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M/s. B.N. Rathi Securities Limited, a registered company incorporated under the Indian Companies Act, having its Registered Officer at Somajiguda, Hyderabad, Rep. by its Officer in Charge M.V. Rao v/s Dasari Nagabhushnam & Others

    O.P. No. 656 of 2011

    Decided On, 19 July 2018

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MR. JUSTICE ABDUL QUDDHOSE

    For the Petitioner: Yashood Varadhan, Senior Counsel for Elangovan, Advocate. For the Respondents: R1, No Appearance.



Judgment Text

(Prayer: Original Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 praying to set aside the Arbitration Award dated 04.06.2011 made in Appeal (A.M) No. CM/C-0055/2010 on the file of the 2nd respondent confirming the Award dated 03.01.2011 made in Arbitration Matter (A.M) No.CM/C-0055/2010 by sole Arbitrator Ms.P.S.Prema to the extent of holding that the respondent No.1 is entitled to the award of Rs.17,96,712/- from the petitioner and consequently allow the above petition with costs of the petition.)

1. The instant petition has been filed by the petitioner under Section 34 of the Arbitration and Conciliation Act, 1996 challenging the Arbitral Award dated 04.06.2011 made in appeal (A.M) No.CM/C-0055/2010 on the file of the second respondent confirming the Award dated 03.01.2011 made in Arbitration Matter (A.M) No.CM/C-0055/2010.

2. The brief facts leading to the filing of the instant petition are as follows: The petitioner is a trading member of the National Stock Exchange dealing with Capital Market / Cash segment and Futures and Options segment. The first respondent was a registered sub broker of the petitioner. The petitioner and the first respondent entered into an agreement on 01.04.2006, under which, the first respondent was provided with a terminal by the petitioner and he was permitted to trade on the said terminal on behalf of his clients and the brokerage has to be shared between the petitioner company and first respondent in terms of the said agreement. As per SEBI, every trading member shall enter into a Tripartite Agreement between trading member, Sub-Broker and Client. According to the petitioner, the client under the said Tripartite Agreement is free to change his Sub-Broker by entering into another Tripartite Agreement with another Sub-Broker of trading member. Accordingly, the petitioner company entered into Tripartite Agreements with the first respondent and his clients. According to the petitioner, as per the Tripartite agreement, the first respondent has been receiving the brokerage amounts from the petitioner company for the transactions traded for his clients.

3. The petitioner states that five of the clients of the first respondent decided to shift their accounts from the first respondent to another Sub-Broker and accordingly issued letters to that effect on 03.03.2009 to the petitioner company. It is further submitted that the petitioner company informed the same to the first respondent vide its letter dated 09.03.2009. The first respondent after the receipt of the said letter, issued a reply dated 18.03.2009 giving his no objection for shifting the accounts of his five clients from him to another Sub-Broker of the petitioner company. Subsequently, the said five clients have shifted their accounts to another Sub-Broker of the petitioner company i.e., Pawan Securities, Godavarikhani, Karimnagar District, Andhra Pradesh. The petitioner further states that the Tripartite agreement dated 01.04.2009 was executed by each of the said five clients with the petitioner company and the said Pavan Securities. According to the petitioner, since the said five clients ceased to be the clients of the first respondent with effect from 01.04.2009 and become the clients of the said Pawan Securities, the first respondent is not entitled to the sub-brokerage for the transaction traded by the said five clients and the said Pawan Securities is entitled for the said sub brokerage.

4. According to the petitioner, the said five clients are the existing cl

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ients and therefore, there was no need to allot new client IDs and the petitioner company continued with the existing client Ids. It is submitted that the petitioner has changed the software of their computer system. However, inadvertently the directory of the said five clients in the computer system of the petitioner company was not changed in the changed software and the names of the said five clients continued to appear under the first respondent group in the changed software in the computer system of the petitioner company. It is further submitted that due to non-shifting of the accounts of the said five clients in the computer system from the first respondent group to the group of new sub broker i.e., Pavan Securities, the computer system of the petitioner company continued to show the said five clients as the clients of the first respondent and accordingly, appropriate sub brokerage was wrongly credited to the account of the first respondent for a period from April 2009 to September 2009. After coming to knowledge of the said error in the computer system, the petitioner company shifted the accounts of the said five clients from the first respondent's group to the sub broker s group i.e., Pawan Securities with effect from 01.04.2009 and generated new account statement of the first respondent for the above period, where sub brokerage was wrongly credited to the account of the first respondent. It is submitted that sub brokerage for the rests of the period was not credited to the first respondent but the same was passed on to Pavan Securities, under whom, the said five clients were transferred with effect from 01.04.2009.

