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27. The next contention raised by Learned Senior Counsel for Petitioner is under Section 32 [2] [a] [iv] of the Act that, the arbitral tribunal has dealt with matters which were not arbitrable since the arbitral tribunal has essentially decided dispute arising between the parties under MOU dated 8-02- 2018 which did not contain arbitration clause. In this regard it is to be noted that, admittedly the original contract between the parties which is the supply contract dated 20-5-2015 contains arbitration clause. The MOU was entered into in order to settle the amount payable by petitioner to the claimant under the supply contract. On reading of the MOU, it is clear that the MOU was entered into in order to quantify what is the outstanding amount and interest payable by petitioner to the claimant under the original supply contract CT 1390_Com.A.P.201-2023_Judgment.doc KABC170029862023 dated 20-5-2015. Therefore, any dispute arising out of the MOU would be ultimately traceable to the original supply contract which admittedly contains arbitration clause. Therefore, even accepting the contention of petitioner that, what was referred to arbitration was a dispute arising out of MOU which did not contain arbitration clause, even then, the said dispute would be ultimately traceable to the original contract dated 20-5-2015 which contained arbitration clause and therefore, it cannot be said that, subject matter of the award was not an arbitrable dispute. Therefore, this contention of the petitioner also cannot be accepted.

32. Therefore, the most important question which was before the arbitral tribunal was whether the claimant could claim only the amount of Rs. 1 crore which is the settled amount as per the MOU along with interest or whether the claimant could resile / rescind from the MOU and revert to CT 1390_Com.A.P.201-2023_Judgment.doc KABC170029862023 the original contract and claim the sum of Rs. 2,48,30,815 along with interest from 31-12-2017.

33. According to the petitioner, by entering into the MOU, there was novation of the contract and therefore any claim raised could be only on the basis of the MOU and not by reverting to the original contract. Whereas, the stand of the claimant is that, once there was breach of the terms of the MOU by the petitioner, the claimant could rescind the MOU and revert to the original contract and claim under the original contract.

43. It is crucial to note that, even as per the claim statement at Paragraph 28, even in the notice dated 20-7- 2021, the claimant only claimed Rs.1,07,09,105 i.e. Rs.1 crore under clause 3 of the MOU and other amounts. Therefore, it is important to note that, as per the MOU, the three instalments of Rs.50 lakhs was payable on 30-9-2018, 30-11-2018 and 31-1-2019. Whereas, as late as in the year 2021, the claimant understood that, it can only make claim under the MOU and had claimed the sum due under the MOU and not reverted to the claim under the original contract. This shows that, the parties also understood that, the MOU supersedes the claims under the original contract CT 1390_Com.A.P.201-2023_Judgment.doc KABC170029862023 and therefore, although there was breach of the terms of the MOU in 2019 itself, even in the year 2021, the claimant raised claims in terms of the MOU. It is only subsequently in the notice dated 21-10-2021 that the claimant for first time sought to rescind the MOU and revert to the original claims. This could not have been done when there was novation of the original contract and it was replaced by the terms of the MOU. In conclusion, I am of the view that, the finding of the arbitral tribunal that the claimant could rescind the MOU due to breach of the MOU by the petitioner and the claimant could revert back to the original claims under the original contract suffers from patent illegality and error appearing on the face of the record for the following reasons.

45. Secondly, the arbitral tribunal has failed to take note of two important points. Firstly, the arbitral tribunal has failed to note that MOU does not contain any clause that, in case there is breach of the terms of the MOU, the original claims under the original contract will revive. Instead, the MOU operates as novation of original contract.

46. Thirdly, the arbitral tribunal has failed to note that, admittedly as per the averments of the claim petition itself, even after breach of the MOU by the petitioner, as late as in the year 2021, in the notice dated 20-07-2021, the claimant continued to assert claims under the MOU. This shows that, parties also understood that the original contract has been novated by the MOU and once MOU has been executed, it is only the claim under the MOU that can be raised and not under the original contract.