arbitration

1. ARBITRATION ACT, 1996
Section 25 onwards

2. Srei Infrastructure Finance Limited v. Tuff Drilling
Private Limited, Civil Appeal No. 15036 of 2017
• Tuff Drilling Private Limited (Respondent/ Claimant) filed an application
under Section 11 of the Arbitration and Conciliation Act, 1996 (Act) for
appointment of arbitrator based on the agreement entered between Srei
Infrastructure Finance Limited (Appellant) and the Respondent. During the
pendency of this application, an arbitrator was appointed with the
consent of the parties. Subsequently, application under Section 11 was
dismissed and the arbitral tribunal in its first sitting, held on 27.08.2011,
directed the Respondent/ Claimant to file the statement of claim. The
Respondent/ Claimant failed to file its statement of claim on two
subsequent events, that is, on 19.11.2011 and 09.12.2011. On this
ground, the tribunal vide its order dated 12.12.2011 terminated the
arbitral proceeding under Section 25(a) of the Act. The Claimant filed an
application on 20.01.2012 praying to recall the tribunal's order dated
12.12.2011 and condoning the delay in filing the statement of claim
along with the reasons for the same. The Appellant questioned the
maintainability of this application dated 20.01.2012 on the ground that
arbitral tribunal has become functus officio in view of termination of
proceedings under Section 25(a), hence arbitral tribunal cannot recall its
order terminating the proceedings.

3. • The arbitral tribunal accepted the preliminary objection raised by the Appellant and
rejected the application of Respondent/ Claimant vide order dated 26.04.2012. The
Claimant challenged the said order of the tribunal before the Hon'ble Calcutta High
Court under its revisionary jurisdiction in C.O. No. 3190 of 2012. The Hon'ble High
Court after entertaining the application under Article 227 held that arbitral tribunal
has the power to recall its own order passed under Section 25(a). The Hon'ble High
Court accordingly set aside the order of the tribunal and remitted the matter back to
the arbitral tribunal to decide the application dated 20.01.2012. The Appellant
challenged the decision of the Hon'ble High Court before the Hon'ble Supreme
Court.

4. In the absence of an agreement between the parties on part or whole of the
subject-matter of the dispute, the arbitral tribunal may:
• Appoint one or more experts
• Ask such experts to determine specific issues
• Deliberate upon such issues
• Further, the tribunal to facilitate the expert may direct the party to:
• Give the expert any relevant information
• Produce and provide access to all relevant information/documents/goods etc. for
inspection
• EVIDENCE AND EXPERT:
• If the parties have failed to devise an agreement, the tribunal on request of
written or oral request of expert shall:
• Ask the expert to participate in the oral arbitral proceedings
• Permit the parties to put questions to such experts who had made the report
• Permit the parties to present their own expert witnesses to have viewpoints over
the issue.

5. • It is permissible to an arbitrator to take assistance in technical
matters, in so far as such assistance is necessary, for the
discharge of his duties. If an arbitrator had asked some persons
about the questions of law, or if he had consulted them as to the
style, syntax or grammar of is award, he was quite within his
rights to do so, but if he arrived at any findings of fact by
consulting outsiders and allowed the persons sitting with him to
affect his decision as assessors, then it must be held that there
had been misconduct.
• In the case of Ramesh Chandra Agrawal vs. Regency
Hospital Ltd. (2009), the Supreme Court held that, in the cases
where science involved is highly specialized, expert’s role can’t
be disputed. Expert has to be put before court all materials with
necessary scientific criteria for resting accuracy of conclusions
together with reasons, so that court, although not an expert,
may form its own independent judgement.

