An arbitral award remains valid despite an arbitrator's recusal just before its pronouncement, as a majority decision is required per the Arbitration and Conciliation Act.

Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 37(1)(c) and Section 34 - Appeal against arbitral award - Appellant contended that the award by the majority ceased to be valid as one arbitrator had recused himself pre-award - Court held that a majority decision is valid despite dissenting arbitrators' absence as per Section 29(1) - Recusal post-decision does not invalidate the award. (Paras 20, 28, 39)

(B) Arbitral procedure - It is imperative that dissenting opinions do not invalidate an award reached by the majority. (Paras 36)

Facts of the case:
Disputes arose from a Memorandum of Understanding (MOU) signed by the appellant and respondent concerning the establishment of a business. The arbitral award was challenged, claiming a breach of arbitration procedure due to an arbitrator's recusal just before the award announcement.

Findings of Court:
The learned Commercial Court rejected the appellant's application under Section 34 of the A&C Act, maintaining the validity of the majority award delivered.

Issues: Whether the arbitral tribunal was competent to deliver the award post-recusal of one arbitrator.

Ratio Decidendi: The court highlighted that the majority's decision holds precedence in arbitration, affirming that dissenting opinions do not obstruct the resultant award.

Result: Appeal dismissed.

Table of Content
1. the appeal under a&c act against arbitral award. (Para 1 , 2)
2. appellant's contention on the tribunal's composition. (Para 3)
3. background of the mou and business arrangement. (Para 4 , 5 , 6)
4. respondent's claims during arbitration. (Para 7 , 8 , 9 , 10 , 11)
5. procedural history and timeline of arbitration. (Para 14 , 15 , 20)
6. appellant's grounds for appeal. (Para 18 , 19)
7. legal basis of tribunal composition. (Para 21 , 22)
8. legal analysis of arbitrator recusal. (Para 24 , 25 , 26 , 27 , 29 , 30 , 31)
9. importance of dissenting opinions in arbitration. (Para 32 , 33 , 36 , 37 , 38 , 39)
10. conclusion of the court dismissing the appeal. (Para 40)

JUDGMENT :

VIBHU BAKHRU, J

1. The appellant has filed the present appeal under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996 (hereafter the A&C Act) impugning a judgment dated 04.11.2023 (hereafter the impugned judgment) passed by the learned Commercial Court rejecting OMP(COMM) 25/2019. The appellant had filed the aforementioned application [OMP(COMM) 25/2019] under Section 34 of the A&C Act assailing the arbitral award dated 21.12.2018 (hereafter the impugned award).

2. The impugned award was rendered in the context of disputes that had arisen between the parties in connection with the Memorandum of Understanding dated 15.01.2011 entered into by four individuals including the appellant and the respondent. The disputes were referred to an arbitral tribunal of three members (hereafter the Arbitral Tribunal). The said members are referred by their initials, VKA, RCC and JKM. VKA was appointed on behalf of the respondent and RCC was appointed by this Court on behalf of the appellant. They had appointed JKM as the presiding arbitrator. The impugned award has been rendered by the majority constituting VKA and JKM. RCC had recused from the arbitration on the eve of pronouncement of the impugned award. He had, one day prior to the pronouncement of the impugned award, sent an e-mail stating that he did not wish to continue as a co-arbitrator.

3. The appellant contends that the impugned award is non-est as the Arbitral Tribunal did not exist on the date of the pronouncement of the impugned award, as by an email dated 20.12.2018 RCC had recused himself from the arbitration. Although, the appeal filed by the appellant also includes grounds to challenge the impugned award on merits, no such grounds were pressed.

FACTUAL CONTEXT

4. As noted above, the disputes between the parties arose in the context of the Memorandum of Understanding dated 15.01.2011 (hereafter the MOU). The said MoU was signed by four individuals (the appellant, the respondent, Shri Ravi Doraiswamy and Dr Manoj Verma) including the parties to the present proceedings. The appellant was engaged in the business of dealing with information regarding tenders from India and around the world and was carrying on the same business under the proprietorship concern named ‘Tendernews’. In terms of the MOU, all four signatories to the MoU had agreed to join hands to grow the said business.

5. The relevant terms of the said MOU are set out below:

“Background Information:

Mr. Rakesh Kalia is owning and running a proprietorship concern in the name of Tendernews which is dealing with tender information from India and around the world. Mr. Sanjay Kumar Vyas, Mr. Ravi Doraiswamy and Dr. Manoj Verma are 3 individuals having vast knowledge of Tendering domain. All 4 parties have mutually agreed to join hands and grow the business together, following points have been discussed and agreed between the parties involved and are signatories of this MoU:

1. Promoters: Mr. Rakesh Kalia, Mr. Sanjay Kumar Vyas, Mr. Ravi Doraiswamy and Dr. Manoj Verma will be the main and initial promoters of the company. The 3 promoter directors namely Mr. Sanjay Kumar Vyas, Mr. Ravi Doraiswamy and Dr. Manoj Verma will be exclusive full time Directors of the company, whereas Mr. Kalia would be acting as Managing Director and Chairman of the B