I-PAY CLEARING SERVICES PRIVATE LIMITED versus ICICI BANK LIMITED

Citation: [2022] 2 S.C.R. 893 · Decided: 03-01-2022 · Supreme Court of India · Bench: R. SUBHASH REDDY · Disposal: Dismissed

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Judgment (excerpt)

[2022] 2 S.C.R. 893
893
I-PAY CLEARING SERVICES PRIVATE LIMITED
v.
ICICI BANK LIMITED
(Civil Appeal No. 7 of 2022)
JANUARY 03, 2022
[R. SUBHASH REDDY AND HRISHIKESH ROY, JJ.]
Arbitration and Conciliation Act, 1996 – s.34(4) – Arbitral
award passed by sole arbitrator pursuant to dispute between parties
being referred to arbitration u/s.8 over claims made by appellant –
Petition filed by respondent u/s.34(1) for setting aside the award –
In the same petition, Notice of Motion moved by appellant for
remitting the matter to Sole Arbitrator u/s.34(4) – The Arbitrator
had framed five points for determination and point no.1 was,
“Whether the contract was illegally and abruptly terminated by the
respondent?” – High Court held that unless and until a finding was
recorded on point no.1 first, the Arbitrator should not have
proceeded to record findings on the claims made by appellant, as
such, the Arbitrator committed jurisdictional error – High Court
held that the defect in the award was not curable and accordingly
dismissed the Notice of motion taken out by appellant u/s.34(4) –
Propriety – Held: Proper – Merely because an application is filed
u/s.34(4) by a party, it is not always obligatory on the part of the
Court to remit the matter to Arbitral Tribunal – Discretionary power
conferred u/s.34(4), is to be exercised where there is inadequate
reasoning or to fill up the gaps in the reasoning, in support of the
findings which are already recorded in the award – Under guise of
additional reasons and filling up the gaps in the reasoning, no award
can be remitted to the Arbitrator, where there are no findings on the
contentious issues in the award – A harmonious reading of ss.31,
34(1), 34(2A) and 34(4), make it clear that in appropriate cases,
on request made by a party, Court can give an opportunity to the
arbitrator to resume the arbitral proceedings for giving reasons or
to fill up the gaps in the reasoning in support of a finding, which is
already rendered in the award – But at the same time, when it prima
facie appears that there is a patent illegality in the award itself, by
not recording a finding on a contentious issue, in such cases, Court
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SUPREME COURT REPORTS
[2022] 2 S.C.R.
may not accede to the request of a party for giving an opportunity
to the Arbitral Tribunal to resume the arbitral proceedings.
Judgment / Order – ‘finding’ and ‘reasons’ – Difference
between – Held: Finding is a decision on an issue whereas reasons
are the links between the materials on which certain conclusions
are based and the actual conclusions.
Dismissing the appeal, the Court
HELD: 1. From a reading of Section 34(4) of the Arbitration
and Conciliation Act, 1996, it is clear that on receipt of an
application under sub section (1), in appropriate cases on a
request by a party, Court may adjourn the proceedings for a period
determined by it in the order to give the Arbitral Tribunal an
opportunity to resume the arbitral proceedings or to take such
other action as in the opinion of Arbitral Tribunal, will eliminate
the grounds for setting aside the arbitral award. [Para 17][904-
B-D]
2. When it is the specific case of the respondent that there
is no finding at all, on point no.1 viz. “whether the contract was
illegally and abruptly terminated by the respondent?”, remission
under Section 34(4) of the Act, is not permissible. Section 34(4)
of the Act, can be resorted to record reasons on the finding already
given in the award or to fill up the gaps in the reasoning of the
award. There is a difference between ‘finding’ and ‘reasons’.
Finding is a decision on an issue whereas reasons are the links
between the materials on which certain conclusions are based
and the actual conclusions. In absence of any finding on point
no.1, as pleaded by the respondent and further, it is their case
that relevant material produced before the Arbitrator to prove
‘accord and satisfaction’ between the parties, is not considered,
and the same amounts to patent illegality, such aspects are to
be considered by the Court itself. It cannot be said that it is a
case where additional reasons are to be given or gaps in the
reasoning, in absence of a finding on point no.1 viz. “whether
the contract was illegally and abruptly terminated by the
respondent?” [Para 20][905-H; 906-A-D]
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3. Section 34(4) of the Act itself makes it clear that it is the
discretion vested with the Court for remitting the matter to
Arbitral Tribunal to give an opp

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