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2023 SCC OnLine Del 5183 : (2023) 304 DLT 357

In the High Court of Delhi at New Delhi

(BEFORE YASHWANT VARMA, J.)

O.M.P. (COMM) 95/2023, I.A. 4057/2023 (Stay), I.A. 5361/2023

National Highways Authority of India … Petitioner;
Versus
Trichy Thanjavur Expressway Ltd. … Respondent.
And
O.M.P. (COMM) 106/2023
Trichy Thanjavur Expressway Ltd. … Petitioner;
Versus
National Highways Authority of India …
Respondent.
O.M.P. (COMM) 95/2023, I.A. 4057/2023 (Stay), I.A. 5361/2023
and O.M.P. (COMM) 106/2023
Decided on August 21, 2023, [Judgment reserved on : 06 July
2023]
Advocates who appeared in this case :
Mr. Santosh Kumar, Standing Counsel with Mr. Daksh Arora, Mr.
Manish K. Bishnoi and Ms. Pallavi Singh Bishnoi, Advs.
Ms. Kaadambari, Mr. Pankaj Agarwala, Mr. Sahil Khanna, Ms. Ayushi
and Mr. Amir Zaidi, Advs.
Ms. Kaadambari, Mr. Pankaj Agarwala, Mr. Sahil Khanna, Ms. Ayushi
and Mr. Amir Zaidi, Advs.
Mr. Santosh Kumar, Standing Counsel with Mr. Daksh Arora and Mr.
Kushagra Amar, Advs. for NHAI.
Mr. Gautam Narayan and Ms. Asmita Singh, Advs.
Mr. Gaurav Pachnanda, Sr. Adv. with Ms. Nikita Jaitly and Ms. Anvi
Sharma, Advs.
Mr. Ramesh Singh, Sr. Adv.
Mr. Rajshekhar Rao, Sr. Adv. with Ms. Mansi Sood and Mr. Areeb
Amanullah, Advs.
Mr. Ciccu Mukhopadhyay, Sr. Adv. with Mr. Rishi Agarwala, Ms.
Shruti Arora, Mr. Karanvir Singh, Adv. Mr. Dayan Krishnan, Sr. Adv.
with Mr. Rishi Agarwala, Mr. Shreedhar Kale, Mr. Sanjeevi Seshadri, Ms.
Shruti Arora, Mr. Karan Vir, Advs.
Mr. Saurabh Banerjee, Sr. Adv. with Mr. Yashwardhan, Ms. Anjali
Dwivedi, Mr. Rakesh T., Mr. T.S. Sundaram, Mr. S.P. Mukherjee, Advs.
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Mr. George Pothan, Ms. Manisha Singh, Mr. Ashu Pathak and Ms.
Jyoti Singh, Advs.
Mr. Ashim Sood, Adv.
Ms. Aarzoo Aneja, Adv.
Mr. R.A. Iyer, Adv.
Mr. Arjun Natarajan and Ms. Kamana Pradhan, Advs. Dr. Amit
George, Adv.
Mr. Rohan J Alva, Adv.
Mr. Karan Aggarwal, Adv.
Dr. Shashwat Bajpai, Mr. Akshay Anurag and Ms. Sanjana Sachdev,
Advs.
Mr. Zafar Khurshid, Mr. Amit Singh Chauhan and Mr. Abhishek
Sharma, Advs.
Mr. Manish Bishni, Mr. Nirmal Prasad, Adv.
Mr. Karan Agarwal, Adv.
Mr. Anurag Ojha and Mr. Udit Nagar, Advs.
Mr. Karn bhardwaj, Adv.
Mr. Naushad Ahmed Khan, Adv.
Ms. Payal Chawla and Ms. Hina Shaheen, Advs. Mr. Amit Gupta, Adv.
Mr. Mozzam Khan, Adv.
Mr. Manish Bishnoi, Adv.
The Judgment of the Court was delivered by
Y ASHWANT VARMA, J.:—
A. BRIEF OVERVIEW
1. These two cross petitions under Section 34 of the Arbitration
1
and Conciliation Act, 1996 have come to be preferred seeking the
following reliefs:—
“O.M.P. (COMM) 95/2023
“Set aside the Impugned Award dated 07.08.2022 as corrected
vide order dated 15.11.2022 passed by the AT in the arbitration
proceedings titled “Trichy Thanjavur Expressway Ltd. v. National
Highways Authority of India “to the extent of the findings challenged
above and the award of Claim No. 1 (b) and (g) and Claim No. 8:”
O.M.P. (COMM) 106/2023
a) Set aside and quash the portion of the Impugned Arbitral
Award dated 07.08.2022 to the extent of the rejection of the
valid and legal claims of the Petitioner/Claimant (whereby
claims worth INR 30,27,33,01,844/- were rejected) and to
allow the claims which were wrongfully rejected by the Ld.
Arbitral Tribunal, and award the same in favour of the
Petitioner/Claimant.
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b) Alternatively, nominate and appoint an independent sole

arbitrator to adjudicate the rejected part of the claims of the
Petitioner/Claimant within a time bound manner.”
2. As would be evident from the reliefs claimed in the two petitions,
the appellants question certain parts of the Arbitral Award dated 07
August 2022. While Trichy seeks quashing of a part of the Arbitral
Award dated 07 August 2022 to the extent that it had rejected claims
amounting to INR 30,27,33,01,844/-, National Highways Authority
of India2 seeks the setting aside of the Arbitral Award to the extent of
the findings returned by it in respect of Claim No. 1(b) and (g) as well
as on Claim No. 8. Additionally, the petitioner NHAI has moved I.A.
5361/2023 for eliminating grounds for setting aside under Sec 34(4) of
the Act. When the two appeals were initially called before the Court on
21 March 2023, the question which was raised and stood duly noticed
was with respect to whether parts of an award could be severed and
whether it could be partially set aside. The attendant question which
arose and was so noticed was whether the grant of such a relief would
be contrary to the decision of the Supreme Court in NHAI v. M.
3
Hakeem and which had essentially held that the power to set aside as
conferred by Section 34 cannot be read so as to include the power to
vary or modify the award as rendered by the Arbitral Tribunal4.
3. Taking note of the importance of the questions which arose and
the fact that any decision rendered on the same would impact
numerous matters pending or yet to be instituted, the Court had
published a notice calling upon learned counsels to address
submissions.
4. Pursuant to the aforesaid liberty granted, learned counsels and
members of the Bar were invited to address submissions on the
questions formulated. The Court, at the very outset seeks to duly
acknowledge the invaluable assistance that was rendered by the
hon‘ble members of the Bar of this High Court. Learned counsels who
answered the call of the Court have placed on the record copious
material in the shape of erudite written submissions, judgments
rendered by courts in India as well as in various foreign jurisdictions,
authoritative treatises and background material relating to the
formulation of the Model Law, all of which has been of tremendous
assistance in enabling it to obtain a comprehensive perspective both
from a national and international viewpoint. For this the Court
expresses its immense gratitude.
5. The issue arises in the context of Section 34 of the Act which
comprises the power of the Court to set aside an Arbitral Award. The
issue of severability stood raised principally on account of the Proviso
appended to Section 34(2)(a)(iv), which prescribes that if decisions on
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matters submitted to arbitration can be separated from those which

were not, the unsustainable part of the Arbitral Award and which
contains decisions on matters not submitted to arbitration may alone
be set aside. The question which arose was whether the concept of
partial setting aside or severance would stand restricted to a challenge
to an Arbitral Award on grounds enumerated in clause (iv) of Section
34(2)(a) or would it also be applicable to other clauses falling in that
Section. The second aspect which was canvassed for the consideration
of the Court related to the scope and intent of Section 34(4) and which
contemplates the Court adjourning proceeding on the request made by
one of the parties in order to enable the AT to resume proceedings and
take such further action as in its opinion would eliminate the grounds
for setting aside the Arbitral Award itself.
6. Learned counsels who addressed submissions before the Court
had placed for our consideration written submissions covering the
various facets of the questions which stood raised. For the
completeness of the record, we deem it apposite to extract the relevant
parts of those written submissions hereinafter. The Court deems it
appropriate to observe that it has chosen to reproduce abridged
versions of the written submissions which were tendered for the sake of
preciseness and brevity alone as also as to avoid the judgment itself
becoming too protracted or discursive and thus failing to retain focus on
the core issues that arise.
B. WRITTEN SUBMISSIONS EXTRACTS
7. The written submissions are extracted hereinbelow:—
(a) Mr. Gautam Narayan and Ms. Asmita Singh, Advocates Part
-1
2. “PROPOSITIONS
2.1 M Hakeem does not stultify the power of the objection
court to severe portions of an a rbitral award:
2.1.1 In M Hakeem (supra), the Supreme Court after
contrasting Section 34 of the Arbitration and Conciliation
Act, 1996 (hereinafter, “the 1996 Act”) with Section 15 of
the Arbitration Act, 1940 came to the conclusion that the
power vested in the court hearing objections against an
award which extended to modifying an award under the
1940 Act had been curtailed by the 1996 Act to merely
setting aside an award on satisfaction of any of the grounds
specified under Section 34. In arriving at this conclusion,
the Court found sustenance in the language employed by
Article 34(1) and (2) of the UNCITRAL Model Law on
International Commercial Arbitration, 1985.
2.1.2 Relying on the judgments in Mc Dermott
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International Inc v. Burn Standard Co. Ltd., Kinnari Mullick

v. Ghanshyam Das Damani and Dakshin Haryana Bijli Vitran
Nigam Ltd. v. Navigant Technologies (P) Ltd., the Court
negated the power to modify an award by the Section 34
Court and further went on to hold that any order to do so in
light of the express statutory bar would be to transgress by
way of creative interpretation a “judicial Lakshman Rekha”.
2.1.3 At the outset, it is apposite to note that M Hakeem
did not deal with the issue of severability in as much as the
submission advanced by Ld. Counsel for the Respondent
placing reliance on inter alia judgments of a Ld. Single
Judge and Division Bench of the High Court of Madras and
Gayatri Balaswamy v. ISG Novasoft Technologies Ltd. and
ISG Novasoft Technologies Ltd. v. Gayatri Balaswamy was
that the power to modify an award must necessarily be
located in the Section 34 Court so as to avoid multiplicity of
litigation.
2.2 International position on the Power to severe/“Partial
Annulment of Award”
2.2.1 An examination of the relevant provisions of the
1996 Act, the UNCITRAL Model Law on International
Commercial Arbitration, 1985 (hereinafter, “the Model Law”),
the Arbitration Act, 1996 of England and Wales, the New
York Convention on Recognition and Enforcement of Foreign
Arbitral Awards, 1958 leads one to the irresistible conclusion
that severability of offending portions of an award is
permissible. To wit, the Section 34 Court is empowered, nay
authorised and vested with the authority and jurisdiction to
separate portions of an award that fall foul of the thresholds
prescribed under the various sub-clauses of Section 34(2).
2.2.2 While this is immediately apparent from a reading
of the proviso to Section 34(2)(a)(iv), which empowers the
Court to separate within the award, decisions on matters not
submitted to arbitration and set those aside, there is good
authority to suggest that this yardstick or principle can and,
in fact, should be extended to other situations as well such
as violations of public policy (Section 34(2)(b)(ii)) and
procedural unfairness (Section 34(2)(a)(iii)) as noticed by
Gary B Born.
2.2.3 This proviso is quite clearly inspired by Article 34(2)
(a)(iii) of the UNCITRAL Model Law, which in turn echoes
Article V(1)(c) of the New York Convention.
2.2.4 Having recognised that the effects of a successful
challenge to an award would be determined by the grounds
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of challenge raised and the law applied thereto, it is

observed in Redfern & Hunter that a Court may decide to
confirm the award, refer it back to the Tribunal for
reconsideration, vary it or set the award aside in whole or in
part.
2.2.5 It is interesting to note that various provisions of
the Arbitration Act, 1996 of the UK recognise the concept of
severability albeit while seeking to provide for a varying
nature of challenges to an arbitral award. Section 67
empowers the Court in case of a successful challenge to an
award based on ‘substantive jurisdiction’ to either confirm,
vary or set aside the award in whole or in part under Section
67(3). Similarly, in case of a successful challenge on the
ground of a ‘serious irregularity’, Section 68 empowers the
Court to either remit to the Tribunal in whole or in part for
reconsideration the award, set aside in whole or in part or
declare the award to be of no effect in whole or in part under
Section 68(3). The English Act also contemplates an appeal
on a point of law arising out of an award to a Court under
Section 69(7) whereunder the Court in appeal is empowered
to confirm, vary, remit for reconsideration in whole or in part
or set aside in whole or in part the award. Therefore, under
Section 69, the Court is empowered to vary the award and
substitute its own decision therefor.
2.2.6 Section 71(2) goes on to provide that where the
Court makes an order under Sections 67, 68 and 69,
a) where the award is varied, the variation has effect as part
of the tribunal's award;
b) where the award is remitted in whole or in part, the
tribunal is required to make a fresh award in respect of
matters which are remitted; and
c) where the award is set aside or declared to be of no
effect, in whole or in part, the Court may in addition order
that any provision that an award is a condition precedent
to the bringing of legal proceedings in respect of a matter
to which the arbitration agreement applies is of no effect
as regards the subject matter of the award.
2.2.7 It is pertinent, however, to note that under the
English Act, remission is the default rule and it is only when
the Court finds that this option would be inappropriate, that
the Court would proceed to set aside the award in whole or
in part.
2.3 It, therefore, emerges from the aforesaid discussion that
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severability is a common strain that runs through the spirit of

all statutory provisions dealing with challenges to arbitral
awards.
3. The position in India under Section 34 of 1996 Act
3.1 A Full Bench of the Hon'ble High Court of Bombay
constituted to answer a reference, in RS Jiwani v. Ircon
International Ltd., recognised that severability is an established
concept in law and held that there was no bar in applying the
doctrine in cases where awards are severable. The Court held
that the words “set aside” under Section 34 could not be
construed to imply only a wholescale setting aside of the award
as such an interpretation would be destructive of the legislative
intent of expeditious disposal of disputes subjected to
arbitration.
3.2 The Supreme Court in JG Engineers v. Union of India
while dealing with and interpreting Section 34 of the 1996 Act
reversed the judgment passed by the High Court and held that
the latter had erred in setting aside the award on claims qua
which it had not found any infirmity. It was held that where an
award deals with and decides several claims separately and
distinctly, even if the Court finds that the award in respect of
some items is bad, the Court should segregate the items which
did not suffer from any infirmity and uphold the award to that
extent.
3.3 A Division Bench of the Telangana High Court in
Saptarishi Hotels Pvt. Ltd. v. National Institute of Tourism &
Hospitality Management (NITHM) has recognised the power of
the Court dealing with objections against an arbitral award to
modify the award in part by severing offending portions while
upholding others which do not suffer from any lacuna.
3.4 Similarly, a Division Bench of the High Court of Kerala in
Navyuga Engineering Company Ltd. v. Union of India, after
considering the effect of the law laid down in Hakeem (supra)
has concluded that the doctrine of severability can be applied
to proceedings under Section 34. Pertinently, a Special Leave
Petition filed against the said judgment has been dismissed
and therefore this enunciation of the law has been upheld by
the Hon'ble Supreme Court albeit in exercise of jurisdiction
under Article 136.
3.5 A Ld. Single Judge of the Hon'ble High Court of Bombay
in NHAI v. Addl Commissioner, Nagpur has after noticing the
aforesaid judgments formed the opinion that where several
distinct and independent issues were decided by the arbitrator,
the Court is empowered to segregate and uphold the award in
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respect of items which do not suffer from infirmities.

3.6 Finally, it is apposite also to draw attention to a recent
judgment rendered by a Ld. Single Judge of this Hon'ble Court
in Union of India v. Alcon Builders and Engineers Pvt. Ltd.,
wherein after having traced the development of the law in
India with regard to the doctrine of severability, it was
concluded that the Court is empowered to set aside individual
and severable claims or counterclaims without having to set
aside the entire award and to do so would not amount to
modification of the award.
4. Conclusion
4.1 In view of the aforesaid, it is respectfully submitted that,
in cases where infractions of public policy are palpable or where
substantial injustice has been visited on one of the parties,
whether by reason of the Tribunal dealing with issues beyond
its remit or by reason of the procedure adopted by it being
unjust on account of denial of grant of a fair and reasonable
opportunity of hearing, the power to annul or set aside, in part,
an arbitral award, must of necessity be recognised in the
Section 34 Court. The alternative would be an anathema to the
raison d'être of any proceeding i.e. to do full and complete
justice between the warring parties.
4.2 It is, therefore, submitted that the principle of
severability which has received statutory recognition as also
the imprimatur of judicial interpretation applies with full rigour
and force in situations where the Section 34 Court reaches the
conclusion that the award suffers from illegalities or
irregularities of the nature specified under Section 34(2). In
such a situation, to set aside an award in its entirety is akin to
throwing the baby out with the bath water. The consequence of
such a course of action would be to require a de novo
arbitration, which would be a daunting prospect even for the
most resilient of parties, by reason not only of cost but also
time factors and would therefore be doing a disservice to the
concept of resolution of disputes via the medium of arbitration.
4.3 The wealth of contemporaneous academic and judicial
thinking with regard to the applicability of the principle of
severability would, it is respectfully submitted, suggest that M
Hakeem (supra) is neither the last word on the subject nor
does it in any manner, close the door on the sustainability of a
partial affirmation of an arbitral award. This view gains all the
more traction in light of the indisputable position that a
contention on the anvil of severability was neither raised nor
considered in M Hakeem (supra).”
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(b) Mr. Gautam Narayan and Ms. Asmita Singh, Advocates Part
-2
“Submissions on exercise of jurisdiction under Section 34
(4) of the 1996 Act
2. The power of remission is derived from and circumscribed
by national legislation. Section 34(4) of the 1996 Act is
identical to Section 34(4) of the Model Law which has been
widely regarded as essentially a “curative provision”.
2.1 Redfern & Hunter in Para.10.19 draw reference to
Section 68(3) of the Arbitration Act, 1996 to suggest that to
remit an award to the Tribunal is the default rule and it is
only when this option is found not to be appropriate that the
court hearing the objections against the award would
exercise the power to set it aside in whole or in part.
Arguably, such a course of action seems to tilt the scales in
favour of the beneficiary of the award.
2.2 In para.10.20, the authors further suggest that in
countries that follow the provisions of the Model Law in their
national legislations, the power to remit to the Tribunal has
been linked to the narrow grounds available for setting aside
the award and, therefore, the power is in sum and substance
a means to cure defects in the award which may otherwise
require to be set aside.
2.3 As explained by the oft-quoted judgment of the Court
of Appeals of Singapore in AKN v. ALC appeals, Section 34
(4) of the Model Law is a curative provision which enables
the Court faced with a defective award which could be set
aside to forestall that consequence. It is an alternative to
setting aside of the award and the question of remission
cannot arise for portions of the award which are set aside.
Moreover, as held by the Court of Appeals in Permasteelisa
Pacific Holdings Ltd. v. Hyundai Engineering and
Construction Co. Ltd., the question of remission in terms of
Section 34(4) cannot arise for parts of the award which are
not vulnerable to being set aside.
2.4 More recently, following the law laid down in AKN
(supra), the Court of Appeals has further clarified that the
power to remit under Section 34(4) can only be exercised by
the High Court/court of challenge of first instance and not
appellate courts such as itself.
2.5 The law laid down in AKN (supra) is widely considered
to be the authority on the interpretation of Section 34(4) of
the Model Law and has been relied upon in other
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jurisdictions such as Australia as well.

3. Indian courts have been grappling with Section 34(4)
since coming into force of the 1996 Act and few recent
decisions have clarified its scope and ambit on the lines of the
decisions of the Court of Appeals as essentially a curative
provision which cannot be invoked to remedy a ground of
patent illegality sufficient for setting aside the award.
3.1 One possible view with regard to how Section 34(4) is
to be interpreted could be a situation in which an award
under a particular claim is not supported by reasons as
mandated by under Section 31(3) which was the case in
Dyna Technologies Pvt. Ltd. v. Crompton Greaves Ltd.
3.1.1 In such a situation, the Section 34 Court when
dealing with an objection raised by the Respondent could
at the request of the Claimant exercise the power under
Section 34(4) to remit that part of the award to the
Tribunal to enable the Tribunal to provide reasons for the
award under that Claim.
3.1.2 It is of course understood that this could not
empower the Tribunal to take fresh evidence or permit
parties to raise new grounds in support of or in opposition
of the claim remitted to it as pointed out by the Ld.
Single Judge in DMRC (supra).
3.1.3 Moreover, as held in I-Pay Clearing Services
(supra), such a course cannot save an award which fails
to give “findings” as opposed to “reasons” on certain
issues i.e. an award which fails to adjudicate altogether
contentious issues.
3.2 A consequence of this interplay between Section 34
(2) and 34(4) is that in a situation where a party that has
suffered an adverse award and is able to convince the
objection hearing court that the award or part thereof suffers
from an error of the nature specified under Section 34(2),
could then possibly be in a situation where at the request of
a counter party as pointed out in ONGC Petro Additions Ltd.
v. Tecnimont SPA, the matter is remanded to the Tribunal by
the Section 34 Court thereby virtually affording another
opportunity to the Tribunal to correct the error which would
have otherwise merited the setting aside of the award in
whole or in part.
3.3 This approach can be criticised on the ground that if
upon remand, the Tribunal were to arrive at the same
conclusion in the matter of awarding or rejecting the claims
remanded to it, but on this occasion after curing the error or
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defect pointed out in the first round, it would seemingly

work at least some degree of prejudice to the party against
whom the award is rendered.
3.4 However, since arbitration as a species of alternate
dispute resolution mechanisms derives its legitimacy from
certain foundational principles such as party autonomy,
expeditious adjudication of the lis by minimising of judicial
intervention etc., this being the bargain chosen by parties
consciously, such a view should be an acceptable one that
passes muster.
3.5 It is also possible to criticise the approach
commended by Redfern on the logic that the exercise of
discretion by the Section 34 Court to determine satisfaction
of the “appropriateness test” must be on grounds
independent of those specified under Section 34(2) instead
of conflating the two provisions. In other words, grounds
under Section 34(2) should lead to a setting aside, in whole
or in part, of the award, while under Section 34(4), a Court
could exercise its discretion of course on a request made by
one of the parties to remit the award to the Tribunal on
grounds independent of Section 34(2). However, the
approach of Redfern appears to be in consonance with the
interpretation of Section 34(4) of the Model Law as
explained by the Court of Appeals of Singapore that
remission under Section 34(4) is possible only in case the
award suffers from a defect which is a ground for setting it
aside which could extend to atleast some grounds under
Section 34(2) as well such as Section 34(2)(b)(iii) as
pointed out in RS Jiwani v. Ircon International Ltd.”.
(c) Mr. Dayan Krishnan, Senior Advocate
3. “IT IS SUBMITTED THAT EVEN AFTER THE DECISION INM.
HAKEEM (SUPRA) UNDER S. 34, A&C ACT, 1996 THE COURT HAS
THE POWER TO PARTIALLY SET ASIDE AN AWARD.
3.1. The Supreme Court in M. Hakeem (supra) was
considering the power of a Court to modify/vary an award in
proceedings under S. 34, A&C Act, 1996.
3.2. The fact situation in M. Hakeem (supra), pertained to
cases where under S. 34, A&C Act, the Court had enhanced the
compensation awarded by the authority to landowners under
the NHAI Act.
3.3. In this context, the Court refers to the language of S.
34, A&C Act, 1996 to hold that the remedy prescribed therein
is restricted only to the setting aside of awards.
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3.4. The Court also refers to the UNCITRAL Model Law on

International Commercial Arbitration, 1985 and the
authoritative textbook Redfern and Hunter on International
Arbitration to support the interpretation that even under S. 34,
A&C Act, 1996 a reviewing Court would have no authority to
modify or vary the terms of the Award.
3.5. It is important to note that the extract cited with
approval from Redfern and Hunter, would show that under the
UNCITRAL Model Law, the reviewing Court has the power
either all or part of an award null and void.
“10.06. The purpose of challenging an award before a
national court at the seat of arbitration is to have that
court declare all, or part, of the award null and void. If
an award is set aside or annulled by the relevant court, it
will usually be treated as invalid, and accordingly
unenforceable, not only by the courts of the seat of
arbitration, but also by national courts elsewhere. This is
because, under both the New York Convention and the Model
Law, a competent court may refuse to grant recognition and
enforcement of an award that has been set aside by a court
of the seat of arbitration. It is important to note that,
following complete annulment, the claimant can
recommence proceedings because the award simply does
not exist - that is, the status quo ante is restored. The
reviewing court cannot alter the terms of an award nor
can it decide the dispute based on its own vision of the
merits. Unless the reviewing court has a power to remit the
fault to the original tribunal, any new submission of the
dispute to arbitration after annulment has to be undertaken
by commencement of a new arbitration with a new Arbitral
Tribunal.”
3.6. The Court thereafter makes it clear that the proceeding
under S. 34, A&C Act, 1996 does not entail a review on the
merits of the Award. Consequently, the possibility of awarding
claims which were not awarded by the Tribunal, or varying the
awarded claims does not arise.
3.7. The Court thereafter examines the views of various High
Courts on this issue. Notably, a perusal of the relevant extracts
would show that in each of these cases, the High Court was
dealing with the issue of whether a claim which had been
rejected by the Tribunal could be awarded or an awarded claim
could be varied.
3.8. The Court also notes that the various judgments of the
Supreme Court where modifications (such as a change in the
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rate of interest) were permitted, were orders passed under

Article 142 of the Constitution.
3.9. In light of the above discussion, the Court once again
citing the scope of a reviewing Court under the UNCITRAL
Model Law as elucidated in Redfern and Hunter, holds that
there is no power under S. 34, A&C Act, 1996 to
modify/vary the Award.
3.10. In view of the above, it is submitted that the Supreme
Court in M. Hakeem (supra), in fact did not even consider
whether a partial setting aside of an award as a
modification/variation.
……..
4. THE PARTIAL SETTING ASIDE OF AN AWARD UNDER S. 34,
A&C ACT, 1996 WOULD BE GOVERNED BY THE PRINCIPLES OF
SEVERABILITY.
4.1. From the above, it is clear that the Court has the power
under S. 34, A&C Act, 1996 to partially set aside an Award.
4.2. The guidelines for when a Court would be able to
partially set aside an award has been laid down in decisions of
the Supreme Court, this Hon'ble Court and other High Courts,
i. J.C. Budhraja v. Chairman, Orissa Minig Co. Ltd., (2008) 2
SCC 444,
ii. B.R. Arora v. Airports Authority of India, 2019 SCC OnLine
Del 7765,
iii. R.S. Jiwani v. Ircon International Ltd., 2009 SCC OnLine
Bom 2021,
iv. MMTC Ltd. (India) v. Alacari, SA (Switzerland), 2013 SCC
OnLine Del 2932.
4.3. It is therefore, humbly submitted, that where in the
examination of an award under S. 34, A&C Act, 1996, the Court
comes to a conclusion that the offending part of the award
may be severed without the same having any further
effect on other findings, the Court may set aside only
that offending portion.
4.4. As an illustration, where in an arbitration, the Claimant
has claimed compensation for loss of profit and overheads due
to delay in completion caused by the Respondent. The Tribunal
holds that the Respondent was responsible for the delay and
awards compensation as prayed for.
Situation A:
i. The Court under S. 34, holds that the finding of the Tribunal on the
attribution of delay is liable to be set aside.
ii. In such a situation, the finding on delay, which forms the
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substratum of the finding on compensation cannot be severed,

and the entire Award would be set aside.
Situation B:
i. The Court does not interfere with the finding on delay, however,
finds that the compensation for loss of profit was awarded without
evidence.
ii. No infirmity is found with the finding on overheads.
iii. Here, the award for Loss of Profit, being severable from the award
for Overheads can be severed and only that portion of the Award
may be set aside.
……..
5.3. In view of the above enunciation of law, it is evident
that a Court may at its discretion allow an application under S.
34(4), A&C Act, 1996 where the Tribunal may supply reasons
in support of a finding already recorded. However, where no
finding exists, the power under S. 34(4) cannot be
exercised.
5.4. The scope of S. 34(4), A&C Act, 1996 has also been
interpreted by a Ld. Single Judge of this Court to exclude the
Tribunal from taking any fresh evidence or re-appreciating
the evidence already considered [Delhi Metro Rail
Corporation Ltd. v. J. Kumar Crtg. JV, 2022 SCC OnLine Del
1210.
The Ld. Division Bench of this Court has also endorsed the
position that a party which seeks to set aside the award
cannot simultaneously prefer and maintain an application
under S. 34(4) [Canara Bank v. State Trading Corporation of
India Ltd., (2022) 5 HCC (Del) 638.”
(d) Mr. Gaurav Pachnanda, Senior Advocate
“Proposition 1 : Under Section 34(2) of the A&C Act, the
Court can set asidea part of an arbitral award, only and only
if that part is severable from therest of the award.
2. The Supreme Court of India has held in the case titled J.G.
Engineers Private Limited v. Union of India, reported at (2011) 5
SCC 758 (“J.G. Engineers' Case”), that if an arbitral award deals
with and decides several claims separately and distinctly, even if
the Court finds that the arbitral award is bad with respect to some
items, the Court will segregate the arbitral award from the items
which do not suffer from any infirmity and uphold the arbitral
award to that extent [see paragraphs 24 and 25].
3. In the case titled R.S. Jiwani v. IRCON International Ltd.,
reported at (2010) 1 Mah LJ 547 (“R.S. Jiwani's Case”), the Full
Bench of the Bombay High Court held that Section 34 of the A&C
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Act vests the Court with jurisdiction to apply the principle of

severability to the arbitral award; and that the proviso to Section
34(2)(a)(iv) has to be applied ejusdem generis to Section 34 of
the A&C Act as a whole [see paragraphs 28, 30, 35, 36, 37 and
38].
4. The Division Bench of the Delhi High Court while noticing R.
S. Jiwani's Case in the case titled Puri Construction P. Ltd. v.
Larsen and Toubro Ltd., reported at 2015 SCC OnLine Del 9126
(“Puri Construction's Case”), confirmed the arbitral award on the
issue of liability but set aside certain (unsubstantiated) parts of
an arbitral award with respect to quantum [see paragraphs 114,
115, 118 and 119].
5. The Supreme Court of India did not discuss J. G. Engineers'
Case in the case titled Project Director, National Highways, NHAI
v. M. Hakeem, reported at (2021) 9 SCC 1 (“Hakeem's Case”),
but the decision of the Division Bench of the Delhi High Court in
Puri Construction's Case (which relied upon the Full Bench of the
Bombay High Court in R. S. Jiwani's Case) was impliedly approved
by the Supreme Court [see paragraphs 30 and 31].
6. Therefore, it is respectfully submitted that the decision of
the Supreme Court in Hakeem's Case does not appear to decide
against partial setting aside of severable arbitral awards.
Proposition 2 : However, there is a high threshold for
holding that an arbitral award is severable.
7. Merely deciding the claims and counterclaims separately and
distinctly may not by itself render the arbitral award severable in
all cases. What would be required is an analysis of whether the
good part(s) of the arbitral award, which is to be upheld, can be
separately identified, without any correlation with or dependence
on the invalid or bad part(s) of the arbitral award and that the
setting aside of the bad part(s) would have no impact on the good
part(s) of the arbitral award.
8. Therefore, in order to invoke the principle of severability, the
Court must not only examine “textual severability” but also
“substantial severability”.
9. Where the bad part(s) of an arbitral award is intermingled,
interconnected and/or interdependent upon the good part(s) of
the arbitral award in a manner that it is practically not possible to
sever the bad part(s) from the good, the principle of severability
cannot apply.
10. First, this exercise of severing the good part(s) from the
bad part(s) of an arbitral award can only be undertaken if it is ex
facie possible to do so, with precision. It should not involve
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extensive dissection by the Court by delving not only into the bad
part(s) but also the good part(s) of the arbitral award.
11. Second, whether it is possible to sever an arbitral award or
not, will not only depend on the substance of the arbitral award
but also on the form in which the arbitral award is made or
fashioned.
12. For example, according to the decision of the Division
Bench of the Delhi High Court in the case titled Nussli Switzerland
Ltd. v. Organising Committee Commonwealth Games, reported at
(2014) 145 DRJ 399 [see paragraph 34], where the final awarded
amount has been arrived at after netting off the claims and the
counterclaims, it was held that the principle of severability of the
arbitral award cannot be invoked at all. The Court held that : “34.
A party like the Organizing Committee which has its claims
rejected, except a part, but which subsumes into the larger
amount awarded in favour of the opposite party, even if succeeds
in the objections to the award would at best have the award set
aside for the reason the Arbitration and Conciliation Act, 1996 as
distinct from the power of the Court under the Arbitration Act,
1940, does not empower the Court to modify an award… …”.
The netting off of claims and counterclaims results in a
composite award where as single awarded amount is enforceable
by the successful party, based on the broad principle embodied in
Order VIII Rule 6F of Civil Procedure Code, 1908. This would also
have an impact on the amount of stamp duty payable on the
arbitral award for the purpose of execution, as the stamp duty is
payable on the composite amount and not on constituent amounts
awarded for claims and counter claims before netting.”
(e) Mr. Ciccu Mukhopadhaya, Senior Advocate
“Issue (ii) : Is partial setting aside of an arbitral award
permissible under Section 34 of the Arbitration &
Conciliation Act, 1996 (the “Act”)? If so, in what
circumstances?
7. While submitting that the court does have the power to
partially set aside an award in certain circumstances, reliance has
been placed on the judgment of the Hon'ble Supreme Court in
J.G. Engineers Pvt. Ltd v. Union of India, (2011) 5 SCC 758
(paragraph 25) by all counsels supporting this proposition.
8. Interestingly, paragraph 25 of the said judgment starts with
the words “It is now well settled ….”. However, there is no
reference to any earlier decision of the Hon'ble Supreme Court in
respect of the Act, in which the issue arose for consideration, and
the Hon'ble Supreme Court held that in respect of discreet claims
being awarded, a court could partially set aside one or more of the
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claims while enforcing an award in respect of other claims.

