Section 34 (5) Of The Arbitration And Conciliation Act, 1996: Whether Mandatory Or Directory?

Introduction

Recently, the Supreme Court in The State of Bihar and Ors. Vs. Bihar Rajya Bhumi Vikas Bank Samiti¹, had the opportunity to examine whether Section 34(5) of the Arbitration and Conciliation Act, 1996, ("Act") inserted by Amending Act 3 of 2016 (w.e.f. 23rd October, 2015), is mandatory or directory in nature. The judgment was delivered on July 30, 2018, by a two-judge Bench of Justices Rohintan Fali Nariman and Indu Malhotra, and serves as a precedent for clarifying the nature of the above-mentioned provision. The judgment highlights how the amendment has to be interpreted in the light of convenience and justice, rather than technicalities of law.

Facts of the Case