5. According to the petitioner, taking advantage of the statement of account obtained by the first respondent from the petitioner company, in which, the sub brokerage amount of the said five clients were wrongly accounted to the credit of the first respondent, the first respondent was making claim for the sub brokerage amount of the said five clients with effect from 01.04.2009. It is submitted that the petitioner company, after realising the mistake of crediting the sub brokerage amount of the said five clients to the account of the first respondent instead of crediting the same to the account of Pavan Securities, issued a corrected statement of account to the first respondent by rectifying the said mistakes in the account. It is further submitted that the petitioner company has also clarified to the first respondent regarding the said mistakes. According to the petitioner, one of the e-mails issued by the first respondent to the petitioner company, by which, the first respondent has confiirmed and admitted that he has no issues with the petitioner company regarding the sub brokerage account.

6. According to the petitioner, in spite of the admission of the first respondent that he had no issue with the petitioner company regarding the sub brokerage account, the first respondent made a claim for the sub brokerage amount of Rs.17,96,712/- pertaining to the above said five clients with effect from 01.04.2009 and has lodged a complaint before the National Stock Exchange which was referred to Arbitration. Mrs.P.S.Prema, the Sole Arbitrator was appointed by the National Stock Exchange under the Bye-Laws, Rules and Regulations of the National Stock Exchange of India Limited in A.M.No.CM/C-0055/2010 for deciding the dispute. The learned Arbitrator acted upon the reference and after issuing notice to the parties to the dispute and after hearing the submissions of both the parties, passed an Award dated 03.01.2011, directing the petitioner company to pay the first respondent a sum of Rs.17,96,712/- within 30 days of the Award and in case, the said amount is not paid within time, the petitioner company was directed to pay interest at 12% per annum from the 31st day till the date of payment.

7. Aggrieved by the said Award dated 03.01.2011 passed by the learned Arbitrator, the petitioner company has filed an appeal before the second respondent who is the Appellate authority. According to the petitioner, the award was challenged on various grounds. The Arbitration Award dated 04.06.2011 confirmed the Award dated 03.01.2011 passed by the sole Arbitrator thereby dismissed the appeal.

8. Aggrieved by the Arbitral Award dated 04.06.2011 passed by the Arbitral Appellate Tribunal confirming the Award dated 03.01.2011 passed by the sole arbitrator Mrs. P.S.Prema, the instant petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996.

9. Heard Mr.Yashood Varadhan, learned Senior counsel appearing for Mr.G.Ilangoven, learned counsel for the petitioner. Even though, Mr. V.Purusothaman, learned counsel entered appearance on behalf of the first respondent, there is no representation on the side of the first respondent, when the matter was taken up for final disposal.

10. The learned Senior Counsel for the petitioner drew the attention of this Court to the letter of the petitioner dated 09.03.2009 informing the first respondent that the petitioner has received letters from the clients of the first respondent informing the petitioner that they would like to transfer their accounts from the first respondent to another sub broker.

11. The learned Senior Counsel for the petitioner then drew the attention of this Court to the letter dated 18.03.2009 sent by the first respondent to the petitioner giving his no objection for transferring of the accounts pertaining to his five clients from his account to the account of another sub broker of the petitioner.

12. The learned Senior Counsel submitted that despite giving his no objection for transferring all the accounts pertaining to his five clients, the first respondent has lodged a false claim with a claim statement dated 01.09.2010 against the petitioner for the recovery of Rs.17,96,172/- towards brokerage for the transactions done on behalf of the said five clients. According to the learned Senior Counsel, the first respondent has made a false claim, as if the petitioner got the accounts of the clients of the first respondent transferred to the account of another sub broker without his knowledge. According to the learned Senior Counsel, though the first respondent has given no objection for transfer of the accounts vide letter dated 18.03.2009, the first respondent has made a false claim before the Arbitrator on 01.09.2010.

