Case Note & Summary
The petitioner, Ashesh Busa, proprietor of Apex Chemicals, filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an arbitral award dated 27th February 2017. The arbitral tribunal comprised three members: Mr. Kirit C. Mehta, Mr. Ashish Tawakley, and Mr. Rajesh Tapuriah. However, the impugned award was signed only by Mr. Kirit C. Mehta and Mr. Rajesh Tapuriah, with no signature from Mr. Ashish Tawakley. The petitioner contended that under Section 31(2) of the Act, in proceedings with more than one arbitrator, the signatures of the majority are sufficient only if the reason for any omitted signature is stated. Since no such reason was recorded, the award was invalid. The petitioner also relied on an email exchange with Mr. Ashish Tawakley, who confirmed that he had not signed the award. The respondent argued that the award was valid as it was signed by the majority. The court examined Section 31(2) and noted that the provision requires that the reason for the omitted signature be stated. As the award did not contain any such reason, the court held that the award was not in compliance with the mandatory requirement. Consequently, the court set aside the award and remitted the matter back to the arbitral tribunal for fresh consideration, directing the tribunal to pass a fresh award in accordance with law.
Headnote
A) Arbitration Law - Validity of Arbitral Award - Section 31(2) of the Arbitration and Conciliation Act, 1996 - Requirement of Signatures - The arbitral tribunal consisted of three members, but the award was signed by only two, without stating the reason for the third arbitrator's omitted signature. The court held that the award is invalid and set aside, as the mandatory requirement of Section 31(2) was not complied with. (Paras 2-8)
Issue of Consideration
Whether an arbitral award signed by only two of three arbitrators without recording the reason for the omitted signature of the third arbitrator is valid under Section 31(2) of the Arbitration and Conciliation Act, 1996.
Final Decision
The court allowed the petition, set aside the impugned arbitral award dated 27th February 2017, and remitted the matter back to the arbitral tribunal for fresh consideration. The tribunal was directed to pass a fresh award in accordance with law.
Law Points
- Arbitral award must be signed by majority of arbitrators
- reason for omitted signature must be stated
- non-compliance renders award invalid
Case Details
2019 LawText (BOM) (06) 73
Arbitration Petition No. 577 of 2017
Mr. Sahil Mahajan for the Petitioner; Mr. Kunal Mehta, a/w. Mr. Kayomars Kerawala, i/b. Mr. Gautam Sahni for the Respondent
Ashesh Busa, a proprietor of Apex Chemicals
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Nature of Litigation
Petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenging an arbitral award.
Remedy Sought
The petitioner sought to set aside the arbitral award dated 27th February 2017.
Filing Reason
The award was signed by only two of three arbitrators without stating the reason for the omitted signature of the third arbitrator, violating Section 31(2) of the Act.
Previous Decisions
The arbitral tribunal rejected the petitioner's claims and allowed the respondent's counter claims.
Issues
Whether the arbitral award is invalid for non-compliance with Section 31(2) of the Arbitration and Conciliation Act, 1996, as it was signed by only two of three arbitrators without recording the reason for the omitted signature.
Submissions/Arguments
Petitioner: The award is invalid because the third arbitrator did not sign and no reason for the omitted signature was stated, as required by Section 31(2).
Respondent: The award is valid as it was signed by the majority of the arbitrators.
Ratio Decidendi
Under Section 31(2) of the Arbitration and Conciliation Act, 1996, an arbitral award must be signed by the majority of the arbitrators, and if any arbitrator fails to sign, the reason for the omitted signature must be stated in the award. Failure to comply renders the award invalid and liable to be set aside.
Judgment Excerpts
By this petition filed under section 34 of the Arbitration and Conciliation Act, 1996, the petitioner has impugned the award dated 27th February, 2017 passed by the arbitral tribunal rejecting the claims made by the petitioner and allowing the counter claims made by the respondent.
It is the case of the petitioner that under section 31(2) of the Arbitration and Conciliation Act, 1996, in the arbitral proceedings with more than one arbitrator, the signatures of the majority of all the members of the arbitral tribunal shall be sufficient so long as the reason for any omitted signature is stated.
There are no reasons recorded in the arbitral award as to why Mr.Ashish Tawakley, the third arbitrator has not signed the impugned award.
Procedural History
The arbitral tribunal passed an award on 27th February 2017 rejecting the petitioner's claims and allowing the respondent's counter claims. The petitioner filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 on 26th June 2017 challenging the award. The High Court heard the petition and delivered judgment on 17th June 2019.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 31(2), Section 34
