Published on: 02 October 2023 at 10:43 IST
Court: Supreme Court of India
Citation: Batliboi Environmental Engineers V. Hindustan Petroleum (2023)
Honourable Supreme Court of India has held that ‘Public Policy’ under Section 34 of the Arbitration and Conciliation Act 1996 intent is to reject an Arbitral Award if it is in contravention of provisions of an enactment, since it would be contrary to the basic concept of justice. The concept of ‘public policy’ connotes a matter which concerns public good and public interest. An award which is patently in violation of statutory provisions cannot be held to be in public interest.
Thus, expanding on the scope and expanse of the jurisdiction of the court under Section 34 of the A&C Act, it was held that an award can be set aside if it is contrary to:
- Fundamental Policy of Indian law; or
- Interest of India; or
- Justice or Morality, or
- If it is Patently Illegal.
35. Under sub-clause (a) to sub-section (2) to Section 34 of the A&C Act, a court can set aside an award on the grounds in sub-clauses (i) to (v) namely, when a party being under some incapacity; arbitration agreement is not valid under the law for the time being in force; when the party making an application under Section 34 is not given a proper notice of appointment of the arbitrator or the arbitration proceedings, or was unable to present its case; and when the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement between the parties, unless such agreement was in conflict with the mandatory and binding non-derogable provision, or was not in accordance with Part I of the A&C Act. Sub-clause (iv) states that the arbitral award can be set aside when it deals with a dispute not contemplated by, or not falling within the terms of submission of arbitration, or it contains a decision on matters beyond the scope of submission to arbitration.
However, the proviso states that the decision in the matters submitted to arbitration can be separated from those not submitted, then that part of the arbitral award which contains the decision on the matter not submitted to arbitration can be set aside. In the present case, we are not required to examine sub-clauses to clause (a) to sub-section (2) to Section 34 of the A&C Act in detail. Hence, this decision should not be read as making any observation, even as obiter dicta on the said clauses.
Drafted By Abhijit Mishra