DAKSHIN HARYANA BIJLI VITRAN NIGAM LTD. Vs M/S NAVIGANT TECHNOLOGIES PVT. LTD.

CITATION : LL 2021 SC 126

JUDGE : Justices Indu Malhotra and Ajay Rastogi

DATE : 02.03.2021

LAW POINT :

The period of limitation for filing the Petition under, Section 34 of the Arbitration and Conciliation Act, would commence from the date on which the signed copy of the award was made available to the parties.

FACTS :

In this case, a Petition was filed under Section 34 by Bijli Vitrain Nigam (Appellant) to challenge the arbitral award dated 27.04.2018 passed by a three- member tribunal (2:1) in favour of Navigant Technologies Pvt. Ltd (Respondent). Even though the award was pronounced on 27.04.2018, on 27.04.2018, only a copy of the award was provided to the parties, On 12.05.2018, the third arbitrator pronounced his dissenting opinion and the tribunal posted the matter to 19.05.2018, On 19.05.2018, the signed copy of the award and the dissenting opinion, alongwith the original record, were handed over to the parties, as also to each of the arbitrators.

This petition was dismissed by the Civil Court on the ground that the copy of the majority award i.e. signed 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 applicants, the petition ought to have been filed by 26.08.2018, whereas the objections had been filed on 10.09.2018. The High Court affirmed this order.

CONTENTIONS OF THE APPELLANT :

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 applies only in the case of a unanimous award. Section 31(2) has no application when there is dissenting view rendered by one of the arbitrators. Section 34 of the Act provides for objections to be filed against the arbitral award, and not the majority award alone. Consequently, the time limit to file objections against an award under Section 34(3) of the Act, does not relate to only the majority award, but to the arbitral award, which includes the opinion of the dissenting member of the tribunal. It was contended that if the majority award was taken to mean the arbitral award, the dissenting opinion of the minority would have no relevance. Such a view would cause grave prejudice to the award debtor. It was further submitted that even though the award of the majority was pronounced on 27.04.2018, the tribunal posted the matter on 12.05.2018 to enable the parties to point out any correction, or any typographical or clerical error in the award. On 12.05.2018, the dissenting opinion was pronounced, and a copy was provided to the parties. The matter was next posted on 19.05.2018, to consider any application for correction in the opinion of the minority. Since there was no application for correction of the award the tribunal terminated the proceedings. It was further submitted that the dissenting opinion has been held to be the correct view by the Courts in various cases.

CONTENTION OF THE RESPONDENT :

The Respondents contended that the objections filed by the appellant corporation under Section 34 of the Arbitration Act are barred by limitation, and ought to be dismissed. The contention is that since the majority award was pronounced on 27.04.2018, the limitation period applicable under Section 34(3) would commence from this date. The Respondent placed reliance 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 Section 34(3). 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 the arbitral award for the purpose of computing limitation under Section 34(3) of the Act.

OBSERVATIONS OF THE SUPREME COURT :

The statute recognises only one arbitral award being passed by an arbitral tribunal, which may either be a unanimous award, or an award passed by a majority in the case of a panel of members. An award is a binding decision made by the arbitrator/s on all the issues referred for adjudication. The view of a dissenting arbitrator is not an award, but his opinion. A dissenting opinion does not determine the rights or liabilities of the parties which are enforceable under Section 36 of the Act. However, a party aggrieved by the award, may draw support from the reasoning and findings assigned in the dissenting opinion.

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 decision reached by the majority of members of the tribunal. Similarly, u/S. 36 what can be enforced is the “arbitral award” passed by the majority of the members.

Signing of Award Mandatory Section 31(1) is couched in mandatory terms, and provides that an arbitral award shall be made in writing and signed by all the members of the arbitral tribunal. If the arbitral tribunal comprises of more than one arbitrator, the award is made when the arbitrators acting together finally express their decision in writing, and is authenticated by their signatures. An award takes legal effect only after it is signed by the arbitrators, which gives it authentication. 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.

Section 31(1) 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.

In Union of India v. Tecco Trichy Engineers & Contractors (2005 SC), a three judge bench of Supreme Court held that the period of limitation for filing an application u/S. 34 would commence only after a valid delivery of the award takes place u/S. 31(5) of the Act. 8. The delivery of an arbitral award under sub- section (5) of Section 31 is not a matter of mere formality. It is a matter of substance. It is only after the stage under Section 31 has passed that the stage of termination of arbitral proceedings within the meaning of Section 32 of the Act arises. The delivery of arbitral award to the party, to be effective, has to be ‘received’ by the party. 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.

As this delivery of the copy of award has the effect of conferring certain rights on the party as also bringing to an end the right to exercise those rights on expiry of the prescribed period of limitation which would be calculated from that date, the delivery of the copy of award by the Tribunal and the receipt thereof by each party constitutes an important stage in the arbitral proceedings. 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 SC).

Section 32 provides that the arbitral proceedings shall be terminated after the final award is passed. With the termination of the arbitral proceedings, the mandate of the arbitral tribunal terminates, and the tribunal becomes functus officio. (xiv) In an arbitral tribunal comprising of a panel of three members, if one of the members gives a dissenting opinion, it must be delivered contemporaneously on the same date as the final award, and not on a subsequent date, as the tribunal becomes functus officio upon the passing of the final award. The period for rendering the award and dissenting opinion must be within the period prescribed by Section 29A of the Act.

There is only one date recognised by law i.e. the date on which a signed copy of the final award is received by the parties, from which the period of limitation for filing objections would start ticking. There can be no finality in the award, except after it is signed, because signing of the award gives legal effect and finality to 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.

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) The arbitrator should consider carefully whether there is good reason for expressing his dissent, because a dissenting opinion may encourage a challenge to the award. This is for the parties’ information only and does not form part of the award, but it may be admissible as evidence in relation to the procedural matters in the event of a challenge or may add weight to the arguments of a party wishing to appeal against the award

(d) The right to provide a dissenting or separate opinion is an appropriate concomitant of the arbitrator’s adjudicative function and the tribunal’s related obligation to make a reasoned award.

Applying the law to the facts of the present case, from a perusal of the arbitral proceedings, it is found that even though the award was pronounced on 27.04.2018, the signed copy of the award was provided to the parties only on 19.05.2018. The procedural orders of the tribunal reveal that on 27.04.2018, only a copy of the award was provided to the parties to point out any computation error, any clerical or typographical error, or any other error of similar nature which may have occurred in the award on the next date. It was also recorded that the third arbitrator had dissented, and would be delivering his separate opinion. The proceedings were then posted for 12.05.2018. On 12.05.2018, the third arbitrator pronounced his dissenting opinion. On that date, the tribunal posted the matter to 19.05.2018, to enable the parties to point out any typographical or clerical mistakes in the dissenting opinion, and for handing over the original record of the proceedings to the parties. On 19.05.2018, the signed copy of the award and the dissenting opinion, alongwith the original record, were handed over to the parties, as also to each of the arbitrators. The tribunal ordered the termination of the proceedings. 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.

The objections were filed within the period of limitation prescribed by Section 34(3) of the Act, if reckoned from 19.05.2018. In the aforesaid facts and circumstances, the Appeal succeeded. The judgment of the Court of the District and Sessions Judge and the High Court were accordingly set aside. The Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 being restored to the file is now to be decided on merits in accordance with law.

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