A signed award vs an unsigned draft: SC sets the clock for arbitration challenges

The arbitrators announced the decision on April 27. But the signed copy came three weeks later. The court said: the clock starts ticking only when the ink is dry.

A power distribution company in Haryana had lost a three-year-old arbitration. The majority of the panel had ruled against it on April 27, 2018. But that day, the company’s lawyers walked out of the room holding only an unsigned draft—a sheaf of papers, still warm from the printer, with no signatures at the bottom. The signed copies arrived on May 19, when the proceedings were formally closed. The company filed its challenge on September 10. Both the trial court and the High Court said: too late. The Supreme Court disagreed.

Could a company lose its right to challenge an arbitral award simply because the arbitrators handed over an unsigned draft before the signed copy? That was the question before a bench of Justice Indu Malhotra and Justice Ajay Rastogi in Dakshin Haryana Bijli Vitran Nigam Ltd. v. M/s Navigant Technologies Pvt. Ltd. The answer would decide not just this case, but the fate of every arbitration challenge where the ink dried after the announcement.

When the call centre deal fell apart

In 2011, Dakshin Haryana Bijli Vitran Nigam Ltd (DHBVN)—a state-owned power distribution company—hired Navigant Technologies to run a call centre. The agreement ran for three years. In 2014, DHBVN terminated it. Disputes followed, and the matter went to a three-member arbitral tribunal (a panel of three arbitrators appointed to decide the dispute).

On April 27, 2018, the tribunal delivered its verdict. By a 2:1 majority, the panel ruled in favour of Navigant. But here is where the trouble began: the majority award handed to the parties that day was unsigned. It was a draft. The dissenting arbitrator—the one who disagreed with the majority—delivered his separate opinion on May 12, 2018. The signed copies of both the majority award and the dissent were finally delivered on May 19, 2018, when the tribunal formally terminated the proceedings (closed the arbitration).

DHBVN filed its objections under Section 34 of the Arbitration and Conciliation Act, 1996 (the provision that allows a party to ask a court to set aside an arbitral award) on September 10, 2018. The company believed it had three months from May 19. The law under Section 34(3) gives a party three months to challenge an award, extendable by another 30 days if the court is satisfied there was sufficient cause for the delay.

The trial court said: you are late

The Court of Additional Civil Judge / District & Sessions Judge, Hisar, Haryana, did not agree. The court counted the limitation period from April 27—the date the unsigned draft was circulated. By that reckoning, DHBVN had until July 27, 2018, to file its challenge. The September 10 petition was more than a month late. On February 14, 2019, the court dismissed it as time-barred.

DHBVN appealed to the Punjab and Haryana High Court under Section 37 of the Act (the provision for appeals against orders under Section 34). On December 11, 2019, the High Court affirmed the trial court’s decision. The company was out of time, both courts said. The clock had started ticking the day the arbitrators announced their decision, not the day they signed it.

What the law actually says about signing

The Supreme Court saw the problem differently. The court examined three provisions of the Arbitration and Conciliation Act together: Section 29 (decision-making by a panel of arbitrators), Section 31 (form and contents of the arbitral award), and Section 34(3) (the limitation period for challenging an award).

Section 31(1) requires that an arbitral award be signed by all members of the tribunal. Section 31(5) says that after the award is signed, a signed copy must be delivered to each party. The court noted that under Section 35, an award becomes final and binding on the parties only after it is signed and delivered. Until then, it has no legal effect.

The dissenting opinion of the minority arbitrator, the court clarified, is not an 'arbitral award' under the Act. It does not determine the rights or liabilities of the parties. The 'arbitral award' that matters under Sections 29, 34, 35, and 36 means the decision of the majority of the tribunal members—and that decision attains legal force only when it is signed.

Why the signed copy is the only copy that counts

The court relied on two earlier decisions: Union of India v. Tecco Trichy Engineers & Contractors (2005) 4 SCC 239 and State of Maharashtra v. Ark Builders (2011) 4 SCC 616. Both cases had held that the limitation period under Section 34(3) starts from the date the signed copy of the award is delivered to the party, not from the date of any earlier communication. The court also considered other precedents including Anilkumar Jinabhai Patel v. Pravinchandra Jinabhai Patel (2018), State of Himachal Pradesh v. Himachal Techno Engineers (2010), Ssangyong Engineering & Construction Co. Ltd. v. NHAI (2019), Union of India v. Popular Construction (2001), Simplex Infrastructure v. Union of India (2019), and P. Radha Bai v. P. Ashok Kumar (2019).

The bench observed that signing is not a mere formality or a ministerial act. It is the act that gives the award its legal existence. An unsigned draft is exactly that—a draft. It carries no legal weight. A party cannot be expected to challenge something that has not yet come into legal being. As the court held, the period of limitation for filing an application under Section 34(3) of the Arbitration and Conciliation Act, 1996 commences from the date on which the party making the application receives a signed copy of the arbitral award as mandated by Section 31(5), and not from the date on which an unsigned or draft copy was circulated.

The court also noted that the dissenting opinion was delivered on May 12, 2018, and the signed copies of both the majority award and the dissent were handed over together on May 19. Until that date, the parties did not have a complete, signed award that they could meaningfully challenge.

The clock starts when the ink dries

The Supreme Court allowed DHBVN’s appeal. It set aside the judgment of the Court of the District and Sessions Judge, Hisar dated February 14, 2019 and the impugned order of the High Court of Punjab & Haryana dated December 11, 2019. The Section 34 petition (Arb. Pet. No. 316/2018) was restored to the file of the Court of District and Sessions Judge, Hisar to be decided on merits in accordance with law—not on a technicality about when the clock started.

The court held that under Section 31(1), signing of the arbitral award by the members of the tribunal is a mandatory requirement that gives legal effect and finality to the award; it is not a mere ministerial act or empty formality. The dissenting opinion of a minority arbitrator is not an 'arbitral award' within the meaning of the Act; it does not determine the rights or liabilities of the parties. The 'arbitral award' under Sections 29, 34, 35, and 36 means the decision of the majority of the members of the tribunal.

THE PLAY: If you receive an unsigned draft of an arbitral award, wait for the signed copy—your three-month clock to challenge the award starts only when the signed copy is delivered, not when the draft lands in your inbox.

The ink was dry on May 19. The clock started that day.