2024 INSC 478 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.7247 OF 2024

(Arising out of Special Leave Petition (C) No.16451 of 2023)

Bombay Slum Redevelopment Corporation

Private Limited                                        … Appellant

versus

Samir Narain Bhojwani          … Respondent

with

CIVIL APPEAL NO.7248 OF 2024

(Arising out of Special Leave Petition (C) No.20359 of 2023)

and

CIVIL APPEAL NO.7249 OF 2024

(Arising out of Special Leave Petition (C) No. 14238 of 2024)

(Diary No.40494 of 2023)

J U D G M E N T

ABHAY S. OKA, J.

1.The   application   for   permission   to   file   special   leave

petition is allowed.  Leave granted.

FACTUAL ASPECTS

2.These appeals take exception to the same judgment and

order   dated   7

th

  July   2023   passed   by   the   High   Court   of

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 1 of 35

Judicature at Bombay. Therefore, the same are being decided

together.  We are setting out a few factual aspects necessary

for deciding the appeals.  

3.On 31

st

 March 1993, the Maharashtra Housing and Area

Development Authority (MHADA) executed a lease agreement

in respect of the subject property in favour of Andheri Kamgar

Nagar Co­operative Housing Society Limited (for short, ‘the

Society’).  It is stated to be a society of slum dwellers.  The

Society, by the agreement dated 6

th

 October 1996, appointed

M/s.   Aurora   Properties   and   Investments   (for   short,   ‘M/s.

Aurora’)   as   the   property   developer   to   implement   a   slum

rehabilitation scheme.   M/s. Aurora was to construct 237

rehabilitation tenements for slum dwellers and 40 tenements

for project­affected persons (PAPs) free of cost and develop the

property   using   the   available   Floor   Space   Index   (FSI)   and

dispose of the same.  It appears that M/s. Aurora could not

discharge its obligations.  Therefore, by the agreement dated

22nd September 1999 (described as an agreement for the

grant   of   sub­development   rights),   the   society   appointed

Bombay   Slum   Redevelopment   Corporation   Private   Limited

(the appellant) as the developer.  Apart from taking over the

obligations of M/s. Aurora under the development agreement

dated 6th October 1996, the appellant corporation agreed to

hand   over   15,000   square   feet   of   built­up   area   in   the

redeveloped   property   to   M/s.Aurora   against   M/s.   Aurora

paying the cost of construction at Rs.600 per square foot.

After   that,   the   appellant   started   the   development   of   the

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 2 of 35

property.   On 10

th

 March 2003, an agreement was executed

by and between the appellant and one Samir Narain Bhojwani

(the respondent), under which the appellant retained 45% of

the   total   available   FSI   and   permitted   the   respondent   to

construct the free sale area by allotting him FSI to the extent

of the remaining 55%.  According to the appellant's case, the

respondent was appointed as a contractor to carry out the

construction activities of the said building on the site.  On 3

rd

July 2004, a deed of confirmation was executed to register the

agreement   dated   10

th

  March   2003.     Thereafter,   on   11

th

September   2009,   there   was   a   letter/tripartite   agreement

executed,   to   which   M/s.   Aurora,   the   appellant   and   the

respondent were parties under which it was agreed that the

appellant would provide 22,500 square feet of constructed

area to M/s. Aurora instead of 15,000 square feet, which was

agreed   to   be   allotted   under   the   agreement   dated   22

nd

September 1999.

4.The  dispute   began  on   22

nd

  March   2012   when   the

respondent, by his letter, alleged default against the appellant

as set out in the said letter.  After the letter was sent, there

was a prolonged correspondence, exchange of drafts of the

sale   agreements,   etc.     Ultimately,   the   respondent   filed   a

petition  before   the   High   Court   under   Section   11   of   the

Arbitration   and   Conciliation   Act,   1996   (for   short,   ‘the

Arbitration Act’).   An Arbitrator was appointed. The arbitral

proceedings concluded in the form of an award made by the

Arbitral   Tribunal   on   7

th

  September   2018   in   favour   of   the

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 3 of 35

respondent (the claimant before the Arbitral Tribunal). Most

of   the   claims   made   by   the   respondent   were   granted.   The

counter­claim   made   by   the   appellant   was   rejected.     The

appellant filed a petition under Section 34 of the Arbitration

Act before the High Court to challenge the award.   By the

judgment   dated   13

th

  September   2019,   the   learned   Single

Judge of the High Court allowed the petition under Section 34

of the Arbitration Act and proceeded to set aside the award on

various grounds, such as perversity, patent illegality, etc.  The

respondent   filed   an   appeal   under   Section   37(1)(c)   of   the

Arbitration   Act   to   challenge   the   judgment   of   the   learned

Single Judge.   By the impugned judgment, which set aside

the judgment of the learned Single Judge, the Division Bench

of the High Court passed an order of remand to the learned

Single Judge on the ground that the learned Single Judge did

not consider several issues.   The Division Bench referred to

an application made by the third parties. It directed that the

interim   arrangements   made   earlier   by   making   an

appointment  of the Court Receiver shall continue for four

weeks with a liberty to the parties to seek appropriate interim

orders   in   the   restored   petition   under   Section   34   of   the

Arbitration Act. Both the parties to the appeal under Section

37 have preferred these cross­appeals.

