Arbitral Award Not Hit By Adequacy Facet If Reasons Given Are Not Laconic: Madras High Court

The Single Bench of Justice M. Sundar ruled that being 'tersely eloquent' is not alien to judgment writing.

A contract was awarded to the respondent M/s Progressive-Aliens by the petitioner Southern Railways for some construction work. After some disputes arose between the parties, an Arbitral Tribunal was constituted and an award was passed. The Arbitral Tribunal had passed an award holding that the petitioner had not adhered to the provisions of the agreement and had wrongly terminated the agreement.

The petitioner filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act) before the Madras High Court to set aside the arbitral award made by the Arbitral Tribunal.

The petitioner Southern Railways submitted before the Madras High Court that the Arbitral Tribunal had acceded to the claims made by the respondent/claimant before the Arbitral Tribunal without giving specific reasons.

The Court noted that Section 31 (3) of the A&C Act mandates that an arbitral award shall state the reasons upon which it is based unless the parties have agreed that no reasons are to be given or when it is a compromise arbitral award pursuant to a settlement under Section 30 of the A&C Act.

The Court observed that the arbitral award was neither a compromise award nor was it a case where the parties had agreed that no reasons were to be given. Therefore, the Court held that Section 31 (3) of the A&C Act would operate.

The Court noted that the Supreme Court in the case of Dyna Technologies Pvt Ltd versus Crompton Greaves Ltd (2019) had held that an arbitral award need not be elaborate like a judgment, and that it must be proper, intelligible and adequate. The Supreme Court had added that there was no straight jacket formula regarding adequacy, and the arbitral award has to be tested on a case to case basis depending on the kind of reasons that need to be given.

The High Court ruled that the reasons given by the Arbitral Tribunal were epigrammatic but not laconic. The Court added that as long as the reasons are not laconic, the award cannot be hit by the adequacy facet qua the reasons in an award.

"A careful perusal of the excerpted portions makes it clear that the reasons no doubt are epigrammatic but not laconic. As long as the reasons are not laconic, it cannot be gainsaid that it is hit by adequacy facet qua reasons in a impugned award. When this Court says epigrammatic being terse and being expressive are not mutually exclusive. After all, the expression 'tersely eloquent' is not alien to judgment writing."

The Court thus dismissed the petition.

* Epigrammatic= terse and not superfluous                    * Laconic= very brief and uncommunicative

( Word meaning is supported by Livelaw)

Case Title: The Chief Engineer / Metropolitan Transport Project (Railways), Southern Railway and Anr. versus M/s. Progressive-Aliens

Dated: 08.03.2022 (Madras High Court)

Counsel for the Petitioner: Mr. A.V. Arun and Mr. M.T. Arunan

Counsel for the Respondent: Mr. G. Jeremiah

Citation: 2022 LiveLaw (Mad) 189

Click Here To Read/Download Order