9. As such these submissions attempt to address this issue
independent of the decision of the Hon'ble Supreme Court in JG
Engineers (supra).
10. The first question that, in essence, arises therefore is
whether, a partial setting aside of an award of findings which are
severable from other findings would amount to a modification,
variation or alteration of an award in terms of the law laid down
by the Hon'ble Supreme Court in Hakeem.
11. If a partial setting aside would result in a modification,
variation or alteration of an award, as meant in Hakeem, then the
answer would be that a partial setting aside of an individual claim
would not be permissible save in circumstances where Section 34
(2)(a)(iv) of the Act would apply.
12. If however a partial setting aside of one or more claims out
of several in an award would not result in a modification, variation
or alteration as referred to in Hakeem, then the question for the
court to address would be, whether on a true interpretation of
Section 34 of the Act, a partial setting aside of the award would
be impermissible or prohibited, failing which the answer must be
that a partial setting aside of an award would be permissible in
law.
13. It is submitted that in the process of analysis, the starting
point ought to be the object and reason for parties agreeing to
arbitrate their disputes. One of the indisputable reasons,
internationally accepted, is the expeditious redressal of
commercial disputes. It is that objective which has largely led to
the limited scope for setting aside and the minimal supervisory
role of the courts.
14. It is submitted that the analysis must then consider what
an arbitral award in essence is. Blacks' Law Dictionary defines an
“arbitration award” as “a final decision by an arbitrator or a panel
th
of arbitrators” (2019, 11 Edition, Page 130).
15. The Act only defines an arbitral award as including “the
interim award” (Section 2(1)(c)).
16. Section 31 deals with form and contents of an award.
Section 31 does not in fact address what the essence of an award
isbut does provide for certain procedural formalities and
substantively that save for the two exceptions in Section 31(3)(a)
& (b), the award must state the reasons upon which it is based.
17. Further, Section 31(6) of the Act provides or empowers an
arbitral tribunal to make “an interim arbitral award on any matter
with respect to which it may make a final arbitral award”.
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18. The language of Section 31(3) of the Act provides that “the
arbitral award” shall state the reasons upon which it is based. This
must mean that the arbitral award is in essence what is
traditionally known as the dispositive section of an award i.e. what
the tribunal has finally awarded in terms of money, declarations,
injunctive relief etc. i.e. matters which would be ultimately the
subject matter of enforcement, if not voluntarily complied. The
reasons are the basis on which the dispositive award is made.
19. The dispositive section of an award may be in various
forms. Typically, in arbitrations where there are several claims
under different heads of claims, made in an arbitration, a
dispositive section would (or should) read as follows:
“The Tribunal therefore finds that:
(i) the Claimant is awarded a sum of …… towards Claim No.
1 for ……;
(ii) the Claimant is awarded a sum of …… towards Claim No.
2 for …..”
and so forth.
20. Where there are declarations coupled with award of money,
the dispositive section may read, for example,:
“(i) The Tribunal declares that the termination of the contract
was invalid (or wrongful or illegal);
(ii) The Claimant is awarded a sum of …. against Claim No.
1towards loss of profit;”
and so forth.
21. The submission therefore is that, in effect, each such
declaration or award of money is an independent arbitral award so
long as they are independent and distinct from others and not
predicated on another part of the award.
22. For example, if a tribunal grants a declaration that the
termination of a contract was illegal and accordingly grants, for
example, some amount towards loss of profit, if the court were to
set aside the finding of illegal termination, necessarily, the award
for loss of profit would be set aside as well. The two would not be
severable.
23. As a procedural matter, there could be instances where
different heads of claims are made as typically made in a
construction contract. One or more heads may be connected to a
finding of entitlement before quantification. If the challenge is to
the finding of entitlement and that challenge is upheld, all
consequential quantification of claims awarded under separate
heads dependent upon that threshold finding must also be set
aside.
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24. However, where the finding of entitlement is not disturbed

but with respect to one or more heads of claims arising from that
finding of entitlement, a court finds that the amount awarded was
without any evidence whatsoever, or that the amount awarded
had failed to consider a significant amount, which otherwise
should have been awarded, the court could set aside that part of
the award alone.
25. If the award of each claim is in fact or in essence a
separate award, then a partial setting aside would not amount to
a modification, variation or alteration of an award as the court
would not be increasing or decreasing the amount awarded under
a particular claim but either upholding it or setting aside the
amount awarded under a particular claim as a whole. The court
would not be substituting its own view over that of the Tribunal.
The party autonomy would be preserved.
27. Thus, an award dealing with a ‘dispute not contemplated
by, or not falling within the terms of the submissions to
arbitration’, as also an award which decides matters beyond the
scope of submission to arbitration, is void for want of jurisdiction
to that extent. In case the valid and void parts of the award are
integrally connected with one another, and are incapable of being
separated, the whole award will be liable to be set aside (See for
instance Grid Corpn. of Orissa Ltd. v. Balasore Technical School,
(2000) 9 SCC 552).
28. The concept of severability therefore is inherent in Section
34 of the Act. Section 34(2)(a)(iv), it is submitted must be read
as being clarificatory in nature, i.e. that merely because an award
does include or deal with a dispute outside the tribunal's
jurisdiction or scope of the submission, does not mean that a
court should set aside the whole of the award but that it must
then, so long as such a decision is severable from the rest, be set
aside only to that extent.
34. So long as from the award, it is discernible that separate
heads have been addressed and separate amounts found due
against each head, even if, in the ultimate dispositive section, a
tribunal were to make one dispositive award adding all of the
amounts awarded, the setting aside of one or more heads of
award and resultantly reduction in the ultimate amount awarded
would not be a modification, variation or alteration of the award as
per the meaning thereof in Hakeem.
Since a setting aside of award results in restarting of
arbitration (and for which Section 43(4) of the Act protects
limitation), a partial setting aside is conducive to the speedy
resolution of disputes as the fresh arbitration, if at all resorted,
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would be limited in its scope. Indeed, there are likely to be

instances where the partial setting aside may result in a party
accepting the same rather than restarting arbitration which is
more likely if the whole award is set aside merely because one or
two heads out of many are set aside by the court. Thus, partial
setting aside is conducive to speedy resolution.”
(f) Mr. Gourab Banerji, Senior Advocate
“B. Is it open to the Court under Section 34 of the Arbitration
and Conciliation Act, 1996 to modify an award?
1. Under Section 34 of the Arbitration Act, the court may either
dismiss the objections filed, and uphold the award, or set
aside the award if the grounds contained in sub-sections (2)
and (2-A) are made out. There is no power to modify an
arbitral award.
2. An interpretation that would read into Section 34 a power to
modify, revise or vary the award would ignore the previous
law contained in the 1940 Act; as also to ignore the fact that
the 1996 Act was enacted based on the UNCITRAL Model
Law on International Commercial Arbitration.
3. Parliament intended that no power of modification of an
award exist in Section 34 of the Arbitration Act, 1996.
4. The ‘limited remedy” under Section 34 is coterminous with
the “limited right”, namely, either to set aside an award or
remand the matter under the circumstances mentioned in
Section 34 of the Arbitration Act, 1996.
C. Is it open to the Court to partially set aside an award under
Section 34? If so, on what basis is the test of severability to be
applied?
1. If an award deals with and decides several claims separately
and distinctly, even if the court finds that the award in
regard to some items is bad, the court will segregate the
award on items which did not suffer from any infirmity and
uphold the award to that extend.
2. When the arbitrator's decision on multiple claims and
counter-claims are severable and not inter-dependent, the
court is empowered under section 34 to set-aside or uphold
the arbitrator's decisions on individual and severable claims
or counter-claims, without having to set-aside the entire
arbitral award.”
“E. What is the true scope and ambit of Section 34(4) of the
Act?:
1. On receipt of an application under sub-section (1), in
appropriate cases, on a request by a party, Court may
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adjourn the proceedings for a period determined by it in the

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.
2. The power vested under Section 34(4) of the Arbitration Act
to cure defects can be utilized in cases where the arbitral
award does not provide any reasoning of if the award has
some gap in the reasoning or otherwise and that can be
cured so as to avoid a challenge based on the aforesaid
curable defects under Section 34 of the Arbitration Act.
3. The ground for setting aside the award must be capable of
being eliminated and that the order discretionary in nature.
Section 34(4) excludes reconsideration of the Award for the
purpose of eliminating the grounds on which the Award can
be challenged under Section 34(1), 34(2) and 34(2A).
4. Merely because an application is filed under Section 34(4) of
the Act by a party, it is not obligatory on the part of the
Court to remit the matter to Arbitral Tribunal.
5. The legislative intention of providing Section 34(4) in the
Arbitration Act was to make the award enforceable, after
giving an opportunity to the Tribunal to undo the curable
defects.
6. The discretionary power conferred under Section 34(4) of the
Act, is to be exercised where there is inadequate reasoning
or to fill up the gaps in the reasoning, in support of the
findings which are already recorded in the award.
7. When an application is filed under Section 34(4) of the Act,
the same is to be considered keeping in mind the grounds
raised in the application under Section 34(1) of the Act and
the grounds raised in the application under Section 34(4).”
(g) Mr. Rohan J. Alva, Advocate
“I. Court can partially set aside an arbitral award under
Section 34 of the A&C Act
3. It is submitted that under Section 34 of the A&C Act, the
court is empowered to only set aside an arbitral award on the
specific grounds mentioned therein. Neither Section 34 nor any
other provision of the A&C Act confers on the court the power
to modify/alter the terms of an arbitral award.
4. If the court finds that some parts of the award cannot be
sustained under Section 34 of the A&C Act whereas other
portions of the award can be upheld, then by applying the
doctrine of severability the court adjudicating an application
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under Section 34 can uphold the award in part. In other words,

Section 34 does not impose a bar on a court from partially
upholding the arbitral award.
(Ref : Compilation of Case Law, Section I)
5. In using the term ‘set aside’ in Section 34 without any
qualifications or conditions, the court has the power to judge
the arbitral award in respect of each of the claims that have
been adjudicated upon by the arbitral tribunal to determine if
the findings comply with the A&C Act and more particularly
Section 34. If any claim that has been so adjudicated upon
cannot be sustained under the A&C Act, the court has the
power to set aside that particular claim in the arbitral award.
6. The doctrine of severability is a well-known principle in
constitutional law as well as in commercial law including the
law of contracts. For instance, in cases where a contract
contains obligations which are illegal and legal, a court can
apply the doctrine of severability and ensure the enforcement
of those obligations which are legal.
7. However, it is respectfully submitted that in partially
setting aside an arbitral award, a few key facts are important:
a. The claims that have been adjudicated in the arbitral
award must be such that can be separated from each
other.
b. If the said claims are so inextricably intertwined that they
cannot be separated, then it is not plausible for a court to
partially uphold/reject an arbitral award.
c. If the court chooses to apply the doctrine of severability,
the court must ensure that upholding/rejecting an award
partially does not render the arbitral award unworkable
and unenforceable.
8. Advantage of courts applying the doctrine of severability
to arbitral awards:
a. When a court is reviewing an arbitral award which, in
part, cannot be legally sustained the doctrine of
severability allows the court to partially set aside the
arbitral award, instead of setting aside the entire award.
b. Seen another way, if a court is empowered to apply the
doctrine of severability and partially set aside an arbitral
award, it ensures that a court is not compelled to uphold
the entire arbitral award, including those claims which are
legally unsustainable.
c. By applying the doctrine of severability, a court is
presented with an appropriate middle path to pursue a
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pro-arbitration approach but nonetheless ensure that

parts of an arbitral award, which are not consistent with
the applicable law are not converted into binding
obligations inter se the parties.
II. Partially setting aside an arbitral award is not
tantamount to modification of an arbitral award. The
judgment of the Supreme Court in NHAI v. M. Hakeem,
(2021) 9 SCC 1 does not prohibit a court from partially
setting aside an arbitral award.
9. Typically, a court reviewing an arbitral award has the
power to either modify the terms of the arbitral award or to set
aside the award. The following extract from Redfern & Hunter
on International Arbitration (5th edition, 2009) (pg. 585-586)
clarifies that under the UNCITRAL Model Law, courts are
empowered to partially set aside an arbitral award:
“The purpose of challenging an award before a national
court at the seat, or place, or arbitration is to have it
modified in some way by the relevant court, or more
usually to have that court declare that the award is to be
disregarded (ie ‘annulled or ‘set aside’) in whole or in
part.
If an award is set aside or annulled by the relevant court, it
will usually be treated as invalid and accordingly
unenforceable, not only by the courts of the seat of arbitration
but also by national courts elsewhere. This is because, under
both the New York Convention and the Model Law, the
competent court may refuse to grant recognition and
enforcement of an award that has been set aside by a court of
the seat of arbitration.”
10. Prior to the A&C Act, 1996, the Arbitration Act of 1940
was in force. Under the 1940 Act, Section 15 empowered the
court to modify an arbitral award. By virtue of this provision, a
court could interfere with the merits and findings of an award
and alter them as the court deemed fit. This was indeed done
by the Supreme Court in J.C. Budhiraja's case which was a
case which arose under the 1940 Act.
11. The 1940 Act in Section 30 provided the “Grounds for
setting aside award”. Thus, under the 1940 Act, the court had
the power to either modify/alter the award or to set aside the
award itself (either partially or fully).
12. The A&C Act, 1996 does not contain any provision which
is pari materia to Section 15 of the 1940 Act. Section 34 is the
provision which enumerates the grounds on which a court may
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set aside an award. It does not provide that a court is

empowered to modify an award. The only power that the court
has under Section 35 is to set aside an award. It is in this
context that the judgment of the Supreme Court in M.
Hakeem's (Ref : Case Compilation, Section I, Sr. No. 8)
case needs to be appreciated.
13. In M. Hakeem (supra), the Supreme Court declared that
in light of the previous decisions in McDermott International Inc
v. Burn Standard Co. Ltd., (2006) 11 SCC 181, Kinnari Mullick
v. Ghanshyam Das Damani, (2018) 11 SCC 328; Dakshin
Haryana Bijli Vitran Nigam Ltd. v. Navigant Technologies (P)
Ltd., (2021) 7 SCC 657, it was clear that since Section 34 of
the A&C Act was modeled on Article 34 of the UNCITRAL Model
Law, the principle of arbitration law that had to be applied was
that judicial interference was only permissible when specifically
provided for. Thus, under the A&C Act, the court had only the
power to either set aside the award or to remand it to the
arbitral tribunal for further consideration.
14. Further, the Supreme Court further declared that the
power to modify an award was specifically provided for in the
1940 Act. But such a power was not conferred on a court under
the 1996 Act. The absence of such a provision was dispositive
of the fact that the A&C Act did not authorize a court to modify
the terms of an arbitral award.
15. As the Supreme Court declared in M. Hakeem (supra), to
modify an award is to vary the terms of the arbitral award
itself. Such modification does not result in the award being set
aside but results in the merits claim that has been adjudicated
being varied or altered by the court. By contrast, setting aside
an award indicates that the finding in respect of a particular
claim has been declared to be legally unsustainable and hence
is unenforceable.
16. When an award is partially set aside, that part of the
award is rendered unenforceable. As the High Court of Delhi
declared in Alcon (Ref : Case Compilation, Section I, Sr.
No. 4), the distinction between a court modifying an award
and setting aside an award clearly shows that the judgment of
the Supreme Court declared in M. Hakeem (supra) does not
apply to the partial setting aside of awards, because that is not
the equivalent of modifying an award.
17. It is submitted that Section 34 empowers to a court to
partially set aside an arbitral award. If a court does so, it will
not be tantamount to modifying an award. Partially setting
aside an award under Section 34 will not fall foul of the
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principles enunciated in M. Hakeem (supra).”

(h) Mr. Rajshekhar Rao, Senior Advocate
B. “The scope for severing/partial setting aside of an arbitral
award is limited but does not amount to modification, which is
otherwise impermissible.
(1) It is well-settled that the general scope of an inquiry u/s.
34 is limited and is in keeping with the principle of
minimising judicial intervention in arbitral awards.
(2) On the one hand, it is evident that the term ‘arbitral award’
refers to the binding decision made collectively on all the
issues/claims, including the reasoning and
conclusions/findings thereon. At the same time, the very
definition of ‘arbitral award’ under s. 2(1)(c) includes an
interim award. Hypothetically, therefore, if the arbitrator
were to make individual interim awards on each claim before
it, rather than putting them together in a final arbitral
award, each of those interim awards could be challenged
and set aside individually. It follows, therefore, that the
decision of the arbitral tribunal on each claim/counter-claim
is independently final and binding and the mere putting
together of these individual decisions in the form of one final
award cannot detract from their nature as such. This is
reinforced by the previous jurisprudence recognizing the
power of an arbitrator to render ‘final partial awards’ in
relation to some of the claims and defer rendering an award
on the others.
(3) Equally however, whether or not the finding and relief on
each of these claims can stand on a separate footing is a
question of fact, which must be decided on the substance of
each case, and not on the form in which the claims may
have been made. For instance, in a claim for (i) breach of
contract; (ii) damages; and (iii) interest, it ought not to
matter whether these have been made as three separate
claims or one composite claim and it is the manner in which
the arbitral tribunal deals with them, which would be
material in deciding whether severability is possible.
C. Section 34(4) must be read restrictively and does not
envisage fresh consideration of an issue that has already been
decided by the arbitral award
(1) S. 34(4) requires the Court to determine whether it is
appropriate to resume arbitral proceedings for the purpose
of eliminating grounds for setting aside. However, this
cannot mean that the Court should intervene to allow the
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tribunal to undertake a fresh consideration of any issues that

have already been decided, solely with a view to eliminating
unsustainability in the award. Equally, there is no power for
the Court to remit part of the award u/s. 34(4) after having
set aside any other part thereof. Such an interpretation
would require the Court to prejudge the sustainability of an
award without adjudicating upon it, which is impermissible.
It would result in an anomalous situation where the Court
would have to “adjourn the proceedings … to give the
arbitral tribunal an opportunity to resume arbitral
proceedings”, even after having discharged its mandate u/s.
34 and there being no ‘proceedings’ to adjourn per se.
(2) This interpretation is also in line with the express provisions
of Sections 32(3) and 35 of the Act as well, whereby a
tribunal becomes ‘functus officio’ after rendering an award
and is only allowed to ‘resume’ proceedings for the limited
purposes specified in s. 32(3). This is distinguishable from
the earlier position under the 1940 Act, where such
provisions were absent and s. 16 expressly permitted
remission to the tribunal from “time to time”, for the
purpose of reconsideration.
(3) Consequently, the power under s. 34(4), which is relatable
to such action that will “eliminate the grounds for setting
aside the arbitral award” cannot be read to be in the
nature of a ‘partial remand’ that permits fresh consideration
of specific issues/claims. This is different from the position
on the aspect of severability of claims in an award because
the concept of severability is expressly envisaged under s.
34, whereas remission (which was present under the
erstwhile s. 16) has been expressly removed.
(4) There is a well-recognised distinction between ‘findings’
and ‘reasons’ and s. 34(4) cannot be used to fill up the
absence of a ‘finding’ in the guise of providing additional
reasons or eliminating grounds for setting aside. It can only
be utilised to undo curable defects, which if left as it is,
would result in setting aside of the award.”
(I) Mr. R. Arunadhri Iyer, Advocate
“6.5. It is pertinent to point out that setting aside a part of the
award is expressly contemplated under the proviso to Section 34
(2)(a)(iv).
6.6. The law as judgment in M Hakeem was enunciated despite
the provision in Section 34(2)(a)(iv). It is submitted that this
demonstrates that setting aside a part of the award does not
amount to modification of an award.
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6.7. It is submitted that the term “set aside” used in Section

34(1) of the Act ought to be interpreted to include the power to
set aside the whole or a part of the award, not merely in terms of
Section 34(2)(a)(iv), but even under other provisions of Section
34 of the Act.
6.8. It is submitted that Section 34 of the Act is substantially
identical to Article 34 of the Model law. Thus, the Model law may
be relied on to interpret the provision, as was held by the
Supreme court in various judgments. Even the judgment in M
Hakeem relied on the Model law to hold that the Court has no
power to modify an award.
6.13. It is significant to note that the Act slightly differs in
language under Section 34(2)(b)(ii) from that used in Article 34
(2)(b)(ii) of the Model law.
6.14. Whereas the Model law provides that an award may be
set aside if the award or any decision contained therein is in
conflict with public policy, the Act provides that an award may be
set aside if the award is in conflict with public policy.
6.15. It is submitted that the distinction between an award (as
a whole), and a decision contained therein is already found in the
proviso to Section 34(2)(a)(iv) (i.e., Article 34(2)(a)(iii)), where
the concept of severability is discussed.
6.16. The reason for using this distinction in Article 34(2)(b)(ii)
of the Model law is ex facie apparent - it is to clarify the fact that
a decision that is contrary to public policy, if it can be severed
from the rest of the award, ought to be so severed. However, it is
pertinent to point out that the provisions of Article 34(2) are
merely pertaining to the procedure for exercising the power found
in Article 34(1) of the Model law. The fact that Article 34(2)(b)(ii)
is explicit in clarifying that the power can be exercised to set
aside the award as a whole or in part does not modify the nature
of the power under Article 34(1).
6.17. It is submitted thus, that the fact that the words “or any
decision contained therein” were omitted from Section 34(2)(b)
(ii) does not change the nature of the power under Section 34(1)
to set aside an award, since the said provision is identical to the
provision under Article 34(1) of the Model law.
6.18. Thus, it is submitted that the power to set aside an
award can be exercised to set aside the whole or a part of the
award. This is the scheme and intent of the law under the Model
law, which is incorporated in Section 34 of the Act. Setting aside a
part of the award, provided it is severable from the rest of the
award, is thus permissible.
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7. On when can a part of an award be regarded as severable

from another:
7.1. It is submitted that Section 34 of the Act itself clarifies
the circumstances in which a part of an award can be regarded
as severable from another, similar to Article 34 of the Model
law.
7.2. By drawing a distinction between the award, and
decisions therein on matters submitted (Section 34(2)(a)(iv)
and Article 34(2)(a)(iii)), the scheme of the Act is that parts of
an award may be differentiated by virtue of “decisions”
rendered therein.
7.3. The judgment of the Supreme Court in I-Pay is
instructive in understanding the scope of a “decision”. The said
judgment discusses the distinction between a “finding” and
“reasons”, holding that a “finding” is a decision on an issue,
whereas reasons are the link between material on which
conclusions are based, and the conclusions themselves.
7.4. It is submitted that the term “decision on [a] matter” in
Section 34(2)(a)(iv) of the Act is what the said judgment
regards as a “finding”, i.e., a decision on an issue.
7.5. An award can thus be regarded as being severable
where there are sufficiently distinct “findings” or “decisions” on
“matters submitted to arbitration” or “matters not submitted to
arbitration”. To restate the submission differently, the
severability of parts of an award is based on the
findings/decisions returned by the award on whatever has been
referred (or not referred to the Tribunal).
7.6. The matters submitted to (or not submitted to)
arbitration are necessarily derivable from the pleadings filed by
the parties before the Tribunal, and the findings thereon are
derivable from the decisions on such matters in the award.
7.7. So long as the findings/decisions on a matter is
sufficiently distinct from another matter referred to the
Tribunal, they will be severable from each other.
7.8. It is pertinent to point out that there is a distinction
between a finding on a matter/issue, and the award on a
claim/prayer raised. It is only the former on the basis of which
an award can be severed, and not the latter.
……
8.23. It is submitted that the drafting history of the
provisions and the views of the Working Group make it
apparent that the power of remission is to be used to cure
procedural defects in an award without setting aside the award.
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It cannot be exercised once the award is set aside. It also

cannot be exercised to cure a defect that is substantial in
nature, since that would require remission after the award is
set aside. It cannot be exercised to enable re-institution or a re
-trial. Further, the Court cannot issue instructions to the
Tribunal when remitting the award.
8.24. As earlier set out, the Arbitral Tribunal can take action
under Section 34(4) that will eliminate grounds raised under
Sections 34(2)(a)(iii), 34(2)(a)(iv), the second part of Section
34(2)(a)(v) or Section or 34(2)(b)(ii) of the Act.
8.25. However, objections under Section 34(2)(a)(iii),
Section 34(2)(a)(iv) and Section 34(2)(b)(ii) are not matters
of procedure, but rather indicate substantive defects in the
Award.
8.26. To enable a Tribunal to eliminate such grounds by
exercising power under Section 34(4) would result in the
rendering of an entirely different award from what was
originally issued, inasmuch as it would result in findings
assailed under Section 34(2)(a)(iii) being changed after
hearing the party that was unable to present its case, or
findings assailed under Section 34(2)(a)(iv) being deleted from
the award, or findings assailed under Section 34(2)(b)(ii) being
changed to comply with public policy.
8.27. As is apparent from the Model law, this was not the
intent of the power of remission. This view is consistent with
the law laid down in IPay as well, which holds that an award
lacking findings cannot be remitted to the Tribunal under
Section 34(4).”
(j) Mr. Arjun Natarajan and Ms. Kamana Pradhan, Advocate
“HAKEEM IS NOT AN AUTHORITY ON SEVERABILITY:
2. The legal position which flows from Hakeem is clear i.e.,
no power of modification of an award by the court exists in the
1996 Act.
Justice R.P. Sethi's Supreme Court on Words & Phrases
rd
(1950-2021) (3 Edition) defines the word ‘modify’ at p.
929 as follows:
“According to the Oxford Dictionary, the word ‘modify’
means, “to limit, restrain, to assuage to make less severe,
rigorous or decisive to tone down”. It also means “to make
partial changes in : to alter without radical transformation”.
3. However, Hakeem neither deals with severability of parts
of an award nor with setting aside of a part of an award.
Justice R.P. Sethi's Supreme Court on Words & Phrases
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(1950-2021) (3rd Edition) defines the words ‘set aside’ at p.

1300 as follows:
“The ordinary meaning of the words “set aside” is to
revoke or quash the effect of which is to make the interim
order inoperative or non-existent”.
4. Neither Section 34(1) nor the marginal note of Section 34
is qualified by words like ‘wholly’ or for that purpose by words
like ‘partly’. Thus, it appears that an application for setting
aside an award can either be for setting it aside wholly or be for
setting it aside partly, which is reflective of the grundnorm of
arbitration as being party autonomy.
4.1 SCENARIO 1 - A PARTIAL SETTING ASIDE
APPLICATION
In an application for partially setting aside an award,
the court ought to test the award on the anvil of Sections
34(2) and (2A) only to the extent that it has been
challenged; to determine whether and to what extent
such an application succeeds.
4.2 SCENARIO 2 - A TOTAL SETTING ASIDE APPLICATION
In an application for totally setting aside an award, the
court ought to test the award on the anvil of Sections 34
(2) and (2A) in its entirety; to determine whether and to
what extent such an application succeeds.”
5. Hakeem neither mandates that every application for
setting aside has to be for total setting aside or that it has to
be for partial setting aside.
6. It also appears that references to Section 34(4) in
Hakeem are in the context of the court having no power to
modify an award and not in the context of severability of parts
of an award/setting aside of a part of an award.
7. Thus, it appears that modification of an award is distinct
from severability of parts of an award/setting aside of a part of
an award. It also appears that modification is in the domain of
substitution, whereas severability of parts of an award/setting
aside of a part of an award is in the domain of expungement.”
(k) Ms. Payal Chawla, Advocate
“Does the power of setting aside include the power to
modify?
a) In Hakeem the Supreme Court has held that the power to
set aside does not include the power to modify.
b) It is respectfully submitted that such an observation would
be in the teeth of Ahmedabad St. Xavier's College Society v.
State Of Gujarat, a Constitution Bench (seven judges) which
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held that a greater power includes a lesser power. This

principle was previously cited by a five judge bench in Atma
Ram v. State of Punjab. Copies of these judgment are
appended hereto as Annexure 10 and 11.
c) Importantly for this Hon'ble Court to hold that the courts do
not have the power to modify, this Hon'ble Court will
necessarily need to come to a finding that the power to set
aside and to modify are two distinct powers and not
subordinate to one another.
d) In Alcon Builders, the Delhi High Court has held, that
partial setting aside would not amount to modification. In
Alcon Builders, the Court while making a distinction
between the power to modify and the power to partially set
aside, the Court held that the former requires a positive act.
e) At the same time, it is hard to reconcile the aforesaid with
the decision in Ssyangyong Engineering & Construction Co.
Ltd. v. NHAP where the Supreme Court on the one hand set
aside the majority award and upheld the minority award, the
latter being a positive act. A copy of this judgment is
appended hereto as Annexure 12.
f) It may not be out of place to mention that a three-judge
bench in the matter of ONGC v. Western Geco International
Limited, whilst dealing with the issue of modification of an
arbitral award had stated-“What is important in the context
of the cast at band is that if on the facts proved before them
the arbitrators failed to draw an inference which ought to
have been drawn or they have drawn in inference which on
the face of it, is untenable resulting in miscarriage of justice,
the adjudication even if made by an arbitral tribunal that
enjoys considerable latitude and play at the joints in making
awards will be open to challenge and maybe castaway or
modified depending upon whether the offending part is or is
not severable from the rest.” A copy of this judgment is
appended hereto as Annexure 13.
While Western Geco is considered to be legislatively
overruled, it is respectfully submitted that the same would
be limited only in the context where the judgment expanded
the scope of the court's power in “setting aside” of an
arbitral award, particularly with regard to its observations on
the Wednesbury principle of reasonableness.”
(l) Mr. Amit Gupta, Advocate
“(b) Partial Setting Aside of Award-specifically provided
by legislature:
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i. Sec. 34 (2) (a) (iv) : arbitral award deals with a dispute not
contemplated by or not falling within terms of submission to
arbitration;
ii. Sec. 34 (2) (a) (iv) : arbitral award contains decisions on
matters beyond scope of the submission to arbitration. (c)
Partial Setting Aside of Award on a reasonable interpretation
of the provisions and its applicability:
(c) Partial Setting Aside of Award-on a reasonable
interpretation of the provisions and its applicability
i. Sec. 34 (2) (b) (i); subject matter of dispute is not capable
of settlement by arbitration under law for time being force;
ii. Sec. 34 (2) (b) (ii) : arbitral award is in conflict with the
public policy of India, i.e., contravention with fundamental
policy of Indian law [Explanation I (ii)]
iii. Sec. 34 (2) (b) (ii) : arbitral award is in conflict with the
public policy of India, i.e., in conflict with the most basic
notions of morality or justice [Explanation 1 (iii)]
iv. Sec. 34 (2 A) : arbitral award is vitiated by patent illegality
on the face of the award.
1.4 Each distinct claim has to be considered separately.
As a matter of practice, the parties, the arbitrators and the
Courts consider the claim separately. Order XX Rule 5 also
requires a Court go give a finding or decision, upon each
separate issue, unless the finding upon any one or more of
the issue is, sufficient for the decision in the Suit.
(a) J.G. Engineers v. UOI, (2011) 5 SCC 758, Paras 24 and 25;
(b) State Trading Corporation of India Ltd. v. Toepfer
International Asia Pte Ltd., (2014) 144 DRJ 220 (DB) @
paragraphs 7 to 9.
1.5 The judgments of the Delhi High Court relied upon in
Project Director, National Highways Authority of India v. M.
Hakeem, (2021) 9 SCC 1, i.e., (a) Cybernetics Network Pvt.
Ltd. Bisquare Technologies Pot Lid., 2012 SCC OnLine Del
1155 (b) Nussli Seitzerland Ltd. v. Organizing Committee,
Commonwealth Games, 2010, 2014 SCC OnLine Del 4834
and (c) Puri Construction (P) Lid. v. Larsen & Toubro Lid.,
2015 SCC OnLine Del 9126 are limited to the issue of
modification of an arbitral award and do not consider the
issue of partial setting aside of an award. This would be clear
from paras 28 to 30 of M. Hakeem, wherein the judgments
have been discussed.”
(m) Mr. Sanjit Shenoy, Advocate
“20) Conclusion : -(i) Firstly, while the Supreme Court has
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rightly observed that it is not possible to modify awards under

section 34 of the 1996 Act, the Court has time and again upheld
the modification of award under the garb of doing ‘complete
justice’ in accordance with Article 142 of the Constitution. This
indicates that the Court is of the opinion that modification is not
contrary to the overall procedure but is not permitted under
section 34 (2) or (4). Additionally, this clearly reflects an
approach of the Court that does incorporate the idea of limited
modification. In NHAI, the Supreme Court observed that the
present judgment does not bar the exercise of its extraordinary
powers under Article 142 of the Constitution in order to achieve
complete justice between parties. It is apparent that while the
primary objective of arbitration is ‘minimum judicial interference’,
there are questions of practical considerations that co-exists.
(ii) Secondly, from the perspective of comparative analysis of
provisions for setting aside and modifying the awards across
jurisdictions, it is apparent that various countries have amended
their statutes to incorporate modifying power. While adopting the
Model Law, the Indian legislature must have also taken ideas from
the statutes of other jurisdictions which empower their courts to
modify an award. Countries like Australia, which share a similarly
worded section for setting aside the award, formulated additional
provision that specifically allows for modification, hence reflecting
the importance of the same.
(iii) Thirdly, an order that remits the parties back for de novo
proceedings before the arbitration tribunal might run contrary to
the very foundation of preferring alternative dispute resolution
over litigation and defeat the time bound alternate dispute
resolution mechanism envisaged under the ACA. Therefore, to
allow such a modification, either, the 1996 Act must be amended
to incorporate this specific proviso as a new section to the ACA
(albeit with limited powers) or a proviso should be added to the
existing section 34 with limited modification power as to obviate
circumvention of the statute. However, as the present position
stands, there is no power vested with the courts under Section 34
to modify an award and as regards setting aside of an award, the
same is postulated under S. 34 (2). Section 34 (4) on the other
hand envisages only resuming the proceedings before the
arbitrator but only upon an application made by a party under sub
section (1) of S. 34 and the court cannot suo motu remit the to
the arbitrator for resumptions of the proceedings in the absence of
a formal application by the party that has filed the original
application under S. 34 (1). Moreover, the award cannot be
concurrently set aside and then remitted back to the Arbitrator for
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resuming the proceedings since that would be contrary to the

wordings of 34 (4) : - “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.”
(n) Mr. Zafar Khurshid & Mr. Amit Singh Chauhan, Advocates
“COURT MAY PARTIALLY SET ASIDE AWARD WHERE
AWARD IS SEVERABLE
7. Various courts have held that the Court can partially set
aside an arbitral award, and the same would not amount to
modification of the award.
8. Applying the ‘Doctrine of Severability’, the issues/claims
decided in the arbitral award may be analysed independent of
each other, and rather than setting aside the entire award and
mandating the parties to start afresh, the court may set aside
an award partially based on the facts and circumstances of the
case.
9. In NHAI v. Addl. Comm. Nagpur the Hon'ble Court has
observed that “when the Award deals with several claims that
can be said to be separate and distinct, the Court can
segregate the Award on items that do not suffer from any
infirmity and uphold the Award to that extent. The Court cited
and approved the earlier judgment of the Hon'ble Bombay High
Court in R.S. Jiwani v. Ircon Intl.
“The judicial discretion vested in the court in terms of the
provisions of section 34 of the Arbitration and Conciliation
Act, 1996 takes within its ambit power to set aside an award
partly or wholly depending on the facts and circumstances of
the given case. In our view, the provisions of section 34 read
as a whole and in particular section 34(2) do not admit of
interpretation which will divest the court of competent
jurisdiction to apply the principle of severability to the award
of the Arbitral Tribunal, legality of which is questioned
before the court. The Legislature has vested wide discretion
in the court to set aside an award wholly or partly, of course,
within the strict limitations stated in the said provisions.”
10. In R.S. Jiwani the Hon'ble Court observed that where the
bad part of the award was intermingled and interdependent
upon the good part of the award there it is practically not
possible to sever the award as the illegality may affect the
award as a whole. In such cases, it may not be possible to set
aside the award partially. However, there appears to be no bar
in law in applying the doctrine of severability to the awards
which are severable.
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11. Similarly in Navayuga Engineering v. UOI the Court held

that:
[I]f the court finds the award with regard to some claims
to be bad, the court can segregate the award on items which
did not suffer from any infirmity and uphold the award to
that extent. If such an interpretation is not given, it would
result in gross injustice and absurd results because the court
would have to set aside that portion of the award also which
suffers from no infirmity. This certainly cannot be what was
contemplated by the Legislature.
12. In Ravindra Kumar Gupta v. UOI the Hon'ble
Uttarakhand High Court has recently reiterated that a court
cannot partly set aside an award in absence of manifest and
patent error and without a finding as to its severability.”
(o) Dr. Shashwat Bajpai, Advocate
“Purpose and object of S. 34(4)
• Sub-Clause 4 of S. 34 has been a part of the Act since its
inception in 1996. This sub-clause has been taken from the
UNCITRAL Model Law u/s 34(4) with slight modifications.
• It is submitted that Sub-Clause (4) is a ‘CURATIVE
ALTERNATIVE’ TO SETTING ASIDE the award itself; so that the
parties don't have to initiate fresh arbitration and go back to
square one.
• Some apprehensions have been raised that the outcome
of S. 34(4) is going back to square one or initiation of de
novo/fresh arbitration-But, it is respectfully submitted that the
object of S. 34(4) is exactly opposite as it is merely a
curative alternative to setting aside. This is the language
adopted by various rulings of the Hon'ble Supreme Court as well
as the High Courts and also in some of the major decisions of the
Singapore court.
• Singapore Courts Judgments in AKN and Permasteelisa
Pacific Holdings Ltd interpreting similar clause observed -that
the Purpose is to preserve the award and not set it aside(as
judicially recorded by the Hon'ble Supreme Court in the Judgment
of I-Pay Clearing Services Pvt. Ltd. v. ICICI Bank Ltd., [email protected].
(C) No. 24278 of 2019). (Paar 27, Pg 172, CLC)
• SECTION 34 (4) IS NOT A REMAND JURISDICTION IT IS
CURABLE JURISDICTION and has been held in number of
jurisdictions both in India and outside -this is also in
consonance with the language adopted in the Act.
• Cybernetics Network Pvt. Ltd. v. Bisquare Technologies Pvt.
Ltd., 2012 SCC OnLine Del 1155@ Para 51 also observes - “to
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eliminate the grounds for setting aside the arbitral award”. There
is no specific power granted to the Court to itself allow the claims
originally made before the Arbitral Tribunal where it finds the
Arbitral Tribunal erred in rejecting such claims. If such a power is
recognized as falling within the ambit of Section 34(4) of the Act,
then the Court will be acting no different from an appellate court
which would be contrary to the legislative intent behind Section
34 of the Act. Accordingly, this Court declines to itself decide the
claims of CNPL that have been wrongly rejected by the learned
Arbitrator.(Para 51, Pg 86 CLC)
• Therefore, it is submitted that the point of view advanced by
some of my brother counsels that S. 34(4) has no application
after S. 34(1) or S. 34(2), is respectfully incorrect.
NO RE-APPRECIATION OF EVIDENCE
• The bench had raised a pertinent issue -Can parts of a
claim be knocked off?
• To answer this, I would like to place reliance on the case of J.
Kumar - CRTG JV v. Delhi Metro Rail Corporation, O.M.P. (COMM)
39/2020 & IA No. 13874/2021, dated 25.04.2022, where this
precise issue was raised within the claim itself under Section 34
(4) (allowed the claim but considered only from grid 1-14 and not
grid 14-17, without any reasoning)- though the Arbitral Tribunal
awarded the claim but had wrongly quantified it.
• Para 48 J Kumar judgment dated 25.04.2022, the court
held “The scope of Section 34(4) of the A&C Act is limited. It does
not extend to remanding the matter to Arbitral Tribunal for
reviewing a finding returned after appreciation of evidence or for a
decision afresh”
• Para 49 of J. Kumar Judgment dated 25.04.2022, “In
IPay Clearing Services (P) Ltd. v. ICICI Bank Ltd.,(2022) 3 SCC
121, the Supreme Court has held that Section 34(4) of the Act
can be resorted to record reasons for the finding already given in
the award or to fill up the gaps in the reasoning of the award. But
recourse to Section 34(4) of the A&C is not available to review
findings, which are not based on evidence or where there are no
findings on contentious issues.
This directly sits well with the S. 34(2) Explanation (ii)
and S. 34(2)(a) providing no re-appreciation of evidence or
reviewing the merits of the dispute while adjudicating on public
policy and patent illegality doctrines.
• In this case even there was a gap of reasoning, it is settled
and is no longer res-integra that the court is not required to go in
‘merits’ and ‘re-appreciation the evidence’, therefore consciously
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it didn't do so.
So even though u/s S. 34(4) a curable defect was there,
but its elimination would have required re-appreciation of
evidence which is impermissible under S. 34(2).This further
advances the harmonious reading of the two section
together - S. 34(2) particulars have to be mandatorily
followed while exercising power under S. 34(4).”
(p) Mr. George Pothan Poothicote, Advocate
“D. UNCITRAL MODEL LAW AND THE NEW YORK CONVENTION
D.1 Cross border enforcement of arbitration awards is under
the New York Convention, which is one of the most successful
UNCITRAL Conventions having 172 parties including India as
on date.
D.2 It is important to note that the Model Law on Arbitration
and the New York Convention are complementary and to be
read together. Therefore, an arbitral award passed in a
jurisdiction which is signatory to the New York Convention, is
done so with the objective to enforce such an award under the
New York Convention.
E. POWER OF COURTS IN MODIFYING ARBITRAL AWARDS AND
ENFORCEMENT OF ARBITRAL AWARDS
E.1 The New York Convention, like the Indian Arbitration
Act, provides grounds where an award “may” be refused on
certain grounds, and the word used is not “shall”.
E.2 The ground where the enforcement court may refuse
enforcement in the Indian Arbitration Act, as mirrored from the
New York Convention reads “(e) the award has not yet become
binding on the parties, or has been set aside or suspended by a
competent authority of the country in which, or under the law
of which, that award was made.”
E.3 Neither does the Model law nor the New York Convention
contemplate modification or partial set aside of awards.
F. CONCLUSION
F.1 Enforcement of arbitral awards are contemplated under
the New York Convention. Under this Convention it is the award
that is the subject matter of enforcement or non-enforcement.
Modifying or partial set aside of an award would result in a
judgment of the Court which varies from the arbitral award -
which is not a complete acceptance or set aside.
F.2 This would result in a conflict between the arbitral award
and the judgment of the court. While arbitral awards are
enforced cross-border under the New York Convention,
judgments of the courts have a different mechanism of
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enforcement-like the enforcement of foreign judgments under

Section 44 of the CPC.
F.3 Awards that are distinct, separate and unconnected
albeit in the same case, i.e., if awards on jurisdiction, merits
and quantum are rendered as separate awards, each can be set
aside independently and individually. However, neither does
the Model Law nor the New York Convention contemplate a
scenario where part of an award is set aside whilst the
remaining is upheld.
F.4 Therefore the remedy contemplated under Section 34(4)
of the Arbitration Act is an important matter of inquiry, and
which requires investigation and discussion and application of
mind by the Court to see if on the application of a party, an
award can be sent back to the tribunal to cure the defects,
rather than set it aside.
F.5 The important factor is that the court must be satisfied
that it is appropriate to suspend the setting aside proceedings
in order to give the tribunal an opportunity to take such steps
as may be required to eliminate the grounds for setting aside.
This is plainly a curative provision which enables the court,
faced with the fact there has been some defect which could
result in the award being set aside, to take a course that might
forestall that consequence. Though this is discretionary, just
from the use of the word “may” there are no limits to the power
to remit that is conferred by the provision.”
(Q) Mr. Bibin Kurian, Advocate
“Comparison of Arbitration and Conciliation Act, 1996
(Arbitration Act, 1996) and Arbitration and Conciliation Act,
1940 (Arbitration Act, 1940)
3. Under the Arbitration Act, 1940, the Act provided for 4
options to the Court when an award is under challenge:
a. Section 15 - On the satisfaction of the specific grounds
specified in the section, the Courts were allowed to
modify the arbitral award;
b. Section 16 - On the satisfaction of the specific grounds
specified in the section, the Courts were allowed to remit
the arbitral award to the tribunal remit;
c. Section 17 - if court does not find any ground for
remitting the award or for reconsideration or to set aside,
then the Court was supposed make the award part of its
judgment and pass decree to that effect; and
d. Section 30 - On the satisfaction of the specific grounds
specified in the section, the Courts were allowed to set
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aside the arbitral award.

