A Division Bench of the Supreme Court in the case of Dakshin Haryana Bijli Vitram Nigam Limited v. Messrs. Navigant Technologies Private Limited, [Civil Appeal No.791 of 2021, decided on March 2, 2021], adjudicated upon the issue whether the period of limitation for filing a challenge under Section 34 of the Arbitration and Conciliation Act, 1996 (“the Act”) would commence from the date on which the draft award was circulated to the parties or the date on which the signed copy of the award was provided?
Decision:
The Supreme Court noted that, Section 31(1) of the Act is couched in mandatory terms vide usage of the term “shall” and stipulates that an arbitral award shall be made in writing and signed by all the members of the arbitral tribunal.
The Court also observed that the Act makes it obligatory for each of the members of the arbitral tribunal to sign the award, to make it a valid award.
The Supreme Court thus opined that an arbitral award takes legal effect and validity only after it has been signed by the arbitrators, which gives it authentication and there can be no finality of the award, except after it is signed.
Turning to the crux of the dispute, the Supreme Court observed that Section 31(1) read with Section 31(4) of the Act, 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. The Court also placed reliance upon Section 31(5) of the Act which enjoins upon the arbitrator/ tribunal to provide the signed copy of the arbitral award to the parties.
Thus, the Supreme Court held that the date on which the signed award is provided/ “received” by the parties is a crucial date in arbitration proceedings under the Act and it is from this date that:
It is also pertinent to mention that the Supreme Court in the aforesaid judgment also analysed the relevance of a dissenting opinion of a minority arbitrator. The Court noted that, 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 of the Act and that, at the stage of judicial scrutiny by the court under Section 34 of the Act, the court is not precluded from considering the findings and conclusions of the dissenting opinion of the minority member of the arbitral tribunal.
The Supreme Court thus, held that under Section 34 of the 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) of Section 34 are made out since, the court does not have the power to modify an arbitral award.
Please find a copy of the judgment here.
This update has been contributed by Udit Mendiratta (Partner) and Kunal Dey (Associate).
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