Statutory exchange byelaws can authorise a two-arbitrator tribunal and prevail over the general odd-number rule under arbitration law.

Under the stock exchange arbitration framework, a byelaw made under the enabling securities legislation authorised references to two arbitrators, and that special statutory scheme prevailed over the general requirement in section 10 of the Arbitration and Conciliation Act, 1996 for an odd-number tribunal. The court treated the byelaw as subordinate legislation with the force of law, held that section 2(4) saved the exchange mechanism from inconsistency with the general Act, and rejected the challenge under section 34(2)(a)(v) because the tribunal was validly constituted. The award was therefore protected from attack on the ground of tribunal composition.

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Issues: (i) Whether an arbitral tribunal consisting of two arbitrators appointed under the stock exchange byelaws was invalid for breach of section 10 of the Arbitration and Conciliation Act, 1996; (ii) Whether section 2(4) of the Arbitration and Conciliation Act, 1996 saved the exchange byelaws from the operation of section 10; (iii) Whether the award was liable to be set aside under section 34(2)(a)(v) of the Arbitration and Conciliation Act, 1996.

Issue (i): Whether an arbitral tribunal consisting of two arbitrators appointed under the stock exchange byelaws was invalid for breach of section 10 of the Arbitration and Conciliation Act, 1996.

Analysis: The dispute arose under the statutory framework governing stock exchange contracts. Section 10 of the Arbitration and Conciliation Act, 1996 generally requires an odd number of arbitrators, but the exchange byelaw prescribed arbitration by two arbitrators, one appointed by each party. The judgment held that the byelaw was a statutory byelaw made under the authority of the Securities Contracts (Regulation) Act, 1956 and therefore had the force of law as subordinate legislation. On that basis, the byelaw was treated as falling within the saving language applicable to arbitrations under another enactment, so that the special arbitration scheme under the exchange rules was not displaced by the general rule in section 10.

Conclusion: The two-member arbitral tribunal was valid and was not invalidated by section 10.

Issue (ii): Whether section 2(4) of the Arbitration and Conciliation Act, 1996 saved the exchange byelaws from the operation of section 10.

Analysis: Section 2(4) applies the Act to arbitrations under another enactment except where the Act is inconsistent with that enactment or the rules made thereunder. The judgment construed the stock exchange byelaws as rules made under the enabling provisions of section 9 of the Securities Contracts (Regulation) Act, 1956. Relying on the settled line of authority treating such byelaws as statutory and part of the regulatory scheme, it was held that the special byelaw governing appointment of arbitrators prevailed over the general prohibition in section 10. The saving clause therefore protected the exchange mechanism.

Conclusion: Section 2(4) saved the exchange byelaws and the arbitral process under them.

Issue (iii): Whether the award was liable to be set aside under section 34(2)(a)(v) of the Arbitration and Conciliation Act, 1996.

Analysis: Once the tribunal was held to be validly constituted under the statutory byelaw, the foundation for challenging the award on that ground disappeared. The judgment therefore rejected the premise that the award suffered from a defect in the composition of the tribunal. The award could not be annulled merely because the tribunal comprised two arbitrators where the governing statutory byelaw authorised that constitution.

Conclusion: The award was not liable to be set aside on that ground.

Final Conclusion: The statutory byelaw governing two-arbitrator references under the stock exchange framework was upheld, the contrary view of the Single Judge was reversed, and the award stood protected from challenge on the ground of tribunal composition.

Ratio Decidendi: Where an arbitration is held under a special enactment and its statutory byelaws are made under the enabling power of that enactment, those byelaws prevail over the general provisions of the Arbitration and Conciliation Act, 1996 to the extent of inconsistency.

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