Bangalore District Court
Universal Test Solutions Llp vs Slk Software Services Pvt. Ltd on 30 October, 2021
IN THE COURT OF THE LXXXIII ADDITIONAL CITY CIVIL
AND SESSIONS JUDGE AT BENGALURU CITY [CCH84]
:Present:
Ravindra Hegde,
M.A., LL.M.,
LXXXIII Addl. City Civil & Sessions Judge,
Bengaluru
Dated on this the 30th day of October 2021
COM.A.S.No.182/2019
Plaintiff Universal Test Solutions LLP
A limited Liability Partnership
Registered under the Limited
Liability Partnership Act, 2008
under Registration No.AAB1485
and having its registered office at
C/o 303, Anurag Business Center,
VT Patil Marg, near Amar Theater,
Chembur (E),
Mumbai400071
Through its partner Mr.Anand Khosia.
(By Sri.J.H.S, Advocate)
// versus //
Respondent SLK Software Services Pvt. Ltd.,
A company registered under the
provisions Companies Act, 1956
having its registered office at:
SLK 1, 40/A, KHB Industrial Area,
Yelahanka
Bengaluru560064.
Represented by its
Managing Director.
(By Sri.Thamanna, Advocate)
2
CT 1390_Com.A.S.1822019_Judgment .doc
Date of Institution of the : 19/12/2019
suit
Nature of the suit : Arbitration Suit
Date of commencement of :
recording of the evidence
Date on which the : 30/10/2021
Judgment was pronounced.
: Year Month/ Day/s
Total duration /s s
01 10 11
JUDGMENT
This Arbitration Suit under Section 34 of the Arbitration & Conciliation Act is filed by the plaintiff praying to set aside portion of the award passed by the learned Arbitrator in AC No.92/2018 on 30/9/2019.
2. The plaintiff was claimant before the learned Arbitrator and the defendant was the respondent. Parties are referred to by the respective ranks as appeared before the learned Arbitrator for the sake of convenience.
3. The brief facts of the case are as under:
Claimant is a limited liability partnership firm registered under the provisions of LLP Act and defendant is registered under STPI and is a SEZ Unit. Claimant had developed an automatic tests solutions software "Test Magic". The respondent approached the plaintiff for license to use the said software on its IT related software products and a Business Alliance Agreement (BAA) dated 10/10/2014 was entered 3 CT 1390_Com.A.S.1822019_Judgment .doc between the parties. SLK America Inc is subsidiary of SLK India. Respondent has signed the BAA with the claimant. Under the said agreement claimant has agreed to grant the respondent "Test Magic" license for use in the territory of North America. The agreement provided for consideration amount to be paid to the claimant. The tenure of the agreement is two years. The respondent had agreed that license fee for the first year would be 10% of the annual revenue or minimum guarantee of 300,000 USD whichever is higher and for the second year the license fee would be 10% of the annual revenue or minimum guarantee of 800,000 USD whichever is higher. It is also agreed that the minimum guarantee would be initially paid at the beginning of every quarter and that at the end of every quarter there will be a reconciliation based on the revenue generated at the end of the quarter. In terms of BAA, claimant had issued license to the defendant and has raised quarterly invoice. For the first year, respondent made payment of minimum guarantee amount of 300,000 USD, but not shared the details of revenue generated. Respondent had the benefit of claimant's software and every updated version of the same and had deceitfully conspired with some of the plaintiff's employees and one of its partner and got executed amended BAA on 12/10/2015. The licenses were used by respondent's customers to the optimum and that the product had been functioning without any glitch or snag. On 16/4/2016 respondent sent email and called for meeting and has raised 4 CT 1390_Com.A.S.1822019_Judgment .doc few issues regarding internal restructuring in the claimant's business. Respondent withheld claimant's lawful dues, despite exploiting the licenses and has blocked the email addresses of the claimant. This lead to the plaintiff issuing notice terminating the agreement and respondent issued reply and the respondent has invoked dispute clause in the BAA. However, respondent has not taken steps to initiate arbitration. Thereafter, claimant issued notice consenting for reference to arbitration and then filed CMP before the Hon'ble High Court wherein the learned Arbitrator was appointed by order dated 6/4/2018 in CMP No.345/2017. Before the learned Arbitrator 17 issues were framed and evidence was led and after after hearing award is passed on 30/9/2019 partly allowing the claim of the claimant and rejected the counter claim of the respondent. In the award, learned Arbitrator has directed the respondent to pay 7,92,369 USD to the claimant, in Indian rupees as per the exchange rate prevalent on the date of filing of the claim petition along with interest @ 18% from 30/12/2016 till the date of award and future interest @9% till realization. Before the Arbitrator in order to establish the revenue generated by the respondent in North America, claimant had produced the balance sheet of the defendant for the relevant period. The learned Arbitrator has not considered 10% of the revenue as appearing in BAA and seen in the balance sheet, but has considered 10% of the net profit earned by the respondent. The learned Arbitrator did not include the claim of 20% AMC of the license fee per 5 CT 1390_Com.A.S.1822019_Judgment .doc annum for continuous use of the claimant's product even after termination of the BAA. The learned Arbitrator has awarded future interest @ 9%.
