Was Also Asked To Replace The Components vs Side In Respect Of Nomination And ... on 17 February, 2022

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Bangalore District Court

Was Also Asked To Replace The Components vs Side In Respect Of Nomination And ... on 17 February, 2022

                           1
                                       Com. A.S. No.2/2015

 IN THE COURT OF LXXXII ADDL. CITY CIVIL & SESSIONS
           JUDGE, AT BENGALURU (CCH.83)

           THIS THE 17TH DAY OF FEBRUARY 2022

                      PRESENT:
        SRI. DEVARAJA BHAT. M., B. COM, LL. B.,
      LXXXII ADDL. CITY CIVIL & SESSIONS JUDGE,
                     BENGALURU.

                   Com. AS.No.2/2015

BETWEEN:


M/s          Micronova
Singapore       Private
Limited, Block # 83,
Yishun Streer, 81, No.
06-05, Orchid Park,
Singapore      768446,
represented    by    its
Authorised Signatory,
Mr.TS.     Devanathan,
aged about 69 years S/
o    T.R.  Sundararaja
Iyengar, R/at. No. 101,
2nd A Cross, Gavipuram
Extension, Bengaluru -
560 019

                                       :       PETITIONER.

(Represented by M/s.
M. Veerabhadraiah &
Associates,
                             2
                                      Com. A.S. No.2/2015

Advocates.)

                            AND

1. M/s.          Bharat
Electronics     Limites,
Jalahalli           Post,
Bengaluru - 560 013,
represented     by    its
Senior Deputy General
Manager/P/MMF/EM,
M/s Bharat Electronics
Limited., Jalahalli Post,
Bengaluru - 560 013.

2. Mr. Suresh Katyal,
Major, Sole Arbitrator
in   Award    bg    No.
15011/7/CMD, General
Manager (Telecom &
Broad Cast Systems),
M/s Bharat Electronics
Limited, Jalahalli Post,
Bengaluru - 560 013.

                                  :        RESPONDENTS

(Respondent   No.1   is
represented by Sri. G.
B. Sharath Gowda -
Advocate           and
Respondent    No.2   is
represented by Sri. M.
Sadanand)
                                 3
                                                Com. A.S. No.2/2015

Date of Institution of the 02.01.2015
suit
Nature of the suit (suit on
pronote,        suit      for Petition for setting aside Arbitral
declaration & Possession, Award
Suit for injunction etc.)
Date of commencement of
recording of evidence                     - Nil -
Date on which judgment
was pronounced         17.02.2022
Date  of  First   Case - Not held -
Management Hearing
Time taken for disposal         14 days
from    the     date  of
conclusion of arguments
Total Duration                      Year/s      Month/s   Day/s
                                     07          01        15




                               (DEVARAJA BHAT. M),
                   LXXXII Addl. City Civil & Sessions Judge,
                                    Bengaluru.


                      JUDGMENT

This is a Petition filed by the Petitioner under Section 34 (2) of the Arbitration & Conciliation Act, 1996 for setting aside the Arbitral Award dated 06.10.2014 passed by the learned Sole Arbitrator.

Com. A.S. No.2/2015

2. The Respondent No.1 "M/s Bharat Electronics Limited and Another" had invoked the Arbitration Agreement and preferred certain Claims against "M/s Micronova Singapore Private Limited" the Petitioner.

3. The Brief facts leading to the case are as follows:-

The Respondent No.1 has issued a Tender Notification dated 29.04.2011, for which the Petitioner applied and its tender offer was accepted, that the Respondent No.1 is the Government of India Enterprises, manufacturing electronics products, that the Respondent No.1 invited bid/tender for supply of "MICRO SD CARDS-2GB" from the reputed and experienced suppliers, they were required for low cost enumeration devise, that the Petitioner being reputed and experienced supplier offered to supply the "MICRO SD CARDS-2GB", as per conditions in the tender notification, that the Petitioner provided samples even before the Purchase Order was raised, that the said samples were accepted by the Respondent No.1, that the Respondent No.1 accepted the offer and placed the Purchase Order dated 24.06.2011 for supply of 6,15,800 MICRO CARDS, that the Petitioner supplied 4,24,000 MICRO CARDS in 5 batches and Respondent No.1 released the payments for each of the batches as per purchase order by letter of credit, that the 5 Com. A.S. No.2/2015 payment were made on 25.07.2011, 10.08.2011, 11.08.2011, 22.08.2011 and 24.11.2011, that the Respondent No.1 sent another e-mail listing out alleged problems/issues with regard to 4,24,000 components supplied by the Petitioner, that the Petitioner was also asked to replace the components, that it is pertinent to mention here that repeatedly the Petitioner had given its justifications in reply and had all through stated that the components were as per the approved samples, that it was made clear by the Petitioner that " the Petitioner has complied with the quality of supplies made, as per the purchase order, and same as per the sample and without any variance", that this communication by the Petitioner to the Respondent No.1 is dated 02.09.2011, that the Respondent No.2 Mr. Suresh Katyal was appointed as Sole Arbitrator by Chairman and Managing Director of Respondent No.1 Company to decide the dispute and differences arising between the parties to Purchase order for supply of 2GB Micro SD CARD, that the Petitioner resisted such action as no notice was given, that the letter of communication dated 21.01.2013 which is issued by Petitioner objecting for appointment of Sole Arbitrator, that the Respondent issued a reply communication dated 11.02.2013 rejecting the contentions outright without considering each of the issues raised by the Petitioner, that there was rejection from Respondent's side in respect of nomination and appointment of 6 Com. A.S. No.2/2015 an independent Arbitrator in place of Sole Arbitrator Sri. Suresh Katyal, vide their letter No. 15011/8/CMD dated 11.02.2013 as a response to the communication from the Petitioner vide their letter dated 21.01.2013, that the Petitioner preferred CMP No. 65/2013 before Hon'ble High Court under Section 11 (4) read/w Section 12 (3) of the Arbitration and Conciliation Act, that the said CMP No. 65/2013 was permitted to be withdrawn reserving liberty to Petitioner, that the final order of Hon'ble High Court of Karnataka in CMP NO. 65/2013 dated 06.08.2013, that the Learned Arbitrator has passed the Impugned Award and he has rejected counter claim of the Petitioner and partly allowed the claim of Respondent No.1.

4. Being aggrieved by the said Arbitral Award, the Petitioner has challenged the same on several grounds, which will be discussed later in the body of the Judgment.

5. The Respondent No.1 has filed a detailed Statement of Objections/Written Statement on 07.11.2015 and he prayed to dismiss the said application. The Respondent No.2 has filed a detailed Statement of Objections/Written Statement on 05.12.2015 and he prayed to dismiss the said application.

Com. A.S. No.2/2015

6. The Respondent No.2 being the Sole Arbitrator, has filed the Arbitral records along with a Memo dated 11.11.2020. I have heard the arguments of the Advocate for the Petitioner Sri. M. Veerabhadraiah, and the arguments of the Advocate for the Respondent No. 1 Sri. G. B. Sharath Gowda. I have also heard the arguments of the Advocate for Respondent No.2 Sri. M. Sadananda. The Advocate for the Petitioner has filed Written Arguments on 06.01.2022. The Advocate for the Respondent No.1 has filed written arguments on 20.01.2022. The Advocate for the Petitioner has filed written reply arguments on 24.01.2022.

7. Based on the above contentions of both parties, following Points arise for my consideration:-

1. Whether there are grounds to set aside the Impugned Award under Section 34 of the Arbitration & Conciliation Act?

2. What Order?

8. My findings on the above points are as follows:-

Point No.1:- In the Negative.

Point No.2:- As per the final Order for the following reasons.

Com. A.S. No.2/2015 REASONS

9. Point No.1: - The Respondent No.1 has preferred a Claim Petition before the Learned Arbitrator for Rs. 10,31,25,447/- under 4 heads detailed at Para No. 8 of the Claim Petition. The Petitioner has raised a counter-claim of Rs. 2,21,14,153/-.

10. The Learned Arbitrator has partly allowed the claims of the Respondent No.1 and dismissed the Counter Claim of the Petitioner in the Impugned Award. It is to be noted that the Respondent No. 1 has not challenged the rejection of the portion of his Claims.

11. The Petitioner has challenged the said Impugned Award in this proceeding. The Hon'ble High Court in the Judgment dated 17.04.2021 in Com. A.P.No.25/2021 (Union of India vs. M/s Warsaw Engineers), has laid down certain guidelines/ principles about the writing of Judgments in a Petition filed under Section 34 of the Arbitration & Conciliation Act. Keeping in my mind the said guidelines, I now propose to examine each and every ground urged by the Petitioner specifically with reference to the submissions made by both Advocates.

Com. A.S. No.2/2015

12. In order to appreciate the said grounds, the following points about the facts of the case is to be taken into consideration.

a. Under Ex.C.1/ Newspaper advertisement the 1st Respondent invited bids from reputed and experienced suppliers for the supply of "Electronic Components and Materials" for "Low Cost Enumeration Device Project", that in terms of the advertisement, the bidders are required to visit the website of 1st Respondent for details, that as per Ex.C.2/ Tender Notification the Micro SD Card 2GB were required for the said project of the 1st Respondent, that the commercial specifications were stated in Ex.C.3, that in Ex.C.4/ Extract of bill of material, at Sl No. 115, the designation as well as the specification of the material is mentioned as "Micro SD Card 2GB" and the vendor was required to provide data sheets and 25 samples, that one of the material required by the 1 st Respondent under the tender notification is "Micro SD Card 2GB", that the Petitioner had quoted for "Micro SD Card 2GB" of "Transcend" make as per the offer sent through Ex.C.5/ Email dated 14.05.2011, that the Petitioner provided samples of "Micro SD Card 2GB", that the samples did not have any brand name, that the 1st Respondent placed the Ex.C.6/ Purchase Order dated 24.06.2011 on the Petitioner for supply of 615800 10 Com. A.S. No.2/2015 Micro Cards on the terms and conditions mentioned in the Ex.C.6.

b. The Petitioner accepted the Ex.C6/Purchase Order and supplied 424000 Micro Cards with the brand name "Micronova" on the Micro Cards, under Ex.C.7 to Ex.C.11/ 5 invoices dated 13.07.2011, 29.07.2011, 02.08.2011, 15.08.2011 and 24.08.2011 respectively, in terms of the Purchase Order, the 1st Respondent paid Rs, 4,60,26,034/- to the Petitioner towards the supply of Micro Cards by Ex.C. 12 to Ex.C.16/ Debit Advice for Payment.

c. It is the contentions of the 1st Respondent that the said Micro Cards which were supplied by the Petitioner were assembled in the Tablet PCs and supplied to the customers of the 1st Respondent, that the customers of the 1 st Respondent sent Ex.C.17 & 18/ Reports of failure of Micro Cards, that the defects pointed out in the Ex.C.17 & 18/ Reports are that the images loaded in the Tablet PC vanished after rebooting the Tablet PC, that the image folder when clicked to see the contents inside, just pops out to the main menu, that the SD Card is not mounted after repeated trials of mounting the SD Cards failed and some of the images folder cannot be deleted.

Com. A.S. No.2/2015 d. Under such circumstances, the 1st Respondent tested in random the functionality of the Micro Cards supplied by the Petitioner which were used in the Tablet PCs and also the balance quantities of Micro Cards out of the supplies made by the Petitioner remaining with the 1 st Respondent to be used in the Tablet PCs, that he sent Ex.C.19/ Report of the defects/failure of the Micro Cards to the Petitioner on 26.08.2011 and claimed replacement of the defective batches of Micro Cards, that the 1st Respondent also informed the Petitioner as per Ex.C.20/ letter dated 31.08.2011 regarding the defects/failure of the Micro Cards supplied by the Petitioner requesting the Petitioner to replace the Micro Cards, that the representatives of the Petitioner also visited the work place of the 1st Respondent and witnessed the defects/failure in random samples of all lots available with 1st Respondent, that they have also agreed on the defects/failure in the Micro Cards, that the 1 st Respondent requested the Petitioner to provide Return Material Account Number to re-export and replace the defective Micro Cards, that despite repeated demands, the Petitioner failed to issue the RMA No and did not replace the defective Micro Cards.

e. As could be seen from Ex.C.27 & Ex.C.29 to Ex.C. 40 and Ex.C.41, the 1st Respondent Company issued several Purchase Order to Purchase the Micro Cards. Further, on 12 Com. A.S. No.2/2015 24.11.2011, the 1st Respondent has raised the Ex.C.16 Debit Note.

f. Thereafter, on 22.11.2012 the 1st Respondent has appointed the Arbitrator. The Advocate for the Petitioner has vehemently argued that the said appointment was without Notice to the Petitioner.

g. Thereafter, on 12.12.2012 the 1st Respondent filed Claim Petition before the learned Arbitrator. The learned Advocate for the Petitioner has for the first time produced a copy of letter dated 21.01.2013, issued by the Petitioner to the 1st Respondent Company along with his written reply arguments. In the said letter, the Petitioner Company has informed the 1st Respondent Company as follows:-

"In this regard we would like to inform you that we have received the notice from the Sole arbitrator Sri. Suresh Katyal along with the claim statement filed by you asking us to file reply and also attend the arbitration proceedings on 20.02.2013.

We would like to inform you that earlier to the said claim statement filed by you, there is no prior notice regarding your company's claim against us. Hence, the entire thing has been done in a hurry without proper intimation to us.

Com. A.S. No.2/2015 Further, despite response from our side not accepting the complaint of defective material, you have predetermined that we have made defective supply, which is not at all correct.

Further, though you have appointed the sole arbitrator as per the purchase order, since the sole arbitrator is one of the Company's General Managers, there is likelihood of bias in his approach in the matter of dispute, more so because the claim is off very high value.

Therefore we request you to take a pragmatic approach in the matter and appoint an independent arbitrator under the Arbitration and Conciliation Act, preferably a retired Judge, since the value of your claim is substantial. This will be necessary to enable us to defend the dispute in a fair and legal manner."

h. It is to be noted that this letter was not issued to the learned Arbitrator and that the same is not produced in the arbitral proceedings also. After, three days of issuing such a letter, on 24.01.2013, the Petitioner has filed his objections before the arbitral proceedings. The said objections is at Page No. 194 to 210 of Volume No. II of the Arbitral Proceedings. In the said objections, he has not raised any objections about the appointment of the said arbitrator and about his competency to conduct the arbitral proceedings. Having admitted his role of arbitrator, he has also raised a counter-claim before him.

Com. A.S. No.2/2015 I. Thereafter, on 11.02.2013, the 1st Respondent has issued a reply to the letter dated 21.01.2013, by pointing out that the Petitioner has filed his reply/counter-claim before the learned Arbitrator and has contended that the arbitrator was appointed as per the terms of the contract.

j. Thereafter, on 18.02.2013, the 1st Respondent has filed his rejoinder to the counter-claim of the Petitioner. To the said rejoinder, the Petitioner has filed a reply 18.03.2013. The said reply is available at Page No. 270 to 274 of Volume No. II of the Arbitral Proceedings. In the said reply also, he has not raised any objections about the appointment of the arbitrator.

k. Thereafter, on 25.03.2013, the Petitioner has filed CMP No. 65/2013 before the Hon'ble High Court of Karnataka challenging the appointment of Sri. Suresh Katyal as arbitrator and for appointment of Retired District Judge as an arbitrator to decide the dispute. The 1st Respondent has produced the copy of the said Petition as Annexure- R.1 to the objections filed in this proceedings.

l. As could be seen from the Order Sheet dated 27.05.2013, the Advocate for the present Petitioner (Respondent therein), has informed learned Arbitrator about 15 Com. A.S. No.2/2015 pendency of above-mentioned CMP before the Hon'ble High Court.

m. As could be seen from the Annexure-R.2/ Copy of the Orders passed by the Hon'ble High Court of Karnataka in CMP NO. 65/2013 date 06.08.2013, filed along with the objections of the 1st Respondent, it is evident that after hearing the counsel for the parties, as per the request of the Advocate for the Petitioner the said Petition was disposed as withdrawn with liberty to the Petitioner to pursue remedies if any, available in law, before the arbitrator and that if any application is filed by the Petitioner, the arbitrator has to decide the same in accordance with law.

n. As per the entries in the Order Sheet maintained by the arbitral tribunal, as on the date of above-mentioned Order, the matter was pending before the learned Arbitrator for recording cross-examination of the Claimant/ CW.1. On 14.09.2013, the cross-examination of CW.1 was recorded. However, on that day or on subsequent days, the Petitioner has not informed the learned Arbitrator about the above-mentioned Order passed by the Hon'ble High Court in CMP No. 65/2013. Further, the Petitioner has not filed any application before the 16 Com. A.S. No.2/2015 learned Arbitrator, as observed in the above-mentioned Order of the Hon'ble High Court in CMP No. 65/2013.

o. It is the contentions of the 1 st Respondent that as per Clause 6 of the General Terms and Conditions of Purchase Order, which is the part of the Ex.C.6/ Purchase Order, the Micro Cards supplied by the Petitioner should be free from any defects and should perform satisfactorily for a period of 12 calendar months from the date of supply, that the Micro Cards supplied by the Petitioner are found to be defective within the guarantee period, under such circumstances, that the 1 st Respondent invoked Clause 10 of the General Condition of Ex.C.6/ Purchase Order. Accordingly, arbitral proceedings held and Impugned Award was passed.

p. By considering the above facts of the case and the arguments of both Advocates, I now propose to answer the grounds urged by the Petitioner.

13. The First ground is that the Impugned Award passed by the Learned Arbitrator is highly illegal unjust and arbitrary and hence liable to be set aside.

