SC asks Parliament to consider amending S. 34 of Arbitration and Conciliation Act, 1996 to consolidate all interim awards together

Supreme Court: Deciding the question as to whether an award delivered by an Arbitrator, which decides the issue of limitation, can be said to be an interim award, and whether such interim award can then be set aside under Section 34 of the Arbitration and Conciliation Act, 1996, the bench of R.F. Nariman and Navin Sinha, JJ observed that Parliament may consider amending Section 34 of the Act so as to consolidate all interim awards together with the final arbitral award, so that one challenge under Section 34 can be made after delivery of the final arbitral award.

They said:

“Piecemeal challenges like piecemeal awards lead to unnecessary delay and additional expense.”

Explaining the scheme of Section 32(1) of the Act, the bench said that as per the said provision, the arbitral proceedings would be terminated only by the final arbitral award, as opposed to an interim award, thus making it clear that there can be one or more interim awards, prior to a final award, which conclusively determine some of the issues between the parties, culminating in a final arbitral award which ultimately decides all remaining issues between the parties.

Though it was held that any point of dispute between the parties which has to be answered by the arbitral tribunal can be the subject matter of an interim arbitral award, the Court, however, added a note of caution and said:

“In an appropriate case, the issue of more than one award may be necessitated on the facts of that case. However, by dealing with the matter in a piecemeal fashion, what must be borne in mind is that the resolution of the dispute as a whole will be delayed and parties will be put to additional expense. The arbitral tribunal should, therefore, consider whether there is any real advantage in delivering interim awards or in proceeding with the matter as a whole and delivering one final award, bearing in mind the avoidance of delay and additional expense. Ultimately, a fair means for resolution of all disputes should be uppermost in the mind of the arbitral tribunal.”

The Court, hence, held that such an award, which does not relate to the arbitral tribunal’s own jurisdiction under Section 16, does not have to follow the drill of Section 16(5) and (6) of the Act but the Parliament may consider amending the relevant provision to consolidate all interim awards together with the final arbitral award. [Indian Farmers Fertilizer Co-Operative Limited v. Bhadra Products,  2018 SCC OnLine SC 38, decided on 23.01.2018]

One comment

  • Only interest as compensation is a meagre compensation. The price of properties go up exponentially and purchase of another property in same area becomes an impossible task. Hence compensation is to be enhanced.

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