JAMIA MILLIA ISLAMIA

2018-19
“CLINICAL (ADR) PROJECT REPORT”

Topic : “APPELLATE JURISDICTION AGAINST ADR ”

SUBMITTED BY: SUSHANT NAIN

(SECTION-A) ( 5TH YEAR) (FACULTY OF LAW)
SUBMITTED TO – MRS. MADHU SAINI
ACKNOWLEDGEMENT

I would like to express my special thanks of gratitude to

my teacher MRS. MADHU SAINI who gave me the golden
opportunity to do this wonderful project which also
helped me in doing a lot of Research and I came to know
about so many new things I am really thankful to her.

SUSHANT NAIN
CONTENTS

1. INTRODUCTION
2. APPEAL AGAINST ARBITRAL AWARD
3. MAITAINIBILITY OF SECOND APPEAL
4. DIFFERENCE BETWEEN ARBITRATION ACT OF 1996
AND 1940 ON POINT OF APPEAL
5. CONCLUSION
6. BIBLOGRAPHY
The Arbitration and Conciliation Act, 1996

The earlier laws and acts on the arbitration had been now been reformed to become more
responsive to the contemporary requirements. Arbitration and conciliations are for settling the
disputes between the parties outside the purview of court. This is so to save the time and
workload of the courts. Since everyone is aware of the inefficient working of the current judicial
system, it thus becomes mandatory to use an alternative method of providing justice to the
people. The conditions are crystal clear with the clogging of the cases and the numbers of legal
personnel seem inadequate. This is a substitute to the resolving of the disputes that arise between
people. Arbitration and conciliation focuses on resolving all types of legal cases where there are
chances that negotiation or settlement can be made without wasting time of courts. ADR
provides various modes of settlement including, arbitration, conciliation, mediation,
negotiation and Lok Adalat.
The act that looks upon this alternative method of resolving disputes is THE ARBITRATION
AND CONCILIATION ACT 1996. The Code of Civil Procedure, 1859 in its sections 312 to 325
dealt with arbitration in suits while sections 326 and 327 provided for arbitration without court
intervention. The Code of Civil Procedure (Act 5 of 1908) repealed the Act of 1882. The Code of
Civil Procedure, 1908 has laid down that cases must be encouraged to go in for ADR under
section 89(1). The history of this act can be traced back when the arbitration and conciliation
Act, 1899 was passed. ADR provides techniques and processes that act as a means to solve the
dispute without court interference. This leads to an agreement between the parties short of
litigation. The Geneva Protocol on Arbitration Clauses 1923 and the Geneva Convention on the
Execution of Foreign Arbitral Awards 1927 were implemented in India by the Arbitration
(Protocol and Convention) Act, 1937. This Act was enacted with the object of giving effect to
the Protocol and enabling the Convention to become operative in India.
The attractive feature about this is that there is a third party chosen by the parties themselves
whom they select as their arbitrator. This third party provides for the ways that parties can settle.
ADR has gained widespread acceptance from the worldwide. The United Nations commission on
international trade law provided for the International arbitration and conciliation rules. They
adopted MODEL LAW which is accepted by the world. Whenever there arise any international
commercial disputes, the rules of arbitration and conciliation comes into play.
The statement of objects and reasons clarify that the need of ADR. The whole act is based on
UNCITRAL i.e. The United Nations Commission on International Trade Law.
Whenever a reference is made in the form of an arbitration clause in a contract or in a form of a
separate agreement or in an exchange of statement of claim and defence in which the existence
of the agreement is alleged by one party and not denied by other, arbitrator or arbitrators are
appointed as per the provisions of section 11of the Arbitration and Conciliation Act,
1996Arbitrator so appointed has to conduct arbitral proceedings and finally has to make an
award that is called as an arbitral award. The reference of an arbitral award is made under the
provision of section 31 of the Act. Award means final determination of arbitral proceedings.
Under the Act “Arbitral Award” includes an interim award. The form and contents of an
arbitral award shall be in writing and signed by an arbitrator and also shall state reasons upon
which it is based unless the parties have agreed that no reasons are to be given. It shall also state
its date and the place of arbitration in accordance with section 20 of the Act. The copy of an
order shall be delivered to each party. Now the question arises that if a person is appointed as an
arbitrator what and how much care should be taken by him legally or otherwise under the
provision of the Act or otherwise? One has to understand thoroughly the answer of this question
since arbitral award can be set aside on the grounds enumerated in section 34 of the Act and if an
award is made void then the whole exercise of the object of the Act is nullified.
Statutory Provision-Section 34-

