An Interim or Partial award, which finally settles an issue between the parties in an Arbitral Award and can be challenged under Section 34 separately and independently

The Supreme Court recently had the occasion to determine an issue “Whether an award delivered by an Arbitrator, which decides the issue of limitation, can be said to be an interim award, and whether such interim award can be then set aside under Section 34 of the Arbitration and Conciliation Act 1996 (hereinafter referred to as Act)”. The Supreme Court in the matter of M/s Indian Farmers Fertilizer Co-operative Limited Vs. M/s Bhadra Products, Civil Appeal No. 824/2018 decided on 23rd January, 2018 held that where an Arbitrator has disposed of one matter between the parties is an interim award within the meaning of Section 2(1)(c) of the Act, therefore could be challenged under Section 34 of the Act.


The Court observed that Section 2 (c ) and Section 31 (6) of the Act  except for stating than an arbitral award includes an interim award, the Act is silent and does not define what an interim award is.  It was further noted that section 31(6) of the Act is wide in nature and makes it clear that the jurisdiction to make an interim award is left to the good sense of the arbitral tribunal and that it extends to “any matter” with respect of to which it may make a final award. The expression “matter” is wide in nature and subsumes issues at which the parties are in dispute. Thus any point of dispute between the parties which has to be answered by the arbitral tribunal can be the subject matter of an interim award.


The Supreme Court relying upon Satwant Singh Sondhi Vs. State of Punjab (1999) 3 SCC 487 held that an award on an issue which finally determines the claim of the parties is an interim award and therefore cannot be re-adjudicated all over again. Relying on McDermott international Inc Vs Burn Standard Co. Ltd. (2006) 11 SCC 181 the Supreme Court held that in interim award or partial award is a final award on matters covered therein made at an intermediate stage of the arbitral proceedings.


Therefore, an interim award on the issue of limitation is an arbitral award which can be challenged separately and independently under Section 34 of the Act.