Section 34 of the Arbitration and Conciliation Act, 1996, gives a court the power to set aside an arbitral award. It is the most-pleaded section in arbitration practice in India and, by some distance, the most misunderstood. The misunderstandings cost clients money — in court fees, in time, and in the awards they ought to have honoured but instead chose to challenge.

This note is a brief, working guide to what Section 34 actually permits, with reference to the post-2015 amendments and to the major cases of the last decade.

The six grounds, in plain language

Section 34(2) lists the grounds on which a party may apply to set aside an award. Read in plain language, they are:

  1. That a party was under some incapacity when the arbitration agreement was made.
  2. That the arbitration agreement is not valid under the law to which the parties have subjected it.
  3. That the party was not given proper notice of the appointment of the arbitrator or of the proceedings, or was otherwise unable to present their case.
  4. That the award deals with a dispute not contemplated by the submission to arbitration, or contains decisions on matters beyond the scope of the submission.
  5. That the composition of the tribunal or the arbitral procedure was not in accordance with the agreement of the parties.
  6. That the subject-matter of the dispute is not capable of settlement by arbitration, or that the award is in conflict with the public policy of India.

Which grounds actually win

In practice, three of these six grounds account for almost all successful Section 34 challenges:

(i) The award goes beyond the scope of the reference

This is sub-section (2)(a)(iv). It is the cleanest of the grounds: if the tribunal has decided something the parties did not ask it to decide, that part of the award is liable to be set aside. Courts are willing to read this ground narrowly and faithfully.

(ii) The party was unable to present its case

Sub-section (2)(a)(iii). This covers more than the ordinary ‘no notice’ case. It covers the situation in which the tribunal has refused to admit material evidence, or has refused an adjournment in circumstances amounting to procedural unfairness. The bar is high — the unfairness must be real and not merely felt — but the ground is alive.

(iii) The award is in conflict with the public policy of India

This is the most-litigated ground in the section. After the 2015 amendment and the Supreme Court’s judgment in Ssangyong Engineering v. NHAI (2019), the ground is narrower than it was in the Saw Pipes era. It now covers (a) fraud or corruption, (b) contravention of fundamental policy of Indian law, and (c) conflict with the basic notions of morality or justice. It does not cover errors of law within jurisdiction.

The post-2015 framework is the most important single change to Section 34 in three decades. Practitioners pleading on pre-2015 authority do their clients a disservice.

Which grounds are misused

The other three grounds are pleaded routinely and almost never succeed in isolation. Capacity (2)(a)(i) is rarely the real issue. The validity of the arbitration agreement (2)(a)(ii) is most often pleaded as a make-weight; the real challenge, when it succeeds, runs through the public-policy ground. Composition challenges (2)(a)(v) succeed only when the agreement was clearly disregarded — not when the tribunal merely conducted itself in a manner the losing party disliked.

Procedure and limitation

An application under Section 34 must be filed within three months of the receipt of the award, with a discretionary further thirty days that the court may grant if ‘sufficient cause’ is shown. The Supreme Court has held in Union of India v. Popular Construction (2001) that the further thirty days is the outer limit; no extension beyond it is permitted, even on the most sympathetic facts.

The application is filed in the principal civil court of original jurisdiction, or in the High Court exercising its commercial jurisdiction where applicable. In Karnataka, that is the Bengaluru Bench of the Karnataka High Court for matters above the Commercial Courts Act threshold.

What we tell our clients before they file

That Section 34 is not an appeal. It is a narrow set of supervisory grounds for setting aside an award, and the court that hears it is not entitled to revisit the merits. That before instructing counsel to file, the client should be able to identify which of the three usable grounds is in play, and should be willing to abandon the other three. That the cost of an unsuccessful Section 34 challenge is not just the court fees and the counsel’s brief — it is also the post-award interest that runs while the challenge is pending.

And that, very often, the right answer is to honour the award and move on.