Agreed settlement procedure under arbitration law: award upheld despite objections over delegation, conciliation formalities and unsigned verdict.

A Delhi HC held that an arbitral award was not liable to be set aside under section 34 merely because the parties had agreed to a settlement-oriented procedure involving three mutually acceptable persons. The court treated the procedure as one consciously adopted within the broad settlement framework of the Arbitration and Conciliation Act, 1996, and found no impermissible delegation of the arbitrator's function. Section 73 was held inapplicable because the matter was not statutory conciliation in the strict sense, and the absence of signatures on the verdict was treated as an irregularity that did not affect validity. The challenge was rejected and the award was upheld.

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Issues: Whether the arbitral award was liable to be set aside under section 34 of the Arbitration and Conciliation Act, 1996 on the ground that the arbitrator had impermissibly delegated his function to three agreed persons, that the procedure adopted did not satisfy section 73, and that the award lacked reasons.

Analysis: The dispute was taken up in a setting where both parties were closely related and the proceedings were repeatedly directed towards reconciliation. The record showed that the parties themselves agreed to have three mutually acceptable persons intervene and decide the matter, and further agreed that the award may be made in terms of their unanimous verdict. The award was thus treated as the product of a procedure consciously adopted by the parties within the broad settlement-enabling framework of section 30, which permits mediation, conciliation, or other agreed procedures to encourage settlement. In that setting, the participation of the three persons was not treated as an unlawful delegation of adjudicatory power by the arbitrator. The court also held that section 73 had no application because the matter was not one of statutory conciliation in the strict sense. The absence of signatures on the verdict or award was regarded as at most an irregularity that did not undermine validity in the face of the parties' express agreement. The challenge under section 34 was rejected because none of the pleaded objections brought the case within the permitted grounds, and the award was found to be consistent with the public policy of India. Reliance on the Supreme Court decision concerning consensual referral by a consumer forum was held inapposite because the present statute expressly permits settlement-oriented procedures.

Conclusion: The challenge to the award failed; the award was upheld and the petition was dismissed.

Ratio Decidendi: Where parties expressly agree to a settlement-oriented procedure under the Arbitration and Conciliation Act, 1996, an award founded on that agreed procedure is not invalid merely because the arbitrator relied on the parties' chosen persons to record a unanimous settlement outcome, and such an award cannot be set aside under section 34 absent a recognised statutory ground.

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