Can arbitral award under section 34(2)(a)(V) of the arbitration act be set aside because the composition of the arbitral tribunal was not following the agreement of parties?
Arbitration generally occurs when any dispute involving a contract contains a clause. Such a clause is signed to unravel any future prospective dispute through arbitration willingly. An arbitral/arbitration award is that the award granted within the decision made by the arbitration tribunal in an arbitration proceeding. An arbitral award can be monetary or non-monetary. It can be monetary, which is formed to pay a sum of cash from one party to the other, and it is non-monetary when no money must be paid. Still, it includes decisions like stopping a particular business practice or increasing unemployment perks and incentives.
Recently in a judgment by the Kerala High court, it was observed that awards are often put aside under Section 34(2)(a)(v) of the Act on the ground that the composition of the Arbitral Tribunal wasn't following the agreement of the parties. Suppose a plea of jurisdiction isn't taken before the Arbitrator as provided in Section 16 of the Act. In that case, such a plea can't be permitted to be raised in proceedings under Section 34 of the Act for setting aside the award unless and until good reasons are shown.
Facts of the Case
In this case, an appeal was filed under Section 37 of the Arbitration and Conciliation Act, 1996, challenging the correctness of the order or arbitral award of the III Additional District Judge, Kozhikode. Therefore the appellant asked to put aside the award of the Arbitrator on the same ground.
The appellant and the respondent were partners in the Jewellery business, and a partnership agreement was also executed duly. However, later on, the agreement was dissolved mutually but couldn't reach a consensus for settlement of accounts appointed by two Arbitrators. The appellant nominated arbitrator dismissed the respondent's claim, and the respondent and its Arbitrator found that at the time of dissolution of the partnership, 6481.580 grams of gold was the stocking trade, the respondent was entitled to half the said amount.
In the light of the different findings of the respective Arbitrators, both the Arbitrators then jointly nominated a third Arbitrator, who, after taking evidence, passed an award to the effect that the respondent is entitled to a compensation amount interest at the rate of 11% included. Aggrieved by the arbitral award, the appellant moved the District Court under Section 34 of the Act; however, the petition was dismissed.
In Conclusion, the court cannot undertake an independent assessment of the merits of the award and must only ascertain that the exercise of power under Section 34 has not exceeded the scope of the provisions mentioned in it; just in case an arbitral award has been confirmed by the court under Section 34, in an appeal under Section 37 the appeals court must be cautious.
 Arb.A.No. 53 of 2018
(This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, or Religion, Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts made to ensure the accuracy and correctness of the information published, White Code VIA Mediation and Arbitration Centre Foundation shall not be responsible for any errors caused due to human error or otherwise.)