4. However, the legislature realized that the Arbitration Act,
1940 has become outdated and in order cater to the changing
environment of the Arbitration, globally, amended the
Arbitration Act in line with the United Nations Commission on
International Trade Law (UNCITRAL) Model Law on
International Commercial Arbitration (1985) and Arbitration
and Conciliation Act, 1996 was enacted.
5. One of the major changes intended through this
amendment was to ensure that the Court's interference with
the arbitral award is reduced. In fact, in the catena of cases,
this Hon'ble Court and the Hon'ble Supreme Court of India has
held that there should be minimum intervention by the Court
with respect to any arbitral award. It is submitted that under
Section 34(2) of Arbitration Act, 1996 the Courts has power to
set aside the award and in certain cases, where a party has
sought, to allow the arbitral proceeding to resume to eliminate
any grounds for setting aside the arbitral award (under Section
34(4). In addition, the arbitral tribunal could rectify any clerical
errors under Section 33 of Arbitration Act even after passing of
the arbitral award.
6. Thus, unlike Arbitration Act, 1940, under Arbitration Act,
1996, the Court's have limited role to either set aside or reject
the application under Section 34 of the Arbitration Act or to
remand the matter back to the Tribunal to rectify the errors
which can be ground to set aside the award.
7. It is humbly submitted that without understanding the
power and scope of Section 34(4), the Courts, in catena of
cases, have decided on its power to set aside or modify the
arbitral awards and dwelt on the merits and set aside or
modified the award. Due to this very reason the Courts have
tried to reduce the scope of its intervention whereas the correct
approach would have been that in cases of evidence not
considered, or any law being violated, etc., even those errors
which are not going to the root of the matter or not, the Court
should remit the matter to Arbitral Tribunal for rectifying the
error. The Court should not decide whether the same goes to
the root of the matter or not and only consideration should be
that the grounds pleaded are prima facie and need to be
considered before passing an award. This would have resulted
in no grounds of challenging such award surviving for the
aggrieved party. This would ultimately lead to finality in the
award rather than pushing the parties to challenge the award
and the order under Section 34 of the Arbitration Act, 1996
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under Section 37 of the Arbitration Act, 1996 then under SLP

before the Supreme Court.
8. It is imperative that the Court should not get into
evidence and modify the awards or to set aside the award
partially when the same can be remitted to the Arbitrator for
rectifying any ground for setting aside or modifying the award.
9. It is further submitted that Section 34(4) does not limit
the scope of reference to the Arbitral Tribunal and all grounds
of setting aside, if the same can be rectified by the Arbitral
Tribunal, can be referred to them instead of Court getting into
the merits of the case. And only when either the arbitral
tribunal has failed to rectify such an error (after remission or
under Section 33), or when the defects are such that the same
cannot be eliminated by the Arbitral Tribunal only in such case
the Court should set aside the award.”
(r) Ms. Aarzoo Aneja, Advocate
I. PARTIAL SETTING ASIDE OF THE AWARD VIS-à-VIS
APPLICABILITY OF M. HAKEEM JUDGMENT
1. The answer to the said reference may be answered in the
negative for the simple reason that the Hon'ble Court in M.
Hakeem (supra) did not have the occasion to adjudicate on
the vires of the partial setting aside of Arbitral Award. The
substantial question of law raised in M. Hakeem was merely
with regard to the permissibility of the modification of award
in light of the powers of setting-aside the award under
Section 34 of the A&C Act and not regarding the
permissibility of partially setting aside the award amounting
to modification thereof. In other words, it must be noticed at
the very outset that the Hon'ble Supreme Court in that case
was not concerned with the application of principle of
severability of award. The Court was primarily concerned
with the ambit and scope of section 34 in its entirety. The
contention of severability neither came up for consideration,
was not argued, and nor has been dealt with by the
Supreme Court in the entire judgment as the Court was not
called upon to decide such an issue. Thus, the judgment of
M. Hakeem (supra) cannot be considered as an
authority/decision on ‘power of the court under S 34 of the
Arbitration Act to partially set aside an award.’
2. The facts of the case in M. Hakeem clearly establishes the
same that the challenge to the Impugned Award therein was
with regard to a consolidated award which could not be
severed or separated, hence the question of partially setting
aside the award did not occur. The facts of the case were
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that notifications were issued under the provisions of the

National Highways Act and Awards were passed thereunder.
In the Arbitral Award made by the District Collector in all the
cases, no infirmity was found in the aforesaid award, as a
result of which, same amount of compensation was given to
all the claimants. In Petitions filed before the District and
Sessions Judge under Section 34 of the A&C Act, these
amounts were enhanced and the award of the Collector was
therefore modified by the District Court in exercise of
jurisdiction under Section 34 A&C Act. In the appeal filed to
the Division Bench, the aforesaid modification was upheld,
with there being a remand order to fix compensation. Hence,
the Appeal was filed before the Hon'ble Supreme Court
challenging the said modification. It is therefore clear that
the Award was in the nature of being inseparable and
therefore, there was no room for discussion about the issue
of partially setting aside of the Award.
3. The same is clearly discernible from the findings of the
Hon'ble Court in M. Hakeem whereby the Court refused to
interfere with the findings of the District Collector who
modified the Award since it was impossible to segregate the
same and reach a different conclusion. The said findings are
extracted hereinbelow:
“60.. Given the fact that in several similar cases, the NHAI has
allowed similarly situated persons to receive compensation at a
much higher rate than awarded, and given the law laid down in
Nagpur Improvement Trust (supra), we decline to exercise our
jurisdiction under Article 136 in favour of the appellants on the
facts of these cases. Also, given the fact that most of the awards
in these cases were made 7-10 years ago, it would not, at this
distance in time, be fair to send back these cases for a de novo
start before the very arbitrator or some other arbitrator not
consensually appointed, but appointed by the Central
Government. The appeals are, therefore, dismissed on facts with
no order as to costs.”
4. It is noteworthy to mention the Judgment of the Hon'ble
Supreme Court in J.G. Engineers Private Limited v. Union of
India, 2011 SCC OnLine SC 704 has categorically held that the
Courts under Section 34 has the power to partly set aside the
Award with respect to certain claims which are separate and
distinguishable, and the Court can segregate the items, that
does not suffer from infirmity and uphold the award to that
extent.
5. The Court in M. Hakeem, purposely did not discuss or
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distinguish the Judgment in J.G. Engineers (supra) since it was

not concerned with the issue of partial setting aside of the
Award. The issue of partly setting aside of the award.
6. This position has also been upheld by the following
judgments:
i. Navayuga Engineering Company Ltd. v. Union of India,
ARB. A No. 38 of 2020. (Division Bench, Kerala High
Court)
ii. National Highway Authority of India v. Additional
Commissioner, Arbitration Appeal No. 3 of 2022. (Division
Bench, Bombay High Court, Nagpur Bench)
iii. Union of India v. Alcon Builders and Engineer Private
Limited, OMP 146 of 2008. (Single Bench, Delhi High
Court)
7. It would not be out of place to mention that in any event,
the Court in M. Hakeem (supra) could not have reversed the
findings made by its Coordinate Bench in J.G. Engineers
(supra) since it is impermissible in law for a coordinate bench
to pronounce a judgment contrary to declaration of law made
by a previous coordinate bench. The subsequent Coordinate
Bench (in M Hakeem) could have only referred the issue to a
larger bench, which was not done.
8. Thus, the law declared in J.G. Engineers continues to be
the law of the land and is a binding precedent.
II. DOCTRINE OF SEGREGATION VIS-À-VIS APPLICATION
ON A&C ACT AND ITS EXTENT THEREOF
12. The answer to the said reference may be answered in
the affirmative in light of the findings made by the Hon'ble
Supreme Court in J.G. Industries (supra) and Division Bench
Judgment of the Bombay High Court in R.S. Jiwani v. Ircon
International Ltd., Mumbai, 2009 SCC OnLine Bom 2021.
13. It is submitted that merely because the words “modify”
or “vary” is not indicated in Section 34 of the A&C Act, it will
not take away the jurisdiction of the Court to interfere with the
Award of an Arbitrator partially. If such a power is not vested
with the Court, it will only lead to multiplicity of proceedings,
which destroys the entire substratum and purpose of the
introduction of the A&C Act. A reasonable interpretation of
Section 34 read with Section 31(6) of the A&C Act leads to an
irresistible conclusion that the Courts may partially set aside
the Award under any of the grounds mentioned in Section 34
itself and remit the limited matter of claims back to the Arbitral
Tribunal for afresh consideration without disturbing the findings
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made in certain claims by the Arbitrator which are upheld by

the Courts under Section 34.
Such a purposive interpretation would meet the ends of the
objective of the Act, i.e., speedy disposal of cases, minimum
cost-bearing by the parties and party autonomy.”
(s) Mr. Varun K. Chopra, Advocate
“2. Power of court to partially set-aside an arbitral
award:
m. It is submitted that an award can be partially set aside
under section 34(2)(a)(iv), whereby the statute allows the
Courts to partially set aside an arbitral award by applying the
doctrine of severability. Further, it is submitted that if a part of
an award is against the ‘fundamental policy of Indian law’ as
provided under Section 34(2)(b)(ii) explanation 1(ii), and the
claims of the award are separate and distinct, then applying
the doctrine of severability the Court may partially set aside
the part of the award against ‘fundamental policy of Indian law’
as the proviso to section 34(2)(a)(iv) has to be read ejusdem
generis to the main section.”
n. It is submitted that it would not be out of place to
mention that several high courts including Hon'ble Delhi High
Court, Hon'ble Bombay High Court, and Hon'ble Kerala High
Court have considered the question whether a court can
partially set aside an arbitral award while exercising powers
under ACA 1996, and there is a common view that has been
adopted by the High Courts pan India as mentioned
hereinabove in the previous para.
o. Further, it is submitted that in a recently, in 2023, this
Hon'ble High Court in Union of India v. Alcon Builders &
Engineer (P) Ltd., (2023) 1 HCC (Del) 134 has held where the
claims in an award are distinct and severable then the Court is
empowered to partially set aside individual or several such
claims, and that this partial setting aside would not amount to
modification of the arbitral award.
p. Therefore, it is submitted that there is an absolute duty
on the court under section 34(2)(a)(iv), and matter falling
within that category, to apply the doctrine of severability to
separate and partially set aside matters not referred to
arbitration and decision thereupon by the arbitral tribunal from
those that have been referred to arbitration.”
8. In order to holistically evaluate the questions that stand posited,
it would be profitable to briefly step back and recall the seminal
developments and deliberations which preceded the adoption of the
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5
United Nations Commission on International Trade Laws and the
Model Law which came to be drawn pursuant thereto. Undoubtedly, the
Act that India framed owes its genesis to the Model Law, which acted
as the basis for our nation revamping the law of arbitration. However,
since we are essentially concerned with Section 34 and the
interpretation of its various clauses, we propose to focus our attention
on the discussions which preceded and centered around its formation
and ultimate adoption. As would be evident from a reading of the
Report of the Working Group on International Contract Practices
(Fourth Session) [Vienna, 4-15 October 1982]6 , the core issue
which formed the subject matter of consideration was the modes or
type of action which may be adopted for challenging an award. Dealing
with the aforesaid question, the Working Group observed as follows:—
“13. The Working Group decided to commence its work by
considering the four questions prepared by the Secretariat which had
not been discussed at the third session of the Working Group.
Means of recourse
Setting aside or annulment of award (and similar procedures)
Question 6-6: Should the model law provide for only one type
of action of “attacking” an award, e.g. setting aside (leaving aside
here recourse against exequatur, but see question 6-8)
14. There was general agreement that the model law should
streamline the various types of recourse against an arbitral award
and should provide for only one type of action of “attacking” an
award. However, it was observed that the acceptability of this
approach may depend on the decision as to which arbitral awards
were international, and therefore subject to this law, and that the
position on this question may not be final.
Question 6-7: If so, on what grounds should such an action be
successful? For example, would it be acceptable to restrict the
grounds to those listed in article V, paras. (1)(a-d) and(2)(b) of
the 1958 New York Convention, with a possible restriction of the
“public policy” ground to “international public policy”?
15. There was general agreement that a restrictive approach in
listing the grounds for the setting aside of awards should be
adopted. Some doubt was expressed as to whether the reasons for
setting aside needed to be restricted to those which are mentioned
in the 1958 New York Convention. However, the prevailing view was
that the grounds for setting aside should be restricted to those listed
in article V, paras. (1)(a-d) and (2)(b) of that Convention.
16. Under one view the “public policy” ground for refusal of
recognition or enforcement (article V, paragraph (2)(b)) should be
further restricted and qualified as “international public policy”. In
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this connection it was noted that the case law and doctrine of many
countries showed a clearly detectable trend to apply a different
standard of public policy in cases of international commercial
arbitration from that applied in cases of domestic arbitration.
17. Under another view the introduction of a concept of
“international public order” was unnecessary and could give rise to
difficulties in interpretation. It was noted that there might be a
conflict between the grounds for setting aside of an award for
violation of “international public policy” under the model law and the
grounds for refusing execution of a foreign award for violation of
“public policy” under the 1958 New York Convention.
18. The Working Group requested the Secretariat to prepare draft
provisions for the attacking of an award reflecting two alternative
approaches. One alternative should use the concept of “international
public policy” while the other should retain the traditional concept of
public policy, leaving it to the courts to interpret this concept
adequately.
19. In this connection the Working Group recalled its position in
respect of questions 6-3, 6-4 and 6-5 as expressed in paragraph 109
of the Report on the work of its third session (A/CN.9/216) in which
it said that the model law should not set forth rules on remedies
against decisions granting or refusing enforcement of awards. In
view of the discussion at this session which favoured the listing of
grounds for attacking awards the Working Group decided to
reconsider at a later stage its position adopted at its third session in
respect of questions 6-3, 6-4 and 6-5.
Question 6-8: Assuming that an action to set aside may be
brought only on the same grounds as an appeal against the order
of enforcement of the same award, should the recourse system be
streamlined, e.g. by allowing only the action to set aside and
regard it as implying an appeal against the exequatur, or by
requiring in enforcement proceedings that the party against whom
enforcement is sought would be given an opportunity to raise
objections and, if he does so, to transfer the case to setting aside
proceedings?
20. The Working Group expressed different views regarding the
extent to which different means of recourse against arbitral awards
could be streamlined. Under one view a maximum streamlining in
respect of procedure and grounds for attacking awards was
desirable. Under another view only the substantive grounds could be
unified but not the various procedural aspects of the different means
of recourse. The task would be complicated by the fact that in some
countries there is no special exequatur procedure and an award is
enforceable once it is issued.
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21. The Working Group decided that the model law should not
have detailed procedural rules on exequatur and setting aside but
should place emphasis on the grounds for attacking awards. The
Working Group requested the Secretariat to prepare draft provisions
along these lines.
Question 6-9: Which rules of procedure concerning an action to
set aside the award should the model law lay down, including any
time-limits for bringing such action?”
9. The Working Group clearly appears to have suggested that the
Model Law should rather than attempting to formulate detailed
procedural rules with respect to setting aside, concentrate on
formulating the grounds for “attacking” the award. The Working Group,
accordingly, and as would be evident from the Note by the
Secretariat : Model Law on International Commercial Arbitration
proceeded to frame Draft Articles 40 and 41 as follows:—
“RECOURSE AGAINST ARBITRAL AWARD
Article 40
No recourse against an arbitral award made under this Law [,
22
whether or not rendered in the territory of this State,] may be
made to a court except an action for setting aside in accordance with
the provisions of article 41.
Article 41
(1) An action for setting aside [an arbitral award referred to in article
40]23 may be brought [before the Court specified in article V]24
within four months from the date on which the party bringing that
action has received the award in accordance with article XXII
25
(4).
(2) An arbitral award may be set aside only on one of the grounds on
which recognition or enforcement may be refused under article
26 27
37, paragraph (1) (a), (b), (c), (d) or (2) [or on which an
arbitrator may be challenged under article IX (2)].28
29 29
(3) The court may, where appropriate, [ The main cast envisaged
here (and possibly to be expressed in the provision itself) is where
the ground for setting aside affected only a part of the decision ]
set aside only a part of the award, provided that this part can be
separated from the other parts of the award.
(4) If the court sets aside the award, [it may order that the
arbitration proceedings continue for re-trial of the case] [a party
may within three months request reinstitution of the arbitration
proceedings], unless such measure is incompatible with a ground
30
on which the award is set aside.
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(5) Any decision by the court on an action for setting aside is subject
31
to appeal within three months. ”
10. It becomes pertinent to note that draft Article 41 in terms of
Clause (3) thereof envisaged an award being set aside in part. This
specific recognition of a power to set aside in part finds explicit mention
in subsequent drafts also, till it appears to have been done away with in
the Model Law as would become apparent from the discussion that
follows. However, the Court refrains from observing anything further at
this stage and reserves its comments on this aspect for the latter parts
of this decision.
11. In the Notes drawn by the Secretariat dated 25 January 1983
[A/CN.9/WG.11/WP.42] draft Articles 37 to 41 were suggested to read
as under:—
“RECOGNITION AND ENFORCEMENT OF AWARD
(continued)
Article 37
(1) Recognition and enforcement of an arbitral award made in the
territory of this State may be refused, at the request of the party
against whom it is invoked, only if that party furnishes proof that:
(a) A party to the arbitration agreement referred to in article II
was, under the law applicable to him, under some incapacity,
or the said agreement is not valid under the law to which the
parties have subjected it or, failing any indication thereon,
under the law of this State; or
(b) The party against whom the award is invoked was not given
proper notice of the appointment of the arbitrator(s) or of the
arbitration proceedings or was otherwise unable to present his
case; or
(c) The award [deals with] [decides on] a dispute or matter [not
submitted to arbitration] [outside the scope of the arbitration
agreement or not referred to the arbitral tribunal]; however, if
any decisions on matters submitted to arbitration can be
separated from those not so submitted, that part of the award
which contains decisions on matters submitted to arbitration
may be recognized and enforced; or
(d) The composition of the arbitral tribunal or the arbitral
procedure was not in accordance with the mandatory provisions
of this Law, or the agreement by the parties, unless in conflict
with any mandatory provision of this Law, or, failing such
agreement, the non-mandatory provisions of this Law [,
provided that, if the parties have agreed on the application of
the law of another State, the provisions of that law are
relevant]; or
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(e) The award [has not yet become binding on the parties] [is still
open to appeal before a higher instance arbitral tribunal] or has
been set aside [or suspended] by a court of this State [or, if
the award was made under the law of another country, by a
competent authority of that country].
Article 38
(1) Subject to any multilateral or bilateral agreement entered into by
this State, recognition and enforcement of an arbitral award made
outside the territory of this State may be refused, at the request
of the party against whom it is invoked, only if that party
furnishes proof that:
(a) A party to the arbitration agreement referred to in article II
was, under the law applicable to him, under some incapacity,
or the said agreement is not valid under the law to which the
parties have subjected it or, failing any indication thereon,
under the law of this State; or
(b) The party against whom the award is invoked was not given
proper notice of the appointment of the arbitrator(s) or of the
arbitration proceedings or was otherwise unable to present his
case; or
(c) The award [deals with] [decides on] a dispute or matter [not
submitted to arbitration] [outside the scope of the arbitration
agreement to not referred to the arbitral tribunal]; however, if
any decisions on matters submitted to arbitration can be
separated from those not so submitted, that part of the award
which contains decisions on matters submitted to arbitration
may be recognized and enforced; or
(d) The composition of the arbitral tribunal or the arbitral
procedure was not in accordance with the agreement of the
parties, or, failing such agreement, was not in accordance with
the law of the country where the arbitration took place [,
provided that, if the parties have agreed on the application of
the law of another State, the provisions of that law are
relevant]; or
(e) The award [has not yet become binding on the parties] [is still
open to appeal or other ordinary recourse] or has been set
aside [for one of the reasons set forth in sub-paragraphs (a) to
(d) or in paragraph (2) of this article], or suspended, by a
competent authority of the country in which [, or under the law
of which,] that award was made.
(2) Recognition and enforcement may also be refused if the court [from
which recognition and enforcement is sought] finds that:
(a) The subject matter of the dispute is not capable of settlement
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by arbitration under the law of this State; or

(b) The recognition or enforcement of the award would be
contrary to the [international] public policy of this State.
Article 39
If an application for the setting aside or suspension of an award
has been made to a competent authority referred to in article 37,
paragraph (1) (e) or 38, paragraph (1) (e), the authority before
which the award is sought to be relied upon may, if it considers it
proper, adjourn the decision on the enforcement of the award and
may also, on the application of the party claiming enforcement of the
award, order the other party to give suitable security.
RECOURSE AGAINST ARBITRAL AWARD
Article 40
No recourse against an arbitral award made under this Law [,
whether or not rendered in the territory of this State,] may be made
to a court except an action for setting aside in accordance with the
provisions of article 41.
Article 41
(1) An action for setting aside [an arbitral award referred to in article
40] may be brought [before the Court specified in article V] within
four months from the date on which the party bringing that action
has received the award in accordance with article XXII (4).
(2) An arbitral award may be set aside only on one of the grounds on
which recognition or enforcement may be refused under article
37, paragraph (1) (a), (b), (c), (d) or (2) [or on which an
arbitrator may be challenged under article IX (2)].
(3) The court may, where appropriate,29[29 The main cast envisaged
here (and possibly to be expressed in the provision itself) is where
the ground for setting aside affected only a part of the decision]
set aside only a part of the award, provided that this part can be
separated from the other parts of the award.
(4) If the court sets aside the award, [it may order that the
arbitration proceedings continue for re-trial of the case] [a party
may within three months request reinstitution of the arbitration
proceedings], unless such measure is incompatible with a ground
on which the award is set aside.
(5) Any decision by the court on an action for setting aside is subject
to appeal within three months.”
12. Of significance is Footnote 29, where while dealing with the
power proposed to be conferred on a court to set aside an award in part
and the usage of the word “appropriate” therein, it was observed that
the said expression is in aid of the provision itself being recognised as
envisaging a situation where the ground for setting aside affects only a
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part of the decision. Footnote 29 reads thus:—

“The main cast envisaged here (and possibly to be expressed in
the provision itself) is where the ground for setting aside affected
only a part of the decision.”
13. Over the course of deliberation and more particularly in the Fifth
Session of the Working Group, Articles 40 and 41 again came up for
consideration when the following discussions ensued:—
“Recourse against arbitral award
Article 40
178. The text of article 40 as considered by the Working Group
was as follows:
Article 40
No recourse against an arbitral award made under this Law [whether
or not rendered in the territory of this State,) may be made to a
court except an action for setting aside in accordance with the
provisions of article 41.
179. The Working Group expressed its support for the policy
underlying that article. It was noted, however, that that rule of
exclusion could be finally assessed only after having considered
article 41. It was also noted that the reference to “an action for
setting aside” was too restrictive if article 41 would include other
remedies such as remission to the arbitral tribunal, as envisaged in
its paragraph (4), or correction or interpretation of an award by the
court. In such case it would be more appropriate to delete the words
“an action for setting aside” and merely retain the general reference
“in accordance with the provisions of article 41”
180. The Working Group was divided on whether the words placed
between square brackets should be retained. Under one view, that
text provided a useful clarification (as suggested in footnote 24 of
WP.42). Under another view, that text should not be retained for
either of the following reasons : (a) the words “made under this Law”
were sufficiently clear so as to make any clarification superfluous, (b)
the text between square brackets created uncertainty, by allowing
the possible misinterpretation that article 40 adopted in State A
would also apply to an award made in State B under the model law
adopted there and, even if correctly interpreted, touched upon the
difficult issue of court competence (for setting aside awards made
abroad but under the model law of State A), which was a matter
probably outside the scope of the model law.
Article 41
181. The text of article 41 as considered by the Working Group
was as follows:
Article 41
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(1) An action for setting aside (an arbitral award referred to in

article 40] may be brought (before the Court specified in article
V] within four months from the date on which the party
bringing that action has received the award in accordance with
article XXII (4).
(2) An arbitral award may be set aside only on one of the grounds
on which recognition or enforcement may be refused under
article 37, paragraph (1) (a), (b), (c), (d) or (2) (or on which
an arbitrator may be challenged under article IX (2)].
(3) The court may, where appropriate, set aside only a part of the
award, provided that this part can be separated from the other
parts of the award.
(4) If the court sets aside the award, [it may order that the
arbitration proceedings continue for re-trial of the case] (a
party may within three months request re-institution of the
arbitration proceedings), unless such measure is incompatible
with a ground on which the award is set aside.
(5) Any decision by the court on an action for setting aside is
subject to appeal within three months.
Structure and order of provisions
182. It was suggested to place that article (and art. 40) before
the articles on recognition and enforcement of awards and, then, to
specify in paragraph (2) the reasons for setting aside instead of
referring to article 37. A further suggestion was to reverse the order
of paragraphs (1) and (2). Yet another suggestion was to combine
the provisions on setting aside with the articles on recognition and
enforcement of domestic awards and, thereby, to streamline the
system established in the model law. The Working Group was agreed
that those suggestions could be considered at a later stage.
Paragraph (1)
183. As regards the words between the first square brackets, the
Working Group was agreed that they could either be deleted, in view
of the close proximity of that provision with article 40, or replaced by
the same words as used in article 40 specifying which awards were
covered. As regards the words between the second square brackets,
the Working Group agreed with their contents but felt that a
reference to article 41 in article V was sufficient.
184. As regards the time period stated in paragraph (1), various
suggestions were made for shortening or for extending that period.
After deliberation, a time-period of three months was accepted. It
was noted that the provision might be expanded so as to
accommodate cases of appeal to another arbitral tribunal (as
suggested in footnote 27 of WP.42).
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185. The Working Group decided to retain paragraph (1), subject

to the above modifications.
Paragraph (2)
186. Divergent views were expressed as to the grounds for setting
aside an award. Under one view, the list of reasons set forth in
paragraph (2) was too restrictive since it did not cover some
important grounds recognized in some legal systems, sometimes
even forming part of the public policy of a State. It was suggested,
therefore, to add to the list some more grounds as, e.g., mentioned
in footnote 29 of WP.42 (in particular, under (c) and (d)). An
alternative suggestion was to replace the list by a general formula
such as “in cases of procedural injustice” and to rely on the common
sense of the judge.
187. The prevailing view, however, was to limit the reasons for
setting aside to those grounds on which under article 38 recognition
and enforcement may be refused. That solution would facilitate
international commercial arbitration by enhancing predictability and
expeditiousness and would go a long way towards establishing a
harmonized system of limited recourse against awards and their
enforcement. It was stated in support that the reasons set forth in
article V of the New York Convention provided sufficient safeguards,
and that some of the grounds suggested as additions to the list were
likely to fall under the public policy reason.
188. As regards the reason set forth in subparagraph (d) of article
V (1), there was vide support for providing for a certain qualification
(as suggested in footnote 28 of WP.42), by adopting a general rule
of “estoppel” or implied waiver and, possibly, by excluding minor
defects which had no influence on the award. Subject to such
possible addition, which would also apply to articles 37 and 38, the
Working Group adopted paragraph (2).
Paragraph (3)
189. The Working Group adopted that paragraph.
Paragraph (4)
190. Divergent views were expressed as to the appropriateness of
retaining a rule along the lines of paragraph (4). Under one view, the
provision should be deleted since it dealt in an insufficient manner
with procedural questions which were answered in a way not easily
reconciled with the different concepts of the various legal systems. It
was also pointed out that setting aside should be regarded as a
remedy separate from remission to the arbitral tribunal and that the
wording between the second square brackets and the following
proviso lacked clarity.
191. However, there was more support for retaining a provision
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along the lines of paragraph (4), subject to various modifications.

The main reasons for retention were that the provision made it clear
that the arbitration agreement had not necessarily lapsed and that it
opened the way for remission to an arbitral tribunal. While some
support was expressed for leaving the decision on retrial of the case
solely to the court and its discretion, the prevailing view was to leave
that matter to the parties, possibly subject to some control or
authorization by the court.
192. Various suggestions were made for clarifying, in a revised
draft, in particular, the following issues : (a) to whom would a party
have to address its request for “re-institution”, (b) “re-institution”
should not necessarily mean that the proceedings would be
conducted by the previous arbitrators; (c) remission or retrial might
relate to the whole award or only to part of it, including the
instruction to correct a certain procedural defect, (d) the proviso at
the end of the paragraph should be more detailed and, for example,
should mention the reasons of non-existence of a valid arbitration
agreement and non-feasibility of remission to the previous arbitral
tribunal.
193. The Working Group, after deliberation, requested the
Secretariat to prepare a revised draft on the basis of the views
expressed during the discussion.”
14. It becomes relevant to note that the power to set aside the
award in part and which stood comprised in draft Article 41(3) was duly
adopted. In the Sixth Session, draft Articles 40 and 41 came to be
renumbered as Articles 29 and 30. It would be pertinent to notice the
relevant parts of the report of the said session and which are
reproduced hereinbelow:—
“Article XXIX
No recourse against an arbitral award made under this Law may
be made to a court except as provided in article XXX.
147. The Working Group noted that article XXIX was closely linked
with article XXX in that it expressed the exclusive nature of the
recourse available under article XXX. It was, therefore, suggested to
incorporate the provision of article XXIX into article
XXX.
148. The Working Group noted that both articles applied to
arbitral awards “made under this Law” and that this scope of
application was different from the one used in articles XXV and
XXVII where the territorial approach had been adopted (“awards
made in the territory of this State”). It was thought that this
disparity could lead to conflicts and undesirable results.
149. The Working Group was agreed to reconsider the matter at
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its next session in the light of a general study by the Secretariat on

the scope of application of the various provisions of the model law,
including the question of the choice of a procedural law of a country
other than the place of arbitration and some suggestions as to
possible rules on conflict of laws.
Article XXX
150. The text of article XXX as considered by the Working Group
was as follows:
Article XXX
(1) An award made under this Law may be set aside, whether in
whole or in part, only on grounds on which recognition and
enforcement may be refused under article XXVII (1) (a), (b), (c), (d)
or (2)/or on which an arbitrator may be challenged under article IX
(2)/.
(2) An application action for setting aside may not be made
brought after four months have elapsed from the date on which the
party making that application bringing that action had received the
award in accordance with article XXII (4). However, where the
arbitration agreement provides for appeal to another arbitral
tribunal, this period commences on the date of the receipt of the
decision of that arbitral tribunal.
(3) The Court, when asked to set aside an award, may also order,
where appropriate and if so requested by a party, that the arbitral
proceedings be continued. Depending upon the reason for setting
aside procedural defect found by the Court, this order may specify
the matters to be considered by the arbitral tribunal and may
contain other instructions concerning the composition of the arbitral
tribunal or the conduct of the proceedings.
Paragraph (1)
151. A suggestion was made to widen the supervisory power of
the court under article XXX by adding to the list of grounds
“manifest injustice”. However, this suggestion was not adopted since
it was considered as too vague and too broad and since most cases
of such injustice would fall under the grounds listed in paragraphs
(1) (b) and (2) of article XXVII referred to in article XXX.
152. The Working Group adopted the grounds as listed in
paragraph (1) of article XXX which corresponded to the reasons for
refusal of recognition and enforcement under the 1958 New York
Convention. It was noted that the ground placed between square
brackets was not needed if the Working Group would adopt the
second alternative in article X (3).
Paragraph (2)
153. The Working Group was agreed that the time-period within
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which an application for setting aside may be made should be three

months. The Working Group was also agreed that the wording
between square brackets at the end of the first sentence was not
needed and that the second sentence could be deleted, too.
Paragraph (3)
154. Divergent views were expressed as to whether paragraph (3)
should be retained. Under one view, the draft provision was useful in
that it provided some guidance on procedural questions which were
relevant in the case of remission. Under another view, the provision
should be deleted since remission was not known in all legal systems
and, in particular, the idea of orders or instructions to an arbitral
tribunal was not acceptable. Under yet another view, the option of
remission should be retained, without the giving of orders or
instructions as envisaged in the second sentence; it was stated in
support that this device would allow to cure a procedural defect
without having to vacate the award.
155. The Working Group, after deliberation, adopted this latter
view and requested the Secretariat to revise the provision
accordingly.
Relationship between article XXVII and XXX
156. The Working Group recalled the concern expressed in the
context of article XXVII that this article, even if consolidated with
article XXVIII, would for domestic awards establish a procedure
which would duplicate the examination of the very reasons set forth
in article XXX for the setting aside of awards made under the law of
this State. While some support was expressed for maintaining this
double procedure in view of the different purposes of article XXVII
and article XXX, the prevailing view was that it should be avoided,
not only for the sake of economy and efficiency but also in order to
prevent conflicting decisions.
157. In this respect, a suggestion was made to delete the
provisions of article XXVII, with the result that the only control of
domestic awards (if made under this Law) was exercised upon an
application for setting aside if made within the time-period provided
therefor in article XXX. However, this suggestion was adopted since
it was not justified to deprive a party from raising objections if
“domestic” enforcement was sought after expiration of this time-
limit while the same objections could still be raised against
enforcement in any other State.
158. The Working Group was, thus, agreed that the double
procedure should be avoided during the time-period for setting aside
and requested the Secretariat to prepare a draft provision to that
effect. One possible technique was to refer a party against whom
enforcement was sought within three months after receipt of the
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award to the procedure of setting aside. It was further suggested

