Understanding the distinction between Section 34 (application for setting aside an arbitral award) and Section 37 (appealable orders) is crucial to grasping the framework of judicial intervention in arbitration. While they operate together in challenging arbitral outcomes, they function at distinctly different stages with fundamentally different scopes.
Nature and Stage of Intervention
Section 34 represents the primary recourse mechanism against a final arbitral award. It permits a party to directly challenge the award itself on specifically enumerated grounds before the Court. This application targets the substantive output of the arbitral tribunal—the award.
Section 37, by contrast, is an appellate mechanism that operates at a secondary level. It allows appeals against orders passed by courts while deciding Section 34 applications, and also against certain orders from the arbitral tribunal on jurisdiction and interim measures. Section 37 does not provide recourse against the award itself; rather, it reviews judicial decisions made about the award.
Exhaustive Grounds for Challenge
Section 34 Grounds (Applicant must prove).
Section 34(2)(a) requires the party filing the application to establish:
Incapacity of a party at the time of entering the arbitration agreement;
Invalid arbitration agreement under applicable law;
Lack of proper notice of appointment or inability to present the case;
Matters beyond scope: The award addresses disputes outside the submission to arbitration (with partial severability);
Improper composition or procedure: Tribunal composition or procedure violated party agreement or statutory requirements.
Section 34 Grounds (Court's suo moto intervention)
The Court may consider independently:
Non-arbitrability: The dispute subject is not capable of settlement by arbitration;
Public policy violation: Award contradicts India's core legal principles, including fundamental policy, justice/morality, or involves fraud/corruption;
Patent illegality (domestic arbitrations only): Errors apparent on the award's face (not mere legal/factual errors).
Section 37 Grounds
Section 37 does not create independent grounds for intervention. Instead, it restricts appeals to orders relating to:
Section 8 orders (refusal to refer parties to arbitration);
Section 9 orders (granting/refusing interim measures by court);
Section 34 orders (setting aside or refusing to set aside awards);
Section 16 orders (tribunal's jurisdiction rulings);
Section 17 orders (tribunal's interim measures).
The appellate court under Section 37 mirrors Section 34's limitations, examining only whether the lower court's order complied with Section 34 grounds—not re-appreciating the award's merits.
Scope of Judicial Interference
| Aspect | Section 34 Application | Section 37 Appeal |
|---|---|---|
| Intervention Level | Direct challenge to arbitral award | Review of court orders on award |
| Merits Review | Prohibited; limited grounds only. | Prohibited; appellate court cannot re-evaluate award merits |
| Evidence Re-appreciation | Not permissible | Not permissible; summary nature |
| Power to Modify/Remit | Only power is to set aside or affirm; no modification authority | Appellate court confined to Section 34 constraints; no modification power |
| Scope of Scrutiny | Narrow—limited to statutory grounds | Narrower still—confined to whether lower court exceeded Section 34 limits |
| Aspect | Section 34 | Section 37 |
|---|---|---|
| Applicable Limitation | 3 months from receiving award; extendable by 30 days on sufficient cause shown | 90 days under Article 116, Limitation Act (or Commercial Courts Act timelines for specified value disputes) |
| Second Appeal | No restriction on appeal under Section 37 after Section 34 | No second appeal from Section 37 orders |
| Forum | Principal Civil Court of original jurisdiction | Court authorized to hear appeals from original decrees |
| Prior Notice | Mandatory notice to other party required | Governed by appellate rules |
Section 37(1)(c) explicitly provides that an appeal lies against an order setting aside or refusing to set aside an award under Section 34. This creates a two-tier review structure:
First Tier (Section 34): Party applies to set aside the award on specified grounds.
Second Tier (Section 37): If the first court accepts or rejects the application, the other party may appeal to the higher court, but only to verify whether the lower court's decision adhered to Section 34 limitations.
The Supreme Court has consistently held that interference under Section 37 must adhere strictly to Section 34 limitations, and any separate evaluation of the award's merits is impermissible.
Key Judicial Distinction
The pivotal difference stems from legislative intent to minimize judicial interference in arbitration. Section 34 already narrows recourse to specific grounds, respecting arbitral finality. Section 37 further restricts appellate intervention by preventing the appellate court from exercising powers beyond those available at the Section 34 stage. Unlike the earlier Arbitration Act, 1940—which permitted courts to modify or remit awards—the 1996 Act limits judicial remedies to affirming or setting aside the award entirely, preserving arbitration's finality and efficiency.
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