Section 34(4) of the A&C Act meant only to fix defects; Courts can’t allow tribunal to reexamine award: Delhi High Court

Section 34(4) of the A&C Act meant only to fix defects; Courts can’t allow tribunal to reexamine award: Delhi High Court

The Judge cited the rulings of the Supreme Court and the Singapore Court of Appeals to reach the conclusion

The Delhi High Court has held that the recourse to Section 34(4) of the Arbitration and Conciliation (A&C) Act, 1996, which grants Courts the authority to remit an award to the arbitral tribunal, can only be taken for correcting the curable defects. These include filling the gaps in reasoning and correcting typographical and arithmetical errors. It does not allow the tribunal to review the award.

The Bench comprising Justice Yashwant Varma held that Section 34(4) was limited to providing an opportunity for the tribunal to remove the defects that can be remedied without impacting the foundation of the award or the various findings and conclusions. It does not mean conferral of authority on the tribunal to reconsider or modify a finding, which may entail a ‘merit review.’

The Court stated that if the award suffered from any illegalities mentioned in Section 34(2) (a) or (b), it would be set aside and could not be aided by Section 34(4). Delving into the provision's historical evolution and scrutinizing the drafts discussed by the working group of the UNCITRAL (United Nations Commission on International Trade Law), it perceived a consistent track.

The Judge observed that Article 30(3) emerged during the sixth session and resembled Section 34(4). It aimed to empower Courts to continue arbitral proceedings at a party's request, allowing the tribunal to rectify procedural defects. The consensus highlighted curbing annulments through Article 30(3).

He held that in the seventh session, Article 34(4) took shape, echoing the concept of limited remission. It empowered the Courts to remit awards for fixable procedural flaws, avoiding complete annulments, which was a pragmatic approach.

Referring to the Travaux Préparatoires of the UNCITRAL, the Court observed that it reflected a recurring sentiment by providing the Courts the power to remit awards for curable defects.

The Bench cited the decision of the Supreme Court in the Kinnari Mullick v. Ghanshyam Das Damani case, wherein it was held that Section 34(4) permits remission only in cases of curable defects. The Bench also referred to decisions of the apex Court in the Dyna Technologies v. Crompton Greaves and I-Pay Cleaning Services v. ICICI Bank case, to reiterate that Section 34(4) was not intended to allow review of the award to the tribunal.

Justice Varma also highlighted the decision of the Singapore Court of Appeals in the AKN v. ALC case, wherein it was held that Section 34(4) of the Model Law intended to preserve national Courts’ option to remit an award where it was deemed appropriate. However, it could not be used to allow the tribunal to have a relook at the award.

The Bench stated that the modification of the award by the Court under Section 34(2), as prohibited by the top Court in the M. Hakeem case, would apply to the modification of the award by the tribunal.