that the decision in that procedure would be binding on the
enforcement judge or court and that a provision along the lines of
paragraph (3) of article XXVIII might be appropriate also in this
“domestic” context.
15. Even up to this stage, the power to set aside an award in whole
or in part was retained in Article 30(1). It is also pertinent to take note
of the draft provisions comprised in Article 30(3) and which was a
precursor to Section 34(4) and spoke of procedural defects that may be
discovered by a court in the course of setting aside proceedings. While
dealing with Article 30(3), the Working Group took note of a school of
thought which was in favour of a power of remission being retained. It
was in this Session itself that a proposal was also mooted for draft
Articles 29 and 30 being merged.
16. The said revised and combined provision was thereafter taken up
for consideration in the Seventh Session of the Working Group and
where it came to be numbered as draft Article 34. It is this re-drafted
Article 34 that stands replicated as the setting aside provision which
ultimately came to be adopted in the Model Law. The relevant extracts
from the report of the Working Group drawn upon conclusion of its
Seventh Session is reproduced hereinbelow:—
“CHAPTER VII. RECOURSE AGAINST AWARD
Article 34
126. The text of article 34 as considered by the Working Group
was as follows:
Article 34. Application for setting aside as exclusive recourse
against arbitral award
(1) Recourse to a court against an arbitral award made [in the
territory of this State] [under this Law] may be made only by
an application for setting aside in accordance with paragraphs
(2) and (3) of this article.
(2) An arbitral award may be set aside by the Court specified in
article 6 only if
(a) the party making the application furnishes proof that:
(i) the parties to the arbitration agreement referred to in
article 7 were, under the law applicable to them, under
some incapacity, or the said agreement is not valid under
the law to which the parties have subjected it or, falling
any indication thereon, under the law of this State; or
(ii) the party making the application was not given proper
notice of the appointment of the arbitrator(s) or of the
arbitral proceedings or was otherwise unable to present
his case; or
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(iii) the 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 award which contains decisions on matters not
submitted to arbitration may be set aside; or
(iv) the composition of the arbitral tribunal or the arbitral
procedure was not in accordance with the [mandatory
provisions of this Law and the] agreement of the parties
or, falling 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 or any decision contained therein 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 on which the party making
that application had received the award in accordance with
article 31 (4) [or, if a request had been made under article 33,
from the date on which that request had been disposed of by
the arbitral tribunal).
(4) The Court, instead of setting aside the award, [may order,
where appropriate, that the arbitral proceedings be continued]
[may authorize the continuation of arbitral proceedings where
this would permit an omission or other procedural defect to be
cured without having to set aside the award].
127. The Working Group adopted that article, subject to the
addition, at the end of paragraph (1), of the words “or by a request
to refuse recognition or enforcement in accordance with article 36”,
10/and subject to the replacement of the (2) (a) (iv), by the words
“provisions of this Law from which the parties cannot derogate and
the”, and subject to the deletion, in paragraph (3), of the words “in
accordance with article 31 (4)”, and subject to the revision of
paragraph (4) as follows:“The Court, when asked to set aside an
award, may, where appropriate and so requested by a party,
suspend the setting aside 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 arbitral tribunal's opinion will eliminate the grounds for setting
aside”.
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128. While there was some support for the suggestion to place
article 34 after the provisions on recognition and enforcement, the
Working Group decided to retain the existing order of those articles.
129. It was noted that article 34 regulated the recourse against
an arbitral award without defining the term “award” or specifying
what types of awards would be covered. In order to achieve the
necessary clarification, the Working Group decided to include in the
model law a general definition of the term “award” or, at least, to
specify what types of awards would be subject to setting aside under
article 34. A suggestion for later consideration was to allow recourse
against any award deciding on the substance of the dispute. 11/
130. It was observed that paragraph (1), by presenting the
application for setting aside as exclusive recourse against awards,
appeared to disregard the right of a party under article 36 to raise
objections against the recognition or enforcement of an award.
Although that right was exercised in reply to an initiative by the
other party, the Working Group was agreed that, for the sake of
clarity, paragraph (1) should make reference to that other type of
recourse. 12/
131. As regards the words “[in the territory of this State][under
this Law]”, the Working Group was agreed that it was premature to
decide on the specific scope of application of article 34 before having
discussed the territorial scope of application of the model law in
general. 13/
132. As regards paragraph (2) (a) (i), there was considerable
support for substituting the words “a party to the arbitration
agreement referred to in article 7 lacked the capacity to conclude the
agreement” for the words “the parties to the arbitration agreement
referred to in article 7 were, under the law applicable to them, under
some incapacity” since the latter wording WAS seen as containing an
incomplete and inappropriate conflict of laws rule. The prevailing
view, however, was to retain the current wording which was identical
to the one in article V (1) (a) of the 1958 New York Convention.
133. There was some support for deleting the reference, in
paragraph (2)(a)(i) to the law applicable to the validity of the
arbitration agreement and, thus, to state as reason for refusal merely
that “the arbitration agreement is not valid”. It was pointed out, in
support of that view, that the reference did not set forth a complete
system of conflicts rules and had given rise to some difficulties. The
prevailing view, however, was to retain the current wording as an
acceptable and satisfactory provision which was identical to the one
adopted in the 1958 New York Convention.
134. As regards paragraph (2) (a) (iii), the Working Group was
agreed that the drafting of that provision, in particular its second
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part, could be improved. It was suggested, for example, to replace

the words “only that part of the award which contains decisions on
matters not submitted to arbitration may be set aside” by the words
“that part of the award which contains decisions on matters
submitted to arbitration need not be set aside”.
135. As regards paragraph (2) (a) (iv), the Working Group
adopted the policy underlying the words “mandatory provisions of
this Law and the arbitration agreement” since a mandatory provision
of this Law, by definition, would prevail over any procedural
agreement by the parties which was in conflict with such provision.
However, it was agreed to redraft that portion of the provision so as
to avoid the expression “mandatory” which was not understood in all
legal systems as meaning “from which the parties cannot derogate”.
136. As regards paragraph (2) (b) (i), it was noted that that
provision made the law of the forum determine the arbitrability of
the subject-matter of the dispute. It was suggested that such a rule,
while appropriate in the context of recognition and enforcement (art.
36 (1) (b) (i)), was not appropriate in setting aside proceedings
since here the effect of a finding of nonarbitrability was not limited
to the State of the forum but extended to all other States by virtue
of article 36 (1) (a) (v). Such global effect should obtain only from a
finding that the subject-matter of the dispute was not capable of
settlement by arbitration under the law applicable to that issue
which was not necessarily the law of the State of the setting aside
proceedings. It was, therefore, suggested to delete the provision of
paragraph (2) (b) (i). The result of that deletion, which received
considerable support, would be to limit the court control under
article 34 to those cases where non-arbitrability of a certain subject-
matter formed part of the public policy of that State (para. (2) (b)
(ii)) or where the Court regarded arbitrability as an element of the
validity of an arbitration agreement (para. (2) (a) (i)), although
some proponents of that suggestion sought the more far-reaching
result of excluding non-arbitrability as a reason for setting aside.
Another suggestion was to delete, in paragraph (2) (b) (i), merely
the reference to “the law of this State” and, thus, to leave open the
question as to which was the law applicable to arbitrability.
137. The Working Group in discussing those suggestions, was
agreed that the issues raised were of great practical importance and,
in view of their complex nature, required further study. The Working
Group after deliberation, decided to retain, for the time being, the
provision of paragraph (2) (b) () in its current form so as to invite
the Commission to reconsider the matter and to decide, in the light
of comments by Governments and organizations, on whether the
present wording was appropriate or whether the provision should be
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modified or deleted.
138. As regards paragraph (3), the Working Group reaffirmed its
decision to delete the words “in accordance with article 31 (4)”. As
regards the words “or, if request had been made under article 33,
from the date on which that request had been disposed of by the
arbitral tribunal”, there was considerable support for deleting those
words since they might open the door for dilatory tactics by a party
and because an unbreakable time-limit for applications for setting
aside was desirable for the sake of certainty and expediency. The
prevailing view, however, was to retain those words since they
presented the reasonable consequence of article 33 which allowed a
party to request a correction, interpretation or an additional award.
It was also pointed out that the periods of contained in article 33
enabled the arbitral tribunal to minimize the risk of dilatory tactics
and provided a basis for calculating the possible extension of the
time-limit prescribed in paragraph (3) of article 34.
139. As regards paragraph (4), the Working Group adopted the
policy underlying that provision since remission, though not known
in all legal systems, could be a useful device for curing procedural
defects without having to set aside the award. It was noted that the
wording “Instead of setting aside the award” was not felicitous since
it could be understood as upholding the validity of the award for the
time during which the arbitral tribunal dealt with the case remitted
to it. It was also noted that it was misleading to speak of a
“continuation of the arbitral proceedings” since these were
terminated by the final award and, apart from that, regard should be
had to the fact that the arbitral tribunal may have to repeat an
earlier phase of the proceedings. The Working Group was agreed that
the wording set forth above (para. 127) would meet those concerns.”
17. Significantly, however, the specific reference to a partial setting
aside which otherwise formed part of the previous versions of draft
Articles 40 and 41 and stood incorporated in the report of the Working
Group prepared during the Sixth Session inexplicably ceased to remain
a part of the Article which came to be adopted. While a partial setting
aside or severance was retained in Article 34(2)(a)(iii) [and which is
similar to Section 34(2)(a)(iv) of the Act], the partial setting aside
reference which formed part of the principal body of the draft Article
ceased to find place. Draft Article 34 as mooted by the Working Group
for adoption also incorporated a provision akin to Section 34(4) as it
stands today and envisaged the same to be an enabling power inhering
in the court to frame a direction permitting an AT to continue
proceedings so as to take care of omissions or other procedural defects
and enabling a court to suspend the setting aside proceedings in the
meanwhile. The Working Group in Para 139 of its report significantly
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noted that though a provision for remission may not be accepted in

various legal systems, it would constitute a useful device for curing
procedural defects without the Court being compelled or constrained to
set aside the award.
18. Our attention was also drawn to the Travaux Préparatoires
relating to the UNCITRAL Model Law and which records the views
expressed by representatives of member nations. While dealing with
the power to sever offending parts of an award, the Travaux
Préparatoires prepared for the 318th meeting dated 11 June 1985
records the views expressed by different countries as follows:—
“Article 34(2) (b) (ii)
34. Mr. SEKHON (India) said that his delegation would prefer
to see subparagraph (b) (ii) deleted. The expression “public
policy” was much too vague and had very little to do with the law
of arbitration. If the subparagraph were retained, the Commission
should consider deleting the phrase “or any decision contained
therein”, which was superfluous as the whole necessarily included
all of its parts, and a decision was part of an award.
35. Mr. LOEFMARCK (Sweden) said that his delegation would
prefer the subparagraph to be deleted but would not insist upon
it.
36. Mrs. VILUS (Yugoslavia) said that she agreed with the
comments of the representative of India. The subparagraph could
be interpreted to mean that an award could be set aside because
“a decision contained therein”, i.e. a part of that award, conflicted
with certain principles of the law of the forum which were
irrelevant to the merits of the case. The subparagraph was not,
moreover, compatible with a restrictive interpretation of the
notion of public policy.
37. Mr. SAMI (Iraq) said that his delegation also felt that the
phrase “in conflict with the public policy of this State” was very
ambiguous. He would prefer a wording such as “in conflict with
the legal order of this State”. If the wording was not changed, he
would prefer the subparagraph to be deleted.
38. The CHAIRMAN said that “public policy” was a translation
of the French term “order public” and meant the fundamental
principles of law.
39. Mr OLUKOLU (Nigeria) also felt that subparagraph (b) (ii)
should be deleted. The term “public policy” was too vague to
provide the guidance that the countries applying it should be able
to expect from the Model Law.
40. Mr. JARVIN (Observer for the International Chamber of
Commerce) thought that the idea of public policy was perhaps
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vague. It should, however, be further developed in the Model Law

and a distinction made between international and national public
policy. The Model Law was intended to apply to international
trade.
41. Sir Michael MUSTILL (United Kingdom) pointed out that the
term “public policy” was used again in article 36 (1)(b)(ii). In his
delegation's view, the question was linked with the general
problem of whether there should be a general provision
encompassing all cases of serious procedural injustice. It was
important to know, therefore, whether a case of serious procedural
injustice would be regarded as contrary to public policy. If the
term would allow the court to intervene in such cases, his
delegation would regret the deletion of the subparagraph. If the
subparagraph was not concerned with such cases, he would not
object to its deletion.
42. The CHAIRMAN said that during the drafting of the 1972
European Convention on State Immunity, subsequently ratified by
both the United Kingdom and Austria, there had been a long
discussion on “ordre public”. Ultimately, the French text of the
Convention had used simply “ordre public”, while the English text
had had to specify a violation of a fundamental rule of procedure
in the form of “no adequate opportunity fairly to present his case”.
That language had been used to make it clear that the notion was
not limited to substantive law.
43. Mr. ROEHRICH (France) said that he felt the same concern
as the United Kingdom representative. He had said earlier that his
delegation would have no objection to the deletion of
subparagraph (b) (ii). However, since a discussion had arisen on
an addition to the provision in order to meet the anxiety of the
common law States, an approach must be found which would
cover the notion expressed in the 1972 European Convention on
State Immunity. A formula was needed that would be acceptable
to all States, irrespective of their legal systems. His delegation
favoured retaining the subparagraph, provided it could be
reworded to deal with those anxieties.
44. Mr. GOH (Singapore) was in favour of deleting the
subparagraph. He felt that its retention would allow the court to
intervene in matters which the parties had agreed to submit to
arbitration.
45. The CHAIRMAN thought that subparagraph (b) (ii) was the
best place for an improved explanation of the idea. The problem
raised by the United Kingdom delegation could be solved by using
different wording, because the intention was to refer to deviations
from the fundamental principles of the law “of this State”, both
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substantive and procedural. There was a public policy clause in all

38 conventions of The Hague Conference. He urged the
Commission not to delete the subparagraph simply because the
notion of “public policy” was strange, but rather to find a more
comprehensive formula which would meet the fears of the United
Kingdom and other delegations.
46. Mr. BONELL (Italy) said that the purpose of the
subparagraph was to make it clear that, in addition to the reasons
set out in the preceding subparagraphs, there was a more general
limitation beyond which an award could not go. He pointed out
that there was no other possibility of supervising the content of
the award. If subparagraph (b) (ii) was deleted, there were two
possibilities either the mater would be left entirely open and the
recognition of any kind of award would be allowed, or the
possibility would be hinted at that set only general but less than
general principles were at stake, which would be an undesirable
result. The aim way was to provide for a minimum of court control
and supervision. If a clearer form of wants could be suggested,
his delegation would welcome it. He noted that the 1958 New
York Convention used the same concept (article V para 2 (b)).
That Convention had worked satisfactorily so far.
47. Mr BOGGIANO (Observer for Argentina) felt that it would be
inconsistent to retain subparagraph (b) (i) and to reject (b) (ii).
His delegation considered that “ordre public” constituted a body of
fundamental principles which included also due process of law.
The subparagraph implied a guarantee of protection against
serious procedural injustice in the arbitration proceedings.
48. Mr. HOELLERING (United States of America) was in favour
of retaining the subparagraph as it stood. To delete it would be a
radical departure from the New York Convention. It was a concept
frequently used in the United Nations, and its retention would
enhance the acceptability of the Model Law. He was certain that
the concern of the United Kingdom could be met by means of
drafting changes.
49. Mr. TORNARITIS (Cyprus) thought that the subparagraph
should not be deleted simply on account of its use of the term
“public policy”. If a more appropriate term could be found, his
delegation would have no objection to the subparagraph. He
noted that the words “ordre public” had been used in the English
test of the Fourth Protocol to the European Convention on the
Protection of Human Rights.
50. Mr. MTANGO (United Republic of Tanzania) said it was
inaccurate to say that the concept of public policy was unknown in
some common law States. It was in familiar use in contract law,
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for example. He had heard the concept defined as “binding rules

of the legal system”. He was in favour of retaining the
subparagraph, with the deletion of the phrase “or any decision
contained therein” if the Commission so decided.
51. Mr. GRAHAM (Observer for Canada) sympathized with the
Indian position but favoured retaining the reservation contained in
the subparagraph. In Canada, the common law and the civil law
systems were both present, and problems such as that under
discussion had had to be faced. He associated himself with the
United States position on the subparagraph. The concept of public
policy (ordre public) was included in many international
conventions, and deleting it from the Model Law would be
tantamount to refusing to tolerate the civil law concept. It might
be possible to include a further subparagraph in paragraph (2) to
accommodate the suggestion of respect for procedural regularity.
He felt, however, that it would be better to expand the notion in
paragraph (2) (b)(ii) along the lines of article 20 (2)(a) of the
European Convention on State Immunity.
52. Mr. de HOYOS GUTIERREZ (Cuba) favoured maintaining
subparagraph (b) (ii).
53. Mr. MATHANJUKI (Kenya) also favoured retaining the
subparagraph. His delegation appreciated the need to provide for
a rule of general character which would cover serious misjustice to
the detriment of one of the parties to the arbitration. His
delegation would not insist on the term “public policy” but would
accept any form of words that reflected the seriousness with
which procedural injustice was regarded in the Model Law.
54. Mrs. DASCALOPOULOU-LIVADA (Observer for Greece) said
that the notion of public policy was fundamental to her country's
legal system. Her delegation was therefore in favour of retaining
the subparagraph.
55. Mr. JOKO-SMART (Sierra Leone) said that, before the
debate, his delegation had been in favour of retaining the
subparagraph because of its understanding of the meaning of
“public policy”. There now seemed to be some confusion as to
whether “ordre public” was properly rendered by the term “public
policy”, and unless that term was clarified, his delegation would
be in favour of deleting the subparagraph.
56. The CHAIRMAN said that the Commission seemed disposed
to retain the reference in article 34 (2) (b) (ii) to public policy
without amplification in the text, but with a reference in the
report to what the term meant in other conventions in which it
was used, namely fundamental principles of law, without
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differentiating between substantive and procedural law. On the

other hand, several speakers had supported the deletion of the
phrase “or any decision contained therein”. He took it there was
agreement to delete it.
57. It was so agreed.”
19. The Travaux Préparatoires prepared for the 319th meeting
records the views expressed by representatives of member nations
insofar as draft Article 34(4) is concerned and the relevant parts thereof
are extracted hereinbelow:—
“International commercial arbitration (continued)
(A/CN.9/246, annex; A/CN.9/263 and Add.1-2; A/CN.9/264;
A/CN.9/XVIII/CRP.1 and 3-6)
Article 34. Application for setting aside as exclusive recourse
against arbitral award (continued)
Article 34 (4) (continued)
1. Mr. SAWADA (Japan) said that the paragraph was an unknown
quantity. That was not a reason for its deletion, but it would
help his delegation to make up its mind about the provision if
the secretariat could explain how it would work.
2. Mr. HERRMANN (International Trade Law Branch) said that the
aim of paragraph (4) was to give the court the option of not
setting aside the arbitral award when there was a possibility of
curing the defect in the arbitral proceedings. The question
would be considered by the court referred to in article 6. The
court would not, however, be able to invite the arbitrators to
cure the defect in the case of some of the reasons for setting
aside listed in article 34 (2), for example incapacity of a party
or invalidity of the arbitration agreement. In some legal
systems, once the arbitrators had made their award their
mandate could not be revived, but paragraph (4) would
empower the court to do that.
3. Sir Michael MUSTILL (United Kingdom) said that his delegation
was strongly in favour of the principle expressed in paragraph
(4). In the United Kingdom, remission had proved a very
valuable remedy by avoiding the choice between completely
quashing the award and allowing no relief at all. It was very
rare in practice in the United Kingdom for an award to be set
aside; when a court had to intervene, the less drastic remedy
of remission was usually granted. His delegation supported the
written suggestion of the International Bar Association,
reproduced in A/CN.9/263 (p. 48, para. 18), that the
paragraph should be formulated along the lines of the version
given in paragraph 126 of A/CN.9/246.
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4. Lord WILBERFORCE (Observer for the Chartered Institute of

Arbitrators) said that from the viewpoint of arbitrators
paragraph (4) was very valuable, and he was perturbed at the
prospect of its deletion. The objections raised to the paragraph
were not serious and concerned only the obscurity of the
language and the novelty of the provision. The remission
system already operated well in many countries and offered a
better means of dealing with procedural defects or mistakes by
the arbitrators than the alternative, which was the complete
setting aside of the award.
5. Mr. SEKHON (India) said that his delegation was in favour of
paragraph (4). The fact that such a provision was not found in
some legal systems was not a reason for excluding it if it was
meritorious. The aim, after all, was harmonization of law. He
suggested that the words “an opportunity to resume the
arbitral proceedings” should be replaced by the words “an
opportunity to reconsider the arbitral proceedings”.
6. Mr. STALEV (Observer for Bulgaria) proposed, as a compromise,
that the closing portion of the paragraph should read “an
opportunity to eliminate such grounds for setting aside as are
remediable without reopening of the arbitral proceedings”. That
would cover cases when, for example, the arbitrators had not
given reasons for their award or had not all signed the award.
The present text of the paragraph implied that the arbitrators
would have the power to vacate the contested award, for
otherwise a new award would not be possible; until the court
set the contested award aside, if it did, the parties and the
arbitrators would be bound by it. The arbitrators’ power to
vacate should therefore be stated explicitly, a point to some
extent covered by the useful suggestion made by the German
Democratic Republic (A/CN.9/SR.318, para. 77).
7. Mr. BROCHES (Observer for the International Council for
Commercial Arbitration) said that the Council was strongly in
favour of paragraph (4), which would benefit both arbitrators
and businessmen. He thought that the Bulgarian proposal
would make the provision more generally acceptable.
8. Mr. JOKO-SMART (Sierra Leone) said that if the purpose of the
paragraph was to empower the court to remit an award to the
arbitrators, it would be better to delete the words “and so
requested by a party”, which cast doubt on whether the court
had that power. The hands of the court should not be tied by
the wishes of the parties.
9. Mr. GRIFFITH (Australia) said that paragraph (4) was a
sensible and useful provision in its existing form. He endorsed
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the view of the Observer for the International Council for

Commercial Arbitration that it would benefit arbitrators and
businessmen. His delegation opposed the Bulgarian proposal.
10. Mr. ENAYAT (Observer for the Islamic Republic of Iran) said
that his delegation was in favour of the provision, which would
save the parties time and money in cases in which the court
found there was a defect in the arbitral proceedings. The
arbitrators' review of their award should, however, be for the
purpose of curing defects in the award itself and should not
result in the validation of an award in the making of which
mandatory procedural rules had not been observed.
11. Mr. GRAHAM (Observer for Canada) endorsed the comments
made by the representative of Australia.
12. Mr. HOLTZMANN (United States of America) said that his
delegation could accept the paragraph as submitted by the
Working Group on International Contract Practices even though
the version suggested by the International Bar Association
seemed marginally better. It opposed the Bulgarian proposal
but liked the idea put forward by the representative of Sierra
Leone.
13. Mr. JARVIN (Observer for the International Chamber of
Commerce) said that he was in favour of the principle
contained in paragraph (4) but thought the provision should be
amended to provide that the court had the power to suspend
the setting-aside proceedings of its own motion and not only at
the request of a party.
14. Mr. GOH (Singapore), Mr. LAVINA (Philippines) and Mr. ABOUL
-ENEIN (Observer for the Cairo Regional Centre for Commercial
Arbitration) spoke in favour of the paragraph.
15. Mr. SZURSKI (Observer for Poland) said that his delegation
supported the idea of including the paragraph in the Model Law
but thought it would rarely need to be used in practice. It
would be improved by various drafting changes, including the
replacement of the words “grounds for setting aside” by
“possible grounds for setting aside” or “grounds for setting
aside indicated by the court”. The remission procedure might of
course cause problems for the arbitrators if they were located
in another country, and it would increase the costs of the
arbitral proceedings.
16. Mr. MTANGO (United Republic of Tanzania) said that he was
not opposed to the inclusion of the paragraph in the Model Law.
He wished to point out, however, that if the court had the
power to order a resumption of the arbitral proceedings, the
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potential costs to the parties would be much higher. The

parties should therefore have a say in any decision on
remission.
17. Mr. SAWADA (Japan) said that his delegation felt strongly that
the court should have the power to remit only at the request of
a party.
18. Mr. MOELLER (Observer for Finland) said that even if the
words “and so requested by a party” were deleted, the
provision would still be understood in his country to mean that
remission could only be ordered if requested by a party. The
Commission might make the intention of the paragraph clearer
by using a formula such as “the court, at the request of a party
or of its own motion”.
19. The CHAIRMAN said that in his opinion the words “when
asked to set aside an award” covered that point.
20. Mr. VOLKEN (Observer for Switzerland), Mr. SCHUMACHER
(Federal Republic of Germany) and Mr. OLUKOLU (Nigeria)
expressed their agreement with the Japanese contention that
the court should have power to remit only at the request of a
party.
21. The CHAIRMAN said that it seemed to be the general view
that the paragraph should be included in the Model Law and
that the court should have the power to suspend the setting-
aside proceedings only when so requested by a party. There
appeared to be little support for the Bulgarian proposal. He
suggested, therefore, that the substance of paragraph (4)
should not be changed and that the various drafting
suggestions which had been made should be submitted to the
drafting committee.”
20. The United Nations Commission on International Trade
Law7 Year Book [Volume XVI : 1985] contains an instructive discussion
on the scope of Article 34. The relevant parts of the said Year Book are
extracted hereinbelow:—
“CHAPTER VII. RECOURSE AGAINST AWARD
Article 34. Application for setting aside as exclusive recourse
against arbitral award
(1) Recourse to a court against an arbitral award made [in the
territory of this State] [under this Law] may be made only by
an application for setting aside in accordance with paragraphs
(2) and (3) of this article.
(2) An arbitral award may be set aside by the Court specified in
article 6 only if:
(a) the party making the application furnishes proof that:
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(i) the parties to the arbitration agreement referred to in

article 7 were, under the law applicable to them, under
some incapacity, or the said agreement is not valid under
the law to which the parties have subjected it or, failing
any indication thereon, under the law of this State; or
(ii) the party making the application was not given proper
notice of the appointment of the arbitrator(s) or of the
arbitral proceedings or was otherwise unable to present
his case; or
(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 may be 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 or any decision contained therein 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 on which the party making
that application had received the award or, if a request had
been made under article 33, from the date on which that
request had been disposed of the arbitral tribunal.
(4) The Court, when asked to set aside an award, may where
appropriate and so requested by a party, suspend the setting
aside 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
arbitral tribunal's opinion will eliminate the grounds for setting
aside.
References
A/CN.9/232, paras. 14-22
A/CN.9/233, paras, 178-195
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A/CN.9/245, paras. 146-155

A/CN.9/246, paras. 126-139
Commentary
Sole action for attacking award paragraph (1)
1. Existing national laws provide a variety of actions or remedies
available to a party for attacking the award. Often equating
arbitral awards with local court decisions, they set varied and
sometimes extremely long periods of time and set forth varied
and sometimes long lists of grounds on which the award may
be attacked. Article 34 is designed to ameliorate this situation
by providing only one means of recourse (paragraph (1)),
available during a fairly short period of time (para-graph (3))
and for a rather limited number of reasons (paragraph (2)). It
does not, beyond that, regulate the procedure, neither the
important question whether a decision by the Court of articles
6 may be appealed before another court nor any question as to
the conduct of the setting aside proceedings itself.
2. The application for setting aide constitutes the exclusive
recourse to a court against the award in the sense that it is the
only means for actively attacking the award, i.e. initiating
proceedings for judicial review. A party retains, of course, the
right to defend himself against the award by requesting refusal
of recognition or enforcement in proceedings initiated by the
other party (articles 33 and 36). Obviously, article 34 (1) does
not exclude the right of a party to request any correction or
interpretation of the award or the making of an additional
award under article 33, since such request would be directed to
the arbitral tribunal and not to a court, the situation is different
in the case of a remission to the arbitral tribunal under article
34 (4), which is envisaged as a possible response by a court to
an application for setting aside the award. Finally, article 34 (1)
would not exclude recourse to a second arbitral tribunal, where
such appeal within the arbitration system is envisaged (as,
e.g., in certain commodity trades).
3. Article 34 provides recourse against an “arbitral award” without
specifying which kinds of decision would be subject to such
recourse. The Working Group was agreed that it was desirable
for the Model Law to define the term “award” and noted that
such definition had important implications for a number of
provisions of the Model Law, especially articles 34 and 16. After
commencing consideration of a proposed definition, the
Working Group decided, for lack of time, not to include a
definition in the Model Law to be adopted by it and to invite the
Commission to consider the matter.
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4. Another matter to be considered by the Commission is the

question of the territorial scope of application, the pending
nature of which is clear from the alternative wordings placed
between square brackets in paragraph (1). It is submitted that
the territorial scope of article 34 should be the same as the one
of the Model Law in general, whichever may be the criterion
adopted by the Commission.
Reasons for setting aside the award, paragraph (2)
5. Paragraph (2) lists the various grounds on which an award may
be set aside. This listing is exhaustive, as expressed by the
word “only” and reinforced by the character of the Model Law as
lex specialis.
6. Paragraph (2) sets forth essentially the same reasons as those
on which recognition or enforcement may be refused under
article 36 (1) (or article V of the 1958 New York Convention, on
which it is closely modelled). It even uses, with few exceptions,
the same wording, for the sake of harmony in the
interpretation.
7. The list of reasons presented in paragraph (2) is based on two
different policy considerations, which, however. converge in
their result. First, after an extensive selection process, which
included a considerable number of other grounds suggested for
inclusion in the list, the reasons set forth in paragraph (2), and
only these, were regarded as appropriate in the context of
setting aside of awards in international commercial arbitration.
8. Second, conformity with article 36 (1) is regarded as desirable
in view of the policy of the Model Law to reduce the impact of
the place of arbitration. It recognizes the fact that both
provisions with their different purposes (in one can reasons for
setting aside and in the other case grounds for refusing
recognition or enforcement) form part of the alternative
defence system which provides a party with the option of
attacking the award or making the grounds when recognition or
enforcement is sought. It also recognizes the fact that these
provisions do not operate in isolation. The effect of traditional
concepts and rules familiar and peculiar to the legal system
ruling at the place of arbitration is not limited to the State
where the Arbitration takes place but extends to many other
States by virtue of article 36(1)(a)(v) (or article V (1) (e) of
the 1958 New York Convention) in that an award which has
been set aside for whatever reason recognized by the
competent court or applicable procedural law, would not Ne
recognized and enforced abroad.
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9. Drawing the consequences from this undesirable situation,

article IX of the 1961 Geneva Convention cuts off this
international effect in respect of all awards which have been set
aside for reasons other than those listed in article V of the 1958
New York Convention. The Model Law merely takes this
philosophy one step further by going beyond the angle of
recognition and enforcement to the source and aligning the
very reasons for setting aside with those for refusing
recognition or enforcement. This step has the salutary effect of
avoiding “Split” or “relative” validity of international awards,
i.e. awards which are void in the country of origin but valid and
enforceable abroad.”
10. Since the grounds listed in paragraph (2) are essentially those
of article V of the 1958 New York Convention, they are familiar
and require no detailed explanation; however, the fact that
they are used for purposes of setting aside under the Model
Law leads to some differences. For example, the application of
subparagraphs (a)(i) and (iv), possibly also (iii), may be
limited by virtue of an implied waiver or submission, as
mentioned in the commentary to article 4 (para. 6) and to
article 16 (paras, 8-9).
11. Subparagraph (a)(iv) expresses the priority of the mandatory
provisions of the Model Law over any agreement of the parties,
which is different from article 36 (1) (a) (iv), at least according
to the predominant interpretation of the corresponding
provision in the 1958 New York Convention (article V (1) (d).
The fact that the composition of the arbitral tribunal and the
arbitral procedure are, thus, to be judged by the mandatory
provisions of the Model Law entails, for example, that this
subparagraph (e) (iv) covers to a large extent also the grounds
of subparagraph (e) (ii), copied from the 1958 New York
Convention, which comprise cases of violations of articles 19
(3) and 24 (3), (4)
12. Yet another difference is less obvious since it follows merely
from the different effect of setting aside as compared to
refusing recognition or enforcement. Under subparagraph (b)
(i), an award would be set aside if the court finds that the
subject-matter of the dispute is not capable of settlement by
arbitration “under the law of this State”. This reason is certainly
appropriate for refusing recognition or enforcement in a given
State, which often regards it as part of its public policy and
may reduce its impact by protecting only its ordre public
international, i.e., its public policy concerning international
cases. However, this same reason used for setting aside gains a
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different dimension by virtue of the global effect of setting

aside (article 36 (1) (a) (v), or article V (1) (e) of the 1958
New York Convention). As was suggested in the Working
Group, to quote now from the report of the seventh session
(A/CN.9/246, paras 136-137),
“….such global effect should obtain only from a finding that
the subject-matter of the dispute was not capable of
settlement by arbitration under the law applicable to that issue
which was not necessarily the law of the State of the setting
aside proceedings. It was, therefore, suggested to delete the
provision of paragraph (2) (b) (1). The result of that deletion,
which received considerable support, would be to limit the
court control under article 34 to those cases where non-
arbitrability of a certain subject-matter formed part of the
public policy of that State (para. (2) (b) (ii)) or where the
Court regarded arbitrability as an element of the validity of an
arbitration agreement (para.(2) (a) (i)), although some
proponents of that suggestion sought the more far-reaching
result of excluding non-arbitrability as a reason for setting
aside. Another suggestion was to delete, in paragraph (2) (b)
(1), merely the reference to “the law of this State” and, thus,
to leave open the question as to which was the law applicable
to arbitrability. The Working Group, in discussing those
suggestions, was agreed that the issues raised were of great
practical importance and, in view of their complex nature,
required further study. The Working Group, after deliberation,
decided to retain, for the time being, the provision of
paragraph (2) (b) (1) in its current form so as to invite the
Commission to reconsider the matter and to decide, in the light
of comments by Governments and organizations. On whether
the present wording was appropriate of whether the provision
should be modified or deleted.”
Remission to arbitral tribunal, paragraph (4)
13. Paragraph (4) envisages a procedure which is similar to the
“remission” known in most common law jurisdictions, though in
various forms. Although the procedure is not known in all legal
systems, it should prove useful in that it enables the arbitral
tribunal to cure a certain defect and, thereby, save the award
from being set aside by the Court.
14. Unlike in some common law jurisdictions, the procedure is not
conceived as a separate remedy but placed in the framework of
setting aside proceedings. The Court, where appropriate and so
requested by a party, would invite the arbitral tribunal, whose
continuing mandate is thereby confirmed, to take appropriate
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measures for eliminating a certain remediable defect which

constitutes a ground for setting aside under paragraph (2).
Only if such “remission” turns out to be futile at the end of the
period of time determined by the Court, during which
recognition and enforcement may be suspended under article
36 (2), would the Court resume the setting aside proceedings
and set aside the award.”
21. It was on the basis of the aforesaid deliberations that the
UNCITRAL Model Law came to adopt and incorporate Article 34. The
said Article as appearing in the Model Law came to be adopted by
member nations who proceeded to frame and promulgate independent
statutes accordingly. Some of the salient statutes which came to be
framed are briefly noticed hereinafter.
22. For instance, in the Arbitration Act, 20018 as promulgated by
the Republic of Singapore, the setting aside provision reads thus:—
“Remedies
34.— (1) The parties may agree on the powers exercisable by the
arbitral tribunal as regards remedies.
(2) Unless otherwise agreed by the parties, the arbitral tribunal
may award any remedy or relief that could have been ordered by the
Court if the dispute had been the subject of civil proceedings in that
Court.”
23. Similarly, the Commercial Arbitration Act, 20179 as adopted
by Australia makes the following provisions in relation to the setting
aside of an award:—
“34. Application for setting aside as exclusive recourse against
arbitral award
(Model Law art 34)
(1) Recourse to the court against an arbitral award may be made
only by an application for setting aside in accordance with
subsections (2) and (3) or by an appeal under section 34A.
Note : The Model Law does not provide for appeals as under s
34A.
(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 to the arbitration agreement referred to in section
7was under some incapacity, or the arbitration agreement is
not valid under the law to which the parties have subjected
it or, failing any indication in it, under the law of the
Territory; or
(ii) the party making the application was not given proper
notice of the appointment of an arbitral tribunal or of the
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arbitral proceedings or was otherwise unable to present the

party's case; or
(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
may be 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 Act from which the parties cannot derogate,
or, failing such agreement, was not in accordance with this
Act; or
(b) the court finds that—
(i) the subject-matter of the dispute is not capable of
settlement by arbitration under the law of the Territory; or
(ii) the award is in conflict with the public policy of the
Territory.
(3) An application for setting aside may not be made after 3 months
have elapsed from the date on which the party making that
application had received the 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.
(4) The court, when asked to set aside an award, may, where
appropriate and so requested by a party, suspend the setting
aside of 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 arbitral
tribunal's opinion will eliminate the grounds for setting aside.”
10
24. In New Zealand, the Arbitration Act, 1996 makes the
following provisions for setting aside of an Arbitral Award:—
“Chapter 7
Recourse against award
34 Application for setting aside as exclusive recourse
against arbitral award
(1) Recourse to a court against an arbitral award may be made
only by an application for setting aside in accordance with
paragraphs (2) and (3).
(2) An arbitral award may be set aside by the High Court only if—
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(a) the party making the application furnishes proof that—

(i) a party to the arbitration agreement was under some
incapacity, or the said agreement is not valid under the
law to which the parties have subjected it, or, failing any
indication on that question, under the law of New
Zealand; or
(ii) 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
that party's case; or
(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 may be 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 Act from which the parties cannot
derogate, or, failing such agreement, was not in
accordance with this Act; or
(b) the High Court finds that—
(i) the subject matter of the dispute is not capable of
settlement by arbitration under the law of New Zealand;
or
(ii) the award is in conflict with the public policy of New
Zealand.
(3) An application for setting aside may not be made after 3
months have elapsed from the date on which the party making
that application had received the award or, if a request had
been made under article 33, from the date on which that
request had been disposed of by the arbitral tribunal. This
paragraph does not apply to an application for setting aside on
the ground that the award was induced or affected by fraud or
corruption.
(4) The High Court, when asked to set aside an award, may,
where appropriate and so requested by a party, suspend the
setting aside 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
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arbitral tribunal's opinion will eliminate the grounds for setting

aside.
(5) Where an application is made to set aside an award, the High
Court may order that any money made payable by the award
shall be brought into court or otherwise secured pending the
determination of the application.
(6) For the avoidance of doubt, and without limiting the generality
of paragraph (2)(b)(ii), it is hereby declared that an award is in
conflict with the public policy of New Zealand if—
(a) the making of the award was induced or affected by fraud
or corruption; or
(b) a breach of the rules of natural justice occurred—
(i) during the arbitral proceedings; or
(ii) in connection with the making of the award.”
11
25. The Arbitration Act, 2000 of Canada in Section 45 makes the
following provisions in relation to the setting aside of an award:—
“Setting aside award
45(1) On a party's application, the court may set aside an award
on any of the following grounds:
(a) a party entered into the arbitration agreement while under a
legal incapacity;
(b) the arbitration agreement is invalid or has ceased to exist;
(c) the award deals with a matter in dispute that the arbitration
agreement does not cover or contains a decision on a matter in
dispute that is beyond the scope of the agreement;
(d) the composition of the arbitral tribunal was not in accordance
with the arbitration agreement or, if the agreement did not
deal with the matter, was not in accordance with this Act;
(e) the subject-matter of the arbitration is not capable of being
the subject of arbitration under Alberta law
(f) the applicant was treated manifestly unfairly and unequally,
was not given an opportunity to present a case or to respond to
another party's case, or was not given proper notice of the
arbitration or of the appointment of an arbitrator;
(g) the procedures followed in the arbitration did not comply with
this Act or the arbitration agreement;
(h) an arbitrator has committed a corrupt or fraudulent act or
there is a reasonable apprehension of bias;
(i) the award was obtained by fraud.
(2) If subsection (1)(c) applies and it is reasonable to separate
the decisions on matters covered by the arbitration agreement from
the impugned ones, the court shall set aside the impugned decisions
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and allow the others to stand.

