Challenge to the Arbitral Award: Section 34

Section 34 is the only recourse against an arbitral award. It is not an appeal: the court does not rehear the dispute, does not re-appreciate the evidence and does not substitute its own view for that of the tribunal. It examines whether one of the grounds listed in the section is made out. The history of this provision is the history of Indian arbitration itself, because the width given to the public policy ground between 2003 and 2015 turned every award into the beginning of fresh litigation, and the amendment of 2015 together with the decision in Ssangyong restored the narrow compass the Act was meant to have.

1. The Nature of a Section 34 Proceeding

The proceeding is an application, not a suit. Section 34(1) provides that recourse to a court against an arbitral award may be made only by an application for setting aside in accordance with sub-sections (2) and (3). Four consequences follow.

No appeal on the merits. An error of fact is not a ground at all, and an error of law is a ground only within the narrow limits of patent illegality in a purely domestic award.
A summary procedure. The application is ordinarily decided on the basis of the record of the arbitration and affidavits. Issues are not framed as in a suit, and oral evidence is permitted only in the exceptional case where a ground cannot be established from the record, as where a party alleges facts outside it.
The burden lies on the applicant for the grounds in Section 34(2)(a), which must be furnished as proof by the party making the application; the grounds in Section 34(2)(b) may be found by the court itself.
The award is not stayed automatically. Since the amendment of 2015, the filing of an application does not by itself render the award unenforceable; a separate application for stay must be made under Section 36(2) and the court may grant it on conditions.

2. The Grounds

The two sets of grounds, the Explanations to the public policy ground, and patent illegality

2.1 Grounds to be proved by the party

Incapacity of a party. Section 34(2)(a)(i). Incapacity at the time the agreement was made, which goes to the foundation of the tribunal's authority.
Invalidity of the arbitration agreement. Sub-clause (ii). The agreement must be invalid under the law to which the parties have subjected it, or failing any indication, under the law for the time being in force. It is not enough that the underlying contract is invalid, because Section 16(1) treats the clause as separable.
Want of proper notice, or inability to present the case. Sub-clause (iii). The party was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was otherwise unable to present his case. This is the ground on which a breach of Section 18 is taken, including reliance by the tribunal on material the party never saw.
Award beyond the scope of the submission. Sub-clause (iv). The award deals with a dispute not contemplated by or not falling within the terms of the submission, or contains decisions on matters beyond its scope. The proviso saves the award to the extent that the decisions on matters submitted can be separated from those that were not.
Irregular composition or procedure. Sub-clause (v). The composition of the tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless that agreement was in conflict with a provision of Part I from which the parties cannot derogate; or, failing such agreement, was not in accordance with Part I.

2.2 Grounds the court may find

Section 34(2)(b) permits the court to set aside an award if it finds that the subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or that the award is in conflict with the public policy of India. Neither ground depends on proof by a party, and non-arbitrability is not waived by participation in the reference.

3. Public Policy of India

The expression is not defined, and its content has changed three times. Under the Foreign Awards Act, the Supreme Court in Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp (1) SCC 644 confined it to the fundamental policy of Indian law, the interests of India, and justice or morality. In Oil and Natural Gas Corporation Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705 the Court added patent illegality to public policy for domestic awards, and the ground widened further in Oil and Natural Gas Corporation Ltd. v. Western Geco International Ltd., (2014) 9 SCC 263, which read juristic principles and a Wednesbury standard into the fundamental policy of Indian law. The Law Commission recommended correction in its 246th Report, and the Amendment Act of 2015 inserted the two Explanations and moved patent illegality into a separate sub-section.

Explanation 1 confines the ground to three cases: the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81; the award is in contravention with the fundamental policy of Indian law; or it is in conflict with the most basic notions of morality or justice. Explanation 2 provides that the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.