13.a. This is a general ground and same will be discussed along with other grounds.

Com. A.S. No.2/2015

14. The Second ground is that the Impugned Award is opposed to substantive law governing the parties to the dispute, and hence is liable to be set aside.

14.a. The Petitioner has not mentioned particularly about which substantive law governing the parties to the dispute is violated either by the arbitrator or by the 1st Respondent Company. When such being the case, the said contention cannot be accepted. The said allegation is bald one and not established by the Petitioner. Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub-section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

15. The Third ground is that the Impugned Award is liable to be set aside as the same is a reflection of flouting all the cardinal principles of procedural law to be followed in any Arbitration proceedings in India, that the Impugned Award is reflection of procedural injustice to the Petitioner.

15.a. I am of the considered view that the aforesaid challenge flanked by the Petitioner to the arbitral award is on a 18 Com. A.S. No.2/2015 very thin ice. For the said aspect, I deem appropriate to reproduce Section 18 and 19, nestled under Chapter V - Conduct of Arbitral Proceedings of the Arbitration and Conciliation Act, which reads as under:-

"CHAPTER V Conduct of arbitral proceedings

18. Equal treatment of parties:- The parties shall be treated with equality and each party shall be given a full opportunity to present his case.

19. Determination of rules of procedure:- (1) The arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 (5 of 1908) or the Indian Evidence Act, 1872 (1 of 1872).

(2) Subject to this Part, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting its proceedings.

(3) Failing any agreement referred to in sub-

section (2), the arbitral tribunal may, subject to this Part, conduct the proceedings in the manner it considers appropriate.

(4) The power of the arbitral tribunal under sub- section (3) includes the power to determine the admissibility, relevance, materiality and weight of any evidence."

15.b. In the decision reported in 2002 - S.C.C. OnLine - Bom - 983 (Maharashtra State Electricity Board vs. Datar 19 Com. A.S. No.2/2015 Switchgear Ltd.), it is observed that sub-section (1) of Section 19 of the Act has prescribed that the arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 or by the Evidence Act, 1872. The Para No. 41 of the said decision is reproduced verbatim, as under:-

"41. In sub-section (1) of section 19, the Act has prescribed that the Arbitral Tribunal shall not be bound by the Code of Civil Procedure, 1908 or by the Evidence Act, 1872. These are words of amplitude and 30 not of restriction. These words no not prohibit the Arbitral Tribunal from drawing sustenance from the fundamental principles underlying the Civil Procedure or Evidence Act, but free the Tribunal from being bound, as would a Civil Court, by the requirement of observing the provisions of the Code and the law relating to evidence with all its rigour. Sub-section(2) of section 19 preserves the consensual nature of the arbitral proceedings by laying down that subject to the provisions of Part-I, the parties are free to agree on the procedure to be followed by the Arbitral Tribunal in conducting its proceedings. The freedom which is conferred upon the parties to agree on the procedure to be followed by the Arbitral Tribunal is regulated by Part-I but subject to that regulation parties are otherwise free to agree on arbitral procedure and the conduct of proceedings. In the even that parties are not agreed on the procedure to be followed in the conduct of proceedings, the Arbitral Tribunal is against, subject to Part-I, free to 20 Com. A.S. No.2/2015 conduct the proceedings in a manner which it considers appropriate. Sub-section (4) of section 19 provides some indication of the contents of sub-section (3). Sub-section (4) lays down that the power of the Arbitral Tribunal under sub- section (3) includes the power to determine the admissibility, relevance, materiality and weight of any evidence. Sub-section (4) is of course not exhaustive of the content of sub-section (3) but provides an instance of the power conferred by sub-section (3)."

15.c. In Para No. 52 of the said decision, the Hon'ble Bombay High Court has eloquently reiterated the concept of an arbitral tribunal. The relevant extract of the same is as under: -

"52. The jurisprudential concept of an Arbitral Tribunal is that it is a private forum which is chose by the parties as a means of a speedy and expeditious resolution of disputes between them. The Arbitral Tribunal is not akin to a Court of law which has ordinarily a jurisdiction in general and an existence in perpetuity. The existence of an Arbitral Tribunal arises out of an arbitral agreement between the parties and upon the invocation of arbitration. The adjudicatory powers of an Arbitral Tribunal extend to such matters as parties have referred to it. The Arbitration and Conciliation Act, 1996 is a regulatory statute which has consolidate and amended the law of arbitration. The legislature in its wisdom has conferred power upon the Arbitral Tribunal to terminate its proceedings or to 21 Com. A.S. No.2/2015 suspend its hearings in situations envisaged in the statute. It would, in my view, be impermissible for an Arbitral Tribunal to transcend the ambit of the powers which the parties have conferred and what the legislature has envisaged."

15.d. Further, I shall not refrain to pull out a leaf of knowledge and enlightenment from the decision reported in 2014 (6) - R.A.J. - 465 (Del) (Silor Associates SA vs. Bharat Heavy Electrical Ltd). In the said decision, the Hon'ble High Court of Delhi while deciding a Petition under Section 27 of the Arbitration and Conciliation Act, seeking necessary orders and directions to direct the respondent to produce two documents traversed through the scheme and provisions of the Arbitration and Conciliation Act, has held a follows :-

"15. While hearing a petition under Section 27 of the Act, no doubt, I am not hearing an appeal from the order passed by the Tribunal. An appeal from an order passed by the Tribunal is maintainable only in terms of Section 37(2) of the Act, and not otherwise. But that does not mean that when an order passed by the Tribunal invoking Section 27 of the Act - to seek the assistance of the Court in taking evidence, is placed before the Court, the Court would simply act on the request of the Tribunal, even if it 22 Com. A.S. No.2/2015 appears to the Court that the order of the Tribunal has been passed on an erroneous premise in law. The Court is not bound to act on the request of the arbitral tribunal mechanically -

even when the order appears to have been passed by the arbitral tribunal on a misconception of law. In such a situation, the Court would not only be entitled to, but would be duty bound to correct the error, if any, found in the order passed by the Tribunal. In Managing Director, Army Welfare Organisation (supra), the Supreme Court observed:

"72. This Court cannot sit in appeal over the award of the arbitrator but can certainly interfere when the award suffers from non- application of mind or when a relevant fact is ignored or an irrelevant fact not germane for deciding the dispute is taken into consideration".

In my view, the same principle applies to orders placed before this court under Section 27 of the Act.

16. Section 27(3) mandates that the Court "may" within its competence "and according to its rules on taking evidence", execute the request made by the tribunal by ordering that the evidence be provided directly to the tribunal. The use of the expression "may" shows that the court is not bound to act on the request in every case where a request for taking evidence is made by the tribunal. The Court "may" decline the request of the tribunal, if either it is not within the competence of the 23 Com. A.S. No.2/2015 court to make an order on the request, or the request is not in accordance with the rules of the court on taking evidence.

17. Section 19(1) of the Act, inter alia, provides that "The Arbitral Tribunal shall not be bound by the Code of Civil Procedure, 1908 (5 of 1908) or the Indian Evidence Act, 1872 (1 of 1872)". This means that the Tribunal is not bound by the rigor and strict provisions of the Code of Civil Procedure, 1908 (CPC), or the Indian Evidence Act, 1872 (Evidence Act).

18. Section 19(2) states that subject to the provisions of Part I, the parties are free to agree on the procedure to be followed by the Arbitral Tribunal in conducting its proceedings. In the present case, the parties have not agreed on any specific procedure to be followed by the Arbitral Tribunal in conduct of its proceedings. Section 19(3) states that "failing any agreement referred to in sub-section (2), the Arbitral Tribunal may, subject to this part, conduct the proceedings in the manner it considers appropriate" (emphasis supplied). Therefore, the Arbitral Tribunal is free to devise its own procedure, subject to the condition that such procedure should conform with the provisions of Part I of the Act. The procedure that the Tribunal may devise should meet the basic tenets of an adjudicatory process, namely, that the procedure should treat parties equally, and each party should be given a full opportunity to present its case (see Section 18).

Com. A.S. No.2/2015 The procedure to be evolved by the Tribunal cannot be such that it curtails the rights of the parties under Sections 13, 16, 17, 22, 23, 24, 25 & 26 of the Act, or any of them.

19. There is nothing in the Act to contra indicate the existence of jurisdiction/power in the tribunal to require the parties to produce documents, exhibits or other evidence, as the arbitral tribunal may determine. The aforesaid provision has the effect of vesting the tribunal with much greater autonomy in the matter of regulating its procedure for conduct of the arbitration proceedings, than that exercised by a civil court- which is bound by the rigour of the Code of Civil Procedure (CPC) and the Indian Evidence Act. The scheme contained in Section 19 of the Act is not to denude the arbitral tribunal of its power to regulate its procedure for effective and expeditious conduct of the arbitration proceedings in a transparent and fair manner. On the contrary, the legislative intent appears to be vest the arbitral tribunal with autonomy and flexibility in the matter of conduct of its proceedings so as to expedite the proceedings and cut the procedural wrangles witnessed in courts - which are governed by the CPC and the Evidence Act.

20. The procedure that the Tribunal may adopt for conducting the proceedings need not be evolved by consensus of the parties. It is for the Tribunal to devise its own procedure, if the parties have themselves not evolved the procedure 25 Com. A.S. No.2/2015 consensually under Section 19(2).

21. At this stage, I may take note of the procedure prescribed by the CPC, and the courts power to direct production of documents by a party to the proceedings. Section 30 CPC provides that, subject to such conditions and limitations as may be prescribed, the Court may, at any time, either on its own motion or on the application of any party make an order relating to, inter alia, production of documents. Order 11 deals with the aspect of service of interrogatories, discovery, inspection and production of documents. The aspect of production of documents is dealt with in Order 11 Rule 14, which states that it shall be lawful for the court, at any time during the pendency of the suit, to order the production by any party thereto, upon oath of such of the documents in his possession or power, relating to any matter in question in such suit, as the court shall think right and the court may deal with such documents, when produced, in such manner as shall appear just.

22. Order 11 Rule 21 CPC deals with the consequences of non compliance of an order directing a party to answer interrogatories or to discover documents or grant inspection of documents. If the Petitioner fails to comply with any such direction, the suit is liable to be dismissed for want of prosecution. If the Respondent is in breach of such an order, his defence is liable to be struck out. Pertinently, Order 11 Rule 21 does not take within its scope the aspect of non production of documents 26 Com. A.S. No.2/2015 directed to be produced by a party under Order 11 Rule 14 CPC.

23. Order 16 CPC deals with the aspect of summoning and attendance of witnesses. Order 16 Rule 6 states that any person may be summoned to produce a document, without being summoned to give evidence, and any person summoned merely to produce a document shall be deemed to have complied with the summons if he causes such document to be produced, instead of attending personally to produce the same. The expression "any person" used in Order 16 Rule 6 CPC would include a party to the proceedings. This is evident from Order 16 Rule 20 CPC and is well accepted in judicial pronouncements referred to a little later. Order 16 Rule 10 CPC deals with the procedure to be adopted qua the person to whom summons have been issued, inter alia, for production of documents, and who fails to produce the documents in compliance with such summons. If the person - without lawful excuse, fails to produce the document in compliance with the summons, the court may issue a proclamation requiring him to attend and to produce the document at a time and place to be named. If, inspite of this procedure being adopted, the person fails to produce the document, the court may issue a warrant for his arrest - with or without bail, and may make an order for attachment of his property for an amount not exceeding the amount of the costs of attachment and of fine which may be imposed under Order 16 Rule 12.

Com. A.S. No.2/2015

24. Order 16 Rule 15 imposes a duty upon the person summoned to give evidence or produce documents before the court. Order 16 Rule 20 provides that where any party to a suit present in court refuses, without lawful excuse when required by the court, to give evidence or to produce any document, then and there in his possession or power, the court may pronounce judgment against him or make such order in relation to the suit as it thinks fit.

25. From the above provisions, it appears that the reason why Order 11 Rule 21 does not deal with the aspect of non compliance of an order directing production of documents by a party, is that such a default is covered and dealt with by Order 16 CPC.

26. Consequently, it is evident that the discovery, inspection and production of documents by a party, at the request of the opposite party, is a matter of procedure. It is for this reason that the same has been dealt with in Order XI Rules 12 to 15 and 21, and Order 16 of the CPC. Thus, the arbitral tribunal is not powerless to direct production of a document - considered to be relevant evidence by it, by one or the other party to the proceedings. This power is statutorily conferred upon the tribunal Section 19 of the Act. Exercise of this statutory power by the arbitral tribunal does not tantamount to assumption of "inherent power" by the arbitral tribunal - which power does not vest in an arbitral tribunal.

Com. A.S. No.2/2015

27. It is one thing to say that the arbitral tribunal does not have the power or the jurisdiction to direct production of documents by one of the parties, and it is another thing to say that the arbitral tribunal does not have the power to enforce compliance of such a direction. If a direction issued by the arbitral tribunal directing production of documents by a party is not complied with, it appears that the arbitral tribunal would be in a position to invoke Section 27 of the Act, since Section 27 of the Act deals with the aspect of taking the courts assistance for taking evidence. The aspect of production of documents is specifically dealt with in Section 27(2)(c)(ii). However, the arbitral tribunal in the present case has proceeded on an erroneous premise that it does not have the jurisdiction to direct production of documents by the respondent, even though the arbitral tribunal has found the aforesaid two documents to constitute relevant evidence, and the arbitral tribunal has straightaway invoked the provisions contained in Section 27 of the Act to seek the courts assistance for a direction to the respondent to produce the said documents.

28. The Supreme Court, in Delta Distilleries Limited v. United Spirits Ltd. & Anr., (2014) 1 SCC 113, has held that the expression "any person"

used in Section 27 of the Act is wide enough to cover not merely the witnesses, but also the parties to the proceedings and that, in the event of the document not being produced as directed by the arbitral tribunal, the arbitral tribunal 29 Com. A.S. No.2/2015 would be entitled to draw an adverse inference against such a party. The Supreme Court has held:

"21. As seen from these two sections, Section 25(c) provides that in the event a party fails to appear at an oral hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings, and make the arbitral award on the evidence before it. This evidence can be sought either from any third person or from a party to the proceeding itself. The substitution of the phrase "parties and witnesses"

under Section 43 of the earlier act by the phrase 'any person' cannot make any difference, or cannot be read to whittle down the powers of the Arbitral Tribunal to seek assistance from the court where any person who is not cooperating with the Arbitral Tribunal or where any evidence is required from any person, be it a party to the proceedings or others. It is an enabling provision, and it has to be read as such. The term 'any person' appearing under Section 27(2)(c) is wide enough to cover not merely the witnesses, but also the parties to the proceeding. It is undoubtedly clear that if a party fails to appear before the Arbitral Tribunal, the Tribunal can proceed ex- parte, as provided under Section 25(c). At the same time, it cannot be ignored that the Tribunal is required to make an award on the merits of the claim placed before it. For that purpose, if any evidence becomes necessary, the Tribunal ought to have the power to get the evidence, and it is for this purpose only that this enabling section has been provided. The Supreme Court has further observed 30 Com. A.S. No.2/2015 "23. It was contended that if the necessary documents are not produced, at the highest an adverse inference may be drawn against the Appellant. That is a power, of course available with the Arbitral Tribunal, and if necessary the same can be used. However, as observed by the learned Arbitrator in her order dated 27.3.2007, the documents sought in the present matter were required to arrive at the decision on the claim of the Respondent No. 1, since, the quantification in support of the claim on a theoretical basis. A hypothetical calculation should not be resorted to when actual Sales Tax Assessments are available, which would show as to whether the quantum of set-off allowed and claimed was in fact justified".

29. Therefore, it is evident that the arbitral tribunal is empowered on its own, without taking resort to Section 27 of the Act, to direct, a party to produce documents, and upon the failure to comply with the tribunals direction to produce documents, the aggrieved party - who is aggrieved by the non production of documents, may either require the arbitral tribunal to draw an adverse inference against the defaulting party, or may chose to require the arbitral tribunal to enforce the direction to produce the relevant document with the assistance of the court by resort to Section 27 of the Act.

30. It may be that the aggrieved party (who is aggrieved by the non production of the documents by the opposite party) may be satisfied by the arbitral tribunal drawing an 31 Com. A.S. No.2/2015 adverse inference against the defaulting party, and may not wish to pursue the aspect of production of documents by the opposite/defaulting party by resort to Section 27 of the Act. It is not necessary for the arbitral tribunal in every such case to seek assistance of the court, and it would depend on the facts and circumstances of each case, whether such assistance should be sought. In any event, there would be no cause to seek assistance of the court by resort to Section 27 of the Act, without first issuing a direction to the concerned party to produce the document, and only upon the failure to comply with such a direction, the arbitral tribunal would be justified in seeking the assistance of the court under Section 27 of the Act - if so desired by the aggrieved/non defaulting party.

31. I find merit in the submission advanced by the petitioner before the arbitral tribunal that if the arbitral tribunal is held not to have jurisdiction to evolve its procedure requiring production of documents (when there is no agreed procedure laid down by the parties themselves), the same would delay the conclusion of the arbitration proceedings as, in every case, the arbitral tribunal would necessarily have to move for the courts assistance under Section 27 of the Act to obtain a direction for production of the relevant documents by one of the parties, even though the party from whom documents are required to be produced may be willing to comply with such a direction if it were to be so directed 32 Com. A.S. No.2/2015 by the arbitral tribunal. It would also mean that even in a case where a party requiring production of documents were to be satisfied with the drawing of adverse inference against the defaulting party, the resort to Section 27 of the Act would necessarily have to be undertaken - leading to unnecessary waste of time and resources of the parties and delay in the arbitral process.