6. • Eastern Coalfields Ltd. v. Rungta Projects Ltd. [2018 SCC OnLine Cal 6555], has
observed as follows:
• "...Instead of giving a restrictive meaning to the terms of the contract, the Ld
Arbitrator took a practical, commercial approach to the competing claims. He
could have shut his eyes to the ground realities in most cases of premature
terminations, where the contractor is left high-and-dry and destined to clear the
dirt; including settling claims of vendors, dismantling sheds, rid the site of
equipment....In doing so, the Ld Arbitrator gave a correct construction to section
28 (3) of the Act; he took into account the trade usages and commercial practices
prevalent in situations of this nature where a contractor is saddled with the
burden of taking on expenses for paying off disgruntled third parties over and
above the imminent monetary loss of the project altogether. In this Court's view,
the extent of expenditure incurred under different heads and the quantum
awarded under each head of claim by the learned arbitrator is a question of fact
arrived at after proper evaluation of materials and a re-assessment of those facts
can only be done if the assessment is found to be misdirected or perverse. The
Award is in consonance with efficacious business practices applicable to
commercial transactions where a contractor can apply for liquidated damages for
the loss and damage suffered by it on account of premature termination of the
contract."

7. • Section 32 of the 1996 Act provides for termination of arbitral proceedings
by final arbitration award or an order under Section 32(2) of the Act.
• Section 32(2) of the 1996 Act enumerates Three additional grounds on
which the arbitral proceedings can be terminated namely:
• the claimant withdraws his claim, unless the respondent objects to the
order and the arbitral tribunal recognises a legitimate interest on his part in
obtaining a final settlement of the dispute,
• the parties agree on the termination of the proceedings, or
• the arbitral tribunal finds that the continuation of the proceedings has for
any other reason become unnecessary or impossible.
• While the first 2 (two) grounds relate to consent of the parties, the
third ground is at the discretion of the arbitrator.
• The said discretionary ground is enumerated in Section 32(2)(c) of
the Act empowers the arbitrator to issue an order of termination of
arbitral proceeding
• s where it finds that continuation of the said proceedings has for any
other reason become ‘unnecessary’ or ‘impossible’.

8. • M/s PCL Suncon v. M/s National Highway Authority of India 2021 Latest
Caselaw 102 Del, held that an order terminating arbitration proceedings under
Section 32(2)(c) of the Arbitration and Conciliation Act, 1996 is not an award.
• Dakshin Haryana Bijli Vitran Nigam Ltd. v. M/S Navigant Technologies Pvt.
Ltd. the Supreme stated that, “Section 32 provides that the arbitral proceedings
shall be terminated after the final award is passed. With the termination of the
arbitral proceedings, the mandate of the arbitral tribunal terminates, and the
tribunal becomes functus officio.”
• The Apex Court further stated that, “In an arbitral tribunal comprising of a panel
of three members, if one of the members gives a dissenting opinion, it must be
delivered contemporaneously on the same date as the final award, and not on a
subsequent date, as the tribunal becomes functus officio upon the passing of the
final award. The period for rendering the award and dissenting opinion must be
within the period prescribed by Section 29A of the Act.

9. • Section 33 of the Arbitration & Conciliation Act, 1996, is
similar to Section 152 of the Code of Civil Procedure, 1908
as the latter provision also speaks of correction of
judgments or decrees or orders on account of clerical or
arithmetical mistakes or errors arising from accidental slip
or omission.
• Once there is an additional award, it is considered as a
separate award, and there is no merger of the award
already passed for some claims with the additional award.
The later additional award is given by law a status of an
‘additional award’. When there is correction to the award,
arithmetical or clerical, the original award passed merges in
the corrected award and hence, the period of limitation
necessarily and only starts by applying the doctrine of
merger from the receiving of the corrected copy of the
corrected/amended award.