SUBMISSIONS

5.We have heard the learned senior counsel appearing for

the  parties   in  these   appeals.    The   learned   senior counsel

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 4 of 35

representing the appellant submitted that an appeal under

Section 37 of the Arbitration Act is essentially a continuation

of the proceedings under Section 34. The scope of interference

in an appeal under Section 37(1)(c) is narrower than what is

available under Section 34 of the Arbitration Act.   Reliance

was placed on various decisions of this Court in support of

the   said   submissions.     Another   contention   is   that   while

deciding the  appeal  under Section  37(1)(c),  the   Court  can

either set aside the award or affirm the award but cannot

remand the petition under Section 34 for a fresh hearing.  The

submission is that the provisions of Order XLI of the Code of

Civil Procedure, 1908 (for short, ‘the CPC’) concerning remand

do not apply to an appeal under Section 37 of the Arbitration

Act as the provisions of the CPC do not apply to such an

appeal.  Inviting our attention to the findings recorded by the

learned Single Judge, the learned senior counsel submitted

that   while   allowing   the   petition   under   Section   34   of   the

Arbitration   Act,   the   learned   Single   Judge,   by   a   detailed

judgment, has  dealt with all the  issues canvassed  by the

parties.   Pointing out the findings recorded by the Division

Bench in the impugned judgment, he submitted that it cannot

be said that the reasons recorded by the learned Single Judge

are not elaborate.   The  reasons are very detailed and more

than elaborate.  In short, the submission is that the remand

order is wholly unwarranted, and the Division Bench ought to

have decided the appeal under Section 37 of the Arbitration

Act on merits.

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 5 of 35

6.The appellant was the respondent before the Arbitral

Tribunal.     Even   the   claimant   Samir   Narain   Bhojwani

(described in this judgment as the respondent) has filed the

Civil Appeal arising out of Special Leave Petition (C) No.20359

of   2023.   The   intervenor   before   the   Division   Bench   in   the

appeal under Section 37 of the Arbitration Act has preferred a

Civil  Appeal   arising   out   of   Special   Leave   Petition  (C)Diary

No.40494 of 2023.  The plea by the respondent is naturally

for restoration of the award of the Arbitral Tribunal.  We have

heard the detailed submissions of the learned senior counsel

representing   the   respondent   (the   claimant)  and  the

intervenors. We are not referring to the submissions made by

them relating to the merits of the Award, considering the

limited scope of these appeals.

CONSIDERATION OF SUBMISSIONS

7. After considering the submissions made across the Bar,

we   find   that   the   issue   revolves   around   the   power   of   the

Appellate Court dealing with the appeal under Section 37(1)(c)

of the Arbitration Act to pass an order of remand to Section

34 Court.  Before we address the issue regarding the power of

the Appellate Court, we will need to refer to the award made

by the Arbitral Tribunal.  There are six different parts of the

award by the Arbitral Tribunal.   The operative part of the

award of the Arbitral Tribunal reads thus:

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 6 of 35

“.. .. .. .. .. .. .. .. .. .. .. .. ..

203. In view of the foregoing discussion,

the following Award is made:

I

(a) It is declared that the Development

Agreement dated  10th  March  2003  is

valid, subsisting and binding upon the

Claimant and the Respondent;

(b) It is declared that the Claimant is

entitled to retain possession of 15 Flats

in   Wing   A  (earmarked   for   the

Respondent)  and 0.63 Flat in Wing B

(earmarked for the Respondent),  till the

Respondent   complies   with   all   the

directions being given in this Award;

(c)  The   Respondent   is   directed   to

construct   at   its   own   cost   107   PAP

tenements   (or   any   higher   number   as

may be specified by SRA) at Shiv Shakti

Nagar,   Kandivali,   relatable   to   the

Andheri   Kamgar   Nagar   CHS   Scheme

and handover the same to SRA within 2

months from the date of this Award;

(d) The Respondent  is  further directed

to   obtain   from   SRA   a   certificate   of

discharge   of   the   Respondent   from   its

obligation of constructing 107 (or any

higher   number   of)   PAP   tenements

relatable to Andheri Kamgar Nagar CHS

Scheme, and handing over the same to

SRA, within 3 months from the date of

this Award;

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 7 of 35

(e) The Respondent is directed to obtain

further   Commencement   Certificate   for

construction  of   6th   to  22nd  floors   of

Wing C (further CC for Wing C) on the

basis of sanctioned building plans dated

21

st

 October   2010,   within   4  months

from the date of this Award;

(f) In case SRA requires the Respondent

to comply with any condition under any

Letter of Intent or under any Regulation

or Circular, including payment of any

premium, before issuance of further CC

for   Wing   C,   the   Respondent   shall

comply with such condition or direction

with  utmost  expedition and within one

month from the date of receipt of such

communication;

(g) Once the Respondent obtains further

CC   for   Wing   C   as   aforesaid,   the

Claimant shall at its own cost construct

6th to 22nd floors of Wing C as per the

sanctioned  building  plans  dated   2ist

October  2010,  within  18 months from

the   date   of   receiving  further  CC   for

Wing   C   and   after   completion   of

construction of Wing C, give intimation

thereof to the  Respondent  for applying

to SRA for Occupation Certificate  (OC)

for Wing C; 

(h)  The  Respondent  shall  obtain  from

SRA OC for Wing  C, within 2 months

from  the date  of  receipt  of  intimation

from   the   Claimant   as   per   the   above

direction;

(i) In case SRA requires the Respondent

to comply with any condition under any

Letter of Intent or under any Regulation

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 8 of 35

or Circular,  including payment  of any

premium,   before   issuance   of   OC   for

Wing C, the Respondent shall comply

with  such  condition  or   direction   with

utmost   expedition   and   within   one

month from the date of receipt of such

communication;

II

(j)  The   Respondent  shall   pay   the

Claimant Rs.67,00,000/­ (Rupees Sixty

Seven lakhs) along with Rs.26,00,000/­

(Rupees   Twenty   Six   Lakhs)  being

interest  @  18%  p.a.   from  19th  July,

2016  till  the   date   of  this  Award  and

further  interest  @  18%   p.a.   from   the

date   of   this   Award  till  the  date  of

payment / realization, within 3 months

from the date of this Award;

