Supreme Court of India Oil & Natural Gas Corporation Ltd vs Saw Pipes Ltd on 17 April, 2003 Equivalent citations: AIR 2003 SUPREME COURT 2629, 2003 AIR SCW 3041, 2003 (2) UJ (SC) 1035, (2003) 7 ALLINDCAS 147 (SC), 2003 (3) SLT 324, 2003 (7) ALLINDCAS 147, 2003 (3) COM LJ 1 SC, 2003 (4) SCALE 92, (2003) 4 JT 171 (SC), 2003 (2) ARBI LR 5, 2003 (2) LRI 348, 2003 (4) ACE 724, 2003 (5) SCC 705, (2003) 3 COMLJ 1, (2003) 4 JCR 148 (SC), 2003 UJ(SC) 2 1035, (2003) 4 MAD LW 482, (2003) 3 ANDHLD 82, (2003) 5 INDLD 849, (2003) 2 ARBILR 5, (2003) 2 RECCIVR 554, (2003) 1 WLC(SC)CVL 709, (2003) 2 CURCC 236, (2003) 3 SUPREME 449, (2003) 3 ICC 890, (2003) 4 SCALE 92, (2003) 3 GCD 1877 (SC), (2004) 1 BOM CR 245 CASE NO.: Appeal (civil) 7419 2001 of 518 PETITIONER: Oil & Natural Gas Corporation Ltd. RESPONDENT: SAW Pipes Ltd. DATE OF JUDGMENT: 17/04/2003 M.B. SHAH & ARUN KUMAR. JUDGMENT: J U D G M E N T Shah, J. COURT'S JURISDICTION UNDER SECTION 34 OF THE ARBITRATION AND CONCILIATION ACT, 1966 Before dealing with the issues involved in this appeal, we would first decide the main point in controversy, namely the ambit and scope of Court's jurisdiction in case where award passed by the Arbitral Tribunal is challenged under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act") as the decision in this appeal would depend upon the said finding. In other words whether the Court would have jurisdiction under Section 34 of the Act to set aside an award passed by the Arbitral Tribunal which is patently illegal or in contravention of the provisions of the Act or any other substantive law governing the parties or is against the terms of the contract? Learned senior counsel Mr. Ashok Desai appearing for the appellant submitted that in case where there is clear violation of Sections 28 to 31 of the Act or the terms of the Contract between the parties, the said award can be and is required to be set aside by the Court while exercising jurisdiction under Section 34 of the Act. Mr. Dushyant Dave, learned senior counsel appearing on behalf of respondent company submitted to the contrary and contended that the Court's jurisdiction under Section 34 is limited and the award could be set aside mainly on the ground that the same is in conflict with the 'Public Policy of India'. According to his submission, the phrase 'Public Policy of India' cannot be interpreted to mean that in case of violation of some provisions of law, the Court can set aside the award. For deciding this controversy, we would refer to the relevant part of Section 34 which reads as under: "34. Application for setting aside arbitral award (1) Recourse to a court against an arbitral award may be made only by an application for setting aside such award in accordance with subsection (2) and subsection (3). (2) An arbitral award may be set aside by the court only if (a) the party making the application furnishes proof that (i) a party was under some incapacity, or (ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or (iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration; Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or (b) the court finds that (i) the subjectmatter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or (ii) the arbitral award is in conflict with the public policy of India. ExplanationWithout prejudice to the generality of subclause (ii), it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81." For our purpose, it is not necessary to refer to the scope of self explanatory Clauses (i) to (iv) of subsection (2)(a) of Section 34 of the Act and it does not require elaborate discussion. However, clause (v) of subsection 2(a) and