The Delhi High Court has held that the signature of all members of an arbitral tribunal is a substantive requirement for the validity of an award.

The Single Bench of Justice Prateek Jalan emphasized that the signing of an award is not a mere ministerial act, and if any arbitrator’s signature is missing, the reasons must be recorded.

"...when it provides that an award signed by the majority shall be valid, but that the reasons for the omission of any signature must be stated," the Bench observed.

Senior Advocate Dayan Krishnan appeared for the Petitioner, while Senior Advocate Jayant Mehta appeared for the Respondent.

Background of the Case

The dispute arose from a 2010 agreement for railway track work at the Respondent’s Bhilai Steel Plant. Following disagreements over the execution of work, a three-member arbitral tribunal was constituted. The panel comprised two former Supreme Court judges and a former Chief Labour Commissioner.

The impugned arbitral award dated 12.03.2020 was presented in two parts:

1. A 50-page award, signed only by Arbitrator B, which dismissed the Petitioner’s claims and upheld the Respondent’s counterclaims amounting to ₹5.83 crore.

2. A single-page endorsement by the Presiding Arbitrator, stating his agreement with Arbitrator B’s findings.

However, Arbitrator A’s signature was absent, and emails revealed that he received the proposed award only one day before the tribunal’s mandate expired, leaving him unable to record his dissent.

Key Legal Contentions

The Petitioner argued that the award was invalid under Section 31 of the Arbitration and Conciliation Act, 1996, which mandates that all arbitrators must sign the award unless the reason for omission is stated. They also contended that Arbitrator A was excluded from the deliberations and was not given a fair opportunity to present a dissenting opinion.

The Respondent, however, defended the validity of the majority award, asserting that:

1. All three arbitrators participated in proceedings.

2. The absence of a dissenting opinion does not invalidate the majority award.

3. Setting aside the award would lead to unnecessary litigation and delays.

Court’s Observations

Relying on the Supreme Court’s decision in Dakshin Haryana Bijli Vitran Nigam Ltd. v. Navigant Technologies Pvt. Ltd. (2021), the Court reaffirmed that:

1. A majority award constitutes the arbitral award, but signatures of all arbitrators must be available.

2. If a signature is omitted, reasons must be stated, either in the award or separately.

3. Dissenting opinions, while not legally binding, serve as safeguards against arbitrary decisions.

The Court found undisputed procedural lapses, including:

- Arbitrator A’s signature was absent from the award.

- No explanation was provided for the missing signature.

- Arbitrator A was not given the opportunity to submit a dissenting opinion.

Rejecting the Respondent’s argument that Arbitrator A should have prepared a dissent on time, the Court held that a minority view can only be formulated after knowing the majority decision. The Court distinguished this case from others where missing signatures were justified or dissenting arbitrators failed to submit their opinions.

While cautioning against obstructive arbitrators deliberately refusing to sign awards, the Court found no such misconduct in this case.

Conclusion

The Court set aside the arbitral award, ruling that procedural fairness must take precedence over expediency. The decision, though leading to fresh arbitral proceedings, reinforces the importance of procedural integrity in arbitration.

Cause Title: M/s Isc Projects Private Limited v. Steel Authority of India Limited [O.M.P. (COMM) 370/2021]

Appearance:-

Petitioner: Senior Advocate Dayan Krishnan, Advocates Rishi Agrawala, Aarushi Tiku, Vikram Choudhary, Naman Agarwal, Nilay Gupta, Sukrit Seth

Respondent: Senior Advocate Jayant Mehta, Advocates Priyanka Goswami, Anusuya Sadhu Sinha, Tavdeep Singh, Archit A

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Justice Prateek JalanDelhi High Court

Sukriti Mishra

    Sukriti Mishra was a Legal Correspondent at Verdictum. She covered the Supreme Court. She completed her graduation with BA. LL.B (Hons.) from The ICFAI University, Dehradun. Sukriti started covering courts in March 2022. She had previously worked with another legal news portal, where she covered the Delhi High Court and Trial Courts.