# Sri Deviram Singhal & Ors v. Sri Manjeet Singh & Anr

- **Citation:** (2023) 6 ILRA 34
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2023-04-21
- **Case number:** Conciliation Act 1996 No. 224 of 2023
- **Bench:** Manoj Kumar Gupta, Prashant Kumar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/sri-deviram-singhal-ors-v-sri-manjeet-singh-anr-50468
- **Pages:** 11

## Headnote

A. Civil Law - Arbitration and Conciliation
Act, 1996-Sections 2(e)(1), 9, 20, 34 & 37Arbitral
award-Jurisdiction-place
of
arbitration not mentioned in arbitration
clause-In
present
case,
Section
9
application was filed before District Judge,
Agra prior to seat being determined by
Arbitral Tribunal at Jaipur-Though seat of
arbitration was in Jaipur however,
application u/s 34 filed in Commercial
Court Agra is valid as Court in Agra would
have
supervisory
jurisdiction
over
arbitration.(Para 20 to 26)

B.
Arbitration
and
Conciliation
Act,
1996-Sections 34 and 37-Setting aside
of award-Claim made by claimant never
disputed and also same was supported
by evidence-Arbitrator before passing
award analysed in detail evidence on
record and had also kept in mind
provisions of section 25(b)-Award was
well reasoned and well analysed-Plea of
appellant
that
award
was
passed
without
any reasoning

cannot
be
sustained.(Para 28 and 29)
The appeal is dismissed. (E-6)

List of Cases cited:

## Text

34 INDIAN LAW REPORTS ALLAHABAD SERIES
(2023) 6 ILRA 34
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 21.04.2023

BEFORE

THE HON'BLE MANOJ KUMAR GUPTA, J.
THE HON'BLE PRASHANT KUMAR, J.

Appeal Under Section 37 of Arbitration and
Conciliation Act 1996 No. 224 of 2023

Sri Deviram Singhal & Ors. ...Appellants
Versus
Sri Manjeet Singh & Anr. ...Respondents

Counsel for the Appellants:
Sri Ravi Yadav, Sri Utkarsh Srivastava, Sri
Navin Sinha (Sr. Advocate)

Counsel for the Respondents:
Sri Jata Shankar Pandey, Sri Syed Safdar
Ali Kazmi

A. Civil Law - Arbitration and Conciliation
Act, 1996-Sections 2(e)(1), 9, 20, 34 & 37Arbitral
award-Jurisdiction-place
of
arbitration not mentioned in arbitration
clause-In
present
case,
Section
9
application was filed before District Judge,
Agra prior to seat being determined by
Arbitral Tribunal at Jaipur-Though seat of
arbitration was in Jaipur however,
application u/s 34 filed in Commercial
Court Agra is valid as Court in Agra would
have
supervisory
jurisdiction
over
arbitration.(Para 20 to 26)

B.
Arbitration
and
Conciliation
Act,
1996-Sections 34 and 37-Setting aside
of award-Claim made by claimant never
disputed and also same was supported
by evidence-Arbitrator before passing
award analysed in detail evidence on
record and had also kept in mind
provisions of section 25(b)-Award was
well reasoned and well analysed-Plea of
appellant
that
award
was
passed
without
any reasoning

cannot
be
sustained.(Para 28 and 29)
The appeal is dismissed. (E-6)

List of Cases cited:
1. Bharat Aluminium Co. Vs Kaiser Aluminium
Technical Services Inc.(2012) 9 SCC 552

2. BGS SGS SOMA JV Vs NHPC Ltd (2020) 4 SCC
234

3. Indus Mobile Distribution (P) Ltd. Vs
Datawind Innovations (P) Ltd.(2017) 7 SCC 678

4. BBR (India) Pvt Ltd Vs S.P. Singla Cons. Pvt
Ltd (2023) 1 SCC 693

5. Renusagar Power Co. Ltd. Vs. Gen. Electric
Co. (1994) AIR 860

6. St. of Har. Vs. S.L. Arora & Co. (2010) 3 SCC
690

7. M/S Hyder Consulting (UK) Ltd. Vs. Gov. St.
of Ori. thru Chief Eng. (2015) 2 SCC 189

8.
ONGC
Ltd.
Vs.
Saw
Pipes
Ltd.
(MANU/SC/0314/2003: (2003) 5 SCC 750)

(Delivered by Hon'ble Prashant Kumar, J.)