32. The scheme of the Act, when seen as a whole, is to minimise the interference by the courts during the arbitration proceedings. That is why Section 5 specifically prohibits any judicial authority to intervene in the arbitration proceedings, notwithstanding anything contained in the other law for the time being in force, in matters governed by Part I of the Act except to the extent provided for in the Act. The aforesaid scheme is also evident from Sections 13 and 16 of the Act, which provide that issues relating to challenge to the arbitral tribunal on grounds of justifiable doubt, competence (qualification), and jurisdiction of the tribunal cannot be agitated midway when the arbitral proceedings are on, and such challenges should await the making of the award by the tribunal."

15.e. The Hon'ble Apex Court in the decision reported in (2018) 9 - S.C.C. 49 (Emkay Global Financial Services Ltd. vs. Girdhar Sondhi) has held that an application under Section 34 of the Act for setting aside an arbitral award will not 33 Com. A.S. No.2/2015 ordinarily require anything beyond the record that was before the arbitrator. I have carefully perused the arbitral record and it is observed that as per Section 19(2) of the Arbitration and Conciliation Act, no procedure between the parties was agreed to be followed by the arbitral tribunal in conducting its proceedings. It is further observed that the learned Arbitrator rightfully exercised the power vested in him under the mandate of Section 19(3) and 19(4) of the Arbitration and Conciliation Act. Hence, the arbitral award is neither against the fundamental policy of India nor in contravention of law. Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub-section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

16. The Fourth ground is that the learned Arbitrator in his communication dated 22.11.2012 has mentioned that the notice of arbitration is in respect of the matter of disputes and differences arising between parties to the purchase order, that the Learned Arbitrator failed to appreciate that the very purchase order is not acknowledged by the Petitioner, that there was no communication acknowledging all the terms and 34 Com. A.S. No.2/2015 conditions of purchase order, that the said purchase order was asked to be acknowledged by the Respondent No.1 as per Clause No.1 of the terms and conditions, that even though the Petitioner did not sign the acknowledgment, the Respondent No.1 accepted supply as per samples only, that there should not have been a dispute in respect of terms and conditions that were never agreed upon by the Petitioner, nor insisted by the Respondent No.1, that in the absence of specific contract the Arbitrator could not have gone in detail with regard to guarantee and other clauses in terms and conditions.

16.a. From the arbitral records, it is very clear that the Petitioner offered to supply Micro Cards as per Ex.C.5/ E-mail dated 14.05.2011, that the Respondent No.1 accepted the offer and placed Ex.C.6/Purchase Order dated 24.06.2011, that pursuant to Ex.C.6, accepting the terms and conditions mentioned therein, the Petitioner acted upon the Purchase Order and supplied 4,24,000/- Micro Cards with brand name "Micronova" under Five Invoices marked as Ex.C.7 to Ex.C.11, that in terms of the Purchase Order, the Respondent No.1 paid Rs. 4,60,26,034/- to the Petitioner towards the supply of Micro Cards by Ex.C.12 to Ex.C.16/ Debit Advice for Payment.

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16.b. When such being the case the contention of the Petitioner that he has not acknowledged the terms and conditions of the Purchase Order is unjust, unreasonable and untenable. He has also not raised said contention before the learned Arbitrator and therefore he is estopped from raising such a contention in this proceedings. The Arbitrator has properly considered Ex.C.2 to Ex.C.4/E-Tender Documents, Ex.C.5/ Offer dated 14.05.2011 and the Ex.C.6/Purchase Order and therefore the award is in accordance with law. Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub-section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

17. The Fifth ground is that the learned Arbitrator failed to appreciate that contract was not as per the prevailing laws of the international contract, that the purchase order referred is not a contract between the parties due to the fact that the Petitioner has never issued an order of acknowledgment which is a pre-requisite for making the purchase order a bipartite contract, that the Petitioner is not bound by all the terms and conditions of the contract, more specifically Clause 10 against which the arbitration has been invoked by the Respondent No.1.

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17.a. The Respondent No.1 has contended that having supplied the Micro Cards pursuant to Ex.C.6 and having received the amounts against the said supply of Micro Cards, it is not just and fair by the Petitioner to contend that the contract was not as per the prevailing laws of the international contract. He has also contended that if the contract was not as per the prevailing laws of the international contract, the Petitioner ought to have rejected the Ex.C.6 and ought not to have received the amounts from the Respondent No.1 and the Petitioner is liable to reimburse the Respondent No.1 the amount received under Ex.C.12 to Ex.C.16. He has further contended that having regard to the facts and circumstances, the Petitioner is bound by all the terms and condition of the contract and cannot subsequently choose the terms of the contract which is / are favourable or suits them to circumvent his legal obligation arising out of the contract, that the 'General Terms and Conditions of Purchase Order (Foreign)' is a part of Ex.C.6/Purcahse Order and the Petitioner is bound by the same, which contains Arbitration Clause also, that the Petitioner filed CMP. No. 65/2013 before the Hon'ble High Court of Karnataka praying to set aside the appointment of the Arbitrator and the Petitioner withdrew the same when he realized that he will suffer an adverse order, that the Petitioner understood the dispute involved in the Arbitration Proceeding, filed pleadings, 37 Com. A.S. No.2/2015 produced oral as well as documentary evidence, fully participated in the Arbitration proceedings without any demur and having regard to the facts and circumstances is estopped from raising such contentions in this proceedings.

17.b. Having considered about the facts leading to the present dispute and about the filing of CMP before the Hon'ble High Court and subsequent withdrawal by the Petitioner, the said contentions of the 1st Respondent cannot be brushed aside. Therefore, I cannot accept the contentions urged by the Petitioner in this ground. Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub-section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

18. The Sixth ground is that any issue/ dispute covered in the arbitration proceedings is not binding whatsoever on the Petitioner being an international company as per the laws of its country as per Clause 28 (b) (ii), since the jurisdiction as per the terms and conditions of the Purchase Order not becoming a contract without the order of acknowledgment, that the dispute itself is not capable of settlement by the arbitration, and is 38 Com. A.S. No.2/2015 liable to be set aside in terms of the provisions of Arbitration and conciliation Act, 1996.

18.a. This ground is similar to that of Ground No.5 and the same is discussed while answering Ground No.5. For the same reasons, I cannot accept the contentions urged by the Petitioner in this ground. Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub-section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

19. The Seventh ground is that the existence of an Arbitration agreement between the parties to the Petition under Section 11 of the Act and existence of disputes to be referred to arbitrator are conditions precedent for appointing arbitrator under Section 11 of the Act, that the learned Arbitrator failed to appreciate that virtually there is no Arbitration agreement in the given case on hand since the order of acknowledgment for the Purchase order was not issued by the Petitioner, that even the details of the dispute have not been communicated to the Petitioner either by the sole arbitrator or by the Respondent No.1, that mere mention of matter of dispute and differences to the purchase order or mention of a claim statement from the 39 Com. A.S. No.2/2015 Respondent No.1 does not prove what was the dispute for which the arbitration is invoked, that the Arbitrator had no jurisdiction to entertain the claim raised by the Respondent No.1.

19.a. This ground is similar to that of Ground No.5 and the same is discussed while answering Ground No.5. For the same reasons, I cannot accept the contentions urged by the Petitioner in this ground. Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub-section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

20. The Eighth ground is that the there is no record of what is the dispute which is referred to in the Arbitration, that the Arbitrator has not informed the dispute referred to in the Arbitration, that as per the notice of the Arbitration dated 02.11.2012, it appears that Mr. Manamohan Handa, GM (Export Manufacturing) has made a request dated 06.06.2012 for appointment of an Arbitrator to decide upon the disputes raised by him, that the CMD of 1st Respondent has appointed Mr. Suresh Katyal as the Sole Arbitrator invoking Clause 10 vide letter dated 22.11.2012, that neither the document dated 06.06.2012 nor document dated 22.11.2012 from CMD nor the 40 Com. A.S. No.2/2015 details of the dispute has been communicated to the Petitioner either by the Arbitrator or the Respondent No.1, that mere mention of matter of disputes and differences to the Purchase Order or mention of a claim statement from the Respondent No.1 does not prove what the dispute for which the Arbitration is invoked, that on the contrary it was the duty of the Arbitrator to ask for the claim statement within the terms of reference to the dispute referred to Arbitration, that in the absence of even the information on the dispute the jurisdictions of the Arbitration or undefined, that the award is out side the scope of the Arbitration and liable to be set aside as per Section 34 (2)

(b) (I) of the Arbitration and Conciliation Act.

20.a. This ground is similar to that of Ground No.5 and the same is discussed while answering Ground No.5. For the same reasons, I cannot accept the contentions urged by the Petitioner in this ground. Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub-section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

21. The Ninth ground is that the Arbitrator failed to appreciate that Petitioner is a Company incorporated in 41 Com. A.S. No.2/2015 Singapore under the laws of Singapore, that the Purchase Order between the parties is covered under the scope of international contract, that the Impugned Award is contrary to Section 28 of the Arbitration and Conciliation Act.

21.a. This ground is similar to that of Ground No.5 and the same is discussed while answering Ground No.5. For the same reasons, I cannot accept the contentions urged by the Petitioner in this ground. Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub-section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

22. The Tenth ground is that the Impugned Award is liable to be set aside as per Section 34 (2) (a) (iii) of the Arbitration and Conciliation Act, that the Petitioner was not given proper notice of the appointment of Arbitrator, that no prior notice was issued to the Petitioner before initiation of Arbitration Proceedings, that the Respondent No.1 did not even informed the Petitioner that their denial is not accepted and they are invoking the Arbitration Clause, that whenever any proceedings are to be commenced, a formal notice would be sent to the other party so that the proposed Arbitration dispute comes to 42 Com. A.S. No.2/2015 end at the initial stage, that such notice was warranted in the given circumstances to avoid prolonged proceedings, that the Petitioner was not offered an opportunity of submitting his explanation before the commencement of Arbitration Proceedings, that the Respondent No.1 without issuing any such notice hurriedly initiated Arbitration Proceedings, that if a notice would have been issued and was not obtained explanation from the Petitioner the proposed dispute could not have been arisen and would have clearly made both the parties understand where exactly they stood, that the narrowed issued involved in the present Arbitration dispute is has to whether the Petitioner supplied the components as per samples, that the said question would have been resolved if an independent expert was appointed and his opinion was obtained.

22.a. This ground is similar to that of Ground No.5 and the same is discussed while answering Ground No.5. Though the Petitioner has not taken any such contentions before the Arbitral Tribunal and in the grounds urged in this Petition, in his reply arguments has contended that without issuing the mandatory notice as required under Section 59 of the Sale of Goods Act, without the knowledge of the Petitioner, Respondent No.1 Company appointed its own employee as an arbitrator even without issuing the mandatory notice and hence initiation 43 Com. A.S. No.2/2015 of arbitration proceedings is illegal and contrary to law. In support of the said arguments he has relied on a decision reported in A.I.R. - 1992 - BOM - 55 (City & Industrial Development Corporation of Maharashtra Limited, Bombay and Another vs. M/s Nagpur Steel and Alloys Private Limited, Nagpur).

22.b. For better understanding, Section 59 of the Sale of Goods Act is reproduced hereunder:-

"(1) Where there is a breach of warranty by the seller, or where the buyer elects or is compelled to treat any breach of a condition on the part of the seller as a breach of warranty, the buyer is not by reason only of such breach of warranty entitled to reject the goods; but he may--

(a) set up against the seller the breach of warranty in diminution or extinction of the price; or

(b) sue the seller for damages for breach of warranty.

(2) The fact that a buyer has set up a breach of warranty in diminution or extinction of the price does not prevent him from suing for the same breach of warranty if he has suffered further damage".

22.c. The legal position on this aspect is well established and as highlighted in A.I.R. - 1971 - Cal - 357 (Bengal 44 Com. A.S. No.2/2015 Corporation Private Ltd. vs The Commissioner For The Port), is as under:-

"In a suit by the seller where the buyer sets up a breach of warranty and claims damages in diminution or extinction of the price claimed by the seller by exercising his right under Section 59 of the Act, actual damages have to be proved. The measure of damages again is really not different from the measure adopted in the law of contract. In assessing the damages which the buyer would be entitled to under Section 59 of the Act, two things have to be found out. The first conclusion that the Court has to arrive at is what is the value or price of the goods which were contracted to be bought and sold. The Court has further to find out as to what is the value or price of the goods in respect of which a breach of warranty is being set up. Having done so, the Court has to deduct the second figure from the first and the difference would be the measure of damages which the buyer is entitled to in diminution or extinction of the price claimed by the seller."

22.d. Such being the case, there is no such mandatory notice to be issued under this Section as argued by the learned Advocate for the Petitioner. The notice referred to at Para No. 14 of the above-mentioned decision reported in A.I.R. - 1992 - BOM - 55 (City & Industrial Development Corporation of Maharashtra Limited, Bombay and Another vs. M/s 45 Com. A.S. No.2/2015 Nagpur Steel and Alloys Private Limited, Nagpur) is with reference to the facts and circumstances of the said case and the same is not applicable to the facts and circumstances of the present case. Hence, I cannot accept the said arguments of the Advocate for the Petitioner.

22.e. Further, the learned Advocate for the Petitioner has also relied on the decision reported in A.I.R. - 1987 - S.C. - 1359 = 1987 (2) - S.C.C. - 160 (State of Karnataka vs. Rameshwara Rice Mills, Thirtahalli). In the said case, the Hon'ble Supreme Court construed Clause 12 of the agreement to purchase paddy by the State of Mysore under the Paddy Procurement Scheme, 1959, which is as follows:-

"In token of the first party's willingness to abide by the above conditions, the first party has hereby deposited as security a sum of Five Hundred Rupees only with the second party and for any breach of conditions set forth herein before, the first party shall be liable to pay damages to the second party as may be assessed by the second party, in addition to the forfeiture in part or whole of the amount deposited by him. Any amount that may become due or payable by the first party to the second party under any part of the agreement, shall be deemed to be and may be recovered from the first party as if they were arrears of land revenue, by which the State has been conferred power to assess the damages in case of any breach of conditions committed by 46 Com. A.S. No.2/2015 the individual party. The Hon'ble Supreme Court finding that the Deputy Commissioner representing the State who was a party to the agreement himself was to assess the damages, rejected the contention of the State and held that on a reading of the said Clause 12 it is clear that the State can assess damages only if the breach of conditions is admitted. It was held as follows:-

"7. On a consideration of the matter we find ourselves unable to accept the contentions of Mr. Iyenger. The terms of clause 12 do not afford scope for a liberal construction being made regarding the powers of the Deputy Commissioner to adjudicate upon a disputed question of breach as well as to assess the damages arising from the breach. The crucial words in clause 12 are and for any breach of conditions set forth hereinbefore, the first party shall be liable to pay damages to the second party as may be assessed by the second party. On a plain reading of the words it is clear that the right of the second party to assess damages would arise only if the breach of conditions is admitted or if no issue is made of it. If it was the intention of the parties that the officer acting on behalf of the State was also entitled to adjudicate upon a dispute regarding the breach of conditions the wording of clause 12 would have been entirely different. It cannot also be argued that a right to adjudicate upon an issue relating to a breach of conditions of the contract would flow from or is inhered in the right conferred to assess the damages arising from a 47 Com. A.S. No.2/2015 breach of conditions. The power to assess damages, as pointed out by the Full Bench, is a subsidiary and consequential power and not the primary power. Even assuming for arguments sake that the terms of clause 12 afford scope for being construed as empowering the officer of the State to decide upon the question of breach as well as assess the quantum of damages, we do not think that adjudication by the officer regarding the breach of the contract can be sustained under law because a party to the agreement cannot be an arbiter in his own cause. Interests of justice and equity require that where a party to a contract disputes the committing of any breach of conditions the adjudication should be by an independent person or body and not by the officer party to the contract. The position will, however, be different where there is no dispute or there is consensus between the contracting parties regarding the breach of conditions. In such a case the officer of the State, even though a party to the contract will be well within his rights in assessing the damages occasioned by the breach in view of the specific terms of clause 12.

8. We are, therefore, in agreement with the view of the Full Bench that the powers of the State under an agreement entered into by it with a private person providing for assessment of damages for breach of conditions and recovery of the damages will stand confined only to those cases where the breach of conditions is admitted or it is not disputed."

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22.f. The learned Advocate for the Petitioner has also relied on a decision reported in A.I.R. - 1960 - S.C. - 588 (Alopi Parshad & Sons Limited vs. Union of India). In the said case, the Hon'ble Supreme Court held that the contract is not discharged merely because it turns out to be a difficult to perform or onerous. In that case the agent, appointed by the Government for supply of ghee, claimed enhancement of rates on the ground that the circumstances changed due to the war. The Hon'ble Supreme Court rejected the claim and held as under:

21. ...Performance of the contract had not become impossible or unlawful; the contract was in fact, performed by the Agents, and they have received remuneration expressly stipulated to be paid therein. The Indian Contract Act does not enable a party to a contract to ignore the express covenants thereof, and to claim payment of consideration for performance of the contract at rates different from the stipulated rates, on some vague plea of equity. The parties to an executor contract are often faced, in the course of carrying it out, with a turn of events which they did not at all anticipate - a wholly abnormal rise or fall in prices, a sudden depreciation of currency, an unexpected obstacle to execution, or the like.

xxx xxx xxx

22. There is no general liberty reserved to the courts to absolve a party from liability to 49 Com. A.S. No.2/2015 perform his part of the contract, merely because on account of an uncontemplated turn of events, the performance of the contract may become onerous. That is the law both in India and in England, and there is, in our opinion, no general rule to which recourse may be had, as contended by Mr. Chatterjee, relying upon which a party may ignore the express covenants on account of an uncontemplated turn of events since the date of the contract..."

