Delhi District Court
Kee Pharma Ltd vs Satya Brat Bhadani on 21 December, 2024
IN THE COURT OF MR. SATYABRATA PANDA, DJ-04,
PATIALA HOUSE COURTS, NEW DELHI
ARBTN No.3346/2017
Date of Institution:08.05.2017
Date of Arguments: 22.11.2024
Date of Judgment: 21.12.2024
M/s Kee Pharma Ltd.,
A-1, Community Centre,
Naraina Industrial Area, Phase II,
New Delhi ......Petitioner
Vs.
Shri Satya Brat Bhadani,
Prop. Of Suyash Pharma,
26, A.N. Road, Murarpur,
Gaya-823001, Bihar ..Respondent
JUDGMENT
1. The petitioner has filed the present petition under Section 34 of the Arbitration and Conciliation Act challenging the arbitral award dated 03.02.2017 passed by the Ld. sole arbitrator Sh. P.L. Singla (Retd. Additional District and Sessions Judge). The petitioner herein was the claimant before the sole arbitrator and the respondent herein was the respondent.
2. The petitioner herein is a company dealing in the field of healthcare products. The respondent was a distributor of the petitioner. The arbitration proceedings arose in relation to disputes arising out of the agreement dated 25.11.1994 between the parties.
ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 1 of 56
3. The petitioner herein had made total claim of Rs.
11,95,507.27 against the respondent in the arbitration in the following manner:
Sl. No. Particulars Claim Amount
Towards outstanding
1. amounts against the sale Rs. 6,48,702.78
proceeds
Rs. 4,46,338.87
Towards stock withheld
minus Rs.
by the respondent after
2. 2,00,000/-
adjusting security amount
of Rs. 2,00,000/-
= Rs. 2,46,338.87
Towards deduction made
by respondent against
non-receipt of amounts
3. against sale effected but Rs. 1,53,876.63
money not recovered
from stockists i.e. bad
debts
Towards wrongful
deduction against
4. Rs. 91,501.62
commissions/ incentives
for the FY 1998-99
5.
Towards wrongful Rs. 55,289.67
deduction against
ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 2 of 56 commissions/ incentives for the FY 1997-98 Total: Rs. 11,95,507.27
4. The respondent disputed the claim of the petitioner in the arbitration proceedings, and set up a counter-claim of Rs. 7,19,606.85 in the following manner:
Sl. No. Particulars Claim Amount
1. Towards security amount; Rs. 2,00,000/-
Towards excess on-account
2. payment made by Rs. 2,32,156.49
respondent to the claimant;
Towards refund of money
3. illegally charged towards Rs. 2,87,450.36
free samples of stocks.
Total: Rs. 7,19,606.85
5. The following issues were framed in the arbitration, as also recorded in the award:
"1. What amount, if any, is party No.1 entitled to recover from Party No.2 on account of goods delivered?
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2. Whether Party No.1 is entitled to recover any amount from Party No.2 on account of unsold goods.
3. Is Party No.1 entitled to recover any amount from Party No.2 towards deduction of recovery from stockists, if so, how much?
4. Did Party No.2 wrongfully deduct commission/ incentive in the year 1997-98 and 1998-99, if so, how much and is Party No.1 entitled to recover the same from Party No.2?
5. Did Party No.2 pay any excess amount to Party No.1, if so, how much?
6. Did Party No.1 charge for free samples from Party No.2 and if so, how much and is Party No.2 entitled to recover the same from Party No.1?
7. Is Party No.2 entitled to refund of security deposit?"
(Note: In the above, Party No.1 is the petitioner herein, and Party No.2 is the respondent herein.)
6. Ultimately, the ld. Arbitrator passed the impugned award, the final portion of which is extracted as under:
"The end result is that the entitlement of parties is as under:
Party No.1 Party No.2 Particulars
Rs.7,36,341.91 Rs.2,32,540.00 5 DDS.
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as on
1.12.1998. Rs. 79,160.34 Goods lifted from the
godown of Party No.2
by the Regional
Manager of Party
No.1.
Rs.64,432.00 4 Dds.
RS.1,71,677.68 Inwards not given.
Rs. 1,53,876.63 Bad debts.
Rs. 2,87,450.36 Free Samples.
_____________
Rs. 7,89,137.01
Party No.2 is entitled to recover Rs.52,795.10 with interest from Party No.1 w.e.f. the date of reference @ 18% per annum and Rs.2,00,000/- as security with interest @ 18% per annum w.e.f. 25.11.1994 till realization. Parties shall bear their own costs."
7. Being aggrieved by the aforesaid award, the petitioner/claimant has filed the present petition under Section 34 of the A&C Act.
PETITIONER'S SUBMISSIONS
8. Ld. Counsel for the petitioner has made the following submissions:
8.1. That the impugned award is liable to be set aside under Section 34(2)(b)(ii) of the A&C Act as it is in conflict with the policy of India and also as the impugned award is in contravention of Section 28(3) ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 5 of 56 of the A&C Act since the award does not take into account the terms of the contract. There is a fundamental defect in the approach of the Ld. Arbitrator in passing the award inasmuch as he has refused to accept as binding the very agreement from which he has derived jurisdiction, which is the agreement dated 25.11.1994. The Ld. Arbitrator has erred in holding that he would not consider the agreement dated 25.11.1994, but rather the offer letter to determine the disputes between the parties.
It is settled law that the tribunal is a creature of the agreement which confers him with jurisdiction and cannot travel outside it. This error in approach of the arbitrator vitiates the entire award. The arbitrator has also failed to consider or apply the relevant provisions of the agreement between the parties. Reference in this regard is made to the following decisions: Associate Builders Vs. DDA (2015) 3 SCC 49, MSK Projects India (JV) Ltd V. State of Rajasthan (2011) 10 SCC 573, Hindustan Zinc Ltd V. Friends Coal Carbonisation (2006) 4 SCC 445, and Hindustan Steel Works Construction V. Union of India 2018 SCC Online Del 12160.
8.2. That the offer letter which simply offered appointment to the respondent, had no force under the law of contract, the same being deprived of any confirmation or signature of the respondent. When the agreement dated 25.11.1994 was in force, there ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 6 of 56 could be no question of going back to the offer letter. The offer letter did not constitute an enforceable agreement between the parties. Reference in this regard is made to the following decisions: Speech and Software Technologies (India) Pvt. Ltd V. Neos Interactive Ltd.; (2009) 1 SCC 475, and Rishi Kiran Logistics Pvt. Ltd. V. Board of Trustees of Kandla Port Trust and Ors.; (2015) 13 SCC 233.
8.3. That the impugned award was contrary to the specific terms of the agreement, the instances of which are as follows:
a) With respect to the Issue no.2, the arbitrator has erroneously held the petitioner to be not entitled to the price of the goods handed over to the respondent but which remained unsold.
This was clearly contrary to Clause 24 of the agreement which required the respondent to deliver/account for the goods that remained unsold at the time of the termination of the agreement. This was also contrary to Clauses 4 and 9 which made it clear that the respondent was not debited the amount of the goods on delivery but was obligated to remit the money only when the goods were invoiced by the respondent to the concerned stockists. This was also contrary to the own pleadings of the respondent at paragraphs 13 and 14 of his statement of defence where the respondent had ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 7 of 56 taken the bald plea that while he tried to return the unsold goods, he was unable to do so. As such, it was not even pleaded by the respondent what has been held by the arbitrator that there was a debit entry made in the accounts immediately on delivery of goods. The finding being contrary to the agreement and contrary to the respondent's own pleadings was perverse.
b) With respect to the Issue no.3, the arbitrator has erred in denying the petitioner recovery of sums which the respondent failed to collect from the stockists i.e. bad debts. This was again contrary to Clauses 9(b) and 10 of the agreement under which it was the responsibility of the respondent to collect the money from the stockists and the petitioner could not have been penalised for the same. Yet again, the finding that it was the offer letter and not the agreement which was to be construed to decide the issue, was completely beyond pleadings and no such plea was even taken by the respondents. The only defence at paragraph 9 of the statement of defence taken by the respondent was that the petitioner had requested the respondent to not exert pressure on the stockists. As such being contrary to the ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 8 of 56 agreement and the pleadings, the finding on Issue no.3 was perverse.
c) Furthermore, the finding of the arbitrator that there was waiver by the petitioner of the payment of bad debts was erroneous. Even if the petitioner had ever excused the defaults of the respondent in the past, the same did not amount that the subsequent failures/defaults could be excused as well. In this regard, reliance is place on Clause 21 of the agreement which clearly states that waiver for one default would not constitute waiver for subsequent defaults. Even the respondent neither pleaded any waiver nor led any evidence in this regard. As such, the findings of the arbitrator are perverse. In support of the submission that the respondent ought to have pleaded and proved waiver, reliance is placed upon the following decisions: Motilal Padampat Sugar Mills V. State of Uttar Pradesh (1979) 2 SCC 409, and V.M. Salgaocar V. Board of Trustees of Port of Mormugao; (2005) 4 SCC 613.
d) With respect to the Issue no.4, the arbitrator has erroneously permitted the respondent to wrongfully retain commission from the dues of the petitioner. In holding so, the arbitrator has ignored Clause 12(a) of the agreement ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 9 of 56 which clearly provided that such commission would only be payable if the respondent managed to collect and remit the money from the stockists on the agreed dates in Clause 9. Since this was admittedly not done, there was thus no question of deducting any commission. The finding on Issue no.4 being contrary to the agreement is perverse.
e) With respect to the Issue no.7, the arbitrator failed to appreciate that the petitioner had already adjusted the security deposit while claiming for the value of the unsold goods. This was evident from the pleading of the petitioner in the statement of claim at paragraph 15 and computation of the claim at paragraph 25. Hence, the arbitrator has erroneously directed the petitioner to refund amount of Rs.2 lacs towards security deposit along with interest to the respondent.
