary.

1. Booz Allen Hamilton vs. SBI Home Finance (2011) 5 SCC 532

This judgment is pivotal for setting the judicial test to determine the non-arbitrability of
disputes and clarifying the difference between action in rem and action in personam. The
ruling stemmed from Section 34(2)(b) of the Act, which allows an award to be set aside if the
subject matter is not capable of settlement by arbitration.

A. Core Principle: Arbitrability Test (Action in Rem vs. Action in Personam)

The Supreme Court held that the arbitrability of a dispute hinges on its nature:

• Action in Personam (Arbitrable): These actions determine the rights and interests of
only the parties involved in the dispute (e.g., contractual rights or rights over a
specific movable property). These disputes are generally arbitrable.

• Action in Rem (Non-Arbitrable): These actions determine rights that are exercisable
against the world at large and typically create a definitive legal status (e.g., property
title or corporate status).

B. Enumerated Categories of Non-Arbitrable Disputes

The Court specifically enumerated certain disputes that are considered actions in rem and
therefore not capable of settlement by arbitration, even if the parties agree by consent to
refer them:

1. Disputes relating to criminal offense.

2. Matrimonial disputes relating to divorce or maintenance.

3. Guardianship matters.

4. Insolvency and winding up matters.

5. Testamentary matters.
 6. Eviction or tenancy matters (though this specific point was later reviewed and
clarified by Vidya Drolia).

7. Suit for enforcement of mortgage by sale of property.

8. Intellectual Property Disputes.

C. Finding on Mortgages

The case was crucial in classifying disputes involving mortgages. The Court determined that
a suit for the enforcement of a mortgage by the sale of property is an action in rem and
thus non-arbitrable.

2. Vidya Drolia and Others vs. Durga Trading Corporation (2019/2021)

This case, cited as 2019 SCC Online SC 358, is a landmark decision that re-examined and
substantially clarified the law on arbitrability, particularly concerning landlord-tenant
disputes and the concept of action in rem as established in Booz Allen.

A. Arbitrability of Lease and Tenancy Disputes

• TPA Disputes: The Court specifically addressed whether a dispute regarding the
determination of a lease arising under Section 111 of the Transfer of Property Act
(TPA) could be arbitrated.

• Finding: The Supreme Court held that there is nothing in the Transfer of Property
Act that indicates such a dispute cannot be decided by arbitration.

• Action in Personam: A suit for cancellation of a deed or a declaration of rights

arising from a deed would be an action in personam and not in rem, which generally
allows for arbitration.

B. The Role of Statutory Protection and Public Policy

The judgment delved into how specialized statutes creating public forums impact
arbitrability:

• Contracting Out of Legislative Mandate: Public policy generally requires that

parties be permitted to contract out of the legislative mandate that requires certain
disputes to be settled by special Courts/Tribunals constituted by an Act.
 • Consumer Disputes: The Court observed that where a party to the agreement is
statutorily protected, such as a consumer, this creates a case for non-arbitrability.
However, the law provides a choice to the consumer to either avail a remedy under
the Consumer Protection Act or opt for arbitration. This option is not available to the
builder (who is not a ‘consumer’), and the mere fact that the builder approaches the
Court first under Section 11 will not automatically oust the Consumer Courts’
jurisdiction.

C. Non-Arbitrability of Trusts

The ruling reaffirmed that disputes arising under the Indian Trusts Act cannot be referred to
arbitration.

D. Arbitrability of Fraud

The Vidya Drolia principle was also used to clarify the arbitrability of fraud allegations
(referencing Rashid Raza vs. Sadaf Akhtar):

• A plea of fraud must be serious to oust the jurisdiction of an arbitrator.

• The allegations of fraud must fulfill two conditions to warrant rejection of arbitration:

1. The fraud must permeate the entire contract, rendering the arbitration
agreement void.

2. The fraud allegations must have implications in the public domain.

• If the allegations of fraud are simple (e.g., siphoning of funds relating to the internal
affairs of a partnership), the disputes are arbitrable. If they are complex or make a
virtual case of criminal offense, they are reserved for the Civil Court.