22.g. It is to be noted that the above-mentioned decisions are dealing with Sections 56 and 73 of the Indian Contract Act. In the present case in any of the grounds urged in this Petition, the Petitioner has taken such contentions about Sections 56 and 73 of the Indian Contract Act. Therefore, I cannot accept the said arguments of the learned Advocate for the Petitioner. Hence, this ground is not available for the Petitioner under Sub- section (2) and Sub-section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

23. The Eleventh ground is that the Impugned Award is liable to be set aside in view of Section 34 (2) (a) (iv) of the Arbitration and Conciliation Act, that the Impugned Award deals with a dispute not known to the Petitioner and hence not 50 Com. A.S. No.2/2015 contemplated by or falling within the terms of the submission to the Arbitration, that it is liable to set aside because it contains decisions on matter beyond the scope of the submission to Arbitration.

23.a. This ground is similar to that of Ground No.5 and the same is discussed while answering Ground No.5. For the same reasons, I cannot accept the contentions urged by the Petitioner in this ground. Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub-section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

24. The Twelfth ground is that the Impugned Award is not a reasoned award, that proper appreciation of evidence is not done and unreasonable unimaginable inferences are drawn without any basis, hence the award is liable to be set aside in view of Section 31 of the Arbitration and Conciliation Act.

24.a. For the attack of the Petitioner on this ground, I wish to refer a decision reported in A.I.R. - 1988 - S.C. - 1340 (Indian Oil Corporation vs. Indian Carbon Ltd) wherein, at Para No.8, it is held as follows:-

Com. A.S. No.2/2015 "It is one thing to say that reasons should be stated and another thing to state that a detailed judgment is to be given in support of an award. Even if it be held it is obligatory to state the reason, it is not obligatory to give a detailed judgment".

24.b. A similar view was also taken by the Hon'ble Supreme Court in the decision reported in A.I.R. - 1989 - S.C.

- 973 (Gujarat Water Supply vs. Unique Erectors), and A.I.R. - 1991 - S.C. - 2089 (Goa, Daman & Diu Housing Board vs. Ramakant V.P, Darvotkar).

24.c. In another decision reported in A.I.R. - 1990 - S.C. -

1426 (Raipur Development Authority etc. vs. M/s. Chokhamal contractors) wherein, the Hon'ble Apex Court at Para No. 37 has held as follows:-

"There is, however, one aspect of non-speaking awards in non-statutory arbitrator to which Government and Governmental authorities are parties that compel attention......, the legitimate criticism that Government failed to provide against possible prejudice to public interest."

24.d. In another decision reported in (2014) 9 - S.C.C. - 212 (Anand Brothers Private Limited vs. Union of India and Others), the Hon'ble Supreme Court has considered and decided the phrase 'finding' at Para No. 12 and defined the 52 Com. A.S. No.2/2015 phrase "conclusion" at Para No. 13. The Hon'ble Supreme Court has further held about speaking order at Para No. 14, which is as follows:-

"It is trite that a finding can be both; a finding of fact or a finding of law........This is the rule also in the case of finding of fact where too the process of reasoning must be disclosed in order that it is accepted as a finding in the sense the expression is used in Clause 70".

24.e. Therefore, in view of the aforesaid Judgments, it has to be examined by perusing of the award wherein the learned Arbitrator has dealt with each and every contentions of both parties and recorded the reasoning for allowing or disallowing the claim and counter-claim. Hence, this ground is not available for the Petitioner under Sub-Section (2) and Sub-Section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of Arbitral Award on this court is thwarted and rejected.

25. The Thirteenth ground is that the learned Sole Arbitrator failed to appreciate that the origin of the dispute between the parties is the Tender Notification dated 29.04.2011, that though the said tender bids from reputed experienced suppliers for the supply of "ELECTRONICS 53 Com. A.S. No.2/2015 COMPONENTS AND MATERIALS" for Low Cost Enumeration Project was invited, that the device in issue was notified at Sl.No. 115 in the Commercial specifications, that the designation of the item was MICRO SD CARD 2 GB, even the specification was also Micro SD CARD 2 GB, that the Packaging was Stacked Trays Manufacture was of "ANY MAKE" in the remark column it was notified that "Vendor of provide datasheets and 25 samples."

25.a. In fact, this ground is in the nature of a ground to be urged in an appeal. The position in law is well settled that this court while exercising power under Section 34 of the Act does not sit as a court of appeal. The nature of proceedings under Section 34 of the Act is summary in nature as held in the decision reported in (2019) - S.C.C. Online - S.C. - 1244 = (2019) 9 - S.C.C. - 462 (Canara Nidhi Limited vs. M. Shashikala). Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub-section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

26. The Fourteenth ground is that the contract between the Petitioner the Respondent No.1 was in respect of the tender 54 Com. A.S. No.2/2015 notification, that the pursuant to the offer letter dated 14.05.2011 by the Petitioner, in response to this offer the Respondent No.1 had in their Purchase Order under the head "ITEM SPECIFICATION' - PART SHOULD BE SUPPLIED AS PER OUR REQUIREMENT AND YOUR EMAIL QUOTE DATED 14.02.2011, This purchase order also had an IMPORTANT NOTE:

FIRST OFF SAMPLES ARE TO BE SENT AND THE SAME ARE TO BE ACCEPTED BEFORE BULK SUPPLIES." Clause 10 of the agreement referred this order shall be referred to our Managing Director or his nominee for arbitration who shall have all powers conferred by the Arbitration Act for the time being in force." that the dispute if any which could have been subject matter of arbitration was only " MICRO SD CARD 2 GB, of ANY MAKE"

with a condition interalia that Vendor to provide datasheets and 25 samples" however the entire arbitral award revolves around some other product which was never reflected in the tender document, but which was supposed to be running in the mind of the Respondent No.1 and reflected in its claim petition and in the rejoinder and in the evidence before the Sole Arbitrator.

26.a. In fact, this ground is also in the nature of a ground to be urged in an appeal. The position in law is well settled that this court while exercising power under Section 34 of the Act does not sit as a court of appeal. The nature of proceedings 55 Com. A.S. No.2/2015 under Section 34 of the Act is summary in nature as held in the decision reported in (2019) - S.C.C. Online - S.C. - 1244 = (2019) 9 - S.C.C. - 462 (Canara Nidhi Limited vs. M. Shashikala). Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub-section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

27. The Fifteenth ground is that at no point of time Respondent No.1 gave the specification, that the tender document reflected designation and specification both as MICRO SD CARD 2 GB only and nothing beyond this, at no point of time the Respondent No.1 mentioned that this was required for usage in tablet PC, that on the other hand the Tender Notification dated 29.04.2011 had mentioned the purpose as "for Low Cost Enumeration Device Project", in what other component this MICRO SD CARD 2 GB would be used, and how and where by different customers of Respondent No.1 were never informed to the Petitioner at any point of time, hence when the Respondent No.1 initiated arbitration proceedings on the complaint of one of the consumers who had taken 640 pieces as against bulk supply of 4,24,000 pieces supplied by the Petitioner, the arbitrator should have rejected the claim of the 56 Com. A.S. No.2/2015 Respondent No.1 on the ground that as there was no specification given in the tender notification, and as no field of usage was ever informed to the Petitioner by additional agreement before accepting the offer, the claim of the Respondent No.1 was one dealing with a dispute not contemplated by or not falling within the terms of submission to arbitration, that however as the Impugned Arbitral Award has addressed the issues raised by the Claimant/ Respondent No.1 that never fell within the terms of submission to arbitration the same is liable to be set aside, that the Impugned Arbitral Award contains decisions on matters beyond the scope of the submission to arbitration, that the scope of subject matter of arbitration is expanded to facilitate the Respondent No.1 contrary to the settled principles of law on this issue, that the Sole Arbitrator virtually had no jurisdiction to try the claim of the Respondent No.1 at all on the premises which were never the subject matter of contract.

27.a. In fact, this ground is also in the nature of a ground to be urged in an appeal. The position in law is well settled that this court while exercising power under Section 34 of the Act does not sit as a court of appeal. The nature of proceedings under Section 34 of the Act is summary in nature as held in the decision reported in (2019) - S.C.C. Online - S.C. - 1244 = 57 Com. A.S. No.2/2015 (2019) 9 - S.C.C. - 462 (Canara Nidhi Limited vs. M. Shashikala). Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub-section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

28. The Sixteenth ground is that the the Arbitration Clause 10 referred to jurisdiction of Arbitrator under the Arbitration and Conciliation Act is no more in force, that even on this ground the Impugned Award is liable to be set aside.

28.a. As discussed earlier, the Petitioner filed CMP No. 65/2013 before the Hon'ble High Court of Karnataka under the provisions of the Arbitration and Conciliation Act in respect of the very same contract, that the Petitioner withdrew the said petition. Further, the Petitioner filed pleadings, produced oral as well as documentary evidence, fully participated in the Arbitration Proceedings without any demur. Having regard to the said facts and circumstances the Petitioner is estopped from raising such contentions in this proceedings. Further, the 1 st Respondent has contended that the Micro Cards are required for the product 'Tablet PCS' for which the main customer of the 1 st Respondent is the departments of Union of India.

Com. A.S. No.2/2015

28.b. The learned Advocate for the Petitioner has argued that the Petitioner in its letter dated 21.01.2013 addressed to the Chairman and Managing Director of the 1 st Respondent Company opposed the appointment of its own employee as an arbitrator and requested to appoint any retired judge to avoid the bias and personal interest in the matter. However, for this aspect I have already discussed above at Para No. 12 (m) & (n). For the same reasons, I cannot accept the said arguments of the learned Advocate for the Petitioner. Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub- section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

29. The Seventeenth ground is that the Impugned Award is also liable to be set aside under Section 34 (2) (b) (ii) as being the one opposed to and being in conflict with the public policy of India.

29.a. The scope of this court is limited with regard to Section 34 of the Act. The position of law stands crystallized today, that findings, of fact as well as of law, of the arbitrator/Arbitral Tribunal are ordinarily not amenable to 59 Com. A.S. No.2/2015 interference under Section 34 of the Act. The scope of interference is only where the finding of the Tribunal is either contrary to the terms of the contract between the parties, or, ex facie, perverse, that interference, by this court, is absolutely necessary.

29.b. The Hon'ble Supreme Court in the decision reported in (2006) 11 - S.C.C. - 181 (McDermott International Inc. vs. Burn Standard Co. Ltd. and Ors.), has held as follows :-

"52. The 1996 Act makes provision for the supervisory role of courts, for the review of the arbitral award only to ensure fairness. Intervention of the court is envisaged in few circumstances only, like, in case of fraud or bias by the arbitrators, violation of natural justice, etc. 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, 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."

29.c. Thus, it is observed and held that the arbitral award is not marred by any patent illegality, as there is no contravention 60 Com. A.S. No.2/2015 of the substantive law of India, which would result in the death knell of an arbitral award. It is also observed that there is no patent illegality in the arbitral award, which must go to the root of the matter. The arbitral award is also a well reasoned and a speaking award. The arbitral award is also held to not be in contravention of Section 28(3) of the Act, which pertains to the terms of the contract, trade usages applicable to the nature of contract and substance of dispute.

29.d. The learned Advocate for the Petitioner has relied on the decisions reported in 2003 (5) - S.C.C. - 705 = 2003 (4) - SCALE - 92 (ONGC vs. Saw Pipes Limited) and 2015 (3) - S.C.C. - 49 (Associate Builders vs. DDA). The ratio of the said decisions are to be appreciated along with the subsequent decisions of the Hon'ble Supreme Court.

29.e. Subsequent to the said decisions, in the decision reported in (2017) 13 - SCALE - 91 (SC) (Venture Global Engineering LLC and Ors vs. Tech Mahindra Ltd. and Ors), the Hon'ble Supreme court has held as follows:-

"The Award of an Arbitral Tribunal can be set aside only on the grounds specified in Section 34 of the Arbitration & Conciliation Act and on no other ground.

Com. A.S. No.2/2015 The Court cannot act as an Appellate Court to examine the legality of Award, nor it can examine the merits of claim by entering in factual arena like an Appellate Court."

29.f. A similar view is also taken in the decision reported in (2017) 14 - SCALE - 240 (SC) ( Sutlej Construction vs. The Union Territory of Chandigarh).

29.g. The learned Advocate for the 1st Respondent has relied on the decision reported in 2019 (15) - S.C.C. - 131 (Ssangyong Engineering & Construction Co. Ltd. vs. National Highways Authority of India Ltd.), wherein the Hon'ble Supreme Court has once again reiterated the law related to the examination by a Court of an Award under Section 34 of the Arbitration & Conciliation Act, 1996 and has held as under:-

"34. What is clear, therefore, is that the expression public policy of India, whether contained in Section 34 or in Section 48, would now mean the fundamental policy of Indian law as explained in paragraphs 18 and 27 of Associate Builders (supra), i.e., the fundamental policy of Indian law would be relegated to the "Renusagar"

understanding of this expression. This would necessarily mean that the Western Geco (supra) expansion has been done away with. In short, Western Geco (supra), as explained in paragraphs 28 and 29 of Associate Builders 62 Com. A.S. No.2/2015 (supra), would no longer obtain, as under the guise of interfering with an award on the ground that the arbitrator has not adopted a judicial approach, the Court's intervention would be on the merits of the award, which cannot be permitted post amendment. However, in so far as principles of natural justice are concerned, as contained in Sections 18 and 34(2) (a) (iii) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in paragraph 30 of Associate Builders (supra).

35. It is important to notice that the ground for interference in so far as it concerns "interest of India"

has since been deleted, and therefore, no longer obtains. Equally, the ground for interference on the basis that the award is in conflict with justice or morality is now to be understood as a conflict with the "most basic notions of morality or justice". This again would be in line with paragraphs 36 to 39 of Associate Builders (supra), as it is only such arbitral awards that shock the conscience of the court that can be set aside on this ground.

36. Thus, it is clear that public policy of India is now constricted to mean firstly, that a domestic award is contrary to the fundamental policy of Indian law, as understood in paragraphs 18 and 27 of Associate Builders (supra), or secondly, that such award is against basic notions of justice or morality as understood in paragraphs 36 to 39 of Associate Builders (supra). Explanation 2 to Section 34(2)(b)(ii) and Explanation 2 to Section 48(2)(b)(ii) was added by the Amendment Act only so that Western Geco (supra), as understood in Associate Builders (supra), and paragraphs 28 and 29 in 63 Com. A.S. No.2/2015 particular, is now done away with.

37. Insofar as domestic awards made in India are concerned, an additional ground is now available under subsection (2A), added by the Amendment Act, 2015, to Section 34.Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, what is not subsumed within the fundamental policy of Indian law, namely, the contravention of a statute not linked to public policy or public interest, cannot be brought in by the back door when it comes to setting aside an award on the ground of patent illegality.

38. Secondly, it is also made clear that re-

appreciation of evidence, which is what an appellate court is permitted to do, cannot be permitted under the ground of patent illegality appearing on the face of the award.

39. To elucidate, paragraph 42.1 of Associate Builders (supra), namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Paragraph 42.2 of Associate Builders (supra), however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award.

40. The change made in Section 28(3) by the Amendment Act really follows what is stated in 64 Com. A.S. No.2/2015 paragraphs 42.3 to 45 in Associate Builders (supra), namely, that the construction of the terms of a contract is primarily for an arbitrator to decide, unless the arbitrator construes the contract in a manner that no fair minded or reasonable person would; in short, that the arbitrator's view is not even a possible view to take. Also, if the arbitrator wanders outside the contract and deals with matters not allotted to him, he commits an error of jurisdiction. This ground of challenge will now fall within the new ground added under Section 34(2A).

41. What is important to note is that a decision which is perverse, as understood in paragraphs 31 and 32 of Associate Builders (supra), while no longer being aground for challenge under public policy of India, would certainly amount to a patent illegality appearing on the face of the award. Thus, a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality. Additionally, a finding based on documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties, and therefore, would also have to be characterized as perverse."

29.h. In the decision reported in 2019 (16) - SCALE - 823 (Hindustan Construction Company Limited & Anr. vs. Union of India & Ors.), the Hon'ble Apex Court has held as under:-

Com. A.S. No.2/2015 "49. Further, this Court has repeatedly held that an application under Section 34 of the Arbitration Act, 1996 is a summary proceeding not in the nature of a regular suit - see Canara Nidhi Ltd. v. M. Shashikala 2019 SCC Online SC 1244 at paragraph 20. As a result, a court reviewing an arbitral award under Section 34 does not sit in appeal over the award, and if the view taken by the arbitrator is possible, no interference is called for -

see Associated Construction v. Pawanhans Helicopters Limited. (2008)16 SCC 128 at paragraph 17.

50. Also, as has been held in the recent decision Ssangyong Engineering & Construction Co. Ltd. vs. NHAI 2019 SCC Online SC 677, after the 2015 Amendment Act, this Court cannot interfere with an arbitral award on merits."

