Section 34(4) of The Arbitration Act

To differentiate between ‘findings’ and ‘reasons’, Mr. K.V. Vishwanathan relied on Income Tax Officer, A-Ward, Sitapur v. Murlidhar Bhagwan Das, AIR 1965 SC 342. It is clear, “finding is a decision on an issue”. J. Ashoka v. University of Agricultural Sciences, (2017) 2 SCC 609 held, “reasons are the links between the materials on which certain conclusions are based and the actual conclusions.”

The discretionary power conferred under Section 34(4) is to be exercised where there is inadequate reasoning or to fill up gaps in reasoning. Where there are no findings on contentious issues, no Award can be remitted to Arbitrator. If there are no findings on contentious issues or if any findings are recorded ignoring material evidence on record, same are acceptable grounds for setting aside the Award itself. In absence of any finding on a contentious issue, no amount of reasons can cure the defect in the Award. A harmonious reading of Section 31, 34(1), 34(2A) and 34(4) of The Arbitration and Conciliation Act, 1996 makes it clear, in appropriate cases, on request made by a party, Court can give an opportunity to Arbitrator to resume Arbitral Proceedings for giving reasons or to fill up gaps in reasoning in support of a finding, which is already rendered in the Award. But at the same time, when it prima facie appears, there is a patent illegality in the Award itself, by not recording a finding on a contentious issue, in such cases, Court may not accede to request of a party for giving an opportunity to Arbitral Tribunal to resume Arbitral Proceedings.

– Hon’ble Justice R. Subhash Reddy, I-Pay Clearing Services Private Limited v. ICICI Bank Limited, [Civil Appeal No. 7 of 2022].