1. Fast Track Arbitration (FTA)

Fast Track Arbitration is governed by Section 29B of the Arbitration and Conciliation Act,
1996, which was inserted by the 2015 Amendment, aiming to expedite the arbitral process.

A. Agreement and Composition

• Written Agreement: Parties may agree in writing to have their dispute resolved by
the fast track procedure at any stage either before or at the time of the appointment of
the arbitral tribunal.
 • Sole Arbitrator: Fast track arbitration requires the appointment of a sole arbitrator.

B. Procedure

The FTA procedure is designed to be streamlined, primarily relying on documentation rather

than lengthy hearings:

• Written Submissions Basis: The Arbitral Tribunal shall generally decide the dispute
based on written pleadings, documents, and submissions filed by the parties,
typically without any oral hearing.

• Clarification Power: The Arbitral Tribunal retains the power to call for any further
information or clarification from the parties.

• Limited Oral Hearings: An oral hearing may be held only if all the parties make a
request or if the Arbitral Tribunal considers it necessary.

• Dispensing Formalities: If an oral hearing is held, the Arbitral Tribunal has the
authority to dispense with any technical formalities.

C. Time Limit for Award

• Mandatory Timeline: The award under the fast track procedure shall be made
within a period of six months from the date the Arbitral Tribunal enters upon the
reference.

• Recourse to Court: If the award is not made within this 6-month period, the parties
must make an application to the Court.

2. Conciliation Process under the Arbitration and Conciliation Act, 1996 (Part III)

The sources specifically detail the process of conciliation as found in Part III (Sections 61 to
81) of the Arbitration and Conciliation Act, 1996, which deals with a "new internationalised
approach" to conciliation based on the UNCITRAL Conciliation Rules 1980.

A. Structure and Appointment

• Part III: Conciliation provisions are contained in Part III of the 1996 Act.

• Number of Conciliators (Section 63): The number of conciliators is prescribed by

agreement of the parties.
 o If there is more than one conciliator, they ought, as a general rule, to act jointly.

B. Procedural Rules

• Exclusion of Formal Codes (Section 66): A key feature is that the Conciliator is not
bound by the Code of Civil Procedure, 1908, or the Indian Evidence Act, 1872.
This allows for a flexible and informal mutual conciliation process.

C. Role of Conciliation in Arbitration Proceedings (Section 30)

• Settlement Encouragement: With the agreement of the parties, the arbitral tribunal
may use mediation, conciliation or other procedures at any time during the arbitral
proceedings to encourage settlement.

• Settlement as an Award: If the parties settle the dispute during the arbitral
proceedings, the arbitral tribunal must:

1. Terminate the proceedings.

2. Record the settlement in the form of an arbitral award on agreed terms.

• Status of Settlement Award: An arbitral award on agreed terms must be made in

accordance with Section 31. This award has the same status and effect as any other
arbitral award on the substance of the dispute.

D. Confidentiality and Admissibility

• Confidentiality: The making of an arbitral award may be set aside if it was affected
by corruption or was in violation of Section 75 or Section 81. (Note: Section 75 and
81 of the 1996 Act relate to the confidentiality and inadmissibility of evidence derived
from conciliation proceedings).
Notes on Conciliation under the Arbitration and Conciliation Act, 1996

The Arbitration and Conciliation Act, 1996, incorporates a structured framework for
conciliation in Part III of the Act. This part adopts a new internationalized approach to
conciliation, explaining its application and scope.

1. Statutory Provisions for Conciliation (Part III)

Part III of the 1996 Act governs the conciliation process:

• Number of Conciliators (Section 63): Section 63 provides that the number of

conciliators should be prescribed by agreement of the parties.

o If there is more than one conciliator, they ought, as a general rule, to act
jointly.

• Procedural Rules (Section 66): The Conciliator is not bound by the Code of Civil
Procedure, 1908, or the Indian Evidence Act, 1872. The process relies on mutual
conciliation.

2. Conciliation in the Context of Arbitral Proceedings

The A&C Act, 1996 allows for the use of conciliation procedures within the arbitration
process to facilitate dispute resolution:

• Encouraging Settlement (Section 30): With the agreement of the parties, the arbitral
tribunal may utilize mediation, conciliation, or other procedures at any time during the
arbitral proceedings to encourage settlement.