(3) The court shall not set aside an award on grounds referred to
in subsection (1)(c) if the applicant has agreed to the inclusion of
the matter in dispute, waived the right to object to its inclusion or
agreed that the arbitral tribunal has power to decide what matters in
dispute have been referred to it.
(4) The court shall not set aside an award on grounds referred to
in subsection (1)(h) if the applicant had an opportunity to challenge
the arbitrator on those grounds under section 13 before the award
was made and did not do so or if those grounds were the subject of
an unsuccessful challenge.
(5) The court shall not set aside an award on a ground to which
the applicant is deemed under section 4 to have waived the right to
object.
(6) If the ground alleged for setting aside the award could have
been raised as an objection to the arbitral tribunal's jurisdiction to
conduct the arbitration, the court may set the award aside on that
ground if it considers the applicant's failure to make an objection in
accordance with section 17 justified.
(7) When the court sets aside an award, it may remove an
arbitrator or the arbitral tribunal and may give directions about the
conduct of the arbitration.
(8) Instead of setting aside an award, the court may remit it to
the arbitral tribunal and give directions about the conduct of the
arbitration.”
12
26. The South African statute being the Arbitration Act, 1965 ,
incorporates Section 33 in relation to the setting aside of an award and
reads thus:—
“Setting aside of award.
33. (1) Where-
(a) any member of an arbitration tribunal has misconducted
himself in relation to his duties as arbitrator or umpire; or
(b) an arbitration tribunal has committed any gross irregularity in
the conduct of the arbitration proceedings or has exceeded its
powers; or
(c) an award has been improperly obtained, the court may, on the
application of any party to the reference after due notice to the
other party or parties, make an order setting the award aside.
(2) An application pursuant to this section shall be made within
six weeks after the publication of the award to the parties : Provided
that when the setting aside of the award is requested on the ground
of corruption, such application shall be made within six weeks after
the discovery of the corruption and in any case not later than three
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years after the date on which the award was so published.

(3) The court may, if it considers that the circumstances so
require, stay enforcement of the award pending its decision.
(4) If the award is set aside the dispute shall, at the request of
either party, be submitted to a new arbitration tribunal constituted
in the manner directed by the court.”
27. In Germany too, an identical provision exists for the purposes of
considering challenges in respect of an Arbitral Award. The Arbitration
Act, 199613 as prevalent in the United Kingdom while spelling out the
grounds on which an award may be assailed makes the following
significant provisions in Section 68:—
“68 Challenging the award : serious irregularity.
(1) A party to arbitral proceedings may (upon notice to the other
parties and to the tribunal) apply to the court challenging an
award in the proceedings on the ground of serious irregularity
affecting the tribunal, the proceedings or the award.
A party may lose the right to object (see section 73) and the
right to apply is subject to the restrictions in section 70(2) and
(3).
(2) Serious irregularity means an irregularity of one or more of the
following kinds which the court considers has caused or will
cause substantial injustice to the applicant—
(a) failure by the tribunal to comply with section 33 (general
duty of tribunal);
(b) the tribunal exceeding its powers (otherwise than by
exceeding its substantive jurisdiction : see section 67);
(c) failure by the tribunal to conduct the proceedings in
accordance with the procedure agreed by the parties;
(d) failure by the tribunal to deal with all the issues that were
put to it;
(e) any arbitral or other institution or person vested by the
parties with powers in relation to the proceedings or the
award exceeding its powers;
(f) uncertainty or ambiguity as to the effect of the award;
(g) the award being obtained by fraud or the award or the way
in which it was procured being contrary to public policy;
(h) failure to comply with the requirements as to the form of
the award; or
(i) any irregularity in the conduct of the proceedings or in the
award which is admitted by the tribunal or by any arbitral or
other institution or person vested by the parties with powers
in relation to the proceedings or the award.
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(3) If there is shown to be serious irregularity affecting the

tribunal, the proceedings or the award, the court may—
(a) remit the award to the tribunal, in whole or in part, for
reconsideration,
(b) set the award aside in whole or in part, or
(c) declare the award to be of no effect, in whole or in part.
The court shall not exercise its power to set aside or to
declare an award to be of no effect, in whole or in part,
unless it is satisfied that it would be inappropriate to remit
the matters in question to the tribunal for reconsideration.
(4) The leave of the court is required for any appeal from a
decision of the court under this section.”
28. As would be evident from Section 68(3), the said provision
empowers the court to either remit the award in whole or in part as well
as to adopt an identical procedure while setting aside the award or
declaring it to be of no effect. The English statute also enables parties
to appeal on a point of law. This is evident from Section 69 which reads
thus:—
“69 Appeal on point of law.
(1) Unless otherwise agreed by the parties, a party to arbitral
proceedings may (upon notice to the other parties and to the
tribunal) appeal to the court on a question of law arising out of
an award made in the proceedings.
An agreement to dispense with reasons for the tribunal's
award shall be considered an agreement to exclude the court's
jurisdiction under this section.
(2) An appeal shall not be brought under this section except—
(a) with the agreement of all the other parties to the
proceedings, or
(b) with the leave of the court.
The right to appeal is also subject to the restrictions in
section 70(2) and (3).
(3) Leave to appeal shall be given only if the court is satisfied—
(a) that the determination of the question will substantially
affect the rights of one or more of the parties,
(b) that the question is one which the tribunal was asked to
determine,
(c) that, on the basis of the findings of fact in the award—
(i) the decision of the tribunal on the question is obviously
wrong, or
(ii) the question is one of general public importance and the
decision of the tribunal is at least open to serious doubt,
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and
(d) that, despite the agreement of the parties to resolve the
matter by arbitration, it is just and proper in all the
circumstances for the court to determine the question.
(4) An application for leave to appeal under this section shall
identify the question of law to be determined and state the
grounds on which it is alleged that leave to appeal should be
granted.
(5) The court shall determine an application for leave to appeal
under this section without a hearing unless it appears to the
court that a hearing is required.
(6) The leave of the court is required for any appeal from a
decision of the court under this section to grant or refuse leave
to appeal.
(7) On an appeal under this section the court may by order—
(a) confirm the award,
(b) vary the award,
(c) remit the award to the tribunal, in whole or in part, for
reconsideration in the light of the court's determination, or
(d) set aside the award in whole or in part.
The court shall not exercise its power to set aside an
award, in whole or in part, unless it is satisfied that it would
be inappropriate to remit the matters in question to the
tribunal for reconsideration.
(8) The decision of the court on an appeal under this section shall
be treated as a judgment of the court for the purposes of a
further appeal.
But no such appeal lies without the leave of the court which
shall not be given unless the court considers that the question
is one of general importance or is one which for some other
special reason should be considered by the Court of Appeal.”
29. The effect of the ultimate order that may be passed by the court
on an appeal against the award is set forth in Section 71 which reads as
under:—
“71 Challenge or appeal : effect of order of court.
(1) The following provisions have effect where the court makes an
order undersection 67, 68 or 69 with respect to an award.
(2) Where the award is varied, the variation has effect as part of
the tribunal's award
(3) Where the award is remitted to the tribunal, in whole or in
part, for reconsideration, the tribunal shall make a fresh award
in respect of the matters remitted within three months of the
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date of the order for remission or such longer or shorter period

as the court may direct.
(4) Where the award is set aside or declared to be of no effect, in
whole or in part, the court may also order that any provision
that an award is a condition precedent to the bringing of legal
proceedings in respect of a matter to which the arbitration
agreement applies, is of no effect as regards the subject matter
of the award or, as the case may be, the relevant part of the
award.”
30. Turning then to developments closer to home, we find that the
Supreme Court while rendering its decision in M. Hakeem had
principally borne in consideration the provisions which stood embodied
14
in the erstwhile Arbitration Act, 1940 and which included Sections
15 and 16 which enabled a court to vary or modify an award. It,
however, found that significantly while promulgating the Act, no
parallel provisions came to be adopted. It was in the aforesaid backdrop
that the Supreme Court in M. Hakeem observed as follows:—
“25. As a matter of fact, the point raised in the appeals stands
concluded in McDermott International Inc. v. Burn Standard Co. Ltd.
[McDermott International Inc. v. Burn Standard Co. Ltd., (2006) 11
SCC 181], where this Court held : (SCC p. 208, paras 51-52)
“51. After the 1996 Act came into force, under Section 16 of
the Act the party questioning the jurisdiction of the arbitrator has
an obligation to raise the said question before the arbitrator. Such
a question of jurisdiction could be raised if it is beyond the scope
of his authority. It was required to be raised during arbitration
proceedings or soon after initiation thereof. The jurisdictional
question is required to be determined as a preliminary ground. A
decision taken thereupon by the arbitrator would be the subject-
matter of challenge under Section 34 of the Act. In the event the
arbitrator opined that he had no jurisdiction in relation thereto an
appeal there against was provided for under Section 37 of the Act.
52. The 1996 Act makes provision for the supervisory role of
courts, for the review of the arbitral award only to ensure fairness.
Intervention of the court is envisaged in few circumstances only,
like, in case of fraud or bias by the arbitrators, violation of natural
justice, etc. The court cannot correct errors of the arbitrators. It
can only quash the award leaving the parties free to begin the
arbitration again if it is desired. So, the scheme of the provision
aims at keeping the supervisory role of the court at minimum
level and this can be justified as parties to the agreement make a
conscious decision to exclude the court's jurisdiction by opting for
arbitration as they prefer the expediency and finality offered by
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it.”
26. This statement of the law was followed in Kinnari Mullick v.
Ghanshyam Das Damani [Kinnari Mullick v. Ghanshyam Das Damani,
(2018) 11 SCC 328 : (2018) 5 SCC (Civ) 106] at p. 334 (see para
15).
27. Also, in Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd.
[Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., (2019) 20
SCC 1], this Court held : (SCC p. 15, paras 36-37)
“36. At this juncture it must be noted that the legislative
intention of providing Section 34(4) in the Arbitration Act was to
make the award enforceable, after giving an opportunity to the
Tribunal to undo the curable defects. This provision cannot be
brushed aside and the High Court [Crompton Greaves Ltd. v. Dyna
Technologies (P) Ltd., 2007 SCC OnLine Mad 427] could not have
proceeded further to determine the issue on merits.
37. In case of absence of reasoning the utility has been
provided under Section 34(4) of the Arbitration Act to cure such
defects. When there is complete perversity in the reasoning then
only it can be challenged under the provisions of Section 34 of the
Arbitration Act. The power vested under Section 34(4) of the
Arbitration Act to cure defects can be utilised in cases where the
arbitral award does not provide any reasoning or if the award has
some gap in the reasoning or otherwise and that can be cured so
as to avoid a challenge based on the aforesaid curable defects
under Section 34 of the Arbitration Act. However, in this case
such remand to the Tribunal would not be beneficial as this case
has taken more than 25 years for its adjudication. It is in this
state of affairs that we lament that the purpose of arbitration as
an effective and expeditious forum itself stands effaced.”
28. Some of the judgments of the High Courts are also
instructive. A learned Single Judge of the Delhi High Court in
Cybernetics Network (P) Ltd. v. Bisquare Technologies (P) Ltd.
[Cybernetics Network (P) Ltd. v. Bisquare Technologies (P) Ltd.,
2012 SCC OnLine Del 1155], held : (SCC OnLine Del paras 47-51)
“47. The next question that arises is whether the above claims
as mentioned in para 44 that have been erroneously rejected by
the learned arbitrator can be allowed by this Court in exercise of
its powers under Section 34(4) of the Act?
48. Under Section 34(4) of the Act, the Court while deciding a
challenge to an arbitral award, can either ‘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 the Arbitral Tribunal
will eliminate the grounds for setting aside the arbitral award’.
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This necessarily envisages the Court having to remit the matter to

the Arbitral Tribunal. This is subject to the Court finding it
appropriate to do so and a party requesting it to do so.
49. In Union of India v. Arctic India [Union of India v. Arctic
India, 2007 SCC OnLine Bom 409 : (2007) 4 Arb LR 524], a
learned Single Judge of the Bombay High Court opined that the
Court can modify the award even if there is no express provision
in the Act permitting it. The Court followed the decision of the
Supreme Court in Krishna Bhagya Jala Nigam Ltd. v. Harischandra
Reddy [Krishna Bhagya Jala Nigam Ltd. v. Harischandra Reddy,
(2007) 2 SCC 720]. A similar view has been taken by a learned
Single Judge of this Court in Union of India v. Modern Laminators
Ltd. [Union of India v. Modern Laminators Ltd., 2008 SCC OnLine
Del 956 : (2008) 3 Arb LR 489] There the question was whether
in light of the arbitrator having failed to decide the counterclaim
of the respondent in that case the Court could itself decide the
counterclaim. After discussing the case law, the Court concluded
that it could modify the award but only to a limited extent. It held
(Arb LR p. 496) : (Modern Laminators Ltd. case [Union of India v.
Modern Laminators Ltd., 2008 SCC OnLine Del 956 : (2008) 3 Arb
LR 489], SCC OnLine Del para 22)
‘22. … Such modification of award will be a species of “setting
aside” only and would be “setting aside to a limited extent”.
However, if the courts were to find that they cannot within the
confines of interference permissible or on the material before the
arbitrator are unable to modify and if the same would include
further fact finding or adjudication of intricate questions of law,
the parties ought to be left to the forum of their choice i.e. to be
relegated under Section 34(4) of the Act to further arbitration or
other civil remedies.’
50. However, none of the above decisions categorically hold
that where certain claims have been erroneously rejected by the
arbitrator, the Court can in exercise of its powers under Section
34(4) of the Act itself decide those claims. The Allahabad High
Court has in U.P. State Handloom Corpn. Ltd. v. Asha Lata Talwar
[U.P. State Handloom Corpn. Ltd. v. Asha Lata Talwar, 2009 SCC
OnLine All 624 : (2009) 4 All LJ 397], held that while exercising
the powers to set aside an award under Section 34 of the Act the
Court does not have the jurisdiction to grant the original relief
which was prayed for before the arbitrator. The Allahabad High
Court referred to the decision of the Supreme Court in McDermott
International Inc. v. Burn Standard Co. Ltd. [McDermott
International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181],
where it was observed (SCC p. 208):
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***
51. The view of the Allahabad High Court in U.P. State
Handloom Corpn. Ltd. v. Asha Lata Talwar [U.P. State
Handloom Corpn. Ltd. v. Asha Lata Talwar, 2009 SCC OnLine
All 624 : (2009) 4 All LJ 397] appears to be consistent with the
scheme of the Act, and in particular Section 34 thereof which is
a departure from the scheme of Section 16 of the 1940 Act
which perhaps gave the Court a wider amplitude of powers.
Under Section 34(2) of the Act, the Court is empowered to set
aside an arbitral award on the grounds specified therein. The
remand to the arbitrator under Section 34(4) is to a limited
extent of requiring the Arbitral Tribunal ‘to eliminate the
grounds for setting aside the arbitral award’. There is no
specific power granted to the court to itself allow the claims
originally made before the Arbitral Tribunal where it finds the
Arbitral Tribunal erred in rejecting such claims. If such a power
is recognised as falling within the ambit of Section 34(4) of the
Act, then the court will be acting no different from an appellate
court which would be contrary to the legislative intent behind
Section 34 of the Act. Accordingly, this Court declines to itself
decide the claims of CNPL that have been wrongly rejected by
the learned arbitrator.”
29. The Delhi High Court in Nussli Switzerland Ltd. v.
Organizing Committee, Commonwealth Games, 2010 [Nussli
Switzerland Ltd. v. Organizing Committee, Commonwealth
Games, 2010, 2014 SCC OnLine Del 4834], held : (SCC OnLine
Del para 34)
“34. A party like the Organising Committee which has its
claims rejected, except a part, but which subsumes into the
larger amount awarded in favour of the opposite party, even if
succeeds in the objections to the award would at best have the
award set aside for the reason the Arbitration and Conciliation
Act, 1996 as distinct from the power of the court under the
Arbitration Act, 1940, does not empower the court to modify an
award. If a claim which has been rejected by an Arbitral
Tribunal is found to be faulty, the court seized of the objections
under Section 34 of the Arbitration and Conciliation Act, 1996
has to set aside the award and leave the matter at that. It
would be open to the party concerned to commence fresh
proceedings (including arbitration) and for this view one may
for purposes of convenience refer to sub-section (4) of Section
43 of the Arbitration and Conciliation Act, 1996. It reads:
‘43. Limitations.—(1)-(3) * * *
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(4) Where the Court orders that an arbitral award be set

aside, the period between the commencement of the
arbitration and the date of the order of the Court shall be
excluded in computing the time prescribed by the Limitation
Act, 1963 (36 of 1963), for the commencement of the
proceedings (including arbitration) with respect to the
dispute so submitted.’”
30. An instructive judgment of the Delhi High Court in Puri
Construction (P) Ltd. v. Larsen & Toubro Ltd. [Puri Construction
(P) Ltd. v. Larsen & Toubro Ltd., 2015 SCC OnLine Del 9126] deals
with the authorities of the Madras and Calcutta High Courts on the
one hand and the other High Courts dealing with this problem as
follows : (SCC OnLine Del paras 115-16 & 118)
“115. In these circumstances, this Court holds that the
reliefs granted by the Tribunal cannot be sustained and are
hereby set aside. The question that follows is whether this
Court, exercising jurisdiction under Section 37 read with
Section 34 of the Act, can modify, vary or remit the award. At
the outset, it is noticed that there are divergent views on this
issue. Here, the Court notices a somewhat divergent approach
of various High Courts. The case law is discussed in the
following part of the judgment.
Authorities in Favour of the Power to Modify, Vary or Remit the award
116. A learned Single Judge of this Court in Bhasin
Associates v. N.B.C.C. [Bhasin Associates v. N.B.C.C., 2005
SCC OnLine Del 689 : ILR (2005) 2 Del 88] held that ‘the
power to set aside an award when exercised by the court would
leave a vacuum if the said power was not understood to include
the power to remand the matter back to the arbitrator’. This
view was subsequently adopted in Single Bench decisions in
Union of India v. Modern Laminators Ltd. [Union of India v.
Modern Laminators Ltd., 2008 SCC OnLine Del 956 : (2008) 3
Arb LR 489] (in the context of modification of the award),
IFFCO-Tokio General Insurance Co. Ltd. v. Indo-Rama
Synthetics Ltd. [IFFCO-Tokio General Insurance Co. Ltd. v. Indo
-Rama Synthetics Ltd., 2015 SCC OnLine Del 6669] (decided
on 20-1-2015) and Canara Bank v. BSNL [Canara Bank v.
BSNL, 2015 SCC OnLine Del 8379] (decided on 26-3-2015). In
Modern Laminators [Union of India v. Modern Laminators Ltd.,
2008 SCC OnLine Del 956 : (2008) 3 Arb LR 489], the Court
relied upon the Supreme Court's decision in Numaligarh
Refinery Ltd. v. Daelim Industrial Co. Ltd. [Numaligarh Refinery
Ltd. v. Daelim Industrial Co. Ltd., (2007) 8 SCC 466], noting
that the Court therein had modified the award in terms of its
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findings; and the decision in Krishna Bhagya Jala Nigam Ltd. v.

G. Harischandra Reddy [Krishna Bhagya Jala Nigam Ltd. v.
Harischandra Reddy, (2007) 2 SCC 720], where the interest
rate awarded by the arbitrator was modified. The learned
Single Judge in Canara Bank relied upon a decision of a Single
Judge of the Madras High Court in Gayatri Balaswamy v. ISG
Novasoft Technologies Ltd. [Gayatri Balaswamy v. ISG Novasoft
Technologies Ltd., 2014 SCC OnLine Mad 6568 : (2015) 1 Mad
LJ 5] The Court in Gayatri Balaswamy [Gayatri Balaswamy v.
ISG Novasoft Technologies Ltd., 2014 SCC OnLine Mad 6568 :
(2015) 1 Mad LJ 5] examined the issue in significant [sic] and
held as follows : (Gayatri Balaswamy case [Gayatri Balaswamy
v. ISG Novasoft Technologies Ltd., 2014 SCC OnLine Mad
6568 : (2015) 1 Mad LJ 5], SCC OnLine Mad para 52)
‘52. Therefore, in my considered view, the expression
“recourse to a court against an arbitral award” appearing in
Section 34(1) cannot be construed to mean only a right to
seek the setting aside of an award. Recourse against an
arbitral award could be either for setting aside or for
modifying or for enhancing or for varying or for revising an
award. The expression “application for setting aside such an
award” appearing in Sections 34(2) and (3) merely
prescribes the form, in which, a person can seek recourse
against an arbitral award. The form, in which an application
has to be made, cannot curtail the substantial right
conferred by the statute. In other words, the right to have
recourse to a court, is a substantial right and that right is
not liable to be curtailed, by the form in which the right has
to be enforced or exercised. Hence, in my considered view,
the power under Section 34(1) includes, within its ambit,
the power to modify, vary or revise.’
The same view had been adopted earlier by Single Bench
decisions of the Bombay High Court in Axios Navigation Co.
Ltd. v. Indian Oil Corpn. Ltd. [Axios Navigation Co. Ltd. v.
Indian Oil Corpn. Ltd., 2012 SCC OnLine Bom 4 : (2012)
114 Bom LR 392] and Angerlehner Structurals & Civil Engg.
Co. v. Municipal Corpn. of Greater Mumbai [Angerlehner
Structurals & Civil Engg. Co. v. Municipal Corpn. of Greater
Mumbai, 2012 SCC OnLine Bom 1454 : (2013) 7 Bom CR
83] and a Division Bench of the Calcutta High Court in W.B.
Electronics Industries Development Corpn. Ltd. v. Snehasis
Bhowmick [W.B. Electronics Industries Development Corpn.
Ltd. v. Snehasis Bhowmick, 2012 SCC OnLine Cal 10262].
Authorities holding there is no power to Modify, Vary or Remit the
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award
***
118. This Court is inclined to follow the decisions in Central
Warehousing Corpn. [Central Warehousing Corpn. v. A.S.A.
Transport, 2007 SCC OnLine Mad 972], DDA [DDA v. Bhardwaj
Bros., 2014 SCC OnLine Del 1581], State Trading Corpn. of
India Ltd. [State Trading Corpn. of India Ltd. v. Toepfer
International Asia PTE Ltd., 2014 SCC OnLine Del 3426], Bharti
Cellular Ltd. [Bharti Cellular Ltd. v. Deptt. of
Telecommunications, 2012 SCC OnLine Del 4846], Cybernetics
Network (P) Ltd. [Cybernetics Network (P) Ltd. v. Bisquare
Technologies (P) Ltd., 2012 SCC OnLine Del 1155] and Asha
Talwar [U.P. State Handloom Corpn. Ltd. v. Asha Lata Talwar,
2009 SCC OnLine All 624 : (2009) 4 All LJ 397]. The guiding
principle on this issue was laid down by the Supreme Court in
McDermott International Inc. [McDermott International Inc. v.
Burn Standard Co. Ltd., (2006) 11 SCC 181], where the Court
held : (McDermott International Inc. case [McDermott
International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC
181], SCC p. 208, para 52)
‘52. The 1996 Act makes provision for the supervisory
role of courts, for the review of the arbitral award only to
ensure fairness. Intervention of the court is envisaged in few
circumstances only, like, in case of fraud or bias by the
arbitrators, violation of natural justice, etc. The court cannot
correct errors of the arbitrators. It can only quash the award
leaving the parties free to begin the arbitration again if it is
desired. So, the scheme of the provision aims at keeping the
supervisory role of the court at minimum level and this can
be justified as parties to the agreement make a conscious
decision to exclude the court's jurisdiction by opting for
arbitration as they prefer the expediency and finality offered
by it.’
Although the Madras High Court in Gayatri Balaswamy
[Gayatri Balaswamy v. ISG Novasoft Technologies Ltd., 2014
SCC OnLine Mad 6568 : (2015) 1 Mad LJ 5] appropriately
noted that these observations in McDermott International
Inc. [McDermott International Inc. v. Burn Standard Co.
Ltd., (2006) 11 SCC 181] were not in the context of the
specific issue being dealt herewith, this Court is of the
opinion that it is determinative of the Court's approach in an
enquiry under Section 34 of the Act. Indeed, a court, while
modifying or varying the award would be doing nothing else
but “correct[ing] the errors of the arbitrators”. This is
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expressly against the diktat ofMcDermottInternational Inc.

[McDermott International Inc. v. Burn Standard Co. Ltd.,
(2006) 11 SCC 181] Further, if the power to remit the
matter to the arbitrator is read into Section 34, it would
render inexplicable the deliberate omission by Parliament of
a provision analogous to Section 16 of the Arbitration Act,
1940 in the present Act. Section 16 of the 1940 Act
specifically armed courts with the power to remit the matter
to arbitration. Noticeably, the scope of remission under the
present Act is confined to that prescribed in sub-section (4)
of Section 34. Besides the Division Bench rulings of this
Court in DDA [DDA v. Bhardwaj Bros., 2014 SCC OnLine Del
1581], State Trading Corpn. of India Ltd. [State Trading
Corpn. of India Ltd. v. Toepfer International Asia PTE Ltd.,
2014 SCC OnLine Del 3426], this was also noted by a Full
Bench of the Bombay High Court in R.S. Jiwani v. Ircon
International Ltd. [R.S. Jiwani v. Ircon International Ltd.,
2009 SCC OnLine Bom 2021 : (2010) 1 Bom CR 529], where
the Court held : (R.S. Jiwani case [R.S. Jiwani v. Ircon
International Ltd., 2009 SCC OnLine Bom 2021 : (2010) 1
Bom CR 529], SCC OnLine Bom paras 28 & 35)
‘28. … An award can only be set aside under the
provisions of Section 34 as there is no other provision
except Section 33 which permits the Arbitral Tribunal to
correct or interpret the award or pass additional award,
that too, on limited grounds stated in Section 33. …
***
35. … It is also true that there are no pari materia
provisions like Sections 15 and 16 of the Act of 1940 in the
1996 Act but still the provisions of Section 34 read together,
sufficiently indicate vesting of vast powers in the court to set
aside an award and even to adjourn a matter and such acts
and deeds by the Arbitral Tribunal at the instance of the
party which would help in removing the grounds of attack
for setting aside the arbitral award.’
On the other hand, the Calcutta High Court in Snehasis
Bhowmick [W.B. Electronics Industries Development Corpn.
Ltd. v. Snehasis Bhowmick, 2012 SCC OnLine Cal 10262]
did not analyse this distinction, or the specific observations
of the Supreme Court in McDermott International Inc.
[McDermott International Inc. v. Burn Standard Co. Ltd.,
(2006) 11 SCC 181] quoted above. Further, the decisions in
Numaligarh Refinery [Numaligarh Refinery Ltd. v. Daelim
Industrial Co. Ltd., (2007) 8 SCC 466] and Harischandra
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Reddy [Krishna Bhagya Jala Nigam Ltd. v. Harischandra

Reddy, (2007) 2 SCC 720] did not discuss the Court's power
to modify, vary or remit the award under Section 34 of the
Act. Therefore, in light of the dictum in McDermott
International Inc. [McDermott International Inc. v. Burn
Standard Co. Ltd., (2006) 11 SCC 181] and the difference in
provisions of the 1940 Act and the present Act, this Court
holds that the power to modify, vary or remit the award does
not exist under Section 34 of the Act.”
(emphasis in original)
31. Thus, there can be no doubt that given the law laid down by
this Court, Section 34 of the Arbitration Act, 1996 cannot be held to
include within it a power to modify an award. The sheet anchor of
the argument of the respondents is the judgment of the learned
Single Judge in Gayatri Balaswamy [Gayatri Balaswamy v. ISG
Novasoft Technologies Ltd., 2014 SCC OnLine Mad 6568 : (2015) 1
Mad LJ 5]. This matter arose out of a claim for damages by an
employee on account of sexual harassment at the workplace. The
learned Single Judge referred to the power to modify or correct an
award under Section 15 of the Arbitration Act, 1940 in para 29 of the
judgment. Thereafter, a number of judgments of this Court were
referred to in which awards were modified by this Court, presumably
under the powers of this Court under Article 142 of the Constitution
of India. In para 34, the learned Single Judge referred to para 52 in
McDermott case [McDermott International Inc. v. Burn Standard Co.
Ltd., (2006) 11 SCC 181] and then concluded that since the
observations made in the said para were not given in answer to a
pointed question as to whether the court had the power under
Section 34 to modify or vary an award, this judgment cannot be said
to have settled the answer to the question raised finally.”
31. It must, however, be borne in mind that M. Hakeem was
essentially concerned with the validity of the District and Sessions
Judge enhancing the amount of compensation as awarded by the
Collector in its award while entertaining a petition under Section 34 of
the Act. It was in that backdrop that the Supreme Court observed that
the only option available to the Section 34 court would have been to set
aside the award if it be found to suffer from any of the infirmities
prescribed in Section 34 and that while considering a challenge to an
award, no power existed in a court to modify or vary the terms of the
award.
32. As a preface to the discussion which follows, it must therefore be
recognised that the question which falls for consideration would be
whether M. Hakeem while proscribing a modification of an award by a
Section 34 court should be read as an authority for the proposition that
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there can be no partial setting aside. While dealing with this aspect we
would have to also bear in mind whether a conscious decision by the
Legislature to desist from adopting provisions akin to Sections 15 and
16 of the Arbitration Act, 1940 should be read as being representative
of an intent to deprive courts from exercising a power to set aside an
award partially.
33. We may at this juncture itself also notice a recent decision
rendered by the Supreme Court in Larsen Air Conditioning and
Refrigration Company v. Union of India15 in which N. Hakeem came to
be reiterated as would be evident from the following passages:—
“15. The limited and extremely circumscribed jurisdiction of the
court under Section 34 of the Act, permits the court to interfere with
an award, sans the grounds of patent illegality, i.e., that “illegality
must go to the root of the matter and cannot be of a trivial nature”;
and that the tribunal “must decide in accordance with the terms of
the contract, but if an arbitrator construes a term of the contract in a
reasonable manner, it will not mean that the award can be set aside
on this ground” [ref : Associate Builders (supra)]. The other ground
would be denial of natural justice. In appeal, Section 37 of the Act
grants narrower scope to the appellate court to review the findings in
an award, if it has been upheld, or substantially upheld under
Section 34. It is important to notice that the old Act contained a
provision which enabled the court to modify an award. However, that
power has been consciously omitted by Parliament, while enacting
the Act of 1996. This means that the Parliamentary intent was to
exclude power to modify an award, in any manner, to the court. This
position has been iterated decisively by this court in M. Hakeem:
“42. It can therefore be said that this question has now been
settled finally by at least 3 decisions [McDermott International
Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181], [Kinnari
Mullick v. Ghanshyam Das Damani, (2018) 11 SCC 328 : (2018) 5
SCC (Civ) 106], [Dakshin Haryana Bijli Vitran Nigam Ltd. v.
Navigant Technologies (P) Ltd., (2021) 7 SCC 657] of this Court.
Even otherwise, to state that the judicial trend appears to favour
an interpretation that would read into Section 34 a power to
modify, revise or vary the award would be to ignore the previous
law contained in the 1940 Act; as also to ignore the fact that the
1996 Act was enacted based on the Uncitral Model Law on
International Commercial Arbitration, 1985 which, as has been
pointed out in Redfern and Hunter on International Arbitration,
makes it clear that, given the limited judicial interference on
extremely limited grounds not dealing with the merits of an
award, the “limited remedy” under Section 34 is coterminous with
the “limited right”, namely, either to set aside an award or
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remand the matter under the circumstances mentioned in Section