Recourse against arbitral award

Application for setting aside arbitral award.-(1)

Recourse to a Court against an arbitral award may be made only by an application for setting
aside such award in accordance with sub-section (2) and sub-section (3).(2)

An arbitral award may be set aside by the Court only if---A.

the party making the application furnishes proof that-----

I.a party was under some incapacity, or

II.the arbitration agreement is not valid under the law to which the parties have subjected it or,
failing any indication thereon, under the law for the time being in force; or

III.the party making the application was not given proper notice of the appointment of an
arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

IV. the arbitral award deals with a dispute not contemplated by or not falling within the terms of
the submission to arbitration, or it contains decisions on matter beyond the scope of the
submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can
be separated from those not so submitted, only that part of the arbitral award which contains
decisions on matters not submitted to arbitration may be set aside; or

v. the composition of the arbitral tribunal or the arbitral procedure was not in accordance with
the agreement of the parties, unless such agreement was in conflict with a provision of this Part
from which the parties cannot derogate, or, failing such agreement, was not in accordance with
this Past;
or B.

The Court finds that------I.

the subject-matter of the dispute is not capable of settlement by arbitration under the law for the
time being in force, orII.
the arbitral award is in conflict with the public policy of India. Explanation. ---Without prejudice
to the generality of sub-clause (ii), it is hereby declared, for the avoidance of any doubt, that an
award is in conflict with the public policy of India if the making of the award was induced of
affected by fraud or corruption or was in violation of section 75 or section 81.(3) An application
for setting aside may not be made after three months have elapsed from the date on which the
party making that application had received the arbitral award, or, if a request had been made
under section 33, from the date on which that request had been disposed of by the arbitral
tribunal: Provided that if the Court is satisfied that the applicant was prevented by sufficient
cause from making the application within the said period of three months if may entertain the
application within a further period of thirty days, but not thereafter.(4) On receipt of an
application under sub-section (1), the Court may, where it is appropriate and it is so requested by
a party, adjourn the proceedings for a period of time determined by it in order to give the arbitral
tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the
opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award.
Backdrop of S.34:
The purpose of arbitration is to ensure effective, quick and consensual decision making process
avoiding the arduous process of courts. The need for such a procedure is greater in a country like
India where delay has ingrained itself as part of the system of administration of justice. While
arbitration is indeed a quick procedure, the interference by court in the process acts as a clog to
its development. The enactment of the Arbitration Act, 1940, was a reflection of the legislature's
determination to ensure speedy resolution of disputes. However, the 1940 Act, though sound in
principle, was bogged down by procedural delays. There was no uniform procedure in terms of a
unified codes for the enforcement of foreign awards under the New York Convention and the
Geneva Convention. The Foreign Awards (Recognition and Enforcement) Act, 1961 for the
enforcement of arbitral awards under the New York Convention and the Arbitration (Protocol
and Convention), Act 1937 hitherto held the field. With the adoption, by the United Nations
Commission for International Trade Law of the UNCITRAL Model Arbitration Law and the
subsequent adoption of the same by various countries in the world, it was but necessary that
India adopt the Model Law to govern arbitrations and this saw the genesis of the more dynamic
Arbitration and Conciliation Ordinance leading to the Arbitration and Conciliation Act, 1996.
Whereas, the new Act of 1996, has consolidated and amended the law relating to arbitration and
is comprehensive in the sense that it covers both domestic and foreign arbitrations. Section 30(a)
of the Arbitration & Conciliation Act, 1940 opens with the restrictive wording:
“an arbitral award shall not be set aside except on one or more” of the three grounds set forth in
it. These grounds were: --1.

An arbitrator or umpire has misconducted himself or the proceeding.2.

An award has been made after the issue of on order by the court superseding the arbitration or
after arbitration proceedings have become invalid under S.35, &3.

An award has been improperly procured or is otherwise invalid. Whereas S.16 (1) of the 1940
Act, empowers the court to remit the award to the arbitral tribunal for reconsideration. But now
this two sections i.e. Sec. 30 & 16 (1) of the 1940 act has now been replaced by Sec. 34 of
the Arbitration & Conciliation Act, 1996. This provision reinforces the current trend in the
Indian law to allow judicial scrutiny of the merits of arbitral awards only on an exceptional basis.
As, it can be inferred from the various judicial pronouncements of the courts.

