Statutory arbitration bye-laws and reasoned awards: appellate award challenge survived, and an unreasoned award was set aside.

Stock exchange bye-laws with statutory force may validly provide an appellate remedy alongside the Arbitration and Conciliation Act, 1996, because the Act applies to such statutory arbitrations only so far as it is not inconsistent with the governing rules. A challenge directed at the appellate award was therefore not barred on the limitation objection premised on a direct section 34 attack on the original award. The award was also vulnerable because both the original and appellate awards failed to give reasons for rejecting the adjustment claim, contrary to the mandatory requirement in section 31(3).

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Issues: (i) Whether the appeal mechanism under the Stock Exchange bye-laws was invalid or the petition was barred because the challenge should have been made directly under section 34 of the Arbitration and Conciliation Act, 1996 within limitation; (ii) Whether the arbitral award and the appellate award were liable to be set aside for want of reasons.

Issue (i): Whether the appeal mechanism under the Stock Exchange bye-laws was invalid or the petition was barred because the challenge should have been made directly under section 34 of the Arbitration and Conciliation Act, 1996 within limitation?

Analysis: The bye-laws governing Stock Exchange arbitration had statutory force, and the provision enabling an appeal to the Appeal Bench operated as an additional remedy. Section 2(4) of the Arbitration and Conciliation Act, 1996 permits the Act to apply to other statutory arbitrations only to the extent not inconsistent with the other enactment or rules. The appellate mechanism under the bye-laws was therefore not void. Since the petition challenged the appellate award and not the original award directly, limitation under section 34 was not attracted in the manner suggested by the respondent.

Conclusion: The preliminary objection on maintainability and limitation was rejected, and the objection failed against the petitioner.

Issue (ii): Whether the arbitral award and the appellate award were liable to be set aside for want of reasons?

Analysis: Section 31(3) of the Arbitration and Conciliation Act, 1996 requires an arbitral award to state reasons unless the parties agree otherwise. The original award did not deal with the petitioner's adjustment claim, and the appellate award also rejected that contention in a conclusory manner without reasons. The absence of reasons in both awards constituted a legal infirmity attracting interference under section 34. The award of the Appeal Bench, into which the original award had merged, was therefore unsustainable.

Conclusion: The award was set aside for breach of the mandatory requirement to give reasons, in favour of the petitioner.

Final Conclusion: The petition succeeded, the challenge to the appellate award was upheld, and the matter stood cleared for further proceedings in accordance with the bye-laws if so pursued.

Ratio Decidendi: Where the governing statutory arbitration bye-laws provide an additional appellate remedy and are not inconsistent with the Arbitration and Conciliation Act, 1996, the appellate award remains challengeable under section 34; moreover, an award that fails to disclose reasons as required by section 31(3) is liable to be set aside.

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