In Oil and Natural Gas Corporation Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705 it was observed as under:
“Therefore, in our view, the phrase “public policy of India” used in Section 34 in context is required to be given a wider meaning. It can be stated that the concept of public policy connotes some matter which concerns public good and the public interest. What is for public good or in public interest or what would be injurious or harmful to the public good or public interest has varied from time to time. However, the award which is, on the face of it, patently in violation of statutory provisions cannot be said to be in public interest. Such award/judgment/decision is likely to adversely affect the administration of justice. Hence in addition to the narrower meaning given to the term “public policy” in Renusagar Power Company Ltd. v. General Electric Company, (1994) Supp (1) SCC 644, it is required to be held that the award could be set aside if it is patently illegal. The result would be – award could be set aside if it is contrary to:
- Fundamental policy of India law; or
- The interest of India; or
- Justice or morality; or
- In addition, if it is patently illegal.
Illegality must go to the root of the matter and if the illegality is of trivial nature, it cannot be held that award is against the public policy. Award could also be set aside if it is so unfair and unreasonable, that it shocks the conscience of the Court. Such award is opposed to public policy and is required to be adjudged void.” Uttar Haryana Bijli Vitran Nigam Ltd. v. M/s P.M. Electronics Ltd., 2020 (140) ALR 852.
In Section 34(3) of the Arbitration and Conciliation Act, the commencement period for computing limitation is the date of receipt of award or the date of disposal of request under Section 33 (i.e. correction/additional award). If Section 17 of the Limitation Act were to be applied for computing the limitation period under Section 34(3) of the Arbitration & Conciliation Act, the starting period of limitation would be the date of discovery of the alleged fraud or mistake. The starting point for limitation under Section 34(3) would be different from the Limitation Act.
In the context of Section 34(3) of the Arbitration & Conciliation Act, a party can challenge an award as soon as it receives the award. Once an award is received, a party has knowledge of the award and the limitation period commences. The objecting party is therefore precluded from invoking Section 17(1)(b) and (d) of the Limitation Act once it has knowledge of the award. Section 17(1)(a) and (c) of the Limitation Act may not even apply, if they are extended to Section 34, since they deal with a scenario where the application is “based upon” the fraud of the respondent or if the application is for “relief from the consequences of a mistake.” Section 34 application is based on the award and not on the fraud of the respondent and does not seek the relief of consequence of a mistake. P. Radha Rai v. P. Ashok Kumar, (2019) 13 SCC 445.
In Mcdermott International Inc. v. Burn
Standard Company, (2006) 11 SCC 181, it was held as under:
33 of the Arbitration and Conciliation Act empowers the Arbitral Tribunal to
make correction of errors in arbitral award to give interpretation of a
specific point or a part of the arbitral award and to make an additional award
as to claims, though presented in the arbitral proceedings, but omitted from
the arbitral award. Sub-section (4) empowers the Arbitral Tribunal to make
additional arbitral award in respect of claims already presented to the
Tribunal in the arbitral proceedings but omitted by the Arbitral Tribunal
- There is no
contrary agreement between the parties to the reference;
- A party to
the reference, with notice to the other party to the reference, requests the
Arbitral Tribunal to make the additional award;
request is made within thirty days from the receipt of the arbitral award;
Arbitral Tribunal considers the request so made, justified; and
arbitral award is made within sixty days from the receipt of such request by
the Arbitral Tribunal.”
The powers under Section 33 (4) of the Arbitration and
Conciliation Act cannot be invoked for raising fresh claims or seeking an
appeal against the arbitral award. The powers of the Arbitral Tribunal in these
proceedings are restricted to making an award for such claims which formed a
matter for adjudication and on which the parties had led arguments. Pramod v. Union of India, 2019 (1) AWC 969.
Section 29-A of the Arbitration and
Conciliation Act, 1996 provides for the award to be made within a period of
twelve months from the date the arbitral tribunal enters upon the reference.
Sub-section (2) provides for an incentive in the form of fees to the arbitral
tribunal if the award is made within a period of six months from the date the
arbitral tribunal enters upon the reference. Time for making award as provided
under sub-section (1), may be extended with the consent of parties for a
further period of not exceeding six months. In the event, award is not made
within the period specified under sub-section (1) or the extended period
specified under sub-section (3), the mandate of the arbitrator(s) shall
terminate unless the court has, either prior to or after the expiry of the period
so specified, extend the period, provided that while extending the period, if the
court finds that the proceedings have been delayed for the reasons attributable
to the arbitral tribunal, then, it may order reduction of fees of arbitrator(s)
by not exceeding five percent for each month of such delay. Thus, while
sub-section (2) provides an incentive for disposal of arbitration proceeding
within a time bound period, sub-section (4) provides for reduction in fees of the
arbitral tribunal in the event award is not made within a period of twelve
months or within extended period of six months.
power to extend the period is vested in the parties who may extend the period
by consent upto six months. The power to extend the period vested in court
under sub-section (5), is required to be exercised by the court on application
of mind. The period can be extended by court only for sufficient cause and on
such terms and conditions as may be imposed by the court. Sub-section (6)
further confers power to the court that while extending the period referred to
in sub-section (4), it may substitute one or all of the arbitrators and if one
or all of the arbitrators are substituted, the arbitral proceedings shall
continue from the stage already reached and on the basis of the evidence and
material already on record, and the arbitrator(s) appointed under this section
shall be deemed to have received the said evidences and material. The arbitral
tribunal so reconstituted shall be deemed to be in continuation of the previously
appointed arbitral tribunal. To discourage the delay in conclusion of the arbitral
proceedings, the court has been conferred power under sub-section (8) to impose
actual or exemplary costs upon any of the parties. Jairath Constructions v. Triveni
Engineering and Industries Ltd., 2018 (5) AWC 4676.
As can be seen from Section 2 (c) and Section 31 (6), except for stating that an arbitral award includes an interim award, the Act is silent and does not define what an interim award is. Section 31(6) of the Act delineates the scope of interim arbitral awards and states that the arbitral Tribunal may make an interim arbitral award on any matter with respect to which it may make a final arbitral award.
The language of Section 31(6) is advisedly wide in nature. A reading of the said sub-section makes it clear that the jurisdiction to make an interim arbitral award is left to the good sense of the arbitral Tribunal, and that it extends to “any matter” with respect to which it may make a final arbitral award. The expression “matter” is wide in nature and subsumes issues at which the parties are in dispute. It is clear, therefore, that any point of dispute between the parties which has to be answered by the Arbitral Tribunal can be the subject matter of an interim arbitral award. However, by dealing with the matter in a piecemeal fashion, what must be borne in mind is that the resolution of the dispute as a whole will be delayed and parties will be put to additional expense. The Arbitral Tribunal should, therefore, consider whether there is any real advantage in delivering interim awards or in proceeding with the matter as a whole and delivering one final award, bearing in mind the avoidance of delay and additional expense.
To complete the scheme of the Act, Section 32(1) is also material. It goes on to state that the arbitral proceedings would be terminated only by the final arbitral award, as opposed to an interim award, thus making it clear that there can be one or more interim awards, prior to a final award, which conclusively determines some of the issues between the parties, culminating in a final arbitral award which ultimately decides all remaining issues between the parties. M/s IFFCO v. M/s Bhadra Products, 2018 (129) ALR 927.