4. Being aggrieved by this finding in the award the claimant has filed present arbitration suit on various grounds. The claimant contended that the award suffers from serious infirmities, in so far as, restricting the relief to 10% of the net profit when the parties had contracted otherwise, for 10% of the revenue. It is stated that not awarding invoices of 20% AMC payable after the contract period had lapsed despite the product being used by the defendant is patently illegal and awarding of only 9% interest is also patently illegal. It is stated that the learned Arbitrator after coming to a positive conclusion that the claimant provided a fully functional software with all upgrades and which was commercially exploited by the respondent earning substantial revenue in dollars, ought not to have deviated from the agreed terms of the agreement which entitles the claimant to 10% of the revenue generated and award 10% of the profit earned. Therefore this portion of the award is against basic notions of morality and justice and the conclusions are vitiated by patent illegality as held in the various decisions. It is stated that learned Arbitrator has arrived to a wrong conclusion in contravention of the terms of the agreement and has wrongly considered 10% of the profit instead of 10% of the revenue. In interpreting the terms revenue the learned Arbitrator has 6 CT 1390_Com.A.S.1822019_Judgment .doc traveled beyond the terms of the agreement. It is stated that after coming to the conclusion that particular sum is the revenue of the respondent, he ought to have granted 10% of the said sum by taking into account the period during which an agreement was in force. If 10% of the revenue was awarded the claimant would have been entitled for 1,01,178,500 USD. This is contrary to the commercial terms agreed between the parties. It is also stated that finding of the learned Arbitrator that there is no evidence of the product being used after termination is against the evidence available. It is stated that respondent in their statement of objections that in March and April 2016 they had certain issues which show that the product was being used. It is stated that as the product has been used even subsequent to the termination 20% of the license fee as AMC was necessary to be awarded. It is stated that the terms of the contract states that after termination of the contract the respondent will continue to use the license and will pay AMC of 20% of the license fee to be agreed by the parties. Since the parties were in dispute, future license fee could not be fixed. In the absence of agreed future license fee, learned Arbitrator ought to have awarded 20% of license fee mentioned in the agreement which is 11 lakh USD, based on which plaintiff had raised invoice. It is stated that in the absence of any evidence on record produced by the respondent to establish that they are not used the software after termination of the agreement, the plaintiff was entitled to the said 20% AMC on the 7 CT 1390_Com.A.S.1822019_Judgment .doc consideration of 11 lakh USD and finding of the learned Arbitrator in not awarding 20% AMC is error apparent on the face of the record. It is also stated that the learned Arbitrator has not given finding or reasoning for awarding future interest @9% per annum. It is stated that as per Section 31(7)(b) of the Act, future interest @2% higher than the current prevailing rate of interest is to be awarded. It is stated that there is no discretion to the Arbitrator to award any rate of interest contrary to what is mandated. Since prevalent rate of interest on lending and borrowing for commercial purposes is between 14 to 18%, by adding 2%, future interest @16 to 20% should have been awarded. On all these grounds the finding of the Arbitrator on these 3 points is prayed to be set aside.
