The recourse to a court against an arbitral award is governed by Section 34 of the Arbitration and Conciliation Act, 1996. The law is designed to ensure "minimal judicial intervention," meaning the court does not act as an appellate court to re-evaluate the merits or evidence of the case. Instead, it can only set aside an award on specific, exhaustive grounds.
The grounds are divided into two categories: those that the party must prove and those that the court can find on its own.
1. Grounds to be Proven by the Applicant [Section 34(2)(a)]
The party challenging the award must furnish proof of the following:
Incapacity of Parties: One of the parties to the arbitration agreement was under some legal incapacity (e.g., a minor or person of unsound mind) at the time of the agreement.
Invalidity of Agreement: The arbitration agreement is not valid under the law to which the parties have subjected it.
Lack of Proper Notice: The party was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was otherwise unable to present their case (violation of Natural Justice).
Beyond the Scope of Submission: The award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration.
Note: If the "bad" part of the award can be separated from the "good" part, only the part outside the scope will be set aside (Doctrine of Severability).
Irregular Composition/Procedure: The composition of the tribunal or the arbitral procedure was not in accordance with the agreement of the parties (unless such agreement conflicted with a non-derogable provision of the Act).
2. Grounds Found by the Court [Section 34(2)(b)]
The Court may set aside the award if it finds that:
Non-Arbitrable Subject Matter: The subject matter of the dispute is not capable of settlement by arbitration under Indian law (e.g., criminal offenses, matrimonial status).
Conflict with Public Policy of India: This is the most debated ground. As of 2026, "Public Policy" is strictly narrowed to:
Fraud or Corruption: The making of the award was induced by fraud or corruption.
Fundamental Policy of Indian Law: The award contravenes the core legal values of India.
Basic Notions of Morality or Justice: The award is so unfair that it shocks the conscience of the court.
3. Patent Illegality [Section 34(2A)]
Introduced by the 2015 Amendment for domestic arbitrations only:
An award can be set aside if it is vitiated by patent illegality appearing on the face of the award.
Limitation: It cannot be set aside merely because of an erroneous application of the law or by re-appreciating evidence. The illegality must go to the root of the matter.
4. Important Procedural Limitations
Time Limit (Section 34(3)): An application must be made within 3 months of receiving the award. A further delay of only 30 days can be condoned if "sufficient cause" is shown. After 120 days total, the court has no power to entertain the challenge.
No Power to Modify: In the landmark case of Project Director, NHAI v. M. Hakeem (2021), and reaffirmed in 2025/2026, the Supreme Court held that a court under Section 34 can only uphold or set aside an award. It cannot modify, rewrite, or vary the award (though recent 2025 rulings allow the "severance" of invalid parts if they are clearly separable).
Summary View
| Ground | Description | Applicable To |
| Section 34(2)(a) | Incapacity, Invalidity, Lack of Notice, Scope, Composition. | All Arbitrations |
| Section 34(2)(b) | Non-arbitrable, Public Policy (Fraud/Justice). | All Arbitrations |
| Section 34(2A) | Patent Illegality (Error on the face of the award). | Domestic Only |
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