Section 34 of The Arbitration Act III

We need to be cognizant of the fact that Arbitral Awards should not be interfered with in a casual and cavalier manner, unless the Court comes to a conclusion that the perversity goes to the root of the matter, unpardonable under Section 34, without there being a possibility of an alternative interpretation which may sustain the Arbitral Award.

The mandate under Section 31(3) is to have reasoning which is intelligible, adequate and which can, in appropriate cases, be even implied by the Courts from a fair reading. The Court while exercising jurisdiction under Section 34 has to adjudicate the validity of the Arbitral Award based on the degree of particularity of reasoning required, having regard to the nature of issues falling for consideration. The degree of particularity cannot be stated in a precise manner as the same would depend on the complexity of the issue.

Courts are required to be careful while distinguishing between inadequacy of reasons and unintelligible reasons. Even if the Court comes to a conclusion that there were gaps in the reasoning for the conclusions reached, the Court needs to have regard to the documents submitted and the contentions raised before the Arbitral Tribunal so that inadequate reasons are not set aside in a casual and cavalier manner. In case of absence of reasoning the utility has been provided under of Section 34(4) to cure such defects. When there is complete perversity in the reasoning then only it can be challenged under the provisions of Section 34.

Hon’ble Justice N.V. Ramana, M/s. Dyna Technologies Pvt. Ltd. v. M/s. Crompton Greaves Ltd., [Civil Appeal No. 2153 of 2010].