The SC in Dyna Technologies Private Limited v. Crompton Greaves Limited,[1] set aside an arbitral award on the ground that the award was unintelligible as the award suffered from inadequate reasoning. The SC held that the award was confusing and had abruptly concluded at the end of the factual narration without providing any reasons. The SC observed that while this could have been cured under Section 34(4) of the (Indian) Arbitration and Conciliation Act, 1996 (‘Arbitration Act’), by sending the award back to the arbitral tribunal, the facts of the case did not merit such a remand as the disputes had been pending for more than 25 years. Accordingly, the SC set aside the award and directed the respondent to pay the claimant an amount to provide quietus to the litigation.

While the SC reiterated the settled position that Courts do not to sit in appeal over an award and ought not to interfere with an award merely because an alternate view on facts is possible, the challenge under Section 34 was upheld as the award was held to have been rendered without reasons. An important distinction was also drawn between inadequacy of reasons in an award and an award suffering from perversity. An award which suffers from inadequate reasoning can be cured of defects under Section 34(4) of the Arbitration Act, while an unintelligible award or an award which suffers from perversity of reasoning is required to be set aside.

[1] Civil Appeal No. 2153/2010.