IMPORTANT DEFINITIONS :
Section 2 gives the definitions of important arbitration terms:
(a) “Arbitration” means any arbitration whether or not administered by permanent arbitral
institution.
(b) “Arbitration agreement” means any agreement referred to in section 7.
(c) “Arbitral award” includes interim award.
(d) “Arbitral tribunal” means a sole arbitrator or a panel of arbitrators.
(e) “Court” means
(i) in the case of an arbitration other than international commercial
arbitration, the principal Civil Court of original jurisdiction in a district,
and includes the High Court in exercise of its ordinary original civil
jurisdiction, having jurisdiction to decide the questions forming the
subject-matter of the arbitration if the same had been the subject-matter of
a suit, but does not include any Civil Court of a grade inferior to such
principal Civil Court, or any Court of Small Causes;
(ii) in the case of international commercial arbitration, the High Court in
exercise of its ordinary original civil jurisdiction, having jurisdiction to
decide the questions forming the subject-matter of the arbitration if the
same had been the subject-matter of a suit, and in other cases, a High
Court having jurisdiction to hear appeals from decrees of courts
subordinate to that High Court;]
(f) “international commercial arbitration” means an arbitration relating to disputes arising
out of legal relationships, whether contractual or not, considered as commercial under the
law in force in India and where at least one of the parties is— (i) an individual who is a
national of, or habitually resident in, any country other than India; or (ii) a body corporate
which is incorporated in any country other than India; or (iii) an association or a body of
individuals whose central management and control is exercised in any country other than
India; or (iv) the Government of a foreign country;

What is an arbitration award?

An arbitration award (or arbitral award) is a determination on the merits by an arbitration
tribunal in an arbitration, and is analogous to a judgment in a court of law. It is referred to as an
'award' even where the entire claimant's claims fail (and thus no money needs to be paid by either
party), or the award is of a non-monetary nature. An arbitration award is given by the arbitrator/s
in their decision. Arbitration award can be understood as the decision of the case based on the
merits of it. Section 7 of the Act defines “arbitral award” as award includes interim award.
Interim award is the measure provided to the parties before, during or after the arbitral
proceedings.
Section 9 of the Act defines Interim measures, etc. by Court as—A party may, before or during
arbitral proceedings or at any time after the making of the arbitral award but before it is enforced
in accordance with section 36, apply to a court—
(i) For the appointment of a guardian for a minor or a person of unsound mind for the purposes
of arbitral proceedings; or
(ii) For an interim measure of protection in respect of any of the following matters, namely:—
(a) The preservation, interim custody or sale of any goods which are the subject-matter of the
arbitration agreement;
(b) Securing the amount in dispute in the arbitration;
(c) the detention, preservation or inspection of any property or thing which is the subject-matter
of the dispute in arbitration, or as to which any question may arise therein and authorizing for
any of the aforesaid purposes any person to enter upon any land or building in the possession of
any party, or authorizing any samples to be taken or any observation to be made, or experiment
to be tried, which may be necessary or expedient for the purpose of obtaining full information or
evidence;
(d) Interim injunction or the appointment of a receiver;
(e) such other interim measure of protection as may appear to the court to be just and convenient,
and the Court shall have the same power for making orders as it has for the purpose of, and in
relation to, any proceedings before it.

Section 31 of the act lays down the essentials of arbitral award.

Form and contents of arbitral award.—
(1) An arbitral award shall be made in writing and shall be signed by the members of the arbitral
tribunal.
(2) For the purposes of sub-section (1), in arbitral proceedings with more than one arbitrator, the
signatures of the majority of all the members of the arbitral tribunal shall be sufficient so long as
the reason for any omitted signature is stated.
(3) The arbitral award shall state the reasons upon which it is based, unless—
(a) the parties have agreed that no reasons are to be given, or
(b) the award is an arbitral award on agreed terms under section 30.
(4) The arbitral award shall state its date and the place of arbitration as determined in accordance
with section 20 and the award shall be deemed to have been made at that place.
(5) After the arbitral award is made, a signed copy shall be delivered to each party.
(6) The arbitral tribunal may, at any time during the arbitral proceedings, make an interim
arbitral award on any matter with respect to which it may make a final arbitral award.
(7) (a) Unless otherwise agreed by the parties, where and in so far as an arbitral award is for the
payment of money, the arbitral tribunal may include in the sum for which the award is made
interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole
or any part of the period between the date on which the cause of action arose and the date on
which the award is made.
(b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry
interest at the rate of eighteen per centum per annum from the date of the award to the date of
payment.
(8) Unless otherwise agreed by the parties,—
(a) the costs of an arbitration shall be fixed by the arbitral tribunal;
(b) the arbitral tribunal shall specify—
(i) the party entitled to costs,
(ii) the party who shall pay the costs,
(iii) the amount of costs or method of determining that amount, and
(iv) the manner in which the costs shall be paid. Explanation.—For the purpose of clause (a),
“costs” means reasonable costs relating to—
(i) the fees and expenses of the arbitrators and witnesses,
(ii) legal fees and expenses,
(iii) any administration fees of the institution supervising the arbitration, and
(iv) any other expenses incurred in connection with the arbitral proceedings and the arbitral
award.

