Arbitral Award Not Signed By All Members Of Tribunal Can Be Set Aside If Reasons For Omission Of Missing Signature Are Not Stated: Delhi High Court
The Delhi High Court Bench of Justice Prateek Jalan has observed that the signature of all members of the arbitral tribunal should be available on the award as the signing of an award is not a ministerial act but a substantive requirement. It was further observed that if the signature of any member of the tribunal is omitted, then the reasons should be stated as this requirement...
The Delhi High Court Bench of Justice Prateek Jalan has observed that the signature of all members of the arbitral tribunal should be available on the award as the signing of an award is not a ministerial act but a substantive requirement. It was further observed that if the signature of any member of the tribunal is omitted, then the reasons should be stated as this requirement is referable to the need to ensure that all members of the tribunal have has an opportunity to participate in the decision-making process.
Background Facts
The parties entered into an agreement on 18.08.2010 for railway track work for an internal yard at the Respondent's Bhilai Steel Plant. Disputes arose between the parties with regard to the execution of the work, and as provided by the agreement, a three-member arbitral tribunal was constituted. It consisted of a former judge of Supreme Court nominated by the Petitioner (“Arbitrator A”), former Chief Labour Commissioner, Government of India, nominated by the Respondent (“Arbitrator B”) and another former judge of Supreme Court as the Presiding Arbitrator appointed by Standing Conference of Public Enterprises Forum for Conciliation and Arbitration, New Delhi [“SCOPE”].
The impugned award is dated 12.03.2020 and consists of two parts. The first part is an award of 50 pages, signed only by Arbitrator B whereby the claims of the petitioner have been dismissed, and counterclaims of the Respondent have been allotted to the extent of Rs. 5,83,10,232/-. The second part of the award is a single page award signed by the Presiding Arbitrator which states that he has gone through the award written by Arbitrator B and that he is in agreement with the findings recorded and orders passed by him.
The record summoned from SCOPE included two email communications by Arbitrator A. By an email dated 13.03.2020, addressed to the Presiding Arbitrator and copied to Arbitrator B and an official of SCOPE, Arbitrator A stated that the award written by Arbitrator B was received by him that morning itself. While he disagreed with the award, it was impossible for him to write his opinion in such a short period as the last date for giving the award was 13.03.2020. He registered his protest against the copy of the award circulated to the parties without consulting him and sought extension of time for writing his opinion.
The second email was addressed by Arbitrator A to SCOPE on 18.05.2020, whereby he made reference to his email dated 13.03.2020 addressed to the Presiding Arbitrator and informed SCOPE that the Presiding Arbitrator had refused to ask for further extension and was announcing the award by majority.
Contentions
The Counsel for the Petitioner submitted that the decision in the present case does not constitute an award in the eyes of law as it does not satisfy the requirement of Section 31, Arbitration and Conciliation Act, 1996 which requires that an award of multi-member tribunal must be signed by all its members. Exception can only be made only if the reasons for omission of the missing signature are stated and in the present case, the award as it stands does not contain any explanation for omission of the signature of Arbitrator A.
It was further submitted that the material on record makes it evident that Arbitrator A was left out of the tribunal's deliberations at the stage of finalising the award and the fact that the proposed award was transmitted to him only a day before the expiry of the mandate, made it impossible for him to publish his dissent.
The Counsel for the Respondent submitted that the present case does not disclose any ground for setting aside the award. Contrary to Petitioner's submission, all three members of the arbitral tribunal participated fully in the arbitral proceedings. It was argued that there is no requirement that all arbitrators must pronounce their award by way of a single opinion and the statute expressly recognizes the validity and sanctity of a majority award.
It was further submitted that there is no requirement of a detailed and reasoned dissent and the absence of such a dissent does not affect the validity of the majority award. It was always open to Arbitrator A to prepare his award within the time available before the expiry of the mandate of the tribunal and there was no reason for him to wait for a communication from the Presiding Arbitrator or for not giving a reasoned dissent even thereafter.
Lastly, it was argued that practical considerations also require that the award must be upheld as setting aside of the award would necessitate a fresh round of avoidable litigation.
Observations
The Court relied on the decision of the Apex Court in Dakshin Haryana Bijli Vitran Nigam Lts. V. Navigant Technologies Pvt. Ltd (2021) (“Dakshin Haryana”), wherein it was observed that all members of the tribunal should have signed the award and that a dissenting opinion, if any must be delivered contemporaneously with the majority award. The Court also considered the decisions of the Delhi High Court in Mahanagar Telephone Nigam Ltd. v. Siemens Public Communication Network Ltd. (2005), Government of India v. Acome (2008) and M/s Chandok Machineries v. M/s S.N. Sunderson & Co. (2018) amongst others and laid down the following points –
- It is the award of the majority alone that constitutes an arbitral award. The opinion of a dissenting arbitrator is not an award at all.
- Signatures of all members of the arbitral tribunal should be available on the award. The signing of an award is not a ministerial act, but a substantive requirement.
- If the signature of any member of the tribunal is omitted, the reasons should be stated. However, the reasons can be supplied separately and subsequently.
- The requirement is referable to the need to ensure that all members of the tribunal have had an opportunity to participate in the decision-making process
- While a dissenting opinion has no direct legal effect, it is also not wholly meaningless or irrelevant, it constitutes a safeguard against arbitrary and unchecked decision-making, and can be used by the aggrieved party as well as the Court in the course of a challenge to the majority award.
The Court noted that the following are undisputed facts of the case (a) the signature of Arbitrator A does not appear on the award; (b) The impugned award does not disclose any reason for the fact that the signature of Arbitrator A was missing; and (c) there is no separate dissenting award circulated by him.
From the material available on record, the Court concluded that Arbitrator A was not invited to participate in the deliberation of the tribunal at the stage of final decision making.
The Court held that the argument of the Respondent that Arbitrator A ought to have prepared his own award within the period of the tribunal's mandate or even thereafter is liable to be rejected in view of the Supreme Court's decision in Dakshin Haryana wherein it was held that a minority view can be formulated only after the majority view is known.
The Court also observed that in all the the cases cited on behalf of the Respondent, where a majority award has been upheld despite a missing signature, either the reasons for the missing signature have been found to be satisfactory, or time was given to the dissenting arbitrator to prepare his dissent, but he failed to do so. However, the present case can be distinguished as one of the three arbitrators was excluded from the final consultation process, and was also not given the opportunity to publish a dissenting award.
However, the Court cautioned against a situation where a recalcitrant or obstructive minority arbitrator holds the proceedings to ransom, by refusing to sign the award but stated that there was nothing on record to show that the present case fell into such a category.
Accordingly, the Court allowed the petition and set aside the award, noting that while it was true that such a decision would entail a fresh round of arbitral proceedings but considerations of expediency and convenience cannot override principles of fairness and procedural integrity, which must underpin arbitral adjudication.
Case Title: M/s Isc Projects Private Limited v. Steel Authority of India Limited
Citation: 2025 LiveLaw (Del) 249
Case Number: O.M.P. (COMM) 370/2021
Appearance:
For Petitioner – Mr. Dayan Krishnan, Sr. Advocate with Mr. Rishi Agrawala, Ms. Aarushi Tiku, Mr. Vikram Choudhary, Mr. Naman Agarwal, Mr. Nilay Gupta, Mr. Sukrit Seth, Advocates.
For Respondent- Mr. Jayant Mehta, Sr. Advocate with Ms. Priyanka Goswami, Ms. Anusuya Sadhu Sinha, Mr. Tavdeep Singh, Mr. Archit A., Advocates.
Date: 21.02.2025
