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TaxTMI 
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2008 (8) TMI 1020
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....d Conciliation Act, 1996, on the file of the District Court, Tuticorin. When the same was pending, the first respondent filed an Interlocutory Application in I.A. No. 206 of 2007 under Section 34(4) of the Act, seeking to remit the award back to the Arbitrator so as to eliminate the grounds for setting aside the award. 3. By an order dated 3.2.2008, the District Court, Tuticorin, allowed the application I.A. No. 206 of 2007 and remitted the matter back to the Arbitrator for fresh consideration after sufficient opportunities to both sides and further directed the award already passed to be kept in abeyance for a period of six months in terms of Section 34(4) of the Act. Aggrieved by the said order passed by the District Court, Tuticorin in I.A. No. 206 of 2007, the petitioner has come up with the present Civil Revision Petition. 4. Heard Mr. M. Vallinayagam, learned Counsel for the petitioner and Mr. N. Dilipkumar, learned Counsel for the first respondent. The second respondent is the Arbitrator and hence is only a formal party. 5. Mr. M. Vallinayagam, learned Counsel for the petitioner assailed the order of the Court below on the following grounds viz.: (a) that t....
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....hquake and that such payments were not made in terms of the contract. The stand taken by the petitioner was accepted by the Arbitrator. However when the first respondent sent a query under the Right to Information Act, on 8.6.2007, he received a reply dated 4.7.2007 from the Chief General Manager of the petitioner-Company to the effect that MMTC did not divert any Wheat Cargo from Kandla Port to Tuticorin Port during the relevant time. Therefore, according to the 1st respondent, the petitioner has obviously played a fraud upon the Arbitrator by giving false information deliberately and that therefore the District Court, Tuticorin was convinced to remit the matter back for a fresh consideration by the Arbitrator. 7. I have carefully considered the rival submissions. As seen from the contentions of the learned Counsel for the first respondent, the first respondent primarily wants two issues to be gone into by the Arbitrator, in pursuance of the order of remand. The first issue relates to the payment of storage rent made by the Bangalore Office to the first respondent, in respect of which an affidavit was filed by the petitioner before the Arbitrator after the conclusion of the pro....
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....nated the second respondent about the failure of the Arbitrator to furnish copy of the affidavit dated 7.3.2006 and the correspondence referred to therein. Thus it is clear that the first respondent did not have an opportunity to challenge the affidavit filed on behalf of the petitioner on 7.3.2006 and the documents referred to therein. Therefore, there is no doubt that the first respondent has at least prima facie made out one ground for setting aside the arbitration award in terms of Section 34(2) of the Act. Since the first respondent has made out at least one ground for setting aside the arbitral award in terms of Section 34(2) of the Act and also since the ground so made out by the first respondent is capable of being eliminated by the Arbitrator, I cannot find fault with the District Court, Tuticorin, in invoking Section 34(4) of the Act. 9. That the first issue raised by the petitioner is certainly a ground for setting aside the award in terms of Section 34(2) of the Act and that therefore Section 34(4) of the Act, could be invoked in the present case, can be appreciated even by a bare reading of Section 34 of the Act. Section 34 of The Arbitration and Conciliation Act, 1....
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....en 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. 10. It is seen from Sub-clause (i) and Sub-clause (iii) of Clause (a) of Sub-section (2) of Section 34 that an arbitral award can be set aside if the party seeking it to be set aside furnishes proof that he was under some incapacity or that he was otherwise unable to present his case. The arbitration proceedings in the present case concluded on 1.3.2006. On the same date, the Arbitrator directed the ....
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.... on account of diversion of goods intended for Kandla Port to Tuticorin Port, on the basis of the material adduced before the Arbitrator by both parties. The Arbitrator passed the award on 16.3.2006. Thereafter the first respondent claims to have sent an application under the Right to Information Act, on 8.6.2007 and got a reply on 4.7.2007. On the basis of the said correspondence, entered into after nearly 15 months of the passing of the award, the first respondent is not, according to the learned Counsel for the petitioner entitled to a re-enquiry under Section 34(4) of the Act. In other words, the contention of the learned Counsel for the petitioner is that taking advantage of the order of remand passed under Section 34(4) of the Act, the first respondent cannot lead fresh evidence in the form of the letters dated 8.6.2007 and 4.7.2007, obtained post award. The learned Counsel for the petitioner submitted that the scope of an order under Section 34(4) of the Act, is much restricted than an order of remand passed by the Civil Court. The purpose of an order of remand under Section 34(4) of the Act, is not to enable the parties to have a re-hearing nor to enable the parties to addu....
