Elevating Dissenting Opinion As Award Would Be Inappropriate And Improper If Majority Award Is Set Aside: Supreme Court
The Supreme Court has held that it would be inappropriate and improper to elevate a dissenting opinion as a Tribunal award if the majority award has been set aside.
The Court allowed a set of Civil Appeals challenging the order of the Division Bench, wherein the Tribunal's majority view and award were set aside on grounds of an implausible contract interpretation. The Court determined whether it was acceptable to elevate a dissenting opinion to the status of an award if the majority award was nullified, under Section 34 of the Arbitration and Conciliation Act, 1996 (Act).
The Court also stated that the minority award or dissenting opinion should not be challenged by either the aggrieved or succeeding party as it does not undergo the same level of scrutiny as the majority award. In cases where a majority award is contested, Courts should focus on identifying any errors or illegalities.
The bench comprising Justice S. Ravindra Bhat and Justice Aravind Kumar noted, “It is, therefore, evident that a dissenting opinion cannot be treated as an award if the majority award is set aside. It might provide useful clues in case there is a procedural issue which becomes critical during the challenge hearings. This court is of the opinion that there is another dimension to the matter. When a majority award is challenged by the aggrieved party, the focus of the court and the aggrieved party is to point out the errors or illegalities in the majority award. The minority award (or dissenting opinion, as the learned authors point out) only embodies the views of the arbitrator disagreeing with the majority. There is no occasion for anyone- such as the party aggrieved by the majority award, or, more crucially, the party who succeeds in the majority award, to challenge the soundness, plausibility, illegality or perversity in the approach or conclusions in the dissenting opinion. That dissenting opinion would not receive the level and standard of scrutiny which the majority award (which is under challenge) is subjected to. Therefore, the so-called conversion of the dissenting opinion, into a tribunal’s findings, [in the event a majority award is set aside] and elevation of that opinion as an award, would, with respect, be inappropriate and improper”.
Senior Advocate Abhishek Manu Singhvi, Senior Advocate V. Giri, and Senior Advocate Anil Airi appeared for the Appellant and Additional Solicitor General Aishwarya Bhati appeared for the Respondents.
The NHAI awarded a construction project for the Allahabad bypass in Uttar Pradesh to a Contractor (Appellant). The project was completed, but disputes arose regarding the interpretation of a contract clause. Specifically, the clause required measuring the quantities utilised for payment during the construction of the embankment, which could be either soil or pond ash. These disputes were referred to an inbuilt resolution mechanism known as the Dispute Resolution Board (DRB), which consists of technical experts in the field. However, the contractor disagreed with the DRB's opinion and invoked arbitration per the agreement. The disputes were ultimately referred to a panel of three technical arbitrators (Tribunal), who made a unanimous award on most questions. Still, one arbitrator disagreed on some issues.
The contractor, unhappy with both views, filed objections under Section 34 of the Arbitration and Conciliation Act, 1996 (Act). A Single Judge of the High Court dismissed the petition, but the NHAI appealed to the Division Bench of the High Court. The Division Bench overturned the decision and set aside the Tribunal's majority view and award. A set of Civil Appeals was filed for interpretation of a contract condition, which required the measurement of quantities used for payment for embankment construction with soil or with pond ash.
The Court observed that the Majority opinion of the Tribunal comes from a group of technical experts who acted as arbitrators with extensive knowledge of interpreting contracts for this particular type of work. The Court noted that when the majority of these experts supported a composite measurement, the question arises as to what role the court should play under Section 34 of the Act.
The Court asserted that once disputants have chosen a decision-maker for an award, that decision should be respected and not interfered with unless there is patent illegality or a perverse interpretation of the facts or terms. The Court also noted that Judges don't have the ability to correct decisions when reviewing under Section 34 of the Act. By interpreting the contract, the Court cannot create ways to review that are forbidden under Section 34. It has long been established that interfering with awards that provide reasons, especially when interpreting contractual terms, should be done with careful consideration.
“The prevailing view about the standard of scrutiny- not judicial review, of an award, by persons of the disputants’ choice being that of their decisions to stand- and not interfered with, [save a small area where it is established that such a view is premised on patent illegality or their interpretation of the facts or terms, perverse, as to qualify for interference, courts have to necessarily chose the path of least interference, except when absolutely necessary]. By training, inclination and experience, judges tend to adopt a corrective lens; usually, commended for appellate review. However, that lens is unavailable when exercising jurisdiction under Section 34 of the Act. Courts cannot, through process of primary contract interpretation, thus, create pathways to the kind of review which is forbidden under Section 34. So viewed, the Division Bench’s approach, of appellate review, twice removed, so to say [under Section 37], and conclusions drawn by it, resulted in displacing the majority view of the tribunal, and in many cases, the unanimous view, of other tribunals, and substitution of another view. As long as the view adopted by the majority was plausible- and this court finds no reason to hold otherwise (because concededly the work was completed and the finished embankment was made of composite, compacted matter, comprising both soil and fly ash), such a substitution was impermissible”, the Bench noted.
The Court asserted that the dissenting opinion could help identify procedural issues during challenge hearings. The Court emphasised that when a majority award is contested, the focus should be on identifying any errors or illegalities in the majority award.
The Court upheld the impugned awards. However, the Court modified the requirement for compounded monthly interest payments. The Court directed the NHAI to pay a uniform interest rate of 12% on the amounts due for the construction of the embankment from the date of the award to the date of payment within eight weeks from the date of the judgment.
Accordingly, the Court allowed the Appeal and set aside the impugned judgments of the High Court.
Cause Title: M/S Hindustan Construction Company Limited v M/S National Highways Authority Of India (2023 INSC 768)