(k) The Respondent shall also pay the

Claimant   Rs.53,00,00,000/(Rupees

Fifty Three Crores) as compensation for

the period from 19

th

 July 2016 till the

date of this Award, being compensation

for   the   delay   on   the   part   of   the

Respondent in not obtaining further CC

for Wing C, within 4 months from the

date of this Award;

(I) The Respondent shall further pay the

Claimant   Rs.50,00,00,000/(Rupees

Fifty Crores) as compensation for delay

in obtaining further CC for Wing C for

the period of 24 months from the date

of   this   Award   till   issuance   of   OC   for

Wing C, within 4 months from the date

of issuance of OC for Wing C;

III

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 9 of 35

(m)   The   Respondent   is   directed   to

remove   all   encroachments   from   9.15

mtr wide road to the South Side of the

property under the said project; (n) The

Respondent is also directed to obtain at

its own cost, all necessary permissions

for separate Lease and/or Assignment

from MHADA in respect of the free sale

component   area   in   favour   of   the

Andheri   Kamgar   Nagar   Society,   and,

thereafter, in favour of the purchasers

of the Apartments or their Association

under the Indenture of Lease dated 31st

March 1993 from MHADA;

(o) The Respondent is further directed to

pay   Stamp   Duty   on   the   Indenture   of

Lease dated 31st March 1993 executed

by   MHADA   and   on   the   Development

Agreement for  Development dated  6th

October 1996 between Andheri Kamgar

Nagar   CHS   and   Aurora   Properties  &

Investments and also on the Agreement

for Sub Development dated

22nd September 1999 between Aurora

Properties  &  Investments   and   the

Respondent;

IV

(p) Till the OC is received for Wing C,

neither   the   Claimant   nor   the

Respondent shall sell, or in any other

manner dispose of, encumber, or create

any third party rights in any flat or any

parking space in Wing C;

(q)  Till  the OC is received for Wing C

and  till  the Respondent  complies with

the other directions given  in  Part II of

the operative portion of this Award, the

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 10 of 35

Respondent   and   the   persons   claiming

through the Respondent shall not sell/

re­sell or  in  any other  manner  dispose

of or encumber or create any third party

rights in any of the 15 flats in Wing A

(earmarked for the Respondent) and the

parking spaces related thereto;

V

(r)  It  is  declared  that   the   Letters   of

Allotment   purportedly  issued  by  the

Respondent   in  respect  of   31   flats   in

Wings   A   and   B   (earmarked  for   the

Respondent)  are   sham,   bogus,   illegal

and  null   and   void   ab­initio   and  not

binding on the Claimant;

(s)  It  is   further   declared   that  the

Agreements for Sale of 15 flats in Wing

A   (earmarked   for   the   Respondent)

purportedly   executed   by  the

Respondent   in   favor  of   the   Managing

Director   and   Directors   of   the

Respondent Company and their family

members are also sham and null and

void  ab­initio and not binding on the

Claimant;

(t) In case, within 4 months from the

date of this Award, the Respondent does

not  pay  the  Claimant  the  aforesaid

amount of Rs.54.03 crores or  does  not

surrender 3.63 flats in Wing B ( out of

those  earmarked  for  the   Respondent),

the   Claimant   shall   be   entitled   to  sell

0.63 flat in Wing

B (Flat No.4 on the pt floor) and 3 flats

in Wing B, out of the following 9 flats:­

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 11 of 35

► 2 Flats purportedly transferred by

the   Respondent   to   Mr.  Kiran

H.Hemani ­ M.D. of the Respondent,

► 7 flats purportedly transferred by

the   Respondent   to   Mr.   Priyank   K.

Hemani   ­   Director   of   the

Respondent;

(u)   The   Respondent   and   the   persons

claiming   through   the   Respondent   are

hereby restrained from selling/reselling,

or in any other manner disposing of or

encumbering or parting with possession

of or creating any third party rights, in

the   flats   in   Wing   B   purportedly

transferred to Mr. Kiran H. Hemani and

Mr. Priyank K. Hemai till identification

and intimation of 3 flats out of those 9

flats   in   Wing   B   is   conveyed   by   the

Respondent   to   the   Claimant   for   the

purpose of being available for sale by

the   Claimant   for   recovery   Rs.54.03

crores   as   directed   in   (h),   (i)  &  (r)

hereinabove   and   explained   in   detail

para 199 hereinabove;

(v)   In   case   the   Respondent   does   not

obtain further CC for Wing C within 4

months from the date of this Award, the

Claimant shall be entitled to sell the 15

flats   in   Wing   A   (earmarked   for   the

Respondent)   and   adjust   the   sale

proceeds   thereof   against   the   loss   of

profit from Wing C;

(w)   In   case   the   Respondent   obtains

further CC for Wing C and also obtains

OC for Wing C within the time limits

stipulated   in   this   Award,   but   the

Respondent does not pay the Claimant

Rs.50   crores,   as   directed   in   (j)  above

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 12 of 35

within   4   months   from   the   date   of

obtaining OC for Wing C, or does not

surrender   3.37   flats   to   the   Claimant

and the parking spaces related thereto,

within   the   said   period,   the   Claimant

shall   be   entitled   to   sell   off   3.37   flats

earmarked for the Respondent in Wing

C   and   the   parking   spaces   related

thereto;

VI

(x)   The   Respondent   shall   pay   the

Claimant   costs   of   this   proceeding

quantified at Rs.1,50,00,000/­ (Rupees

One  Crore  Fifty   Lakhs),  within  4

months   from   the   date   of   this   Award.

The Respondent shall bear its own costs

for this proceeding. 

205. The claims made by the Claimant

for the other reliefs not granted in this

Award   are  hereby  rejected.   All   the

Counter   Claims  made   by  the

Respondent are also rejected. 