5. The respondent has filed statement of objections. Respondent has stated that the claimant has suppressed the fact of filing the present arbitration suit and though arbitration suit was filed in 2019 December, notice was served only on 20/1/2021. It is stated that with an intention to mislead the court claimant had suppressed the fact of filing this arbitration suit and has not even disclosed the same in another AP 1/2020 filed by the respondent challenging the award. The respondent has stated that the arbitration suit is not maintainable in law or on facts. It is stated that the prayer of the claimant is in effect modification of the impugned award which is impermissible. The respondent has 8 CT 1390_Com.A.S.1822019_Judgment .doc also replied to the various contentions taken by the claimant in different paragraphs of the petition and stated that the entire award passed by the learned Arbitrator has been challenged by the respondent in AP No.1/2020 and the award is necessary to be set aside in total. It is stated that the SLK America Inc was not party before the learned Arbitrator. However the learned Arbitrator has passed the award against the said company. It is stated that SLK America Inc has no privity of the contract with the plaintiff. The respondent has denied the allegation about conspiracy with claimant's employees and its partners. It is stated that the documents placed by the claimant did not disclose the details of revenue generated by using the software of the claimant. It is stated that the claimant is illegally attempting to gain from the defendant by claiming 10% annual revenue of respondent for which it is not entitle and it is stated that the impugned award is perverse and patently illegal and respondent has also challenged this award. It is stated that as regards 20% AMC the learned Arbitrator has rightly rejected the plaintiff's claim. The respondent has also stated that claimant has failed to produce any documentary evidence to establish commercial use of the software by Respondent. It is stated that the claimant had an opportunity of producing the copy of software before the learned Arbitrator and demonstrate working of the software in accordance with the specification provided by it to the defendant, but has failed to do so. It is stated that the impugned award has proceeded on the basis 9 CT 1390_Com.A.S.1822019_Judgment .doc that over all revenue of SLK Amercia Inc are from the use of software, which finding is also not borne out by the records. It is stated that the finding in the impugned award itself being patently illegal and liable to be set aside on the grounds urged in AP No.1/2020 awarding of future interest is also liable to be set aside. It is stated that the claimant has failed to make out any valid ground for setting aside the portion of the impugned award. On all these grounds the petition is payed to be dismissed with costs.
6. Heard both the counsels. Perused the records.
7. Now the points that arise for consideration of this court are:
1) Whether the claimant has made out any grounds to set aside portion of the award passed by the learned Arbitrator in AC No.92/2018 under Section Section 34 of the Arbitration & Conciliation Act?
2) What order?
8. My answer to the above points are :
POINT No.1 : In the Negative.
POINT No.2 : As per final order for the following:
REASONS
9. POINT No.1 : The admitted facts of the case are that the claimant and the respondent entered into business alliance agreement for providing test magic license to use the software developed by the respondent in the territory of North America. This business alliance agreement was entered on 10 CT 1390_Com.A.S.1822019_Judgment .doc 10/10/2014 and was for a period of two years with a clause for automatic renewal for two years unless parties by notice decide not to renew the agreement. It also contains termination clause. It is also an admitted fact that as per clause 4.1 of this agreement certain amount is payable to the claimant by the respondent for using the said software. It is also an admitted fact that claimant is entitle for 10% of annual revenue received by the respondent by use of the software for testing as service in the territory of North America, but minimum guarantee amount payable to the claimant is fixed as 300,000 USD for the first year and 800,000 USD for the second year. Though amendment to this agreement is also entered on 12/10/2015 i.e. after one year, there is no change in consideration payable. In amended agreement there is provision for payment of certain penalty by the claimant and such penalty is to be deducted from the consideration amount payable. Though claimant has certain reservations about this amended agreement, fact remains that it is in existence as per Ex.P.4. It is admitted fact that for the first year, minimum guarantee amount was paid and in the second year payment of 1 st quarter was made and for the second quarter advance payment for 100,000 USD is paid by the respondent, but subsequent payments are not received. Thereafter, dispute arose between the parties. There are several allegations made against each other in the exchange of email and notice and finally, respondent sent a letter stating that it will initiate arbitration, but respondent 11 CT 1390_Com.A.S.1822019_Judgment .doc has not initiated arbitration and then claimant filed CMP before the Hon'ble High Court and learned Arbitrator was appointed by Hon'ble High Court.