8.4. The above glaring and fundamental errors vitiate the entire award, since they are not severable from the rest of the findings. This is evident from the final reconciliation and adjustment of the claims conducted by the arbitrator. The findings on the aforesaid issues were enmeshed with the rest of the award and could not be separated. The entire award would have to set aside as all the issues are interconnected and cannot be separated. ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 10 of 56 8.5. There are other glaring errors and patent illegalities in the award, as under:
a) With respect to the Issue no.1, the arbitrator has erred in finding that it was the petitioner who owed money to the respondent. It is submitted that a bare perusal of the correspondence between the parties was sufficient to conclude that the respondent had never requested for any amount paid in excess to the petitioner, and hence the past conduct of the respondent goes against its counter-claim.
Further, in the award there is mention of 4 demand drafts dated till August 1999. The award includes them in calculating the amount paid by the respondent in excess, however, the same finds no evidence on the debit side of the reconciliation statement date after the alleged payments i.e. September 1999. Moreover, the award dispels any reliance on the accounts submitted by the petitioner and then relies on those accounts to hold that the respondent had overpaid the petitioner.
b) With regard to Issue no.6, that the arbitrator has simply made presumptions mala fide on the part of the petitioner and has allowed the claims of the respondent without any evidence.
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9. On the basis of the aforesaid submissions, Ld. Counsel for the petitioner has submitted that the impugned award is liable to be set aside.
RESPONDENT'S SUBMISSIONS
10. On the other hand, Ld. Counsel for respondent has made the following submissions:
10.1. That the subject award is a well reasoned award and calls for no interference. The scope of interference with an arbitral award under Sec. 34 was very limited. While deciding objections under Sec. 34 of the Act, the court does not sit as an appellate court.
The interpretation of the terms of the contract was in the realm of the arbitrator and unless the arbitrator had constructed the contract in such a way that no reasonable person could do, the court could not interfere with the award. Under Sec. 34 of the Act, the court could not also not re-appreciate the evidence. Under Sec. 34, the court could also not impose its own reasoning after the arbitrator has given reasons and the same was not perverse or shock the conscience of the court. The scope of interference after the amendments in the Arbitration and Conciliation Act of 2015 and 2019 has further decreased as the words "public policy" and "fundamental policy" have been clarified by the explanation and proviso respectively. That errors of law or facts even if committed by the arbitrator were ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 12 of 56 within the jurisdiction of the arbitrator and the court under Sec. 34 of the Arbitration and Conciliation Act could not interfere with the award. The award could not also be challenged on the ground that the arbitrator had arrived at a wrong conclusion. With respect to the submission regarding the limited scope of the Section 34 of the A&C Act, reliance is placed upon the following decisions: Delhi Airport Metro Express Private Limited Vs. Delhi Metro Rail corporation Limited (2022) 1 SCC 131, and PSA SICAL Terminals Pvt. Ltd. V. Board of Trustees of V.O. Chidambranar Port TRUST Tuticorin and Others 2021 SCC Online SC 508.
10.2. That the arbitrator has applied his mind to the case at hand and has given detailed reasons for the award. The arbitrator has not ignored the terms of the contract but has taken into account the actual conduct of the parties and has given his findings accordingly. The exercise was of the construction of the contract which was well within the jurisdiction of the arbitrator and which was outside the scope of interference under Sec. 34.
10.3. In particular, reference is made to the offer letter dated 01.11.1994 and the clause 7 therein which provides advance of Rs.2 lacs and clause 11 which provides that the bad debts could be recovered by the respondent from the petitioner. That although the agreement dated 25.11.1994 provided in clause 15(a) ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 13 of 56 for advance of Rs.3 lacs and clause 10 provided that the petitioner would not be liable for bad debts, however, these clauses of the agreement dated 25.11.1994 were never acted upon by the parties and the parties by their conduct had agreed that the total advance was Rs.2 lacs and that the bad debts would be the liability of the petitioner. The arbitrator has gone into the conduct of the parties and thereafter come to the conclusion that the parties had given a go-by to certain terms of the agreement dated 25.11.1994 and had not acted in terms thereto.
10.4. With respect to the Issue no.3, reference is made to Ex. R7 to Ex. R9 which are letters from the petitioner to the respondent between 1997 and 2000. That this correspondence goes to show that the parties had given a go-by to the clause of the agreement as per which the petitioner was not to be liable for the bad debts. Reference is also made to Ex. R12 which is the account statement of the petitioner. It is submitted that the same was also relied upon by the arbitrator to arrive at the finding that the parties had by their conduct given a go-by to certain terms of the contract. That the parties themselves had ignored/waived certain clauses of the agreement and this was clearly shown from their conduct and that the arbitrator had observed this conduct and given his finding accordingly, which was well within his jurisdiction.
ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 14 of 56 10.5. Reference is also made to Sec. 28(3) of the A&C Act.
It is submitted that the same was amended by the Amending Act 3 of 2016 and whereas earlier it was provided that the award was to be in accordance with the terms of the contract, after the amendment now the award is to be passed taking into account the terms of the contract. It is submitted that with the amendment, the provision has become more liberal with the arbitrator in constituting the contract.
10.6. Ld. Counsel has next referred to the decision in Aston Field Renewables Pvt. Ltd. Vs Ravinder Raina 2018 (247) DLT 115, and has submitted that the act of the arbitrator in the present case was in respect to the construction of the contract which was well within his jurisdiction. It is submitted that the arbitrator has interpreted the contract in the light of the conduct of the parties and the correspondence which the arbitrator was entitled to. Ld. Counsel has also referred to decisions in State of Chhattisgarh vs SAL Udyog 2022 (2 SCC) 275.
11. Both parties have also filed their respective written arguments.
DISCUSSION AND DECISION
12. I have considered the submissions of the Ld. Counsels for the parties and I have perused the record.
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13. It would be appropriate to refer at the outset to the judgment of the Hon'ble High Court of Delhi (Division Bench) in Delhi Development Authority v. Bhardwaj Brothers, 2014 SCC OnLine Del 1581, in which the scope and ambit of jurisdiction of the Court u/s. 34 A&C Act has been delineated. In this judgment, the Hon'ble High Court has also referred to its earlier judgments in State Trading Corporation of India Ltd. v. Toepfer International Asia Pte Ltd. MANU/DE/1480/2014, and in Delhi State Industrial & Infrastructure Development Corporation Ltd. v. Rama Construction Company MANU/DE/1518/2014. The relevant portion of the judgment in DDA v. Bhardwaj Brothers (supra) is extracted hereunder:
"8. We have enquired from the counsel for the appellant whether not the said challenge is a challenge on the merits of the arbitral award. We have yet further put to the counsel for the appellant that as to how, misinterpretation of a contractual provision or misinterpretation of a contract by the Arbitral Tribunal constitutes a ground of challenge under Section 34 of the Arbitration Act.
9. We have in State Trading Corporation of India Ltd. supra held : -
"5. The challenge in this appeal is on the ground that the learned Single Judge ignored that the interpretation of the contract between the parties given by the Arbitral Tribunal is contrary to the express terms and conditions thereof and the Arbitral Tribunal has given a meaning to the terms and conditions which is not contemplated in the contract. The senior counsel for the appellant thus wants us to read the contract between the parties, particularly the clauses relating to demurrage, and then to ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 16 of 56 judge whether the interpretation thereof by the Arbitral Tribunal is correct or not.
6. In our view, the interpretation in Saw Pipes Ltd. supra (ONGC Ltd. v. Saw Pipes Ltd. (2003) 5 SCC 705) of the ground in Section 34 of the Act for setting aside of the arbitral award, for the reason of the same being in conflict with the public policy of India, would not permit setting aside, in the aforesaid facts. A Section 34 proceeding, which in essence is the remedy of annulment, cannot be used by one party to convert the same into a remedy of appeal. In our view, mere erroneous/wrong finding of fact by the Arbitral Tribunal or even an erroneous interpretation of documents/evidence, is non- interferable under Section 34 and if such interference is done by the Court, the same will set at naught the whole purpose of amendment of the Arbitration Act.
