2026 Supreme(Cal) 163

IN THE HIGH COURT AT CALCUTTA
SABYASACHI BHATTACHARYYA, J.
Kessels Engineering Works Pvt. Ltd. - Appellant
Versus
Neo Metalicks Limited - Respondent
AP-COM/245 of 2024 IA No. GA/1 of 2022, EC/143 of 2021
Decided On : 15-05-2026

In a multi-member arbitral tribunal, failure to record specific reasons for an omitted signature within the majority award itself constitutes a procedural illegality, and the interpretation of contractual terms that is manifestly contrary to the agreement's express provisions constitutes patent illegality necessitating intervention.

Headnote:(A) Arbitration and Conciliation Act, 1996 - Sections 31(2), 34(2)(b) and 34(2-A) - Arbitral award - Validity of award in multi-member tribunal - Requirement for signing of award - Mandatory duty to state reason for omission of signature in the award itself - Procedural fairness and mandatory deliberation - Where an award is rendered by a multi-member tribunal, non-signing by a member without a contemporaneous reason recorded for the omission within the majority award violates statutory requirements and fundamental principles of party autonomy. (Paras 16, 17, 110, 111, 126 and 129)

(B) Contract law - Construction of terms - Interpretation of Guarantee Clause - Patent illegality - Where an arbitral tribunal interprets a contract in a manner contrary to its plain meaning, such that no reasonable or prudent person would arrive at such a conclusion, it amounts to patent illegality under the Act - Arbitral tribunals must act in accordance with the express terms of the agreement and cannot rewrite the contract under the guise of interpretation. (Paras 142, 143, 149 and 155)

(C) Evidence - Allegations of fraud - Standard of proof - Allegations of fraud and corruption in arbitral proceedings must be established beyond reasonable doubt - Suspicion or conjecture cannot replace the requirement for empirical proof of misconduct. (Paras 89, 90 and 106)

Facts of the case:
An application was filed under Section 34 to set aside an arbitral award and, consequently, an enforcement application was contested. The challenge was based on two threshold grounds: the award being vitiated by fraud due to the physical and mental health of the presiding arbitrator, and the violation of Section 31(2) regarding the signature of the dissenting arbitrator. On merit, it was argued that the tribunal misinterpreted the guarantee clause, extending the warranty period beyond the contractual terms and disregarding the second limb of the warranty limitation.

Findings of Court:
The court held that the majority award failed to provide reasons for the omitted signature in the award itself. The post-facto publication of a minority opinion did not cure this procedural defect, as the co-arbitrators were required to deliberate and consult as part of the adjudicative process. The court further found the tribunal's interpretation of 'successful commissioning' to be an absurd deviation from the contract terms, creating an perpetual guarantee period that was not supported by the written agreement, thus amounting to patent perversity and illegality.

Issues: The main issues were whether the majority award was vitiated by fraud/corruption, whether the missing signature of a third arbitrator rendered the award invalid under Section 31(2), and whether the tribunal acted with patent illegality by ignoring specific contract conditions regarding the warranty period.

Ratio Decidendi: The court ruled that Section 31(2) is a mandatory requirement designed to ensure that all members have had the opportunity to participate in the decision-making process. The failure to record the reason for a missing signature in the majority award itself, combined with the lack of prior deliberation, hits at the root of the award's validity. Additionally, an interpretation of a contract that ignores unambiguous express clauses and results in an absurd commercial outcome violates the requirement for arbitral tribunals to adhere to the governed agreement, thus necessitating the setting aside of the award.

Result: Application under Section 34 allowed; impugned award set aside; counter-claim of the petitioner allowed.