If the arbitral award is vitiated by patent illegality, same is a ground for setting aside the award. - SC

Section 31, 34, 34(1), 34(2A) and 34(4) of Arbitration and Conciliation Act, 1996 – Appellant’s grievance  suffered losses of over Rs.50 crores, on account of loss of jobs of its employees, retrenchment compensation - made a total claim of Rs.95 crores against the respondent in the High Court - referred the dispute to arbitration under Section 8 of the Act  - ICICI Bank has been ordered to pay an amount of Rs.50m (Rupees Fifty Crores) in damages to Reliance Energy and interest @18% per annum from the date of award till the costs are paid. The award of the learned Sole Arbitrator was mainly questioned on the ground that it suffers from patent illegality, inasmuch as there is no finding recorded in the award to show that the respondent illegally and abruptly terminated the contract - Held - an arbitral award shall be made in writing and shall be signed by the members of the Arbitral Tribunal. The arbitral award shall state the reasons, upon which it is based, unless parties agree that no reasons are to be given, or the award is an arbitral award on agreed terms under Section 30 of the Act. If the arbitral award arising out of arbitrations other than international commercial arbitrations, is vitiated by patent illegality, same is a ground for setting aside the award.

Section 34(4) of the Arbitral Act gives the Court discretion to give an opportunity to resume proceedings or not. It is the discretion vested with the Court for remitting the matter to Arbitral Tribunal, where it is requested by a party. If there are no findings on 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. 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 order.

D.D: - January 3, 2022

I-Pay Clearing Services Private Limited  versus. ICICI Bank Limited