w w w . L a w y e r S e r v i c e s . i n



A. Ranjith Kumar v/s M/s. Cholamandalam Investment & Finance Company Ltd. & Others


Company & Directors' Information:- P V T INVESTMENT LTD [Not available for efiling] CIN = U67120PB1988PLC008068

Company & Directors' Information:- S T INVESTMENT PRIVATE LIMITED [Amalgamated] CIN = U65993WB1990PTC050032

Company & Directors' Information:- V R V INVESTMENT PRIVATE LIMITED [Active] CIN = U67120WB1985PTC039793

Company & Directors' Information:- S P INVESTMENT PVT LTD [Active] CIN = U70109WB1961PTC025099

Company & Directors' Information:- K. S. R. INVESTMENT LIMITED [Strike Off] CIN = U65992UP1988PLC010253

Company & Directors' Information:- S P INVESTMENT AND FINANCE COMPANY PRIVATE LIMITED [Strike Off] CIN = U65990MH1998PTC116516

Company & Directors' Information:- T M INVESTMENT CO PVT LTD [Active] CIN = U67120WB1971PTC028172

Company & Directors' Information:- B C K H INVESTMENT CO PVT LTD [Active] CIN = U67120MH1982PTC026819

Company & Directors' Information:- M G A INVESTMENT COMPANY PRIVATE LIMITED [Strike Off] CIN = U99999MH1980PTC022406

Company & Directors' Information:- C J P INVESTMENT PVT LTD [Strike Off] CIN = U99999GJ1981PTC004662

    O.P.No. 1125 of 2018 & A.No. 9777 of 2018

    Decided On, 24 March 2021

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MR. JUSTICE M. SUNDAR

    For the Petitioner: P. Jagadeesan, Advocate. For the Respondents: R1, R. Balambigai Gowri, Advocate, R2, No appearance.



Judgment Text

(Prayer: Original Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside the Arbitration award dated 01.08.2017 made in Arbitration Case No.CIFCL/ARB/L-X/1173/2017 against the petitioners herein and pass such further or other orders as this Hon’ble Court may deem fit and proper in the circumstances of the case and thus render justice.)

1. Captioned 'Original Petition' ('OP' for the sake of brevity) is an application under Section 34 of 'The Arbitration and Conciliation Act, 1996 (Act No.26 of 1996)', which shall hereinafter be referred to as 'A and C Act' for the sake of brevity, assailing an 'arbitral award dated 01.08.2017 bearing reference Arbitration Case No. CIFCL/ARB/L-X/l 173/2017' (hereinafter 'impugned award' for the sake of brevity and convenience) made by an 'Arbitral Tribunal' ('AT' for the sake of brevity) constituted by a sole Arbitrator.

2. Owing to the short statutory perimeter of Section 34 of A and C Act and the limited legal landscape within which a legal drill of testing an arbitral award should perambulate, short facts shorn of elaboration will suffice.

3. Short facts are that a Loan Agreement bearing reference 'Loan No.XOHESLM00001665568 under which a loan of Rs.45,00,000/-(Rupees Forty Five Lakhs only) was sanctioned on 30.04.2016' (hereinafter 'said contract' for the sake of brevity) is the fulcrum of the lis between the parties; that this loan was disbursed; that the borrower submits that a sum of little over Rs.36.74 lakhs (Rs.36,74,744/- to be precise) only was disbursed though Rs.45,00,000/- was sanctioned; that this loan had to be repaid in 156 installments of Rs.58,489/- each; that the borrower had mortgaged immovable property in favour of the lender company [this Court is informed that lender company is a 'Non-Banking Financial Company' ('NBFC for the sake of brevity)]; that this mortgage is a equitable mortgage; that there is an arbitration clause in the said contract being Clause 26; that this Clause 26 of said contract serves as the arbitration agreement between the parties being 'arbitration agreement' within the meaning of Section 2(1 )(b) read with Section 7 of A and C Act; that alleging default in repayment, NBFC triggered the arbitration clause and appointed sole Arbitrator who constituted the AT; that AT entered upon reference; that AT issued two notices to the respondents before it, but respondents did not appear; that AT, therefore, made the impugned award on the basis of materials placed before it by the NBFC; that the impugned award, which is an exparte award, has now been challenged by Respondents 1, 2 and 4 before AT; that Respondents 1, 2 and 4 before AT are petitioners 1, 2 and 3 respectively in captioned OP; that NBFC, which was the lone claimant before AT is the first respondent in captioned OP; that Respondent No.3 before AT (this Court is informed that Respondent No.3 before AT is the mother of Respondent No.l before AT) has been arrayed as Respondent No.2 in captioned OP; that captioned OP was heard out.