7. Arbitration is intended to be a faster and less expensive alternative to the courts. If this is one's motivation and expectation, then the finality of the arbitral award is very important. The remedy provided in Section 34 against an arbitral award is in no sense an appeal. The legislative intent in Section 34 was to make the result of the annulment procedure prescribed therein potentially different from that in an appeal. In appeal, the decision under review not only may be confirmed, but may also be modified. In annulment, on the other hand, the decision under review may either be invalidated in whole or in part or be left to stand if the plea for annulment is rejected. Annulment operates to negate a decision, in whole or in part, thereby depriving the portion negated of legal force and returning the parties, as to that portion, to their original litigating positions. Annulment can void, while appeal can modify. Section 34 is found to provide for ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 17 of 56 annulment only on the grounds affecting legitimacy of the process of decision as distinct from substantive correctness of the contents of the decision. A remedy of appeal focuses upon both legitimacy of the process of decision and the substantive correctness of the decision. Annulment, in the case of arbitration focuses not on the correctness of decision but rather more narrowly considers whether, regardless of errors in application of law or determination of facts, the decision resulted from a legitimate process.
8. In the case of arbitration, the parties through their agreement create an entirely different situation because regardless of how complex or simple a dispute resolution mechanism they create, they almost always agree that the resultant award will be final and binding upon them. In other words, regardless of whether there are errors of application of law or ascertainment of fact, the parties agree that the award will be regarded as substantively correct. Yet, although the content of the award is thus final, parties may still challenge the legitimacy of the decision-making process leading to the award. In essence, parties are always free to argue that they are not bound by a given "award" because what was labeled an award is the result of an illegitimate process of decision.
9. This is the core of the notion of annulment in arbitration. In a sense, annulment is all that doctrinally survives the parties' agreement to regard the award as final and binding. Given the agreement of the parties, annulment requires a challenge to the legitimacy of the process of decision, rather than the substantive correctness of the award.
10. *** *** *** ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 18 of 56
11. Arbitration under the 1940 Act could not achieve the savings in time and money for which it was enacted and had merely become a first step in lengthy litigation. Reference in this regard can be made to para 35 of Bharat Aluminium Company v. Kaiser Aluminium Technical Services Inc. (2012) 9 SCC 552. It was to get over the said malady that the law was sought to be overhauled. While under the old Act, the award was unenforceable till made rule of the court and for which it had to pass various tests as laid down therein and general power/authority was vested in the court to modify the award, all this was removed in the new Act. The new Act not only made the award executable as a decree after the time for preferring objection with respect thereto had expired and without requiring it to be necessarily made rule of the court but also did away with condonation of delay in filing the said objections. The reason/purpose being expediency. The grounds on which the objections could be filed are also such which if made out, the only consequence thereof could be setting aside of the award. It is for this reason that under new Act there is no power to the court to modify the award or to remit the award etc. as under the old Act. A perusal of the various grounds enunciated in Section 34 will show that the same are procedural in nature i.e., concerning legitimacy of the process of decision. While doing so, the ground, of the award being in conflict with Public Policy of India, was also incorporated. However the juxtaposition of Section 34(2)(b)(ii) shows that the reference to 'Public Policy' is also in relation to fraud or corruption in the making of the award. The new Act was being understood so [see Konkan Railway Corporation Ltd. v. Mehul Construction Co. (2000) 7 SCC 201 (para 4 and which has not been set aside in S.B.P. & Co. v. Patel Engineering Ltd. (2005) 8 SCC ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 19 of 56
618)] till the Supreme Court in Saw Pipes Ltd. (supra) held that the phrase 'Public Policy of India' is required to be given wider meaning and if the award on the face of it is patently in violation of statutory provisions, it cannot be said to be in public interest and such award/judgment/decision is likely to adversely affect the administration of justice.
In para 37 of the judgment it was held that award could be set aside if it is contrary to fundamental policy of Indian Law or the interest of India or justice or morality or if it is patently illegal. A rider was however put that illegality must go to the root of the matter and if the illegality is of trivial nature it cannot be held that the award is against the public policy. Yet another test laid down is of the award being so unfair and unreasonable that it shakes the conscience of the court.
12. The courts have thereafter been inundated with challenges to the award. The objections to the award are drafted like appeals to the courts; grounds are urged to show each and every finding of the arbitrator to be either contrary to the record or to the law and thus pleaded to be against the Public Policy of India. As aforesaid, the courts are vested with a difficult task of simultaneously dealing with such objections under two diverse provisions and which has led to the courts in some instances dealing with awards under the new Act on the parameters under the old Act.
13. The result is that the goal of re-
enactment has been missed.
14. The re-enactment was not only to achieve savings in time and prevent arbitration from merely becoming the first step in lengthy litigation but also in consonance with the international treaties and commitments of this country thereto. Since ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 20 of 56 the enactment of the 1940 Act, the international barriers had disappeared and the volume of international trade had grown phenomenally. The new Act was modeled on the model law of international commercial arbitration of the United Nations Commission on International Trade Law (UNICTRAL). It was enacted to make it more responsive to contemporary requirements. The process of economic liberalization had brought huge foreign investment in India. Such foreign investment was hesitant, owing to there being no effective mode of settlement of domestic and international disputes. It was with such lofty ideals and with a view to attract foreign investment that the re-enactment was done. If the courts are to, notwithstanding such re- enactment, deal with the arbitration matters as under the old Act it would be a breach of the commitment made under the treaties on international trade.
15. Applying the aforesaid test, we are afraid, the arguments of the senior counsel for the appellant are beyond the scope of Section 34.
16. The senior counsel for the respondent has in this regard rightly argued that the scope of appeal under Section 37 is even more restricted. It has been so held by the Division Benches of this Court in Thyssen Krupp Werkstoffe v. Steel Authority of India MANU/DE/1853/2011 and Shree Vinayak Cement Clearing Agency v. Cement Corporation of India 147 (2007) DLT 385. It is also the contention of the senior counsel for the respondent that the argument made by the appellant before the learned Single Judge and being made before this Court, that the particular clause in the contract is a contract of indemnification, was not even raised before the Arbitral Tribunal and did not form the ground in the OMP filed under Section 34 ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 21 of 56 of the Act and was raised for the first time in the arguments.
17. The Supreme Court in Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran (2012) 5 SCC 306 refused to set aside an arbitral award, under the 1996 Act on the ground that the view taken by the Arbitral Tribunal was against the terms of the contract and held that it could not be said that the Arbitral Tribunal had travelled outside its jurisdiction and the Court could not substitute its view in place of the interpretation accepted by the Arbitral Tribunal. It was reiterated that the Arbitral Tribunal is legitimately entitled to take the view which it holds to be correct one after considering the material before it and after interpreting the provisions of the Agreement and if the Arbitral Tribunal does so, its decision has to be accepted as final and binding. Reliance in this regard was placed on Sumitomo Heavy Industries Ltd. v. ONGC Ltd. (2010) 11 SCC 296 and on Kwality MFG. Corporation v. Central Warehousing Corporation (2009) 5 SCC 142. Similarly, in P.R. Shah, Shares & Stock Broker (P) Ltd. v. B.H.H. Securities (P) Ltd. (2012) 1 SCC 594 it was held that a Court does not sit in appeal over the award of an Arbitral Tribunal by reassessing or reappreciating evidence and an award can be challenged only under the grounds mentioned in Section 34(2) and in the absence of any such ground it is not possible to reexamine the facts to find out whether a different decision can be arrived at. A Division Bench of this Court also recently in National Highways Authority of India v. Lanco Infratech Ltd.
MANU/DE/0609/2014 held that an interpretation placed on the contract is a matter within the jurisdiction of the Arbitral Tribunal and even if an error exists, this is an error of fact within jurisdiction, which cannot be reappreciated by the Court under Section ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 22 of 56 34 of the Act. The Supreme Court in Steel Authority of India Ltd. v. Gupta Brother Steel Tubes Ltd. (2009) 10 SCC 63 even while dealing with a challenge to an arbitral award under the 1940 Act reiterated that an error by the Arbitrator relatable to interpretation of contract is an error within his jurisdiction and is not an error on the face of the award and is not amenable to correction by the Courts. It was further held that the legal position is no more res integra that the Arbitrator having been made the final Arbiter of resolution of dispute between the parties, the award is not open to challenge on the ground that Arbitrator has reached at a wrong conclusion.
18. If we were to start analyzing the contract between the parties and interpreting the terms and conditions thereof and which will necessarily have to be in the light of the contemporaneous conduct of the parties, it will be nothing else than sitting in appeal over the arbitral award and which is not permissible."