206. It is clarified that this Award does

not deal with any of the 5 flats in Wing

A, 3 flats in Wing B and 4 flats in Wing

C, earmarked for Aurora  Properties  &

Investments,   for   which   orders   of

injunction  were passed by the  Bombay

High Court on 3rd and 17th December

2013 in Notice of Motion 147 of 2013,

and which injunction orders have been

restored  by   the   Supreme   Court  by

judgment and order  dated  2ist  August

2018 in Civil Appeal No. 7079 of 2018.

.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..”

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 13 of 35

8.While  deciding the petition under  Section 34 of  the

Arbitration Act, the learned Single Judge  has made an in­

depth discussion on the factual aspects and the submissions

of the learned counsel representing the parties. Paragraphs 1

to 35 of  his  judgment  deal with  the  factual  aspects  and

details about the directions issued by the Arbitral Tribunal

under the award.  Paragraphs 36 to 125, spanning over 45

pages,   record   the   submissions   made   by   the   parties,   and

paragraphs 126 to 194, covering 37 pages, are the reasons

recorded by the learned Single Judge.  There is a discussion

about the oral and documentary evidence adduced by the

parties.  From paragraphs 140 onwards, the learned Single

Judge   discussed   the   issue   of   jurisdiction   of   the   Arbitral

Tribunal to pass the award against the third parties who

were not parties to the arbitral proceedings.   The learned

Single Judge referred to the finding of the Arbitral Tribunal

that 31 agreements/allotment letters for the sale of flats were

sham and bogus and were not binding on the respondent.

The learned Single Judge found that no persons shown as

purchasers   under   the   agreement   were   parties   to   the

proceedings before the Arbitral Tribunal.  The learned Single

Judge   also   noted   that   these   31   flats   were   mortgaged   in

favour   of   various   Banks   and   Financial   Institutions.

Therefore, the learned Single Judge held that even the Banks

and Financial Institutions would be affected by the finding of

the Arbitral Tribunal that 31 flats under the sale agreements

were sham, bogus, null, and void.   Therefore, the learned

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 14 of 35

Single Judge held that the Arbitral Tribunal had exceeded its

jurisdiction.   The learned Single Judge also held that the

respondent before the Arbitral Tribunal (the appellant herein)

was entitled to sell the said 31 flats, and the purchasers

thereof were neither parties to the agreement containing the

arbitration clause nor claiming under the said agreement. 

9.The learned Single Judge also referred to that part of

the arbitral award, which provided that there would be a

charge   over   the   flats   held   by   the   appellant   herein.     The

learned Single Judge held that the charge on the properties

could be either created by operation of law or by agreement

of   the   parties,   and   in   this   case,   there   was   no   such

agreement.  Therefore, the learned Single Judge held that the

direction   to   create   the   charge   was  ex­facie  without   the

jurisdiction.  Thereafter, the learned Single Judge referred to

the reliefs granted by the Arbitral Tribunal in clauses (c) to

(l), (m) to (q), (t), (u) and (v) of paragraph 203 of the award.

According to the learned Single Judge, some of the reliefs

could have been granted only in the execution of the award.

Further, the learned Single Judge held that under clauses (c)

to (l) and  (m) to  (q) of  paragraph  203 of  the  award,  the

appellant herein was directed to carry out various acts to

obtain multiple permissions from the authorities within the

prescribed   time   and   based   on   such   compliance,   further

directions   were   issued   for   the   execution   of  multiple

documents, etc.   The authorities from whom the appellant

was directed to obtain various permissions were admittedly

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 15 of 35

not   parties   before   the   arbitral   proceedings.     The   learned

Single Judge also noted that the directions issued in the

abovementioned clauses required continuous supervision by

the Court.  Therefore, in view of the provisions of the Specific

Relief Act, 1963, such reliefs ought not to have been granted

by the Arbitral Tribunal.

10.The learned Single Judge also held that though specific

performance   was   sought   in   the   claim   made   before   the

Arbitral   Tribunal   based   on   the   Letter   of   Intent   dated   7

th

March   2012,   the   Arbitral   Tribunal   granted   specific

performance based on the Letter of Intent of 2010.   The

learned Single Judge also held that the learned Arbitrator or

the Court could not supervise whether the appellant can

shift 107 PAPs in its other properties as directed under the

award.     Further,   it   was   observed   that   the   direction   to

construct the 6th to 22nd floors could be implemented only

upon   completing   the   entire   chain   of   events,   such   as

obtaining permissions, shifting of PAPs, etc.   The learned

Single Judge held that the grant of specific performance in

the present case would be hit by Section 14 of the Specific

Relief   Act,   1963,   as   the   enforcement   of   such   a   contract

involves continuous supervision by the Court.  On perusing

the material on record, the learned Single Judge also held

that the respondent herein had not proved his readiness and

willingness to perform his obligations.   The learned Single

Judge held that since the relief of specific performance is

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 16 of 35

discretionary, the conduct of the respondent ought to have

been taken into consideration by the Arbitral Tribunal.  

11.The   learned   Single   Judge   dealt   with   the   award   of

damages in the sum of Rs.53 crores for the period from 19

th

July 2016 till the date of the award on account of the alleged

delay by the respondent.  The learned Single Judge held that

the evidence on record had been completely overlooked while

granting the relief of damages in the sum of Rs.53 crores.