• Award on Agreed Terms (Section 30/31): If the parties settle the dispute during the
arbitral proceedings, the arbitral tribunal must terminate the proceedings and record
the settlement in the form of an arbitral award on agreed terms.

• Effect of the Award: An arbitral award on agreed terms must be made in accordance
with Section 31 and shall state that it is an arbitral award. This award holds the same
status and effect as any other arbitral award on the substance of the dispute.
3. Principles and Judicial Interpretation (Case Law Reference)

When parties settle a dispute, especially during proceedings, judicial scrutiny ensures the
finality and binding nature of that settlement, often linking back to the concept of waiving
rights to future claims.

• Finality of Settlement Agreements and Claims: If parties have executed an

agreement, whereby the contractor gives up all claims and consents to a new
arrangement that specifies there will be no arbitration for the settlement of any future
claims, the party is not allowed to take recourse to arbitration or resurrect the resolved
claim.

o In WAPCOS Ltd. vs. Salma Dam Joint Venture & Ors. (2020) 3 SCC 169, the
Supreme Court held that the application under Section 11(6) filed by the
contractor was not maintainable where the contractor had earlier executed an
agreement resolving all claims and consenting to a new arrangement
precluding future arbitration on those claims.

• Waiver of Rights to Object (Section 4): If a party has knowledge of the non-
compliance with a provision of Part I or any requirement under the arbitration
agreement, yet proceeds with the arbitration without raising an objection within the
stipulated time, this amounts to a waiver of the right to object. This principle of
waiver is critical to the process and finality of dispute resolution, whether through
arbitration or an agreed settlement/conciliation proceeding.

o In Quippo Construction Equipment Limited vs. Janardan Nirman Pvt. Limited,

the Supreme Court found that the respondent had waived the right to object to
the venue of arbitration by failing to raise the objection before the arbitral
tribunal, and could not raise it later in Section 34 proceedings.

In essence, under the A&C Act, 1996, conciliation is treated as a flexible, non-binding dispute
resolution mechanism used to reach a voluntary settlement, which, if finalized by the arbitral
tribunal, gains the powerful enforceability of an official arbitral award.
Urban Infrastructure and Development Disputes: Notes from Case Law

The sources frequently cite decisions involving public and quasi-governmental bodies
responsible for infrastructure, regional planning, and municipal services, illustrating how the
provisions of the Arbitration and Conciliation Act, 1996 (A&C Act, 1996) govern these
complex contractual disputes.

1. Metropolitan and Municipal Authorities

Disputes involving local governance and city infrastructure development regularly appear in
the legal records:

• Mumbai Metropolitan Region:

◦ The Municipal Corporation of Greater Mumbai (MCGM) is cited in cases dealing

with judicial intervention under Section 5 of the A&C Act.

◦ The Bombay High Court examined an application under Section 11 involving the
Municipal Corporation of Greater Mumbai where the arbitration clause stipulated that the
decision of a committee would be final and binding. The court held that this clause did not
constitute an arbitration agreement because the parties did not intend for disputes to be
resolved through arbitration.

◦ The Mumbai Metropolitan Regional Development Authority (MMRDA) was a party

in a case where the court emphasized that the existence of a clear and unequivocal
arbitration agreement is a pre-requisite for appointing an arbitrator.

◦ Cases involving the Dhule Municipal Commr. and the Municipal Corporation of the
city of Ichalkarnji are noted in the context of procedural sections like Section 20 (place of
arbitration) and Section 29A (time limits for awards).

• Delhi/NCR Region:

◦ Cases involving the South Delhi Municipal Corporation relate to distinguishing

genuine arbitration agreements from clauses designed merely for departmental appeal or
supervisory control over work.

◦ The New Delhi Municipal Council (NDMC) is mentioned in relation to the exclusion of
the moratorium period under the IBC when calculating the limitation period for filing a
Section 11(6) application.
• Slum Redevelopment:

◦ The Bombay Slum Redevelopment Corporation Pvt. Ltd. is explicitly named in a case
concerning Section 37 appeals, emphasizing the necessity of limited interference with awards
to prevent defeat of the Act's purpose.