34 of the Arbitration Act, 1996.”
16. In view of the foregoing discussion, the impugned judgment
warrants interference and is hereby set aside to the extent of
modification of rate of interest for past, pendente lite and future
interest. The 18% per annum rate of interest, as awarded by the
arbitrator on 21.01.1999 (in Claim No. 9) is reinstated. The
respondent-state is hereby directed to accordingly pay the dues
within 8 weeks from the date of this judgment.”
34. While attempting to answer the issues flagged above, we must
at the outset, acknowledge the shift in legislative policy which underlies
the Act and which mandates intervention by courts to be minimal. This
flows from the recognition of the theory that once parties have agreed
to the resolution of their disputes by an alternative adjudicatory forum,
courts must as a matter of first principle refrain from interfering with
the process or the decision except on the limited grounds that the
statute recognises. Courts are thus obliged to bear in mind the principle
of minimalist intervention insofar as awards are concerned. This also
flows from the legislative command of the resolution of disputes by way
of arbitration being accorded a finality as opposed to endless challenges
that may otherwise be resorted to under the normal justice
dispensation system of nations. For after all, if arbitration is to be truly
accorded the status of an effective alternative resolution mechanism
and consequently insulated from myriad challenges that may otherwise
be available under ordinary law, the aforesaid self-imposed restraints
would always have to be borne in the forefront. It is these objectives
which enjoin courts to desist from adopting an “interventionist” position
and stepping into the fray only where patent illegalities are found to
exist or where the arbitration is shown to suffer from fundamental and
manifest errors.
35. The aforesaid aspect was succinctly explained by Shakdher J.
while speaking as a Judge of the Madras High Court in Interbulk
16
Trading SA v. Adam and Coal Resources Private Limited :—
“Preface:
RAJIV SHAKDHER, J.:— Let me preface this judgment with two
aspects, which crossed my mind during the course of arguments
advanced before me.
2. First, is there a perfect answer to every legal issue, which
comes before the Court.
3. Second, will the Court try and reduce the rigours of obligations
reflected in a commercial contract, executed between two entities,
having equal bargaining power.
4. In so far as the first aspect is concerned, I would be the first
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one to confess, that there is no perfect answer to every legal

problem, which is why, in an adversarial system, one party goes
back, feeling dissatisfied.
5. A quietus is put to litigation, only because of a hierarchical
system that the Courts maintain. As Judges we are trained to be
interventionist. We attempt to set right, in a manner of speech, that
slightly crooked picture hanging on the wall, till we reach, what
according to us, is a just solution.
6. Whether such an approach is right or wrong, is often governed,
both by the jurisdiction that a Judge sits in and the personal
disposition as well as predilection of a person exercising that
jurisdiction. Some jurisdictions have more width and amplitude than
others. Restraints are often self-imposed.
7. Arbitration is one such jurisdiction, where the temptation for a
judge to straighten that proverbial crooked picture is, immense.
Repeatedly, the interventionist in the Judge comes to fore, however,
in my view and experience the rule, which should play out, is that,
once, parties have made their bed, they should be made to sleep on
it. Any other approach is a recipe for docket clogging and is often
seen to give succour to critics, and perhaps, rightly, that the
alternate dispute resolution system is a failing proposition.
8. Having said so, the exception to this approach should be : that
obvious case of fraud, compromised integrity of arbitrators and
plainly erroneous awards, which go against the stated position of law
and, hence, border on perversity and/or, those awards, which go
against public policy.”
36. However, and at the same time while courts are enjoined to
follow the minimalist intervention route, it would clearly be a travesty
of justice if they were to fail to intervene where circumstances warrant
and demand corrective measures being adopted. It is these
compulsions which have led to courts evolving the serious irregularity
or the patent illegality grounds to interfere with an award. Section 34 is
a clear and unequivocal embodiment of the Legislature's intent to
balance these competing facets of arbitration.
37. That takes us to the heart of the issue that arises, namely, the
partial annulment of an award. Undisputedly, Section 34(2)(a)(iii)
speaks of a part of an award being exorcised from the rest. The Court
also finds no justification to lend too much credence on Article 34 of the
Model Law ultimately failing to allude to a partial setting aside power
even though that was provisioned for in explicit terms in draft Articles
29, 30, 40 and 41. This since neither the Working Group Reports nor
the contemporaneous material that we have noticed hereinbefore seem
to suggest a conscious deletion of that power. The considerable
material, on the aspects surrounding partial setting aside that we have
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had an occasion to review, does not evidence any deliberation or

discussion which may have predicated or actuated its deletion. The said
material is also not indicative of any principled decision that may have
been taken by member nations for deletion of the partial setting aside
power. Its absence from Article 34 which came to be ultimately
adopted stands lost in a mist of conjecture. The Court, however, is of
the opinion that no useful purpose would be served in speculating on
this aspect any further since one would still have to consider whether
the power to set aside an award in part stands lost by virtue of Section
34 as it presently stands. The Court has in any case found that the
deletion of references to partial setting aside does not appear to have
been premised on any principled decision to deprive courts of such a
power.
38. In our considered opinion, therefore, the answer to the question
which stands posed would have to be rendered on an interpretation of
the phrase “setting aside” as ultimately adopted and forming part of
Section 34. As was noticed hereinbefore, Section 34(2)(a)(iii) does
speak of an award being set aside in part. We find that the key to
understanding the intent underlying the placement of the Proviso in
sub-clause (iv) of Section 34(2)(a) is in the nature of the grounds for
setting aside which are spoken of in clause (a). As would be manifest
from a reading of the five sub-clauses which are positioned in Section
34(2)(a), those constitute grounds which would strike at the very heart
of the arbitral proceedings. The grounds for setting aside which are set
forth in clause (a) strike at the very foundation of validity of arbitration
proceedings. Sub-Clauses (i) to (v) thus principally constitute grounds
which would render the arbitration proceedings void ab initio. Although
the Section 34(2)(a)(iv) ground for setting aside also falls in the same
genre of a fundamental invalidity, the Legislature has sought to temper
the potential fallout of the award being set aside in toto on that score.
The Proviso to sub-clause (iv) seeks to address a comprehensibly
conceivable situation where while some parts of the award may have
dealt with non-arbitrable issues or disputes falling outside the scope of
the reference, its other components or parts constitute an adjudication
which could have been validly undertaken by the AT. The Proviso thus
seeks to address such a situation and redeems as well as rescues the
valid parts of an award. This saves the parties from the spectre of
commencing arbitral proceedings all over and from scratch in respect of
all issues including those which could have validly formed part of the
arbitration.
39. The grounds for setting aside encapsulated in Section 34(2)(b)
on the other hand relate to the merits of the challenge that may be
raised in respect of an award and really do not deal with fundamental
invalidity. However, the mere fact that the Proviso found in sub-clause
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(iv) of Section 34(2)(a) is not replicated or reiterated in clause (b) of

that provision would not lead one to conclude that partial setting aside
is considered alien when a court is considering a challenging to an
award on a ground referable to that clause. In fact, the Proviso itself
provides a befitting answer to any interpretation to the contrary. The
Proviso placed in Section 34(2)(a)(iv) is not only an acknowledgment of
partial setting aside not being a concept foreign to the setting aside
power but also of parts of the award being legitimately viewed as
separate and distinct. The Proviso itself envisages parts of an award
being severable, capable of segregation and being carved out. The
Proviso is, in fact, the clearest manifestation of both an award being set
aside in part as well as an award comprising of distinct components and
parts.
40. Undoubtedly, an award may comprise a decision rendered on
multiple claims. Each claim though arising out of a composite contract
or transaction may be founded on distinct facts and flowing from
separate identifiable obligations. Just as claims may come to be
preferred resting on a particular contractual right and corresponding
obligation, the decision which an AT may render on a particular claim
could also be based on a construction of a particular covenant and thus
stand independently without drawing sustenance on a decision
rendered in the context of another. If such claims be separate,
complete and self-contained in themselves, any decision rendered
thereon would hypothetically be able to stand and survive irrespective
of an invalidity which may taint a decision on others. As long as a claim
is not subordinate, in the sense of being entwined or interdependent
upon another, a decision rendered on the same by the AT would
constitute an award in itself. While awards as conventionally drawn,
arranged and prepared may represent an amalgam of decisions
rendered by the AT on each claim, every part thereof is, in fact, a
manifestation of the decision rendered by it on each claim that may be
laid before it. The award rendered on each such claim rules on the
entitlement of the claimant and the right asserted in that regard. One
could, therefore, validly, subject of course to the facts of a particular
case, be entitled to view and acknowledge them as binding decisions
rendered by the AT on separate and distinct claims.
41. The Court notes in this regard that Mr. Mukhopadhaya, Mr.
Rajshekhar Rao, learned senior counsels as well as Mr. Ashim Sood had
urged that while an award as ultimately rendered may contain findings
on numerous claims, the decision rendered in respect of each such
claim is entitled to be viewed as an award in itself. This, according to
learned counsels, clearly flows from the power of the AT to not just
render a final award but also and in the course of arbitral proceedings
render interim awards in respect of various claims. It was rightly
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pointed out by learned counsels that each such decision on a claim

could stand independently and be final and binding in itself. Those
findings or decisions in relation to various claims that stand placed
before the AT may each constitute an award itself and the operative
directions framed representing the disposition of all such claims. As
was rightly contended by Mr. Mukhopadhaya, the declaration with
respect to entitlement and the award of a money claim consequent
thereto would be liable to be viewed as independent Arbitral Awards.
Mr. Sood had chosen to describe such a disposition of claims as being
an “agglomeration” of awards. The Court accords its emphatic and
wholehearted acceptance to the aforenoted submissions and comes to
the conclusion that an award is thus liable to be viewed and understood
accordingly. It thus comes to conclude that each such decision
rendered by an AT could be validly viewed as the decision rendered on
a particular claim and thus constituting an independent award in itself.
42. Once an award is understood as comprising of separate
components, each standing separately and independent of the other,
there appears to be no hurdle in the way of courts adopting the
doctrine of severability and invoking a power to set aside an award
partly. The power so wielded would continue to remain one confined to
“setting aside” as the provision bids one to do and would thus
constitute a valid exercise of jurisdiction under Section 34 of the Act.
That takes us to the question whether the adoption of such a course
would be contrary to what the Supreme Court had forbidden in M.
Hakeem.
43. The Supreme Court in M. Hakeem, as would be evident from the
passages of that decision extracted hereinabove, has enunciated the
setting aside power as being equivalent to a power to annul or setting
at knot an Arbitral Award. It has essentially held that bearing in mind
the plain language of Section 34 coupled with the Act having desisted
from adopting powers of modification or remission that existed in the
erstwhile 1940 Act, a court while considering a challenge under Section
34 would not have the power to modify. The expression “modify” would
clearly mean a variation or modulation of the ultimate relief that may
be accorded by an AT. However, when a Section 34 Court were to
consider exercising a power to partially set aside, it would clearly not
amount to a modification or variation of the award. It would be confined
to an offending part of the award coming to be annulled and set aside.
It is this distinction between a modification of an award and its partial
setting aside that must be borne in mind.
44. We note that such a recourse was accorded a judicial imprimatur
in J.G. Engineers (P) Ltd. v. Union of India17 by the Supreme Court
where it observed:—
“Re : Question (ii)
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24. The arbitrator had considered and dealt with Claims 1, 2, 3, 4

and 5, 6, 7 and 8, 9 and 11 separately and distinctly. The High Court
found that the award in regard to Items 1, 3, 5 and 11 was liable to
be set aside. The High Court did not find any error in regard to the
award on Claims 2, 4, 6, 7, 8 and 9, but nevertheless chose to set
aside the award in regard to these six items, only on the ground that
in the event Counterclaims 1 to 4 were to be allowed by the
arbitrator on reconsideration, the respondents would have been
entitled to adjust the amounts awarded in regard to Claims 2, 4, 6,
7, 8 and 9 towards the amounts that may be awarded in respect of
Counterclaims 1 to 4; and that as the award on Counterclaims 1 to 4
was set aside by it and remanded for fresh decision, the award in
regard to Claims 2, 4, 6, 7, 8 and 9 was also liable to be set aside.
25. It is now well settled that if an award deals with and decides
several claims separately and distinctly, even if the court finds that
the award in regard to some items is bad, the court will segregate
the award on items which did not suffer from any infirmity and
uphold the award to that extent. As the award on Items 2, 4, 6, 7, 8
and 9 was upheld by the civil court and as the High Court in appeal
did not find any infirmity in regard to the award on those claims, the
judgment of the High Court setting aside the award in regard to
Claims 2, 4, 6, 7, 8 and 9 of the appellant, cannot be sustained. The
judgment to that extent is liable to be set aside and the award has
to be upheld in regard to Claims 2, 4, 6, 7, 8 and 9.”
45. J.G. Engineers thus clearly affirms a power vesting in the Court
to segregate different parts of the award and which may relate to
independent and identifiable claims and thus upholding those parts
which do not suffer from any legal infirmity or fall foul of the grounds of
challenge set out in Section 34(2).
46. One of the earliest judgments rendered by this High Court in
which the power to set aside an award in part was recognised is State
Trading Corporation of India Ltd. v. Toepfer International Asia Pte Ltd.18
The learned Judge in State Trading Corporation observed thus:
“7. Arbitration is intended to be a faster and less expensive
alternative to the courts. If this is one's motivation and expectation,
then the finality of the arbitral award is very important. The remedy
provided in Section 34 against an arbitral award is in no sense an
appeal. The legislative intent in Section 34 was to make the result of
the annulment procedure prescribed therein potentially different
from that in an appeal. In appeal, the decision under review not only
may be confirmed, but may also be modified. In annulment, on the
other hand, the decision under review may either be invalidated in
whole or in part or be left to stand if the plea for annulment is
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rejected. Annulment operates to negate a decision, in whole or in

part, thereby depriving the portion negated of legal force and
returning the parties, as to that portion, to their original litigating
positions. Annulment can void, while appeal can modify. Section 34
is found to provide for annulment only on the grounds affecting
legitimacy of the process of decision as distinct from substantive
correctness of the contents of the decision. A remedy of appeal
focuses upon both legitimacy of the process of decision and the
substantive correctness of the decision. Annulment, in the case of
arbitration focuses not on the correctness of decision but rather more
narrowly considers whether, regardless of errors in application of law
or determination of facts, the decision resulted from a legitimate
process.”
47. The Telangana High Court in Saptarishi Hotels Pvt. Ltd. v.
19
National Institute of Tourism & Hospitality Management (NITHM) had
upon noticing J.G. Engineers held in paragraph 33 as follows:—
“33. In J.G. ENGINEERS PVT. LTD. v. UNION OF INDIA, the
Supreme Court observed that it is now well settled that if an Award
deals with and decides several claims separately and distinctly and if
such Award is found to be bad in regard to some items, the Court
would be entitled to segregate the Award on the items which did not
suffer from any infirmity so that it could be upheld to that extent.
The Award in that case was sustained in part and set aside in
relation to rest of it. In effect, the Supreme Court modified the
Award.”
48. However in paragraph 35, the said High Court has observed as
under:—
“35. The aforestated case law makes it clear that the Court
exercising power under Section 34 of the Act of 1996 is not
restrained from interfering with the arbitral Award even by way of
modification. It can modify the Award, by sustaining it in relation to
parts thereof and setting it aside in relation to others, as long as
such parts are severable. Therefore, the very foundational premise,
which formed the basis for the decisions in DIRK INDIA PRIVATE
LIMITED and NUSSLI SWITZERLAND LTD., stands shaken. Once
it is accepted that the Court exercising power under Section 34 can
modify the Award, if warranted, as per the provisions thereof and in
the light of the case law cited supra, the party whose claim was
rejected during the arbitral proceedings, as reflected in the final
Award, cannot be left remediless (See SUNIL VASUDEVA v. SUNDAR
GUPTA) during the pendency of the petition filed by such party under
Section 34. It may be necessary for such party to seek interim
measures of protection, as contemplated under Section 9. As rightly
pointed out by the Gujarat High Court in GAIL (INDIA) LTD., there
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is no distinction drawn, as per the language of Section 9, between a

party who has succeeded in the arbitral proceedings as opposed to a
party who has lost and both are equally entitled to invoke the
provisions of Section 9, even after passing of the final arbitral Award
but before execution thereof. In this context, it may be noted that
even if the final Award is a ‘nil’ Award as in the case on hand, once it
is accepted that there is a possibility of the nature of the Award
being changed by exercise of jurisdiction by the Court under Section
34, it cannot be ruled out that a ‘nil’ Award may transform into an
Award favouring one or the other party. Be it noted that in the case
on hand, both parties have filed petitions under Section 34 and they
are pending consideration. That being so, until the disposal of these
pending petitions under Section 34, the appellants cannot be non-
suited on the ground that the Award in question is a ‘nil’ Award,
disentitling them from invoking the provisions of Section 9.”
49. The only caveat that we propose to record insofar as the
aforenoted observations are concerned is that where parts of an award
are found to be unsustainable and severable, there setting aside would
clearly not amount to a modification, an expression which the learned
Judges have chosen to employ in Saptarishi Hotels.
20
50. In Navayuga Engineering Company Ltd. v. Union of India , the
Kerala High Court drawing sustenance from J.G. Engineers had
observed as follows:—
“14. As in the aforesaid decision, in the case on hand also, the
award has dealt with and decided several claims separately and
distinctly. Therefore, if the court finds the award with regard to some
claims to be bad, the court can segregate the award on items which
did not suffer from any infirmity and uphold the award to that
extent. If such an interpretation is not given, it would result in gross
injustice and absurd results because the court would have to set
aside that portion of the award also which suffers from no infirmity.
This certainly cannot be what was contemplated by the Legislature.
No reference has been made to J.G. Engineers Pvt. Ltd. (supra) in
Hakeem's case nor has it been distinguished or overruled. The
decision in J.G. Engineers Pvt. Ltd. is apparently not under Article
142 of the Constitution also. That being the position, we find that
the doctrine of severability can be applied to proceedings under
Section 34 also because as held in R.S. Jiwani (supra), if a person
can challenge an award in part, certainly the court can also set aside
an award in part. That being the position, we negative the argument
advanced on behalf of the appellant that the impugned order is liable
to be set aside on the said preliminary ground alone.”
51. The Court notes that the most comprehensive review of the issue
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was undertaken by the Full Bench of the Bombay High Court in R.S.
21
Jiwani v. Ircon International Ltd. The Full Bench of the Bombay High
Court in R.S. Jiwani made the following pertinent observations:—
“16. In terms of section 34(1) recourse to a Court against an
arbitral award has been limited by the Legislature which can be
made only by one mode that is, by filing an application for setting
aside an arbitral award in accordance with provisions of sub-section
(2) and sub-section (3) of the Act. Sub-section (3) primarily
prescribes the limitation within which an application for setting aside
an award can be made that the Court would entertain such an
application only within 3 months from the date on which the party
making application received the award and would entertain it after
the prescribed limitation of three months only if sufficient cause is
shown within a period of 30 days and not thereafter. The ambit and
the scope of power setting aside an arbitral award are entirely
controlled by section 34(2). An arbitral award may be set aside by
the Court only if the grounds stated in sub-section (2) are satisfied
and application to that effect are placed before the Court. The
expression ‘May’ sufficiently indicates that larger discretion is vested
in the Court which has to be exercised in accordance with the settled
canons of judicial discretion and the context would require that the
expression ‘may’ should be read as ‘may’ alone and does not admit
or invite any other meaning or interpretation. The other expression
which is of significance is ‘only if. The word ‘only if empowers the
Court to set aside an award only if conditions of sub-clauses (a) and
(b) of sub-section (2) are satisfied. In other words, it is for the
grounds stated in the said provisions alone that the award can be set
aside and not otherwise. Further an obligation is cast upon the
applicants to furnish proof thereof. The word “proof again has some
definite value in law and it cannot be equated to the word ‘ground’
or ‘alleged facts’. Thus, the provisions of sub-section (2) of section
34 contemplate a higher degree of deliberation than a mere
statement of fact when an award is challenged. It is expected that
the documents produced in evidence before the arbitral tribunal
would be the proof in support of an objection raised by an applicant.
The applicant should be able to demonstrate from the record that his
objection is supported by evidence and is not a mere objection for
the sake of objecting. The word “proof need be understood in the
sense in which it is defined in the Evidence Act because proof
depends upon the admissibility of evidence. A fact is said to be
proved when, after considering the matters before it, the Court
either believes it to exist, or considers its existence so probable that
a prudent man ought, under the circumstances of the particular
case, to act upon the supposition that it exists. This is the definition
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given for the word “proved” in the Evidence Act. What is required is
production of such materials on which the Court can reasonably act
to reach the supposition that a fact exists. ‘Proof of the fact depends
upon the degree of probability of its having existed. The standard
required for reaching the supposition is that of a prudent man acting
in any important matter concerning him. M. Narsinga Rao v. State of
A.P., (2001) 1 SCC 691.
17. The argument raised before us is that sub-clauses (i) to (iii)
and (v) of clause (a) of sub-section (2) of section 34 are the grounds
where it is mandatory for the Court to set aside the whole award and
there is no other choice before the Court. It is only in the class of
cases falling under section 34(2)(a)(iv) that with the aid of the
proviso to that sub-section, the Court can apply principle of
severability. In that case, if the matter submitted to the arbitration
can be separated from the one not submitted then the Court may set
aside that part of the award alone which is not submitted to
arbitration. This argument is founded on the Division Bench
judgment of this Court in the case of Pushpa P. Mulchandani v.
Admiral Radhakrishin Tahiliani, 2008 (7) LJ Soft, 161, and which was
relied upon by the respondents for inviting the decision against the
Appellant. Thus, we have to examine the provision of section 34 of
the 1996 Act to find whether it permit of any other interpretation
than the one put forward by the respondents. Sub-clauses (i), (ii),
(iii) and (v) of clause (a) of subsection (2) of section 34 deal with
certain situations which may require the Court to set aside an award
of the arbitral tribunal. These may be the cases where the party was
under incapacity, the agreement is not valid under the law in force,
where proper notice was not given to the party or otherwise enable
to present his case, and the composition of arbitral tribunal or
procedure was not in accordance with the agreement between the
parties and lastly the subject-matter of the dispute is not capable of
settlement by arbitration under the law for the time being in force.
Explanation to section 34(2) which is in the nature of a declaration
further explains that when an award is in conflict with the public
policy of India when the award was induced or affected by (i) fraud
or (ii) by corruption; or (iii) was in violation of section 75 or 81 of
the Act. It is difficult for this Court to hold that under all these
categories it would be inevitable for the Court to set aside the entire
award. It may not be very true that even under these categories, it
would be absolutely essential for the Court to set aside an award. It
is true that where a party was under incapacity or was not served
with the notice at all and the arbitration agreement itself was not
valid that an award may have to be set aside in its entirety. But even
within these clauses, there is possibility of a situation where it may
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not be necessary for the Court to set aside the entire award. Let us
take an example that where a party is given a notice has participated
in the proceedings before the arbitral tribunal but was unable to lead
evidence or present himself or submit his counter claim. Would it be
fair for the Court to set aside an award of the arbitral tribunal in its
entirety in this situation? A party who participated in the arbitral
proceeding even led evidence and cross-examined the witnesses of
the claimants in relation to the claims but for any reason was not
able to place his evidence on record in relation to the counter claims
or he was not granted sufficient opportunity to present his case or
for some reason was unable to present his case before the arbitral
tribunal, would it not be just, fair, equitable and in line with the
object of the Act of 1996 to consider setting aside award only
regarding counter claim. Is such a party which has succeeded in the
claims made by it, which are otherwise lawful and not hit by any of
the stated circumstances, should be awarded his reliefs while either
rejecting or even altering the award with regard to the counter claim
filed by the aggrieved party before the Arbitrator. Situation may be
different where arbitration agreement is not valid. In other words,
where claim is unlawful the Supreme Court in the case of Karnail
Singh v. State of Haryana, 1995 Supp (3) SCC 376 held that not
valid would mean unlawful and equated it to void.
“8. ‘Void’ dictionarily means, ineffectual, nugatory; having no
legal force or binding effect, unable in law to support the purpose
for which it was intended; nugatory and ineffectual so that
nothing can cure it; not valid. In Words and Phrases (American),
Vol. 44, published by West Publishing Co., at page 319 it is stated
thus:
“A ‘void’ thing is nothing; it has no legal effect whatsoever;
and no rights whatever can be obtained under it or grow out of
it. In law it is the same thing as if the void thing had never
existed.”
What was declared void was election. That is the process
which led to choosing or selecting appellant as a member was
invalid. The legal effect of declaration granted by the Tribunal
was that the election of the appellant became non-existent
resulting automatically in nullifying the earlier declaration. The
declaration did not operate from the date it was granted but it
related back to the date when election was held. The legislative
provision being clear and the Tribunal being vested only with
power of declaring election to be void the entire controversy
about voidable and void was unnecessary. The appellant could
not therefore, claim any pension under section 7A of the 1975
Act.”
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18. In the event the arbitration agreement between the parties is

not valid means where it is unlawful or void, the whole award will
have to be set aside as the very root of the matter suffers from a
defect of law and is not valid under the law for the time being in
force. Severability is an established concept. It is largely applicable
to various branches of civil jurisprudence. Where it is possible to
sever the bad part from the good part, the good part of the contract
can always be enforced and partial relief can be granted. Doctrine of
severability has been applied to law of Contract since time
immemorial of course, it could be said that substantial severability
and not textual divisibility is the principle controlling this concept. In
the case of Shin Satellite Public Co. Ltd. v. Jain Studios Ltd., (2006)
2 SCC 628 where the Supreme Court was dealing with an agreement
between the parties for availing broadcasting services in favour of
the petitioner therein by the respondent. Because of the dispute
between the parties, arbitration clause was invoked to which defence
was taken by the respondent that the claim of the petitioner was not
maintainable inasmuch as clause 20 of the agreement was against
the public policy and was not enforceable. The Supreme Court in the
th
light of para 430 of Halsbury Law of England, 4 Edition, Volume 9,
page 297 finally held as under:—
“430. Severance of illegal and void provisions— A contract will
rarely be totally illegal or void and certain parts of it may be
entirely lawful in themselves. The question therefore arises
whether the illegal or void parts may be separated or ‘severed’
from the contract and the rest of the contract enforced without
them. Nearly all the cases arise in the context of restrain of trade,
but the following principles are applicable to contracts in general.
First, as a general rule, severance is probably not possible
where the objectionable parts of the contract involve illegality
and not mere void promises. In one type of case, however, the
Courts have adopted what amounts almost to a principle of
severance by holding that if a statute allows works to be done
up to a financial limit without a licence but requires a licence
above that limit, then, where works are done under a contract
which does not specify an amount but which in the event
exceeds the financial limit permitted without licence, the cost
of the works up to that limit is recoverable.
Secondly, where severance is allowed, it must be possible
simply to strike out the offending parts but the Court will not
rewrite or rearrange the contract.
Thirdly, even if the promises can be struck out as
aforementioned, the Court will not do this if to do so would
alter entirely the scope and intention of the agreement.
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Fourthly, the contract, shorn of the offending parts, must

retain the characteristics of a valid contract, so that if
severance will remove the whole or main consideration given
by one party the contract becomes unenforceable. Otherwise,
the offending promise simply drops out and the other parts of
the contract are enforceable.
Reference may be made to Chitty on Contracts (29th Edn.
Vol. 1) pp. 1048-49:
“16-188. Introductory.— Where all the terms of a
contract are illegal or against public policy or where the
whole contract is prohibited by statute, clearly no action can
be brought by the guilty party on the contract; but
sometimes, although parts of a contract are unenforceable
for such reasons, other parts, were they to stand alone,
would be unobjectionable. The question then arises whether
the unobjectionable may be enforced and the objectionable
disregarded or ‘severed’. The same question arises in
relation to bonds where the condition is partly against the
law.
16- 189. Partial statutory invalidity.— It was laid down in
some of the older cases that there is a distinction between a
deed or condition which is void in part at common law. This
distinction must now be understood to apply only to cases
where the provisions shall be wholly void. Unless that is so,
then provided the good part is separable from and not
dependent on the bad, that part only will be void which
contravenes the provisions of the statute. The general rule is
that ‘where you cannot sever the illegal from the legal part
of a covenant, the contract is altogether void; but, where
you can sever them, whether the illegality by created by
statute or by the common law, you may reject the bad part
and retain the good’. Thus, a covenant in a lease that the
tenant should pay ‘all parliamentary taxes’, only included
such as he might lawfully pay, and a separate covenant to
pay the landlord's property tax, which it was illegal for a
tenant to contract to pay, although void, did not affect the
validity of the instrument. In some situations where there is
a statutory requirement to obtain a licence for work above a
stipulated financial limit but up to that limit no licence is
required, the Courts will enforce a contract up to that limit.
There is some doubt whether this applies to a lump sum
contract ‘for a single and indivisible work’. Even in this
situation if the cost element can be divided into its legal and
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illegal components, the Courts will enforce the former but

not the latter.”
(Emphasis supplied)
15. It is no doubt true that a Court of law will read the
agreement as it is and cannot rewrite nor create a new one. It is
also true that the contract must be read as a whole and it is not
open to dissect it by taking out a part treating it to be contrary to
law and by ordering enforcement of the rest if otherwise it is not
permissible. But it is well settled that if the contract is in several
parts, some of which are legal and enforceable and some are
unenforceable, lawful parts can be enforced provided they are
severable.
16. xxxxxxxxx
17. In several cases, Courts have held that partial invalidity in
contract will not ipso facto make the whole contract void or
unenforceable. Wherever a contract contains legal as well as
illegal parts and objectionable parts can be severed, effect has
been given to legal and valid parts striking out the offending
parts.”
19. Similar situations also had arisen under section 23 of the
Contract Act where a contract was partly lawful and partly unlawful.
The contract where the unlawful parts were severable from lawful
parts had been held to be enforceable. [Referred Canbank Financial
Services v. Custodian, (2004) 8 SCC 355.]
20. The cases would be different where it is not possible or
permissible to sever the award. In other words, where the bad part
of the award was intermingled and interdependent upon the good
parts of the award there it is practically not possible to sever the
award as the illegality may affect the award as a whole. In such
cases, it may not be possible to set aside the award partially.
However, there appears to be no bar in law in applying the doctrine
of severability to the awards which are severable. In the case of
Messrs. Basant Lal Banarsi Lal v. Bansi Lal Dagdulal, AIR 1961 SC
823, though the Supreme Court was dealing with an application for
setting aside an award passed by the Bombay City Civil Court,
contending that forward contract in groundnuts were illegal as
making of such contracts was prohibited by Oil Seeds (Forward
Contract Prohibition) Order, 1943 and hence arbitration clause
contained in the forward contracts in groundnuts between the parties
was null and void, where it was found as a matter of fact that it was
not possible to segregate the dispute under the various contracts as
there was direct link between them. The Supreme Court held as
under:
“It would follow that the arbitration clause contained in that
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contract was of no effect. It has therefore to be held that the

award made under that arbitration clause is a nullity and has been
rightly set aside. The award, it will have been noticed, was
however in respect of disputes under several contracts one of
which we have found to be void. But as the award was one and is
not severable in respect of the different disputes covered by it,
some of which may have been legally and validly referred, the
whole award was rightly set aside.”
*****
24. Now a further question that falls for consideration of this Court
is as to whether there is anything contained in 1996 Act which
prohibits in law the Court from adopting the approach applicable
under the 1940 Act or prohibits applicability of principle of
severability to the awards under 1996 Act. We are unable to see any
prohibition much less an absolute bar in the provisions of section 34
of 1996 Act to that effect. There could be instances falling under
section 34(2)(a), sub-sections (iii) and (v) where the principle of
severability can safely be applied. These provisions do not
specifically or impliedly convey legislative intent which prohibits the
Courts from applying this principle to the awards under the 1996
Act. Again for example, an Arbitral Tribunal might have adopted a
procedure at a particular stage of proceeding which may be held to
be violative of principles of natural justice or impermissible in law or
the procedure was not in accordance with the agreement between
the parties but the parties waived such an objection and participate
in the arbitration proceedings without protest, in that event it will be
difficult for the Court to hold that the good part of the award cannot
be segregated from the bad part.
25. Section 4 of the 1996 Act has been enacted by the Legislature
to control the conduct of the parties during the arbitral proceedings.
The purpose appears to be that unnecessary technical objections
with regard to the continuation or otherwise of the arbitration
proceedings and challenge to an award on that ground at a
subsequent stage should be discouraged. This itself is indicative of
the legislative intent not to unnecessarily prolong the litigation on
such believable objection which may be waived. The language of
section 34(2) does not use any specific language which debars the
Court from exercising its discretion otherwise vested in it by virtue of
its very creation to set aside the award wholly or partially as the case
may be.
*****
30. If the principles of severability can be applied to a contract on
one hand and even to a statute on the other hand, we fail to see any
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reason why it cannot be applied to a judgment or an award

containing resolution of the disputes of the parties providing them
such relief as they may be entitled to in the facts of the case. It will
be more so, when there is no statutory prohibition to apply principle
of severability. We are unable to contribute to the view that the
power vested in the Court under section 34(1) and (2) should be
construed rigidly and restrictedly so that the Court would have no
power to set aside an award partially. The word “set aside” cannot be
construed as to ‘only to set aside an award wholly’, as it will neither
be permissible nor proper for the Court to add these words to the
language of section which had vested discretion in the Court.
Absence of a specific language further supported by the fact that the
very purpose and object of the Act is expeditious disposal of the
arbitration cases by not delaying the proceedings before the Court
would support our view otherwise the object of Arbitration Act would
stand defeated and frustrated.
*****
33. It must be understood that the scope of judicial intervention
under section 34 is very limited and cannot be equated to the
powers of a civil appellate Court. The award can be set aside on the
grounds stated in these provisions and that is what is emphasized by
the use of expression ‘only’. The Supreme Court in the case of Mc
Dermott International Inc. v. Burnt Standard Co. Ltd., (2006) 11
SCC 181 has discussed in some elaboration the cases where the
Court can interfere with the awards and/or set aside the award. Mere
appreciation of evidence or an error simpliciter in appreciation of fact
or law may not essentially fall within the class of cases which may be
covered within the ambit and scope of section 34 of the Act. We will
shortly proceed to discuss this aspect of law but only insofar as it is
relevant for answering the question posed before the larger Bench.
34. Number of cases have been relied upon and referred by the
learned counsel appearing for the respective parties. One set of
cases have taken the view that partial setting aside of the award is
permissible and the Court can exercise its discretion while granting
partial relief to the parties. On the other hand, the rival contention is
that an award can partially be set aside only if a case falls under
proviso to section 34(2)(iv) and the Court is bound to set aside the
entire award in other cases and leave the parties to such remedy as
may be available to them in law. The judgments of this Court as well
as the other Courts which take the former view are Amir Begum v.
Syed Badruddin Husain, AIR 1914 PC 105; Mattapalli Chelamayya v.
Mattapalli Venkataratnam, (1972) 3 SCC 799; Upper Ganges Valley
Electricity Supply Co. Ltd. v. U.P. Electricity Board, (1973) 1 SCC
254; State of Orissa v. Niranjan Swain, (1989) 4 SCC 269; Union of
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India v. Jain Associates(1994) 4 SCC 665; J.C Budhrajav. Orissa

Mining Corpn. Ltd., (2008) 2 SCC 444 : (2008) 3 Mah LJ 33 (SC);
Poonam International Co. Pvt. Ltd. v. ONGC, (1998) 1 Arb LR 28;
Union of India v. M L. Dalmiya, AIR 1977 Cal 266; Metro Electric Co.
v. DDA, AIR 1976 Del 195; Umraosingh and Co., Lucknow v. State of
Madhya Pradesh, AIR 1976 MP 126; Anandilal Poddar v. Keshavdeo
Poddar, AIR 1949 Cal 549; S.B. Garware v. D.V. Garware, AIR 1939
Bom 296; Dagdusa Tilakchand v. Bhukan Govind Shet, 1884 Indian
Law Reports Vol. IX 82; Mehta Teja Singh and Co. v. UOL, AIR 1977
Del 231, Union of India v. Artie India, Arb. Petn. No. 355/2004 (SJ);
and Sanyukt Nirmata v. IIT., (1986) 2 Arb LR 33; while Rakomder
Lrosjam Ljamma v. IPO, (1998) 7 SCC 129; ITDC v. T.P. Sharma,
(2002) 3 RAJ 360; Mc Dermott International v. Burns Standard Co.
Ltd., (2006) 11 SCC 181 cases including the Division Bench
judgment of this Court take the later view. We have given detailed
reasoning as to why the view taken by the Division Bench of this
Court in the case of Ms. Pushpa Mulchandani (supra) may not be a
correct view of law. It will be appropriate to discuss the reasoning
given by the Division Bench while taking that view in some detail. In
the case of Ms. Pushpa Mulchandani (supra), the Court was
concerned with a case where the disputes and differences had been
referred to the Arbitrator and the Arbitrator had made his award
holding that the testator willed the goodwill of his trading concerns
to the Trust and other ancillary matters like tenancy and conversion
of a partnership concern into a limited company and its winding up
of the business. Aggrieved from the award of the Arbitral Tribunal, a
petition was filed under section 34 of the 1996 Act on different
grounds. The grounds raised were rejected by the learned Single
Judge who declined to interfere with the award. This judgment of the
learned Single Judge was challenged before the Division Bench on
two grounds; (a) the award had been vitiated on account of non-
compliance of provision of sub-section (3) of section 24 of the Act
due to non-supply of copies of the valuation report on which the
award was based and (b) the award had been passed after
termination of mandate of the arbitrator. The Division Bench
discussed various aspects of the case and it finally allowed the
appeal, set aside the award as well as the judgment of the learned
Single Judge. In the present case, we are not concerned with the
merits of this case as such. The only relevance of the order of the
Division Bench for answering the present reference is whether the
Division Bench has taken a correct view that the only option with the
Court was to set aside the whole award and not part thereof. The
relevant part of the judgment of the Division Bench we have already
reproduced above. The Division Bench while taking that view
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recorded reasons that it is not permissible for the Court to modify

the award even if it finds that only part of the award is affected by
illegality, the Court has to still set aside the entire award unless a
party had applied under the provisions of section 34(4) of the Act.
While taking this view, the Division Bench entirely relied upon para
52 of the judgment of the Supreme Court in the case of McDermott
International (supra). It must be noticed at the very outset that the
Supreme Court in that case was not concerned with the application
of principle of severability of award. The Court was primarily
concerned with the ambit and scope of section 34(2) in its entirety.
The contention of severability neither came up for consideration nor
has been dealt with by the Supreme Court in the entire judgment as
the Court was not called upon to decide such an issue. In stricto
sensu the proviso to section 34(2)(iv) may not literally apply to the
entire provision of section 34(2) but can certainly be taken as a
yardstick for rest of the provision insofar as exercise of judicial
discretion of the Court is concerned. The Supreme Court while
considering the provisions of section 34(2) discussed in some detail
as to which of the cases would fall under those heads and defined
the supervisory role of the Courts under that provision. Discussion on
this topic, in fact, starts at paragraph 45 and goes upto paragraph
66 of the judgment. The Supreme Court in that case has defined in
particular principle which may be attracted in relation to setting
aside of an award. Paragraph 52 relied upon by the Division Bench.
Paras 59, 60 and 65 which can be usefully referred to at this stage
which read as under:
59. Such patent illegality, however, must go to the root of the
matter. The public policy violation, indisputably, should be so
unfair and unreasonable as to shock the conscience of the Court.
Where the arbitrator, however, has gone contrary to or beyond the
expressed law of the contract or granted relief in the matter not in
dispute would come within the purview of section 34 of the Act.
However, we would consider the applicability of the
aforementioned principles while noticing the merits of the matter.
60. What would constitute public policy is a matter dependent
upon the nature of transaction and nature of statute. For the said
purpose, the pleadings of the parties and the materials brought
on record would be relevant to enable the Court to judge what is
in public good or public interest, and what would otherwise be
injurious to the public good at the relevant point, as
contradistinguished from the policy of a particular Government.
[See State of Rajasthan v. Basant Nahata, (2005) 12 SCC 77].
65. We may consider the submissions of the learned counsel
for the parties on the basis of the broad principles which may be
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attracted in the instant case i.e. (i) whether the award is contrary
to the terms of the contract and, therefore, no arbitrable dispute
arose between the parties; (ii) whether the award is in any way
violative of the public policy; (iii) whether the award is contrary to
the substantive law in India viz. Sections 55 and 73 of the Indian
Contract Act; (iv) whether the reasons are vitiated by perversity
in evidence in contract; (v) whether adjudication of a claim has
been made in respect whereof there was no dispute or difference;
or (vi) whether the award is vitiated by internal contradictions.”
Thus, the above observations and dictum held in paragraph 52
has to be construed in the context in which it has been referred to
and decided. If a issue is not raised before the Court, no
arguments are addressed on that issue and no reasons on an
issue is recorded by the Court, such a judgment cannot be treated
as a precedent applicable to a subsequent case on the correct
application of the principle of ratio decidendi. order for a
judgment to apply as a precedent, the relevant laws and earlier
judgments should be brought to the notice of the Court and they
should be correctly applied. Mere observations in a previous
judgment may not be binding on a subsequent Bench if they are
not applicable to the facts and controversies in a subsequent case
as per settled principle of “ratio decidendi”. The rule of precedent,
thus, places an obligation upon the Bench considering such
judgments that the Court should discuss the facts and the law of
both the cases and then come to a conclusion as to whether the
principle enunciated in the previous judgment is actually
applicable on facts and in law of the subsequent case. In the case
of Commissioner of Customs (Fort) v. Toyota Kirloskar Motor (P)
Ltd., (2007) 5 SCC 371, the Supreme Court stated the law
relating to precedents and held that a decision, as is well known,
is an authority for what it decides and not what can logically be
deduced therefrom. The ratio of a decision must be culled out
from the facts involved in a given case and need not be an
authority in generality without reference to the reasons,
discussions and facts of the case.
35. The Supreme Court was primarily stating the principles which
have been kept in mind by the Courts while interfering with the
award of the Arbitral Tribunal that it was to outline the supervisory
role of the Courts within the ambit and scope of section 34. It is true
that the Court like a Court of appeal cannot correct the errors of
arbitrator. It can set aside the award wholly or partially in its
discretion depending on the facts of a given case and can even
invoke its power under section 34(4). It is not expected of a party to
make a separate application under section 34(4) as the provisions
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open with the language “on receipt of application under sub-section

