Report No. 176
2.26.4 Ground of absence of reasons - proposed: (purely domestic awards between Indian nationals.
The second additional ground which we propose to recommend, in the case of purely domestic arbitrations between Indian nationals is the one relating to domestic 'absence of reasons' in the award. While Section 31 (3) requires reasons to be given in the award (except in cases where parties otherwise agree that reasons need not be given or the award is one by settlement), no adequate provision is made in Section 34 in this behalf, if reasons are not given in the award.
There is considerable divergence of opinion in the courts in different countries as to whether error of law would fall within the word 'public policy'. There has been lot of litigation under the old Act of 1940 which permitted unreasoned awards. But once the 1996 Act requires reasons to be given under Section 31 (3), there must be a provision for referring the matter back to the arbitral tribunal under Section 31 (4) and for reasons to be given and then for objections to be filed under the proposed section 31 (5) and (6).
Hence, this additional ground is also included in Section 34A. The ground is to be included in Section 34A applications. These two additional grounds for purely domestic arbitration between Indian nationals are contained in the proposed Section 34A. To enable these grounds to be raised and to be rectified by the arbitral tribunal, Section 34A is also amended to cover these grounds.