Before proceeding further, mention may also be made of New Delhi Apartment Group Housing Society v. Jyoti Swaroop Mittal MANU/DE/9107/2007 which remained to be noticed and where a Division Bench of this Court held that Saw Pipes Ltd. supra cannot be read as permitting a Court exercising powers under Section 34 to sit in appeal over the findings of fact recorded by the Arbitrator or interpretation placed upon the provisions of the agreement.
10. We have in Delhi State Industrial & Infrastructure Development Corporation Ltd. supra further held that : -
"...the parties, by agreeing to be bound by the arbitral award and by declaring it to be final, agree to be bound also by a wrong ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 23 of 56 interpretation or an erroneous application of law by the Arbitral Tribunal and once the parties have so agreed, they cannot apply for setting aside of the arbitral award on the said ground. Even under the 1940 Act where the scope of interference with the award was much more, the Apex Court in Tarapore and Co. v. Cochin Shipyard Ltd., Cochin (1984) 2 SCC 680 and U.P. Hotels v. U.P. State Electricity Board (1989) 1 SCC 359 held that the arbitrator's decision on a question of law is also binding even if erroneous. Similarly, in N. Chellappan v. Secretary, Kerala State Electricity Board (1975) 1 SCC 289 it was held that even if the umpire committed an error of law in granting amount, it cannot be said to be a ground for challenging the validity of the award; the mistake may be a mistake of fact or of law."
11. We are further of the view that the scope of judicial review of an arbitral award is akin to review under Article 226 of the Constitution of India of the decisions of bodies, where it is a settled principle of law (See State of U.P. v. Maharaja Dharmander Prasad Singh (1989) 2 SCC 505 and State of U.P. v. Johri Mal (2004) 4 SCC 714) that the judicial review is of the decision making process and not of the decision on merits and cannot be converted into an appeal. This is quite evident from the various Clauses of Section 34(2)(a) which prescribe the grounds of challenge on the lines of violation of the principles of natural justice in making of the award or invalidity of the arbitral agreement and nonarbitrability of the disputes arbitrated and of the composition of the Arbitral Tribunal or arbitral procedure being not in accordance with the agreement between the parties. Section 34(2)(b) adds the ground of the arbitral award being in conflict with the public policy of India. None of the said grounds are the grounds of challenge on the merits of the award. The ground of challenge of the award being in conflict with the public policy of India is explained as the award ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 24 of 56 being induced or affected by fraud or corruption or being in violation of Section 75 or Section 81. Thus the grounds of challenge are akin to the grounds of judicial review under Article 226 and not to grounds of appeal or revision. We are reminded of the merits legality distinction in judicial review as culled out by Lord Hailsham in The North Wales v. Evans (1982) 1 WLR 1155 by observing "the purpose of judicial review is to ensure that the individual receives fair treatment, and not to ensure that the authority, after according fair treatment, reaches on a matter which it is authorized by law to decide for itself a conclusion which is correct in the eyes of the Court". Lord Brightman in the same judgment held that judicial review, as the words imply, is not an appeal from a decision, but a review of the manner in which the decision was made and it would be an error to think that the Court sits in judgment not only on the correctness of the decision making process but also on the correctness of the decision itself. It was clarified that only when the issue raised in judicial review is whether a decision is vitiated the judicial review of the decision making process includes examination, as a matter of law, of the relevance of the factors. In our opinion the same is an apt test also for judicial review of the arbitral awards and just like a mere wrong decision without anything more is not enough to attract the power of judicial review, the supervisory jurisdiction conferred on the Court under the Arbitration Act is limited to see that the Arbitral Tribunal functions within the limits of its authority and that the arbitral award does not occasion miscarriage of justice. The Supreme Court in Mc. Dermott International Inc. v. Burn Standard Co. Ltd. (2006) 11 SCC 181 commenting on the radical changes brought about by the re-enactment of the arbitration law observed that the role of the Courts under the new law is only supervisory, permitting intervention in few circumstances only, like, in case of fraud or bias by the arbitrators, violation of natural justice etc. and the Court cannot correct the errors of arbitrators ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 25 of 56 and can only quash the award leaving the parties free to begin arbitration again.
12. Of the finality of arbitral awards, there is no doubt under our arbitration law. The Supreme Court as far back as in Union of India v. A.L. Rallia Ram AIR 1963 SC 1685 held that : -
"An award being a decision of an arbitrator whether a lawyer or a layman chosen by the parties, and entrusted with power to decide a dispute submitted to him is ordinarily not liable to be challenged on the ground that it is erroneous. In order to make arbitration effective and the awards enforceable, machinery is devised for lending the assistance of the ordinary Courts. The Courts are also entrusted with power to modify or correct the award on the ground of imperfect form or clerical errors, or decision on questions not referred, which are severable from those referred...... The Court may also set aside an award on the ground of corruption or misconduct of the arbitrator, or that a party has been guilty of fraudulent concealment or wilful deception. But the Court cannot interfere with the award if otherwise proper on the ground that the decision appears to it to be erroneous. The award of the arbitrator is ordinarily final and conclusive, unless a contrary intention is disclosed by the agreement. The award is the decision of a domestic tribunal chosen by the parties, and the civil courts which are entrusted with the power to facilitate arbitration and to effectuate the awards, cannot exercise appellate powers over the decision. Wrong or right the decision is binding, if it be reached fairly after giving adequate opportunity to the parties to place their grievances in the manner provided in the arbitration agreement."
ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 26 of 56 Of course the said judgment being under the Arbitration Act, 1940 proceeds to hold that an award is bad on the ground of error of law on the face of it. However the legislature while re-enacting the arbitration law has removed the ground of challenge of error of law on the face of the award. In Mc. Dermott International Inc. supra also it was held that the parties to the Arbitration Agreement make a conscious decision to exclude the Courts jurisdiction as they prefer the expediency and finality offered by arbitration. We are bound to respect the said change brought about by the legislature and cannot dogmatically review the awards on the grounds of challenge which have been intentionally taken away by the legislature.
13. It cannot also be lost sight of that non- conferring of finality on the arbitral awards not only affects the speed and expense of arbitration but also has a more subtle consequences of, extensive judicial review changing the nature of the arbitral process to an even greater extent. If arbitration becomes simply another level of decision making, subject to judicial review on merits, arbitrators may begin to decide cases and write opinions in such a way as to insulate their awards against judicial reversal producing opinions that parrot the appropriate statutory standards in conclusory terms, but suffer from a lack of reasoned analysis. Such a shift from the arbitral model, in which decision makers are free to focus solely on the case before them rather than on the case as it might appear to an Appellate Court, to the administrative model, in which decision makers are often concerned primarily with building a record for review, in our opinion would substantially undercut the ability of arbitrators to successfully resolve disputes. The Courts therefore have no business weighing the merits of the grievance, considering whether there is equity in a particular claim, or determining whether there is particular language in the written instrument which will support the claim. The agreement is to submit all grievances to arbitration, not merely those which the Court will deem meritorious. The ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 27 of 56 Courts if start undertaking to determine the merits of the grievance, would be usurping the function which under that Arbitration Act, 1996 is entrusted to the Arbitration Tribunal. This plenary review by the Courts of the merits would make meaningless the provisions that the arbitral award is final, for in reality it would almost never be final. We though may admit that sieving out the genuine challenges from those which are effectively appeals on merits is not easy.
14. Arbitration will not survive, much less flourish, if this core precept is not followed through by the Courts. The integrity and efficacy of arbitration as a parallel dispute resolution system will be subverted if the Courts appear unable or unwilling to restrain themselves from entering into the merits of every arbitral decision that comes before it. The power to intervene must and should only be exercised charily, within the framework of the Arbitration Act. Minimal curial intervention is underpinned by need to recognise the autonomy of the arbitral process by encouraging finality, so that its advantage as an efficient alternative dispute resolution process is not undermined. The parties having opted for arbitration, must be taken to have acknowledged and accepted the attendant risks of having only a very limited right of recourse to the Courts. It would be neither appropriate nor consonant for the Court to lend assistance to a dissatisfied party by exercising appellate function over arbitral awards, save to the extent statutorily permitted.
15. As it would be obvious from the above, the contention aforesaid of the counsel for the appellant does not constitute a challenge to the arbitral award on the grounds permitted and as discussed hereinabove. It is not the case of the appellant that the arbitral award is vitiated, for us to go into the merits of the challenge."
(Emphasis supplied by me) ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 28 of 56
14. The Hon'ble High Court has in a subsequent judgment in National Highways Authority of India v. Oriental Structural Engineers Pvt. Ltd., 2015 SCC OnLine Del 6524 relied upon the judgments in Delhi Development Authority v. Bhardwaj Brothers (supra) and State Trading Corporation of India Ltd. v. Toepfer International Asia Pte Ltd. (supra). After referring to the said judgments in paragraph 9 of the judgment, the Hon'ble High Court proceeded to observe as follows:
"10. I have enquired from the senior counsel for the petitioner whether not at least this Court would be bound by the judgment aforesaid of the Division Bench and as per which the grounds urged by the petitioner for setting aside of the Arbitral Award are not within the ambit of Section 34(2) of the Arbitration Act.
