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TMI Blog2024 (7) TMI 752X X X X Extracts X X X X X X X X Extracts X X X X ..... ered by the claimant for refusal of the award-debtor to receive the same. It is well-settled that the very premise of arbitration is the consensus and concurrence between the parties to refer specific disputes to arbitration. The arbitrator is a creature of contract and as such, is bound by the terms of the agreement between the parties. Thus, being specifically debarred by the agreement and/or falling outside the purview of the agreement, the awards on the above components are categorically vitiated under Section 34(2)(a)(iv) of the 1996 Act, as well as by patent illegality as envisaged in Sub-section (2-A) of Section 34. It has been held by the Supreme Court and this Court time and again that the award of the arbitrator in violation of a bar contained in the contract has to be held as one beyond his jurisdiction, requiring interference by the Court. The impugned award passed by the learned Arbitrator dated September 24, 2020 is set aside - application allowed. - HON BLE JUSTICE SABYASACHI BHATTACHARYYA For the Petitioner : Mr. Satyendra Agarwal, Adv. Mr. B. Bag, Adv. Mr. G. Malik, Adv. For the Respondent : Mr. Malay Kr. Das, Adv. Mr. Sourav Chatterjee, Adv. JUDGMENT SABYASACHI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... breach of the agreement; rather, the same fell within the purview of the tender conditions. Such aspect was not considered by the Arbitrator at all. 8. It is contended that in view of the short closure clause and/or the short closure not being challenged by the petitioner, the Arbitrator acted de hors jurisdiction in granting the reliefs on the premise that such short closure was contrary to the contract. 9. Learned counsel cites Shri H.D. Vashishta vs. M/s. Glaxo Laboratories(I.) (P.) Ltd, reported at AIR (1979) SC 134 and Bhagat Singh and others, Vs. Jaswant Singh, reported at AIR (1966) SC 1861 for the proposition that all material facts necessary to constitute a cause of action must be averred in the plaint and where a claim has never been made, no amount of evidence can be looked into in support of the same. 10. With regard to the proposition that the arbitrator cannot grant pendente lite interest if the agreement between the parties prohibits the same, learned counsel cites the unreported judgments in Civil Appeal Nos. 15545-15546 of 2017 (Sri Chittaranjan Maity Vs. Union of India), and APO 156 of 2018 arising out of AP 423 of 2009 (Union of India Vs. A.K. Mukherjee). 11. Lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, the present challenge under Section 34 of the said Act ought to be dismissed. 20. The issue which is to be considered here is whether the Arbitrator committed a perversity or acted beyond jurisdiction in passing the arbitral award and/or whether the impugned award is ex facie illegal and/or opposed to public policy or otherwise comes within the ambit of Section 34 of the 1996 Act. 21. The first component of claim on which the impugned award was passed is a claim of the claimant/respondent regarding the price of the 2596 items not supplied to the award debtor/petitioner. By way of reasons/justifications for awarding such amount to the tune of Rs. 35,04,600/-, the learned Arbitrator only recorded that the award debtor could not provide the storage space within the validity of the P.O. as tender notice, though the rest 2596 numbers of material was kept ready by the claimant. It was also considered that the balance quantity was tailor-made item for use of the Metro Railway only. 22. The above adjudication is vitiated by several factors. 23. First, the arbitrator failed to take into account that such items were never supplied by claimant to the award-debtor and as such, under normal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same. Hence, the question of any breach of contract does not arise; resultantly, the very premise of the said claim in item no. 1, that is breach of contract leading to loss, is absent even on a plain reading of the tender document and/or the contract between the parties. 29. Thus, the said part of the award was not only beyond the scope of the contract which formed the basis of submission to arbitration, but also opposed to the fundamental policy of Indian law and basic notions of morality or justice. 30. Insofar as item nos. 2 and 3 of the claim is concerned, the first of the two refer to Value Added Tax (VAT) and the second to extra VAT for materials not supplied at all by the claimant to the award debtor. The concept of value added tax is that the same is collected from the purchaser and deposited to the statutory authorities for materials actually supplied. Since the balance items were not supplied in the present case at all, no occasion arose for VAT being raised, collected and/or deposited before the authorities. 31. Thus, the said component of the award granting claim nos. 2 and 3 are based on fictitious claims having no material basis at all and thus fall beyond the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he parties as embodied in the bid document. 38. Section 31 (7) empowers the arbitrator to include in the awarded sum interest at certain rates. However, Section 31 (7) (a) commences with the rider Unless otherwise agreed by the parties... . Hence, since in the present case not only was there no agreement to impose interest but a specific bar to such imposition, the arbitrator traversed beyond the agreement and acted contrary to the agreement in granting interest against the award-debtor. 39. It has been held by the Supreme Court and this Court time and again that the award of the arbitrator in violation of a bar contained in the contract has to be held as one beyond his jurisdiction, requiring interference by the Court. 40. Section 31 (7) has also been interpreted in A.K. Mukherjee s case following Sri Chittaranjan Maity s case, both of which are cited by the award-debtor, to mean that the arbitrator exercising Authority under the 1996 Act does not have any power to grant pendente lite interest, if the agreement between the parties prohibits the same, even if such prohibition does not expressly refer to the authority of the arbitrator. In M/s Rashtriya Chemicals (supra) and Oil Nat ..... 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