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14 February 2022, Monday

2 years ago

Because views of members of a tribunal are separately recorded does not make each view an award: Kerala High Court

17 January 2022 | Lloyed Insulations (India) Ltd. v. Foremexx Space Frames | PB Suresh Kumar and CS Sudha JJ | 2022 SCC OnLine Ker 344

In a 3-member tribunal, the procedure followed for making the award was that:

  1. Arbitrator No.1 gave his findings on 24 February 2010.
  2. Arbitrator No.2 gave his findings on 19 March 2010.
  3. The presiding arbitrator concurred with the findings of Arbitrator No. 2 on 05 April 2010. This concurrence was recorded in a separate document.
  4. Then, on 05 April 2010 itself, the gist of the claims allowed and rejected by the majority members (Arbitrator No.1 & the Presiding Arbitrator) were listed on a stamp paper and authenticated by the two. This document was described as the “Majority Award.”

Appended to the Majority Award were: (i) Appendix A: Arbitrator No.1 findings (ii) Appendix B: Presiding arbitrator’s concurrence (iii) Appendix C: Arbitrator No.2’s finding. Each of these documents described itself as an “Award.”

The set-aside petition challenging the findings of the tribunal was rejected.

In a Section 37 ACA appeal before the Kerela High Court, Lloyed also contended that the majority award should be set aside because the ACA recognises only one award, but in this case, multiple awards of different dates had been passed. In addition, the majority award was unreasoned because the presiding arbitrator simply accepted the findings of another arbitrator without independent reasons, thus, violating Sections 29 and 31 ACA.

The court rejected the contentions:-

  1. There can only be one award. If the tribunal is constituted of a panel of members, the award is unanimous or the majority's decision. An award comes into being when it is signed. Though there is no specific provision in the ACA for passing a dissenting view, there is no prohibition. [citing Dakshin Haryana Bijli Vitaran (2021) 7 SCC 657]
  2. Appendix A matured into an award when the Presiding Arbitrator accepted it by recording his concurrence in Appendix B.
  3. So, there is only one final majority award in this case. It is three documents taken together: Appendix A, Appendix B, and the stamped document. Appendix C was the dissenting view and did not form part of the award.
  4. The argument that the award was unreasoned was also incorrect because Arbitrator No.1 had given detailed reasons wholly adopted by the Presiding Arbitrator and made part of the majority award.

The High Court also rejected the argument that once the set-aside court (district court) disagreed with the tribunal’s findings on novation of the underlying contract under Section 62 Indian Contract Act, 1872, it should have set aside the award. The set-aside noted that though the tribunal found novation, it did not proceed on that premise. Instead, it relied on the underlying agreement, evidence that it applied Section 63 ICA. In view of the appellate court, no interference was required.

Read the judgment here.

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Categories: Appealable Orders | Application for Setting Aside Arbitral Award | Arbitrators Interpretation of Contract | Delivery of Award | Dissenting Opinion | Majority Awards | Making of Award | Merits Based Review | Minority Award | Novation | Patent Illegality | Reappreciation of Evidence | Revaluation of Evidence | Review on the Merits of the Dispute | Section 29 ACA | Section 31 ACA | Section 34 (2A) | Section 34 ACA | Section 37 ACA | Signing of Award | Unreasoned Award

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