11. The senior counsel for the petitioner has not shown any judgment to the contrary.
12. I may add, an indication of what the legislature, while re-enacting the arbitration law, meant by including the ground, of the arbitral award being in conflict with public policy of India, for setting aside of arbitral awards can be had from the Explanation to Section 34(2) which declares that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption or was in violation of Section 75 or Section 81. Sections 75 as well as 81 are contained in Part III titled 'Conciliation'. Section 75 requires the parties and the conciliator to keep confidential all matters relating to conciliation proceedings and the settlement agreement. Section 81 provides that the parties shall not rely on or introduce as evidence in arbitral or judicial proceedings, views expressed or suggestions made by the other party in respect of a possible settlement of the dispute, the admissions made by the other ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 29 of 56 party in course of the conciliation proceedings, the proposals made by the conciliator, the fact that the other party had indicated his willingness to accept a proposal for settlement made by the conciliator. Thus, if the arbitral award is based on what had transpired in the conciliation proceedings which ultimately failed and not on adjudication by the Arbitral Tribunal, it would be deemed to be in conflict with the public policy of India. Though the explanation to Section 34(2) containing the ground of the arbitral award being in conflict with the public policy of India is prefaced with "without prejudice to the generality of Section 34(2)(b)(ii)"
but the declaration therein of the award being in conflict with the public policy of India if the making of the award was induced by fraud or corruption or was in violation of Sections 75 or 81, in my humble view is suggestive of the expression "the public policy of India" being required to be read as meaning grounds ejusdem generis with the grounds of fraud or corruption or the award being based on material exchanged in conciliation which ultimately failed. In my view, the same cannot be read as referring to public policy of India qua adjudication of disputes in Courts, where error of law or fact is a ground for interference by higher Court. If the intent was to make the award liable to be set aside if contrary to the substantive law applicable to the decision thereof the legislature would have provided so. Even under the 1940 Act, neither the error of law nor of fact in the arbitral award was a ground for setting aside thereof. The preamble to the re-enacted Act states the purpose of the re-enactment to make our domestic law relating to arbitration in consonance with the United Nations Commission on International Trade Law (UNCITRAL) Model Law and the grounds of interference with the arbitral award under the same were/are much narrower than the grounds of interference under the 1940 Act. If the words "in conflict with the public policy of India" are to be read as permitting interference with the arbitral award whenever the same is found to be contrary to the substantive law applicable to the ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 30 of 56 merits of the dispute, the same in my view would be in violation of the preamble to the re-enacted law.
13. I may however notice Oil and Natural Gas Corporation Ltd. v. Western GECO International Ltd. (2014) 9 SCC 263 where also it was held : -
"35. What then would constitute the 'Fundamental policy of Indian Law' is the question. The decision in Saw Pipes Ltd. (supra) does not elaborate that aspect. Even so, the expression must, in our opinion, include all such fundamental principles as providing a basis for administration of justice and enforcement of law in this country.
Without meaning to exhaustively enumerate the purport of the expression "Fundamental Policy of Indian Law", we may refer to three distinct and fundamental juristic principles that must necessarily be understood as a part and parcel of the Fundamental Policy of Indian law. The first and foremost is the principle that in every determination whether by a Court or other authority that affects the rights of a citizen or leads to any civil consequences, the Court or authority concerned is bound to adopt what is in legal parlance called a 'judicial approach' in the matter. The duty to adopt a judicial approach arises from the very nature of the power exercised by the Court or the authority does not have to be separately or additionally enjoined upon the fora concerned. What must be remembered is that the importance of Judicial approach in judicial and quasi judicial determination lies in the fact so long as the Court, Tribunal or the authority exercising powers that affect the rights or obligations of the parties before them shows fidelity to judicial approach, they cannot act in an arbitrary, capricious or whimsical manner. Judicial approach ensures that the authority acts bonafide and deals with the subject in a fair, reasonable and objective ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 31 of 56 manner and that its decision is not actuated by any extraneous consideration. Judicial approach in that sense acts as a check against flaws and faults that can render the decision of a Court, Tribunal or Authority vulnerable to challenge.
36. In Ridge v. Baldwin [1963 2 All ER 66], the House of Lords was considering the question whether a Watch Committee in exercising its authority Under Section 191 of the Municipal Corporations Act, 1882 was required to act judicially. The majority decision was that it had to act judicially and since the order of dismissal was passed without furnishing to the Appellant a specific charge, it was a nullity. Dealing with the Appellant's contention that the Watch Committee had to act judicially, Lord Reid relied upon the following observations made by Atkin L.J. in [1924] 1 KB at pp. 206, 207:
Wherever anybody of persons having legal authority to determine questions affecting the rights of subjects, and having the duty to act judicially, act in excess of their legal authority, they are subject to the controlling jurisdiction of the King's Bench Division exercised in these writs.
37. The view taken by Lord Reid was relied upon by a Constitution Bench of this Court in A.C. Co. Ltd. v. P.N. Sharma AIR 1965 SC 1595 where Gajendragadkar, C.J. speaking for the Court observed:
In other words, according to Lord Reid's judgment, the necessity to follow judicial procedure and observe the principles of natural justice, flows from the nature of the decision which the watch committee had been authorised to reach Under Section 191(4). It would thus be seen that the area where the principles of natural justice have to be ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 32 of 56 followed and judicial approach has to be adopted, has become wider and consequently, the horizon of writ jurisdiction has been extended in a corresponding measure. In dealing with questions as to whether any impugned orders could be revised Under Article 226 of our Constitution, the test prescribed by Lord Reid in this judgment may afford considerable assistance.
38. Equally important and indeed fundamental to the policy of Indian law is the principle that a Court and so also a quasi- judicial authority must, while determining the rights and obligations of parties before it, do so in accordance with the principles of natural justice. Besides the celebrated 'audi alteram partem' rule one of the facets of the principles of natural justice is that the Court/authority deciding the matter must apply its mind to the attendant facts and circumstances while taking a view one way or the other. Non-
application of mind is a defect that is fatal to any adjudication. Application of mind is best demonstrated by disclosure of the mind and disclosure of mind is best done by recording reasons in support of the decision which the Court or authority is taking. The requirement that an adjudicatory authority must apply its mind is, in that view, so deeply embedded in our jurisprudence that it can be described as a fundamental policy of Indian Law.
39. No less important is the principle now recognised as a salutary juristic fundamental in administrative law that a decision which is perverse or so irrational that no reasonable person would have arrived at the same will not be sustained in a Court of law. Perversity or irrationality of decisions is tested on the touchstone of Wednesbury's principle of reasonableness. Decisions that fall short of the standards of reasonableness are open to ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 33 of 56 challenge in a Court of law often in writ jurisdiction of the Superior courts but no less in statutory processes where ever the same are available.
40. It is neither necessary nor proper for us to attempt an exhaustive enumeration of what would constitute the fundamental policy of Indian law nor is it possible to place the expression in the straitjacket of a definition. What is important in the context of the case at hand is that if on facts proved before them the arbitrators fail to draw an inference which ought to have been drawn or if they have drawn an inference which is on the face of it, untenable resulting in miscarriage of justice, the adjudication even when made by an arbitral tribunal that enjoys considerable latitude and play at the joints in making awards will be open to challenge and may be cast away or modified depending upon whether the offending part is or is not severable from the rest."
14. I have considered the challenge aforesaid to the arbitral award on the anvil of the above latest adjudication also. No ground, of the Arbitral Tribunal in the instant case having not adopted a judicial approach or having acted in violation of the principles of natural justice has been urged. It is also not the case that the Arbitral Tribunal has not acted bona fide or not dealt with the subject in a fair, reasonable and objective manner or that the decision of the Arbitral Tribunal was actuated by any extraneous consideration. Non application of mind by the Arbitral Tribunal is also not pleaded or argued. No case of perversity or irrationality has also been made out. The entire challenge is on the ground of the findings of the Arbitral Tribunal being factually erroneous and which is not a ground even as per the judgment (supra) of the Supreme Court. Of course, the Supreme Court in para 40 of the judgment has held that if the Arbitral Tribunal, from the facts proved before it fails, to draw an inference ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 34 of 56 which ought to have been drawn or draws the inference which on the face of it is untenable, the arbitral award would be in conflict with public policy of India and the test of "fails to draw inference which ought to have been drawn or draws an inference which is untenable" is very wide but the said test is qualified with the words "resulting in miscarriage of justice". I am unable to read the judgment of the Supreme Court as opening the doors of challenge to an Arbitral Award by a detailed examination of all the facts and material before the Arbitral Tribunal and to determination of whether the inferences drawn and the consequences reached by the Arbitral Tribunal therefrom are correct or not and whether the Court agrees with the same or not. If the same were to be permitted, it would do away with the difference between the Court exercising appellate power and power of judicial review of Arbitral Award under Section 34 of the Act and would be against the several other judgments of the Supreme Court and which, in the judgment (supra) were neither considered nor differed from. The judgment (supra) of the Supreme Court, cannot be read in isolation, forgetting all other judgments of the Supreme Court and none of which have been overruled.