10. Before the learned Arbitrator, claimant filed claim petition for Rs.6,12,74,995/ towards unpaid invoices and also claimed Rs.15,00,000/ towards on site and support charges and Rs.1 crore towards loss of business. Claimant has also claimed a relief of direction to the respondent to furnish complete details of the revenue generated by the respondent in terms of BAA and claiming the amount of 10% of the revenue with interest. The claimant has also prayed for 20% of AMC for use of the software even after termination of the business agreement. Respondent filed objection and also counter claim seeking return of entire amount of Rs.1.97,75,669/ which has been paid and also Rs.2,58,88,960/ on the ground that it has incurred expenses for servicing the software and incurred loss. After considering the evidence and the documents, learned arbitrator has partly allowed the claim petition and rejected the counter claim. Learned arbitrator held that the claimant is entitle for 792,369 USD from the respondent which shall be paid by the respondent in Indian rupee as per the exchange rate as on the date of claim petition with interest @18% per annum from 30/12/2016 till the date of award and the future interest is awarded @9% per annum till realization. In the award, learned arbitrator has considered the gross profit as seen in Ex.P.,44 in respect of SLK America and awarded 12 CT 1390_Com.A.S.1822019_Judgment .doc 7,92,369 USD as balance in 10% revenue. 20% AMC claimed is also not accepted. Being aggrieved by the award to the extent of not considering income of SLK America Inc for calculation of 10% of the revenue and not awarding 20% AMC charges for use of software after termination and awarding only 9% future interest, claimant has filed the present petition. Except these three findings on which the award of learned Arbitrator is challenged by the claimant, claimant is agreeable to other parts of the award. Therefore, only portion of the award is challenged in the present petition by the claimant. The respondent has filed objection and denied the claim of the claimant.
11. The jurisdiction of the court to set aside an arbitral award is limited to the grounds set out in Section 34 of the Arbitration & Conciliation Act 1996. Even if a contrary view based on the facts before the Arbitral Tribunal is possible, in the absence of any compelling reasons, court cannot interfere with the view taken by the learned Arbitrator Grounds on which the award of learned Arbitrator can be set aside by court is clearly mentioned in Section 34(2) and 34(2A)of the Arbitration & Conciliation Act. Since any of the grounds mentioned in Section 34(2)(a) and 34(2)(b)(i) of the Act are not urged, challenge to the present award of the Arbitral Tribunal would be under Section 34(2)(b)(ii) and 34(2A)of the Act. Award could be set aside if it is against public policy of India or is patently illegal. It is also well established principle that the court sitting U/S.34 of the Act 13 CT 1390_Com.A.S.1822019_Judgment .doc is not supposed to go for reappreciation of evidence or impose its view as against the view of learned learned Arbitrator and the power of the court is only to set aside the award, if it is coming under one of the grounds mentioned in the said section. In the presence of these basic principles, grounds urged by the claimant and the award of the learned Arbitrator are to be looked into.
12. As admitted, clause 4.1 of BAA marked as Ex.P.3 provides for payment of consideration of 10% of the annual revenue received by the SLK America Inc by exclusive use of the software for testing as a service in the territory of North America. The agreement was entered between SLK Software Services Private Limited a registered company in India who is the respondent with the claimant who is universal test solution LLP. The software developed by the claimant by name "Test Magic" was permitted to be used in the territory of North America. Admittedly SLK America Inc which was using the software is the subsidiary of the respondent. Therefore as per this clause, consideration out of actual revenue received by SLK America Inc by exclusive use of the software of the claimant is to be paid to the claimant. As per cause 4.1, 10% of the annual revenue send, delivered and accepted by the SLK customers in the North America is to be paid for both first and second year to the claimant by the respondent. However minimum guarantee consideration payable to the claimant is 300,000 USD in 1 st year and 800,000 USD in the second year. If after reconciliation it is found that 10% of the 14 CT 1390_Com.A.S.1822019_Judgment .doc revenue as mentioned in clause 4.1, exceeds this minimum guarantee amount, excess amount is also to be paid. Time schedule for payment is also mentioned in this clause. Agreement is for two years with automatic renewable clause for further period.
