Domestic arbitration arrangement may yield a valid award, but a changing deciding tribunal can invalidate it for breach of natural justice.

A domestic dispute-resolution arrangement providing for arbitrators, an umpire and a final appeal to a board of directors can produce an award within the Arbitration Act where the parties have agreed that the board's final decision is to operate as the conclusive determination. The court treated the statutory concept of submission broadly and held that such a board decision was capable of being filed as an award. However, the award was invalid because the deciding board did not remain the same throughout and did not act jointly as a properly constituted tribunal. That change in composition, absent clear authorisation in the governing rules, breached natural justice and required the award to be set aside.

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Issues: (i) Whether an appeal decision of the board of directors under the association by-laws, rendered after an umpire's award, was an award capable of being filed under the Indian Arbitration Act. (ii) Whether the award was vitiated because the members of the board who heard the appeal were not the same throughout and because the award was made without the whole tribunal acting together in accordance with natural justice.

Issue (i): Whether an appeal decision of the board of directors under the association by-laws, rendered after an umpire's award, was an award capable of being filed under the Indian Arbitration Act.

Analysis: The contractual scheme provided for reference to arbitrators, then an umpire, and then an appeal to the board of directors, with the final decision under that domestic tribunal treated by the by-laws as an award. The statutory concept of submission was construed broadly, and the Act left the parties free to choose the tribunal and the manner in which the dispute was to be finally decided. A final decision reached in the manner agreed upon by the parties was held to fall within the Act, even though the tribunal was an appeal committee or board rather than ordinary arbitrators in the narrow sense.

Conclusion: The board's appeal decision was held to be an award within the Indian Arbitration Act and was not liable to be taken off the file on that ground.

Issue (ii): Whether the award was vitiated because the members of the board who heard the appeal were not the same throughout and because the award was made without the whole tribunal acting together in accordance with natural justice.

Analysis: The tribunal was required to act judicially, and where several arbitrators or members decide a matter, they must all act together and each must participate in the making of the award. A change in the personnel of the deciding body during the hearing, without a specific rule authorising such a course, was inconsistent with the parties' entitlement to a decision by the tribunal as constituted for the appeal. Mere mercantile practice could not override the requirements of natural justice. The Court also rejected waiver on the facts, and treated the omission as going to the legality of the award rather than a curable irregularity.

Conclusion: The award was held to be invalid and was set aside for breach of natural justice arising from the changing composition of the deciding board.

Final Conclusion: The petition succeeded because, although the award was held maintainable under the arbitration law, it failed on the more fundamental objection that the deciding tribunal did not act as a properly constituted and unified judicial body.

Ratio Decidendi: A domestic arbitral arrangement agreed by the parties can produce an award enforceable under the Arbitration Act, but an award is liable to be set aside where the deciding tribunal is not the same throughout the hearing and does not act jointly in the making of the decision, unless the governing rules clearly authorise such a departure from natural justice.

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