Arbitration award can be set aside in terms of section 34 and under process of law; Hon’ble Supreme Court on examining various judgments and situations provided simple principles for setting aside arbitral award.
Section 34 of the Arbitration and Conciliation Act, 1996 provides provision for setting aside arbitral award.
Supreme Court in Delhi Development Authority V S Sharma and Co10 had very exhaustively examined various judgments and situations in which an arbitration award gets vitiated for being set aside in terms of section 34 of the Arbitration and Conciliation Act, 1996, and provided following principles:
(1) An award, which is (i) contrary to substantive provisions of law, or (ii) the provisions of the Arbitration and Conciliation act 1996, or (iii) against the terms of the respective contract, or (iv) patently illegal, or (v) prejudicial to the rights of the parties, is open to interference by the Court under section 34 (2) of the Act.
(2) Award could be set aside if it is contrary to (a) fundamental policy of Indian Law, or (b) the interest of India, or (c) justice or morality
(3) The award could also be set aside if it is so unfair and unreasonable that it shocks the conscience of the Court.
(4) It is open to the Court to consider whether the award is against the specific terms of contract and if so, interfere with it on the ground that it is patently illegal and opposed to the public policy of India.
