Inox Air Products pvt.ltd.  v Air Liquide North India 

Introduction:- 

The case of Inox Air Products pvt.ltd v Air Liquide North India pvt.ltd , involves an application by the respondent under Section 34(4) of the Arbitration & Conciliation Act,1996 to seek an adjournment for a fixed period of time , in order to give the Arbitral Tribunal an opportunity to resume the arbitration proceedings to eliminate the ground for setting aside the Arbitral award relating to non- consideration of petitioner’s documents. This was a commercial arbitration case and the judgement of this case was produced on 24^th March,2023.

Facts of the case:- 

1. The facts that are not in dispute are that there was a Sale and Purchase Agreement dated 14^th / 19^th December,2009 entered into between the petitioner and the respondent with the respondent being the seller and petitioner being the buyer and the respondent was to supply Liquid Oxygen and Liquid Nitrogen to the petitioner.
2. Disputes arose between the parties and an Arbitrator was appointed by this court. The respondent had made various claims before the learned Arbitrator along with the interest thereupon. The claims were of ₹41,73,747/- under a debit note dated 11.08.2011/16.08.2011 and the other claim of ₹1,87,62,502/- under a debit note dated 07.11.2012/19.10.2012.
3. The petitioner had disputed those claims and had also filed a counter claim of ₹5,39,79,500/- .
4. The affidavits of evidence were filed by the parties and the statement of respondent’s witnesses commenced.
5. Unfortunately, during the course of proceedings, the learned Arbitrator passed away and because of which the court had ordered a substitute Arbitrator.
6. The learned Arbitrator considered eight issues for his consideration out of which issue no. 4 was whether the respondent proves that the claimant’s price undercutting and customer solicitation violated the contract or not.
7. After hearing the parties, the learned Arbitrator had passed and impugned award of ₹2,29,36,249/-  in favour of the respondent. This was challenged before the Hon’ble High Court Of Delhi on the ground that the Tribunal failed to consider the additional documents filed by the petitioner.
8. The respondent after seeking the notice moved an application under section 34(4) of the Arbitration & Conciliation Act,1996 , seeking to eliminate the ground for setting aside the award relating to non- consideration of the petitioner’s documents.

Issues Raised:- 

Whether the invocation of section 34(4) of the Arbitration & Conciliation Act,1996 by the respondent for eliminating the ground of challenge to the award by remanding the matter to the Tribunal justified in the light of facts and circumstances of the case?

Contentions of the Appellant:- 

1. The petitioner challenges that the learned Arbitrator had failed to consider the additional documents filed by the petitioner in Annexures A1 to A60.
2. The learned senior counsel, Mr. Jayant Bhushan submitted that the matter lies outside the scope of Section 34 (4) of the Act , the learned Arbitrator had to reconsider the award altogether in light of the documents in question.

Contentions of the Respondent:- 

1. The respondent supports the view taken in the impugned awards and also stated that the additional documents which were sought to be relied upon were disputed.
2. The respondent seeks to invoke section 34(4) of the Act, according to which the tribunal can be given an opportunity to resume proceedings and eliminate the ground for challenge.
3. The learned senior counsel for the respondent, Mr. Akhil Sibal submitted that the learned Arbitrator had disregarded the documents not only on the ground that there was lack of formal proof but also on the ground that they did not establish the case which the petitioner set out to prove .
4. The learned counsel for the respondent submitted that the impugned award suffers from a curable ambiguity and effort ought to be made to resolve it, rather than to adjudicate it as a ground under section 34 of the Act .

Legal Provisions :-

• Section 34 (4) of the Arbitration & Conciliation Act:- This section provides a discretionary power to the courts that they can adjourn the proceedings and remand the matter to the Tribunal for either resuming the proceedings or eliminating the grounds for setting aside the Arbitral award. 

An exception to this is that an application must be made by either of the parties.

Analysis :- 

In this case , there is no scarcity of the precedents on the legal resource that can be taken under section 34 (4) of the Act .

1. Mr. Sibal relied upon the decisions of the supreme court in the case of Som Datt Builders Ltd. V state of Kerala , where it was held that the Arbitral Tribunal must offer reasons and not just note the parties’ submission or reference documents. The award must provide the explanation and show the thought process behind the decision 
2. In Kinnari Mullick v GhanshyamDas Damini , the Supreme Court held that section 34 (4) of the Act cannot be invoked after the Arbitral award has already been set aside . This section does not entail the competence to remand the award to the Arbitral Tribunal.
3. The most recent judgement of the Supreme court cited by the learned counsel for the parties was of I – Pay clearing services pvt. Ltd V ICICI Bank Ltd. , wherein the Court clarified that Section 34 (4) of the Act can be invoked to enable the tribunal to provide reasoning or fil a lacuna in the reasoning in support of a finding rendered in the award , but not to render a finding which is altogether missed in the award.
4.  The decisions of these cases indicate that consideration of fresh material doesn’t fall within the grounds available. 

Judgement:- 

1. When the Court applied the principles established by the existing judgements on the current issue, the court was of the opinion that the provisions of the Section 34 (4) cannot be applied in the case .
2. This section cannot be used to allow an Arbitral Tribunal to revisit it’s finding. The issue of the petitioner was that of the non – consideration of material evidence and not that where the finding in the award has been rendered without adequate reasons.
3.  If the matter is taken back to the learned Arbitrator, the petitioner’s ground of challenge can be eliminated only if the learned Arbitrator considers the documents which he had failed to  consider and that is also not permitted under section 34 (4) of the Act . This is very much clear from the judgements in I- pay , Bentwood, coal industries pvt.ltd. and BTP Structural.
4. Infact , this would also fall foul of the principles established in Kinnari Mullick v GhanshyamDas Damini and Radha Chemicals case , which puts the recourse under section 34 (4) of the Act in the same place as remand but less effective because it is a remand without the power tj reach a different conclusion.
5. Also , in UEM India’s  case, the tribunal was only required to make a clarification with regard to the relief granted and thus the court was not persuaded by the contentions made by the respondent. 
6. The court had thus held that the exercise of power under this case would not be appropriate and also dismissed the respondent’s  application.

Conclusion:- 

The court had dismissed the respondent’s application and it was observed that even though there are cases in which it is mandatory for the tribunal to hear the cases again but fact based conclusion cannot be allowed to take away the scope and effect of section 34 (4) of the Act. 

This states that in no situation the Arbitral Tribunal is allowed to reopen the conclusion it has arrived at . 

Thus, in this case, the parties were left to bear their own costs. 

References:- 

• O.M.P. (COMM) 212/2018 & I.A. 6847/2018
• 2023 SCC Online Del 1778
• https://www.latestlaws.com/adr/arbitration/delhi-high-court-holds-that-section-34-4-cannot-be-used-to-enable-an-arbitral-tribunal-to-reopen-the-conclusion-reached-198338
• 2022 SCC OnLine Del 7167.
• 2021 SCC OnLine Del 3989.
• 2021 SCC OnLine Cal 518.
• 2012 SCC OnLine Bom 639.
•  (2018) 11 SCC 328.
•  Civil Appeal No. 10386 of 2018, Supreme Court of India, order dated 10 October 2018.
•  (2019) 20 SCC 1.
• https://jusmundi.com/en/document/decision/en-air-liquide-north-india-private-limited-v-inox-air-products-private-limited-judgment-of-the-delhi-high-court-2023-dhc-2092-friday-24th-march-2023

This article is written by Pakshita Sharma, student of The Law School University of Jammu, an intern at Legal Vidhiya.

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