2. Transportation and Road Infrastructure

The development and operation of public transit and major roadways feature prominently,
often involving the National Highways Authority of India (NHAI) and Metro Rail
Corporations:

• National Highways Authority of India (NHAI):

◦ NHAI is frequently involved in landmark decisions defining the seat of arbitration and
the limited scope of judicial review under Section 34.

◦ The principle that courts cannot substitute their own view for that of the Arbitrator on
contract interpretation is heavily reinforced in NHAI disputes.

◦ NHAI cases also illustrate the application of Section 34 in setting aside awards deemed
perverse or irrational, such as in Ssangyong Engineering & Construction Co. Ltd. vs. NHAI.

• Metro Rail Corporations:

◦ The Delhi Metro Rail Corporation (DMRC) appears in cases related to the judicial
interference scope under Section 34 and the binding nature of the agreement terms.

◦ The Chennai Metro Rail Ltd. was a party in a case concerning the non-judicial authority
of arbitrators to unilaterally determine their fees under Section 12.

3. General Infrastructure and Utilities Disputes

The legal principles established in infrastructure disputes extend beyond urban transit:

• Ports and Maritime:

◦ Cases involving the Board of Trustees, Port of Mumbai demonstrate how differences
that arise through claims and silence/non-rejection by the opponent constitute disputes
referable to arbitration.
 • Electricity and Telecom:

◦ The sources note the proliferation of multinational corporations (MNCs) in infrastructure

sectors such as "Building construction, electricity, telecommunication".

◦ Disputes involving bodies like the Maharashtra State Electricity Distribution

Company Limited relate to complex issues such as the applicability of Section 29A time
limits.

Case Law Illustrating Key Arbitral Principles in Infrastructure Context

Infrastructure disputes often serve as the vehicle for articulating critical arbitration principles:

Principle Illustrated Case Example(Entity/Context) Key Takeaway

Quippo Construction Equipment

A party that participates without objecting to the
Waiver of Objection Limited vs. Janardan Nirman
venue before the Tribunal waives that right and
(Sec. 4) Pvt. Limited (Involved
cannot raise it later in a Section 34 challenge.
construction equipment)

If a contractor executes a settlement agreement

Finality of Settlement WAPCOS Ltd. vs. Salma Dam giving up all claims and precluding future
Section 11(6) Joint Venture arbitration, they cannot resurrect the claim later
under Section 11(6).

Judicial Non- Courts are repeatedly instructed not to interfere

Narsi Creation Pvt Ltd vs. State
Intervention with arbitration proceedings, especially before
of Uttar Pradesh
Section 5 an Award is passed.

Inherent lack of jurisdiction (e.g., due to

Jurisdiction/Non- Chief General Manager (IPC)
exclusive statutory authority) cannot be
Arbitrability MP Power Trading Co. Ltd.
overcome by consent, even if arbitrators were
11(6) (Electricity Act)
previously agreed upon.
Remaining Notes on Arbitration and Conciliation Act, 1996

The remaining provisions cover the framework, procedure, power of courts, termination, and
enforcement of arbitral awards.

I. Fundamental Concepts & Definitions (Sections 1, 2)

1. Scope and Structure of the Act

• The Arbitration and Conciliation Act, 1996 (A&C Act, 1996) is a comprehensive
statute covering domestic, international, and inter-state arbitrations, as well as the
enforcement of international arbitral awards and conciliation matters.

• It is structured into four Parts: Part I (Arbitration Agreement, Tribunal, Awards,

Enforcement), Part II (Enforcement of Arbitral awards), Part III (Conciliation), and
Part IV (Miscellaneous).

• The Act is based on the 1985 UNCITRAL Model Law on International Commercial
Arbitration and the UNCITRAL Arbitration Rules 1976.

• The Act is an Explanatory Code and a complete code, unlike the old Act of 1940,
which lacked provisions for international arbitration.

2. Key Definitions (Section 2)

• Arbitration (Section 2(a)): Means any arbitration whether or not administered by a

permanent arbitral institution.