1. Heard Sri Navin Sinha, learned
Senior Counsel assisted by Sri Utkarsh
Srivastava, counsel for the appellants and
Sri Syed Safdar Ali Kazmi, learned counsel
for the respondents.

2. Brief facts of the case are, that the
parties herein had entered into a partnership
agreement on 01.04.1997 with the intention
to construct a hotel and run the same in the
partnership. It was decided that the
business would be carried out in a
partnership which would run the hotel, bar
and restaurant in Agra and the head office
of this business would be at E-14, Kailash
Colony at New Delhi. This arrangement
was such where the claimant (respondents
herein) would invest the capital, and the
appellants (herein) would be a working
6 All. Sri Deviram Singhal & Ors. Vs. Sri Manjeet Singh & Anr.
35
partner and would be responsible for
running the business, maintaining the
accounts and handle the situation which
arises in the ordinary course of business.
During the construction of hotel the
claimant not only provided sufficient fund
for construction and for running the hotel,
but also gave a personal loan of Rs. 20 lakh
to the appellants. The construction was
completed
in
December
1999. After
opening and till July 2002, the hotel ran
well and made a profit. After July, 2002,
the appellants (herein) turned dishonest and
stopped paying the profit to the respondents
on the pretext that the business was running
in loss. He did not allow the respondents to
inspect the accounts. Since the hotel was
located at the prime location, hence, the
occupancy was very high. After February
2003,
the
appellants
stopped
the
respondents from entering into the property
the hotel.

3. In the agreement there was an
arbitration clause which provided for
arbitration in case of dispute between the
parties which is reproduced herein under:-

"9. In case of dispute relating to
the partnership or the business carried on
under it, shall be referred to arbitrator and
his decision shall be binding on both the
parties."

It was worthwhile to mention that
the arbitration clause was silent on the
place of arbitration.

4. Since the respondents were not given
the due profit share neither they were allowed to
enter the property or had access to the accounts,
so the respondents were left with no other
option, but to invoke the arbitration clause, and
approached the Court for appointment of
arbitrator to adjudicate the differences so arose
between the parties.

5. The respondents (herein) on 09.11.2006
had filed application under Section 9 of the
Arbitration and Conciliation Act, 1996 (herein
after for the sake of brevity has been referred to
as "Arbitration Act") which was numbered as
Arbitration Case No. 533 of 2006.

6. On this Section 9 application, the Court
was pleased to direct that, "the applicant
(respondents herein) would be allowed to enter
the premises and inspect the record relating to
the business and to take part in the management
of the business as well".

7. On 02.01.2008 on the joint request of
the parties one Sri Rakesh Kaushal resident of
Jaipur was nominated by both the parties to be
the sole arbitrator in the case. Accordingly, the
Court appointed Sri Rakesh Kaushal as sole
arbitrator. The Court directed that the arbitrator
shall be at liberty to pass orders under Section
17 of the Arbitration Act. The Court further
directed that claimants would not be restrained
by the appellants from entering the business
premises and also from taking part in the
management of the business.

8. The arbitrator took up the Arbitration
Reference on 12.07.2008 and after hearing both
the parties, the Tribunal decided that the venue
of the Arbitration Tribunal, would be at 43,
Burmese Colony, Jaipur.

9.
On
17.08.2008
the
Claimant/Respondents filed his claim.
Numerous opportunities were given to the
appellants
to
file
Statement
of
defence/Written statement. For the reasons
best known to them, they chose not to file
the same. They neither filed any counter
claim inspite of getting sufficient number
of opportunities. It was clear that the
appellants were avoiding the arbitration
proceedings and were adopting dilatory
tactics.
36 INDIAN LAW REPORTS ALLAHABAD SERIES

10. Right from the inception of the
arbitration
proceedings,
it
was
the
endeavour of the appellants either to scuttle
the hearings, or to delay the arbitration
proceedings. They went to the extent of
threatening the arbitrator to withdraw from
the proceedings.