15. The expression "miscarriage of justice", used by the Supreme Court in the judgment (supra) as qualifying the test laid down in para 40 thereof of the validity of the Arbitral Award, is an expression well recognized in law and generally associated with grossly unfair outcome in a judicial proceeding as when a defendant is convicted despite a lack of evidence on an essential element of a crime (per Black's Law Dictionary, Eight Edition). The Supreme Court in Union of India v. Ibrahim Uddin (2012) 8 SCC 148 cited with approval Bibhabati Devi v. Ramendra Narayan Roy AIR 1947 PC 19 holding that miscarriage of justice means such a departure from the rules which permeate all judicial procedure as to make that which happen not in the proper sense of the word 'judicial procedure' at all.
ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 35 of 56
16. Thus, it is not every inference drawn or not drawn by the Arbitral Tribunal from the material before it and which the Court finds to have been wrongly drawn or not drawn, which could be held to be resulting in miscarriage of justice. Such inference/failure to interfere by the Arbitral Tribunal, even if in the opinion of the Court wrong, would permit interference under Section 34 of the Arbitration Act only if it results in a grossly unfair outcome.
17. There is another aspect of the matter. A detailed inquiry into the correctness of the inference drawn/not drawn by the Arbitral Tribunal would require the Court not only to go through and dissect the arbitral record which is often voluminous in cases as the present but to also give an opportunity to the parties/their counsels to address on the inferences drawn/not drawn by the Arbitral Tribunal and to only thereafter form an opinion. The same would again make a proceeding under Section 34 of the Arbitration Act and hearing thereof akin to an appeal from original decrees of the Court and would be an antithesis to the very concept of judicial review of arbitral award, even if the Court at the end of such a marathon hearing were to conclude that there has been no miscarriage of justice. It is thus for the contracting party challenging the Arbitral Tribunal to, in the memorandum of challenge itself, make out a case of miscarriage of justice within the parameters aforesaid. No such case has been made out in the petition in the present case. Without any such case having been made out in the memorandum of petition, this Court would not embark upon an exercise of requisitioning the arbitral record and giving an opportunity to the parties/their counsels to address on the correctness of the inference drawn/not drawn by the Arbitral Tribunal and on the aspect of whether there has been a miscarriage of justice.
18. Mention may also be made of another recent dicta in Associate Builders v. DDA where on conspectus of plethora of cases including Western ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 36 of 56 GECO International Ltd. supra, the judgment of the Single Judge of this High Court dismissing the petition under Section 34 of the Arbitration Act was restored and the judgment of the Division Bench in appeal thereagainst interfering with the award was set aside holding that the Division Bench exceeded its jurisdiction in interfering with the pure finding of facts forgetting that the arbitrator is the sole Judge of the quantity and quality of evidence before him and that the Division Bench has no business to enter into the pure question of fact to set aside the award. It was further held that the same cannot be done by any Court under jurisdiction exercised under Section 34 of the Act. The Supreme Court further held that the expression 'justice' when it comes to setting aside an award under the public policy ground can only mean that the award shocks the conscience of the Court and that it cannot possibly include what the Court thinks is unjust on the facts of a case for which the Court then seeks to substitute its own view for the arbitrator's view and does what it considers to be 'justice'. The Supreme Court observed that the Division Bench had lost sight of the fact that it is not a first Appellate Court and cannot interfere with errors of fact. The Supreme Court held that if the arbitrators have decided the dispute with a sound head and a good heart and after hearing both sides, the Courts should not interfere with their award, even if the Court disagrees with the reasons assigned by the arbitrator.
19. It is not the case of the petitioners that the arbitrators in the present case have not decided with a sound head and a good heart.
20. I therefore do not find any case for entertaining the challenge to the Arbitral Award by way of this petition and dismiss the same."
(Emphasis supplied by me)
15. On the touchstone of the aforesaid principles, my findings are as follows.
ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 37 of 56 Re: Adjustment of amounts due to the Respondent against Petitioner's claim of Rs. 7,36,341.91
16. The plaintiff had made the claim for sum of Rs.
6,48,702.78 towards outstanding amounts against the sale proceeds on the basis that a sum of Rs. 7,36,341.91 was outstanding payable by the respondent to the petitioner as on 31.10.1998 which was admitted by the respondent vide its confirmation letter dated 01.12.1998, and upon adjusting the commissions/incentives which the respondent was entitled to, the balance outstanding recoverable was Rs. 6,48,702.78.
17. The Ld. Arbitrator has, based on the material before him, found as a matter of fact that as against the amount of Rs. 7,36,341.91 which was claimed by the petitioner as outstanding as on 31.10.1998, the following amounts had not been credited to the account of the respondent and were liable to be adjusted:
i. Rs. 2,32,540/- towards 5 demand drafts which were paid but were not credited to the respondent's account, ii. Rs. 79,160.34 towards goods lifted from the respondent and sent to another agent of the petitioner, ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 38 of 56 iii. Rs. 64,432/- towards 4 other demand drafts which were put but were not credited to the respondent's account.
iv. Rs. 1,71,677.68 towards inwards which the petitioner had claimed to have credited into the account of the respondent, but which was actually not credited.
18. Hence, the Ld. Arbitrator has taken the amount of Rs.
7,36,341.91 to be due to the petitioner from the respondent, and has also given credit to the respondent of the aforesaid four amounts for adjustment.
19. The relevant findings of the Ld. Arbitrator in this regard are contained in the discussion on Issue No.1, which is extracted hereunder:
"ISSUE No.1 -
What amount, if any, is party No.1 entitled to recover from Party No.2 on account of goods delivered?
Party No.1 in para 12 of the statement of claim contended that Party No.2 committed default in timely remittance of the amount of Rs.7,36,341.91 as on 31.10.1998 which was admitted by party No.2.
To prove this fact, Party No.1 examined Shri C.B. Gupta, Company Secretary and Head, Finance of its company as CW.1 who filed his affidavit, Ext.
ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 39 of 56 CW.1/A. He denied that till 1999 transactions continued on the terms of oral agreement prior to 1994. He admitted that Party No.1 received 5 bank drafts of total value of Rs.2,32,540/- and that this amount had not been adjusted against Rs.7,36,341.91 because the bank drafts were received after 31.10.1998. In para 1 of the statement of claim, Party No.1 claimed Rs.7,36,341.91 as outstanding as on 31.10.19098 but nowhere this amount of Rs.2,32,540/- appears to have been adjusted out of this amount. He also admitted that the Regional Sales Manager of Party No.1 lifted goods of the value of Rs.79,160.34 from the godown of Party No.1 and sent it to other agent of Party No.1 at Patna. Even this amount has not been adjusted by Party No.1. Those 5 bank drafts Ext. R.1, R.2, R.3, R.4 and R.5 have been admitted by the ld. Counsel for Party No.1. All these bank drafts are after letter dated 31.10.1998. Perusal of the letter dated 1.11.1998, Ext. CW.1/6 shows that it is regarding sale for the month of August, 1998 and September, 1998. It is only a statement of account for two months and not for any period prior to that. From this, it cannot be held that the balance of Rs.7,36,341.91 was due on that account towards all the transactions between the parties. Party No.1 did not produce its accounts before this tribunal to show that these amounts had been credited in the account of Party No.2.
ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 40 of 56 Party No.2 sent reconciliation statement as on
20.9.1999, Ext. R.13, receipt of which has been admitted by Id. Counsel for Party No.1 but contents have been denied, however, to rebut this, no counter reconciliation statement has been produced on record by Party No.1. As per this reconciliation statement, Party No.1 is entitled to Rs.3,09,558.64 less interest amounting to Rs.32,000/- by way of interest on security deposit from 1996-97 from Party No.2.
In conclusion I find that out of Rs.7,36,341.91, as mentioned in letter dated 1.12.1998, 5 demand drafts of the value of Rs.2,32,540/- have not been credited to the account of Party No.2 that had to be adjusted out of Rs.7,36,341.91. Besides this, Regional Sales Manager of Party No.1 lifted goods of the value of Rs. 79,160.34 from the godown of Party No.2 and sent to other agents of Party No.1 with whom PartyNo.1 had entered into contract. Party No.1 has not given credit of this amount to Party No.2. This fact has been admitted by Shri C.B. Gupta of Party No.1 who signed and verified the statement of claim. This amount has also not been given credit to by Party No.1 to Party No.2. Shri C.B. Gupta admitted that this amount of Rs.2,32,540/- by way of 5 demand drafts was not adjusted because those were received after31.10.1998. Shri Sunil Sethi admitted that Shri A.K. Sinha was Regional Sales Manager of Party No.1 in January, 2000 but he ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 41 of 56 denied that he received goods of the value of Rs. 18,256.40 from Party No.2 at Gaya. He admitted the signature of Shri A.K. Saxena on Ext. CW.2/1-CX and Shri Saxena admitted that he received goods of the value of Rs.18,256.40 from Party No.2 at Gaya. How can Shri Sunil Sethi, who was Manager, Sales Administration of Party No.1 say that Shri A.K.Saxena, Regional Sales Manager was not authorized to get any such goods. This amount has also not been given credit by party No.1.
