S.34 Arbitration Act | Respect Arbitral Autonomy; Judicial Interference Should Be Minimal : Supreme Court

The Supreme Court reiterated that the courts cannot go beyond the scope of Section 34 of the Arbitration & Conciliation Act, 1996 (“Arbitration Act”) while deciding an application for setting aside of an award.

"the role of the court under Section 34 of the 1996 Act is clearly demarcated. It is a restrictive jurisdiction and has to be invoked in a conservative manner. The reason is that arbitral autonomy must be respected and judicial interference should remain minimal otherwise it will defeat the very object of the 1996 Act.”, the court added.

Holding thus, the bench comprising Justices Abhay S. Oka and Ujjal Bhuyan upheld the Madras High Court Division Bench's ruling, which had overturned the Single Judge's interference with the tribunal's decision based on a re-evaluation of the evidence.

Section 34 of the Arbitration Act limits the court's jurisdiction to setting aside awards only for patent illegality, public policy violation, or jurisdictional errors. Further, the Courts cannot re-examine the merits or substitute their view for the arbitrator's.

However, in the present case the Single Judge reinterpreted contract terms and reassessed evidence, which was beyond Section 34, the Court said.

“We are afraid learned Single Judge had clearly gone beyond the grounds provided in Section 34 of the 1996 Act to set aside the arbitral award. Learned Single Judge exceeded the jurisdiction under Section 34 of the 1996 Act. There was no justification for setting aside the arbitral award by taking a different view. View taken by the arbitral tribunal is certainly a possible and plausible view. A different interpretation of clause 26 other than the one taken by the arbitral tribunal is possible but that will not bring the challenge to the arbitral award within the four corners of Section 34. In any view of the matter, mere 34 setting aside of the arbitral award did not confer any benefit to the appellant. In the circumstances, the Division Bench was justified in reversing the order of the learned Single Judge under Section 37 of the 1996 Act.”, the court observed.

Court Cannot Re-Appraise Evidence If Arbitrator's View Is Plausible

“Scope of Section 34 of the 1996 Act is now well crystallized by a plethora of judgments of this Court. Section 34 is not in the nature of an appellate provision. It provides for setting aside an arbitral award that too only on very limited grounds i.e. as those contained in sub-sections (2) and (2A) of Section 34. It is the only remedy for setting aside an arbitral award. An arbitral award is not liable to be interfered with only on the ground that the award is illegal or is erroneous in law which would require re-appraisal of the evidence adduced before the arbitral tribunal. If two views are possible, there is no scope for the court to re-appraise the evidence and to take the view other than the one taken by the arbitrator. The view taken by the arbitral tribunal is ordinarily to be accepted and allowed to prevail. Thus, the scope of interference in arbitral matters is only confined to the extent envisaged under Section 34 of the Act. The court exercising powers under Section 34 has perforce to limit its jurisdiction within the four corners of Section 34. It cannot travel beyond Section 34. Thus, proceedings under Section 34 are summary in nature and not like a full-fledged civil suit or a civil appeal. The award as such cannot be touched unless it is contrary to the substantive provisions of law or Section 34 of the 1996 Act or the terms of the agreement.”, the court observed.

Accordingly, the Court dismissed the appeal.

Case Title: CONSOLIDATED CONSTRUCTION CONSORTIUM LIMITED VERSUS SOFTWARE TECHNOLOGY PARKS OF INDIA

Citation : 2025 LiveLaw (SC) 501

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Appearance:

For Petitioner(s) Mr. S.S. Rajesh, Adv. Mr. K.S. Mahadevan, Adv. Ms. Swati Bansal, Adv. Mr. Rangarajan R., Adv. Mr. Aravind Gopinathan, Adv. Mr. Rajesh Kumar, AOR

For Respondent(s) Mr. Vinay Mohan Sharma, Adv. Mr. Ravinder Kumar Yadav, AOR Mrs. Arti Anupriya, Adv. Mr. Kartikey, Adv. Mr. Paras Juneja, Adv. Mr. Vineet Yadav, Adv. Mr. Amir Yadav, Adv. Mr. Vinay Kumar Sharma, Adv. Ms. Bhawana Gadpandey, Adv.