11. The Arbitral Tribunal after going
through the statement of claimant and the
written argument and after considering the
facts and evidence on record, came to the
conclusion that, the hotel business which
was run under the partnership had earned
profit, and gave an Award under various
heads in favour of the respondents. Further
the Tribunal held that the award will carry
an interest of 15% per annum from the date
of award till its realization.

12. Aggrieved against the award, the
appellants filed an application under
Section 34 of the Arbitration Act for setting
aside
the
arbitral
award
before
the
Commercial Court Agra, inter alia on the
ground of independence of the arbitrator,
venue of arbitration, not affording an
opportunity of hearing. This application
was numbered as arbitration Case No. 73 of
2010 in the Commercial Court, Agra. The
Commercial Court, Agra after hearing both
the parties was pleased to reject the
application filed under Section 34 of the
Arbitration Act by the appellants vide order
dated 23.01.2023 on the ground that the
award passed by the arbitrator was not
against a public policy and was not in
conflict with the public policy of India.

13. Aggrieved against order passed by
the Commercial Court, Agra, the appellants
(herein) had preferred the instant appeal
under Section 13 (1A) which is specifically
enumerated under Section 37 of the
Arbitration Act.

14. Heard counsel for the parties and
perused the record.

15. In this appeal, two issues were
raised, firstly, about the seat of arbitration
and
the
court
which
would
have
supervisory jurisdiction. Secondly, on facts,
that the award was passed without any
evidence and was not a speaking award,
there was a limitation issue, and compound
interest on the pre award period could not
have been awarded.

16. On the First issue, counsel for the
appellants submits that both the courts in
Agra and Jaipur would have jurisdiction to
entertain application under Section 34 of
the Arbitration Act as the cause of action
arises in both the places.

17. Counsel for the respondents
submits that since there was no place of
arbitration mentioned in the agreement,
hence, it was open for the arbitrator to
choose the place of arbitration. Once the
seat of arbitration have been chosen, any
application/appeal subsequent to it, can
only be filed or entertained in the court,
which has supervisory jurisdiction over the
place where arbitration is carried out.
Hence the appeal filed under Section 34 of
the Arbitration Act in Agra, could also not
have been filed.

18. The respondents urged that the
scope of Section 34 of the Arbitration Act
is very limited, and as per various judgment
of Hon'ble Supreme Court, it is clear that
the Court cannot interfere unless and until
it falls within the straight jacket of the
provisions under Section 34 of the
Arbitration Act. The counsel for the
respondents further submitted that in
various judgments of Hon'ble Supreme
Court it has clearly been laid down that,
6 All. Sri Deviram Singhal & Ors. Vs. Sri Manjeet Singh & Anr.
37
Section 37 of the Arbitration Act could not
be entertained by the courts, as court of
appeal who will look into the award on the
appellate side, unless and until it is shown
and proved that the award is in conflict
with the public policy of India or in
contravention of fundamental policies of
Indian law or in conflict with most basic
notion of morality or justice, or the award
is vitiated by patent illegality appearing on
the face of the award, the application or
appeal cannot be entertained.

19. We deem appropriate to deal with
the First issue of "jurisdiction of the
supervisory Court" first.

20. Before entering into the dispute,
the relevant provision of Arbitration Act,
1996 which is important for adjudication, is
being reproduced herein under:-

Section 2 (1)(e) ''Court' means
the Principal Civil Court of Original
Jurisdiction in a district, and includes the
High Court in exercise of its ordinary
original
civil
jurisdiction,
having
jurisdiction to decide the questions forming
the subject-matter of the arbitration if the
same had been the subject-matter of a suit,
but does not include any civil court of a
grade inferior to such Principal Civil
Court, or any Court of Small Causes;"

"Section 20. Place of arbitration.-
-(1) The parties are free to agree on the
place of arbitration.

(2)
Failing
any
agreement
referred to in sub-section (1), the place of
arbitration shall be determined by the
Arbitral Tribunal having regard to the
circumstances of the case, including the
convenience of the parties.

(3) Notwithstanding sub-section
(1) or sub-section (2), the Arbitral Tribunal
may, unless otherwise agreed by the
parties, meet at any place it considers
appropriate for consultation among its
members, for hearing witnesses, experts or
the parties, or for inspection of documents,
goods or other property."