The learned Single Judge recorded that the Arbitral Tribunal

referred to only a part of the depositions of the witnesses and

ignored the rest.  Further, the learned Single Judge held that

the delay on the part of the appellant in completing other

projects   was   neither   pleaded   nor   proved.     Moreover,   the

learned Single Judge held that even assuming that there was

a delay in completion of other projects on the part of the

appellant, that would be no ground for grant of relief for

specific  performance.     The  learned  Single  Judge  recorded

something about the approach of the Arbitral Tribunal in

paragraph 168.   The learned Single Judge objected to the

learned Arbitrator relying on the news report of some other

developer's project in the Times of India.  The learned Single

Judge noted that the news article was published after the

arguments were concluded.   Moreover, the learned Single

Judge found that relying upon the material, not forming part

of   the   record,   amounts   to   a   breach   of   the   principles   of

natural   justice.     A   clear   finding   recorded   by   the   learned

Single   Judge   is   that   the   learned   Arbitrator   has   applied

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different yardsticks to the evidence adduced by both parties.

Therefore, the Arbitral Tribunal did not treat the parties as

equals.

12.The learned Judge held that while dealing with the per

square feet rate of the flats for awarding a claim for damages,

the   Arbitral   Tribunal   completely   ignored   the   evidence   on

record, which showed that the respondent had sold the flats

at   much   lower   rates.     The   learned   Single   Judge   also

discussed   the   finding   recorded   while   rejecting   the

counterclaim.  The learned Single Judge held that though the

Arbitral Tribunal concluded that the building did not have a

load­bearing capacity of 22 floors, the respondent neither

pleaded nor proved the load­bearing capacity of the building.

The learned Single Judge also held that awarding payment of

interest on interest­free deposit was contrary to the terms of

the contract, which shows patent illegality.   However, the

learned Single Judge rejected the allegation of bias made by

the appellant against the learned Arbitrator. 

13.We   have   referred   to   only   material   findings   of   the

learned Single Judge by way of illustration to emphasise that

there is a very elaborate consideration of the merits of the

challenge to the award in the judgment of the learned Single

Judge.

14.Now, we turn to the judgment of the Division Bench in

the appeal under Section 37 of the Arbitration Act.   The

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 18 of 35

approach of the Division Bench is reflected in paragraph 4 of

the impugned judgment, which reads thus:

“4. Having heard the learned counsel

for   the  parties,  we   were   of   the

opinion  that the  impugned order is

required   to   be   set   aside   and   the

matter  needs to  be  remanded  to the

learned  Single   Judge   for  de   novo

consideration. We had  put it  to the

counsel   for   the  parties  that   the

appeal  can   be   remanded,  without

detailed reasons, by consent, keeping

all contentions open. The Appellant

was  ready  but   the   Respondent   was

not ready. Therefore, we are required

to give elaborate reason why remand

is  necessary.  In this context, we have

briefly referred to the core facts of the

case, the rival contentions, the award

and   the   impugned   order.   The   factual

backdrop   leading  to   the   dispute   is

narrated in detail in the Award and by

the learned Single Judge. The summary

of the factual position is as follows.

.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..”

                   (emphasis added)

In paragraphs 42 and 43, the Division Bench held thus:

“42. Even  otherwise,  question  would

arise  as to whether such a detailed

factual enquiry can be made   to set

aside  the  award.  To  reach  such   a

conclusion   that   it  suffers  from

perversity,  the   Award  had   to  be

carefully  analyzed to rule out  other

possibilities.  It   is   not   enough   to

merely  state   a   conclusion. Further,

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when such a conclusion can be reached

under  Section   34  of  the   Act  is   a

debatable  issue that also needs to  be

addressed.

43.  In   the   impugned   order   in

paragraphs   161   and   162   reference   is

made to the principle of law governing

the discretion to be used for grant of

specific performance. In paragraph 163,

it is stated that 'perusal of  the  record'

will indicate that the Appellant has not

proved that he was ready and willing.

When   the   Appellant   sought   to   argue

that   the   Appellant   was   ready   and

willing,   the   same   was   dealt   with   in

paragraph 164. The submission of the

Appellant   that   unless   the   Respondent

would have fully satisfied the Appellant

that he had made appropriate provision

for shifting 107 PAPs to some other plot

the   Appellant   was   not   required   to

proceed   with   the   construction   of

building,   was   not   accepted.   However,

there is no discussion as to why this

stand of the Appellant was rejected. 

.. .. .. .. .. .. .. .. .. .. .. .. .. .. .. . .. .. … ..”

                     (emphasis added)

In the impugned judgment, certain findings recorded by the

learned Single Judge have been criticised.   Ultimately, in

paragraphs   61   and   62   of   the   impugned   judgment,   the

Division Bench held thus:

“61.  Considering   that   the   impugned

order has not addressed several issues

raised   by   both   parties   before   setting

aside the Award, for the above reasons

we   are   inclined   to   set   aside   the

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 20 of 35

impugned   order   to   remand   the

proceedings   to   the   learned   Single

Judge. Further under the Award itself.

question now will remain for damages. 

62. Since we are of the opinion that the

petition filed by the Respondent needs

to   be   reconsidered,   we   refrain   from

going deeper into the controversy and in

our   discussion,   which   have   only

highlighted   as   to   why   the   impugned

order   is   unreasoned   and   therefore

needs   to   be   set   aside   for

reconsideration.

.. .. .. .. .. .. .. .. .. .. .. .. .. .. ..”

Thus, eventually, an order of remand was passed directing

the learned Single Judge to hear the petition under Section

34 afresh.

15.We   need   not   dwell   on   the   limited   scope   of   the

interference   in   the   petition   under   Section   34   of   the

Arbitration Act.  That position is very well settled.  However,

as far as the appeal under Section 37(1)(c) of the Arbitration

Act is concerned, in the case of MMTC Limited v. Vedanta

Limited

1

, in paragraph 14, this Court held thus:

“14. As   far   as   interference   with   an

order made under Section 34, as per

Section 37, is concerned, it cannot

be   disputed   that   such   interference

under   Section   37   cannot   travel

beyond   the   restrictions   laid   down

under Section 34. In other words, the

court   cannot   undertake   an

1 (2019) 4 SCC 163

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 21 of 35

independent   assessment   of   the

merits of the award, and must only

ascertain that the exercise of power

by   the  court  under  Section  34  has

not   exceeded   the   scope   of   the

provision.  Thus, it is  evident that in

case   an   arbitral   award   has   been

confirmed by the court under Section

34 and by the court in an appeal under

Section   37,   this   Court   must   be

extremely cautious and slow to disturb

such concurrent findings.”