• Arbitral Tribunal (Section 2(1)(d)): Means a sole arbitrator or a panel of arbitrators.

o The term "Umpire" from the old Act is replaced by "Presiding arbitrator" in
the 1996 Act.

o The Tribunal functions in a quasi-judicial manner and is not a court of law.

• Court (Section 2(1)(e)): For domestic arbitration, it means the Principal Civil Court
of original jurisdiction in a district, including the High Court in exercise of its
ordinary original civil jurisdiction. For international commercial arbitration, it
generally means the High Court in exercise of its ordinary original civil jurisdiction.
II. Arbitral Proceedings: Conduct and Jurisdiction (Sections 16–27)

1. Competence of the Arbitral Tribunal (Section 16)

• This section enshrines the doctrine of Kompetenz Kompetenz, allowing the arbitral
tribunal to rule on its own jurisdiction, including objections regarding the existence or
validity of the arbitration agreement.

• Separability Principle: An arbitration clause forming part of a contract shall be

treated as an agreement independent of the other terms. Thus, a decision by the
tribunal that the main contract is null and void shall not automatically entail the
invalidity of the arbitration clause.

• Plea on Jurisdiction: A plea on the tribunal's jurisdiction must be raised no later than
the submission of the statement of defence.

• If the tribunal rejects the plea of jurisdiction, it must continue the proceedings and
make an award. This ruling can only be challenged later along with the final award
under Section 34.

2. Interim Measures (Section 17)

• Section 17, as amended (post-2015), grants the arbitral tribunal identical powers to
the Court to order interim measures.

• The Tribunal can grant interim measures during the proceedings or, prior to the 2019
Amendment, after the award is made but before enforcement under Section 36.

• An order under Section 17(1) is deemed an order of the Court for all purposes and
is enforceable under the Code of Civil Procedure, 1908 (CPC).

• Reliefs include preservation of goods, securing the amount in dispute,

detention/inspection of property, interim injunctions, and appointment of a receiver.

3. General Conduct of Proceedings (Sections 18, 19, 20, 24)

• Equal Treatment (Section 18): Parties must be treated with equality and given a full
opportunity to present their case.

• Rules of Procedure (Section 19): The tribunal is not bound by the CPC or the
Indian Evidence Act, 1872. The tribunal can determine the admissibility, relevance,
materiality, and weight of any evidence.
 • Place of Arbitration (Section 20): Parties are free to agree on the place (seat).
Failing agreement, the Tribunal determines the place having regard to the
circumstances and convenience of the parties.

• Hearings (Section 24): The tribunal shall, as far as possible, hold oral hearings on a
day-to-day basis and should only grant adjournments for sufficient cause, with the
power to impose costs (including exemplary costs) on the party seeking adjournment
without cause.

4. Statements of Claim and Defence (Section 23 & 25)

• The claimant must state facts supporting the claim, points at issue, and relief sought.
The respondent must state their defence.

• 2019 Amendment: The Statement of Claim and Defence must be completed within
six months from the date the arbitrator(s) receive written notice of their appointment
(Section 23(4)).

• The respondent is entitled to submit a counterclaim or plead a set-off if it falls within

the scope of the arbitration agreement (Section 23(2-A)).

• Default (Section 25): If the claimant fails to communicate the statement of claim, the
tribunal shall terminate the proceedings. If the respondent fails to communicate the
statement of defence, the tribunal shall continue proceedings without treating the
failure as an admission of allegations (may proceed ex parte).

III. Termination, Award Form, and Correction (Sections 31–33)

1. Form and Content of the Award (Section 31)

• The award must be in writing and signed by the members of the tribunal. Signatures
of the majority suffice if the reason for the omission of any signature is stated.

• It must state the reasons upon which it is based, unless the parties agreed otherwise or
the award is a settlement on agreed terms (Section 30).

• A signed copy must be delivered to each party (Section 31(5)).

• The tribunal may make an interim arbitral award on any matter that could be the
subject of a final award (Section 31(6)).
2. Interest and Costs (Section 31 & 31A)

• Interest: The tribunal is empowered to award interest for the pre-award period at a
reasonable rate.

o Post-Award Interest (Section 31(7)(b)): If the award is silent on post-award

interest, the sum shall carry interest at a rate two percent higher than the
current rate of interest prevalent on the date of the award.