4. Mr.PJagadeesan, learned counsel on record for three petitioners and Ms. R.Balambigai Gowri, learned counsel on record for contesting first respondent (NBFC), {which was claimant before AT} are before this virtual Court. Respondent No.3 before AT (mother of first petitioner in captioned OP) has been arrayed as second respondent in captioned OP, she has been duly served in captioned OP, but she has not chosen to come before this Court and this Court is informed that second respondent has not chosen to enter appearance through counsel. To be noted, name and full/complete address of the second respondent in captioned OP, as in the short and long cause titles of captioned OP is shown in the cause list, but there is no representation. Therefore, there is no impediment in having the captioned OP heard out on merits by hearing the two contesting learned counsel before this Court.

5. AT has made the impugned award against the respondents before it (three petitioners and second respondent in captioned OP) awarding a sum of Rs.47,44,016.09/- [Rupees Forty Seven Lakh(s) Forty Four Thousand Sixteen And Paise Nine only] with interest at the rate of 18% per annum from 28.03.2017 till the date of realization and more importantly, AT has made the impugned award in favour of the claimant NBFC saying that it can enforce the security by selling the mortgaged immovable property.

6. Though several grounds were articulated in the OP, learned counsel restricted his submissions into two points and they are as follows:

a) AT has virtually adjudicated upon a mortgage suit, which is impermissible as the same is not arbitrable as held by Hon'ble Supreme Court in Booz Allen and Hamilton Inc. Vs.SBIHome Finance Ltd. & Ors. reported in (2011) 5 SCC 532, and

b) Impugned award is an infarct of Section 31(3) of A and C Act as it does not give reasons upon which it is based and is therefore vitiated by patent illegality within the meaning of Section 3 4(2 A) of A and C Act.

7. In response, learned counsel for first respondent in captioned OP NBFC / claimant made submissions, which are as follows:

a) Clause 26 of said contract is the arbitration clause. It provides for arbitration of all the disputes, differences and claims arising out of said contract and therefore, it cannot be gainsaid that a mortgage suit has been decided by AT when the mortgage forms part of said contract;

b) Though details regarding repayment made by petitioners, number of EMIs, quantum have not been set out in the impugned award, Statement of Outstanding was produced before AT, it was marked as Ex.C6 and Ex.C6 before AT contains all these details, though the same have not been articulated in the impugned award.

8. Learned counsel for petitioners by way of reply reiterated his submissions.

9. This Court before embarking upon the exercise of discussion and giving its dispositive reasoning, deems it appropriate to make two extracts and refer to one obtaining position. The two extracts are the operative portion of the impugned award and Clause 26 of the said contract, which serves as the arbitration agreement between the parties.

10. Operative portion of the impugned award reads as follows:

In view of the above, I therefore DO HEREBY DETERMINE AND AWARD that

a] The Respondents will jointly and severally pay to the Claimant, a sum of Rs.47,44,016.09/-[Rupees Forty Seven Lakh(s) Forty Four Thousand Sixteen And Paise Nine Only] and interest @ 18% p.a on the Award amount from 28.03.2017 till the date of realisation, less payments made if any.

b] The Respondents are directed to pay a sum of Rs. 10,000/-towards the Cost and charges.

c] The Claimant can take appropriate legal action/proceedings to enforce/sell the security being the mortgaged property admeasuring 1763 sq.ft., Door No.2/35A, Muniyappan Kovil Street, Andipatty Post, Panangkadu, comprised in S.No.6/2D, Sub Division S. No. 6/2D1, Sivathapuram Village, Suramangalam Sub Registration District, Salem West Registration District and bounced on East by-13 feet Passage, West by-Property of Chinnathabi, North by- Property of Govindaraj, South by-Property of Chinnathambi, in accordance with Law for recovery of the amount as Awarded. In such an eventuality the sale proceeds would be adjusted towards the satisfaction of the amount due and payable by the Respondents under the Award and the balance amount from the sale proceeds, if any, would be returned to the Respondents. It is made clear that in case of any shortfall then the Claimant shall be at liberty to recover the same in accordance with Law.

In the non-compliance thereof, it is open to the parties concerned to enforce this arbitral Award as contemplated under Section 36 of the Arbitration and Conciliation Act, 1996 as against the defaulting parties'.