                   (emphasis added)

In another decision of this Court in the case of UHL Power

Company   Limited   v.   State   of   Himachal   Pradesh

2

,  in

paragraph 16, it was held thus:

“16. As   it   is,   the   jurisdiction

conferred on courts under Section 34

of   the   Arbitration   Act   is   fairly

narrow, when it comes to the scope

of an appeal under Section 37 of the

Arbitration Act, the jurisdiction of an

appellate   court   in   examining   an

order, setting aside or refusing to set

aside   an   award,   is   all   the   more

circumscribed.   In MMTC

Ltd. v. Vedanta   Ltd.  [MMTC

Ltd. v. Vedanta Ltd., (2019) 4 SCC 163 :

(2019) 2 SCC (Civ) 293] , the reasons for

vesting  such  a  limited   jurisdiction  on

the   High   Court   in   exercise   of   powers

under Section 34 of the Arbitration Act

have   been   explained   in   the   following

words : (SCC pp. 166­67, para 11)

2 (2022) 4 SCC 116

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 22 of 35

“11.   As   far   as   Section   34   is

concerned,   the   position   is   well­

settled by now that the Court does

not sit in appeal over the  arbitral

award and may interfere on merits

on   the   limited   ground   provided

under Section 34(2)(b)(ii) i.e. if the

award is against the public policy of

India.   As   per   the   legal   position

clarified   through   decisions   of   this

Court prior to the amendments to

the 1996 Act in 2015, a violation of

Indian   public   policy,   in   turn,

includes   a   violation   of   the

fundamental policy of Indian law, a

violation   of   the   interest   of   India,

conflict with justice or morality, and

the existence of patent illegality in

the arbitral award. Additionally, the

concept of the “fundamental policy

of   Indian   law”   would   cover

compliance   with   statutes   and

judicial   precedents,   adopting   a

judicial approach, compliance with

the   principles   of   natural   justice,

and Wednesbury [Associated

Provincial   Picture   Houses

Ltd. v. Wednesbury Corpn., (1948) 1

KB   223   (CA)]   reasonableness.

Furthermore, “patent illegality” itself

has   been   held   to   mean

contravention of the substantive law

of India, contravention of the 1996

Act, and contravention of the terms

of the contract.”

                 (emphasis added)

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 23 of 35

In the decision of this Court in the case of Konkan Railway

Corporation   Limited   v.   Chenab   Bridge   Project

Undertaking

3

, in paragraph 18, it was held thus:

“18. At the outset, we may state that

the   jurisdiction   of   the   court   under

Section 37 of the Act, as clarified by

this   Court   in MMTC   Ltd. v. Vedanta

Ltd. [MMTC   Ltd. v. Vedanta   Ltd.,

(2019) 4 SCC 163 : (2019) 2 SCC (Civ)

293], is akin to the jurisdiction of the

court under Section 34 of the Act.

[Id, SCC p. 167, para 14:“14. As far as

interference with an order made under

Section   34,   as   per   Section   37,   is

concerned, it cannot be disputed that

such   interference   under   Section   37

cannot   travel   beyond   the   restrictions

laid down under Section 34. In other

words, the court cannot undertake an

independent assessment of the merits of

the award, and must only ascertain that

the exercise of power by the court under

Section 34 has not exceeded the scope

of   the   provision.”]  Scope   of

interference by a court in an appeal

under   Section   37   of   the   Act,   in

examining an order, setting aside or

refusing   to   set   aside   an   award,   is

restricted   and   subject   to   the   same

grounds   as   the   challenge   under

Section 34 of the Act.”

               (emphasis added)

16.The jurisdiction of the Appellate Court dealing with an

appeal under Section 37 against the judgment in a petition

3 (2023) 9 SCC 85

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under Section 34 is more constrained than the jurisdiction of

the Court dealing with a petition under Section 34.  It is the

duty of the Appellate Court to consider whether Section 34

Court has remained confined to the grounds of challenge

that  are   available   in   a   petition   under   Section   34.     The

ultimate function of the Appellate Court under Section 37 is

to decide whether the jurisdiction under Section 34 has been

exercised rightly or wrongly. While doing so, the Appellate

Court   can   exercise   the   same   power   and   jurisdiction   that

Section 34 Court possesses with the same constraints.

17.In the facts of the case in hand, while deciding the

petition under Section 34 of the Arbitration Act, the learned

Single Judge has made a very elaborate consideration of the

submissions made across the Bar, the findings recorded by

the Arbitral Tribunal and the issue of illegality or perversity

of the award.  Detailed reasons while dealing with the alleged

patent illegalities associated with the directions issued under

the   arbitral   award   have   been   recorded.     Considering   the

nature of the findings recorded by the learned Single Judge,

the job of the Appellate Court was to scrutinise the said

findings and to decide, one way or the other, on merits.  In

this   case,   the   finding   of   the   Appellate   Bench   that   the

impugned judgment of the learned Single Judge does not

address   several   issues   raised   by   the   parties   cannot   be

sustained at all.