• Costs (Section 31A): The tribunal has the discretion to determine the amount and
payment of costs.

o The general rule is that the unsuccessful party pays the costs of the successful
party, though the tribunal may order otherwise for recorded reasons.

3. Termination and Correction (Sections 32 & 33)

• Termination (Section 32): Proceedings terminate via a final arbitral award or an

order if the claimant withdraws, parties agree to terminate, or the tribunal finds
continuation unnecessary/impossible.

• Correction/Interpretation (Section 33): Within 30 days of receiving the award

(unless otherwise agreed), a party can request the tribunal to correct
computational/clerical errors or give an interpretation of a specific point. The tribunal
has 30 days to make the correction or interpretation, which becomes part of the award.
An additional award (for claims omitted) must be made within 60 days.

IV. Post-Award Recourse and Enforcement (Sections 34–37)

1. Setting Aside an Award (Section 34)

• Recourse against an award is only by an application for setting it aside under Section
34(2) and (3).

• Grounds for Setting Aside: Include incapacity of a party, invalid arbitration

agreement, improper notice or inability to present a case, disputes falling outside the
submission scope, or composition/procedure issues.

• Public Policy of India (Section 34(2)(b)(ii)): An award conflicts with public policy
only if:

1. It was induced or affected by fraud or corruption.

 2. It is in contravention of the fundamental policy of Indian law (without
reviewing the merits of the dispute).

3. It conflicts with the most basic notions of morality or justice.

• Patent Illegality (Section 34(2A)): For domestic awards (other than international
commercial arbitrations), an award may be set aside if vitiated by patent illegality
appearing on the face of the award. However, an award cannot be set aside merely
on the ground of an erroneous application of law or re-appreciation of evidence.

• Limitation: The application must be made within three months of receiving the
award. Delay can be condoned for a further period of thirty days if sufficient cause
is shown, but not thereafter.

2. Finality and Enforcement (Sections 35 & 36)

• Finality (Section 35): Subject to Part I, an arbitral award is final and binding on the
parties and those claiming under them.

• Enforcement (Section 36): Once the time for challenging the award under Section 34
expires, the award shall be enforced as if it were a decree of the court under the CPC.

• Stay of Award: Filing a Section 34 application does not automatically stay the
award (post-2015 amendment). A separate application must be made for stay, and the
Court must have due regard to the provisions for staying a money decree under the
CPC.

3. Appeals (Section 37) appeals

• An appeal lies to the court authorized to hear appeals from original decrees only
against specific orders:

o Refusing to refer parties to arbitration under Section 8.

o Granting or refusing to grant any measure under Section 9.

o Setting aside or refusing to set aside an arbitral award under Section 34.

• Appeals also lie against orders of the arbitral tribunal under Section 16 (accepting
plea on jurisdiction) or Section 17 (granting/refusing interim measures).
 • No second appeal is maintainable from an order passed in appeal under Section 37
(except appeal to the Supreme Court).

V. Miscellaneous Provisions (Part IV & Amendments)

1. Arbitration Council of India (ACI) (Part I-A)

• The Central Government is empowered to establish the Arbitration Council of India

(ACI) to perform duties under the Act (Sections 43A-43M).

• The Council is empowered to grade arbitral institutions.

• The Chairperson of the Council is a person who has been a Judge of the Supreme
Court, Chief Justice of a High Court, or an eminent person with special knowledge of
arbitration.

2. Jurisdiction of Court (Section 42)

• Section 42 establishes the principle of exclusive jurisdiction: where an application

concerning an arbitration agreement is first made in a Court under Part I, that Court
alone shall have jurisdiction over the arbitral proceedings and all subsequent
applications arising out of that agreement.

3. Confidentiality and Immunity (Sections 42A & 42B)

• Confidentiality (Section 42A): Arbitrators, arbitral institutions, and parties must

maintain confidentiality of all arbitral proceedings, except where disclosure is
necessary for implementation/enforcement of the award.

• Immunity (Section 42B): No suit or legal proceedings shall lie against the arbitrator
for anything done in good faith or intended to be done in good faith under the Act.