In short, the act provides that a duly signed copy of the arbitral award should be given to parties
and the arbitral award must contain the essentials of award. The tribunal can also pass an interim
arbitral award. Section 9 of the act provides that any party to the arbitration agreement can make
an application for the interim measures in the course of the arbitral proceedings. This section
grants temporary measures to the party. The emphasis is on the words ‘before’, ‘during’, ‘at any
time’ of the arbitral proceedings. The law provides flexibility to the people by giving the parties
options to choose their own arbitrators.

In the intervening period between the juncture at which the dispute arose and till the execution of
the award, certain interim measures may be necessary to protect a party’s rights and ensure that
justice is done, the tribunal may pass interim orders.

Correction and Interpretation of Arbitral Award- Section 33 of the Act deals with the correction
and interpretation of Arbitral award. It provides that the Tribunal may correct the award within
30 days from the receipt of award. If the Tribunal finds the request for correction to be
reasonable, then it shall make a correction or interpretation of a specific point or part of the
award within 30 days of the receipt of request. However, if the Tribunal deems it necessary it can
also extend the period of time within which it will make correction in the Award or interpretation
of the Award.
Enforcement of Arbitral Award– Section 36 of the Act provides that if the time for making
application to set aside an award under Section 34 has expired or the application has been
refused then the Award shall be enforced under the Code of Civil Procedure in the same manner
as a decree of a Court.

In accordance with the Arbitration and Conciliation (Amendment) Act, the tribunal must render
awards within 12 months of the date that it enters the reference. This period can be extended by
up to six months if all of the parties agree. If the award is not made within 12 months or within
the mutually extended period, the tribunal’s mandate would be terminated, unless the period has
been extended by the court. Arbitration award is determination on the merits of the case.

APPEAL AGAINST ARBITRAL AWARD

The question arises now whether an appeal lies against the arbitral award? But before that
another important question comes up whether the arbitral award is binding upon the parties or
not? If the arbitration is not binding that the party can appeal against without any valid reason
but when the arbitration is not binding that there must be a valid reason to be given in order to
appeal. A party can only appeal only on certain grounds stated in the act1. The parties cannot
appeal against the arbitral order on the merits of the dispute and court cannot interfere on its
merits. One of the important changes that the new Arbitration Act in India (Arbitration and
Conciliation Act 1996 as amended in 2015 or ACA 1996/2015) has brought in is in the matters
relating to the Finality of Arbitration Awards.

Under the replaced section 36 of the Act on “Enforcement”, it is now stated that

” Where an application to set aside the arbitral award has been filed in the Court under section
34, the filing of such an application shall not by itself render that award unenforceable, unless
the Court grants an order of stay of the operation of the said arbitral award in accordance with
the provisions of sub-section (3), on a separate application made for that purpose.”

Arbitration awards that are generally provided are binding upon the parties and this is the main
reason why people prefer arbitration upon litigation these days. The post-award time gives
aggrieved party to file an application to put a stay on award. Often the award entitles one party to
the monetary benefits or the award denies the claim of the party and also provides the party to

1
The same has been amended by “The Amendment Act, 2015.”
claim the award. The arbitrator must provide a reason for the award. Arbitral award is final and
binding and not appealable.
Reasoned or speaking award is an arbitral award which states clearly what were the reasons
and circumstances under the arbitrator had given the award. 2 Supreme Court has clearly defined
what a reasoned award is. In the case of Hemadari Cements Pvt. Ltd. v. Walchandnagar
Industries Ltd, the petitioner filed the case merely on the reason that the arbitral award was
unreasoned and is liable to be set aside.
However under section 9 only successful party can move an application before the court for the
enforcement of the award.
Unsuccessful party won’t apply for interim relief as the award is not in its favor, thus party can
move application to set aside the arbitral award under section 34 of the Act.
34. Application for setting aside arbitral award.—
(1) Recourse to a Court against an arbitral award may be made only by an application for setting
aside such award in accordance with sub-section (2) and subsection (3).
(2) An arbitral award may be set aside by the Court only if— (a) the party making the application
furnishes proof that—
(i) a party was under some incapacity, or (ii) the arbitration agreement is not valid under the law
to which the parties have subjected it or, failing any indication thereon, under the law for the
time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an
arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of
the submission to arbitration, or it contains decisions on matters beyond the scope of the
submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can
be separated from those not so submitted, only that part of the arbitral award which contains
decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with
the agreement of the parties, unless such agreement was in conflict with a provision of this Part
from which the parties cannot derogate, or, failing such agreement, was not 28 (ii) the arbitral
award is in conflict with the public policy of India.
[Explanation 1—For the avoidance of any doubt, it is clarified that an award is in conflict with
the public policy of India, only if,— (i) the making of the award was induced or affected by
fraud or corruption or was in violation of section 75 or section 81; or (ii) it is in contravention
with the fundamental policy of Indian law; or (iii) it is in conflict with the most basic notions of
morality or justice.