20A. A plain reading of Section
20 leaves no room for doubt that the parties
are free to agree to any "place" or "seat" of
Arbitration. In the absence of the parties'
agreement thereto, Section 20 (2) of the
Arbitration Act authorises the Tribunal to
determine
the
place/seat
of
such
arbitration.

21. The Five Judge Bench of the
Hon'ble Supreme Court in the case of
Bharat Aluminium Company Vs. Kaiser
Aluminium Technical Services Inc.1 in
paragraph No. 96 held that:-

".........The term "subject-matter
of the arbitration" cannot be confused with
"subject-matter of the suit". The term
"subject-matter" in Section 2(1)(e) is
confined to Part I. It has a reference and
connection with the process of dispute
resolution. Its purpose is to identify the
courts having supervisory control over the
arbitration proceedings. Hence, it refers to
a court which would essentially be a court
of the seat of the arbitration process.

The provision in Section 2(1)(e)
has to be construed keeping in view the
provisions in Section 20 which give
recognition to party autonomy.

The legislature has intentionally
given jurisdiction to two courts i.e. the
court which would have jurisdiction where
the cause of action is located and the
courts where the arbitration takes place.
This was necessary as on many occasions
the agreement may provide for a seat of
arbitration at a place which would be
neutral to both the parties.
38 INDIAN LAW REPORTS ALLAHABAD SERIES

Both the courts would have
jurisdiction i.e. the court within whose
jurisdiction the subject-matter of the suit is
situated
and
the
courts
within
the
jurisdiction of which the dispute resolution
i.e. arbitration is located."

22.
The
decision
of
Bharat
Aluminium Company was followed by
the Hon'ble Supreme Court in BGS SGS
SOMA JV vs. NHPC Limited2 in which
the issue was, as to which court would have
exclusive jurisdiction over the arbitration,
as opposed to the place where whole or part
of the cause of action arises. The Hon'ble
Supreme Court in paragraph-38 held that:-

"38............. The Balco vs.Kaiser
Aluminium
Technical
Services
Inc.3,
judgment, when read as a whole, applies
the concept of "seat" as laid down by the
English judgments (and which is in Section
20 of the Arbitration Act, 1996), by
harmoniously construing Section 20 with
Section 2(1)(e), so as to broaden the
definition of "court", and bring within its
ken courts of the "seat" of the arbitration "

In this case it was held that
jurisdiction would be given to two sets of
courts, namely, those courts which would
have jurisdiction where the cause of action
is located; and those courts where the
arbitration takes place.

23. Thereafter, in the matter of Indus
Mobile
Distribution
(P)
Ltd.
vs.
Datawind Innovations (P) Ltd.4 the
Hon'ble Supreme Court properly analyzed
the provisions of Section 20 of the
Arbitration Act and came to a conclusion
that when there is no place of arbitration
mentioned in the agreement and where the
Arbitral Tribunal determines a particular
place as the seat of the arbitration under
Section 31(4) of the Arbitration Act, it
becomes clear that the parties having
chosen the seat, (or the Arbitral Tribunal
having determined the seat), have also
chosen the courts at the seat for the purpose
of interim orders and challenges to the
award.

24. The Hon'ble Supreme Court in the
matter of BBR (India) Private Limited
Vs. S.P. Singla Constructions Private
Limited5 had again dealt with the issue of
jurisdiction or supervisory Court where the
place of arbitration was fixed under Section
20 (2) of the Arbitration Act by the
Arbitrator. The Hon'ble Supreme Court had
held that, all applications under Part I will
be preferred in the court where "the seat" is
located as that court would alone have
jurisdiction over the arbitration proceedings
and all subsequent proceedings arising out
of
the
arbitration
proceedings.
The
quotation also clarifies that when either no
"seat" is designated by an agreement, or the
so-called "seat" is only a convenient venue,
then there may be several courts where a
part of the cause of action arises that may
have jurisdiction. An application under
Section 9 of the Arbitration Act may be
preferred before the court in which a part of
cause of action arises in the case where
parties had not agreed on the "seat of
arbitration". This is possible in the absence
of an agreement fixing "the seat", as an
application under Section 9 may be filed
before "the seat" is determined by the
Arbitral Tribunal under Section 20(2) of the
Arbitration Act. Consequently, in such
situations, the court where the earlier
application has been made, being the court
in which a part or entire of the cause of
action arises, would then be the exclusive
court under Section 42 of the Arbitration
Act. Accordingly, such a court would have
control over the arbitration proceedings.
6 All. Sri Deviram Singhal & Ors. Vs. Sri Manjeet Singh & Anr.
39