11. Clause 26 of said Contract reads as follows:

"All disputes, differences and/or claims arising out of this agreement whether during its subsistence or thereafter shall be settled by Arbitration in accordance with the provisions of the Arbitration and Conciliation Act 1996 or any statutory amendments thereof and shall be referred to Sole Arbitration of an Arbitrator nominated by the Company The Award given by such Arbitrator shall be final and binding on all parties to this Agreement. "

" The venue of arbitration proceedings shall be at Chennai at the registered office of the Company which is presently 'BAKEHOUSE' No. 2 Old No 234 NSC Bose Road Parrys Chennai 600 001. The borrower agrees to fast track arbitration to be disposed within 90 days of reference.'"

12. The impugned award is dated 01.08.2017 and the captioned OP has been presented in this Court on 20.12.2017. In the light of Ssangyong principle i.e., principle laid down by Hon'ble Supreme Court in Ssangyong Engineering and Construction Company Limited Vs. National Highways Authority of India reported in (2019) 15 SCC 131, captioned OP will be governed by post 23.10.2015 regime of A and C Act. To put it differently, captioned OP will be governed by A and C Act, as amended by amending Act being Act 3, 2016, which kicked in with retrospective effect on and from 23.10.2015.

13. This Court having set out the necessary extracts and having recorded the relevant observation now proceeds with the exercise of discussion and giving its dispositive reasoning on the points raised one after the other.

14. The first point is on arbitrability. To be noted, in terms of challenge to an award this arbitrability ground turns on Section 34(2)(b)(i) of A and C Act. In Lion Engineering case law [Lion Engineering Consultants Vs. State of Madhya Pradesh reported in (2018) 16 SCC 758], Hon'ble Supreme Court has held that a preliminary issue can be raised for the first time in a Section 34 application also and therefore, the respondents not having appeared before AT and obviously not having raised this point is not of any consequence when it comes to considering this ground. Learned counsel for petitioners in support of his contention that vide the impugned award AT has virtually decided a mortgage suit, which is impermissible as it is not arbitrable, pressed into service Booz Allen and Hamilton Inc. Vs. SBI Home Finance Limited and Others reported in (2011) 5 SCC 532. As mentioned supra, in Booz Allen, learned Counsel drew the attention of this Court to Paragraphs 46 to 47 and Paragraph 53. As this Court finds that Paragraph 48 of Booz Allen is also relevant, this Court deems it appropriate to extract and reproduce Paragraphs 46, 48, 48.1 to 48.5 and Paragraph 53, which read as follows:

'46. An agreement to sell or an agreement to mortgage does not involve any transfer of right in rem but creates only a personal obligation. Therefore, if specific performance is sought either in regard to an agreement to sell or an agreement to mortgage, the claim for specific performance will be arbitrable. On the other hand, a mortgage is a transfer of a right in rem. A mortgage suit for sale of the mortgaged property is an action in rem, for enforcement of a right in rem. A suit on mortgage is not a mere suit for money. A suit for enforcement of a mortgage being the enforcement of a right in rem, will have to be decided by the courts of law and not by Arbitral Tribunals.

47. The scheme relating to adjudication of mortgage suits contained in Order 34 of the Code of Civil Procedure, replaces some of the repealed provisions of the Transfer of Property Act, 1882 relating to suits on mortgages (Sections 85 to 90, 97 and 99) and also provides for implementation of some of the other provisions of that Act (Sections 92 to 94 and 96). Order 34 of the Code does not relate to execution of decrees, but provides for preliminary and final decrees to satisfy the substantive rights of mortgagees with reference to their mortgage security.

48. The provisions of the Transfer of Property Act read with Order 34 of the Code, relating to the procedure prescribed for adjudication of the mortgage suits, the rights of mortgagees and mortgagors, the parties to a mortgage suit, and the powers of a court adjudicating a mortgage suit, make it clear that such suits are intended to be decided by public fora (courts) and therefore, impliedly barred from being referred to or decided by private fora (Arbitral Tribunals). We may briefly refer to some of the provisions which lead us to such a conclusion.

48.1. Rule 1 of Order 34 provides that subject to the provisions of the Code, all persons having an interest either in the mortgage security or in the right of redemption shall have to be joined as parties to any suit relating to mortgage, whether they are parties to the mortgage or not. The object of this Rule is to avoid multiplicity of suits and enable all interested persons, to raise their defences or claims, so that they could also be taken note of, while dealing with the claim in the mortgage suit and passing a preliminary decree. A person who has an interest in the mortgage security or right or redemption can therefore make an application for being impleaded in a mortgage suit, and is entitled to be made a party. But if a mortgage suit is referred to arbitration, a person who is not a party to the arbitration agreement, but having an interest in the mortgaged property or right of redemption, cannot get himself impleaded as a party to the arbitration proceedings, nor get his claim dealt with in the arbitration proceedings relating to a dispute between the parties to the arbitration, thereby defeating the scheme relating to mortgages in the Transfer of Property Act and the Code. It will also lead to multiplicity of proceedings with the likelihood of divergent results.