📖 Associate Builders v. Delhi Development Authority, (2015) 3 SCC 49

Held: The Court systematised the public policy ground as it stood before the amendment. The fundamental policy of Indian law includes compliance with statutes and judicial precedents, the need for a judicial approach, natural justice, and the requirement that a decision not be perverse or so irrational that no reasonable person would have arrived at it. An award is against justice when it shocks the conscience of the court, and against morality when the contract or conduct is such as no person would consider acceptable. The arbitrator is the sole judge of the quantity and quality of the evidence, and the court does not sit in appeal over his findings.

Significance: The judgment remains the standard exposition of the vocabulary of Section 34, although the parts of it resting on Saw Pipes and Western Geco must be read subject to the amendment of 2015 and to Ssangyong.

📖 Ssangyong Engineering and Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131

Held: After the amendment of 2015, the ground of public policy is confined to the three cases in Explanation 1, and the expansion effected by Saw Pipes and Western Geco no longer represents the law. The fundamental policy of Indian law does not permit a review of the merits or a re-appreciation of evidence. The most basic notions of justice are offended where the award shocks the conscience of the court, as where a decision is based on no evidence at all, ignores vital evidence, or rests on material gathered behind the back of a party. Perversity is no longer available as an aspect of public policy; for a purely domestic award it is now covered by patent illegality under Section 34(2A).

Significance: This is the governing decision on the present content of Section 34, and any answer on public policy must be framed by reference to it rather than to the earlier cases.

4. Patent Illegality: Section 34(2A)

The sub-section, inserted in 2015, provides that an award arising out of an arbitration other than an international commercial arbitration may also be set aside by the court if it finds that the award is vitiated by patent illegality appearing on the face of the award. The proviso adds two limitations: an award is not to be set aside merely on the ground of an erroneous application of the law, or by re-appreciation of evidence.

	Public policy, s. 34(2)(b)(ii)	Patent illegality, s. 34(2A)
Available for	Every award, domestic and international commercial, and for foreign awards in the corresponding form in Section 48	A purely domestic award only; expressly excluded for international commercial arbitration
Content	Fraud or corruption; contravention of the fundamental policy of Indian law; conflict with the most basic notions of morality or justice	An illegality going to the root of the matter and apparent on the face of the award, including a decision contrary to the substantive law, to the terms of the contract, or a finding no reasonable person could reach
Merits	Explanation 2 excludes a review on the merits	The proviso excludes an erroneous application of law and re-appreciation of evidence
Typical illustration	An award procured by bribery; an award enforcing a transaction the law forbids	An award that gives a relief the contract excludes, or that awards a sum with no reasoning or evidence at all

⚠ The bar on re-appreciating evidence

Both provisions prohibit the court from re-examining the evidence, and the prohibition is the single most litigated aspect of Section 34. The arbitrator is the sole judge of the quantity and quality of the evidence, and the court does not interfere because it would have reached a different conclusion. What the court may do is ask whether there was any evidence at all, whether vital evidence was ignored, and whether the conclusion is one no reasonable person could have reached on the material. The distinction between a wrong appreciation of evidence and a decision resting on none is the line an answer on this topic should draw.

5. Limitation

The three months, the further thirty days, and what does or does not shift the start

Section 34(3) requires an application to be made within three months from the date on which the party making it received the arbitral award, or, where a request under Section 33 has been made, from the date on which that request is disposed of by the tribunal. The proviso permits the court, if satisfied that the applicant was prevented by sufficient cause, to entertain the application within a further period of thirty days, but not thereafter.

📖 Union of India v. Popular Construction Co., (2001) 8 SCC 470

Held: The words but not thereafter in the proviso to Section 34(3) amount to an express exclusion within the meaning of Section 29(2) of the Limitation Act, 1963, so Section 5 of that Act does not apply. The court has no power to condone delay beyond the further period of thirty days, however good the explanation.

Significance: The outer limit of three months and thirty days is absolute, which distinguishes Section 34 from ordinary civil proceedings and makes the date of receipt of the award under Section 31(5) a matter of critical importance.