Shri Sunil Sethi admitted that Party No.1 gave credit for invoice 1 to 5 i.e. Annexure: 'L' but did not give credit for other invoices to Party No.2. He has not been able to tell as to whether Party No.1 had received payments of 4 demand drafts, Ext. RW.1/19 for Rs.25,000/- dated 24.8.1999; RW.1/20 for Rs.16,460/- dated 26.7.1999; RW.1/21 for Rs.12,877/- dated 26.6.1999 and Ext. RW1/22 for Rs.10,095/- dated 7.8.1999. Even this amount of Rs.64,432/- was not given credit by party No.1 to party No.2.
Party No.1 allegedly gave credit of Rs.1,71,677.68 regarding inwards as mentioned therein, has not been actually credited, although Party No.1 had credited that amount in the letter dated 20.9.1999 but actually the amount was not credited.
Section 34 of Evidence Act reads as follows:
ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 42 of 56 "Entries in books of account, including those maintained in an electronic form, regularly kept in the course of business, are relevant whenever they refer to a matter into which the court has to inquire, but such statements shall not alone be sufficient evidence to charge any person with liability."
Shri C.B. Gupta, who signed and verified the statement of claim and also the reply to counter claim admitted in cross examination that he had been working in the company since November, 2004. So he has no personal knowledge about what was happening before that and, therefore, he does not know if prior to the agreement dated 25.11.1994 entire business between the parties was done orally. He even admitted that there was a letter which was prior to 1.11.1994 and it was because of that, that party No.2 had deposited Rs.1,25,000/- with Party No.1 and it was only because of letter dated 1.11.1994 that Party No.2 deposited additional amount of Rs.75,000/- to make up the deposit of Rs.2,00,000/-.
Party No.2 alleged that Party No.1 did not give credit of Rs.1,71,677.68 for inwards from 6.4.1999 to 4.9.1999. Shri Sunil Sethi, too admitted that Party No.1 had given credit for inward 1 to 5 as contained in Annexure 'L', credit of other inwards had not been given to Party No.2.
ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 43 of 56 Ld. Counsel for Party No.1 has relied on a ruling cited as OMP No.459/07 titled CHETAN KUMAR AGGARWAL & Son Pvt. Ltd. Vs. New Holland Fiat (India) Pvt.Ltd. In that case accounts maintained in the ordinary course of business were relied upon because the same were audited by the auditor and certificate had been given by the Auditor that the accounts were correct. In the present case accounts are not audited and moreover these accounts are not signed and the person who has prepared these accounts has not been examined, therefore, there is no probative value of the accounts produced by Party No.1.
In the result, I hold that Party No.1 was paid Rs.3,58,685.03 by Party No.2 in excess of the price of goods sold by Party No.1 to Party No.2."
20. In so far as the Ld. Arbitrator has held that the amounts of
i) Rs. 2,32,540/- towards 5 demand drafts, ii) Rs. 79,160.34 towards goods lifted, iii) Rs. 64,432/- towards 4 other demand drafts, and iv) Rs. 1,71,677.68 towards inwards, were liable to be credited to the respondent's account and adjusted against the amount of Rs. 7,36,341.91 due from the respondent to the petitioner, I find no grounds for interference under section 34 of the A&C Act. The Ld. Arbitrator has considered the evidence and material before him and has come to the finding of fact that the aforesaid amounts were liable to be credited to the account of the respondent and liable to be adjusted.
ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 44 of 56 The arbitrator was the master of the facts and evidence and this exercise was well within the jurisdiction of the ld. Arbitrator. This court cannot in exercise of power under section 34 of the A&C Act sit as a court of appeal to re- appreciate the evidence. Hence, the challenge in this regard to the award is rejected.
Re: Remaining Issues
21. This leaves the remaining issues which are as follows:
i. Dismissal of the petitioner's claim towards towards stock withheld.
ii. Dismissal of the petitioner's claim towards wrongful deduction against commissions/ incentives.
iii. Award to the respondent by crediting amount of Rs. 1,53,876.63 towards bad debts.
iv. Award to the respondent towards free samples.
Re: Dismissal of the petitioner's claim towards stock withheld
22. In so far as the dismissal of the petitioner's claim towards stock withheld is concerned, the Ld. Arbitrator has dealt with the same in the discussion on Issue No.2, which is extracted hereunder:
"ISSUE No.2:
ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 45 of 56 Whether Party No.1 is entitled to recover any amount from Party No.2 on account of unsold goods?
Whenever Party No.1 supplied goods to Party No.2, it debited the amount of goods to Party No.2 and payments made on account by Party No.2, were credited to his account.
How can Party No.1 claim the amount of unsold goods? So, this issue No.2 is decided against Party No.1."
23. The Ld. Arbitrator has held that whenever the petitioner supplied the goods to the respondent, the petitioner debited the amount of the goods to the respondent's account and payments made on account by the respondent were credited to the respondent's account, and hence, there could be no claim towards unsold goods. The finding that the petitioner was debiting the amount of the goods to the respondent's account whenever goods were supplied and payments made on account by the respondent were credited to the respondent's account is again a finding of fact based on the material which was before the Ld. Arbitrator. This was a matter within the domain of the ld. Arbitrator. In the face of this finding of fact, there was no perversity in the finding that there could be no claim for unsold goods since the amounts already stood debited to the respondent's account whenever the goods were ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 46 of 56 supplied. Hence, the challenge in this regard to the award is also rejected.
Re: Dismissal of the petitioner's claim towards wrongful deduction against commissions/incentives
24. Now, coming to the dismissal of the petitioner's claim for Rs. 91,501.62 and Rs. 55,289.67 towards wrongful deduction against commissions/ incentives for the FY 1998-99 and 1997-98, respectively. The Ld. Arbitrator has dealt with this aspect in the discussion on the Issue No.4, which is extracted hereunder:
"ISSUE NO.4:
Did Party No.2 wrongfully deduct commission/incentive in the year 1997-98 and 1998- 99, if so, how much and is Party No.1 entitled to recover the same from Party No.2?
Agreement dated 25.11.1994, Ext. CW.1/1-CX clearly mentions in clause 12(a) that in consideration of services rendered by Party No.2, Party No.1 shall pay service charges @2.5% on the net stock price set out to the stockists and shall be entitled for an incentive / commission of 3.5% in cash on the remittance made to Party No.1, therefore, this amount cannot be claimed again. Shri Satya Brat Bhadani in his examination-in-chief of 20.9.2008 stated that his affidavit Ext. RW.1/A was drafted under his instructions and it bears his ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 47 of 56 signature at point A and B and it is correct. Shri Bhadani, Party No.2 was not cross examined on this point and Party No.1 though had opportunity to lead evidence in rebuttal, did not choose to do so. I, therefore, have no hesitation in holding that Party No.1 is entitled to get this amount of Rs.64,432/- and I decide this issue against Party No.1."
25. The Ld. Arbitrator has considered the material before him and has come to the finding that there was no wrongful deduction towards commission/incentives by the respondent and that rather the respondent was entitled to sum of Rs. 64,432/- towards commissions/incentives. With respect to this, the argument of the ld. Counsel for the petitioner is that there was disparity in considering the petitioner's and respondent's weight of evidence by the Ld. Arbitrator. Again, I find that the appreciation and consideration of the evidence was the exclusive domain and jurisdiction of the Ld. Arbitrator, and this Court would not go in for re-appreciation of the evidence to arrive at a different conclusion. Hence, I also find no grounds to interfere with the award in so far as the dismissal of the petitioner's claim for alleged wrongful deduction against commissions/ incentives is concerned.
Re: Award to the respondent by crediting amount of Rs. 2,87,450.36 towards free samples
26. In so far as the award to the respondent of Rs. 2,87,450.36 towards amounts recovered by petitioner against free ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 48 of 56 samples is concerned, the same is dealt with by the Ld. Arbitrator in the discussion on Issue No.6, which is extracted hereunder:
"ISSUE NO.6:
Did Party No.1 charge for free samples from Party No.2 and if so, is Party No.2 entitled to recover the same from Party No.1?