10. • Section 34 of the Arbitration and Conciliation Act of
1996 specifies grounds for challenging an arbitral award
However, the challenge to an award under Section 34 is
subject to certain limitations, such as the fact that it
may only be contested within three months of
receiving the award, which can be extended for
another 30 days.
• Conditions in which an arbitral award can be set aside

11. 1.Incapacity of the party
• If any of the parties is under the age of majority or is a minor,
they are not obligated to follow any agreement in place. As a
result, the agreement becomes void, and any award made in
such a case may be revoked by the court. The incompetent
person can, however, apply to the court for the appointment of a
guardian for arbitral proceedings under Section 9 of the
arbitration act and, after that, the ground for incapacity of the
party will cease to exist.
2.Agreement is not valid
• In order for a contract to be enforceable, all of its essential
elements must be met. If the contract is illegal, the arbitration
agreement will be declared void as well, and the arbitral award
can be revoked. In Adarsh Kumar Khera v. Kewal Kishan
Khera, 2007, the arbitral award was set aside since it was made
without giving the parties a chance to be heard, it was deemed
void, and both parties wanted it overturned.

12. 3.Other party was not notified
• Arbitral award shall be revoked if the party filing the
application was not provided with an advance notice of
the arbitrator’s appointment or the arbitral procedures
or was otherwise unable to submit his case.
4.Subject matter beyond the arbitration clause
• The arbitral award will be challenged if it deals with an
issue that is not addressed by the arbitration
agreement or contains decisions on subjects that are
outside the scope of the arbitration agreement.

13. 5.Composition of arbitral tribunal not as per
contract
• If the arbitrator is not appointed in accordance with the
provisions of the agreement or by the parties, or if any
other administrative aspect of the agreement that was
determined earlier by the parties has not been fully
implemented, the aggrieved party may seek to have
the award set aside in court

14. • Conditions in which an arbitral award cannot be set aside
• Section 34 (3) of the Arbitration and Conciliation Act, 1996 talks about
limitations in which an arbitral award cannot be set aside, which are as
follows:
• Application filed after three months of when the award was received
• The Court will not consider an application to set aside an award if it is filed
after three months have passed since the applicant received the arbitral
award, according to Section 34(3). The caveat to this section further states
that if the Court is convinced that the applicant was prevented from making
the application within the necessary time by sufficient reason, the Court may
hear the application for an additional 30 days but not beyond.
• Erroneous application of law or misappreciation of evidence
• Rationale behind the award
• Section 31(3) of the Arbitration Act states that the award must be a reasoned
award unless the parties stated in their agreement that there was no need for
reasons, or if it is an award made on agreed conditions under section 30 of
the Act.
• The Court concluded in Oil & Natural Gas Corporation Ltd. v. SAW Pipes Ltd.,
2003, was mentioned that the term “public policy” refers to something that
concerns the public benefit and interest. However, the award cannot be argued
to be in the public interest because it is patently in breach of legislative
prohibitions. The administration of justice is likely to be harmed by such an
award or decision.

15. • The arbitral award can only be set aside by Section 34, and the
findings in the arbitral judgment cannot be changed or modified.
• The aggrieved party must request for the arbitration award to be
set aside within three months after the date of the award,
according to Section 34(3) of the Arbitration Act.
• Section 34(4) of the Arbitration Act grants authority to the court
to adjourn the proceedings for a period of time that is
challenging the arbitral award in order to correct the flaws in an
arbitral award. The extent of the court’s authority under Section
34(4), on the other hand, can only be fulfilled under certain
conditions:
1.A party must invoke Section 34(4) of the Arbitration Act before
the award is set aside under sub-section (1).
2.If the party does not ask the court to postpone the Section 34
proceedings before the award is formally set aside, the party will
be barred from filing an application under Section 34(4) of the
Arbitration Act

16. • Section 37 of the Arbitration and Conciliation Act, 1996 (‘Act’)
provides for an appeal against orders passed under Sections 9, 34, 16
and 17 of the Act. The Act does not provide any specific limitation for
filing such appeals, however, Section 43 of the Act provides that the
Limitation Act, 1963 (‘Limitation Act’) shall apply to arbitrations as it
applies to proceedings in Court. It ranges from 30-90 days.