O. O. C. J v. M/s.Nandnandan Silk Mills Pvt.Ltd

The petitioner challenged Award 28th June, 2006 passed Arbitral Tribunal constituted under the Bharat Merchant Chambers Byelaws (for short, "Byelaws").

This Court admitted matter

24.1.2007. The matter called hearing adjourned settlement occasions settlement. As possible listed hearing

5.4.2007. The matter adjourned orders liberty parties settle matter possible. On

9.4.2007 appeared petitioner. The respondent’s counsel informed possibility settlement matter. The matter heard. As appeared 2 petitioner, adjourned

13.4.2007 orders. The matter was called out twice, none appeared for the petitioner again. Therefore this order.

The respondent dispute referred Annexures a Rs.80,073/- interest appointed

Shri K. Agarwal Arbitrator. A reference petitioner directions appoint Arbitrators written submissions defence. The petitioner submitted appointed Shri Surjit Singh Arbitrator. Both Arbitrators have appointed one Shri S. Poddar as Presiding Arbitrator.

The petitioner respondent admittedly entered agreed Agreement

31.1.2006 whereby submit jurisdiction Bharat Merchant Chambers (for short, ‘Chambers’) adjudicating dispute Byelaws chamber. Both parties have agreed that unanimous/majority award should be binding on both the parties.

As clause 22 Byelaws, necessary Arbitral Tribunal reasons. The Tribunal therefore authorised unreasoned agreed parties. Section 3 31(3) Arbitration Conciliation Act, 1966 (Arbitration Act, 1996) provides parties for such terms or procedure as contemplated under Section 31(3) which is reproduced as under: Form and contents of arbitral award.- 31.31.31. Form and contents of arbitral award.- Form and contents of arbitral award.- (1) ...... (2) ...... (3) The arbitral award shall state the reasons upon which it is based, unless - (a) the parties have agreed that no reasons are to be given, or (b) the award is an arbitral award on agreed terms under section 30.

In McDermott McDermott McDermott International International International Inc. Inc. Inc. v. v. v. Burn Burn Burn Standard Standard Standard Co.Ltd., Co.Ltd., Co.Ltd., (2006) (2006) (2006) 11 11 11 SCC SCC SCC

181., 181., 181., Supreme Court considered reiterated following paragraphs, that reasons is a mandatory unless dispensed with by the parties or by a statutory provision.

"... Act important reason Another 1996 arbitrator invariably arise as to what would be meant by a reasoned award. support change unlike required provisions 1940 Act, assign award. A question reasons Law Bachawat’s In Conciliation, 4th Edn., pp.855-56, it is stated: Arbitration ground a a justification ‘Reason belief award must state reasons for the amount awarded. course action. It motive action, explanation a a statement belief 4 . . . . .

affects reached reveal rationale The reasons arbitrator Reasons arbitrator adversely party. reasons Mills’ adequate reason court can see is proper. Contradictory reasons are equal to lack of reasons. means, Arbitration. reasons’. connected The reasons grounds assure conclusion interests requirement contractual In stipulation Poyser Such re, reasons intelligible capriciously. a ‘proper, a meaning The explained by the Kerala High Court in the contest of a reasoned award.... ‘reason’ ‘Reasons materials are based and the actual conclusions....’ certain between conclusions statement A satisfy 31(3). materials Tribunal. reasons on consideration of the relevant material may be ignored.... submitted The Reasons requirements before Tribunal reasons Section Arbitral Statement requirement parties or by a statutory provision. " unless reasons dispensed a mandatory Corpn. Rly. Konkan In Construction mandatoriness unless the arbitration agreement provides otherwise. Co. Ltd. v. Court giving Mehul emphasised reasons

Therefore, normally arbitral should contain reasons, parties agreed agreed permissible reasons given. Therefore, challenge raised petitioner unreasoned itself illegal, unjust 5 contrary award, tenable. The unreasoned circumstances case, agreed between parties within framework record. The therefore valid and need no interference at least on this ground.

The present award, circumstances cannot violation statutory provisions and/or against public policy. This not the case of manifest failure of justice and/or miscarriage of justice.

The submission Association unilaterally referred matter therefore binding without substance agreement petitioner matter Tribunal constituted Rules. The petitioner admittedly participated those proceedings. The Arbitrators have also given full opportunity to the petitioner.

Having agreed the matter Tribunal submission reference jurisdiction Arbitral Tribunal entertain dispute force. cannot illegal, void. The The Tribunal, agreed procedure required 6 therefore detailed reasons itself cannot raised ground raising petition. The which is based on the documents and material placed by the parties is valid and binding.

The expert Tribunal subject consists members, examining documents submitted petitioners respondents hearing parties concluded petitioners required a Rs.66,520/- being due amount inclusive of interest and Rs.1200/- by way of arbitration cost.

The respondent claimed Rs.80,073/- interest 18% p.a.

21.5.2005. In background therefore, I inclined interfere award. However, considering judgment Supreme Court Krishna Krishna Krishna Bhagya Bhagya Bhagya Jala Jala Jala Nigam Nigam Nigam Ltd. Ltd. Ltd. v. v. v. G. G. G. Harischandra Harischandra Harischandra Reddy Reddy Reddy & & & Anr., Anr., Anr., 2007 2007 2007 AIR AIR AIR SCW SCW SCW 527 527 527 extract judgement, interest awarded by the Arbitrator at 18% p.a. is reduced to 9% p.a. The relevant portion of para 11 reads thus: "11........ Here interfere economic reforms Award except interest regime substantially reduced changed and, interest therefore, awarded country 7 period, for the pendente lite period and future interest be reduced to 9%." Arbitrator 18% pre-arbitration

Taking consideration, present petition partly allowed extent interest referred above. The Award modified extent instead 18% p.a. interest should calculated 9% p.a.

21.5.2005

30.11.2005 additional interest should also be at 9% p.a. instead of 18% p.a., as awarded till date of making the payment.

The impugned award is maintained on merits accordingly except with the above modification.