2
Jadojea(overseas) pvt. Ltd v IDC of Orissa Ltd.
Explanation 2—For the avoidance of doubt, the test as to whether there is a contravention with
the fundamental policy of Indian law shall not entail a review on the merits of the dispute.
(2A) An arbitral award arising out of arbitrations other than international commercial
arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by
patent illegality appearing on the face of the award: Provided that an award shall not be set aside
merely on the ground of an erroneous application of the law or by re-appreciation of evidence.
(3) An application for setting aside may not be made after three months have elapsed from the
date on which the party making that application had received the arbitral award, or, if a request
had been made under section 33, from the date on which that request had been disposed of by the
arbitral tribunal: Provided that if the Court is satisfied that the applicant was prevented by
sufficient cause from making the application within the said period of three months it may
entertain the application within a further period of thirty days, but not thereafter.
(4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and
it is so requested by a party, adjourn the proceedings for a period of time determined by it in
order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take
such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside
the arbitral award.
5) An application under this section shall be filed by a party only after issuing a prior notice to
the other party and such application shall be accompanied by an affidavit by the applicant
endorsing compliance with the said requirement.
(6) An application under this section shall be disposed of expeditiously, and in any event, within
a period of one year from the date on which the notice referred to in sub-section (5) is served
upon the other party.

Section 34 of the Act provides for setting aside of an Arbitral Award by the Court. The Act
provides a comprehensive list of circumstances under which an Arbitral Award can be set aside
by the Court and they are:

1. The party is under some incapacity;

2. Arbitration agreement between the parties is not valid;
3. Lack of notice of appointment of arbitrator or of holding of arbitral proceeding;
4. Arbitral award deals with a dispute not contemplated by or not falling within the terms
of the submission to arbitration or it contains decisions on matters beyond the scope of
submission of arbitration;
5. Composition of arbitral tribunal or arbitral procedure was not in accordance with the
agreement of the parties;
 6. The Court finds that the subject matter of the dispute is not capable of settlement by
arbitration under the Law;
7. The Award is in conflict with the Public Policy

Supreme Court has held that Arbitrator has been appointed by the parties themselves so the
arbitral award cannot be interfered by him. But there are provisions under the law to put a check
on the power of the arbitrator. Modification, remission and setting aside have been the remedies
against the tribunal award. Courts can interfere in the arbitral process only under the limited
grounds provided under the Act.
Section 34 provides grounds on which an arbitral award can be set aside by the court. The sole
and exclusive grounds have been provided under section 34(2). Section 2(a)(i) addresses the
validity of the arbitration agreement.
The application to set aside the award must be made by the aggrieved party within 3 months
from the date the award has been received by it. A further period of 30 days after the expiry of 3
months if the court is satisfied that the party was prevented by a sufficient cause from making the
application can also be granted as is given under the proviso to section 34(3).
The time period of 3 months is not specified exclusively but it is in context of the Limitations
Act,1963. Section 14 of the Act applies which determines the time period in which a person can
file for an application. This section is read in connection with section 21 and section 3 of the act.
Beyond this period no appeal would be heard unless a genuine reason is stated. The period of
limitation for setting aside the award
 3 months from the date of the receipt of the award.
 However, this period can be extended for further 30 days on sufficient cause.