48.2. In passing a preliminary decree and final decree, the court adjudicates, adjusts and safeguards the interests not only of the mortgagor and mortgagee but also puisne/mesne mortgagees, persons entitled to equity of redemption, persons having an interest in the mortgaged property, auction-purchasers, persons in possession. An Arbitral Tribunal will not be able to do so.

48.3. The court can direct that an account be taken of what is due to the mortgagee and declare the amounts due and direct that if the mortgagor pays into court, the amount so found due, on or before such date as the court may fix (within six months from the date on which the court confirms the account taken or from the date on which the court declares the amount due), the petitioner shall deliver the documents and if necessary re-transfer the property to the defendant; and further direct that if the mortgagor defaults in payment of such dues, then the mortgagee will be entitled to final decree for sale of the property or part thereof and pay into court the sale proceeds, and to adjudge the subsequent costs, charges, expenses and interest and direct that the balance be paid to the defendant/mortgagor or other persons entitled to receive the same. An Arbitral Tribunal will not be able to do so.

48.4. Where in a suit for sale (or in a suit for foreclosure in which sale is ordered), subsequent mortgagees or persons deriving title from, or subrogated to the rights of any such mortgagees are joined as parties, the court while making the preliminary decree for sale under Rule 4(1), could provide for adjudication of the respective rights and liabilities of the parties to the suit in a manner and form set forth in Forms 9, 10 and 11 of Appendix 'D' to the Code with such variations as the circumstances of the case may require. In a suit for foreclosure in the case of an anomalous mortgage, if the plaintiff succeeds, the court may, at the instance of any party to the suit or any other party interested in the mortgage security or the right of redemption, pass a like decree in lieu of a decree for foreclosure, on such terms as it thinks fit. But an Arbitral Tribunal will not be able to do so.

48.5. The court has the power under Rule 4(2), on good cause being shown and upon terms to be fixed by it, from time to time, at any time before a final decree is passed, extend the time fixed for payment of the amount found or declared due or the amount adjudged due in respect of subsequent costs, charges, expenses and interest, upon such terms as it deems fit. The Arbitral Tribunal will have no such power.

53. Having regard to our finding on Question (iv) it has to be held that the suit being one for enforcement of a mortgage by sale, it should be tried by the court and not by an Arbitral Tribunal. Therefore we uphold the dismissal of the application under Section 8 of the Act, though for different reasons'

15. This Court has already extracted and reproduced operative portion of the impugned award elsewhere supra in this order. AT has framed an issue as to whether the Claimant NBFC is entitled to the claim as prayed for and while answering this issue (Issue No.4 in the impugned award) AT has held as follows:

'It is though only a dispute for recovery of money, since there is an equitable mortgage effected with the intention to create security for the due repayment of the outstanding the Claimant shall take appropriate legal action/proceedings to enforce/ sell the security.'

16. The above extract of the operative portion of the impugned award makes it clear that AT has decided on enforcement of a mortgage by sale of mortgaged property. As rightly pointed out by learned counsel for petitioners, in the light of Booz Allen principle, this is impermissible and therefore it vitiates the impugned award. Learned counsel for petitioners submits that this point regarding Booz Allen principle could have been articulated with greater clarity and specificity in the grounds, but it is covered by the swap of ground (d) in the OP which talks about failure follow procedure established in law.

17. This Court accepts the submission. In this regard, this Court is unable to accept the argument of learned counsel for NBFC that Clause 26 of said contract is very wide and it includes mortgage, as mortgage forms part of transaction qua said contract. The reason is, this tantamounts to begging the question. The question is whether enforcement of a mortgage can be decided i.e., whether a mortgage suit can be decided by an Arbitral Tribunal. The answer that mortgage forms part of the transaction between the parties is begging the question and is therefore unacceptable. That AT has decided NBFC's claim as a claim on the foot of a mortgage is indisputable in the light of the extracts supra.

18. Therefore, this Court finds for the petitioners and holds that impugned award is vitiated for infarct of Booz Allen principle as it has decided on enforcement of a mortgage.

