TMI Blog2021 (3) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... because signing of the award gives legal effect and finality to the award - The date on which the signed award is provided to the parties is a crucial date in arbitration proceedings under the Indian Arbitration and Conciliation Act, 1996. It is from this date that: (a) the period of 30 days for filing an application under Section 33 for correction and interpretation of the award, or additional award may be filed; (b) the arbitral proceedings would terminate as provided by Section 32(1) of the Act; (c) the period of limitation for filing objections to the award under Section 34 commences. The period of limitation for filing objections would have to be reckoned from the date on which the signed copy of the award was made available to the parties i.e. on 19.05.2018 in the instant case - It is the admitted position that the objections were filed within the period of limitation prescribed by Section 34(3) of the Act, if reckoned from 19.05.2018. Undisputedly, in the instant case, the objections have been filed within the period of limitation prescribed under Section 34(3) from the date of receipt of the signed award. Appeal allowed. - CIVIL APPEAL NO. 791 OF 2021 (ARISING OUT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost of arbitration shall be as per instructions to the Nigam issued/prevalent on the date of appointment of arbitral tribunal. The arbitrators may, from time to time, with the consent of the parties enlarge the time for making the award. In the event of any of the aforesaid arbitrators dying, neglecting, resigning or being usable to act for any reason, it will be lawful for the party concerned to nominate another arbitrator in place of the outgoing arbitrator. The arbitrator shall have full powers to review and/or revise any decision, opinion, direction, certification or valuation of the Engineer in consonance with the Contract, and neither party shall be limited in the proceedings before such arbitrators to the evidence or arguments put before the engineer for the purpose of obtaining the said decision. Subject to aforementioned provisions, the provisions of the Arbitration and Conciliation Act, 1996 and the Rules there under any statutory modifications thereof for the time being enforce, shall be deemed to apply to the Arbitration proceedings under the clause. (ii) On 16.10.2014, the appellant corporation terminated the Service Level Agreement, which led ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Now to come up on 19.05.2018 at the same venue to point out any typographical or clerical mistakes if any in the award of today given by Sh. D.S. Yadav, Arbitrator. Venue the same. Also on that date original record should be handed over to the Ld. Counsel for the claimant for safe custody with pen drives of the record to the other party as well as to the Arbitrators. (emphasis supplied) (v) On 19.05.2018, the tribunal recorded that both the parties had not filed any application to point out any clerical or typographical mistakes in the award, or dissenting opinion. On this date, the signed copy of the arbitral award was provided to both the parties, and the proceedings were terminated. The proceedings of 19.05.2018 read as : 19.05.2018 Present:- Sh. Nishant Shrivastava, Advocate for the claimant Sh. Ashish Goyal, Advocate with Sh. Sanjeev Sharma, JE for the respondent. Original record has been handed over to Sh. Nishant Shrivastava, Advocate for its safe custody with him and for its production before the appropriate authority in case of need. Pen drives of the record have been provided to both the counsels as well as to the arbitrators. Record is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by two of the three arbitrators was received on 27.04.2018, and u/S. 34(3), the objections had to be filed within 3 months, which would expire on 27.07.2018. Even if the benefit of 30 days had been granted to the Appellants, the objections ought to have been filed by 26.08.2018, whereas the objections had been filed on 10.09.2018. There was no infirmity in the judgment of the Civil Court, and accordingly, the Appeal was dismissed. (ix) Aggrieved by the rejection of the objections under Section 34 on the ground of delay, the appellant corporation has filed the present Appeal. 3. Submissions of the parties (i) The appellant corporation inter alia contended that its objections had been erroneously dismissed by the Additional Civil Judge, as well as the High Court on the sole ground of limitation, and not on merits. It was submitted that reference to the arbitral award in the Arbitration Act includes both the majority award as well as the minority opinion. Section 31(1) of the Act provides that all the members of the tribunal shall sign the award. Section 31(2) which permits an award to be rendered so long as it is signed by the majority of the members, and reasons for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Section 34(3) of the Act to submit that a party may file objections to the award within a period of three months from the date of receipt of the award. On sufficient cause being shown to the satisfaction of the Court, the three months period could be extended by an additional period of thirty days. The Respondent submitted that the time for filing objections was available till 26.07.2018, or if sufficient cause was made out, an additional period of 30 days which expired on 26.08.2018. The dissenting opinion of the minority member was not an award for the purposes of computing the limitation period prescribed under sub-section (3) of Section 34. Section 29(1) of the Act contemplates that the decision of the majority of members of the tribunal, is the arbitral award. Reliance was placed on Section 31(2) of the Act which provides that the signature of all the members of the tribunal was not required, so long as the award was signed by a majority of the members, and reasons for omission of the signature of the third arbitrator were recorded in the award. The opinion of the minority was only a view, and could not be enforced as an award. It could not be considered to be th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be made by a majority of all its members. (2) Notwithstanding sub-section (1), if authorised by the parties or all the members of the arbitral tribunal, questions of procedure may be decided by the presiding arbitrator. (emphasis supplied) Sub-section (1) provides that unless the parties agree otherwise, in arbitral proceedings with more than one arbitrator, any decision of the arbitral tribunal shall be made by a majority of all its members . An arbitral award is the decision made by the majority members of an arbitral tribunal, which is final and binding on the parties. Section 35 provides that an arbitral award shall be final and binding on the parties and persons claiming under them. A dissenting opinion does not determine the rights or liabilities of the parties which are enforceable under Section 36 of the Act. (v) The reference to the phrase arbitral award in Sections 34 and 36 refers to the decision of the majority of the members of the arbitral tribunal. A party cannot file a petition u/S. 34 for setting aside, or u/S. 36 for enforcement of a dissenting opinion. What is capable of being set aside u/S. 34 is the arbitral award i.e. the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. There