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

Judgment

1 S.C.R. 1135 1135 DAKSHIN HARYANA BIJLI VITRAN NIGAM LTD. A v. M/S NAVIGANT TECHNOLOGIES PVT. LTD. (Civil Appeal No. 791 of 2021) MARCH 02, 2021 [INDU MALHOTRA AND AJAY RASTOGI, JJ.] Arbitration and Conciliation Act, 1996 – s.31 and s.34 – Period of limitation for filing the petition u/s. 34 – A service level agreement was executed by the appellant-corporation in favour of the respondent-company providing call centre services – Agreement provided arbitration clause – The appellant-corporation terminated the service level agreement, which led to dispute between the parties – The disputes were referred to arbitration by a three-member tribunal – The arbitral tribunal orally pronounced the award [2:1] on 27.04.2018, whereby the claims of the respondent-company were allowed – The parties were informed that the third arbitrator had disagreed with the view taken by the majority of arbitrators, and would be rendering his separate opinion – A copy of the draft award was provided to the parties to point out any computation, clerical or typographical errors in the award – On 12.05.2018, a copy of the dissenting opinion was provided by the third arbitrator to the parties (even though the opinion was dated 27.04.2018) – The matter was then posted to 19.05.2018, for the parties to point out any typographical or clerical mistakes in the dissenting opinion delivered by the third arbitrator – On 19.05.2018, the signed copy of the arbitral award was provided to both the parties, and the proceedings were terminated – Whether the period of limitation for filing the Petition u/s.34 would commence from the date on which the draft award dated 27.04.2018 was circulated to the parties, or the date on which the signed copy of the award was provided i.e. 19.05.2018 – Held: s.31(1) makes it obligatory for each of the members of the tribunal to sign the award, to make it a valid award – Further, 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 s.31(5) of the Act – In the instant case, on 19.05.2018, 1135 B C D E F G H 1136 SUPREME COURT REPORTS [2021] 1 S.C.R. 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 – Therefore, 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. Allowing the appeal, the Court HELD: Whether the period of limitation for filing the Petition u/s.34 would commence from the date on which the draft award dated 27.04.2018 was circulated to the parties, or the date on which the signed copy of the award was provided

#1. The legal requirement of signing the arbitral award by a sole arbitrator, or the members of a tribunal is found in Section 31 of the 1996 Act, which provides the form and content of an arbitral award. [Para 4(vii)][1149-C]

#2. 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. [Para 4(viii)][1149-G-H; 1150-A-C]

#3. Sub-section (1) of Section 31 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 A B C D E F G H DAKSHIN HARYANA BIJLI VITRAN NIGAM LTD. v. M/S NAVIGANT TECHNOLOGIES PVT. LTD. 1137 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. This would be evident from the language of sub-section (3) of Section 34(3). [Para 4(ix)][1150-D-E]

#4. 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. [Para 4(xvii)][1153-G; 1154-A]

#5. Section 34 provides recourse for judicial scrutiny of the award by a Court, upon making an application under sub-sections (2) and (3) for setting aside 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. Section 34(3) provides a specific time limit of three months from the date of “receipt” of the award, and a further period of thirty days, if the Court is satisfied that the party was prevented by sufficient cause from making the application within the said period, but not thereafter. [Para 4(xviii)][1154-B-D]

#6. Applying the law to the facts of the present case, this Court finds from a perusal of the arbitral proceedings 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. On 12.05.2018, the third arbitrator pronounced his dissenting opinion. On that date, the tribunal posted the matter to A B C D E F G H 1138 SUPREME COURT REPORTS [2021] 1 S.C.R.

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. [Para 5][1160-C-F]

#7. This Court is of the considered opinion that 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. [Para 6] [1160-G]