Allowed

Oil and Natural Gas Corporation Ltd. v. M/S North Eastern Engineers

Gauhati HC12 Mar 2019Arb.A./4/2016

Case brief

AI extract

What is this about?

The High Court allowed the appeal, setting aside an impugned order that dismissed an application to set aside an arbitral award. The Court held the award was non-existent because it was signed by only one of three arbitrators, violating mandatory signing provisions.

What did the court decide?

The impugned judgment and order dated 29.08.2015 are set aside, and the arbitral award dated 28.09.2004 is set aside.

Oil and Natural Gas Corporation Ltd. Vs M/S North Eastern… — Arbitration | Gauhati HC (2019)

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GAHC010229222016

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THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

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Case No. : Arb.A. 4/2016

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1:OIL AND NATURAL GAS CORPORATION LTD

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EASTERN REGION BUSINESS CENTRE, TECHNICAL BUSINESS GROUP, ELECTRICAL, NAZIRA-785635, DISTRICT- SIVASAGAR, HAVING ANOTHER ESTABLISHMENT AT CINNAMARA IN THE DISTRICT OF JORHAT, ASSAM

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VERSUS

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1:M/S NORTH EASTERN ENGINEERS G.N.B. ROAD, AMBARI, GUWAHATI-781001

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Advocate for the Petitioner : MS.S SENAPATI

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Advocate for the Respondent : MR.S BORA

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BEFORE

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HONOURABLE MR. JUSTICE SUMAN SHYAM

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JUDGMENT AND ORDER

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Date : 12-03-2019

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Heard Mr. A. K. Poddar, learned senior counsel assisted by Ms. D. Senapati and Mr. A. Poddar,

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learned counsel appearing on behalf of the appellant. I have also heard Mr. Priyangshu Goswami,

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learned counsel representing the respondent.

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In this appeal the judgment and order dated 29.08.2015 passed by the learned Additional

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District Judge No.3, Kamrup(M), Guwahati in Misc (Arbitration) Case No.1/2005 dismissing the

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application filed by the appellant under Section 34 of the Arbitration and Conciliation Act, 1996 is put under challenge. The only ground urged by the appellant’s counsel is that the purported arbitral award dated 28.09.2004 contravenes the provision of Section 31(1) and (2) of the Act of 1996 and therefore, is unsustainable in the eye of law.

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It appears from the record that certain disputes and differences arose between the appellant (ONGC) and the respondent pertaining to deductions made from the bills of the respondent to the tune of Rs.11,19,930/-. Since there was an arbitration agreement by and between the parties, the dispute was referred to a three member arbitral tribunal. Eventually, the arbitral tribunal had concluded the proceeding by issuing the award dated 28.09.2004. However, the aforesaid award was signed only by

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the Presiding Arbitrator (umpire) and the other two members of the arbitral tribunal had not put their signatures in the arbitral award.

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By referring to the provisions of Section 31(1) of the Act of 1996, Mr. Poddar submits that since the members of the arbitral tribunal or at least the majority of the members had not put their signatures in the arbitral award, the same is non-est in the eye of law and hence, liable to be set aside. However, the learned District Judge had committed manifest illegality in failing to appreciate the said aspect of the matter while rejecting the application filed under Section 34 of the Act of 1996.

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Mr. Priyangshu Goswami, learned counsel for the respondent, has fairly conceded that the arbitral award dated 28.09.2004, which was published in stamp paper, was signed only by the presiding arbitrator. The learned counsel, however, submits that the learned presiding arbitrator had concurred with the views expressed by the other arbitrator, viz., Sri H. N. Chakraborty, (Retd.) Secretary, PWD, Govt. of Assam, who was appointed by the claimant/respondent. According to Mr. Goswami, the majority view of the three member tribunal is available on record and therefore, there would be substantive compliance of Section 31(2) of the Act of 1996 in this case.

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I am afraid, the said submission of Mr. Goswami cannot be accepted by this Court. Section 31 of the Act of 1996 lays down the form and content of arbitral award. According to sub-section (1) of Section 31, an arbitral award has to be made in writing and shall be signed by the members of arbitral tribunal. Sub-section (2) of Section 31 lays down that for the purpose of sub-section (1), in an arbitral proceeding with more than one arbitrator, the signatures of the majority of the members of the arbitral tribunal shall be sufficient so long as the reason for any omitted signature is stated. In the present case, since it was a three member arbitral tribunal, hence, the award ought to have been signed by at least two members so as to fulfil the requirement of Section 31(2). However, as noticed above, the arbitral award has been signed by only one member, i.e. the umpire.

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Section 31(1) speaks of “an arbitral award” and therefore, it has to be presumed that the final award to be passed by the tribunal has to be a single award and not multiple awards. It is no doubt correct that the arbitrator Sri H. N. Chakraborty had passed a separate award signed by him but what is to be noted herein is that the said award was not published in stamp paper. Therefore, although the umpire has apparently agreed with the views expressed by the other arbitrator, viz. Sri H. N. Chakraborty, yet, since the arbitral award finally published in a stamp paper was not signed by him, hence the same cannot be treated to be valid in the eye of law.

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The language of Section 31 as regards form and contents of arbitral award is quite

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unambiguous. Therefore, having regard to the scheme of the Act of 1996, the said provision has to be treated as mandatory. If that be so, an award which does not comply with the requirement of Section 31 of the Act of 1996 cannot be held to be valid in the eye of law.

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In the result, the impugned judgment and order dated 29.08.2015 is hereby set aside.

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Consequently, the award dated 28.09.2004 also stands set aside.

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Appeal stands allowed.

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It is, however, made clear that notwithstanding this order setting aside the arbitral award, it will be open for the claimant to initiate a fresh process for adjudication of its claim on merit by means of an arbitral tribunal, in accordance with law, if so advised.

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Parties to bear their own costs

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Send back the LCRs.

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JUDGE

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Comparing Assistant

Oil and Natural Gas Corporation Ltd. v. M/S North Eastern Engineers

Case brief

What is this about?

What did the court decide?

Oil and Natural Gas Corporation Ltd. v. M/S North Eastern Engineers

Case brief

What is this about?

What did the court decide?

What the court decided

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