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18.The   provisions   of   the   CPC   have   not   been   made

applicable to the proceedings before the learned Arbitrator

and the Court under Sections 34 and 37 of the Arbitration

Act.  The legislature's intention is reflected in Section 19(1) of

the Arbitration Act, which provides that an Arbitral Tribunal

is not bound by the provision of the CPC.  That is why the

provisions of the CPC have not been made applicable to the

proceedings under Sections 34 and 37(1)(c).  We are not even

suggesting that  because the provisions of the CPC are not

applicable, the Appellate Court dealing with an appeal under

Section 37(1)(c) is powerless to pass an order of remand. The

remedy of an appeal will not be effective unless there is a

power of remand vesting in the appellate authority. In the

Arbitration Act, there is no statutory embargo on the power

of the Appellate Court under Section 37(1)(c) to pass an order

of remand. However, looking at the scheme of the Arbitration

Act, the Appellate Court can exercise the power of remand

only   when   exceptional   circumstances   make   an   order   of

remand unavoidable.  There may be exceptional cases where

remand in an appeal under Section 37 of the Arbitration Act

may be warranted.   Some of the exceptional cases can be

stated by way of illustration:

a.Summary disposal of a petition under Section 34

of   the   Arbitration   Act   is   made   without

consideration of merits;

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 26 of 35

b.Without service of notice to the respondent in a

petition under Section 34, interference is made

with the award; and

c.Decision   in   proceedings   under   Section   34   is

rendered when one or more contesting parties are

dead,   and   their   legal   representatives   have   not

been brought on record.

19.Some of the objectives mentioned in the Statement of

Objects and Reasons of the Arbitration Act are very relevant

which are as follows:

“4. The main objectives of the Bill are as

under:­

(i)   to   comprehensively   cover

international   commercial   arbitration

and   conciliation   as   also   domestic

arbitration and conciliation;

(ii)  to make provision for an arbitral

procedure which is fair, efficient and

capable of meeting the needs of the

specific arbitration;

(iii) to provide that the arbitral tribunal

gives reasons for its arbitral award;

(iv) to ensure that the arbitral tribunal

remains   within   the   limits   of   its

jurisdiction;

(v)  to minimise the supervisory role

of courts in the arbitral process;

…………………………………”

                            (emphasis added)

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 27 of 35

While   coming   out   with   the   2015   Amendment   Bill,   the

legislature has noted in the objects and reasons that a lot of

delay is involved in concluding the arbitral proceedings. In

paragraphs 6 and 7 of the objects and reasons of the Bill, the

Legislature has stated thus:

“6.   It   is   proposed   to   introduce   the

Arbitration   and   Conciliation

(Amendment) Bill, 2015, to replace the

Arbitration   and   Conciliation

(Amendment)   Ordinance,   2015,   which

inter   alia,   provides   for   the   following,

namely—

(i) to amend the definition of “Court” to

provide that in the case of international

commercial   arbitrations,   the   Court

should be the High Court;

(ii) to ensure that an Indian Court can

exercise   jurisdiction   to   grant   interim

measures, etc., even where the seat of

the arbitration is outside India;

(iii) an application for appointment of

an arbitrator shall be disposed of by the

High Court or Supreme Court, as the

case   may   be,   as   expeditiously   as

possible and an endeavour should be

made to dispose of the matter within a

period of sixty days;

(iv)   to   provide   that   while   considering

any   application   for   appointment   of

arbitrator,   the   High   Court   or   the

Supreme   Court   shall   examine   the

existence   of   a   prima   facie   arbitration

agreement and not other issues;

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 28 of 35

(v)  to   provide   that   the   arbitral

tribunal shall make its award within

a period of twelve months from the

date it enters upon the reference and

that   the   parties   may,   however,

extend such period up to six months,

beyond which period any extension

can only be granted by the Court, on

sufficient cause;

(vi) to provide that a model fee Schedule

on the basis of which High Courts may

frame   rules   for   the   purpose   of

determination   of   fees   of   arbitral

tribunal, where a High Court appoints

arbitrator in terms of Section 11 of the

Act;

(vii)   to   provide   that   the   parties   to

dispute   may   at   any   stage   agree   in

writing  that  their   dispute   be   resolved

through fast track procedure and the

award   in   such   cases   shall   be   made

within a period of six months;

(viii)   to   provide   for   neutrality   of

arbitrators,   when   a   person   is

approached in connection with possible

appointment as an arbitrator;

(ix)  to   provide   that   application   to

challenge the award is to be disposed

of by the Court within one year.

7.  The amendments proposed in the

Bill   will   ensure   that   arbitration

process becomes more user friendly,

cost effective and lead to expeditious

disposal of cases.”

                               (emphasis added)

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 29 of 35

The object of the Arbitration Act is to provide an arbitral

procedure that is fair, efficient, and capable of meeting the

needs of specific arbitration. The object is to ensure that the

arbitral proceedings and proceedings filed for challenging the

award are concluded expeditiously. The proceedings have to

be cost­effective. The supervisory role of the Courts is very

restricted. Moreover, we cannot ignore that arbitration is one

of the modes of Alternative Disputes Redressal Mechanism

provided in Section 89 of the CPC.  If the Courts dealing with

appeals   under   Section   37   of   the   Arbitration   Act   start

routinely   passing   the   orders   of   remand,   the   arbitral

procedure will cease to be efficient. It will cease to be cost­

effective.   Such   orders   will   delay   the   conclusion   of   the

proceedings,   thereby   defeating   the   very   object   of   the

Arbitration Act. Therefore, an order of remand by Section 37

Court can be made only in exceptional cases where remand

is unavoidable.  As observed earlier, the scope of interference

in   a   petition   under   Section   34   is   very   narrow.     The

jurisdiction   under   Section   37   of   the   Arbitration   Act   is

narrower.  Looking to the objects of the Arbitration Act and

the limited scope available to the Courts to interfere with the

award of the Arbitral Tribunal, this Court, while dealing with

the decisions under Sections 34 and 37 of the Arbitration

Act, in its jurisdiction under Article 136 of the Constitution

of India, has to be circumspect.   By their own volition,  the

parties choose to go before the Arbitral Tribunal instead of

availing remedy before the traditional civil courts.  Therefore,

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 30 of 35

the   Courts   must   be   very   conservative   when   dealing   with

arbitral   awards   and   confine   themselves   to   the   grounds

strictly available under Section 34 of the Arbitration Act. 