13. The learned Senior Counsel for the petitioner then drew the attention of this Court to the five separate tripartite agreements dated 01.04.2009 entered into between the petitioner, new sub broker Pawan Securities and by each of the five Ex-clients of the first respondent. According to the learned Senior Counsel, only after getting no objection for transferring of accounts from the first respondent, the tripartite agreements were entered into with the five ex-clients of the first respondent.

14. The learned Senior Counsel then drew the attention of this Court to the Insolvency Petition I.P.No.49 of 2008 filed by the first respondent under Section 6 of the Provincial Insolvency Act, before the Senior Civil Judge's Court, Ranga Reddy District, at L.B.Nagar, Andhra Pradhesh to declare himself as an Insolvent. According to the learned Senior Counsel, in the Insolvency Petition the first respondent has not shown the alleged receivable payment from the petitioner which will clearly establish that no money is due and payable by the petitioner to the first respondent.

15. Further, according to the learned Senior Counsel, having committed an act of insolvency, the first respondent is not entitled to any sub brokerage in accordance with the tripartite agreement entered into between the petitioner, the first respondent and his respective clients. For this proposition, the learned Senior Counsel referred to Section 6 of the Provincial Insolvency Act which reads as follows:

6. Acts of insolvency:- (1) A debtor commits an act of insolvency in each of the following cases, namely:

(a) If, in India or elsewhere, he makes a transfer of all or substantially all his property to a third person for the benefit of his creditors generally;

(b) It, in India or elsewhere, he makes a transfer of his property or of any part thereof, with intent to defeat or delay his creditors;

(c) If, in India or elsewhere, he makes a transfer of his property, or of any part thereof, which would, under this or any other enactment for the time being in force, be void as a fraudulent preference if he were adjudged an insolvent;

(d) If, with intent to defeat or delay his creditors,__

(i) he departs or remains out of the territories to which this Act extends;

(ii) he departs from his dwelling-house or usual place of business or otherwise absents himself;

(iii) he secludes himself so as to deprive his creditors of the means of communicating with him ;

(e) If any of his property has been sold in execution of the decree of any Court for the payment of money ;

(f) If he petitions to be adjudged an insolvent under the provisions of this Act ;

(g) If he gives notice to any of his creditors that he has suspended or that he is about to suspend, payment of his debts ; or

(h) If he is imprisoned in execution of the decree of any Court for the payment of money.

(2) Without prejudice to the provisions of sub-section (1), a debtor commits an act of insolvency if a creditor, who has obtained a decree or order against him for the payment of money (being a decree or order which has become final and the execution whereof has not been stayed), has served on him a notice (hereinafter in this section referred to as the insolvency notice) as provided in sub-section (3) and the debtor does not comply with that notice within the period specified therein :

Provided that where a debtor makes an application under sub-section (5) for setting aside an insolvency notice, __

(a) in a case where such application is allowed by the District Court, he shall not be deemed to have committed an act of insolvency under this sub-section; and

(b) in a case where such application is rejected by the District Court, he shall not be deemed to have committed an act of insolvency under this sub-section on the date of rejection of the application or the expiry of the period specified in the insolvency notice for its compliance, whichever is later :

Provided further that no insolvency notice shall be served on a debtor residing, whether permanently or temporarily, outside India, unless the creditor obtains the leave of the District Court therefor.

(3) An insolvency notice under sub-section (2) shall, ___

(a) be in the prescribed form ;

(b) be served in the prescribed manner ;

(c) specify the amount due under the decree or order and require the debtor to pay the same or to furnish security for the payment of such amount to the satisfaction of the creditor or his agent;

(d) specify for its compliance a period of not less than one month after its service on the debtor or, if it is to be served on a debtor residing, whether permanently or temporarily, outside India, such period (being not less than one month) as may be specified by the order of the District Court granting leave for the service of such notice;

(e) State the consequences of non-compliance with the notice.