A challenge to an award is to be made within three months from the date of receipt of the same.
The courts may, however, condone a delay of maximum 30 days on evidence of sufficient cause.
Subject to any challenge to an award, the same is final and binding on the parties and enforceable
as a decree of the Court.
Considerable controversy has been generated as to whether an award is liable to be challenged
under Section 34 on merits. The earlier view, as expounded by the Supreme Court in Renu
Sagar Power Co. Ltd. v. General Electric Co.3 was that an award could be set side if it is
contrary to the public policy of India or the interests of India or to justice or morality – but not on
the grounds that it is based on an error of law or fact. The Supreme Court in that case was faced
with the issue to determine the scope of public policy in relation to proceedings for enforcement
of a foreign award under the Foreign Awards (Recognition and Enforcement) Act, 1961. The

3
(1994) Supp (1) SCC 644
Court also held that in proceedings for enforcement of a foreign award the scope of enquiry
before the court in which the award is sought to be enforced would not entitle a party to the said
proceedings to impeach the award on merits
However, in a later Supreme Court of India decision in Oil and Natural Gas Corporation vs.
Saw Pipes4 the Court added an additional ground of “patent illegality”, thereby considerably
widening the scope of judicial review on the merits of the decision. In Saw Pipes case the court
accepted that the scheme of Section 34 which dealt with setting aside the domestic arbitral award
and Section 48 which dealt with enforcement of foreign award were not identical. The court also
accepted that in foreign arbitration, the award would be subject to being set aside or suspended
by the competent authority under the relevant law of that country whereas in domestic arbitration
the only recourse is to Section 34. The Supreme Court observed: “But in a case where the
judgment and decree is challenged before the Appellate Court or the Court exercising revisional
jurisdiction, the jurisdiction of such Court would be wider. Therefore, in a case where the
validity of award is challenged there is no necessity of giving a narrower meaning to the term
'public policy of India'. On the contrary, wider meaning is required to be given so that the
'patently illegal award' passed by the arbitral tribunal could be set aside. Similarly, if the award is
patently against the statutory provisions of substantive law which is in force in India or is passed
without giving an opportunity of hearing to the parties as provided under Section 24 or without
giving any reason in a case where parties have not agreed that no reasons are to be recorded, it
would be against the statutory provisions. In all such cases, the award is required to be set aside
on the ground of 'patent illegality'.” The court in Saw Pipes case although adopted the wider
meaning to the term ‘public policy’ but limited its application to domestic awards alone. The
Saw Pipes case has generated some controversy, and it remains to be seen if it will stand the test
of time.

In 2011, case of phulchand v OOO patriot came in front of Justice R.M Lodha which compelled
him to say that patent illegality would apply to a foreign arbitral award. If patent illegality is in
domestic arbitral award, it must apply to foreign arbitral award. A wider meaning was given to
public policy and it laid down that the scope and purpose of public policy is the same in section
34 and section 48.

A CRTICIAL ANALYSIS:
A three judge bench of the Supreme Court of India on 16.02.2001 decided the case of Sanshin
Chemicals Industry vs. Oriental Carbons and Chemicals Ltd. and Ors. It was held that a dispute
related to determination of venue for initiating arbitration proceedings between parties cannot be
considered as an ‘award’ for the purposes of Section 34 of the Indian Arbitration and
Conciliation Act, 1996. As per the relevant clauses of the agreement at issue, a Joint Arbitration
Committee was to be constituted in case the two parties could not decide the venue as per Art.

4
(2003) 5 SCC 705
20(1). The two relevant clauses in the agreement are reproduced herein below for a better
understanding of the commentator’s analysis;
"Clause 8.4 - Any dispute or claim arising out of or relating to this Agreement shall be settled by
arbitration. If the arbitration is to be held in India, the dispute shall be submitted to the
Arbitration Tribunal of the Federation of Indian Chambers of Commerce and Industry and shall
be conducted in accordance with the Rules of that Tribunal. If the arbitration is to be held in
Japan, it shall be conducted in accordance with the Rules of the Japan Commercial Arbitration
Association.