(1), the Court may………..” which obviously means that application
would be one for setting aside the arbitral award to be made under
section 34(1) on the grounds of reasons stated in section 34(2) and
has to be filed within the period of limitation as stated as reply under
section 34(3). The Court may if it deems appropriate can pass orders
as required under section 34(4). In other words, the provisions of
section 34(4) have to be read with section 34(1) and 34(2) to
enlarge the jurisdiction of the Court in order to do justice between
the parties and to ensure that the proceedings before the Arbitral
Tribunal or before the award are not prolonged for unnecessarily. In
our humble view, the Division Bench appears to have placed entire
reliance on para 52 by reading the same out of the context and
findings which have been recorded by the Supreme Court in
subsequent paragraphs. It is also true that there are no pari materia
provisions like sections 15 and 16 of the Act of 1940 in the 1996 Act
but still the provisions of section 34 read together, sufficiently
indicate vesting of vast powers in the Court to set aside an award
and even to adjourn a matter and such acts and deeds by the
Arbitral Tribunal at the instance of the party which would help in
removing the grounds of attack for setting aside the arbitral award.
We see no reason as to why these powers vested in the Court should
be construed so strictly which it would practically frustrate the very
object of the Act. Thus, in our view, the principle of law stated by the
Division Bench is not in line with the legislative intent which seeks to
achieve the object of the Act and also not in line with accepted
norms of interpretation of statute.
52. As would be evident from the aforesaid extracts of the decision
in R.S. Jiwani, the Bombay High Court had adopted the principles of
severability when employed in the context of contracts. It is those
principles of severance which were held to be also available to be
invoked in the context of a challenge under Section 34. In R.S. Jiwani
the Bombay High Court also took into consideration the serious
prejudice that may be caused in case a power to partially sever was not
countenanced to exist in Section 34. The said observations are of
significance since a declaration to the contrary may result in the court
setting aside an award in its entirety and thus relegating and
compelling parties to commence proceedings afresh even though the
offending parts of the award may clearly be severable. That clearly does
not appear to be the intent of Section 34.
53. R.S. Jiwani was noticed by a learned Judge of this Court in Union
22
of India v. Alcon Builders & Engineer (P) Ltd. , where the following
observations came to be rendered:—
“On partial setting aside of an award
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18. In the course of hearing the parties, a preliminary query was

raised as to whether, in exercise of its jurisdiction under Section 34
of the A&C Act, this Court can partly set aside an arbitral award.
Learned counsel for the parties answered the query in the
affirmative, to say that in any case, the challenge was only to the
arbitrator's decision on two aspects; and the parties have accepted
and acted upon the rest of the award. That being said however, this
Court finds it necessary to refer to the decision of the Supreme Court
in NHAI v. M. Hakeem [NHAI v. M. Hakeem, (2021) 9 SCC 1], in
which case it was held that the court's power under Section 34 of the
A&C Act does not include the power to “modify” an award. The
question then arises whether partial setting aside of an award would
amount to “modification” thereof. It would be beneficial at this point
to extract para 42 of M. Hakeem case [NHAI v. M. Hakeem, (2021) 9
SCC 1] which reads as under : (SCC p. 28, para 42)
“42. It can therefore be said that this question has now been
settled finally by at least 3 decisions McDermott International Inc.
v. Burn Standard Co. Ltd. [McDermott International Inc. v. Burn
Standard Co. Ltd., (2006) 11 SCC 181], Kinnari Mullick v.
Ghanshyam Das Damani [Kinnari Mullick v. Ghanshyam Das
Damani, (2018) 11 SCC 328 : (2018) 5 SCC (Civ) 106], Dakshin
Haryana Bijli Vitran Nigam Ltd. v. Navigant Technologies (P) Ltd.
[Dakshin Haryana Bijli Vitran Nigam Ltd. v. Navigant Technologies
(P) Ltd., (2021) 7 SCC 657 : (2021) 4 SCC (Civ) 157] of this
Court. Even otherwise, to state that the judicial trend appears to
favour an interpretation that would read into Section 34 a power
to modify, revise or vary the award would be to ignore the
previous law contained in the 1940 Act; as also to ignore the fact
that the 1996 Act was enacted based on the Uncitral Model Law
on International Commercial Arbitration, 1985 which, as has been
pointed out in Redfern and Hunter on International Arbitration,
makes it clear that, given the limited judicial interference on
extremely limited grounds not dealing with the merits of an
award, the ‘limited remedy’ under Section 34 is coterminous with
the ‘limited right’, namely, either to set aside an award or remand
the matter under the circumstances mentioned in Section 34 of
the Arbitration Act, 1996.”
19. Upon a closer reading of M. Hakeem case [NHAI v. M.
Hakeem, (2021) 9 SCC 1] however, it transpires that the said case
concerned a claim for payment of compensation for land acquisition
and the District Court, in exercise of its powers under Section 34 of
the A&C Act, had increased the quantum of compensation awarded
by the competent authority. M. Hakeem case [NHAI v. M. Hakeem,
(2021) 9 SCC 1] therefore, was not a case where some of several
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claims made before the Arbitral Tribunal were set aside.

20. In order to better appreciate and apply M. Hakeem case [NHAI
v. M. Hakeem, (2021) 9 SCC 1], and to understand the correct
meaning of what amounts to “modification” of an arbitral award, it is
necessary to refer to the following decisions:
21. In J.G. Engineers (P) Ltd. v. Union of India [J.G. Engineers (P)
Ltd. v. Union of India, (2011) 5 SCC 758 : (2011) 3 SCC (Civ) 128]
which involved multiple claims dealt with and decided by the
arbitrator, this is what the Supreme Court had to say : (SCC p. 775,
para 25)
“25. It is now well settled that if an award deals with and
decides several claims separately and distinctly, even if the court
finds that the award in regard to some items is bad, the court will
segregate the award on items which did not suffer from any
infirmity and uphold the award to that extent….”
22. Then again, in R.S. Jiwani v. Ircon International Ltd. [R.S.
Jiwani v. Ircon International Ltd., 2009 SCC OnLine Bom 2021] a Full
Bench of the Bombay High Court has dealt with the concept of
severability of the decisions on various claims/counterclaims
comprised in an award and has held as follows….
23. The judgment in R.S. Jiwani case [R.S. Jiwani v. Ircon
International Ltd., 2009 SCC OnLine Bom 2021] has been relied
upon recently in a judgment of the Bombay High Court in NHAI v.
Commr. [NHAI v. Commr., 2022 SCC OnLine Bom 1688]
*****
28. Upon a combined and meaningful reading of the provisions of
the A&C Act and the aforesaid judicial precedents, in the opinion of
this Court, the following position emerges:
29. A court exercising power under Section 34 of the A&C Act
cannot “modify” an arbitral award;
30. The arbitrator's decision on each claim and counterclaim,
taken individually, is final. “Modification” means to substitute the
court's own decision for the decision made by the arbitrator on any
given claim or counterclaim; which the court cannot do.
31. If objections are filed under Section 34, impugning the
arbitrator's decision only on some of the claims or counterclaims, it
is not necessary for the court to set aside the entire arbitral award
viz. the decision on all claims and counterclaims. This follows from
the limited ambit of the court's powers under Section 34. Besides,
the decision on a Section 34 petition cannot go beyond the scope of
the challenge itself.
32. When the arbitrator's decisions on multiple claims and
counterclaims are severable and not interdependent, the court is
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empowered under Section 34 to set aside or uphold the arbitrator's

decisions on individual and severable claims or counterclaims;
without having to set aside the entire arbitral award. That would not
amount to modification of the arbitral award.
33. The above is also in line with the overarching principle that
the scope of interference by the court under the A&C Act in arbitral
proceedings and arbitral awards, is to be minimal. The statute does
not command the court to go for the overkill. To adapt a phrase
famously used by Justice Felix Frankfurter, while exercising power
under Section 34, it is not necessary to burn the house to roast the
pig.”
54. As was rightly propounded in Alcon Builders, the injunct of
modification as enunciated in M. Hakeem would only apply where the
Court were to consider rendering its own decision or substituting its
own view over that of the Arbitrator on a particular claim. The learned
Judge also rightly noticed a situation where a decision only on some
parts of an award or counter claims may be laid before a Court. It was
in that backdrop significantly observed that it would be wholly
unnecessary for a court to set aside the award in its entirety even
though the challenge itself may stand confined to certain parts thereof.
In Alcon too the learned Judge propounded the principles of severability
and claims not being inter-dependent so as to enable the Court to
consider partially setting aside the award. The views thus expressed in
the aforesaid decision clearly commends acceptance and a power of
partial setting aside being recognized to inhere in courts. We have
already found that Section 34(2)(a)(iv) cannot be construed as being
indicative of the legislative intent for a partial setting aside power being
available to be invoked only in cases that may fall within the ambit of
that clause. In light of the foregoing discussion, we are of the firm
opinion that the expression “setting aside” as employed in Section 34
would include the power to annul a part of an award provided it is
severable and does not impact or eclipse other components thereof.
55. Viewed in light of the aforesaid, learned counsels appear to be
correct in their submission that M. Hakeem does not really deal with the
question of a partial setting aside of an award. In fact, they appear to
be correct in their submission that a partial setting aside may not
amount to a variation or modification at all.
56. Of equal significance are the observations appearing in the
decision of the Ad-Hoc Committee of the International Centre for
23
Settlement of Investment Disputes which was cited by Dr. George.
The Court refers to Klöckner Industrie-Anlagen GmbH v. United
Republic of Cameroon and Société Camerounaise des Engrais24 where
the Committee observed thus:—
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“80. The finding that there is a ground for annulment of the

Award under Article 52 of the Washington Convention immediately
raises the question of the consequences of that finding. According to
Article 52(3) in fine, the “Committee shall have the authority to
annul the award or any part thereof on any of the grounds set forth
in paragraph (1).”
In concrete terms, the question is whether, applying the
principle of favor validitatis or “partial annulment of legal acts,”
only a part of the contested award should be annulled, or whether
it should be annuled in its entirety.
Generally speaking, partial annulment would seem appropriate
if the part of the Award affected by the excess of powers is
identifiable and detachable from the rest, and if so, the remaining
part of the Award has an independent basis.
81. Such is clearly not the case here. Indeed, the Award rejected
Klöckner's claim for payment by a single decision. (pp. 136-137)
What the Tribunal terms “this company's responsibility for
shortcomings in delivering the factory and in its technical and
commercial management” and in the alleged duty of “full disclosure”
seem, insofar as one can understand in the Award, to be linked both
to the delivery obligation and doubtless above all to the
management obligation. It is because of the breach of this
“contractual duty of full disclosure” that the Award concludes (p.
109) that Klöckner “is not entitled to the contract price” and that it
has already been “paid enough.” Since in the Tribunal's view the
Award forms a whole, and since the Tribunal, in rejecting the counter
-claim, as it were made parallel decisions based on the alleged
illegality of Klöckner's lack of frankness, the Award's annulment
should also extend to the part relating to the counter-claim.
That being the case, one does not see how, at least in the
Award's operative parts, one can dissociate matters relating solely
to a breach of the alleged “duty of full disclosure,” and to decide
on only a partial annulment. This conclusion is moreover
confirmed and reinforced, as will be seen below, by the response
to some of the other complaints of the Applicant for Annulment.”
57. Dr. George had also drawn our attention to a judgment handed
25
down by the Swiss Federal Tribunal in X._____ v. Z._____ Inc. where
although on facts a partial setting aside was refused, the Court made
the following pertinent observations:—
“Appellant,
X.________,
Represented by Mr Philippe Bärtsch and Mrs Anne-Carole
Cremades,
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v.
Respondent,
Z.________ Inc.,
Represented by Mr Jean-Philippe Rochat,
6. According to the Appellant the award under appeal must be
annulled entirely.
6.1. Case law and legal writing recognize the possibility of
partial annulment, irrespective of the fact that an appeal against
an international arbitral award may only seek its annulment (see
Art. 77 (2) LTF ruling out the applicability of Art. 107 (2) LTF)
when the issue appealed is independent of the others (judgment
4P.129/2002 of Novembre 2002 at 10; judgment 4P.114/2001 of
December 19, 2001 at 1c; Sébastien BESSON, Le recours contre
la sentence arbitrale internationale selon la nouvelle LTF (aspects
procéduraux), in Bulletin de I'Association suisse de I'arbitrage
[ASA], 2007, p. 2 ff, nr. 49; Jean-François POUDRET, Les recours
au Tribunal fédéral suisse en matière d'arbitrage international
(Commentaire de I'art. 77 LTF), in Bulletin ASA 2007 p. 669 ff,
685 ch. 4.9; KAUFMANN-KOHLER/RIGOZZI, op. cit., p. 484
footnote 565).
6.2. In this case the procedural requirement enabling the Court
to depart from a full annulment of the award is not met. Indeed,
items 1 and 2 of the award refer to global amounts, without any
distinction between the various heads of claim involved. These
amounts are moreover in various currencies (US dollars and
euros) and furthermore result from setoff between the claims of
both Parties.
Consequently the award must be annulled entirely. However it
goes without saying that notwithstanding the annulment it is only
the claims in respect of which the appeal has been granted which
will need to be decided again in the new award.”
58. We also note that while the Model Law ultimately failed to
specifically or explicitly speak of partial setting aside, Section 34 has
been understood and interpreted as clearly embodying such a power
notwithstanding the same having not been unambiguously spelt out.
Redfern and Hunter (6th Edition) in their seminal treatise on
International Arbitration have explained that power in the following
terms:—
“D. Effects of Challenge
10.89 The effects of a successful challenge differ depending upon
the grounds of the challenge, the relevant law, and the decision of
the court that dealt with it. This decision in itself may take several
forms. The court may decide to confirm the award, refer the award
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back to the arbitral tribunal for reconsideration, vary the award, or

set the award aside, in whole or in part.
10.90 When an award is set aside, it is unenforceable in the
country in which it was made, and it will usually be unenforceable
elsewhere. In this situation, the party who won the arbitration, but
lost the challenge, is in an unenviable position. If, for example, the
award has been set aside completely on the basis that the arbitration
agreement was null and void, a further resort to arbitration (on the
basis of the void agreement) would be out of the question. Resort to
litigation might be considered, but there could be problems of time
limit, to say nothing of more substantive difficulties.
10.91 If the award has been set aside for procedural defects (for
example lack of due process), the party who won the arbitration, but
lost the challenge, will have to resubmit the dispute to arbitration
and the process will start over again. This is a daunting prospect for
even the most resilient claimant.
10.92 A successful party does not wish to be deprived of victory
because of a procedural failure on the part of the arbitral tribunal. As
the practice of international arbitration becomes increasingly
litigious, a party who expects to be on the losing side may seek,
during the course of the proceedings, to lay the basis for a claim that
the hearing was not conducted fairly. This point should be kept well
in mind by parties to an arbitration (usually the claimants) who
consider that the arbitral tribunal is being too generous to their
opponents in allowing extensions of time and giving them a full
opportunity to state their case. Arbitrators are well advised to obtain
a clear statement on the record upon conclusion of the last oral
hearing that the parties are satisfied with the conduct of the hearing,
in order to protect the eventual award. If a party then declares a
concern, there is still time for the tribunal to address it before
issuing the final award.”
59. A similar instructive enunciation on the scope of partial
annulment is found in International Commercial Arbitration
authored by Gary B Born. The relevant parts dealing with the aforesaid
subject are extracted hereinbelow : -
““[7] Partial Annulment of Award Under Article 34
It is clear that partial annulment of arbitral awards is permitted,
and in some cases required, by the UNCITRAL Model Law. Article 34
(2)( a)( iii) of the Model Law provides for partial annulment of an
award where only part(s) of the award exceeded the jurisdiction of
the tribunal:“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 may be set aside.” As discussed below, courts have
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applied this provision to annul only parts of awards where other

parts of those awards were within the tribunal's authority.
Although other subsections of Article 34(2) lack Article 34(2)(a)
(iii)'s express reference to partial annulment (in cases of excess of
authority), the same possibility exists under other ground for
annulment. Thus if one part of a tribunal's award violates the
annulment forum's public policy, or rested on a procedurally-unfair
process, then that portion of the award may be annulled without—
requiring (or warranting) annulment of separable parts of the award
that are unaffected by the relevant public policy or procedural
objections. This parallels the treatment of partial recognition under
the New York Convention and Article 36 of the Model Law.”
60. The Court also acknowledges and records it appreciation for the
herculean task which was undertaken by Mr. Arunadhri Iyer, learned
counsel, who had placed a detailed note setting out the 451 occasions
when this Court while exercising powers either under Section 34 or
Section 37 had set aside awards in part. These were decisions rendered
right from 1996 to 2023. The aforesaid precedents which have been
detailed in the table placed by Mr. Iyer along with his Note of 18 July
2023 does reinforce the conclusion of partial setting aside as
propounded hereinabove.
61. While closing the chapter on the power of a Court to set aside an
award in part, the Court deems it apposite to deal with a decision
rendered by a Division Bench of our Court in MBL Infrastructures Ltd. v.
26
Telecommunication Consultants of India . In MBL the Division Bench
had while considering an appeal preferred under Section 37 of the Act
made the following pertinent observations:—
“11.1 It is to be noted here that vide impugned judgment dated
10.02.2021, the learned Single Judge has made
modifications/corrections in the impugned Award dated 10.01.2020
as under:
1. No. Claim/Counter- Majority Amount (Rs.)
claim MBL/TCIL Tribunal Award modified by
learned Single
Judge
(i) Against Claim 5,14,48,210/- Rs.
No. 1 Rs. 4,14,66,495/-
(ii) Against Claim Rs. 8,00,000/- Rs. 8,00,000/-
No. 4 (No
change)
(iii) Against Claim Rs. 72,71,257/- Rs. 2,89,575/-
No. 7
Total Rs. Rs.
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5,95,19,467/- 4,25,56,070/-
Less: Counter Claim Rs. 3,82,653/- Rs. 3,82,653/-
No. 2 of the
Respondent (No
change)
Net Rs. 5,91,36,814/- Rs.
4,21,73,417/-
*********
16. It is to be noted that in the present case, the arbitral Award
dated 20.01.2020, passed by the Majority Arbitrators, was
modified/set aside/corrected. Section 34(2)(a)(iv) deals with
separation of the claims and it gives power to the Civil Court to set
aside only part of the arbitral Award but the overriding condition is
that the said part of the Award, which can be set aside, should have
dealt with a dispute, which is beyond the terms of submission to
arbitration or the decision made was beyond the scope of submission
to arbitration.
16.1 In the present case, where parts of Claim Nos. 1 and 7 of
the MBL have been set aside, the learned Single Judge has neither
pointed out nor exercised his powers under Section 34(2)(a)(iv)
of the Act. There is no other power available with the learned
Single Judge to set aside a part of the award. The award can only
be set aside as a whole. Moreover, the learned Single Judge has
no power to modify the award as the same is beyond the scope of
Section 34 of the Act.
16.3 The law in this regard is very clear. It is not in doubt that
under the Arbitration Act, 1940, the Court had power to modify or
correct an Award as provided under Section 15 of the Arbitration
Act, 1940. Under Section 16 of the Arbitration Act, 1940, the
Court had power to remit the Award back to the arbitrators. These
two powers have been expressly taken away after promulgation of
the Arbitration and Conciliation Act, 1996.
*********
17. It is again to be noted here that sub-Section (4) of Section 34
of the Act gives power to the Court to adjourn the proceedings,
giving an opportunity to the Arbitral Tribunal to resume its
proceedings or to take any other action to eliminate the grounds for
setting aside the arbitral Award. The said power is to be exercised on
the specific request by a party. No such request was made, so there
was no occasion even to remit the matter to the Arbitral Tribunal.
*********
17.3 In the present case, the learned Single Judge has taken
upon himself the responsibility of correcting the errors committed
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by the Arbitrators and has partly set-aside the Award, which is

not permissible. The only course open to the learned Single Judge
was to quash the Award and leave the parties free to take
appropriate action, if he had found that there were numerous
errors in the approach of the Majority Arbitrators.”
62. All that we deem necessary to observe is the observation made
by the Division Bench in paragraph 16.1 that a Section 34 court has no
power to set aside an award in part except where the provisions of
Section 34(2)(a)(iv) is liable to be appreciated and understood in the
context of the facts which obtained in MBL. As is evident from
paragraph 11.1, the Section 34 court had not only proceeded to set
aside the award rendered by the AT, it had also proceeded to modify
and accord relief to the claimant. The adoption of such a course of
action is what had been clearly frowned upon by M. Hakeem. It was
therefore in those circumstances that the Division Bench of our Court
was constrained to observe that the Section 34 court had no power to
modify the award and made certain observations in paragraph 16.1.
The aforesaid view is further fortified from the observations made in
paragraph 16.3 and 17.3 where the Division Bench noticed the absence
of a power to modify or correct an award existing under the Act as
opposed to Sections 15 and 16 which formed part of the 1940 Act. The
Court in MBL in light of the relief which came to be granted and which
evidently not only moulded the relief granted by the AT but proceeded
to accord positive relief on a re-appreciation of the case of parties was
constrained to hold that the only option available to the learned Single
was to quash the award and leave parties free to take appropriate
action. This Court therefore, finds that MBL also does not detract from
the partial setting aside power which this Court has recognised to exist
in Section 34.
63. The body of precedent that has evolved around the question that
stands raised as well as the authoritative texts that we have had an
occasion to review hereinabove thus lends credence to our conclusion
that courts could resort to a partial setting aside of an award subject to
the conditions noticed above. We however note that while theoretically
it may be permissible to view such decisions rendered by an AT as
distinct awards in themselves, the complexities of the question which
stands posited arises when one proceeds to consider the issue of a
partial setting aside or annulment of an award in actuality. Even though
an award may be viewed as an agglomeration of the decisions rendered
by an AT on various claims, the question of partial setting aside would
ultimately depend on whether there is an inextricable link between the
offending part of the award with any other part of the disposition.
64. The power to partially sever an offending part of the award
would ultimately depend on whether the said decision is independent
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and distinct and whether an annulment of that part would not disturb
or impact any other finding or declaration that may have been returned
by the AT. The question of severability would have to be decided
bearing in mind whether the claims are interconnected or so
intertwined that one cannot be segregated from the other. This for the
obvious reason that if the part which is sought to be set aside is not
found capable of standing independently, it would be legally
impermissible to partially set aside the award. A partial setting aside
should not lead to a component of the award being rendered vulnerable
or unsustainable. It is only when the award relates to a claim which is
found to stand on its own and its setting aside would not have a
cascading impact that the Court could consider adopting the aforesaid
mode.
65. For the purposes of demonstration, if the Court views that a
finding with respect to entitlement is liable to be upheld, it could be
possible to deal with issues of quantification independently. This, since,
if the entitlement of the claimant is found worthy of affirmation and it is
only a quantification exercise which is found to suffer from a patent
illegality that a partial setting aside power could be exercised. Thus.
while considering the question of severability, the Court would have to
necessarily examine the issue not from a facile or textual point of view
but be convinced that the principles of severability can be validly
invoked and exercised so as to exorcise an offending part of the award
without effecting or impacting any other part thereof.
66. In fact, Dr. George had commended for our consideration the
principles of “polycentricity” and referred to an illuminating article by
Lon L. Fuller titled The Forms and Limits of Adjudication as
published in the Harvard Law Review. While rendering a view in the
context of the adjudicatory process, Fuller spoke of how adjudication
may have a ripple effect on various subjects. While dealing with this
aspect, the learned author had observed as follows:—
“As a second illustration suppose in a socialist regime it were
decided to have all wages and prices set by courts which would
proceed after the usual forms of adjudication. It is, I assume,
obvious that here is a task that could not successfully be undertaken
by the adjudicative method. The point that comes first to mind is
that courts move too slowly to keep up with a rapidly changing
economic scene. The more fundamental point is that the forms of
adjudication cannot encompass and take into account the complex
repercussions that may result from any change in prices or wages. A
rise in the price of aluminum may affect in varying degrees the
demand for, and therefore the proper price of, thirty kinds of steel,
twenty kinds of plastics, an infinitude of woods, other metals, etc.
Each of these separate effects may have its own complex
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repercussions in the economy. In such a case it is simply impossible

to afford each affected party a meaningful participation through
proofs and arguments. It is a matter of capital importance to note
that it is not merely a question of the huge number of possibly
affected parties, significant as that aspect of the thing may be. A
more fundamental point is that each of the various forms that award
might take (say, a three-cent increase per pound, a four-cent
increase, a five-cent increase, etc.) would have a different set of
repercussions and might require in each instance a redefinition of
the “parties affected.”
We may visualize this kind of situation by thinking of a spider
web. A pull on one strand will distribute tensions after a complicated
pattern throughout the web as a whole. Doubling the original pull
will, in all likelihood, not simply double each of the resulting tensions
but will rather create a different complicated pattern of tensions.
This would certainly occur, for example, if the doubled pull caused
one or more of the weaker strands to snap. This is a “polycentric”
situation because it is “many centered” - each crossing of strands is
a distinct center for distributing tensions.
Suppose, again, it were decided to assign players on a football
team to their positions by a process of adjudication. I assume that
we would agree that this is also an unwise application of
adjudication. It is not merely a matter of eleven different men being
possibly affected; each shift of any one player might have a different
set of repercussions on the remaining players : putting Jones in as
quarterback would have one set of carryover effects, putting him in
as left end, another. Here, again, we are dealing with a situation of
interacting points of influence and therefore with a polycentric
problem beyond the proper limits of adjudication. Let me now
mention a polycentric problem that would be difficult to handle by
adjudication as usually conducted, where the form of adjudication is
sometimes modified to accommodate it to the nature of the problem.
A textile mill is in agreement with a labor union that its internal
wage scale is out of balance; over the years the payments made for
certain kinds of jobs have “got out of line” and are now too high or
too low in comparison with what is paid for other jobs. The company
and the union agree that a fund equal to five cents an hour for the
whole payroll shall be employed to create a proper balance. If the
parties are unable to agree on the adjustments that should be made,
the question shall go to arbitration.
Here we have a problem with strong polycentric features. If the
weavers are raised, say, more than three cents an hour, it will be
necessary to raise the spinners; the spinners’ wages are, however,
locked in a traditional relationship with those of the spinning doffers,
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etc. If there are thirty different classifications involved, it is obvious

how many different forms the arbitration award might take; each
pattern of the award could produce its own peculiar pattern of
repercussions. If such a problem is presented to a single arbitrator,
he will be under strong temptation to “try out” various forms of
award in private conversations with the parties. Irregular and
improper as such conversations may appear when judged by the
usual standards of adjudication, it should be noted that the motive
for them may be the arbitrator's desire to preserve the reality of the
parties' participation in the decision-to preserve, in other words, the
very core of adjudication.
Now it is in cases like this that the “tripartite” arbitration board
finds its most useful application. The “impartial chairman” is flanked
by two fellow arbitrators, one selected by the company, the other by
the union. After the hearings the three consult together, the
impartial chairman at some point proposing to the other members of
the board various wage scales. He will in the process learn such
things as that an increase for a particular occupation that seemed to
him both proper and feasible will have repercussions in the bleachery
of which he was unaware.
This is what I have called a “mixed” form of adjudication. In fact
the device as I have stated it amounts to a mixture of adjudication
and negotiation. All mixed forms have their dangers, and tripartite
arbitration is no exception. The danger lies in the difficult role to be
played by the flanking arbitrators. They can be neither wholly
advocates nor wholly judges. They cannot perform their role
adequately if they are completely impartial; it is their task during
the deliberations to represent an interest, a point of view. It may be
that they will wish to communicate with the parties they represent to
inform themselves of the implications of some step proposed -
though whether they should feel free to indulge in such
consultations, and if so, to what extent, is one of the ambiguities
that plague this form of arbitration. If, on the one hand, each of the
flanking arbitrators must represent the party who appointed him, he
must at the same time observe some of the restraints that go with a
judicial position. If he runs back and forth between those he
represents and the meetings of the arbitration board, reporting freely
everything that happens during those meetings, the adjudicative
process breaks down and there is substituted for it an awkward form
of bargaining-in a situation, be it remembered, where negotiation
has already failed to produce a solution.”
67. The learned author had drawn an analogy from the various tugs
and multi-directional pulls to which a string may be subjected and thus
distributing tension across an interconnected web. The proverbial
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spider's web being an allusion to a web of issues. It was in this context

that the learned author had spoken of the multi-centred aspect of
adjudication where the process itself relates to criss-crossing strands.
What essentially would therefore have to be borne in mind is whether a
partial setting aside of a particular module of an award would not
precipitate a chain reaction which adversely impacts other parts of the
award. The award, as was rightly explained by learned counsels,
essentially constitutes Jenga blocks. While it may be possible in fact to
remove an individual block, Courts would have to be circumspect and
proceed down that path with utmost care and caution and beware of
the polycentricity effect of their judicial power.
68. Mr. Gautam Narayan had commended for our consideration the
adoption of the “blue pencil test” which is generally employed in the
context of contractual provisions. The blue pencil test enables a
severance of offending parts of the contract while preserving the
substantive bargain struck by parties. The said precept could be validly
adopted while considering the issue of severability of an award.
However, while hypothetically the adoption of the blue pencil rule could
be permissible, Courts would have to proceed with precedence and
circumspection bearing in mind the obligation to ensure that the use of
the surgeon's scalpel does not scar the other parts of the award.
69. Dr. George had in this regard cited for our consideration the
following instructive observations as made by the Supreme Court in
27
Shin Satellite Public Co. Ltd. v. Jain Studios Ltd. .
“27. The proper test for deciding validity or otherwise of an
agreement or order is “substantial severability” and not “textual
divisibility”. It is the duty of the court to sever and separate trivial or
technical parts by retaining the main or substantial part and by
giving effect to the latter if it is legal, lawful and otherwise
enforceable. In such cases, the court must consider the question
whether the parties could have agreed on the valid terms of the
agreement had they known that the other terms were invalid or
unlawful. If the answer to the said question is in the affirmative, the
doctrine of severability would apply and the valid terms of the
agreement could be enforced, ignoring invalid terms. To hold
otherwise would be
“to expose the covenanter to the almost inevitable risk of
litigation which in nine cases out of ten he is very ill-able to afford,
should he venture to act upon his own opinion as to how far the
restraint upon him would be held by the court to be reasonable,
while it may give the covenantee the full benefit of unreasonable
provisions if the covenanter is unable to face litigation”.”
70. The Court is thus of the firm opinion that the power to set aside
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an award in part would have to abide by the considerations aforenoted

mindful of the imperatives of walking a line which would not dislodge or
disturb another part of the award. However as long as the part which is
proposed to be annulled is independent and stands unattached to any
other part of the award and it could be validly incised without affecting
the other components of the award, the recourse to partial setting aside
would be valid and justified.
D. THE SECTION 34(4) QUESTION
71. In order to understand the width of the power exercisable in
terms of Section 34(4) of the Act one may usefully refer to the drafts
which were circulated for the consideration of the Working Group and
the notes of discussion drawn in the course of its deliberations. As far
back as in the Sixth Session, the Working Group while drafting Article
30 included therein sub-article (3) which is akin to Section 34(4) as it
stands presently. Draft Article 30(3) sought to empower courts, where
it was found appropriate, on a request of a party to direct arbitral
proceeding to be continued and thus enabling the AT to attend to
procedural defects. The discussion which followed appears to indicate
that member Nations had all agreed that Article 30(3) was a salutary
provision which would enable an AT to cure a procedural defect without
courts being constrained to “vacate” the award. When the matter was
taken up again in the Seventh Session of the Working Group, Article 34
(4) was framed recognising an identical exercise of limited remission
being resorted to by courts where it was found that an omission or
other procedural defect could be cured without the court being
compelled to set aside the award. The discussion of the Working Group
suggests that Article 34(4) was accepted to constitute a useful device
for the purposes of attending to procedural defects and thus avoiding
the situation of the award being set aside in its entirety. 71. From the
Travaux Préparatoires which have been noticed in the preceding parts
of this decision, it is evident that the sentiment of a power vesting in
courts to remit the award enabling arbitrators to cure defects was
reiterated. It becomes significant to note the suggestion which was
mooted by the Observer for Bulgaria who had suggested that paragraph
4 of Article 34 be reworded to be read as an opportunity to eliminate
such grounds as may be remediable without a re-opening of arbitral
proceedings. The Observer for the Islamic Republic of Iran had
suggested that paragraph 4 should be restricted to curing defects in
the award itself and had raised a cautionary note of the said provision
not being viewed as one empowering arbitrators to either review the
award or attempt to revalidate the same. However, and on account of a
lack of consensus, paragraph 4 came to be adopted and retained in
terms as originally drafted.
72. The UNCITRAL Year Book while explaining the scope of Article 34
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(4) of the Model Law has spoken of the same being aimed at
empowering the AT to take appropriate measures for eliminating
“remediable defects” and which may constitute a ground for setting
aside the award itself.
73. The scope and intent of the Section 34(4) power has formed the
subject matter of consideration of various decisions handed down by
our Supreme Court itself. The issue firstly fell for consideration in
28
Kinnari Mullick v. Ghanshyam Das Damani where the principal
question which arose was whether the Court could relegate parties to
the AT after having set aside the Arbitral Award in purported exercise of
powers conferred by Section 34(4). In Kinnari Mullick, the Supreme
Court held that Section 34(4) can be invoked only while an Arbitral
Award still exists. It was thus held that once the award has been set
aside, the matter cannot be remanded to the AT. The relevant passages
of that decision are extracted hereinbelow:—
“15. On a bare reading of this provision, it is amply clear that the
Court can defer the hearing of the application filed under Section 34
for setting aside the award on a written request made by a party to
the arbitration proceedings to facilitate the Arbitral Tribunal by
resuming the arbitral proceedings or to take such other action as in
the opinion of the Arbitral Tribunal will eliminate the grounds for
setting aside the arbitral award. The quintessence for exercising
power under this provision is that the arbitral award has not been set
aside. Further, the challenge to the said award has been set up
under Section 34 about the deficiencies in the arbitral award which
may be curable by allowing the Arbitral Tribunal to take such
measures which can eliminate the grounds for setting aside the
arbitral award. No power has been invested by Parliament in the
Court to remand the matter to the Arbitral Tribunal except to adjourn
the proceedings for the limited purpose mentioned in subsection (4)
of Section 34. This legal position has been expounded in McDermott
International Inc. [McDermott International Inc. v. Burn Standard
Co. Ltd., (2006) 11 SCC 181] In para 8 of the said decision, the
Court observed thus : (Bhaskar Industrial case [Bhaskar Industrial
Development Ltd. v. South Western Railway, 2016 SCC OnLine Kar
8330], SCC OnLine Kar)
“8. … Parliament has not conferred any power of remand to the
Court to remit the matter to the Arbitral Tribunal except to
adjourn the proceedings as provided under subsection (4) of
Section 34 of the Act. The object of subsection (4) of Section 34
of the Act is to give an opportunity to the Arbitral Tribunal to
resume the arbitral proceedings or to enable it to take such other
action which will eliminate the grounds for setting aside the
arbitral award.”
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(emphasis supplied)
16. In any case, the limited discretion available to the Court
under Section 34(4) can be exercised only upon a written application
made in that behalf by a party to the arbitration proceedings. It is
crystal clear that the Court cannot exercise this limited power of
deferring the proceedings before it suo motu. Moreover, before
formally setting aside the award, if the party to the arbitration
proceedings fails to request the Court to defer the proceedings
pending before it, then it is not open to the party to move an
application under Section 34(4) of the Act. For, consequent to
disposal of the main proceedings under Section 34 of the Act by the
Court, it would become functus officio. In other words, the limited
remedy available under Section 34(4) is required to be invoked by
the party to the arbitral proceedings before the award is set aside by
the Court.
*********
18. In MMTC [MMTC v. Vicnivass Agency, 2008 SCC OnLine Mad
584 : (2008) 3 LW 1063], the Madras High Court, while dealing with
the purport of Section 34(4) of the Act in para 22(c) of the reported
judgment, observed thus : (SCC OnLine Mad)
“22. … (c) … 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.”
(emphasis supplied)
Again, in para 22(e)(iv) of the reported judgment, it observed
thus : (SCC OnLine Mad)
“22. … (e)(iv) … But under the 1996 Act, the Court has only two
sets of powers after the award is pronounced viz.
(i) to set aside the award under Section 34(2); or
(ii) to adjourn the proceedings to enable the Arbitral Tribunal to
resume the proceedings or to take such other action as in the
opinion of the tribunal will eliminate the grounds for setting
aside the arbitral award.”
74. The issue arose for consideration yet again in Dyna Technologies
29
(P) Ltd. v. Crompton Greaves Ltd. Dyna Technologies explained the
scope of the provision in the following terms:—
“35. When we consider the requirement of a reasoned order,
three characteristics of a reasoned order can be fathomed. They are :
proper, intelligible and adequate. If the reasonings in the order are
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improper, they reveal a flaw in the decision-making process. If the

challenge to an award is based on impropriety or perversity in the
reasoning, then it can be challenged strictly on the grounds provided
under Section 34 of the Arbitration Act. If the challenge to an award
is based on the ground that the same is unintelligible, the same
would be equivalent of providing no reasons at all. Coming to the
last aspect concerning the challenge on adequacy of reasons, the
Court while exercising jurisdiction under Section 34 has to
adjudicate the validity of such an award based on the degree of
particularity of reasoning required having regard to the nature of
issues falling for consideration. The degree of particularity cannot be
stated in a precise manner as the same would depend on the
complexity of the issue. Even if the Court comes to a conclusion that
there were gaps in the reasoning for the conclusions reached by the
Tribunal, the Court needs to have regard to the documents
submitted by the parties and the contentions raised before the
Tribunal so that awards with inadequate reasons are not set aside in
casual and cavalier manner. On the other hand, ordinarily
unintelligible awards are to be set aside, subject to party autonomy
to do away with the reasoned award. Therefore, the courts are
required to be careful while distinguishing between inadequacy of
reasons in an award and unintelligible awards.
36. At this juncture it must be noted that the legislative intention
of providing Section 34(4) in the Arbitration Act was to make the
award enforceable, after giving an opportunity to the Tribunal to
undo the curable defects. This provision cannot be brushed aside and
the High Court could not have proceeded further to determine the
issue on merits.
37. In case of absence of reasoning the utility has been provided
under Section 34(4) of the Arbitration Act to cure such defects.
When there is complete perversity in the reasoning then only it can
be challenged under the provisions of Section 34 of the Arbitration
Act. The power vested under Section 34(4) of the Arbitration Act to
cure defects can be utilised in cases where the arbitral award does
not provide any reasoning or if the award has some gap in the
reasoning or otherwise and that can be cured so as to avoid a
challenge based on the aforesaid curable defects under Section 34 of
the Arbitration Act. However, in this case such remand to the
Tribunal would not be beneficial as this case has taken more than 25
years for its adjudication. It is in this state of affairs that we lament
that the purpose of arbitration as an effective and expeditious forum
itself stands effaced.”
75. As is evident from the passages extracted above, this decision
too advocates the scope of Section 34(4) as being applicable only in
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respect of curable defects. Section 34(4) again came up for