20.In the facts of the case, the remand was completely

unwarranted. The reason is that the learned Single Judge

has elaborately dealt with the merits of the challenge in the

Section 34 petition. This Court should benefit from reasoned

judgment rendered by the Court under Section 37.  In this

case, we do not have the benefit of a decision of the Appellate

Court dealing with all the issues dealt with by the learned

Single Judge while deciding the petition under Section 34 of

the Arbitration Act.  Therefore, it will not be appropriate for

this Court to look at the arbitral award and the findings

recorded   by   the   Section   34   Court   and   exercise   the

jurisdiction of  the Section 37 Court.   If we do something

which Section 37 Court was required to do, it will be unjust

to the parties as the unsuccessful party before us will be

deprived of one forum of challenge. Therefore, we have no

option   but   to   set   aside   the   impugned   judgment   of   the

Division Bench and request the Division Bench to decide the

appeals on merits after considering the arbitral award and

the decision of Section 34 Court.  

21.Before   we   part   with   the   judgment,   we   must   record

some   serious   concerns   based   on   our   judicial   experience.

Case after case, we find that the arbitral proceedings have

become synonymous with very bulky pleadings and evidence

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 31 of 35

and very long, time­consuming submissions, leading to very

lengthy awards. Moreover, there is a tendency to rely upon a

large   number   of   precedents,   relevant   or   irrelevant.     The

result of all this is that we have very long hearings before the

Courts in Sections 34 and 37 proceedings.

22.By way of illustration, we are referring to the factual

aspects of the present case.  The award runs into 139 pages.

The petition under Section 34 of the Arbitration Act runs into

93 pages and incorporates 151 grounds.   The judgment of

the   learned   Single   Judge   dealing  with   the   petition  under

Section 34 consists of 101 pages.   One of the contributing

factors is that more than 35 decisions were relied upon by

the parties before the learned Single Judge. On the same

point, multiple judgments have been cited, taking similar

views.  As per the practice in the High Court of Judicature at

Bombay, a memorandum of appeal under Section 37 of the

Arbitration   Act   does   not   contain   the   facts   but   only   the

grounds   of   challenge.     In   the   memorandum   of   appeal

preferred   by   the   respondent   consisting   of   46   pages,   164

grounds have been incorporated.   Considering the narrow

scope   of   interference   under   Sections   34   and   37   of   the

Arbitration Act, we cannot comprehend how there could be

151 grounds in a petition under Section 34 and 164 grounds

in an appeal under Section 37. It is not surprising that this

appeal has a synopsis running into 45 pages, and it contains

as many as 54 grounds of challenge. 

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 32 of 35

23.In many cases, the proceedings under Sections 34 and

37 are being treated as if the same are appeals under Section

96 of the CPC.  When members of the bar take up so many

grounds in petitions under Section 34, which are not covered

by Section 34, there is a tendency to urge all those grounds

which are not available in law and waste the Court’s time.

The time of our Courts is precious, considering the huge

pendency. This is happening in a large number of cases. All

this makes the arbitral procedure inefficient and unfair. It is

high time that the members of the Bar show restraint by

incorporating only legally permissible grounds in petitions

under   Section   34   and   the   appeals   under   Section   37.

Everyone   associated   with   the   arbitral   proceedings   must

remember that brevity will make the arbitral proceedings and

the proceedings under  Sections  34 and 37 more effective.

All that we say is that all the stakeholders need to introspect.

Otherwise, the very object of adopting the UNCITRAL model

will   be   frustrated.   We   are   not   called   upon   to   consider

whether   the   arbitral   proceedings   are  cost­effective.   In  an

appropriate   case,   the   issue   will   have   to   be   considered.

Arbitration must become a tool for expeditious, effective, and

cost­effective dispute resolution. 

24.As we are directing the rehearing of the appeal under

Section 37 of the Arbitration Act, it is necessary to extend the

interim relief that was operative during the pendency of these

appeals.

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 33 of 35

25.Accordingly, we pass the following order:

a.The impugned judgment dated 7

th

  July 2023 in

Commercial Appeal no.31 of 2023 is, hereby, set

aside, and Commercial Appeal no.30 of 2023 is

restored to the file of the High Court of Judicature

at Bombay;

b.The restored appeal shall be placed before the

roster Bench on 29

th

 July 2024 at 10:30 a.m.  The

parties to the appeal before this Court shall be

under   an   obligation   to   appear   before   the

concerned Bench on that day, and no fresh notice

shall be served to the parties. The High Court will

permit   the   appellants   to   file   an   amended

memorandum   of   appeal   containing   only   the

relevant and permissible grounds.  The concerned

Division Bench shall fix a schedule for hearing of

the appeal;

c.The Registry of this Court shall forward a copy of

this   judgment   to   the   Prothonotary   and   Senior

Master of the High Court of Bombay, who shall

ensure that the appeal is listed before the roster

Bench as directed above;

d.The interim relief, granted by this Court on 11

th

August 2023, shall continue to operate till the

disposal of the remanded appeal;  

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 34 of 35

e.We   make   it   clear   that   we   have   made   no

adjudication on the merits of the arbitral award

and the judgment of the learned Single Judge and

all the issues arising in the remanded appeal are

left open to be decided by the High Court; and

f.The appeals are, accordingly, partly allowed with

no orders as to costs.

……………………..J.

(Abhay S. Oka)

……………………..J.

(Pankaj Mithal)

New Delhi;

July 08, 2024

    Civil Appeal @ SLP (C) No.16451 of 2023, etc. Page 35 of 35