29.i. The Hon'ble Supreme Court in the decision reported in 2020 - SCC Online - S.C. - 466 ( Patel Engineering Ltd. vs. North Eastern Power Corporation Ltd) has once again exposited the 'patent illegality' ground, appearing in Section 34 (2A) of the Arbitration and Conciliation Act, 1996. The most significant part of this judgment is the recognition and re- affirmation given to the test of patent illegality, as set out in Paragraph (42.3) of the above-mentioned decision reported in 2015 (3) - S.C.C. - 49 (Associate Builders vs. DDA) and which was reiterated in Paragraph (40) of the decision reported in 2019 (15) - S.C.C. - 131 (Ssangyong Engineering & 66 Com. A.S. No.2/2015 Construction Co. Ltd. vs. National Highways Authority of India Ltd.). The aforementioned test of 'patent illegality' lays down that any contravention of Section 28 (3) of the Arbitration & Conciliation Act, 1996 is deemed to be a sub-head of patent illegality. According to it, an Arbitral Tribunal must decide in accordance with the terms of the contract, but if an Arbitrator construes a term of the contract in such a way that it could be said to be something that no fair minded or reasonable person could do, the same will render the award 'patently illegal'.

29.j. By keeping in mind about the said legal aspects, I am of the opinion that the Arbitral Award is not marred by any patent illegality, as there is no contravention of the substantive law of India, which would result in the death knell of an Arbitral Award. It is also observed that there is no patent illegality in the Arbitral Award, which must go to the root of the matter. The Arbitral Award is also a well reasoned and a speaking award. The Arbitral Award is also held to not be in contravention of Section 28(3) of the Arbitration & Conciliation Act, which pertains to the terms of the contract, trade usages applicable to the nature of contract and substance of dispute.

29.k. As far as reliance placed by the Learned Advocate for the Petitioner on the recent judgment of the Hon'ble Apex 67 Com. A.S. No.2/2015 Court reported in 2021 - S.C.C. Online - S.C. - 508 (PSA Sical Terminals Pvt. Ltd. vs. Board of Trustees of V.O. Chidambranar Port Trust Tuticorin and Others) is concerned, the Hon'ble Apex Court has held that a decision, which is perverse, though may not be a ground for challenge under public policy of India, however, the same can certainly amount to a patent illegality appearing on the face of the award. The Hon'ble Apex Court has further held that a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision, would be perverse and liable to be set aside.

29.l. The learned Advocate for the Petitioner has vehemently argued that in the entire award, the learned Arbitrator has contended that the Petitioner has not proved his contentions and hence he has not properly appreciated the evidence. According to him, the 1st Respondent being the Claimant before the learned arbitrator, he has to prove his contentions and that without considering the said aspect, the learned arbitrator has blamed the present Petitioner that he has not proved his contentions, which is not in accordance with law. However, the burden on Issue No. 3 is on the Petitioner himself. In fact, Issue No.3 is the vital issue and the entire dispute based on the said issue itself. While appreciating the said issue, the 68 Com. A.S. No.2/2015 learned Arbitrator has held that the Petitioner has not proved his contentions. Under the said circumstances, a bare perusal of the award passed by the Learned Arbitrator shows that evidence of both the parties have been considered in detail and the Learned Arbitrator has taken into account each and every submissions advanced by the parties before him, including appreciation of evidence in proper manner before arriving at the decision to pass the impugned award and as such, the judgment cited by the Learned Counsel for the Petitioner, is of little assistance to him.

29.m. The learned Advocate for the Petitioner has also relied on a decision of the Hon'ble Apex Court reported in (2021) 3 - S.C.C. - 308 (Anglo American Metallurgical Coal Pty. Ltd. vs. MMTC Limited), wherein it has laid down the parameters of judicial review and Courts have been permitted to interfere only if there is a ground of patent illegality or violation of fundamental policy of Indian law and if a possible view is based on oral and documentary evidence led in the case, which cannot be characterized as being either perverse or being based on no evidence and as such, no interference is permissible. The relevant portion of the judgment is reproduced hereunder:-

Com. A.S. No.2/2015 "48. Given the parameters of judicial review laid down in Associate Builders, it is obvious that neither the ground of fundamental policy of Indian law, nor the ground of patent illegality, have been made out in the facts of this case, given the fact that the majority award is certainly a possible view based on the oral and documentary evidence led in the case, which cannot be characterized as being either perverse or being based on no evidence."

29.n. The learned Advocate for the Petitioner has relied on a recent Judgment of the Hon'ble Supreme Court in Delhi Airport Metro Express Private Limited vs. Delhi Metro Rail Corporation Limited in Civil Appeal No.5627/2021 (arising out of SLP (C) No. 4115/2019) decided on 09.09.2021. In the said judgment, the Arbitral Award which was challenged before the Hon'ble High Court under Section 34 was dismissed and in appeal under Section 37. The Division Bench of Hon'ble High Court has allowed the appeal and set aside the award. In this judgment, the Hon'ble Supreme Court has set aside the order of the Division Bench. In the said Judgment, the Hon'ble Supreme Court in Para 24 has held as under:-

"24. This court has in several other judgments interpreted Section 34 of the 1996 Act to stress on the restraint to be shown by courts while examining the validity of the arbitral awards. The limited grounds available to courts for annulment of arbitral awards are 70 Com. A.S. No.2/2015 well known to legally trained minds. However, the difficulty arises in applying the well-established principles for interference to the facts of each case that come up before the courts. There is a disturbing tendency of courts setting aside arbitral awards, after dissecting and reassessing factual aspects of the cases to come to a conclusion that the award needs intervention and thereafter, dubbing the award to be vitiated by either perversity or patent illegality, apart from the other grounds available for annulment of the award. This approach would lead to corrosion of the objection of the 1996 Act and the endeavours made to preserve this court, which is minimal judicial interference with arbitral awards. That apart, several judicial pronouncements of this court would become a dead letter if arbitral awards are set aside by categorizing them as perverse or patently illegal without appreciating the contours of the said expressions."

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29.o. The Hon'ble Supreme Court at Para 35 of the said Judgment has held that as the arbitrator is the sole judge of the quality as well as the quantity of the evidence, the task of being a judge on the evidence before the Tribunal does not fall upon the court in exercise of its jurisdiction under Section 34. The Hon'ble Supreme Court has also held in Para 39 of the said Judgment that construction of the contract is within the jurisdiction of the Tribunal and merely because another view is possible, the court cannot interfere with such construction and substitute its own view.

Com. A.S. No.2/2015

29.p. On going through these Judgments, it makes further clear that Arbitrator is sole judge of the quality and quantity of the evidence and construction of contract is within the jurisdiction of the Tribunal and the court cannot lightly interfere with the award passed by the learned Arbitrator. On considering the facts of the present case, as held in this Judgment there are no grounds to set aside the award of the learned Arbitrator under Section 34 of the Act. The Hon'ble Supreme Court in this Judgment has even held that patent illegality which do not go to the root of the matter and every error of law committed by the Arbitral Tribunal could not fall within the expression patent illegality.

29.q. In the present case, cogent grounds, sufficient reasons have been assigned by Arbitral Tribunal in reaching the just conclusion and no error of law or misconduct is apparent on the face of the record. No error is apparent in respect of the Impugned Award. I do not find any contradiction in the observations and findings given by Arbitral Tribunal. The Impugned Award does not suffer from vice of irrationality and perversity. The conclusion of the Arbitral Tribunal is based on a possible view of the matter, so the Court is not expected to interfere with the award. Even impugned award passed by 72 Com. A.S. No.2/2015 Arbitral Tribunal cannot be set aside on the ground that it was erroneous. The award is not against any public policy. Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub-section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

30. The Eighteenth ground is that the Petitioner had stated in its response dated 24.01.2013, that there is a requirement of the "Independent Expert Opinion", for the reasons best known to the Respondent, that the Respondent has taken a stand that there is no requirement of any independent expert opinion to clarify whether the samples and bulk matched, that the entire contract revolved around a demand by the Respondent No.1 to supply MICRO CARDS as per samples and subsequent offer by the Petitioner to supply as per samples, and further subsequent acceptance of samples and acceptance by the Respondent No.1 of bulk supplied by the Petitioner as per samples, hence whether the bulk was in variance with the samples could have been found out through an expert's opinion, that the Arbitral Tribunal erred in expecting the Petitioner to do the same, without appreciating the fact that 73 Com. A.S. No.2/2015 it was the Respondent No.1 who should have got the expert examined in order to prove its stand, that the Sole Arbitrator erred in not following procedure as contemplated in Section 26 of the Arbitration and Conciliation Act, hence the Impugned Arbitral Award is opposed to public policy and is liable to be set aside.

30.a. The learned Advocate for the Petitioner has argued that from plain reading of Section 26 of the Arbitration and Conciliation Act, it clearly establishes that it is the duty of the arbitrator to pass order when the request is made for appointment of expert, that intentionally and deliberately the arbitrator has not passed the order as and when it was demanded but blame is putting on the Petitioner Company for his lapse, that it shows he acted in biased manner and misused the office just to favour to the 1st Respondent Company.

30.b. The 1st Respondent has contended that having regard to the facts and circumstances, the 1st Respondent found that there is no requirement of independent expert and stated so in the reply to the rejoinder, that the denial in the reply to the rejoinder cannot be ground for non-introduction of independent expert, that the Petitioner has not made any efforts to get independent expert opinion either by filing an application or 74 Com. A.S. No.2/2015 otherwise, that in fact the Petitioner has examined Mr. Abhinav as RW.1, that he is a Technical person and he was deputed to China by the Petitioner for testing of Micro Cards, that he is an expert, that if the Petitioner is of the opinion that he is not an expert, he could have examined an independent expert, that under the circumstances it is an attempt of the Petitioner to cover up his lapses.

30.c. The learned Advocate for the 1st Respondent has argued that a bare reading of Section 26 of the Arbitration and Conciliation Act, would reflect that the arbitral tribunal on its own or on an application filed by any of the parties can appoint an expert to give evidence/opinion on the issue, that admittedly, there is defect in the supply made by the Petitioner, which are reflected in the correspondences between the parties, that the Petitioner had given sample Micro Cards of "Transcend" make to the 1st Respondent, that after being satisfied with the performance of "Transcend" Micro Cards, the 1 st Respondent placed the Purchase Order, that the Petitioner clandestinely supplied Micro Cards of Micronova make to the 1 st Respondent, that the said facts are admitted facts, that the supplied Micro Cards of Micronova were defective, that there was no need for the 1st Respondent to examine any expert on the issue, that the 75 Com. A.S. No.2/2015 Petitioner has not made any application before the arbitral tribunal to examine the expert.

30.d. It is to be noted that Clause 4 of Ex.C.6 provides for guarantee as per Clause 6 of GCC. As per Clause 6, the Micro Cards supplied by the Petitioner should be free from any defects and should perform satisfactorily for a period of 12 calendar months from the date of supply. Ex.C. 17 to 19 are the Emails sent by the Respondent No.1 company to the Petitioner communicating the defects found in the Micro Cards supplied by the Petitioner. As could be seen from Ex.R.27, the Petitioner took 50 pieces of Micro Cards from the Respondent No.1 Company on 26.08.2011 for analysis. The Petitioner has also sent Ex.C. 21 and Ex.C.22 for the said aspect also. Further the Petitioner has deputed the Testing Engineer/R.W.1 to China to verify the defects. From the evidence of R.W.1 also, it is clear that the said Micro Cards were defective. The Petitioner has not replaced the said defective materials. He has not produced the analysis report in pursuance to Ex.R.27. On 20.7.2013, the petitioner has undertaken to file an application seeking production of samples supplied by the Petitioner in the proceedings. According to the Learned Arbitrator, no such application has been filed by the Petitioner in the arbitral proceedings. In fact, the Petitioner has not requested to 76 Com. A.S. No.2/2015 examine any independent expert by filing a separate application to that effect before the Arbitral Tribunal. As per Section 26 of the Arbitration and Conciliation Act, the Arbitral Tribunal can appoint an expert to give evidence/opinion on the issue, on its own or on an application filed by any of the parties. In this case, no application is filed by any of the parties. In the said circumstances, the Aribitral Tribunal on the available evidence, that too, relying on the evidence of R.W.1, who is an expert, came to the conclusion that the evidence of the independent expert is not necessary. The said finding cannot be considered as perverse or illegal. Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub- section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

31. The Nineteenth ground is that the Impugned Award is a reflection of Bias of the Sole Arbitrator and is vitiated by partiality and absence of independence of the Sole Arbitrator, and hence is opposed to public policy of India.

31.a. Before appreciating the contention of the Petitioner in this ground, it will be appropriate to refer law laid down by the 77 Com. A.S. No.2/2015 Hon'ble Apex Court, before the amendment to the Arbitration and Conciliation Act. In the decision reported in A.I.R. - 1988 - S.C. - 1099 (International Airport Authority vs. K.D. Bali & Another), the Hon'ble Apex Court considering apprehension of bias of arbitrator held that it must be judged from a healthy, reasonable and average point of view. The Hon'ble Apex Court has held thus :-

"5. Several points were taken in support of the application for revocation. It was sought to be urged that the petitioner had lost confidence in the sole arbitrator and was apprehensive that the arbitrator was biased against the petitioner. It is necessary to reiterate before proceeding further what are the parameters by which an appointed arbitrator on the application of a party can be removed. It is well settled that there must be purity in the administration of justice as well as in administration of quasi justice as are involved in the adjudicatory process before the arbitrators. It is well said that once the arbitrator enters in an arbitration, the arbitrator must not be guilty of any act which can possibly be construed as indicative of partiality of unfairness. It is not a question of the effect which misconduct on his part had in fact upon the result of the proceeding, but of what effect it might possibly have produced. It is not enough to show that even if there was misconduct on his part, the award was unaffected by it, and was in reality just; arbitrator must not do anything which is not in itself fair and impartial. See Russel on Arbitration, 18th Edition page 378 and observations of Justice Boyd in Re Brien and Brien, (1910) 2 IR 84 at P. 89. Lord O'brien in King (De Vesci) v.

Com. A.S. No.2/2015 Justices of Queen's County (1908) 2 IR 285, observed as follows: "By bias I understand a real likelihood of an operative prejudice, whether conscious or unconscious. There must in my opinion be reasonable evidence to satisfy us that there was a real likelihood of bias. I do not think that their vague suspicions of whimsical capricious and unreasonable people should be made a standard to regulate our action here. It might be a different matter if suspicion rested on reasonable grounds was reasonably generated and but certainly mere flimsy ground elusively generated and morbid suspicions should not be permitted to form a ground of decision. (Emphasis supplied) See Queen v. Rand (1866) 1 QB 230 : Ramnath vs. Collector, Darbhanga, : Queen v. Meyer (1875) 1 QBD 173 and Eckersley v. Mersey Docksand Harbour Board (1894) 2 QB 667.

6. In the words of Lord O'Brien, LCJ there must be a real likelihood of bias. It is well settled that there must be a real likelihood of bias and not mere suspicious of bias before the proceedings can be quashed on the ground that the person conducting the proceedings is disqualified by interest. See in this connection Gullapathi Nageshwara Rao vs. State of Andhra Pradesh and Mineral Development Limited vs. State of Bihar. Recently this Court in a slightly different context in Ranjit Thakur vs. union of India, had occasion to consider the test of bias of the Judge. But there must be reasonableness of the apprehension of bias in the mind of the party. The purity of administration requires that the party to the proceedings should not have apprehension that the authority is biased and is likely to decide against the party. But we agree with the learned Judge of the High Court that it is equally true that it is not every suspicion felt by a party which must lead to 79 Com. A.S. No.2/2015 the conclusion that the authority hearing the proceedings is biased. The apprehension must be judged from a healthy, reasonable and average point of view and not on mere apprehension of any whimsical person. While on this point we reiterate that learned Counsel appearing for the petitioner in his submissions made a strong plea that his client was hurt and had apprehension because the arbitrator being the appointee of his client was not acceding to the request of his client which the petitioner considered to be reasonable. We have heard this submission with certain amount of discomfiture because it can not be and we hope it should never be in a judicial or a quasi- judicial proceeding a party who is a party to the appointment could seek the removal of an appointed authority or arbitrator on the ground that appointee being his nominee had not acceded to his prayer about the conduct of the proceeding. It will be a sad day in the administration of justice if such be the state of law. Fortunately, it is not so. Vague suspicions of whimsical, capricious and unreasonable people are not our standard to regulate our vision. It is the reasonableness and the apprehension of an average honest man that must be taken note of. In the aforesaid light, if the alleged grounds of apprehension of bias are examined, we find no substance in them. It may be mentioned that the arbitrator was appointed by the Chief Engineer of the petitioner, who is in the service of the petitioner. "

31.b. In the decision reported in (2002) 2 - S.C.C. - 388 (M/S. Konkan Railway Corporation vs. M/S. Rani Construction Pvt. Ltd) , the Hon'ble Apex Court held thus:-

Com. A.S. No.2/2015 "20. It might be that though the Chief Justice or his designate might have taken all due care to nominate an independent and impartial arbitrator, a party in a given case may have justifiable doubts about that arbitrators' independence or impartiality. In that event it would be open to that party to challenge the arbitrator nominated under Section 12, adopting the procedure under Section

13. There is no reason whatever to conclude that the grounds for challenge under Section 13 are not available only because arbitrator has been nominated by the Chief Justice or his designate under Section 11."

