Case Note & Summary
The dispute involved a family property arbitration among the legal heirs of Abdullabhai, concerning properties of firms M/s Abdullabhai Fiddali and Company, Abdullabhai Fiddali and Sons, joint family properties, and five rooms in Fiddali Building. The parties had initially entered into consent terms for the firm properties, resulting in consent awards dated 26 April 2001 and 5 April 2002. For the remaining joint family properties and five rooms, the Arbitrator observed that the parties had reached a settlement during meetings, and despite some parties not signing the drafted consent terms, the Arbitrator proceeded to record a finding of settlement and passed consent awards on 13 June 2002. One party applied under Section 33 for correction of the award. Shabbirbhai Abdullabhai filed Arbitration Petition No. 332 of 2002 under Section 34 of the Arbitration and Conciliation Act, 1996 challenging the consent award. The single judge, after conjoint hearing with three other petitions, held that under Sections 30 and 32 of the Act, an Arbitrator can only pass a consent award if all parties jointly request such recording; the Arbitrator lacks jurisdiction to suo motu determine the existence of a settlement. The single judge set aside the consent awards but left the awards on merits undisturbed. Aggrieved heirs and some non-parties filed the present batch of appeals, arguing that Section 30 only requires a settlement, not a written or signed request, and that the parties' agreement to draft consent terms implied a request. The Division Bench considered the distinction between Order XXIII Rule 3 CPC and Section 30 of the Act, and upheld the single judge’s reasoning that without an express joint request, the Arbitrator was powerless to pass consent awards. Appeals dismissed.
Headnote
A) Arbitration - Consent Award - Interpretation of Sections 30 and 32 - Arbitration and Conciliation Act, 1996, Sections 30, 32 - The Arbitrator can only pass a consent award if all parties request the recording of settlement; mere existence of settlement without such request does not empower the Arbitrator to pass consent award (Paras 5, 7). B) Arbitration - Jurisdiction of Arbitrator - Determining Settlement - Arbitration and Conciliation Act, 1996, Sections 30, 32 - The Arbitrator does not have jurisdiction to adjudicate whether the parties have arrived at a settlement, as his power is limited to recording a settlement only if all parties jointly request an award in terms of settlement (Paras 5, 8). C) Civil Procedure - Compromise of Suit - Comparison with Arbitration - Code of Civil Procedure, 1908, Order XXIII Rule 3 - Unlike a civil court which can record a compromise if it is in writing and signed by parties, an Arbitrator under the 1996 Act cannot record a settlement unless all parties request it, highlighting the distinct procedural requirements (Paras 7, 9). D) Arbitration - Consent Terms - Absence of Request - Arbitration and Conciliation Act, 1996, Sections 30, 32 - Where some parties to arbitration did not request the Arbitrator to pass an award in terms of settlement and contested the existence of settlement, the consent awards were set aside, but the awards on merits were upheld (Paras 5, 9). E) Appeal - Maintainability - Leave to Appeal - Arbitration and Conciliation Act, 1996 - A person not party to the arbitration petition can be granted leave to file an appeal against the order setting aside consent awards if the order affects his interests, as held by the Division Bench granting leave (Paras 4).
Issue of Consideration
Whether an Arbitrator under the Arbitration and Conciliation Act, 1996 has jurisdiction to determine if a settlement has been reached between parties and pass a consent award without an express request from all parties?
Law Points
- Under Section 30 and 32 of the Arbitration and Conciliation Act
- 1996
- an Arbitrator can only make a consent award upon request of all parties
- Arbitrator has no jurisdiction to unilaterally determine existence of a settlement
- distinction from Order XXIII Rule 3 of CPC which requires written and signed compromise
