Parties can agree for fresh Arbitration by same Arbitrator, where award is set aside u/s 34 of Arbitration & Conciliation Act: SC

Read Order: MUTHA CONSTRUCTION vs. STRATEGIC BRAND SOLUTIONS (I) PVT. LTD. 

Pankaj Bajpai

New Delhi, February 15, 2022: While dismissing a Special Leave Petition, seeking reference of arbitration dispute to another sole arbitrator, the Supreme Court held that once a consent order was passed by the Single Judge of the High Court on the basis of agreement of the parties to set aside the arbitral award and remand the matter to the Sole Arbitrator for a fresh reasoned award, then it is not open for parties to contend that the matter ought not to have been remanded to the same sole arbitrator. 

A Division Bench of Justice M.R Shah and Justice B.V Nagarathna therefore observed that the High Court has rightly dismissed the application as in the present case both the parties agreed to set aside the award and to remit the matter to the Sole Arbitrator for fresh reasoned Award.

Going by the background of the case, pursuant to a dispute that arose between the parties, the matter was referred to the Sole Arbitrator, who passed an award. Challenging the same, Mutha Construction (Petitioner) preferred the Commercial Arbitration Petition u/s 34 of the Arbitration and Conciliation Act, 1996, wherein the Single Judge by consent set aside the award and remanded the matter to the Sole Arbitrator to pass a fresh reasoned award. 

However, thereafter the petitioner moved an application before the Single Judge seeking modification of the previous order submitting that the consent had not been accorded for the matter being sent to the same Sole Arbitrator. Thereafter, on the limited aspect of consent to have the matter heard by the same sole arbitrator, the petitioner filed a Commercial Arbitration Appeal before the Division Bench, which came to be dismissed reserving liberty to the petitioner to seek review of the previous order. 

Going by the same, the petitioner filed a review petition before the Single Judge, which came to be rejected by observing that the order was passed by consent. Hence, present appeal. 

On considering the submissions, the Top Court opined that the Division Bench of the High Court has rightly dismissed the I.A. and has rightly refused to restore the appeal which was filed against the order passed by the Single Judge dated April 30, 2019. 

The order dated April 30, 2019 was a consent order by which the counsel on behalf of the parties agreed to set aside the award passed by the sole Arbitrator and to remand the matter to the sole Arbitrator to pass a fresh reasoned Award, found the Court. 

The Apex Court also noted that when an application was moved before the Single Judge that the order dated April 30, 2019 was not a consent order to remand the matter to the same Arbitrator, the same came to be rejected by the Single Judge by specifically observing that the Court does not accept that it was not a consent order to remand the matter to the same sole Arbitrator to pass a fresh reasoned Award. 

Once the Single Judge who passed the order was of the opinion that the same was a consent order, the matter ends there, as the Single Judge who passed the subject order has given the finding that it was a consent order, added the Court. 

Even considering the order dated April 30, 2019, the Apex Court observed that there does not appear to be any intention on the part of the parties to set aside the award and remand the matter to another sole arbitrator.

“In his order dated April 30, 2019, the Single Judge has specifically observed that “the parties intend to approach the sole arbitrator for a fresh reasoned award”. The Single Judge has also observed that “the parties intend to request the sole Arbitrator to publish a fresh award as expeditiously as possible”. From the aforesaid wordings the intention of the parties can be culled out that the award be set aside by consent and the matter be remanded to the same Sole Arbitrator for a fresh reasoned award”, added the Court.