(4) No insolvency notice shall be deemed to be invalid by reason only that the sum specified therein as the amount due under the decree or order exceeds the amount actually due, unless the debtor, within the period specified in the insolvency notice for its compliance, gives notice to the creditor that the sum specified in the insolvency notice does not correctly represent the amount due under the decree or order:

Provided that if the debtor does not give any such notice as aforesaid, he shall be deemed to have complied with the insolvency notice if, within the period specified therein for its compliance, he takes such step as would have constituted a compliance with the insolvency notice had the actual amount due been correctly specified therein.

(5) Any person served with an insolvency notice may, within the period specified therein for its compliance, apply to the District Court to set aside the insolvency notice on any of the following grounds, namely. ___

(a) that he has a counter-claim or set-off against the creditor which is equal to or is in excess of the amount due under the decree or order and which he could not, under any law for the time being in force, prefer in the suit or proceeding in which the decree or order was passed ;

(b) that he is entitled to have the decree or order set aside under any law providing for the relief of indebtedness and that, ___

(i) he has made an application before the competent authority under such law for the setting aside of the decree or order; ot

(ii) the time allowed for the making of such application has not expired ;

(c) that the decree or order is not executable under the provisions of any law referred to in Clause (b) on the date of the application.

16. The learned Senior Counsel then drew the attention of this Court to the findings of the learned Arbitrator Mrs.P.S.Prema, with regard to the Insolvency Petition filed by the first respondent in the month of November 2008 to declare himself as an insolvent. According to the learned Senior Counsel, the findings of the learned Arbitrator, with regard to the insolvency as found in paragraph 6.2 of the Award is perverse and not in accordance with law. Since according to him on filing of Insolvency Petition by a debtor, all contracts gets automatically terminated and there is no necessity to issue any notice prior to termination.

17. The learned Senior Counsel submitted that the accounts of the five clients were transferred to the accounts of the new sub broker, but in the computer system, they were shown as if they are still the clients of the first respondent, which is a mistake. According to the learned Senior Counsel, exploiting the said mistake in the Computer system, the first respondent has lodged a false complaint against the petitioner.

18. The learned Senior Counsel also drew the attention of this Court to Clause 19(ii) of the agreement which is extracted by the Arbitration Appellate Tribunal in paragraph 9.5 of its Award which reads as follows:

9.5 Further, the Learned Counsel for the appellant contended that by virtue of filing insolvency Petition by the respondent, the agreement stands terminated pusuant to clause 19(ii) of the agreement.

19. The agreement shall forthwith terminate;

(ii) upon the demise/insolvency of the sub-broker or the cancellation of his/its regulation with the Board or/withdrawal of recognition of the sub-broker by the Stock Exchange....

The Learned Counsel also contended that the word upon insolvency in clause 19(ii) would refer only the act of insolvency as defined in Section 6 (1) of the Provincial Insolvency Act. Though the respondent can not be termed as an insolvent before adjudication, he has committed an act of insolvency by filing a debtor petition as contemplated under Section 6 (1) of the said Act. So, the agreement stands terminated automatically on the date of filing of the Insolvency Petition by the respondent and as such he is not entitled for any brokerage beyond that date. It may be worth to refer Section 6 of the Insolvency Act.

Section 6. Act of Insolvency (1) A debtor commits an act of insolvency in each of the following cases, namely

(a to e, are omitted as unnecessary)

(f) if he petitions to be adjudged an insolvent under the provisions of the Act .

It is an admitted fact that the Respondent filed Insolvency Petition of the year 2008. Even assuming for argument sake the learned counsel's submission is correct, then the termination will date back to the date of filing of the Insolvency Petition. The appellant came to know of the fact of the filing of the petition by the Respondent only on 2010. During the interregnum i.e. from the date of filing of the Insolvency Petition by the respondent to the date of knowledge of the appellant, admittedly there were transactions and the appellant also paid the sanctioned brokerage to the respondent. If that be so, what would be the effect of such payments made by the appellant. So, if at all one can deny the benefit of the agreement on termination, it can be only after coming to know of the fact since the appellant had the benefit in respect of those transactions done by the respondent between the date of the filing of the Insolvency Petition by the respondent and the date of knowledge of the appellant about such filing.