13. Dispute between the parties that led to the initiation of arbitration is non furnishing of revenue details and non payment of the minimum guarantee amount from the second quarter of the second year. In the first year, minimum guarantee consideration amount of 300,000 USD is paid by the respondent to the claimant. However 10% revenue calculation was not made as according to the claimant such accounts are not shared with the claimant. In the second year, for the first quarter minimum guarantee amount which is 1/4th of the total guarantee amount which comes to 200,000 USD was paid and for the second quarter advance payment of 100,000 USD was paid by the respondent, but thereafter he has not made any payment. In total for the two years minimum guarantee amount payable to the claimant 1,100,000 USD. Out of which respondent has made payment of 600,000 USD. Therefore on considering the admitted facts 500,000 USD is due in respect of second year which is minimum guarantee consideration to be paid to the claimant. Apart from this, respondent was also required to provide details of revenue generated at the end of each quarter for making calculation of 10% of the annual revenue 15 CT 1390_Com.A.S.1822019_Judgment .doc which according to the claimant is not furnished. Even before the learned Arbitrator, respondent has not produced these details of the revenue earned during particular quarter by use of this software in the territory of North America by the subsidiary of the respondent. Claimant produced Finanacial statements filed before Authorities by the Respondent to establish the Revenue earned by respondent as Ex.P.44. Respondent contended that the software remained at the testing stage and was never used for commercial purpose. Claimant, who has filed present arbitration suit contends that while considering the revenue of 10% derived by the SLK America Inc, learned Arbitrator has considered the gross profit as the revenue, but income which is said to have been received by SLK America Inc as seen in Ex.P.44 should have been considered.
14. As regards first challenge on considering 10% of the gross profit as the revenue of SLK America Inc, Ex.P.3 dated 10/10/2014 clearly provides that consideration amount payable by Respondent to the claimant is 10% of the actual revenue signed, delivered and accepted by SLK customers in the territory of North America by use of the software of the claimant. Though the minimum guaranteed amount was to be paid in advance, after completion of quarter, reconciliation was to be made based on the revenue generated at the end of the quarter. Respondent has not produced any document showing the revenue earned in the particular quarter starting 16 CT 1390_Com.A.S.1822019_Judgment .doc from 10/10/2014 during the entire period of two years which is the initial validity period of the agreement. However, claimant has produced financial statement obtained form the Registrar of Companies for the period of 201415, 201516 and 201617 as Ex.P.44. In these financial statements SLK America Inc is shown as subsidiary of respondent and income, gross profit and net profit of SLK America Inc is clearly appearing. Learned Arbitrator, in the absence of any other documents produced by other party showing revenue earned by use of the software by the respondent through its clients, has considered gross profit earned by SLK America Inc as the revenue and taken 10% of the same as the amount payable as consideration to claimant in terms of clause 4.1 of Ex.P.3. The learned Arbitrator in his award at para No.30 to 35 has considered this revenue and taken 10% of the gross profit of this particular period as 10% revenue for which the claimant is entitled. The respondent seriously disputed this consideration, on the ground that only revenue earned by exclusive use of software is to be considered as per clause 4.1 and entire revenue of SLK America Inc cannot be considered for this purpose, as SLK America Inc may be having other income also. However, this is not the point for consideration in the present arbitration suit and for this purpose, by challenging the entire award respondent has filed Com.AP No.1/2020. Be that as it may.
15. Respondent has not produced any document to show as to what is the revenue received by the respondent by 17 CT 1390_Com.A.S.1822019_Judgment .doc use of the software in North America through its subsidiary SLK America Inc. In the absence of any material produced by respondent, learned Arbitrator has rightly calculated the revenue by considering the material available before it by way of Ex.P.44. The claimant disputes the way in which the calculation is made on the ground that income mentioned in Ex.P.44 derived by SLK America Inc for the particular period should have been taken as the revenue and 10% of the same should have been considered as the consideration payable to the claimant.
16. On looking to the award, learned Arbitrator has taken the gross profit on the ground that word revenue used in the agreement is not been clarified. The learned Arbitrator in para 31 has noted the dictionary meaning of the word revenue is return from property or investment, income. By considering the same learned Arbitrator has considered the gross profit amongst the gross income, gross profit and net profit, as it show revenue earned after expenditure. This consideration of gross profit as the revenue clearly appears very reasonable. The income derived by the company is the total income derived, out of which, expenditure, reserves etc may have to be deducted and after deducting the expenses the gross profit will come and that would be the real revenue that is earned by company which can be shared with claimant in terms of clause 4.1. Therefore considering of the gross profit as revenue by the learned Arbitrator is very reasonable 18 CT 1390_Com.A.S.1822019_Judgment .doc and cannot be said to be against the public policy or is patently illegal.
