2002 (1) TMI 1249 - HC - Companies Law

Issues Involved:
1. Delegation of arbitrator's responsibility.
2. Nature of the award (settlement vs. adjudication).
3. Compliance with Section 73 of the Arbitration and Conciliation Act, 1996.
4. Requirement of reasons in the arbitral award.
5. Validity of the award under Section 34 of the Arbitration and Conciliation Act, 1996.
6. Public policy and estoppel.

Detailed Analysis:

1. Delegation of Arbitrator's Responsibility:
The petitioner contended that the arbitrator improperly delegated his responsibility to three individuals, referred to as "referees," without adhering to Section 73 of the Arbitration and Conciliation Act, 1996. The court noted that the parties themselves had agreed to this course of action, indicating that the arbitrator did not delegate his duty but facilitated a mutually agreed procedure. The arbitrator's role was to encourage settlement, which is permissible under Section 30 of the Act.

2. Nature of the Award (Settlement vs. Adjudication):
The petitioner argued that the award was not a settlement but an adjudication, which should have followed the Act's provisions. The court found that the entire process was aimed at an amicable settlement, as evidenced by the parties' joint statements and the involvement of mutually agreed mediators. The award was thus a result of a settlement facilitated by the arbitrator, not a formal adjudication.

3. Compliance with Section 73 of the Arbitration and Conciliation Act, 1996:
The petitioner claimed non-compliance with Section 73, which mandates a written settlement agreement signed by the parties. The court observed that the procedure agreed upon by the parties did not necessitate strict adherence to Section 73, as the award was based on a mutually agreed settlement process. The spirit of the Act, which encourages amicable settlements, was upheld.

4. Requirement of Reasons in the Arbitral Award:
The petitioner argued that the award lacked reasons, violating Section 31 of the Act. The court held that the award, being a result of a settlement, did not require detailed reasoning. The arbitrator's reference to Regulation 5.13 of the NSE, which allows for an arbitral award on agreed terms, was deemed appropriate.

5. Validity of the Award under Section 34 of the Arbitration and Conciliation Act, 1996:
The court examined whether the award could be set aside under Section 34, which allows challenges on specific grounds, including conflict with public policy. The court found that the award did not violate public policy and was consistent with the Act's objective of encouraging settlements. The petitioner's objections did not fall within the grounds specified in Section 34.

6. Public Policy and Estoppel:
The court emphasized that the award was in line with public policy, promoting amicable resolution of disputes. The petitioner, having agreed to the settlement process, was estopped from challenging the award on technical grounds. The court criticized the petitioner's attempt to retract from the agreed procedure, labeling it as dishonest and an afterthought.

Conclusion:
The court dismissed the petition and upheld the arbitral award, affirming that the procedure adopted was mutually agreed upon and in conformity with the Arbitration and Conciliation Act, 1996. The objections raised by the petitioner were found to be without merit, and the interim orders were vacated.

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