19. This takes us to the next point i.e., impugned award not giving reasons upon which it is based. Learned counsel for petitioners submitted that this ground is covered in Ground (h). This ground (h) is not happily worded but it talks about the impugned award not taking into account the EMIs being paid till November 2017 and not taking note of the entire accounts. As already alluded to supra, the entire loan amount had to be repaid in 156 installments of Rs.58,489/- each. It is necessary that AT should have mentioned the number of installments paid, the number of installments which remain unpaid and if there are delayed payments qua installments or if there has been any part payment of some installments that also should have been set out in the impugned award. A perusal of the impugned award brings to light that it is bereft of these particulars. This again turns on answer to Issue No.4 and Issue No.4 and answer to the same as in the impugned award read as follows:

'Issue No 4

Whether the Claimant is entitled to the Claim prayed for?

The loan agreement dated 30-APR-16 is marked as Exhibit C 3. It is entered into between the Claimant and the Respondents. It is seen that based on the loan agreement the Respondents were sanctioned a loan of Rs.45,00,000/- [Rupees Forty Five Iakh(s) Only] repayable in 156 installments of Rs.58489/- each, in loan No.X0HESIM00001665568 dated 30-APR-16 and the same was disbursed. Thereafter the Respondents created equitable mortgage by deposit of title deeds of the mortgaged property, described in the Claim Schedule with the intention to create security for the due repayment of the loan. It is seen that the Respondents defaulted in making payment of monthly installments. Despite repeated reminders, the Respondents failed to repay the outstanding. Under these circumstances, on 05.01.2017 the Claimant sent a demand legal notice to the Respondents to repay the dues. Even after all the attempts, the Respondents did not pay the outstanding. It is seen from statement of dues marked as Exhibit C6 that as on 25-Mar-2017 the Respondents are jointly and severally liable to pay a sum ofRs.47,44,016.09/- [Rupees Forty Seven Lakh(s) Forty Four Thousand Sixteen and Paise Nine Only]. Exhibits C3 and C6 prove the claim. As the Respondents have neither appeared nor rebutted the claim, from the materials available, the proof affidavit and the documents marked the Claim is liable to be awarded.

In the result the Respondents are jointly and severally liable to pay a sum of Rs.47,44,016.09/- to the Claimant. It is though only a dispute for recovery of money, since there is an equitable mortgage effected with the intention to create security for the due repayment of the outstanding the Claimant shall take appropriate legal action/proceedings to enforce/ sell the security.

This issue is answered accordingly.'

20. To be noted, one paragraph of the impugned award with regard to Issue No.4 has already been extracted and reproduced elsewhere supra in this order. With regard to violation of Booz Allen principle, the counter submission of learned counsel for NBFC is that a document described as 'Statement of Outstanding', has been marked as Ex.C6 and this Ex.C6 contains all these details. This Court is of the considered view that this is hardly convincing in the light of Dyna Technologies principle being principle laid down by Hon'ble Supreme Court in Dyna Technologies Pvt. Ltd. Vs. Crompton Greaves Ltd., [2019 SCC OnLine SC 1656]. Dyna Technologies principle deals with scope of Section 31(3) requirement of A and Act. Hon'ble Supreme Court has held that with regard to requirement of reasoned award three characteristics qua reasoned award can be fathomed. Hon'ble Supreme Court has held that the three characteristics are a) proper, b) intelligible and c) adequate.

21. This aspect of the matter is articulated in paragraph 34 and a portion of paragraph 35 of Dyna Technologies, which read as follows:

'34.The mandate under Section 31(3) of the Arbitration Act is to have reasoning which is intelligible and adequate and, which can in appropriate cases be even implied by the courts from a fair reading of the award and documents referred to thereunder, if the need be. The aforesaid provision does not require an elaborate judgment to be passed by the arbitrators having regard to the speedy resolution of dispute.

35. When we consider the requirement of a reasoned order, three characteristics of a reasoned order can be fathomed. They are : proper, intelligible and adequate. If the reasonings in the order are improper, they reveal a flaw in the decision-making process. If the challenge to an award is based on impropriety or perversity in the reasoning, then it can be challenged strictly on the grounds provided under Section 34 of the Arbitration Act. If the challenge to an award is based on the ground that the same is unintelligible, the same would be equivalent of providing no reasons at all. Coming to the last aspect concerning the challenge on adequacy of reasons, the Court while exercising jurisdiction under Section 34 has to adjudicate the validity of such an award based on the degree of particularity of reasoning required having regard to the nature of issues falling for consideration. The degree of particularity cannot be stated in a precise manner as the same would depend on the complexity of the issue. Even if the Court comes to a conclusion that there were gaps in the reasoning for the conclusions reached by the Tribunal, the Court needs to have regard to the documents submitted by the parties and the contentions raised before the Tribunal so that awards with inadequate reasons are not set aside in casual and cavalier manner..............'