19. The learned Senior Counsel would contend that the word upon insovency in clause 19(ii) would refer only the act of insolvency as defined under Section 6 of the Provincial Insolvency Act. According to him, the first respondent has committed an act of insolvency by filing a debtor petition as contemplated under Section 6 (i)(b) of the Provincial Insolvency Act. Therefore, the agreement stands terminated automatically on the date of filing of the Insolvency Petition by the first respondent and as such, he is not entitled for any brokerage beyond that date.

20. Under Section 6 of the Provincial Insolvency Act, a debtor commits an act of insolvency, if he petitions to be adjudged an insolvent under the provisions of the Act. According to the learned Senior Counsel, the Arbitration Appellate Tribunal has given a perverse finding by rejecting the contention of the petitioner on the ground that the first respondent filed Insolvency Petition in the year 2008, but allegedly, it was known to the petitioner only in the year 2010 and during the interregnum period the petitioner was having transactions with the first respondent and has also paid the sanctioned brokerage to the first respondent and therefore, the defence taken by the petitioner on the ground of insolvency cannot be sustained.

21. The learned Senior Counsel concluded his argument by submitting that the Award passed by the sole Arbitrator as well as the Arbitration Appellate Tribunal is patently illegal and the findings are totally perverse and therefore, the Award dated 04.06.2011 will have to be set aside by this Court.

22. This Court has examined and analysed the Arbitral Award dated 03.01.2011 as well as the Award dated 04.06.2011 passed by the Arbitration Appellate Tribunal confirming the Award of the sole Arbitrator. The grounds raised in the instant petition for challenge were the same defences raised by the petitioner before the sole arbitrator as well as before the Arbitration Appellate Tribunal. The Arbitrator as well as the Arbitration Appellate Tribunal has considered each and every defence raised by the petitioner, disputing the claim made by the first respondent.

23. The sole arbitrator has referred to clause 17 of the Tripartite agreement dated 27.07.2007 with one of the clients of the first respondent and the four separate Tripartite agreements all dated 03.03.2008 with the other four clients of the first respondent and observed that under clause 17 of the agreement one months notice has to be given for termination of the contract. The arbitrator has given a finding that neither the petitioner nor the clients have given any such notice to the first respondent before terminating the contract.

24. The leared Arbitrator has also observed that the letter dated 09.03.2009 allegedly sent by the petitioner intimating the first respondent about transfer of clients to another sub broker is not supported by proof of despatch (POD). Further the first respondent has also produced another letter on the same date from the petitioner and therefore according to the sole arbitrator, it is not clear, as to which letter, the proof of despatch relates. Further the arbitrator has observed that the copy of proof of despatch submitted by the petitioner submitted on 15.10.2010 and the one submitted along with the letter dated 08.02.2010 are different. The signature of the consignee is not appearing in the former but appearing in the latter. According to the arbitrator, it is not clear, as to how, the same POD has two different versions .

25. The sole arbitrator has also observed that the petitioner has not given satisfactory explanation for the clients remaining under the first respondent code and account till Febrauary 2010, even though according to the petitioner, the clients accounts were transferred to the new sub broker in March 2009 itself. The arbitrator has observed that the computer records arise from contractual agreement and are part and parcel of the agreement and therefore, the contention of the petitioner that it is an error should not be relied upon.

26. As seen from the findings of the sole arbitrator, it is based on the documents available with the arbitrator and it is a plausible finding.

27. Insofar as automatic termination of the contract on the filing of the Insolvency Petition by the first respondent in November 2008, the Arbitrator has observed that the agreement dated 01.04.2006 between the petitioner and the first respondent, the agreement can be terminated without notice, if the sub broker becomes insolvent. The arbitrator has observed that there is no indication that the petitioner has terminated the agreement, since the first respondent remained as sub broker of the petitioner during the disputed period between March 2009 and March 2010.