31.c. In the decision reported in (2002) 3 - S.C.C. - 572 (Narayan Prasad Lohia vs. Nikunj Kumar Lohia & Ors) , the Hon'ble Apex Court held thus :-

"18. Even otherwise, under the said Act the grounds of challenge to an arbitral award are very limited. Now an award can be set aside only on grounds of challenge under Section 12, 13 and 16 provided such a challenge is first raised before the Arbitral Tribunal and has been rejected by the Arbitral Tribunal. The only other provision is Section 34 of the said Act. The only ground, which could be pressed in service by Mr. Venugopal is that provided under Section 34(2)(a)(v). Again Section 34(2)(a)(v) has been extracted hereinabove. According to Mr. Venugopal if the composition of the Arbitral Tribunal or the arbitral procedure, even though it may be in accordance with the agreement of the parties, is in conflict with the provision of the Act from which the parties cannot derogate, then the party is entitle to have the award set aside. He submits that the words "unless such agreement was in conflict with a provision 81 Com. A.S. No.2/2015 of this part from which the parties cannot derogate" as well as the words "failing such agreement" show that an award can be set aside the agreement is in conflict with a provision of Part I of the said Act or there is no agreement which is in consonance with the provisions of Part I of the said Act. In other words, according to Mr. Venugopal, even if the composition or procedure is in accordance with the agreement of the parties an award can be set aside if the composition or procedure is in conflict with the provisions of Part I of the said Act. According to Mr. Venugopal the words "failing such agreement" do not mean that there should be no agreement in respect of the composition of the Tribunal or the arbitral procedure. According to Mr. Venugopal, an agreement in respect of the composition of the Arbitral Tribunal or arbitral procedure which is not consonance with the provision of Part I of the said Act would be invalid in law and therefore would be covered by the phrase "failing such agreement". He submits that the words "failing such agreement" mean failing an agreement which is in consonance with a provision of Part I of the said Act. He submits that Section 34(2)(a)

(v) entitles the respondents to challenge the award and have it set aside.

19. In our view, Section 34(2)(a)(v) cannot be read in the manner as suggested. Section 34(2)(a)(v) only applies if "the composition of the Arbitral Tribunal or the arbitral procedure was not in accordance with the agreement of the parties". These opening words make it very clear that if the composition of the Arbitral Tribunal or the arbitral procedure is in accordance with the agreement of the parties, as in this case, then there can be no challenge under this provision. The question of "unless such agreement was in conflict with the 82 Com. A.S. No.2/2015 provisions of this part" would only arise if the composition of the Arbitral Tribunal or the arbitral procedure is not in accordance with the agreement of the parties. When the composition of the procedure is not in accordance with the agreement of the parties then the parties get a right to challenge the award. But even in such a case the right to challenge the award is restricted. The challenge can only be provided the agreement of the parties is in conflict with a provision of Part I from which the parties cannot derogate. In other words, even if the composition of the Arbitral Tribunal or the arbitral procedure is not in accordance with the agreement of the parties but if such composition or procedure is in accordance with the provisions of the said Act, then the party cannot challenge the award. The words "failing such agreement" have reference to an agreement providing for the composition of the Arbitral Tribunal or the arbitral procedure. They would come into play only if there is no agreement providing for the composition of the Arbitral Tribunal or the arbitral procedure. If there is no agreement providing for the composition of the Arbitral Tribunal or the arbitral procedure and the composition of the Arbitral Tribunal or the arbitral procedure was not in accordance with Part I of the said Act then also a challenge to the award would be available. Thus so long as the composition of the Arbitral Tribunal or the arbitral procedure are in accordance with the agreement of the parties. Section 34 does not permit challenge to an award merely only the ground that the composition of the Arbitral Tribunal was in conflict with the provisions of Part I the of the said Act. This also indicates that Section 10 is a derogable provision.

Com. A.S. No.2/2015

20. Respondents 1 and 2 not having raised any objection to the composition of the Arbitral Tribunal, as provided in Section 16, they must be deemed to have waived their right to object."

31.d. In this case, the only question is whether Respondent No. 2, who is an employee of the Respondent No.1 Company was suffering from any disability from appointing as an arbitrator or he ought to have denied arbitration and accepting arbitration falls within the purview of 'misconduct'. The Petitioner, who raised this objection now, ought to have placed some material apart from the aforesaid allegation in respect of some bias, misconduct or partiality of Respondent No. 2. The Petitioner has challenged his appointment by filing CMP No. 65/2013, later he withdrew it with liberty to raise the said question before the Arbitral Tribunal. But he has not raised the said question before the Arbitral Proceedings. In these circumstances, the Petitioner ought to have placed some material showing any act of partiality, unfairness or some interest shown by the arbitrator in favour of the 1st Respondent. In these circumstances, merely arbitrator happened to be an employee of the 1st Respondent Company will not be a case of bias or misconduct on the part of the Respondent No. 2.

Com. A.S. No.2/2015

31.e. It is to be noted that as discussed above, after filing the objection statement and counter-claim before the learned Arbitrator, the Petitioner has challenged the appointment of arbitrator before the Hon'ble High Court of Karnataka in CMP No. 65/2013 and thereafter withdrew the same with liberty to file an application before the learned Arbitrator and that he has never filed any such application before the learned Arbitrator. By referring all these aspects, the learned Advocate for the 1 st Respondent has argued that in view of Section 4 of the Arbitration and Conciliation Act, the Petitioner has waived his right to challenge the validity of appointment of the arbitrator. In support of said arguments, he has relied on a decision reported in 2001 - S.C.C. Online - KAR - 659 (Rail India Technical and Economic Services Limited vs. Ravi Constructions, Bangalore and Another). In the said decision, the Hon'ble Supreme Court has explained the consequences of such waiver as follows:-

"even if there is any violation or irregularity, by subjecting itself to the jurisdiction of Arbitrator, without challenging his appointment, RITES is also barred under the principles of estoppel and waiver from challenging the award of the Arbitrator on the ground that the Arbitrator was not appointed in terms of the appointment procedure."

Com. A.S. No.2/2015

31.f. In view of the said ratio and on the facts and circumstances of the case as discussed above, since the Petitioner has not filed any application in pursuance to the withdrawal of CMP No. 65/2013 and participated in the arbitral proceedings without any demur, he has waived his right of challenge about the appointment of the arbitrator under Section 4 of the Arbitration and Conciliation Act. However, the learned Advocate for the Petitioner has argued that the above- mentioned letter dated 21.01.2013 itself is to be treated as his protest for the appointment of the arbitrator and no separate application is necessary to be filed for that aspect. It is to be noted that the said letter was addressed to the 1 st Respondent and not to the arbitrator. The said letter or copy of the said letter is not produced before the arbitrator. When such being the case the said arguments of the learned Advocate for the Petitioner cannot be accepted at all.

31.g. The learned Advocate for the Petitioner has argued that the 1st Respondent Company has not placed any resolution passed by the Board of Management for having authorized the Managing Director to Act as on Arbitrator and that no resolution is placed having given power to the Director to appoint his nominee as an arbitrator as far as the dispute arises out of 86 Com. A.S. No.2/2015 company business and that in the absence of such a resolution under Section 179 of the Companies Act, the appointment of the Arbitrator itself is invalid. In support of his contentions, he has relied on a decision reported in 2011 (11) - S.C.C. - 524 (State Bank of Travancore vs M/s. Kingston computers (I) Pvt. Ltd). The Hon'ble Supreme Court in the said case has held that once there is no resolution is filed, a person who claims to have instituted the suit, cannot be said to have validly instituted the suit, more so, because the person who claimed to have instituted the suit as a Director, did not file any proof that he was the Director of the Company. However, in an earlier decision reported in A.I.R. - 1997 - S.C. - 3( United Bank of India vs. Naresh Kumar), it is held that the cases filed by the companies should not be dismissed on technical ground with respect to validity of institution, and in fact the Hon'ble Supreme Court went on further to hold that as long as the suit is contested to the hilt, it ought to be held that the suit was validly instituted and filed.

31.h. The learned Advocate for the Petitioner has also relied on a Judgment of the Hon'ble Supreme Court in Civil Appeal No. 7697/2021 dated 04.01.2022 (Ellora Paper Mills Limited vs. The State of Madhya Pradesh). In the 87 Com. A.S. No.2/2015 said case, by applying the rule against bias and neutrality of the Arbitrator, the Hon'ble Supreme Court reiterated that when the arbitration clause is found to be foul with Section 12 (5), the appointment of the arbitrator would be beyond the pale of the arbitration agreement. The facts of the case were that the appellant was awarded a tender for supply of the cream wove paper and duplicating paper for the year 1993-94 by the State, however a dispute arose between the parties. According to the appellant, though it supplied 420 MT of cream wove paper and 238 MT of duplicating paper to the respondent, the latter not only did not make the payment of 90% of the amount as per the terms of the contract, but also rejected some consignments without any justification, causing loss to it. It was in the above backdrop an Arbitral Tribunal was constituted as "Stationery Purchase Committee" comprising the officers of the respondent. The appellant assailed the constitution of the Arbitral Tribunal before the Hon'ble High Court of Madhya Pradesh at first under Section 13 of the Act in 2000 and later on under Sections 11 and 15 of the Act seeking termination of the mandate of originally constituted Arbitral Tribunal which were dismissed by the arbitrator. In the said Judgment, it is observed that though the Arbitral Tribunal (Stationery Purchase Committee) was constituted as per the agreement entered into between the parties in 2001, the Tribunal could not commence the 88 Com. A.S. No.2/2015 arbitration proceedings in view of number of proceedings initiated by the appellant and therefore technically it could not be said that the arbitration proceedings by the Arbitral Tribunal had commenced. Similarly, observing that the main purpose for amending the provision, namely, to provide for "neutrality of arbitrators" and rule against bias, sub-section (5) of Section 12 (as inserted by 2015 Amendment) provided that notwithstanding any prior agreement to the contrary, any person whose relationship with the parties or counsel or the subject matter of the dispute falls under any of the categories specified in the Seventh Schedule, he shall be ineligible to be appointed as an arbitrator. In such an eventuality, i.e., when the arbitration clause is found to be foul with the amended provision, the appointment of the arbitrator would be beyond the pale of the arbitration agreement, empowering the Court to appoint such an arbitrator as may be permissible. Therefore, the facts of the said case is entirely different from the facts of the present case. Hence, the said Judgment is not applicable to the facts of the present case.

31.i. The learned Advocate for the Petitioner has also relied on a decision reported in A.I.R. - 1991 - P & H - 258 (State of Punjab vs. M/s Chahal Engineering and Co.). However, 89 Com. A.S. No.2/2015 the said Judgment was challenged before the Hon'ble Supreme Court and the Judgment of the Hon'ble Supreme Court is reported in A.I.R. - 1993 - S.C. - 2541 ( Chahal Engineering Co. vs. Irrigation Department Punjab, Sirsa). In the said decision, the Hon'ble Apex Court has set aside the Award and referred to the new Arbitrator holding that the award by the Arbitrator suffered from several patent errors and that the objections raised by the respondent department were within the scope of Section 30 of the Act, 1940. The Hon'ble Apex Court dealt with import of expression "is otherwise invalid" in Section 30 (c) and held that this expression would include an error apparent on the face of the record. However, in the said case, the dispute related to the ascertainment of the quantities as well as to the quality of the work done under the contract. Therefore, the question before the Hon'ble Supreme Court was, whether the learned arbitrator has failed to consider any of the subject matter to him for arbitration or whether he has travelled beyond the scope of the dispute referred to him. After discussing the entire matter the Hon'ble Apex Court has held that the Arbitrator committed errors apparent on the face of record, viz. (1) that he proceeded on the lump sum basis whereas the contract was on the item rate basis; and (2) that he did not consider counter claim, and accordingly, the matter was referred to a New Arbitrator to evaluate the work on the 90 Com. A.S. No.2/2015 item rate basis by considering the entire work executed till termination of the contract besides claims and counter claims of the parties. Therefore, the facts of the said case is entirely different from the facts of the present case. Hence, the said Judgment is not applicable to the facts of the present case.

31.j. The learned Advocate for the Petitioner has also relied on a decision reported in A.I.R. - 1992 - S.C. - 232 (Associated Engineering Co. vs. Government of Andhra Pradesh and Another). In the said case, the Hon'ble Supreme Court has held as follows:-

"The arbitrator cannot act arbitraily, irrationallly, capriciously or independently of the Contract. His sole function is to arbitrate in terms of the contract. He has no power apart from what the parties have given him under the contract. If he has travelled outside the bounds of the contract, he has acted without jurisdiction. But if he has remained inside the parameters of the contract, his award cannot be interfered with unless he has given reasons for the award disclosing an error apparent on the face of it."

31.k. It has been further held that a dispute as to the jurisdiction of the arbitrator is not a dispute within the award, but one which has to be decided outside the award. The Hon'ble Supreme Court has further held that if the arbitrator commits 91 Com. A.S. No.2/2015 an error in the construction of the contract, that is an error within his jurisdiction.

31.l. In the present case, the arbitrator has remained inside the parameters of the contract. The arbitrator has not acted arbitrarily, irrationally, capriciously or independently of the contract nor he has ignored the limits and the provisions of the contract. Further, in the said case, the contract contained a specific prohibition against price adjustment or award for escalated cost in respect of any matter falling outside item 35 and that the umpire out stepped the confines of the contract in awarding claims which were totally opposed to the provisions of the contract and as such, the award was set aside. This being not so in the present case and hence the decision in the said case has no applicability to the facts of the present case.

31.m. Further, in the present case, the Arbitrator has rejected the claim of Rs. 3,87,95,400/- made in Para 8(B) of the Claim statement of the 1st Respondent, regarding reimbursement of additional expenditure, which shows the impartiality and fairness of the Arbitrator. Hence, I cannot accept the contentions urged by the Petitioner in this ground. Hence, this ground is not available for the Petitioner under Sub-

Com. A.S. No.2/2015 section (2) and Sub-section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

32. The Twentieth ground is that the learned Arbitrator had no right to continue as Arbitrator since he was the General Manager-T & BS of the 1st Respondent, that the learned Arbitrator was sub-ordinate to Mr. Manmohan Handa, the General Manager of Export Manufacturing Group of the 1 st Respondent, that there was an apparent bias reflected through his continuation despite having knowledge that he is sitting in arbitration over an issue in dispute raised by his own immediate reporting authority and hence the Impugned Award is liable to be set aside on the ground of the bias of the Learned Arbitrator and due to suppression of facts, and due to non disclosure of element of conflict of interest as require to be done by any arbitrator.

32.a. The learned Advocate for the Petitioner has argued that plain reading of the Section 12 of the Arbitration and Conciliation Act, it clearly establishes that the arbitrator, Sri. Suresh Katyal was holding the controlling post equivalent to the appointing authority, that he is the employee of the 1 st 93 Com. A.S. No.2/2015 Respondent Company working under Chairman and Managing Director, that there is a statutory/in appointing the employee of the 1st Respondent Company as an arbitrator, that the 1st Respondent Company by taking advantage of Clause 10 of the General terms and conditions of the Purchase Order, appointed its own employee as arbitrator who is working under controlling authority more particularly under Chairman and Managing Director.

32.b. The learned Advocate for the Petitioner has argued that under prevailing law before appointing any arbitrator to resolve the issues arising out of the contract, notice is mandatory and with the consent of the both the party any arbitrator can be appointed, that in the present case, Chairman and Managing Director of the 1 st Respondent Company on his own appointed its employee as an arbitrator without notice, hence when appointment of arbitrator itself is bad in law any proceeding is conducted and any award is passed is illegal, without authority, jurisdiction and not valid under law and same is to be set aside.

32.c. Per-contra, the learned Advocate for the 1 st Respondent has argued that in terms of the Purchase Order, the learned Arbitrator has been appointed by the Chairman and 94 Com. A.S. No.2/2015 Managing Director of the 1st Respondent as his nominee for the Arbitral Proceedings and the learned Arbitrator is required to report only to the Chairman and Managing Director of 1 st Respondent and not to any body else, that the Arbitration proceedings show that the Arbitrator has reported the Arbitration Proceedings only to the Chairman and Managing Director of the 1st Respondent, that the position of Sri.Suresh Katyal as an arbitrator did not change, that Sri. Suresh Katyal remained a nominee throughout the proceedings period, though the position of Chairman and Managing Director was occupied by a different person, that the appointment of Mr. Manmohan Handa as the Director of 1st Respondent has not changed the position of Sri. Suresh Katyal as arbitrator, as the arbitrator was required to report to the Chairman and Managing Director and not to the Director, that the conduct of the arbitrator is not opposed to provision of Section 12 of the Arbitration and Conciliation Act, that the Arbitrator exposed the unethical, deceitful, fraudulent actions of the Petitioner.

32.d. It is to be noted that this ground is more or less similar to that of Ground No. 19. I have elaborately discussed about all these facts, while answering Ground No. 19. For the same reasons I cannot accept the contentions of the Petitioner urged in this ground. For the same reasons I cannot reject the 95 Com. A.S. No.2/2015 above-mentioned arguments of the Advocate for the 1 st Respondent. Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub-section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

33. The Twenty-First ground is that the Arbitrator failed to appreciate the evidence on record in proper perspective applying the applicable law in force in India as far as appreciation of evidence is concerned, that proper inference is also not drawn on the available oral and documentary evidence.

33.a. The 1st Respondent has contended that the document produced on behalf of the 1st Respondent were marked in the Arbitration proceedings without any objections, that the burden on Issue No. 3 is on the Petitioner to prove that they have made bulk supplies in accordance with the approved samples, that the Petitioner has miserably failed to prove the Issue No.3 in the arbitration proceedings, is trying to place the said burden on the 1st Respondent, that without admitting that the Petitioner made bulk supplies in accordance with the approved samples, the Petitioner is bound to comply with Clause 6 of the General Terms and Conditions of the Purchase Order, that the Arbitrator 96 Com. A.S. No.2/2015 has applied the applicable law regarding cardinal principles to be followed while appreciating evidence placed before the arbitrator by the parties, that the evidence of CW.1 before the Arbitrator was with supporting documentary evidence.