In the event that the parties have not designated the place of arbitration or are unable to agree
thereon within thirty (30) days after the demand for arbitration has been made, the place of
arbitration shall be determined by a Joint Arbitration Committee of three members, one to be
appointed by the Arbitration sub-committee of the Federation, another by the Japan Commercial
Arbitration Association and the third of a nationality other than that of any one of the parties to
act as Chairman to be chosen by the other two members. In deciding the place of arbitration, the
Joint Arbitration Committee shall consider among others the principle that, if only the quality of
the good is in dispute and/or inspection of the goods is necessary, arbitration of such case shall
take place at the place where the merchandise is located. The party demanding arbitration
according as it is resident in India or Japan shall give notice to the Arbitration Tribunal of the
Federation or the Japan Commercial Arbitration Association, as the case may be. The Arbitration
Tribunal of the Federation or the Japan Commercial Arbitration Association, as the case may be,
shall request both the parties to submit their agreement and reasons within thirty (30) days for
preference regarding the place of arbitration. The determination of the place by the Joint
Arbitration Committee shall be final and binding."
"9.7. The terms and conditions herein contained constitute the entire agreement between the
parties and shall supersede all previous communication, either oral or written, between the
parties with respect to the subject matter hereof, and no agreement or understanding varying or
extending the same shall be binding upon either party unless in writing signed by a duly
authorized representative thereof in which writing this Agreement is expressly referred to."
The learned senior counsel for the Appellants, Mr. Ashok H. Desai contended that the agreement
contained two arbitration clauses, Joint Arbitration Committee and Arbitral Tribunal. Using the
principles laid down in K.K Modi vs. K.N Modi and Ors., pertaining to what constitutes an
arbitration agreement, the Court adjudicated that JAC was not an arbitration clause. Apart from
relying upon the supra judgment, it admitted in para 9 of its judgment that as contended by the
Appellant a decision upon the venue of arbitration is of utmost importance as it leads to
application of the substantive law of that country. If I may further quote the verbatim following
this ratio of the bench;
“But the further contention that an aggrieved party has no right to assail the same, once the said
decision is not assailed at this stage, does not appear to be correct. The ultimate arbitral award
could be assailed on the grounds indicated in sub-section(2) of Section 34 and an erroneous
decision on the question of venue, which ultimately affected the procedure that has been
followed in the arbitral proceeding could come within the sweep of Section 34(2) and as such it
cannot be said that an aggrieved party has no remedy at all.”
To the understanding of the author, the Court considers that because a remedy to question the
rationality of the venue decided by the authorized institution or person is available at a later
stage, the decision which cannot be considered as an award, cannot be challenged before this
court of law unless the poor litigant spends/squanders all his money and time in asserting his
claims in accordance with a substantive law which in the first place may not be the legally
correct position to adopt. The basic objective behind the Arbitration and Conciliation Act, 1996
was to make disposal of cases and litigation faster and less cumbersome. Does this ratio not go
against the principle objective of the Act?
Also while adjudicating upon whether JAC was an arbitration clause or not, the court seemed to
have only read the words dispute mentioned in Clause 8.4 and not given any attention to the
words any claims arising out of this agreement. Is not the right determination of venue one of the
claims available to a party as per the terms of this agreement? The word claim can also be
construed as to mean a right. Is it not the Appellant’s right to enforce the arbitral proceedings at
the right venue?

MAITAINIBILITY OF SECOND APPEAL

S.37(3) of the arbitration and conciliation act expressly bar the second appeal against decision of appeal
in S.37(1) & S.37(2). But this section does not bar the right to appeal to supreme court.
In many cases5 it has been held that no second appeal is maintainable under S.37
In Cref Finance Limited vs Puri Construction Ltd. & Ors.6
This appeal has been filed under Clause (10) of the Letters Parent of Lahore High Court as applicable to
Delhi High Court. challenge is to the judgment of learned Single Judge dated 12.2.2001 in FAO(It is
entertained against order which do not fall within the definition of decree) 75 OF 2001 holding the same
to be not maintainable under Section 37(2) of the Arbitration and Conciliation Act, 1996 (in short the
Act). Subject matter of the said appeal was order dated 12th January, 2001 passed by the Arbitrator
appointed pursuant to the directions given by this court in OMP 173/2000.
First appeal was filed as an application before the Arbitrator to implead respondents 2 to 6 herein was
rejected by the Arbitrator on the ground that there was no arbitration agreement between the appellant and
the said respondents and therefore, there is no question of impleading respondent 2 to 6 herein as parties
to the arbitration proceedings. In the FAO, stand of the appellant was that order of the Arbitrator is under
Section 16(2) of the Act and consequently an appeal against the said order is maintainable. Learned
Single Judge held that the matter raised before the Arbitrator by the appellant and decision taken therein
was not encompassed by Section 16(2) of the Act and therefore, the plea was not maintainable.

