Case Number: Civil Appeal No. 7 OF 2022 [arising out of S.L.P.(C) No.24278 of 2019]

Judges Name: Hon’ble Judges R. Subhash Reddy J, Hrishikesh Roy J.

Order dated: 03.01.2022

“Arbitral Award which lacks reasons cannot be remitted back to Arbitrator under Section 34(4) of the Arbitration and Conciliation Act, 1996.”

Facts of the Case:

• The I-Pay Clearing Services Private Limited (Appellant) entered into an agreement dated 04.11.2002 with the ICICI Bank Limited (Respondent) to provide technology and manage the operations and process smart card-based loyalty programs for Hindustan Petroleum Corporation Limited. The Appellant alleged that the Respondent abruptly terminated the agreement and the Appellant suffered losses of over Rs. 50 Crores.
• The Appellant initially filed a suit before the Hon’ble High Court of Bombay making a total claim of Rs. 95 Crores. Since there was an arbitration clause in the agreement, the Hon’ble High Court of Bombay referred the matter to arbitration.
• The learned Arbitrator passed an award dated 13.11.2017 directing the Respondent to pay Rs. 50 Crores with 18% interest from the date of the award till payment. The Respondent filed an application under Section 34(1) of the Arbitration and Conciliation Act, 1996 (“Act”). The Appellant filed a Notice of Motion under Section 34(4) of the Act to adjourn the proceedings for a period of three months and to issue directions to the learned Arbitrator to issue directions or reasons.
• The Hon’ble High Court of Bombay dismissed the application under Section 34(4) of the Act preferred by the Appellant. The Appellant has preferred an appeal against the decision of the Hon’ble High Court of Bombay before this Hon’ble Court.

Order:

The Hon’ble Supreme Court observed/held as follows:

• The Appellant argued that though the learned Arbitrator awarded compensation to the Appellant, he has not recorded detailed reasons. Thus, the matter can be remitted back to the learned Arbitrator for recording reasons under Section 34(4) of the Act.
• The Respondent contended that the learned Arbitrator failed to consider the evidence that there was accord and satisfaction among the parties via a letter dated 01.06.2010. The defect in the award is not curable and liable to be set aside.
• Section 34(4) of the Act clearly states that the discretion is vested with the Court for remitting the matter to Arbitral Tribunal to give an opportunity to resume the proceedings or not.
• Merely because an application is filed under Section 34(4) of the Act, it is not always obligatory on the part of the Court to remit the matter to Arbitral Tribunal.

The Hon’ble Supreme Court dismissed the Appeal.