30
consideration in I-Pay Clearing Services (P) Ltd. v. ICICI Bank Ltd.
when the Supreme Court observed:—
“18. It is pleaded the appellant that Section 34(4) of the Act is
based on Article 34(4) of the UNCITRAL Model Law on International
Commercial Arbitration, which came up for consideration before the
Singapore Court of Appeals in AKN v. ALC [AKN v. ALC, 2015 SGCA
63], wherein, it was held that remission is a “curative alternative” to
setting aside the award. Reference is also made to the judgment of
the Singapore High Court in Permasteelisa Pacific Holdings Ltd. v.
Hyundai Engg. & Construction Co. Ltd. [Permasteelisa Pacific
Holdings Ltd. v. Hyundai Engg. & Construction Co. Ltd., 2005 SGHC
33]
********
22. It is submitted by Shri Viswanathan that in spite of sufficient
evidence on record to prove that there was “accord and satisfaction”
between the parties, without considering such evidence, the
arbitrator has proceeded on the premise that there was no “accord
and satisfaction” and passed the award in favour of the appellant.
The findings recorded on the plea of “accord and satisfaction” in the
award without considering the entire evidence on record, constitute
patent illegality, as such, same is to be considered only by the Court
while considering the application filed under Section 34(1) of the
Act. Even assuming that on remittal, the arbitrator wants to
consciously hold that there was accord and satisfaction of claims and
there was no abrupt and illegal termination of the contract, he would
not be able to do so, as he cannot change his own award. The
judgments relied on by learned counsel for the appellant are
distinguishable on facts and would not render any support to the
case of the appellant. Oral submissions made before this Court, run
contrary to pleadings on record in the application.
********
37. In our view, Section 34(4) of the Act can be resorted to
record reasons on the finding already given in the award or to fill up
the gaps in the reasoning of the award. There is a difference between
“finding” and “reasons” as pointed out by the learned Senior Counsel
appearing for the respondent in the judgment in ITO v. Murlidhar
Bhagwan Das [ITO v. Murlidhar Bhagwan Das, AIR 1965 SC 342]. It
is clear from the aforesaid judgment that “finding is a decision on an
issue”. Further, in the judgment in J. Ashoka v. University of
Agricultural Sciences [J. Ashoka v. University of Agricultural
Sciences, (2017) 2 SCC 609 : (2017) 1 SCC (L&S) 517], this Court
has held that “reasons are the links between the materials on which
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certain conclusions are based and the actual conclusions”.

38. In absence of any finding on Point 1, as pleaded by the
respondent and further, it is their case that relevant material
produced before the arbitrator to prove “accord and satisfaction”
between the parties, is not considered, and the same amounts to
patent illegality, such aspects are to be considered by the Court
itself. It cannot be said that it is a case where additional reasons are
to be given or gaps in the reasoning, in absence of a finding on Point
1 viz. “whether the contract was illegally and abruptly terminated by
the respondent?”.
39. Further, Section 34(4) of the Act itself makes it clear that it is
the discretion vested with the Court for remitting the matter to
Arbitral Tribunal to give an opportunity to resume the proceedings or
not. The words “where it is appropriate” itself indicate that it is the
discretion to be exercised by the Court, to remit the matter when
requested by a party. When application is filed under Section 34(4)
of the Act, the same is to be considered keeping in mind the grounds
raised in the application under Section 34(1) of the Act by the party,
who has questioned the award of the Arbitral Tribunal and the
grounds raised in the application filed under Section 34(4) of the Act
and the reply thereto.
40. Merely because an application is filed under Section 34(4) of
the Act by a party, it is not always obligatory on the part of the Court
to remit the matter to Arbitral Tribunal. The discretionary power
conferred under Section 34(4) of the Act, is to be exercised where
there is inadequate reasoning or to fill up the gaps in the reasoning,
in support of the findings which are already recorded in the award.
41. Under the guise of additional reasons and filling up the gaps
in the reasoning, no award can be remitted to the arbitrator, where
there are no findings on the contentious issues in the award. If there
are no findings on the contentious issues in the award or if any
findings are recorded ignoring the material evidence on record, the
same are acceptable grounds for setting aside the award itself.
Under the guise of either additional reasons or filling up the gaps in
the reasoning, the power conferred on the Court cannot be relegated
to the arbitrator. In absence of any finding on contentious issue, no
amount of reasons can cure the defect in the award.
42. A harmonious reading of Sections 31, 34(1), 34(2-A) and 34
(4) of the Arbitration and Conciliation Act, 1996, make it clear that
in appropriate cases, on the request made by a party, Court can give
an opportunity to the arbitrator to resume the arbitral proceedings
for giving reasons or to fill up the gaps in the reasoning in support of
a finding, which is already rendered in the award. But at the same
time, when it prima facie appears that there is a patent illegality in
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the award itself, by not recording a finding on a contentious issue, in

such cases, Court may not accede to the request of a party for giving
an opportunity to the Arbitral Tribunal to resume the arbitral
proceedings.”
76. It becomes pertinent to note that I-Pay Clearing Services while
taking note of the decision rendered earlier in Dyna Technologies and
which had expounded the test of a “gap in the reasoning” as being a
justifiable ground to proceed under Section 34(4), significantly holds
that the provision can be resorted to only in respect of a finding already
existing or a conclusion recorded. The Supreme Court significantly
observed that the curative tool of “gap in the reasoning” or “additional
reasons” would only be liable to be invoked in a case where a finding
already exists. Their Lordships observed that Section 34(4) cannot be
resorted to where no finding has been returned at all. This since their
Lordships found that the absence of any reasoning would constitute a
ground which would justify the award itself being set aside. The
aforesaid principles as enunciated in I-Pay Clearing Services reinforces
the curial character of Section 34(4).
77. A reading of the report of I-Pay Clearing Services would indicate
that the appellant had also cited for the consideration of the Supreme
Court a judgment rendered by the Singapore Court of Appeals in AKN
v. ALC appeals31. The Singapore Court of Appeals explained the scope
of Article 34(4) in the following terms:—
“25. We deal briefly with the latter two points first. In relation to
the second point, although Art 34(4) might be enabling or
permissive (presumably with particular emphasis on the word “may”
contained in Art 34(4)) in that it enables the court to remit matters
in certain circumstances, we cannot see how this advances Mr Yeap's
position. The extent to which it enables the remission must be as
prescribed by the words of the section. In this regard, it is evident
that to avail itself of this power, the court must be satisfied that it is
appropriate to suspend the setting aside proceedings in order to give
the tribunal an opportunity to take such steps as may be required to
eliminate the grounds for setting aside. This is plainly a curative
provision which enables the court, faced with the fact there has been
some defect which could result in the award being set aside, to take
a course that might forestall that consequence. Though this is
discretionary, we see no basis for concluding just from the use of the
word “may” that there are no limits to the power to remit that is
conferred by the provision.
26. As to the third point, the argument that an expansive reading
is cognisant with the policy of minimal curial intervention is, with
respect, misplaced. First, a policy of minimal curial intervention
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nonetheless calls for such intervention whenever it is warranted; and

where it is warranted, there is no basis for suggesting that the court
should seek somehow to negate or mitigate the effects of its
intervention by referring the matter back to the same tribunal. Aside
from this, the argument seems to us to be internally inconsistent. An
expansive reading of Art 34(4) would mean more intervention - not
less - for the simple reason that the court would be able to confer
further jurisdiction on tribunals in more cases and this would almost
necessarily be contrary to the legitimate expectations of at least one
of the parties, namely the one with a grievance that has been found
to be valid. Finally, in our judgment, the expansive interpretation
that Mr Yeap urged upon us was simply incapable of being applied
without doing violence to the language used in Art 34(4) and indeed,
as we shall momentarily see, without breaking faith with the intent
of the drafters of the Model Law.
27. We turn now to the history of Art 34(4). In support of his
contention that the history of Art 34(4) spoke in favour of an
expansive approach, Mr Yeap placed particular emphasis on an
excerpt from the work of Mr Chan Leng Sun SC which, according to
Mr Yeap, suggests that the travaux préparatoires of the Model Law
indicate that Art 34(4) “was intended to preserve the national courts'
option to remit an award where it was deemed appropriate” : see
Chan Leng Sun SC, Singapore Law on Arbitral Awards (Academy
Publishing, 2011) at para 6.219. The full paragraph from the work in
question reads:
Nonetheless, it is clear from the travaux preparatoires of
the UNCITRAL Working Group that Article 34(4) of the
Model Law 1985 was intended to preserve national courts'
option to remit an award where it was deemed appropriate.
The UNCITRAL Analytical Commentary on Draft Text of a Model
Law on International Commercial Arbitration was more explicit
on the intent of Article 34(4):
Paragraph (4) envisages a procedure which is similar to the
‘remission’ known in most common law jurisdictions, although in
various forms. Although the procedure is not known in all legal
systems, it should prove useful in that in enables the arbitral
tribunal to cure a certain defect and, thereby, save the award
from being set aside by the Court.
Unlike in some common law jurisdictions, the procedure is not
conceived as a separate remedy but placed in the
framework of setting aside proceedings. The Court, where
appropriate and so requested by a party, would invite the arbitral
tribunal, whose continuing mandate is thereby confirmed, to take
appropriate measures for eliminating a certain remediable defect
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which constitutes a ground for setting aside under paragraph (2).

Only if such ‘remission’ turns out to be futile at the end of
the period of time determined by the Court, during which
recognition and enforcement may be suspended under
article 36(2), would the Court resume setting aside
proceedings and set aside the award.
[emphasis added in bold and bold italics]
28. The portion of the quote that we have highlighted in bold was
emphasised by Mr Yeap in his written submissions. However, later in
the same paragraph, which, to be fair, was also excerpted in Mr
Yeap's written submissions, it becomes clear from the portions in
bold italics that the “explicit intent” of Art 34(4) was that remission
was conceived as an alternative to setting aside (see the UNCITRAL
Analytical Commentary extracted in the previous paragraph).
29. Turning to the history of Art 34(4), it is equally difficult to
find support for Mr Yeap's proposition. In one of the earlier drafts,
the equivalent provision, which, at the time, was numbered Art 41
(4), read (excerpted in Holtzmann & Neuhaus at p 933):
If the court sets aside the award, [it may order that the
arbitration proceedings continue for re-trial of the case] [a party
may within three months request re-institution of the arbitration
proceedings], unless such measure is incompatible with a ground
on which the award is set aside.
30. When this draft was reviewed by the UNCITRAL Working
Group on International Contract Practices (“the Working Group”) in
its fifth session, the following was noted (Report of the Working
Group on International Contract Practices on the Work of its Fifth
Session, UN Doc A/CN.9/233 at paras 190-193, excerpted in
Holtzmann & Neuhaus at pp 936-937):
190. Divergent views were expressed as to the appropriateness
of retaining a rule along the lines of paragraph (4). Under one
view, the provision should be deleted since it dealt in an
insufficient manner with procedural questions which were
answered in a way not easily reconciled with the different
concepts of the various legal systems. It was also pointed out that
setting aside should be regarded as a remedy separate from
remission to the arbitral tribunal and that the wording between
the second square brackets and the following provisio lacked
clarity.
191. However, there was more support for retaining a provision
along the lines of paragraph (4), subject to various modifications
…
…
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193. The Working Group, after deliberation, requested the

Secretariat to prepare a revised draft …
31. The later draft (excerpted in Holtzmann & Neuhaus at p 938)
read:
(3) The Court, when asked to set aside an award, may also
order, where appropriate [and if so requested by a party], that the
arbitral proceedings be continued. Depending upon the [reason
for setting aside] [procedural defect found by the Court], this
order may specify the matters to be considered by the arbitral
tribunal and may contain other instructions concerning the
composition of the arbitral tribunal or the conduct of the
proceedings.
32. This, in turn, was reviewed by the Working Group which noted
the following in its sixth session (Report of the Working Group on
International Contract Practices on the Work of its Sixth Session, UN
Doc A/CN.9/245 at paras 154-155, excerpted in Holtzmann &
Neuhaus at p 940):
154. Divergent views were expressed as to whether paragraph
(3) should be retained. Under one view, the draft provision was
useful in that it provided some guidance on procedural questions
which were relevant in the case of remission. Under another view,
the provision should be deleted since remission was not known in
all legal systems and, in particular, the idea of orders or
instructions to an arbitral tribunal was not acceptable. Under yet
another view, the option of remission should be retained, without
the giving of orders or instructions as envisaged in the second
sentence; it was stated in support that this device would allow to
cure a procedural defect without having to vacate the award.
155. The Working Group, after deliberation, adopted this latter
view and requested the Secretariat to revise the provision
accordingly.
[emphasis added]
*********
34. We therefore disagree with Mr Yeap on this point. In our
judgment, the court has no power to remit an award after it has
been set aside. Not only is this founded on the plain words of Art 34
(4), but it also accords with good sense. Remission is a curative
option that is available to the court in certain circumstances where it
considers that it may be possible to avoid setting aside the award.
For that reason, remission, in the correct sense, will always be to the
same tribunal that made the award that is under the consideration of
the court……..”
78. From the aforesaid decisions which have been rendered on the
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subject, it is manifest that once the Court has been moved by way of
an application referable to Section 34(4), it must, at least prima facie,
be satisfied that the award suffers from a defect which is curable and
thus the ends of justice warranting the AT being accorded an
opportunity to take appropriate measures to eliminate the spectre of
the award itself coming to be set aside. The necessity of the Court
being satisfied in the first instance flows from the provision adopting
the phrase “the Court may where it is appropriate….”. However, as had
been explained by the Supreme Court in Dyna Technologies as well as I
-Pay Clearing Services, the suspension of the setting aside proceedings
and the remit to the AT in the meanwhile stands restricted to an
opportunity being accorded to it to attend to curable defects only. The
said provision clearly appears to be guided by the intent of the
Legislature to stave off the possibility of an award coming to be set
aside even though it may suffer from a defect or mistake which is
remediable.
79. The power conferred by Section 34(4) also cannot be viewed or
understood as empowering the AT to either review or reconsider
findings or conclusions that may have already been rendered. Such a
course clearly stands injuncted in light of the clear enunciation of the
limited review which stands conferred by Section 34(4) in I-Pay
Clearing Services. The structure of Section 34(4) thus appears to be
limited to an opportunity being afforded to the AT to rid the award of
defects which are manifest and can be remedied without the foundation
of the award or the various findings and conclusions recorded therein
being impacted. The remit to the AT in terms of the said provision also
cannot be read as a conferral of authority on the AT to reconsider or
modify a finding and which may entail what in legal terms is alluded to
as a “merit review”. It is within this limited window that a court could
possibly invoke Section 34(4) and consequently enable the AT to take
appropriate measures.
80. To discern the true scope of Section 34(4) and the
circumstances in which that provision may be invoked, let us examine
certain instances of least complexity which could fall within its ambit. It
would be apposite to briefly notice Section 33. The said section makes
provisions for a certain category of remedial or curial measures being
adopted by a party within 30 days of the award being rendered. While
Section 33 (1) (a) provides for correction of computational, clerical,
typographical or other errors of a similar nature, Section 33 (1) (b)
speaks of the power of the AT to give an interpretation on any particular
aspect of an award. The word interpretation as used in that provision
appears to be the conferment of a power on the AT to enter a
clarification or explanatory note on any aspect covered under the
award. Apart from the above, the AT in terms of Section 33(4) is
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empowered to pronounce an additional award on claims submitted but

not ruled upon.
81. Section 34(4) is undoubtedly and fundamentally curial in
character since the same is liable to be invoked in a situation where the
Court finds that the adoption of such a course would save the award
from being otherwise set aside. The grounds on which an award could
be set aside are stipulated in clauses (a) and (b) of Section 34(2). That
power has been understood and explained in M. Hakeem to stand
restricted to a measure relating to setting aside as opposed to variation
or modification, powers which were otherwise available with a court
under the 1940 Act. Therefore, what M. Hakeem proscribes under
Section 34(2) cannot be introduced by way of a side wind and read into
Section 34(4). Consequently, it must be held that if an award be found
to suffer from any of the illegalities which are spelt out in Section 34(2)
(a) or (b), it must suffer the fate of being set aside and cannot be
saved with the aid of Section 34(4).
82. That leaves one to decipher the true intent behind the
introduction of Section 34(4). In order to understand the true scope of
that provision one must balance the power of setting aside against the
power which is otherwise reserved by Section 34(4). If the power under
Section 34(2) be understood to be independent of and separate from
the power to afford an opportunity permitting the AT to rectify, the
meaning would be clear. Section 34(4) can only operate in a narrow
window which is ordained by the statute to exist outside of Section 34
(2). In the scheme of Section 34, sub-section (4) can only be
understood to be curative and remedial. It must consequently be
accorded a meaning which is distinct from a setting aside power which
is otherwise recognized under Section 34(2).
83. It could thus extend to the curative measures contained in
Section 33. It could also be recognized to stretch to Section 33(4).
However, it cannot extend to the AT undertaking a review of the award
or revisiting or revising its opinion which already stands recorded
therein. This would also be in accord with the decisions in Dyna and I-
Pay Clearing Services which had recognized that provision as extending
to a situation where the AT may have failed to provide adequate
reasons or where a gap in the reasoning is discerned. However, those
two decisions had also emphasized the narrow window within which
such recourse would be available and the folly of the same being
extended to a case where no reasons had been recorded. It would thus
stand confined to curative and remedial measures which could be
adopted by the AT without influencing or modifying the basic structure
or edifice of the award.
84. The power under Section 34(4) must thus be held to be confined
to an opportunity being accorded to the AT to correct typographical,
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arithmetical errors akin to those which are conceived in Section 33. It

could also extend to situations contemplated under Section 33(4). This
since an award rendered on a claim which has been overlooked would
essentially be a fresh award untainted by the adjudicatory proceedings
initiated by the AT. This would be a conceivable and justifiable ground
to resort to Section 34(4) bearing in mind the plain language and
intent underlying Section 32(3) of the Act. It becomes pertinent to note
that the mandate of the AT terminates upon the happening of any one
of the contingencies stipulated in Section 32. Thus, while ordinarily
arbitral proceedings would terminate upon the final award being
rendered or where no steps in terms of Section 33 are initiated, Section
32(3) makes the closure of proceedings subject to a court framing a
direction in terms of Section 34(4). The Section 34(4) power,
undoubtedly, is one which would be invoked only after the award has
been rendered. However, in a case where the AT has failed or omitted
to rule upon a claim, the Court may exercise its authority under Section
34(4) rather than being compelled to set aside the award merely on the
ground that the AT had failed to rule on one of the various claims laid
before it. Courts may adopt such a course provided the claim on which
the AT is being invited to render its award is independent and the
question of entitlement relating thereto not connected to other parts of
the award.
85. Steps in terms of Section 34(4) can clearly be taken where the
AT is required to provide additional reasons or fill in gaps in the line of
reasoning set forth in the award subject to the cautionary note entered
by I-Pay Clearing Services. The reasoning would necessarily have to
rest on material already existing on the record of the AT. The Court
further notes that while it was urged that evident fallacies could also be
envisaged as falling within the Section 34(4) power, the argument
though attractive, especially when viewed in light of the likely prejudice
to be caused to parties in the sense of they being constrained to initiate
proceedings afresh, it would be imprudent to concur to the aforesaid
submission as broadly articulated for the following reasons.
86. A curative alternative, which Section 34(4) has been understood
to represent, cannot be invoked to call upon the AT to review a finding
or conclusion that stands rendered or recorded. The examination of a
plea of apparent errors or fallacies would necessarily require the AT to
revisit its conclusions on merits. An assertion of an ex-facie error may
also not and invariably be free of disputation. While apparent mistakes
in respect of which parties are ad idem may fall within the ken of
Section 34(4), it would be impermissible in the scheme of that
provision to acknowledge a mistake or error apparent, as those phrases
are legally understood, as constituting valid grounds for application of
Section 34(4) de hors the facts of a particular case. Ultimately, whether
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the mistake or error is one which is clearly evident and would merit
rectification would be a subject matter of contestation and the position
of parties in a particular case. The acceptance of the aforesaid
submissions may lead courts down a perilous path and open a further
floodgate of judicially recognised grounds to assail an award. If the
delicate and nuanced balance which is sought to be struck by the
Legislature between the power of setting aside and the curial measures
which are envisaged in Section 34(4) is to be maintained, wisdom lies
in restricting its essay within the narrow confines as enunciated above.
D. CONCLUSIONS
87. The Court thus records its conclusions as follows:—
A. While attempting to answer the issues flagged above, we must at
the outset, acknowledge the shift in legislative policy which
underlies the Act and which mandates intervention by courts to
be minimal. This flows from the recognition of the theory that
once parties have agreed to the resolution of their disputes by an
alternative adjudicatory forum, courts must, as a matter of first
principle, refrain from interfering with the same except on the
limited grounds that the statute recognises. Courts are thus
obliged to bear in mind the principle of minimalist intervention
insofar as awards are concerned.
B. However, at the same time while courts are enjoined to follow the
minimalist intervention route, it would clearly be a travesty of
justice if courts were to fail to intervene where circumstances
warrant and demand corrective measures being adopted. It is
these compulsions which have led to courts evolving the serious
irregularity or the patent illegality grounds to interfere with an
award. Section 34 is a clear and unequivocal embodiment of the
Legislature's intent to balance these competing facets of
arbitration.
C. Undisputedly, Section 34(2)(a)(iii) speaks of a part of an award
being exorcised from the rest. The Court finds no justification to
confer too much credence on Article 34 of the Model Law
ultimately failing to allude to a partial setting aside power even
though that was provisioned for in explicit terms in draft Articles
29, 30, 40 and 41. This since neither the Working Group Reports
nor the contemporaneous material that we have noticed
hereinbefore seem to suggest a conscious deletion of that power.
The considerable material, on the aspects surrounding partial
setting aside that we have had an occasion to review, does not
evidence any deliberation or discussion which may have
predicated or actuated its deletion. The said material is also not
indicative of any principled decision that may have been taken by
member nations for deletion of the partial setting aside power. Its
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absence from Article 34 which came to be ultimately adopted

stands lost in a mist of conjecture.
D. We find that the key to understanding the intent underlying the
placement of the Proviso in sub-clause (iii) of Section 34(2)(a) is
in the nature of the grounds for setting aside which are spoken of
in clause (a). As would be manifest from a reading of the five sub-
clauses which are positioned in Section 34(2)(a), those constitute
grounds which would strike at the very heart of the arbitral
proceedings. The grounds for setting aside which are set forth in
clause (a) strike at the very foundation of validity of arbitration
proceedings. Sub-Clauses (i) to (v) thus principally constitute
grounds which would render the arbitration proceedings void ab
initio. Although the Section 34(2)(a)(iv) ground for setting aside
also falls in the same genre of a fundamental invalidity, the
Legislature has sought to temper the potential fallout of the award
being set aside in toto on that score.
E. The Proviso to sub-clause (iv) seeks to address a comprehensibly
conceivable situation where while some parts of the award may
have dealt with non-arbitrable issues or disputes falling outside
the scope of the reference, its other components or parts
constitute an adjudication which could have been validly
undertaken by the AT. The Proviso thus seeks to address such a
situation and redeems as well as rescues the valid parts of an
award. This saves the parties from the spectre of commencing
arbitral proceedings all over and from scratch in respect of all
issues including those which could have validly formed part of the
arbitration.
F. The grounds for setting aside encapsulated in Section 34(2)(b) on
the other hand relate to the merits of the challenge that may be
raised in respect of an award and really do not deal with
fundamental invalidity. However, the mere fact that the Proviso
found in sub-clause (iv) of Section 34(2)(a) is not replicated or
reiterated in clause (b) of that provision does not lead one to an
inevitable conclusion that partial setting aside is considered alien
when a court is considering a challenging to an award on a ground
referable to that clause. In fact, the Proviso itself provides a
befitting answer to any interpretation to the contrary. The Proviso
placed in Section 34(2)(a)(iv) is not only an acknowledgment of
partial setting aside not being a concept foreign to the setting
aside power but also of parts of the award being legitimately
viewed as separate and distinct. The Proviso itself envisages parts
of an award being severable, capable of segregation and being
carved out. The Proviso is, in fact, the clearest manifestation of
both an award being set aside in part as well as an award
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comprising of distinct components and parts.

G. Undoubtedly, an award may comprise a decision rendered on
multiple claims. Each claim though arising out of a composite
contract or transaction may be founded on distinct facts and
flowing from separate identifiable obligations. Just as claims may
come to be preferred resting on a particular contractual right and
corresponding obligation, the decision which an AT may render on
a particular claim could also be based on a construction of a
particular covenant and thus stand independently without drawing
sustenance on a decision rendered in the context of another. If
such claims be separate, complete and self-contained in
themselves, any decision rendered thereon would hypothetically
be able to stand and survive irrespective of an invalidity which
may taint a decision on others. As long as a claim is not
subordinate, in the sense of being entwined or interdependent
upon another, a decision rendered on the same by the AT would
constitute an award in itself.
H. While awards as conventionally drawn, arranged and prepared
may represent an amalgam of decisions rendered by the AT on
each claim, every part thereof is, in fact, a manifestation of the
decision rendered by it on each claim that may be laid before it.
The award rendered on each such claim rules on the entitlement
of the claimant and the right asserted in that regard. One could,
therefore, validly, subject of course to the facts of a particular
case, be entitled to view and acknowledge them as binding
decisions rendered by the AT on separate and distinct claims.
I. Once an award is understood as consisting of separate
components, each standing separately and independent of the
other, there appears to be no hurdle in the way of courts adopting
the doctrine of severability and invoking a power to set aside an
award partly. The power so wielded would continue to remain one
confined to “setting aside” as the provision bids one to do and
would thus constitute a valid exercise of jurisdiction under Section
34 of the Act.
J. The Supreme Court in M. Hakeem, has enunciated the setting
aside power as being equivalent to a power to annul or setting at
knot an Arbitral Award. It has essentially held that bearing in
mind the plain language of Section 34 coupled with the Act
having desisted from adopting powers of modification or remission
that existed in the erstwhile 1940 Act, a court while considering a
challenge under Section 34 would not have the power to modify.
K. The expression “modify” would clearly mean a variation or
modulation of the ultimate relief that may be accorded by an AT.
However, when a Section 34 Court were to consider exercising a
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power to partially set aside, it would clearly not amount to a

modification or variation of the award. It would be confined to an
offending part of the award coming to be annulled and set aside.
It is this distinction between a modification of an award and its
partial setting aside that must be borne in mind.
L. The power to partially sever an offending part of the award would
ultimately depend on whether the said decision is independent
and distinct and whether an annulment of that part would not
disturb or impact any other finding or declaration that may have
been returned by the AT. The question of severability would have
to be decided bearing in mind whether the claims are
interconnected or so intertwined that one cannot be segregated
from the other. This for the obvious reason that if the part which
is sought to be set aside is not found to stand independently, it
would be legally impermissible to partially set aside the award. A
partial setting aside should not lead to a component of the award
being rendered vulnerable or unsustainable. It is only when the
award relates to a claim which is found to stand on its own and its
setting aside would not have a cascading impact that the Court
could consider adopting the aforesaid mode.
M. The Court is thus of the firm opinion that the power to set aside
an award in part would have to abide by the considerations
aforenoted mindful of the imperatives of walking a line which
would not dislodge or disturb another part of the award. However
as long as the part which is proposed to be annulled is
independent and stands unattached to any other part of the
award and it could be validly incised without affecting the other
components of the award, the recourse to partial setting aside
would be valid and justified.
N. From the contemporaneous material as well as the decisions
rendered on the subject, it is manifest that once the Court has
been moved by way of an application referable to Section 34(4), it
must, at least prima facie, be satisfied that the award suffers from
a defect which is curable and thus the ends of justice warranting
the AT being accorded an opportunity to take appropriate
measures to eliminate the spectre of the award itself be coming to
be set aside. The necessity of the Court being satisfied in the first
instance flows from the provision adopting the phrase “the Court
may where it is appropriate….”.
O. However, as had been explained by the Supreme Court in Dyna
Technologies as well as I-Pay Clearing Services, the suspension of
the setting aside proceedings and the remit to the AT in the
meanwhile stands restricted to an opportunity being accorded to
it to attend to curable defects only. The said provision clearly
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appears to be guided by the intent of the Legislature to stave off

the possibility of an award coming to be set aside even though it
may suffer from a defect or mistake which is remediable.
P. The power conferred by Section 34(4) also cannot be viewed or
understood as empowering the AT to either review or reconsider
findings or conclusions that may have already been rendered.
Such a course clearly stands injuncted in light of the clear
enunciation of the limited review which stands conferred by
Section 34(4) in I-Pay Clearing Services. The structure of Section
34(4) thus appears to be limited to an opportunity being afforded
to the AT to rid the award of defects which are manifest and can
be remedied without the foundation of the award or the various
findings and conclusions recorded therein being impacted.
Q. The remit to the AT in terms of the said provision also cannot be
read as a conferral of authority on the AT to reconsider or modify a
finding and which may entail what in legal terms is alluded to as a
“merit review”. It is within this limited window that a court could
possibly invoke Section 34(4) and consequently enable the AT to
take appropriate measures.
R. Section 34(4) is undoubtedly and fundamentally curial in
character since the same is liable to be invoked in a situation
where the Court finds that the adoption of such a course would
save the award from being otherwise set aside. The grounds on
which an award could be set aside are stipulated in clauses (a)
and (b) of Section 34(2). That power has been understood and
explained in M. Hakeem to stand restricted to a measure relating
to setting aside as opposed to variation or modification, powers
which were otherwise available with a court under the 1940 Act.
S. Therefore, what M. Hakeem proscribes under Section 34(2) cannot
be introduced by way of a side wind and read into Section 34(4).
Consequently, it must be held that if an award be found to suffer
from any of the illegalities which are spelt out in Section 34(2) (a)
or (b), it must suffer the fate of being set aside and cannot be
saved with the aid of Section 34(4).
T. The Section 34(4) power could thus extend to the curative
measures contained in Section 33. It could also be recognized to
stretch to Section 33(4). However, it cannot extend to the AT
undertaking a review of the award or revisiting or revising its
opinion which already stands recorded therein. This would also be
in accord with the decisions in Dyna and I-Pay Clearing Services
which had recognized that provision as extending to a situation
where the AT may have failed to provide adequate reasons or
where a gap in the reasoning is discerned. It would thus stand
confined to curative and remedial measures which could be
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adopted by the AT without influencing or modifying the basic

structure or edifice of the award.
U. The power under Section 34(4) could also extend to situations
contemplated under Section 33(4). This since an award rendered
on a claim which has been overlooked would essentially be a fresh
award untainted by the adjudicatory proceedings initiated by the
AT. This would be a conceivable and justifiable ground to resort to
Section 34(4) bearing in mind the plain language and intent
underlying Section 32(3) of the Act. Section 32(3) makes the
closure of proceedings subject to a court framing a direction in
terms of Section 34(4). The Section 34(4) power, undoubtedly, is
one which would be invoked only after the award has been
rendered. However, in a case where the AT has failed or omitted
to rule upon a claim, the Court may exercise its authority under
Section 34(4) rather than being compelled to set aside the award
merely on the ground that the AT had failed to rule on one of the
various claims laid before it. Courts may adopt such a course
provided the claim on which the AT is being invited to render its
award is independent and the question of entitlement relating
thereto not connected to other parts of the award.
V. Steps in terms of Section 34(4) can clearly be taken where the AT
is required to provide additional reasons or fill in gaps in the line
of reasoning set forth in the award subject to the cautionary note
entered by I-Pay Clearing Services. The reasoning would
necessarily have to rest on material already existing on the record
of the AT.
W. The Court further notes that while it was urged that evident
fallacies could also be envisaged as falling within the Section 34
(4) power, the argument though attractive, especially when
viewed in light of the likely prejudice to be caused to parties in
the sense of they being constrained to initiate proceedings afresh,
it would be imprudent to concur to the aforesaid submission as
broadly articulated for the following reasons.
X. A curative alternative, which Section 34(4) has been understood
to represent, cannot be invoked to call upon the AT to review a
finding or conclusion that stands rendered or recorded. The
examination of a plea of apparent errors or fallacies would
necessarily require the AT to revisit its conclusions on merits. An
assertion of an ex-facie error may also not invariably be free of
disputation. While apparent mistakes in respect of which parties
are ad idem may fall within the ken of Section 34(4), it would be
impermissible in the scheme of that provision to acknowledge a
mistake or error apparent, as those phrases are legally
understood, as constituting valid grounds for application of
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Section 34(4) de hors the facts of a particular case.

Y. Ultimately, whether the mistake or error is one which is clearly
evident and would merit rectification would be a subject matter of
contestation and the position of parties in a particular case. The
acceptance of the aforesaid submissions may lead courts down a
perilous path and open a further floodgate of judicially recognised
grounds to assail an award.
Z. If the delicate and nuanced balance which is sought to be struck
by the Legislature between the power of setting aside and the
curial measures which are envisaged in Section 34(4) is to be
maintained, wisdom lies in restricting its essay within the narrow
confines as enunciated above.
88. Having ruled on the questions of law which stood raised, these
two cross petitions may now be placed before the concerned Roster
Bench for further consideration on 14.09.2023.
———
1
the Act

2
NHAI

3
(2021) 9 SCC 1

4
AT

5
UNCITRAL

6
Fourth Working Group Report

7
UNCITRAL

8
The 2001 Act

9
The 2017 Act

10
The 1996 NZ Act

11
The 2000 Act

12
The 1965 Act

13
The 1996 UK Act

14
The 1940 Act

15
2023 SCC OnLine SC 982
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16
2016 SCC OnLine Mad 10306

17
(2011) 5 SCC 758

18
2014 SCC OnLine Del 3426

19
2019 SCC OnLine TS 1765

20
2021 SCC OnLine Ker 5197

21
2009 SCC OnLine Bom 2021

22
2023 SCC OnLine Del 160

23
ICSID

24
ICSID Case No. ARB/81/2

25
4A_360/2011

26
2022 SCC OnLine Del 4613

27
(2006) 2 SCC 628

28
(2018) 11 SCC 328

29
(2019) 20 SCC 1

30
(2022) 3 SCC 121

31
[2015] SGCA 63

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