5
Cref Finance Limited vs Puri Construction Ltd. & Ors AIR 2001 DEL 414
6
ibid
 A preliminary objection was raised by the respondent as to the maintainability of the present appeal with
reference to Section 37(3) of the Act.
Appellant contended that dismissal of appeal on the ground of non-maintainability by the single judge
bench of High court amount to no adjudication, and hence it cannot be treated as appeal under S.37
The court held that dismissing appeal on the ground of non- maintainability amounts to adjudication, and
hence it will be treated as first appeal under s.37. The court dismissed the present appeal as section 37(3)
expressly bar the second appeal.
Whether letter patent appeal is allowed under S.37
Letter Patents Appeal (LPA) is an appeal from a decision of a single judge to another bench of the same
court. It was a remedy provided when high courts were first created in India by Letters Patent in 1865. It
is the only remedy available against the decision of a single judge of the high court, otherwise the remedy
would lie with the Supreme Court.
It has been held in various cases7 that letter patent appeal is not allowed under S.37
A three judge bench of the Bombay High Court recently in Conros Steels Private Limited ("Conros")
v. Lu Qin (Hong Kong) Company Limited ("Lu Qin") and Others8 has resolved the question
pertaining to the appealability from an order passed under Section 8 of the Arbitration and Conciliation
Act, 1996 ("the Act") under clause 15 of the Letters Patent. It has been observed that an application under
Section 8 of the Act is an application under part I of the Act and hence the bar under Section 37 of the Act
would apply to an appeal from an order passed under Section 8 of the Act. It has been held that a Letters
Patent appeal is not maintainable from an order passed under Section 8 of the Act.
Appeal to supreme court
S.37 of the arbitration act provides right to appeal to the supreme court. The procedure how this right is to
be exercised is given in S.109 r/w order 45 of the CPC.
According to sec.109, an appeal lies to the Supreme Court from any judgment, decree or final order in a
civil proceeding of a high court, if the high court certifies that-
a. That the involves a substantial question of law of general importance, and
b. That in the opinion of the high courtthe said question need to be decided by the Supreme Court

7
Union Of India & Anr. vs Monoranjan Mondal & Ors. on 6 December, 1999
Union Of India vs M/S. Simplex Infrastructures Ltd on 13 April, 2017
8
2011
 DIFFERENCE BETWEEN ARBITRATION ACT
OF 1996 AND 1940 ON POINT OF APPEAL

Sec. 39 of Arbitration and conciliation act, 1940

39. Appealable orders.
(1) An appeal shall lie from the following orders passed under this Act (and from no others) to
the Court authorized by law to hear appeals from original decrees of the Court passing the
order:- An order-
(i) superseding an arbitration;
(ii) on an award stated in the form of a special case;
(iii) modifying or correcting an award;
(iv) filing or refusing to file an arbitration agreement;
(v) staying or refusing to stay legal proceedings where there is an arbitration agreement;
(vi) setting aside or refusing to set aside an award; Provided that the provisions of this section
shall not apply to any order passed by a Small Cause Court.
(2) No second appeal shall lie from an order passed in appeal under this section, but nothing in
this section shall affect or take away any right to appeal to the Supreme Court

There is no such difference between the act of 1940 and 1996 on the subject matter on which
appeal lies. More or less the grounds are same.
But there is one major departure from the act of 1940 in 1996. The act of 1940 only entertained
appeal from domestic arbitral award whereas in the act of 1996 an appeal also lies for the
enforcement of certain foreign award such as New York convention9 awards under S.50 of the
act, and Geneva convention awards10 under S.59 of the act. Appeal lies under S.50 and S.59 from
the order refusing-
1. To refer the parties to arbitration
2. To enforce foreign award

9
S.44 of the arbitration and conciliation act,1996
10
S.59 of the arbitration and conciliation act,1996
CONCLUSION

Whenever any person is aggrieved by the arbitral award, they have the power to challenge it on
any of the grounds mentioned under sec 34. Though the order of the tribunal is final and binding
but if the party feels the order is in contradict to any of the following mentioned grounds they
can file for appeal. The comprehensive analysis of section 34 of the 1996 Act suggests that the
power of judicial review can be exercised by the court only in accordance with said section and
no other, as it is explicitly mentioned in the language of the said section that recourse to a Court
against an arbitral award may be made only by an application for setting aside such award in
accordance with sub- section (2) and subsection (3) [27]. But as observed above that the courts
have tried to stretch their fangs in the garb of judicial review by expanding the scope of the
doctrine of public policy so as to include the patent illegality in it and expanding the extent of
judicial review of the international commercial arbitral awards ignores the needs of the
international mercantile community. The courts must keep in mind while deciding objections
under this section that the intention of the legislature in repealing the 1940 Act and substituting it
by the 1996 Act was primarily to attach finality to arbitration proceedings and interference by the
courts was intended to be curtailed drastically. By the recent advent of time there has evolved a
alternate way of dealing with the disputes and whenever there arises any dispute, chances are
they are often settled outside the court saving the courts time and workload. This also brings the
efficiency in the working of the formal legal system.
BIBLOGRAPHY

BARE ACTS:
1. The Arbitration and conciliation act, 1996
2. The Arbitration and conciliation act, 1940
3. Civil procedure Code, 1908
4. Limitation act, 1963

WEBSITES:
1. www.indiankanoon.org
2. www.manupatra.com