33.b. From the perusal of the arbitral records, the above- contentions of the Respondent No.1 are to be accepted. Moreover, this ground is in the nature of a ground to be urged in an appeal. The position in law is well settled that this court while exercising power under Section 34 of the Act does not sit as a court of appeal. The nature of proceedings under Section 34 of the Act is summary in nature as held in the decision reported in (2019) - S.C.C. Online - S.C. - 1244 = (2019) 9

- S.C.C. - 462 (Canara Nidhi Limited vs. M. Shashikala). Hence, this ground is not available for the Petitioner under Sub- section (2) and Sub-section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

34. The Twenty Second ground is that the evidence of RW.1 clearly indicated that enough precautions were taken by the Petitioner company to satisfy the requirement of the 1 st Respondent Company as per the contract, that the evidence of 97 Com. A.S. No.2/2015 RW.1 was clearly indicated that Smt. Parimalam had specifically indicated that as the sixth step of test procedures as indicated by her had been fulfilled, it was more than sufficient, that the evidence of RW.1 should have been appreciated by the learned Arbitrator in the backdrop of the fact that there was no field performance factors specify to the Petitioner earlier at any point of time and hence if for any reason the device did not fit to the Parameters of the requirements of a given customer in the field, the Petitioner could not have been found fault with, that it was also specifically mentioned in the deposition that in the absence of complete specifications being given before entering into the contract itself the component/device may or may not function in the end product and it is under these circumstances the Petitioner cannot be found fault with, that with regard to all the exhibits marked in the arbitral proceedings and in what exactly it reflected, the Arbitrator has not considered many vital points and erroneous interpretations have been made.

34.a. In fact, this ground is in the nature of a ground to be urged in an appeal. In order to answer this Ground, I have to re- appreciate the evidence of RW.1 to 3, which is not permissible under law. The position in law is well settled that this court while exercising power under Section 34 of the Act does not sit as a court of appeal. The nature of proceedings under Section 98 Com. A.S. No.2/2015 34 of the Act is summary in nature as held in the decision reported in (2019) - S.C.C. Online - S.C. - 1244 = (2019) 9

35. The Twenty Third ground is that a proper appreciation of evidence if had been done would have clearly indicated that the Respondent No.1 is looking at something which was never made clear to the Petitioner, that what was the product in their mind, what were its specifications, where was it going to be used, what was the field of usage were all kept hidden with the Respondent No.1, that the tender was for some device and the expectation from the Petitioner was for some other device, the 1st Respondent being a Government of India undertaking would have had a detailed discussion in its Stores Purchase Committee Meetings as to what were the devices to be produced by tender notification, that all these details should have been reflected in the tender notification, that in the same tender notification in respect of other items there were clear specifications, that as far as micro cards were considered the 99 Com. A.S. No.2/2015 designation and specification were one and the same, that it was the mistake of the 1st Respondent in not giving specifications, that the sample supplied by the Petitioner itself was taken as specification, that when once the sample was accepted by communication the 1st Respondent could not have raised any claim against the Petitioner, that whether the bulk did not match with the samples or not was not proved beyond reasonable doubt by the 1st Respondent under these circumstances the claim of the 1st Respondent should have been rejected and counter-claim of the Petitioner ought to have been allowed by the Arbitrator.

35.a. The 1st Respondent has contended that the Ex.C.1/News paper publication was inviting bids from reputed and experienced suppliers for the supply of "Electronic Components and Materials" for "Low Cost Enumeration Device Project" , the "Low Cost Enumeration Device Project"

mentioned in the paper publication and the tender notification is "The Tablet PC Project" and the Micro Cards were required for the said project of the 1 st Respondent, that Ex.C.4 is the relevant extract of bill of material and Sl No. 115 is regarding Micro Cards, wherein the designation and specification of the item is mentioned as "Micro SD CARD 2GB" and the vendor was required to provide data sheets and 25 samples, that the 100 Com. A.S. No.2/2015 Petitioner understood the tender and submitted the Ex.C.5 on 14.05.2011, that RW.3 has categorically stated in the cross- examination that the offer was submitted based on the e- tender, that the Petitioner was aware that Micro Card is a standard and generic off-the shelf item and the specifications are implicit in the description and therefore offered to supply "Transcend" make Micro Cards, that RW.3 has stated in the cross-examination that they sent tender details to their supplier (AITE) and asked them to send the samples, that if the Petitioner had any doubt regarding specification, they should have asked the 1st Respondent Company for specifications of Micro Cards, that RW.3 admitted that the Petitioner has not asked for specification of micro cards before supply of samples, that the representatives of petitioner visited the 1 st Respondent Company several times and they were aware of the end use of the micro cards, that having regard to the facts and circumstances the Petitioner was aware of the specifications of the product and also its end use.

35.b. The learned Advocate for the 1st Respondent has argued that the 1st Respondent issued tender notification after careful study of the product to be manufactured and the components/materials required for the same, that it is not required to publish all particulars in the tender notification, that 101 Com. A.S. No.2/2015 in the tender notification in respect of some other materials there were clear specification or the product, if the petitioner has any doubt about the tender notification or the product, or specification, they should have clarified the doubt before the supply of sample or Ex.C.5 or bulk supply, that the Petitioner understood the tender and submitted Ex.C.5, that it was not the mistake of the 1st Respondent in not giving specifications, that to provide samples is one of the requirements of the contract and it is not the sole requirement of the contract, that in terms of Clause 6 of Ex.C.6, any material/equipment supplied should be free from any defects and should perform satisfactorily for a period of 12 calendar months from the date of supply, that the 1st Respondent proved that the Micro SD Cards supplied by the Petitioner are found defective within the said guarantee period, that the burden to prove that the bulk did not match with the samples was on the Petitioner and the Petitioner failed to prove the same.

35.c. From the perusal of the arbitral records, the above- contentions of the Respondent No.1 are to be accepted. Moreover, this ground is in the nature of a ground to be urged in an appeal. The position in law is well settled that this court while exercising power under Section 34 of the Act does not sit as a court of appeal. The nature of proceedings under Section 102 Com. A.S. No.2/2015 34 of the Act is summary in nature as held in the decision reported in (2019) - S.C.C. Online - S.C. - 1244 = (2019) 9

36. The Twenty Fourth ground is that the learned Arbitrator did not have required competent to adjudicate the dispute in issue between the parties, that the subject matter in issue not only involved technical expertise but also legal expertise, that the issue of estoppel, waiver, adverse inference, suppression of fact, expert's evidence, appreciation of evidence, applicable laws etc., were all integrated in the dispute, that the arbitrator had no legal competence to discuss on these issues.

36.a. The 1st Respondent has contended that the Petitioner made unwarranted and uncharitable allegations against the Arbitrator that the Arbitrator did not have required competence to adjudicate the dispute in issue between the parties and pass an award, that the reasons assigned by the Petitioner that 103 Com. A.S. No.2/2015 subject matter in issue not only involved technical expertise but also legal expertise and the issue of estoppels, waiver, adverse inference, suppression of facts expert's evidence, appreciation of evidence, applicable laws etc were all integrated in the dispute is unsustainable and against the provisions of the Arbitration and Conciliation Act, that arbitrator need not have a degree in law, the statement that the learned arbitrator had no legal competence at all to discuss on these issues and arrive at proper inference is not only unwarranted but also derogatory, before the arbitrator, the parties to the dispute were represented by Advocates, the arbitrator has decided the matter on the basis of evidence on record, written arguments and also oral submissions, that the Petitioner has not raised the issue of "legal competence" or any other competence of the Arbitrator in arbitration proceedings.

36.b. From the perusal of the arbitral records, the above- contentions of the Respondent No.1 are to be accepted. Moreover, this ground is in the nature of a ground to be urged in an appeal. The position in law is well settled that this court while exercising power under Section 34 of the Act does not sit as a court of appeal. The nature of proceedings under Section 34 of the Act is summary in nature as held in the decision reported in (2019) - S.C.C. Online - S.C. - 1244 = (2019) 9 104 Com. A.S. No.2/2015

37. The Twenty Fifth ground is that the learned Arbitrator failed to appreciate that the error in not calling for tender with proper specification was apparent on the face of it, that the 1 st Respondent in order to save its face had falsely implicated the Petitioner, the learned Arbitrator to save higher authorities had passed the Impugned Award flouting all the principles and provisions of law and travelling beyond the terms and conditions.

37.a. The 1st Respondent has contended that the arbitrator passed the award only on the basis of documents on record, affording reasonable opportunity to the parties, that the arbitrator conducted the arbitration proceedings very fairly affording full opportunity to the parties, that the award is in accordance with law, that the arbitrator rejected the claim of Rs. 3,87,95,400/-, the claim statement of the 1 st Respondent, that if the arbitrator was required to please or save the higher 105 Com. A.S. No.2/2015 authorities, the arbitrator would not have rejected the said claim.

37.b. From the perusal of the arbitral records, the above- contentions of the Respondent No.1 are to be accepted. Moreover, this ground is in the nature of a ground to be urged in an appeal. The position in law is well settled that this court while exercising power under Section 34 of the Act does not sit as a court of appeal. The nature of proceedings under Section 34 of the Act is summary in nature as held in the decision reported in (2019) - S.C.C. Online - S.C. - 1244 = (2019) 9

38. The Twenty Sixth ground is that the learned Arbitrator failed to appreciate that the Clauses pertaining to Guarantee would apply to the supply asked for and the supply made but would not apply to the goods imagined to be supplied, the learned Arbitrator failed to appreciate that in the given circumstances on hand there was no violation of guarantee and 106 Com. A.S. No.2/2015 warrantee clauses at all, that this ground is taken without prejudice to the ground taken by the Petitioner in earlier that there was no order of acknowledgment of Purchase order by the Petitioner.

38.a. The 1st Respondent has contended that the material/product involved in the arbitration proceedings is "MICRO CARD SC 2B", that the designation and specification of the material Product is "MICRO CARD SC 2B", that the Respondent pleaded and proved that the Micro Cards are generic off-the-shelf items and the specifications are implicit in the description, that the Micro Cards is data storage device that store filed and data in the electronic form for future retrieval and use, that the data/files should remain on the Micro cards and should retrievable until it is deleted by the user, that the total storage capacity is 2 GB which is also clear from the description of the product, the Micro Cards should perform as described above in all electronic devices that support Micro cards, that even the RW.1, who is a technical person admitted that the Micro card is a memory card and are used in mobiles, cameras, ipads, tables PCs etc., and it should retain stored data, that in his re-examination, he has clarified to the answer to Question No. 86 of his cross-examination that "It will hold the data until instructed to erase or to rewrite", that under the said 107 Com. A.S. No.2/2015 circumstances, the contentions that the learned Arbitrator failed to appreciate that the clauses pertaining to Guarantee would apply to the goods imagined to be supplied is unsustainable, that the learned Arbitrator properly appreciated the evidence on record and found that there is violation of guarantee.

38.b. From the perusal of the arbitral records, the above- contentions of the Respondent No.1 are to be accepted. Moreover, this ground is in the nature of a ground to be urged in an appeal. The position in law is well settled that this court while exercising power under Section 34 of the Act does not sit as a court of appeal. The nature of proceedings under Section 34 of the Act is summary in nature as held in the decision reported in (2019) - S.C.C. Online - S.C. - 1244 = (2019) 9

39. The Twenty Seventh ground is that the learned Aritrator was having wide powers vide Section 26 (2) of the Arbitration and Conciliation Act, in appointing any independent 108 Com. A.S. No.2/2015 expert and to obtain technical report on the disputed issue, the learned arbitrator was also having ample powers to seek expert's opinion suo motto also, the Petitioner had established that the bulk supplies match with the samples with the supporting facts of testing the bulk supplies as per the Test Procedure indicated by Mr. Parimalam, Manager - testing- MMF/ Export Manufacturing SBU of the 1 st Respondent, if the 1st Respondent wanted to prove that the bulk supplies are not matching with the samples he should have accepted the proposal of the Petitioner for an Independent Expert Opinion, the arbitrator has not properly analyzed this aspect, instead of exercising his power to appoint the expert for clarity on the dispute, has concluded that the Petitioner has not persuaded in getting services of an independent expert, it is pertinent to mention here that, the learned arbitrator being subordinate of Mr. Manmohan Handa deliberately avoided exercising his power in appointing an expert.

39.a. It is to be noted that this ground is more or less similar to that of Ground No. 18. I have elaborately discussed about all these facts, while answering Ground No. 18. For the same reasons I cannot accept the contentions of the Petitioner urged in this ground. Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub-section (2-A) of 109 Com. A.S. No.2/2015 Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

40. The Twenty Eight ground is that the close reading of award passed by the learned arbitrator it reflects several self contradictions and bias and ignorance of substantive and procedural law applicable to the parties to the dispute.

40.a. I have elaborately discussed about all these facts, while answering Grounds No.16, 18 and 19. For the same reasons I cannot accept the contentions of the Petitioner urged in this ground. Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub-section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

41. The Twenty Ninth ground is that the Arbitral Award is based on consideration of evidence not on record.

41.a. In fact, this ground is in the nature of a ground to be urged in an appeal. In order to answer this Ground, I have to re- appreciate the evidence, which is not permissible under law.

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Com. A.S. No.2/2015 The position in law is well settled that this court while exercising power under Section 34 of the Act does not sit as a court of appeal. The nature of proceedings under Section 34 of the Act is summary in nature as held in the decision reported in (2019) - S.C.C. Online - S.C. - 1244 = (2019) 9 - S.C.C. - 462 (Canara Nidhi Limited vs. M. Shashikala). Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub-section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

42. The Thirtieth ground is that the learned arbitrator failed to appreciate that the 1st Respondent had made a claim on the ground that it had to purchase Micro Cards from other alternate sources, that the Purchase Orders in this regard placed to different other suppliers were marked in evidence, that these purchase orders had several specifications by way of Part numbers and by way of mentioning of Manufactures name, that Ex.C.31 to 41 are subsequent to 26.08.2011, that the very fact that specifications which were provided in the subsequent purchase orders were not provided to the Petitioner should have drawn the arbitrator to reject the claim of the 1 st Respondent and allow the counter claim of the Petitioner.

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42.a. This ground is in the nature of a ground to be urged in an appeal. In order to answer this Ground, I have to re- appreciate the Ex.C.31 to Ex.C.41, which is not permissible under law. The position in law is well settled that this court while exercising power under Section 34 of the Act does not sit as a court of appeal. The nature of proceedings under Section 34 of the Act is summary in nature as held in the decision reported in (2019) - S.C.C. Online - S.C. - 1244 = (2019) 9

43. The Thirty First ground is that the inference drawn by the learned arbitrator is contrary to the provisions of law of contracts, that the inference drawn by the arbitrator in respect of bulk supply and its acceptance is totally incorrect for the reasons that the Petitioner had ensured that the bulk supply is exactly as per samples, that the manufactures also confirmed the bulk supply made will be exactly as per the samples as enumerated in answer to Question 39 of RW-3, that all the bulk supplies were tested and complied as per the test procedure 112 Com. A.S. No.2/2015 indicated by Mrs. Parimalam, that before supplying bulk quantity, the Petitioner categorically sent an e-mail and clarified with the Respondent as to whether it was necessary to send further samples, that the Respondent replied in the negative, that the Respondent also mentioned that supplies should be matching with the samples, that thereafter the Petitioner supplied first bulk supply of 24,000 components as per the approved samples and the Respondent has clearly indicated the acceptance of this first bulk supply, that based on this approval the further bulk supplies in four more installments were made as per the samples, that all the five bulk installments sent by the Petitioner were accepted by the inspection department of Respondent Company, that the inspection department of Respondent Company has not raised a single objection and not pointed any defect in the bulk quantity supplied by the Petitioner, such bulk supply was made in 5 installments and Respondent Company, that they received them without any objection, that the Respondent Company is estopped from raising any objection under specification clause at a belated later stage, that the Respondent Company raised such objection when it received some complaint from its customers, that the Respondent Company has not summoned and examined any other customers who lodged such complaints, that the Respondents Company has neither conducted any independent 113 Com. A.S. No.2/2015 test other than the customer's report which speaks of defects only on the equipment nor submitted any test report in respect of the alleged defects said to have been found in the bulk components, that the Respondents Company is totally in error in raising such objections at a later stage, that the Respondent Company is under contractual obligation to receive the balance components or to pay the damages, that all these vital aspects are ignored by the learned Arbitrator.

43.a. The 1st Respondent has contended that there is no evidence to show that the Petitioner had ensured that the bulk supply is exactly as per samples, that as per Ex.C.6, the supplier should establish, retain and maintain all relevant records for period of 10 years to provide evidence of conformity to the requirements and the same be made available to 1 st Respondent whenever required and also should furnish process details and other applicable records including sub-tier supplier information, that the Petitioner failed to comply with the said conditions and the Petitioner refused to produce the records in that respect, that as such the statement that the manufacturer also confirmed the bulk supply made will be exactly as per the samples as enumerated in answer to Question No.39 to RW.3 is unacceptable, that the evidence on record establishes that the Petitioner failed to prove that the bulk supplies were tested and 114 Com. A.S. No.2/2015 complied as per the test procedure indicated by Mrs. Parimalam of 1st Respondent, that before supplying bulk quantity, the Petitioner sent an e-mail and clarified with the Respondent as to whether it was necessary to send further samples and the 1 st Respondent replied stating that the supplies should be matching with the samples and thereafter the Petitioner supplied first bulk of 24,000 components, that the said correspondence does not prove that the bulk supply is as per the approved samples, that the 1 st Respondent pleaded and proved the defects in the Micro Cards supplied by the Petitioner, that the 1st Respondent informed the Petitioner immediately on finding of the defects in the Micro Cards supplied by the Petitioner, that further in view of Clause 6 of Ex.C.6, even if the materials are inspected and accepted as per Clause 5, the Petitioner is obliged to comply with Clause 6 of Ex.C.6, that under the circumstances, the examination of any the customers who lodged such complaint was not required and there was no necessity to conduct any independent test, that having found that the Micro Cards supplied by the Petitioner was defective, the 1st Respondent Company is not under contractual obligation to receive the admitted defective balance components from the Petitioner or to pay the damages.