17. In a decision reported in 2006(3) Arb.LR 380 (Del) (Airport Authority of India v. ICM Airport Technics) in para 6, Hon'ble High Court has held that 'some guess work has to be made in the matter of assessing damages'. Therefore, out of the 3 amounts that are found in the financial statement of the subsidiary of the respondent which is working in North America, wherein the license to use the software was given by the claimant to the respondent, learned Arbitrator has considered gross profit as revenue and then considered 10% of the same. Therefore, method adopted by learned Arbitrator to calculate revenue appearing in clause 4.1 of Ex.P.3 cannot be said to be patently illegal.
18. Second finding in the award, which is challenged is not awarding 20% AMC for use of the product after the termination of contract. On this claim, learned Arbitrator in issue No.1, in para 25 has stated that, as regards payment of AMC of 20% of the license fee to the claimant after termination of the agreement, clause 9.2 of the agreement gives right to respondent to use software license under the agreement even after termination of the agreement, but will have to pay 20% AMC and license fee for the software to be mutually discussed and negotiated between the parties. The learned Arbitrator has noted that there is condition to claim AMC of 20% of license fee, for use of software even after 19 CT 1390_Com.A.S.1822019_Judgment .doc termination of agreement, but there must be mutual discussion and negotiation between the parties and there is no such negotiation held between the parties to fix the license fee. Importantly the Arbitrator has noted that there must be evidence that software was used by the respondent even after termination of the agreement and there is no such clear evidence showing the same. By holding so the learned Arbitrator has held that the claimant is not entitle for 20% of AMC. Claimant contends that the award of the Arbitrator not awarding 20% AMC is not correct. It is mentioned in the petition that the finding of learned Arbitrator that there is no evidence of the product being used after termination is not correct. It is stated that in para 22 of the objection, respondent asserted that they had certain issues on the product in March April 2016 which makes it clear that product was used even after February 2016, though respondent has stated that it had stopped using the software from February 2016. It is contended by claimant that in the absence of agreed future license fee learned Arbitrator ought to have awarded 20% of the agreed license fee mentioned in the agreement by making guess work.
19. On looking to award and the contention of the claimant no fault could be found with the learned Arbitrator in not awarding 20% of AMC as claimed. The agreement dated 10/10/2014 and it is for a period of two years thereby it ends by 10/10/2016. According to claimant, after 20 CT 1390_Com.A.S.1822019_Judgment .doc termination respondent has used the software and for this period it have to pay 20% AMC. Respondent is referring to use of product in MarchApril 2016 and the said period comes within the period of two years, as two years period expires on 10/10/2016. It is not the case of the claimant that before expiry of two years, agreement is terminated. For the period of two years amount mentioned in clause 4.1 i.e. 10% of the revenue is awarded by the learned Arbitrator. There is no such material placed by the claimant to show that even after termination, software is used by respondent. As such not awarding 20% AMC for the period after termination of contract cannot be said to be against the public policy.
20. Awarding of interest @ 9% on the ground that it is not in compliance with Section 31(7)(b) of the Arbitration & Conciliation Act. According to the claimant, Arbitrator is bound to award future interest of 2% higher than current prevailing rate of interest and no discretion is given to the Arbitrator to award amount less than that. On looking to Section 31(7)(b) of the Arbitration & Conciliation Act, the contention of the claimant cannot be accepted. As per this provision, if award do not award interest, then interest of 2% higher than current rate of interest would be payable. This section do not take away discrition of Arbitrator to award reasonable interest. Therefore only if no interest is awarded 31(7)(b) of the Arbitration & Conciliation Act can be applied. As per Section 31(7)(a) of the Arbitration & Conciliation Act, 21 CT 1390_Com.A.S.1822019_Judgment .doc the learned Arbitrator is having discretion to award interest. Therefore, the learned Arbitrator is having discretion to decide rate of interest to be paid. Therefore, finding of the learned Arbitrator on interest cannot be said to be against the public policy or is patently illegal.
