Arbitration tribunal composition upheld where clause and parties' conduct supported a three-member majority decision structure.

An arbitration clause providing for either a sole arbitrator by agreement or otherwise a three-member tribunal was read as supporting a tribunal acting by majority under section 10(2) of the Arbitration Act, 1940, rather than an umpire arrangement under section 10(1). The text and structure of the clause, together with the parties' continued participation, supported validation of the tribunal's constitution. Waiver and acquiescence could preclude a late objection to composition, and a later joint statement naming the chairman and two arbitrators further indicated a fresh agreement. The arbitral proceedings were therefore treated as valid and the reference could proceed.

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Issues: (i) Whether the arbitration clause required the third arbitrator to function as an umpire under section 10(1) of the Arbitration Act, 1940, or as a full member of a three-arbitrator tribunal with decision by majority under section 10(2). (ii) Whether the parties' conduct and later agreement validated the tribunal proceedings and precluded objection to the composition of the arbitral tribunal.

Issue (i): Whether the arbitration clause required the third arbitrator to function as an umpire under section 10(1) of the Arbitration Act, 1940, or as a full member of a three-arbitrator tribunal with decision by majority under section 10(2).

Analysis: The clause contemplated a sole arbitrator if agreed, and otherwise a tribunal of three arbitrators. Its language also referred to majority decision, which indicated that the parties intended a three-member tribunal whose award would be governed by majority rule. Section 10(1) was not treated as excluding such an arrangement where the contractual text and the structure of the reference supported a three-arbitrator tribunal. The earlier constitution of the tribunal and the continued conduct of the proceedings were consistent with that reading.

Conclusion: The arbitration clause was held to fall within section 10(2), and the tribunal was treated as a valid three-arbitrator tribunal with the Chairman continuing as a member.

Issue (ii): Whether the parties' conduct and later agreement validated the tribunal proceedings and precluded objection to the composition of the arbitral tribunal.

Analysis: The Court accepted that waiver and acquiescence can validate arbitral proceedings where parties knowingly participate without demur. It also treated the later joint statement referring disputes to a tribunal consisting of the named chairman and two arbitrators as supporting the existence of a fresh agreement. The proceedings were therefore not to be invalidated on a technical objection to composition raised after long participation in the reference.

Conclusion: The objection to the tribunal's composition was rejected, and the proceedings were held to remain valid.

Final Conclusion: The arbitral tribunal was upheld as properly constituted on the basis of the agreement read with the parties' conduct, and the matter was remitted to that tribunal to proceed with the reference.

Ratio Decidendi: Where the arbitration clause and the parties' subsequent conduct support a three-member tribunal with majority decision, a belated objection to the third member's role will not invalidate the arbitral proceedings if waiver, acquiescence, or a fresh agreement can be inferred.

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