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43.b. From the perusal of the arbitral records, the above- contentions of the Respondent No.1 are to be accepted. Moreover, this ground is in the nature of a ground to be urged in an appeal. The position in law is well settled that this court while exercising power under Section 34 of the Act does not sit as a court of appeal. The nature of proceedings under Section 34 of the Act is summary in nature as held in the decision reported in (2019) - S.C.C. Online - S.C. - 1244 = (2019) 9

44. The Thirty Second ground is that the finding of the learned Arbitrator on the principle of Guarantee is totally erroneous and against contrary to substantive law of the land.

44.a. The 1st Respondent has contended that the Clause 5 of the General Terms and Conditions of Purchase Order provides for inspection of materials at the time of arrival by the Inspection Department, that the Inspection Department will inspect the physical condition of the material at the time of 116 Com. A.S. No.2/2015 arrival for damage claim on carrier/insurance company and will not test the performance of materials, that the Micro Cards supplied by the Petitioner are small units but in large quantity and therefore it is not practicable to test all units of Micro Cards by the Inspection Department, that even the evidence of Petitioner shows that they have not tested all units of Micro Cards but tested in random, that as per Clause 6 of the Ex.C.6, any material/equipment supplied should be free from any defects and should perform satisfactorily for a period of 12 calendar months from the date of supply, that therefore, even if the materials are inspected and accepted as per Clause 5, the supplier is obliged to comply with Clause 6 of the General Terms and Conditions of Purchase Order.

44.b. From the perusal of the arbitral records, the above- contentions of the Respondent No.1 are to be accepted. Moreover, this ground is in the nature of a ground to be urged in an appeal. The position in law is well settled that this court while exercising power under Section 34 of the Act does not sit as a court of appeal. The nature of proceedings under Section 34 of the Act is summary in nature as held in the decision reported in (2019) - S.C.C. Online - S.C. - 1244 = (2019) 9

- S.C.C. - 462 (Canara Nidhi Limited vs. M. Shashikala). Hence, this ground is not available for the Petitioner under Sub-

117

45. The Thirty Third ground is that the learned arbitrator lacked competency to appreciate the technical aspects of details of memory card, and the legal knowledge to adjudicate the matter in dispute and hence ideally should have withdrawn himself from being an arbitrator in all fairness, that the learned arbitrator has not recorded his reasons for not considering the written arguments submitted by the Petitioner, that hundreds of manufacturers have built thousands of different types of memory cards and devices to SD standards, that there are over 800 + manufacturers of SD cards and over 8000 + models of different specifications, that these details are available on SD standard website, for everyone to see, that the Respondent Company who has not made out specification, now cannot turn the tables around and say that the bulk components were not as per the specifications, that when no specifications were given either in the tender or in purchase order, the principles of waiver, and estopples by conduct ought to have been applied in favour of the Petitioner against the 1 st Respondent, that the 118 Com. A.S. No.2/2015 learned Arbitrator lacked legal competency to appreciate these factors.

45.a. The 1st Respondent has contended that the arbitrator is an Electronics Engineer and worked in various capacities for decades, that the arbitrator had capacity to understand the issues involved in the arbitration proceedings, that he properly analysed the contentions of the parties in the award, that the Petitioner has not disputed the defects pointed out by this Respondent in respect of the Micro Cards supplied by the Petitioner, that the Petitioner miserably failed to prove their case before the arbitrator, now desperately making allegations against the arbitrator with ulterior motive.

45.b. From the perusal of the arbitral records, the Petitioner has not raised any such contentions before the Arbitral Tribunal. Further, though a request for examination of expert is made in the rejoinder, no separate application as required under Section 26 of the Arbitration and Conciliation Act is filed by the Petitioner. Further, the Petitioner himself has examined an expert Engineer as RW.1. When such being the case it is too late to contend that the learned arbitrator has no capacity to understand the technical aspects at this stage. Hence, this ground is not available for the Petitioner under Sub-section (2) 119 Com. A.S. No.2/2015 and Sub-section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

46. The Thirty Fourth ground is that the Impugned Award is a Biased Award, that a cursory comparison of the award with the Respondent's arguments reveals that the arbitration award is verbatim reproduction of a major portion of the said arguments, that the arbitrator has not recorded the reasons for accepting these arguments in toto which is a strong indication of the arbitrator's predetermined bias.

46.a. This aspect has already been discussed while answering Para No. 19 above. Further, similar allegations are made in Ground No. 16, 18 and 28. Hence, for the same reasons, I cannot accept the said contentions of the Petitioner. Hence, this ground is not available for the Petitioner under Sub- section (2) and Sub-section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

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47. The Thirty Fifth ground is that the award is illegal, arbitrary, biased and not acceptable because the learned arbitrator's interpretation that Micro SD Card is standard item and specifications are implicit in the description is totally wrong, that when they have specifically asked the Petitioner to supply the samples, the arbitrator rejected the counter claim of the Petitioner without sufficiently assigning the reasons, that the learned arbitrator has not considered the counter claim of the Petitioner on its merits and the same has been simply rejected without any application of mind, that in this view of the matter, the award is not a reasoned award as required under Section 31 of the Arbitration and Conciliation Act and the same is liable to be set aside.

47.a. The 1st Respondent has contended that in the Purchase Order the 1st Respondent clearly stated regarding item specification that "Part should be supplied as per our requirements and your e-mail quote dated 14.05.2011, 1:48 PM", that the sample is one of the condition but is not the only condition, that the arbitrator rejected the counter claim of the Petitioner with sufficiently assigning the reasons, that the arbitrator has considered the counter claim of the Petitioner on its merits and it is not the simple rejection without any application of mind, the award is a reasoned award as required 121 Com. A.S. No.2/2015 under Section 31 of the Arbitration and Conciliation Act and the same is not liable to be set aside.

47.b. In the present case the learned Arbitrator has given cogent reasons and made detailed discussions in the Impugned Award. Further, he has framed Twelve Issues and made discussions Issue wise and has given finding on each Issue by discussing the same in detail. At any stretch of imagination, it can be considered that it is not a reasoned order as contended by the Petitioner. Further, in this aspect, I have already discussed while answering Ground No. 12. For the same reasons, I cannot accept the contentions of the Petitioner urged in this ground. Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub-section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

48. The Thirty Sixth ground is that the learned Arbitrator misconceived the word "Transcend" because "Transcend" is only a name of the manufacturer, that in this regard, the learned arbitrator has not made his careful analysis of various aspects raised by the Petitioner during the course of Arbitration 122 Com. A.S. No.2/2015 Proceedings by way of oral evidence and also documentary evidence, that the email of 25.06.2011 from the Petitioner produced in this regard also has not been considered by the arbitrator.

48.a. The 1st Respondent has contended that the contentions raised by the Petitioner in this ground is an attempt to cover up the deceitful action of the Petitioner, that in Ex.C.5, the Petitioner offered to supply "Micro SD CARD 2 B" of "Transcend" make, but they have supplied defective Micro Cards, that the arbitrator properly considered the evidence on record. It is to be noted that the above-mentioned e-mail dated 25.06.2011 was not at all marked in the arbitral proceedings. When such being the case, the non-consideration of the said e- mail cannot be agitated before this Court. Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub- section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

49. The Thirty Seventh ground is that the learned Arbitrator has also thoroughly mixed up his understanding on the clarity of two different aspects namely (1) alteration of the 123 Com. A.S. No.2/2015 condition of the Purchase Order and (2) superseding of the specification, the Petitioner pointed out that, in this case, there is supersession of the assumed specification implicitly in the Purchase Order and the subsequent correspondence, the learned arbitrator has not been able to visualize this clarity, because he has gone on record concluding that there is no supersession of specification keeping in mind there is no alteration in the terms and conditions of the Purchase Order, thus the conclusion arrived by the learned Arbitrator that there was no change in the terms and conditions of the Purchase order as far as the specification, if any is concerned is erroneous.

49.a. The 1st Respondent has contended that the Petitioner contended in the written arguments submitted before the arbitral tribunal that the e-mail dated 25.06.2011 supersedes the stipulation of specification, that the Claimant in the said email asked the 1st Respondent to confirm as to whether they need to submit the samples again before bulk supply, that as the Petitioner already supplied samples, the 1 st Respondent replied stating that the Petitioner need not supply samples again and further stating that 'however you have to ensure that the bulk supplies will match with the samples you had supplied', that having regard to the facts and circumstances, 124 Com. A.S. No.2/2015 the said e-mail does not supersede the stipulation of specification, that the contentions of the Petitioner has been properly answered by the Arbitrator.

49.b. On close scrutiny of the arbitral records, the said contentions of the 1st Respondent are correct and proper and that the Petitioner is now attempting to mislead the facts by raising such a ground. Hence, I cannot accept the said contentions urged by the Petitioner in this ground. Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub-section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

50. The Thirty Eighth ground is that the referring to Para 14 of the award, it is impossible to infer for anyone or to comprehend as to how the learned Arbitrator got thoroughly mixed up the issue of specification and has drawn an erroneous conclusion as to at which point of time the specification was requested.

50.a. This Ground is mere repetition of earlier grounds. In fact, I have discussed about the said allegations while 125 Com. A.S. No.2/2015 answering the earlier Grounds elsewhere. Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub- section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

51. The Thirty Ninth ground is that the learned Arbitrator interpretation of various exhibits including exhibits C-21 is totally erroneous, there is misconstruction of documents, even otherwise when the very arbitrator himself has observed that "if the Petitioner had asked for specifications, the 1 st Respondent would have given it "would go to show that even according to the Arbitrator when the contract was entered there was no "specification", and hence the subject matter in issue namely "specification" was not the part of contract and hence could not have been subject matter of adjudication by the arbitrator, the learned arbitrator has thoroughly mixed up his understanding on the clarity of two different aspects viz (1) alternation of the condition of the Purchase Order and (2) superseding of the specification, if any the Petitioner had clearly pointed out that, in this case, there is supersession of the specification, if any implicitly but not directly in the Purchase Order and the subsequent correspondence.

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51.a. This Ground is mere repetition of earlier grounds. In fact, I have discussed about the said allegations while answering the earlier Grounds elsewhere. Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub- section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

52. The Fortieth ground is that the learned Arbitrator mention of rejection of the Petitioner contention that exhibit R-1 supersedes the stipulation of specification, if any is totally erroneous, it can be seen that the Ex-R1 by itself has no direct or implicit mention of specification at all, this clearly points out to a lack of proper appreciation of the document on record for recording this sentence by the arbitrator.

52.a. This Ground is mere repetition of earlier grounds. In fact, I have discussed about the said allegations while answering the earlier Grounds elsewhere. Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub- section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the 127 Com. A.S. No.2/2015 setting aside of arbitral award on this ground is thwarted and rejected.

53. The Forty-First ground is that the arbitrator has failed to appreciate that the samples supplied were MICRONOVA Brand and not "Transcend" Brand going by the Tender "ANY MAKE" is acceptable, that the e-mail of the 1st Respondent clearly states that the Petitioner to ensure to bulk supplies will match with the samples that have been supplied, which means it is not "Transcend".

53.a. This Ground is mere repetition of earlier grounds. In fact, I have discussed about the said allegations while answering the earlier Grounds elsewhere. Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub- section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

54. The Forty-Second ground is that the learned Arbitrator failed to appreciate that CW-1 in his answer to various questions answered that IG department has accepted the bulk supplies in 5 batches, that if the 1 st Respondent were to 128 Com. A.S. No.2/2015 interpret that there is no supersession of the purchase order they should have rejected not only the 1st Respondent pre- production of 24,000/- pieces but also the subsequent 4 batches of bulk supplies.

54.a. The 1st Respondent has contended that it is either misreading of Clause 5 and 6 of the general terms and conditions of purchase order or deliberate attempt to mislead this court, that as per Clause 6, any material/equipment supplied should be free from any defects and should perform satisfactorily for a period of 12 calendar months from the date of supply, that therefore even if the materials are inspected and accepted as per Clause 5, the Petitioner is bound to comply with Clause 6 of the General Terms and Conditions of Purchase Order.

54.b. On perusal of the entire materials, the said contentions of the 1st Respondent cannot be rejected. Moreover, this ground is in the nature and tenor of appeal. The position in law is well settled that this court while exercising power under Section 34 of the Act does not sit as a court of appeal. The nature of proceedings under Section 34 of the Act is summary in nature as held in the decision reported in (2019) - S.C.C. Online - S.C. - 1244 = (2019) 9 - S.C.C. - 462 129 Com. A.S. No.2/2015 (Canara Nidhi Limited vs. M. Shashikala). Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub-section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

55. The Forty-Third ground is that the learned arbitrator failed to look into the invoice by the Petitioner wherein there was a warranty period of 30 days indicated, and hence the claim in respect of guarantee of twelve months ought to have been rejected.

55.a. On close scrutiny of the arbitral records, it is very clear that the Petitioner has not raised such contentions before the arbitral tribunal and these contentions are raised before this court in this proceedings. Hence, the said contentions cannot be considered in this proceedings. Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub- section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

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56. The Forty-Fourth ground is that the assuming but not admitting that the Petitioner is governed by the guarantee clause, even then the last batch of supply/ fifth batch of supply should not have been included in the claim as the 1 st Respondent had not even received the fifth batch as on the date of their communication of rejection dated 26.08.2011.

56.a. In fact, this ground is in the nature and tenor of appeal. The position in law is well settled that this court while exercising power under Section 34 of the Act does not sit as a court of appeal. The nature of proceedings under Section 34 of the Act is summary in nature as held in the decision reported in (2019) - S.C.C. Online - S.C. - 1244 = (2019) 9 - S.C.C. - 462 (Canara Nidhi Limited vs. M. Shashikala). Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub-section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the setting aside of arbitral award on this ground is thwarted and rejected.

57. The Forty-Fifth ground is that the facts have been ignored by the learned Arbitrator (a) mention that Micro Cards were required in the Tablet PC was mentioned for the first time only in the claim statement of the 1st Respondent dated 131 Com. A.S. No.2/2015 12.12.2012 (b) the 1st Respondent had no authority to cancel or modify purchase order due to irrevocable letter of credit opened by them for the entire quantity of the purchase order (c) Opening of the letter of Credit was not as per applicable laws of India as there was no order acknowledgment by the Petitioner

(d) The low cost enumeration device is a general definition, this could not have been interpreted as a Tablet PC unless it was specifically mentioned (e) There was a total dis regard in respect of quality specification by the 1st Respondent as it did not insist upon production of data sheet or certificate of conformance along with each batch of supply, (f) The 1 st Respondent being an ISO certified Company is guilt of not following the Standards Industry practice applicable for procurement of components as per ISO certification rules regarding systematized steps.

57.a. On close scrutiny of the arbitral records, it is very clear that the Petitioner has not raised such contentions before the arbitral tribunal and these contentions are raised before this court in this proceedings. Hence, the said contentions cannot be considered in this proceedings. Hence, this ground is not available for the Petitioner under Sub-section (2) and Sub- section (2-A) of Section 34 of the Arbitration & Conciliation Act. Thus, the challenge flanked by the Petitioner calling for the 132 Com. A.S. No.2/2015 setting aside of arbitral award on this ground is thwarted and rejected.

58. Having given my careful consideration to the submissions urged and the complete case record in the preceding paragraphs of this judgment, I am of the view that is not a fit and proper case for exercise the jurisdiction of this court under Section 34 of the Arbitration & Conciliation Act and to interfere with the Arbitral Award. Hence, the Arbitral Award is neither against the fundamental policy of India nor in contravention of law. Therefore, I find no perversity in the Arbitral Award and the same is upheld. Accordingly, I answer this Point in Negative.

59. Point No. 2 :- Therefore, I proceed to pass the following Order.

ORDER The Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996, is dismissed.

The Arbitral Award dated 06.10.2014 is hereby upheld.

133

Com. A.S. No.2/2015 The Petitioner shall pay the cost of this proceeding to the Respondents No. 1 and

2. Office is directed to return the arbitral records to the Respondent No.2 after the appeal period is over.

The Office is directed to send copy of this judgment to both parties to their email ID as required under Order XX Rule 1 of the Civil Procedure Code as amended under Section 16 of the Commercial Courts Act.

(Dictated to the Stenographer typed by her, corrected and then pronounced by me in open Court on this the 17th day of February 2022).

(DEVARAJA BHAT.M), LXXXII Addl. City Civil & Sessions Judge, Bengaluru.

134 Com. A.S. No.2/2015 The Judgment is pronounced in Open Court. The operative portion of the said Judgment is as follows :-

ORDER The Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996, is dismissed.

The Arbitral Award dated 06.10.2014 is hereby upheld.

The Petitioner shall pay the cost of this proceeding to the Respondents No. 1 and 2.

     Office is    directed  to
return the arbitral records to
the Respondent No.2 after the
appeal period is over.

      The Office is directed to
send copy of this judgment to
both parties to their email ID
as required under Order XX
Rule 1 of the Civil Procedure
Code   as   amended      under
Section 16 of the Commercial
 135
                Com. A.S. No.2/2015

Courts Act.
    (vide  my    separate   detailed
 Judgment dated 17.02.2022 ).

      (Typed to my dictation)


      LXXXII ACC&SJ, B'LURU.

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