28. Further the arbitrator has observed that the reasons cited for disconnecting the ODIN on 03.07.2010 by the petitioner is on account of dispute raised by the first respondent regarding non payment of brokerage and on account of complaint given by him against the petitioner to various authorities. The Arbitrator has also observed that the first respondent had some more clients other than the five clients under dispute and there is no disagreement regarding these clients.

29. Based on these above findings, the arbitrator has passed an award for a sum of Rs.17,96,172/- in favour of the first respondent which shall be paid by the petitioner within 30 days, failing which, the petitioner shall pay interest at 12% per annum from the 31st day till the date of payment. This Court is convinced and satisfied with the reasons given by the sole arbitrator for rejecting the contention of the petitioner that they are not liable to pay claim amount to the first respondent on account of Insolvency Petition filed by the first respondent to declare himself as an insolvent in November 2008.

30. Insofar as the findings of the Arbitration Appellate Tribunal are concerned, the Arbitration Appellate Tribunal in its Award dated 04.06.2011 has accepted the findings of the sole arbitrator. Apart from accepting the finding of the sole Arbitrator, the Arbitration Appellate Tribunal has also considered clause 19(ii) of the agreement which was relied upon by the learned counsel for the petitioner before the Arbitration Appellete Tribunal. Before the Arbitration Appellate Tribunal, the learned counsel for the petitioner contended that the word upon demise in clause 19(ii) would refer only to the act of insolvency as defined under Section 6(i) of the Provincial Insolvency Act. The Arbitration Appellate Tribunal has observed that the petitioner came to know of the fact of filing of Insolvency Petition by the first respondent only in 2010, but the alleged Insolvency petition was filed by the first respondent only in the year 2008. But admittedly, during the interregnum period i.e., from the date of filing of the Insolvency Petition till the date of knowledge of the same, there were transactions between the petitioner and the first respondent and the sanctioned brokerage during that period was also paid by the petitioner to the first respondent.

31. Therefore, the Arbitration Appellate Tribunal held that if at all one can deny the benefit of agreement on termination, it can only be after coming to know of the fact, since the petitioner had benefitted in respect of those transactions done by the first respondent between the date of filing of the Insolvency Petition by the first respondent and the date of knowledge of the petitioner about such filing.

32. Refering to sub clause (ii) of the clause 19 of the Agreement, the Arbitration Appellate Tribunal has observed that clause starts as upon the demise/insolvency of the sub-broker and therefore, has given a finding that the insolvency can mean only insolvent i.e., upon the insolvency being only on adjudication. According to the learned Arbitration Appellate Tribunal, the clause would have otherwise stated upon an act of insolvency since both act of insolvency and insolvent are different and distinct and to be used for separate context. Based on these findings, the Arbitration Appellate Tribunal rejected the stand taken by the petitioner on the insolvency petition filed by the first respondent.

33. This Court does not find any illegality or perversity in the findings of the Arbitration Appellate Tribunal. Neither before the sole Arbitrator nor before the Arbitration Appellate Tribunal, the petitioner did not place any evidence with regard to the status of the insolvency petition allegedly filed by the first respondent to declare himself as an Insolvent. An Insolvency Petition can be withdrawn by the petitioner under Section 14 of the Provincial Insolvency Act and since there is no evidence regarding the status of the Insolvency Petition in the arbitral proceedings, the Arbitrator as well as the Arbitration Appellate Tribunal rightly did not give weight to the contention of the petitioner denying liability on the ground of insolvency of the first respondent.

34. The adjudication of the insolvency can also be annulled under Section 35 of the Provincial Insolvency Act. The effect of annulment is to vest the property retrospectively in the insolvent in other words the consequence of annulling an order of adjudication is to wipe out altogether the insolvency and its effect except to the limited extent reserved under Section 37 of the Provincial Insolvency Act. Since the insolvency Petition was allegedly filed by the first respondent in November 2008 and there is no evidence placed by the first respondent about its status either before the sole Arbitrator or before the Arbitration Appellate Tribunal, the filing of the Insolvency Petition by the first respondent will not have any bearing for the case on hand and the petitioner cannot contend that once the Insolvency Petition is filed, the contract gets terminated.