can be no finality of the award, except after it is signed, since signing of the award gives legal effect and validity to it. The making and delivery of the award are different stages of an arbitration proceeding. An award is made when it is authenticated by the person who makes it. The statute makes it obligatory for each of the members of the tribunal to sign the award, to make it a valid award. The usage of the term shall makes it a mandatory requirement. It is not merely a ministerial act, or an empty formality which can be dispensed with. (ix) Sub-section (1) of Section 31 read with sub-section (4) makes it clear that the Act contemplates a single date on which the arbitral award is passed i.e. the date on which the signed copy of the award is delivered to the parties. Section 31 (5) enjoins upon the arbitrator / tribunal to provide the signed copy of the arbitral award to the parties. The receipt of a signed copy of the award is the date from which the period of limitation for filing objections u/S. 34 would commence. This would be evident from the language of sub-section (3) of Section 34(3) which reads : 34. Application for setting aside arbitral award ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 31 is the delivery of a copy of the award signed by the members of the arbitral tribunal / arbitrator, and not any copy of the award. On a harmonious construction of Section 31(5) read with Section 34(3), the period of limitation prescribed for filing objections would commence only from the date when the signed copy of the award is delivered to the party making the application for setting aside the award. If the law prescribes that a copy of the award is to be communicated, delivered, despatched, forwarded, rendered, or sent to the parties concerned in a particular way, and since the law sets a period of limitation for challenging the award in question by the aggrieved party, then the period of limitation can only commence from the date on which the award was received by the concerned party in the manner prescribed by law. The judgment in Tecco Trichy has been recently followed in Anilkumar Jinabhai Patel v. Pravinchandra Jinabhai Patel. (2018) 15 SCC 178 (xii) In State of Himachal Pradesh v Himachal Techno Engineers, (2010) 12 SCC 210 this Court held that if one of the parties to the arbitration is Government, or a statutory body, which has notified holidays, and if the aw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The date on which the signed award is provided to the parties is a crucial date in arbitration proceedings under the Indian Arbitration and Conciliation Act, 1996. It is from this date that: (a) the period of 30 days for filing an application under Section 33 for correction and interpretation of the award, or additional award may be filed; (b) the arbitral proceedings would terminate as provided by Section 32(1) of the Act; (c) the period of limitation for filing objections to the award under Section 34 commences. (xviii) Section 34 provides recourse for judicial scrutiny of the award by a Court, upon making an application under sub-sections (2) and (3) for setting aside the award. The period of limitation for filing the objections to the award u/S. 34 commences from the date on which the party making the application has received a signed copy of the arbitral award, as required by Section 31(5) of the 1996 Act. Section 34(3) provides a specific time limit of three months from the date of receipt of the award, and a further period of thirty days, if the Court is satisfied that the party was prevented by sufficient cause from making the application within the said perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t period under Section 36 to execute the award. 36.2. Second, extending Section 17 of the Limitation Act to Section 34 would do violence to the scheme of the Arbitration Act. As discussed above, Section 36 enables a party to apply for enforcement of award when the period for challenging an award under Section 34 has expired. However, if Section 17 were to be extended to Section 34, the determination of time for making an application to set aside the arbitral award in Section 36 will become uncertain and create confusion in the enforcement of award. This runs counter to the scheme and object of the Arbitration Act. (xx) Relevance of a dissenting opinion (a) The dissenting opinion of a minority arbitrator can be relied upon by the party seeking to set aside the award to buttress its submissions in the proceedings under Section 34. (b) At the stage of judicial scrutiny by the Court under Section 34, the Court is not precluded from considering the findings and conclusions of the dissenting opinion of the minority member of the tribunal. (c) In the commentary of Russel on Arbitration , the relevance of a dissenting opinion was explained as follows : 6-058. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrary, much that is right with such a course as part of the adjudicatory process in which the tribunal s conclusion is expressed in a reasoned manner. And, if the arbitrator considers that the award s conclusions require a systematic discussion, that is also entirely appropriate; indeed, it is implied in the adjudicative process, and the requirement of a reasoned award. Gary Born, International Commercial Arbitration, Wolters Kluwer, Ed. 2009, Volume II, p. 2469 It is further observed that : the very concept of a reasoned award by a multi-member tribunal permits a statement of different reasons if different members of the tribunal in fact hold different views. This is an essential aspect of the process by which the parties have an opportunity to both, present their case, and hear the reasons for the tribunal s decision; not hearing the dissent deprives the parties of an important aspect of this process. (e) In Ssangyong Engineering Construction Co. Ltd v. NHAI, (2019) 15 SCC 131 this Court upheld the view taken in the dissenting opinion to be the correct position in law. In this case, the Court was hearing a special leave petition from an order passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st, that will now be executed between the parties. The minority award, in paras 11 and 12, states as follows: 11. I therefore award the claim of the claimant in full. 12. Costs - no amount is awarded to the parties. Each party shall bear its own cost. In Ssangyong, this Court upheld the view taken by the dissenting arbitrator in exercise of its powers under Article 142 of the Constitution, in order to do complete justice between the parties. The reason for doing so is mentioned in paragraph 77 i.e. the considerable delay which would be caused if another arbitration was to be held. This Court exercised its extraordinary power in Ssangyong keeping in mind the facts of the case, and the object of expeditious resolution of disputes under the Arbitration Act. (f) In law, where the Court sets aside the award passed by the majority members of the tribunal, the underlying disputes would require to be decided afresh in an appropriate proceeding. Under Section 34 of the Arbitration Act, the Court may either dismiss the objections filed, and uphold the award, or set aside the award if the grounds contained in sub-sections (2) and (2A) are made out. There is no p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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