Shri C.B. Gupta, CW.1 could not be cross examined on this point because he was dropped by Party No.1 while he was under cross examination. Shri Sunil Sethi, CW.2 on his cross examination denied that Party No.1 charged Rs.2,87,450.36 from Party No.2 for samples from 18.6.1998 to24.3.1999. On cross examination Party No.2 stated that free samples were of two types, one for promotional material for stockist and the other one for company representatives to give the same to Doctors. Free samples are sent by Pharma company to their representatives free of costs for promotional purpose and that the same are not marketable. He stated that packing of free samples for Doctors is different from other packing of free sample for promotional purpose. Para 6(d) of agreement dated 25.11.1994 also mentions that Party No.2 was to arrange merchandising and display of promotional material of their products. This means that promotional material was to be supplied by Party No.1 to Party ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 49 of 56 No.2. Ext. RW.1/2, Annexure E consisting of 9 pages shows that free quantity was supplied and its value is also mentioned therein but this amount has been charged from Party No.2. Although Party No.1 has denied the invoices. They have not produced their own invoices. Party No.1 is supposed to be in possession of copies of these invoices also. If Party No.1 says that these goods were not supplied, then Party No.1 is not entitled to recover anything. Accordingly I have no hesitation in holding that Party No.2 is entitled to deduct Rs.2,87,450.36 for free samples for promotional purposes."
27. The Ld. Arbitrator has found that under the agreement, the promotional material was to be supplied by the petitioner to the respondent. This finding which is essentially an interpretation of the contract was within the domain of the arbitrator. The arbitrator has further found that although the promotional material was supplied by the petitioner to the respondent, however, the same was charged on the respondent. To arrive at this finding, the arbitrator has considered the evidence and material on record. Hence, this finding of the ld. Arbitrator is also outside the scope of review under section 34 of the A&C Act.
Re: Award to the respondent by crediting amount of Rs. 1,53,876.63 towards bad debts
28. Now, coming to the part of the award crediting the respondent's account with Rs. 1,53,876.63 towards bad ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 50 of 56 debts. The Ld. Arbitrator has dealt with this in the discussion under Issue No.3, which is extracted hereunder:
"ISSUE NO.3:
Is Party No.1 entitled to recover any amount from Party No.2 towards deduction of recovery from stockists, if so, how much?
In para 18 of the statement of claim, Party No.1 alleged that Party No.2 deducted an amount of Rs.1,53,876.63 on account of non receipt of the amount against sales to the stockists of Party No.1 because as per clause 10 of the agreement dated 24.11.1994, Party No.2 was exclusively responsible for collecting the amount against sale affected by it and in case of any bad debts arising out of non payment by the stockist against invoices raised by Party No.2, Party No.1 would not be held responsible or liable for the same. It is true that there is such a clause in the agreement dated 25.11.1994 but the letter dated 1.11.1994 expressly states that in case of bad debts from the market beyond 90 days, Party No.2 could recover the same from Party No.1.
It does not stand to reason as to why Party No.2 would agree to depart from this clause as contained in letter dated November, 1, 1994 Ext. CW.1/2- CS to his detriment by making himself liable for any bad debts and that too for sale to the stockist appointed by Party No.1. This term has been ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 51 of 56 wrongfully interpolated in the agreement dated 25.11.1994. Even otherwise, as discussed above, for bad debts Party No.2 has been giving credit to Party No.1. Ext. R.12 of Annexure 1 specifically mentions that Rs.2,19,862.21 had been given credit to by Party No.1 to Party No.2 on account of deduction for over 90 days and this letter is dated 7.1.1998 and it has been admitted by Party No.1. This letter is much after the agreement dated25.11.1994. This means that this condition in the agreement dated 25.11.1994 has been either waived and Party No.2 had been giving credit for bad debts. There is no reason why Party No.2 be not permitted this deduction of Rs.1.53.876.63, on account of non receipt from stockist of Party No.1. The issue No.3 is decided accordingly."
29. The Ld. Arbitrator has given a two-fold reasoning to credit the amount towards bad debts to the plaintiff's account. The agreement between the parties clearly provided that the respondent was exclusively responsible for collecting the amounts against sale affected by it and that in case of any bad debts arising out of non-payment by the stockists against the invoices raised by the respondent, then the petitioner would not be liable for the same. Although the ld. Arbitrator has clearly taken note of this provision of the contract, the Ld. Arbitrator has proceeded to hold that this was contrary to the earlier understanding between the parties as contained in the letter dated 01.11.1994. The Ld. ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 52 of 56 Arbitrator has observed that it did not stand to reason as to why the respondent would agree to depart from the letter dated 01.11.1994 to its detriment and has proceeded to hodl that "This term has been wrongfully interpolated in the agreement dated 25.11.994". This is the first reasoning of the ld. Arbitrator to credit the respondent's account with the amount of Rs. 1,53,876.63 towards bad debts. This reasoning of the Ld. Arbitrator is squarely contrary to the contract between the parties as contained in the agreement dated 25.11.1994 and cannot be sustained. The parties were governed by the terms of the contract and the Ld. Arbitrator has in effect refused to enforce the terms of the contract which is patently illegal. Hence, the first reasoning of the Ld. Arbitrator is liable to be set aside.
30. The second reasoning given by the Ld. Arbitrator was that, even otherwise, the petitioner had earlier given credit to the respondent for bad debts. On this basis, the Ld. Arbitrator has held that, even otherwise, the petitioner had waived the condition in the agreement regarding the respondent being liable for bad debts and as such the amount of Rs. 1,53,876.63 towards bad debts was credited into the respondent's account. The petitioner has argued that even this finding was squarely against the agreement, more particularly Clause 21 of the agreement, and I would agree with this submission. Clause 21 of the agreement provides as follows:
"21. The waiver by either party or the failure by either party to claim a default of any provision of ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 53 of 56 this Agreement shall not be construed to be a waiver of any subsequent default or as affecting in any way the effectiveness of such provision."
31. Thus, the parties had categorically agreed that waiver by either party to claim a default of a provision of the agreement would not be construed as waiver of any subsequent default. Hence, even if the petitioner had on an earlier occasion waived and not insisted upon the liability of the respondent towards bad debts, that would not ipso facto mean that the liability of the respondent for bad debts was waived for all purposes for the future as well. The Ld. Arbitrator has again not considered the contract between the parties as contained in Clause 21, and hence, has essentially refused to enforce the contract between the parties, which is again patently illegal.
32. Hence, both the reasonings given by the Ld. Arbitrator for crediting the amount of bad debts to the respondent's account fail to satisfy the standard of reasonableness and are patently illegal being squarely contrary to contract between the parties. Hence, the portion of the award crediting amount of Rs. 1,53,876.63 towards bad debts into the respondent's account is hereby set aside. The setting aside of this portion of the award would not affect the rest of the award as the same is clearly severable from the rest of the award.
Resultant reconciliation of accounts ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 54 of 56
33. Resultantly, upon setting aside only the part of the award crediting the bad debts to the respondent which was severable from the rest of the award, the reconciliation of accounts and entitlement of the parties as given in the final portion of the award would be read as follows:
"Party No.1 Party No.2 Particulars
Rs.7,36,341.9 Rs.2,32,540.00 5 DDS.
1 as on Rs. 79,160.34 Goods lifted from the
1.12.1998. godown of Party
No.2 by the Regional
Manager of Party
No.1.
Rs.64,432.00 4 Dds.
Rs.1,71,677.68 Inwards not given.
Rs. 1,53,876.63 Bad debts.
Rs. 2,87,450.36 Free Samples.
_____________
Rs. 7,89,137.01
Rs. 6,35,260.38"
34. As a result, on a reconciliation of the accounts, the petitioner would be entitled to recovery of Rs. 1,01,081.53 from the respondent. This amount would be adjusted against the security amount of Rs. 2,00,000/-, and consequently, upon adjustment, the balance security which the respondent would be entitled to recovery of would be Rs. 98,918.47 which would be rounded off to Rs. 98,918/-.
35. The interest would start running only upon the reconciliation of the accounts which would be taken to be ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 55 of 56 done only on the date of the award and not on any date prior thereto. As such, the part of the award granting interest to the respondent @ 18% p.a. for the period prior to the date of the award is patently unreasonable and illegal and is also set aside. Accordingly, the respondent would be entitled to interest @ 18% p.a. on the balance amount of security of Rs.98,918/- w.e.f. the date of the award till realisation.
36. The petition under section 34 of the A&C Act is disposed of in the aforesaid terms.
37. Parties to bear own costs.
38. File be consigned to record room after due compliance.
Digitally signed
Satyabrata by Satyabrata
Panda
Panda Date: 2024.12.21
17:03:29 +0530
(SATYABRATA PANDA)
District Judge-04
Judge Code- DL01057
PHC/New Delhi/21.12.2024
ARBTN No.3346/2017 M/s Kee Pharma Ltd. Vs. Shri Satya Brat Bhadani Page No. 56 of 56