Summary
The challenged arbitral award for unproductive machinery use was unintelligible and could not be sustained as a reasoned award. The Court distinguished inadequate reasons from unintelligibility and emphasised limited judicial review and the opportunity to cure defects under Section 34(4). Given more than twenty-five years of litigation, it ordered Rs.30 lakh in full settlement of the disputed claim instead of remitting the matter.
Issues
- What quality of reasons Section 31(3) requires and how courts should review them.
- Whether the particular award could be sustained or remitted for correction.
- What final relief was appropriate after prolonged litigation.
Provisions considered
- Section 31(3), Arbitration and Conciliation Act, 1996Absent agreed exceptions, reasons must be intelligible and adequate; an elaborate court-style judgment is unnecessary. (¶¶ 28, 29, 33, 35, 36)
- Section 34, before the 2015 amendment, Arbitration and Conciliation Act, 1996Review is confined to statutory grounds; sub-section (4) permits an opportunity to cure remediable defects rather than substituting judicial merits adjudication. (¶¶ 25, 26, 27, 37, 38, 39)
Held
- Section 34 is not an ordinary appeal. An award is not to be disturbed merely because another factual or contractual interpretation is possible, and reasons may emerge by fair reading of the award and its referenced documents. (¶¶ 26, 27, 34, 35)
- Reasons must be proper, intelligible and adequate to the issue’s complexity. Courts should distinguish inadequate reasons from unintelligibility and avoid casually setting aside awards for gaps capable of being understood from the record. (¶¶ 35, 36)
- Section 34(4) provides an opportunity to cure remediable absence or gaps in reasons. The High Court should ordinarily have considered that course rather than proceeding to adjudicate contractual merits after finding the award unreasoned. (¶¶ 37, 38, 39)
- This award jumbled facts, arguments and conclusions and lacked necessary legal reasoning. It was unintelligible and could not be sustained; nevertheless remand would not benefit parties after the protracted litigation. (¶¶ 38, 40, 41, 42, 43)
- To conclude the dispute, the Court directed payment of Rs.30 lakh in full and final settlement of claim 2 within eight weeks, with 12% annual interest until payment in default. (¶ 44)
Result
Appeal disposed of without costs. The award on claim 2 was not sustained, but Rs.30 lakh was directed in full and final settlement of that claim within eight weeks, failing which 12% annual interest would be payable until payment.