35. This Court is of the considered view that the findings of the sole Arbitrator as well as the findings of the Arbitration Appellate Tribunal does not suffer from any perversity or illegality. As examined and analysed by this Court, the respective findings are based on the materials available on record and the evidence submitted by the respective parties. Therefore, there is no merit in the instant petition filed by the petitioner. The view taken by the Arbitrator is a plausible view and has been taken in accordance with law. This Court cannot substitute its view to the view of the Arbitrator when the said view is a plausible view and is not perverse.

36. The Hon'ble Supreme Court in a Catena of decisions starting from Renusagar Power Company Ltd vs. General Electric Company 1994 Supp (1) SCC 644 to the recent Associated Builders Vs DDA (2015) 3 SCC 49 has held only under the following grounds the Arbitral Award can be challenged under Section 34 of the Arbitration and Conciliation Act:

(a)Procedure contemplated under Arbitration and Conciliation Act was not followed by the Arbitrator.

(b) The Arbitral Award is a non speaking Award.

(c) The Arbitrator has transgressed his jurisdiction.

(d) The Arbitral Award is in conflict with the public policy of India.

(iii) An award would be regarded as conflicting with the public policy of India if:-

(a) it is contrary to the fundamental policy of Indian law, or

(b) it is contrary to the interests of India,

(c) it is contrary to justice or morality,

(d) it is patently illegal, or

(e) it is so perverse, irrational, unfair or unreasonable that it shocks the conscience of the court.

(iv) An award would be liable to be regarded as contrary to the fundamental policy of Indian law, for example, if

(a) it disregards orders passed by superior courts, or the binding effect thereof, or

(b) it is patently violative of statutory provisions, or

(c) it is not in public interest, or

(d)the arbitrator has not adopted a ‘judicial approach’, i.e. has not acted in a fair, reasonable and objective approach, or has acted arbitrarily, capriciously or whimsically, or

(e) the arbitrator has failed to draw an inference which, on the face of the facts, ought to have been drawn, or

(f) the arbitrator has drawn an inference, from the facts, which, on the face of it, is unreasonable, or

(g) the principles of natural justice have been violated.

(v) Insofar the ‘patent illegality’ has to go to the root of the matter. Trivial illegalities are inconsequential.

(vi) Additionally, an award could be set aside if

(a) either party was under some incapacity, or

(b) the arbitration agreement is invalid under the law, Or

(c) the applicant was not given proper notice of appointment of the arbitrator, or of the arbitral proceedings, or was otherwise unable to present his case, or

(d)the award deals with a dispute not submitted to arbitration, or decides issues outside the scope of the dispute submitted to arbitration, or

(e)the composition of the Arbitral Tribunal was not in accordance with the agreement of the parties, or in accordance with Part I of the Act, or

(f)the arbitral procedure was not in accordance with the agreement of the parties, or in accordance with Part I of the Act, or

(g) the award contravenes the Act, or

(h) the award is contrary to the contract between the parties.

(vii) ‘Perversity’, as a ground for setting aside an arbitral award,has to be examined on the touchstone of the Wednesbury principle of reasonableness. It would include a case in which

(a) the findings, in the award, are based on no evidence, or

(b) the Arbitral Tribunal takes into account something irrelevant to the decision arrived at, or

(c) the Arbitral Tribunal ignores vital evidence in arriving at its decision.

(viii) At the same time,

(a) a decision which is founded on some evidence, which could be relied upon, howsoever compendious, cannot be treated as ‘perverse’,

(b) if the view adopted by the arbitrator is a plausible view, it has to pass muster,

(c) neither quantity, nor quality, of evidence is open to re-assessment in judicial review over the award.

(ix) ’Morality’ would imply enforceability, of the agreement, given the prevailing mores of the day. ‘Immorality’, however, can constitute a ground for interfering with an arbitral award only if it shocks the judicial conscience.

37. The petitioner has not satisfied any of the grounds mentioned above to interfere with the Award dated 04.06.2011. Hence, the Original Petition shall stand dismissed. However, there shall be no order as to costs.
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