21. On looking to all these aspects, contention of the claimant that award in respect of these three findings is patently illegal or is against the public policy is not established. Moreover, claimant is challenging only portion of the award. In a decision of Hon'ble Supreme Court reported in 2021 SCC Online SC 473 (Project Director, National Highways Authority of India v. Hakeem and another) in para 40 the Hon'ble Supreme Court has held as under:
"It can therefore be said that this question has now been settled finally by atleast 3 decisions of this court. Even otherwise, to state that the judicial trend appears to favour an interpretation that would read into Section 34 a power to modify,revise or vary the award would be to ignore the previous law contained in the 1940 Act; as also to ignore the fact that the 1996 Act was enacted based on the UNCITRAL Model Law on International Commercial Arbitration, 1985 which, as has been pointed out in Redfern and Hunter on International Arbitration, makes it clear that, given the limited judicial interference on extremely limited grounds not dealing with the merits of an award, the 'limited remedy' under Section 34 is coterminus with the 'limited right', namely, either to set aside an award or remand the matter under the circumstances 22 CT 1390_Com.A.S.1822019_Judgment .doc mentioned in Section 34 of the Arbitration Act, 1996."
Therefore the court cannot modify the award, in respect of three findings that are challenged in the present petition.
22. In another decision cited by the learned counsel for the respondent reported in 2019 SCC Online SC 1656 (Dyna Technologies Private Limited v. Crompton Greaves Limited) the Hon'ble Supreme Court in para 26 and 27 has held as under:
"26. There is no dispute that Section 34 of the Arbitration Act limits a challenge to an award only on the grounds provided therein or as interpreted by various courts. We need to be cognizant of the fact that arbitral awards should not be interfered with in a casual and cavalier manner, unless the Court comes to a conclusion that the perversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award. Section 34 is different in its approach and cannot be equate with a normal appellate jurisdiction.
27. Moreover, umpteen number of judgments of this court have categorically held that the courts should not interfered with an award merely because an alternative view on facts and interpretation of contract exists. The Courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act."23
CT 1390_Com.A.S.1822019_Judgment .doc
23. In the decision reported in 2006(11) SCC 181 (Mcdermott International Inc v. Burn Standard Company Limited and others) the Hon'ble Supreme Court in para 52 has held that "The court cannot correct errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. So the scheme of the provision aims at keeping the supervisory role of the court at minimum level and this can be justified as parties to the agreement make a conscious decision to exclude the court's jurisdiction by opting for arbitration as they prefer the expediency and finality offered by it."
24. As held in these decisions, scope for interference in the award passed by the learned Arbitrator is very limited. In the present case, claimant is challenging only three findings in the award. The claimant is not challenging the entire award. As held in the decision referred above the court under Section 34 of the Arbitration & Conciliation Act cannot modify the award. It can only set aside the award by leaving the party to initiate fresh arbitration. Therefore, the court cannot correct error of the Arbitrator even if any. The finding given by the learned Arbitrator which by considering 10% of the gross profit as revenue of the SLK America Inc and not awarding 20% AMC for the alleged use of software of the claimant by the respondent even after termination of the agreement and awarding interest of 9% from the date of award are not found to be erroneous and are not patently 24 CT 1390_Com.A.S.1822019_Judgment .doc illegal and cannot be said to be against the public policy. These findings of the learned Arbitrator cannot be interfered with. As only few findings in the award are challenged by the claimant and the court cannot modify the award and there are no grounds to set aside the award passed by the learned Arbitrator, this petition filed under Section 34 of the Arbitration & Conciliation Act by the claimant deserves to be dismissed. Accordingly, point No.1 is answered in the negative.
25. POINT No.2 : For the discussion made on above point, following order is passed:
ORDER Petition U/S.34 of the Arbitration & Conciliation Act filed by the claimant (plaintiff in the present Arbitration Suit) is dismissed.
In the circumstances of the case, there is no order as to costs.
[Dictated to the Judgment Writer; transcript thereof corrected, signed and then pronounced by me, in the Open Court on this the 30th day of October 2021] [Ravindra Hegde] LXXXIII Additional City Civil Judge.
BENGALURU.
*** 25 CT 1390_Com.A.S.1822019_Judgment .doc