On an analysis on the pre-amendment position of Section 34, the Supreme Court was of the view that such proceedings being summary in nature, have to be seen in light of the object of speedy disposal of such disputes and cannot ordinarily permit the adducing of evidence at the set aside stage. However, in certain exceptional circumstances, the parties would be permitted to adduce evidence to establish that one of the grounds set out in Section 34(2) were met, but not ordinarily. In Alpine for instance, the “exceptional circumstance” was the subsequent development of the refusal of the Authority to grant permission for amalgamation of plots.

The jurisprudence on the point is evolving. The Supreme Court in Fiza Developers and Inter-Trade Private Limited v. AMCI (India) Private Limited & Anr. observed that proceedings under Section 34 of the Act are single issue proceedings and any exercise to frame issues will only cause delay. It was also held that though these proceedings are summary in nature, Section 34 makes it clear that the burden is on the Applicant to prove the existence of one or more of the enumerated grounds of challenge contained therein, by adducing evidence in support of the grounds contained therein.

Fiza Developers was thereafter clarified by the Supreme Court in Emkay Global Financial Services Limited v. Girdhar Sondhi where it was held that an application for setting aside an Award will not ordinarily require anything beyond the record of the arbitrator, except if there are matters not contained in such record, which may be subsequently brought on record by way of an affidavit. Cross-examination will not ordinarily be permitted unless absolutely necessary, as such a procedure would defeat the object of Section 34 as a summary proceeding. This view was also approved by the Supreme Court in Canara Nidhi Limited v. M. Shashikala & Ors. in 2019. Significantly, the Supreme Court, in the above decisions, did not make a distinction between Section 34 pre and post amendment.

We are therefore left with a vague and undefined standard of “exceptional circumstances” that essentially allows a great degree of discretion to the set aside Court. This lacuna raises concerns that the above decisions may be relied on to stall or otherwise delay proceedings.

The authors are of the view that, keeping in mind the objective of “expeditious alternative binding dispute resolution process with minimal court intervention” as stated in Fiza, the “exceptional circumstances” contemplated in the above decisions, ought to be restricted only to subsequent developments, as was the case in Alpine, or such circumstances that could not have been reasonably placed before the arbitral tribunal at the appropriate stage. This would also ensure that judicial restraint, which is at the very core of arbitration, is followed.

This article was originally published in Mondaq on 20 March 2023 Co-written by: Karan Joseph, Partner; Dushyanth Narayanan, Associate. Click here for original article

Read Less-