Receipt by the party. Time runs from receipt of a signed copy by the party itself; delivery to an advocate or agent is not delivery to the party.
Section 14 of the Limitation Act applies. Time spent prosecuting a proceeding bona fide in a court without jurisdiction is excluded, since Section 14 is not inconsistent with the scheme of Section 34(3).
A defective filing may be no filing. An application filed without the award, without a statement of grounds, or as a bundle of blank pages may be treated as non est, so that limitation continues to run.
Section 34(5) and (6). The application is to be filed after issuing prior notice to the other party, accompanied by an affidavit endorsing compliance, and the court is to endeavour to dispose of it within one year from the date of that notice. The requirement of prior notice has been held to be directory rather than mandatory, so non-compliance does not by itself render the application liable to rejection.

6. What the Court May Do

The four possible outcomes, the limits on modification, and the appeal

6.1 Setting aside, in whole or in part

The ordinary consequence of a successful application is that the award is set aside and the parties are returned to the position they were in before it was made, with the claim available to be re-arbitrated subject to limitation; Section 43(4) excludes the period between the commencement of the arbitration and the date of the order setting aside in computing the limitation for fresh proceedings. Where the objectionable part is severable, the proviso to Section 34(2)(a)(iv) allows the rest of the award to stand.

6.2 Remission under Section 34(4)

On a written request by a party, the court may adjourn the proceedings for a period it determines, so as to give the tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the opinion of the tribunal will eliminate the grounds for setting aside. Three limits are established. The power is exercisable only on a written request by a party, and not by the court of its own motion. It must be exercised before the award is set aside, since once the award is gone there is nothing to remit. And it is available to cure a curable defect, such as inadequate or unintelligible reasons, rather than to supply reasons that were never given or to allow the tribunal to reconsider its conclusions.

6.3 Modification

📖 Project Director, NHAI v. M. Hakeem, (2021) 9 SCC 1

Held: Section 34 confers no power to modify an arbitral award. The section is modelled on Article 34 of the UNCITRAL Model Law, which provides only for setting aside, and the omission of the power of modification found in Sections 15 and 16 of the Arbitration Act, 1940 was deliberate. A court which considers an award defective may set it aside, wholly or in part, but may not substitute its own figure or relief.

📖 Gayatri Balasamy v. ISG Novasoft Technologies Ltd., 2025 INSC 605, decided on 30 April 2025

Held: A Constitution Bench held by a majority of four to one that the court has a limited power under Sections 34 and 37 to modify an award: by severing the invalid portion from the valid where the award is severable; by correcting clerical, computational or typographical errors apparent on the face of the record; by modifying post-award interest in some circumstances; and, in the case of the Supreme Court, under Article 142 of the Constitution, to be exercised with great care and within constitutional limits.

Significance: The decision qualifies M. Hakeem without displacing its central proposition. There is still no general power to modify; what exists is a narrow power to correct and to sever, and an answer should state both decisions and the relationship between them.

7. Section 34 Compared

Basis	Appeal from a decree	Application under Section 34
Scope	Rehearing on fact and law	Confined to the grounds in Section 34; no review on the merits
Evidence	The appellate court may re-appreciate the evidence	Re-appreciation is barred by Explanation 2 and by the proviso to Section 34(2A)
Relief	The decree may be reversed, varied or modified	The award may be dismissed, set aside wholly or in part, remitted, or modified only within the narrow limits recognised in 2025
Further recourse	Second appeal or letters patent appeal where available	An appeal under Section 37(1)(c) only, and thereafter special leave under Article 136
Time	Governed by the Limitation Act, 1963 with Section 5 available	Three months and a further thirty days, with Section 5 excluded

8. Related Topics and Provisions

Topic or provision	Connection
Making of the Arbitral Award: Sections 28 to 33	Reasons, correction and the award the challenge attacks
Arbitrability of Disputes	The ground in Section 34(2)(b)(i)
Conduct of Arbitral Proceedings: Sections 18 to 27	Equal treatment, notice and the opportunity to present the case
Sections 36 and 37, A&C Act, 1996	Enforcement, stay of the award and the appeal
Section 48, A&C Act, 1996	The corresponding grounds for refusing enforcement of a foreign award
Section 43(4), A&C Act, 1996	Exclusion of time where an award is set aside