22. In the instant case, as rightly pointed out by learned counsel for petitioners, impugned award is clearly vitiated by the adequacy facet qua requirement under Section 31(3) of A and C Act. The issue is, there is a loan secured by a mortgage of an immovable property. This loan has to be repaid in 156 installments of Rs.58,489/- each. There has been default and therefore, the lender NBFC has triggered the arbitration clause and made a claim. This being the crux and gravamen of the issue, the particularities of the case demand that the details as to how many out of these 156 installments were paid, how many remain unpaid and details regarding delayed payments of installments or part payments, if any are set out in the impugned award as that would be (if that be so) reasons upon which impugned award can be based as the NBFC claimant's claim has been answered in the affirmative vide impugned award. To be noted default in repayment i.e., payment of EMIs is the basis of claim. This purportedly being contained in an exhibit before AT does not satisfy the requirement under Section 31(3) qua adequacy facet of Dyna Technologies principle. It attracts unintelligible facet also as there is no whisper about EMIs paid/defaulted in impugned award. Therefore, this Court has no hesitation in holding that there is an infarct of Section 31(3) of A and C Act. This infarct of Section 31(3) of A and C Act has two pronged impact on the impugned award. One is, oft-quoted Associate Builders principle, being principle laid by Hon'ble Supreme Court in Associate Builders Vs. Delhi Development Authority reported in (2015) 3 SCC 49 where Hon'ble Supreme Court held that infarct of substantive law of India including the provision of A and C Act sounds the death knell of an arbitral award. The second is, Ssangyong case law where Hon'ble Supreme Court held that violation of Section 31(3) tantamounts to patent illegality which is one of the grounds adumbrated under Section34 i.e., Section 34(2A). Relevant paragraph in Associate Builders case is Paragraph 42.1 and relevant paragraph in Ssangyong case is Paragraph 39. These two paragraphs read as follows:

Paragraph 42.1 of Associate Builders Case

'42.1. (a) A contravention of the substan

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tive law of India would result in the death knell of an arbitral award. This must be understood in the sense that such illegality must go to the root of the matter and cannot be of a trivial nature. This again is really a contravention of Section 28(l)(a) of the Act, which reads as under: "28.Rules applicable to substance of dispute.(1) Where the place of arbitration is situated in India (a) in an arbitration other than an international commercial arbitration, the Arbitral Tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India' Paragraph 39 of Ssangyong case: 39. To elucidate, para 42.1 o] Associate Builders [Associate Builders v. DBA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Para 42.2 of Associate Builders [Associate Builders v. DDA, (2015) 3 SCC 49 : (2015) 2 SCC (Civ) 204] , 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.' 23. Lack of adequate reasons in the impugned award i.e., reasons upon which it is based, as a ground to dislodge impugned award gets multiplied manifold as the impugned award is an ex parte award. The contents of Ex.C6, which is interestingly described as 'Statements of Outstanding' should have at least broadly and to the extent necessary for deciding the claim with reasons for accepting the same should have been set out in the impugned award. In this regard, it is made clear that this Court is not venturing into appreciation of Ex.C6 as that would tantamount to re-appreciation of evidence. This Court merely finds that there is no whisper about EMIs paid / not paid, default and as to how the claim has been arrived at in the impugned award and the summation that it is contained in Ex.C6 is no answer / no argument, which has been simply accepted as gospel truth without any discussion or details regarding EMIs. 24. As both the grounds of challenge qua the impugned award made by the petitioners are sustained by this Court, captioned OP is allowed and impugned award is set aside. 25. To be noted, the prayer in the OP talks about impugned award being made by third respondent, but there is no third respondent in captioned OP. Apparently, petitioners intended to array the sole Arbitrator as third respondent (in captioned OP) and subsequently have deleted the learned Arbitrator from the array of parties. This is seen from the original OP and clean copy. This aspect is made clear for the benefit of the Registry while drafting exercise is undertaken. Captioned OP is allowed and impugned award dated 01.08.2017 made in Arbitration Case No. CIFCL/ARB/L-X/l 173/2017 is set aside. There shall be no order as to costs.
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