The Andhra Pradesh High Court, in a significant judgment on arbitration law, has ruled that a separately signed dissenting opinion by an arbitrator is a sufficient reason for the omission of their signature from the majority award. A Division Bench of Justice Ravi Nath Tilhari and Justice Maheswara Rao Kuncheam held that such a procedure complies with the mandatory requirements of Section 31 of the Arbitration & Conciliation Act, 1996, and dismissed an appeal challenging a majority arbitral award on these grounds.
The court dismissed the International Commercial Arbitration Appeal filed by M/s. Orind Special Refractories Ltd. against M/s. Rashtriya Ispat Nigam Ltd., upholding a single judge’s order that had refused to set aside the arbitral award. The Bench imposed costs of Rs. 1,00,000 on the appellant for raising arguments found to be “misconceived and contrary to record.”
Background of the Dispute
The case originates from a contract where M/s. Orind Special Refractories Ltd., a Chinese company, was to supply 260 sets of ladles to M/s. Rashtriya Ispat Nigam Ltd. (Visakhapatnam Steel Plant). A dispute arose when the respondent deducted significant sums—USD 159,638.50 and Rs. 15,72,960.52—as liquidated damages for alleged delivery delays. Further deductions of Rs. 12,75,651.13 for exchange rate fluctuations and Rs. 4,18,00,355.13 as a penalty for underperformance were also made.
Following the failure of amicable settlement, Orind invoked the arbitration clause. An Arbitral Tribunal was constituted with three members: Sri T. V. B. Haranath (Presiding Arbitrator), Justice S. S. Parkar (Co-Arbitrator-1), and Justice NRL Nageswararao (Co-Arbitrator-2).
On June 2, 2017, the Tribunal passed a majority award, with the Presiding Arbitrator and Co-Arbitrator-2 rejecting most of Orind’s claims but granting partial relief of USD 21,837 and Rs. 2,12,268. Co-Arbitrator-1, Justice S. S. Parkar, issued a separate dissenting award, allowing Orind’s claims regarding liquidated damages and exchange rate fluctuations.
Orind challenged the majority award before a Single Judge of the High Court under Section 34 of the Act, but the application was dismissed on August 27, 2024, leading to the present appeal under Section 37.
Arguments Before the Division Bench
The primary contention by the appellant’s counsel, Sri S. Ram Babu, was that the majority award was legally invalid for non-compliance with Section 31(1) and (2) of the Act. He argued that the award was not signed by all arbitrators, and crucially, the majority award did not “state the reason for any omitted signature,” which he contended was a mandatory requirement. He placed reliance on judgments including the Supreme Court’s decision in Dakshin Haryana Bijli Vitran Nigam Limited v. M/s. Navigant Technologies.
In response, Sri S. Vivek Chandrasekhar, counsel for the respondent, argued that the procedure was valid. He submitted that the Presiding Arbitrator signed his award, the concurring Co-Arbitrator-2 signed his separate concurring award, and the dissenting Co-Arbitrator-1 signed his separate opinion. These three documents, compiled and circulated, fulfilled the statutory requirements.
Court’s Analysis and Verdict
The Division Bench centered its analysis on whether the award violated Section 31 of the Arbitration & Conciliation Act, 1996. The court affirmed the legal principle, settled by the Supreme Court, that Section 31(1) is “couched in mandatory terms” and an award takes legal effect only after it is signed by the arbitrators.
However, the court found no procedural infirmity in the present case. The judgment noted that the Presiding Arbitrator had passed a duly signed award, Co-Arbitrator-2 had concurred via a separate signed award, and Co-Arbitrator-1 had issued a duly signed dissenting opinion. These were compiled into a single booklet and circulated.
The court established a key legal position regarding compliance with Section 31(2). The judgment concluded, “the award signed by majority or consented to or agreed upon by the majority and there being a separate opinion signed by other Co-Arbitrator(s), would be in compliance with the statutory provisions of Section 31 (1) & (2) of the Act 1996, even if the reason for omission of the Co-Arbitrator, not signing the majority award, is not recorded as in such a case the opinion by itself would be the reason for omission to sign the majority award.”
The Bench also dismissed the appellant’s claim that the Single Judge had failed to consider this legal argument. Quoting from the Single Judge’s order, the Bench demonstrated that the issue had been thoroughly examined and rejected.
Finding no merit in the appeal, the court dismissed it and imposed costs, ordering the amount to be deposited with the Andhra Pradesh High Court Legal Services Committee within one month.