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....Arbitration Act, has made a complete departure from the provision for remand contained in Section 16 of the Arbitration Act, 1940; and (ii) that the scope of Section 34(4) of the 1996 Act, does not appear to have come up for consideration in great detail, so far by the Courts. Therefore, I shall now take up the issue relating to the scope of an order that can be passed under Section 34(4) of the Act. 16. Section 34(4) of the Arbitration and Conciliation Act, 1996, has already been extracted in paragraph-9 above. Section 16 of the Arbitration Act, 1940 reads as follows: 16. Power to remit award. - (1) The Court may, from time to time, remit the award of any matter referred to arbitration to the arbitrators or umpire for reconsideration upon such terms at it thinks fit- (a) where the award has left undetermined any of the matters referred to arbitration or where it determines any matter not referred to arbitration and such matter cannot be separated without affecting the determination of the matters referred; or (b) where the award is so indefinite as to be incapable of execution; or (c) where an objection to the legality of the awar....
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....ions are satisfied, the Court would adjourn the proceedings. While doing so, the Court would leave it to the discretion of the arbitral tribunal (i) to resume the arbitral proceedings or (ii) to take such other action as in the opinion of the arbitral tribunal will eliminate the grounds for setting aside the arbitral award. 19. While under Section 16(1) of the old Act, the Court is empowered to remit the award for reconsideration, Section 34(4) of the Act, does not speak of such remission and reconsideration. The words "remit the award" and "for reconsideration" appearing in Section 16(1), clearly signify that what the Court was expected to do under the 1940 Act, was something similar to what a Civil Court could do under Section 107(1)(b) of the Code of Civil Procedure. But the circumstances under which the power under Section 16(1) was to be invoked, were circumscribed by three conditions imposed under Clauses (a), (b) and (c) of Section 16(1), unlike the provisions of Order XLI, Rules 23 to 25 CPC. 20. Interestingly, the power of remand under Section 16(1) of the 1940 Act, was not linked to the grounds for setting aside the award under Section 30 of the 1940 Act. But the po....
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...., the Court used to fix the terms of reference while remitting the matter for reconsideration to the Arbitrator under Section 16(1) of the old Act. But under the new Act, the arbitral tribunal itself determines the scope of the enquiry, so as to eliminate the grounds of objection. (c) Section 16(1) of the old Act, enumerated three pre-conditions on the very substance of the matter, under Clauses (a), (b) and (c), without satisfying which, the Court cannot remit the matter for reconsideration. On the other hand, Section 34(4) of the new Act, does not prescribe any condition precedent on the substance of the matter but prescribes three procedural conditions namely that there should be an application under Section 34(1) of the new Act and that a request should emanate from a party and the Court considers it appropriate to invoke the power under Section 34(4) of the new Act. (d) While the purpose of an enquiry under Section 16(1) of the old Act, was to have a fresh award upon reconsideration of the previous award, the purpose of the enquiry under Section 34(4) of the new Act, is to eliminate the grounds for setting aside the arbitral award. This is why Section 16(1) o....
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....on; and (ii) the award is imperfect in form or contains any obvious error. The Court can also remit the award to arbitrator in case (i) where the award has left undetermined any matter referred to arbitration; or (ii) where it has determined any matter not referred to arbitration; or (iii) the award is so indefinite as to be incapable of execution; or (iv) is on the face of it illegal. This is also provided under parenthesis Clause of Section 17 which provides "where the Court sees no cause to remit the award or any of the matters referred to arbitration for reconsideration or to set aside the award, the Court shall...proceed to pronounce judgment...." Therefore, it cannot be stated that in case where objections under Section 30 or 33 are not filed, the Court is bound to pass decree in terms of the award. 14. Similarly, when the Court is required to proceed without objection application under Section 30 or 33 of the Act, it cannot pronounce the judgment without considering the provisions of Sections 15 and 16 of the old Act, which provide, as stated above, for modification or correction of any award or for remitting it to the arbitrator for reconsideration on the ground th....
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....r (iii) the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or 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 award which contains decisions on matters not submitted to arbitration maybe set aside; or (iv) 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 Law from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Law; or (b) the court finds that: (i) the subject-matter of the dispute is not capable of settlement by arbitration under the law of this State; or (ii) the award is in conflict with the public policy of this State. (3) An application for setting aside may not be made after three months have elapsed from the date of which the party making that application had received the award or, if a request had been made un....
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....purpose of such an exercise is to eliminate the grounds for setting aside the award. It appears from the language employed that the arbitral tribunal may even refuse to do anything further and leave it to the Court to decide the matter on its own merits under Section 34(2), since Section 34(4) is only an enabling provision and not strictly an order of remand, so as to compel the Arbitrator to do something. This is why Section 34(4) uses the expression "to give the arbitral tribunal an opportunity". The opportunity may or may not be made use of. If the tribunal chooses not to make use of the opportunity so afforded, then the Court will have to consider the application under Section 34(1), in tune with the parameters laid down under Section 34(2). If Section 34(4) is understood in such a perspective, there is no difficulty in coming to the conclusion that the arbitral tribunal may also entertain additional evidence after resumption of the proceedings, since there are no fetters under Section 34(4). All that is required under Section 34(4) is the subjective satisfaction of the arbitral tribunal that the venture undertaken by it would eliminate the grounds for setting aside the award. ....