25. In view of the ratio laid down by
the Hon'ble Supreme Court, it is clear that
in this case though the seat of arbitration
was in Jaipur but the Court in Agra would
also have supervisory jurisdiction as
Section 9 application was filed before the
District Judge, Agra prior to the seat being
determined by the Arbitral Tribunal.

26. Accordingly, we find no merit in
the arguments of the respondent, and hold
that the application under Section 34 of the
Arbitration Act has rightly been filed in the
Commercial Court, Agra and the Court in
Agra would have supervisory jurisdiction
over arbitration.

27. Secondly, the appellants have
challenged the Award on merit. Counsel for
the appellants submitted that, it is a case of
no evidence as award has been passed
without there being any evidence on record,
the award was not a speaking award, the
future income could not have been
contemplated, claim for share of profit was
not arbitrable, the award is unreasoned and
that the part of the claim was barred by
limitation.

28. The appellant argued that, the
Award lacks proper reasoning. Though, it
has been further argued that it is the duty of
the arbitrator under Section 25 (b) of the
Arbitration Act to proceed without treating
that failure of the respondent to rebut the
allegation as an admission. The Award do
not
entail
any
reason
or
analysis
whatsoever in support of the relief awarded
to the claimant.

This argument raised by the
counsel
for
the
appellants
that
the
impugned award is without any reasoning,
will also hold no ground because of the fact
that claimant has filed the statement of
claim and had supported his claim with the
available evidence on record. The claim
made by the claimant has never been
denied by the respondents. The Award was
well reasoned and well analyzed.

29. Counsel for the appellants relied
on the judgment passed by the Hon'ble
Supreme Court in the matter of Associate
Builders v. Delhi Development Authority
and argued that if an arbitrator gives no
reason for an award, then it will be in
contravention of Section 31 (3) of the
Arbitration Act, such award will be liable
to be set aside."

This argument also, is of no help
to the appellant, as it is not a case where the
award was passed without any evidence, or
documents and material on record. It
cannot be said that the arbitrator has not
given any reasoning while passing the
award.

The Arbitrator while deciding the
claim was careful enough not to pass an
award merely for asking of the claimant but
went deep into the details before passing
the award, he had also kept in mind the
provision of Section 25 (b) of the
Arbitration Act before passing the award.
Hence, it cannot be said that the impugned
order was unreasoned.

30. In reply to the averments made by
the
counsel
for
the
appellants,
the
respondents submitted that, all evidences
and documents available with the claimant
were produced before the arbitrator and the
same was never objected to, or denied by
the Appellants. Even affidavit of manager
was filed before the arbitrator which clearly
mentions the number of rooms, the amount
charged, the occupancy of the hotel, the
expenses, the income and the profits of the
hotel. This has now been denied by the
40 INDIAN LAW REPORTS ALLAHABAD SERIES
appellants. Moreover, the counsel for the
respondents took us to the record which
shows that there was enough evidence on
the basis of which the arbitrator had passed
a speaking award.

31. Counsel for the respondents
submitted that on the basis of income,
expenses, profit, the arbitrator has assessed
the future income. The appellants (herein)
who had cheated the claimant by not giving
his due shares and solely enjoying the
property and the income coming out of the
property. He was not furnishing the account
and not giving true account so there was no
way arbitrator could have calculated the
profit and hence, proceeded to decide on
the basis of proposed income. Hence, this
procedure adopted by the Arbitrator in
passing the Award seems to be perfectly
justified.

32. The arguments raised by the
counsel for the appellants that the award
has been passed without any evidence is
also not tenable. The share of profit of
partnership firm arising out of room rent,
boarding facility and other activities was
available to substantiate the evidence
before the arbitrator. The appellants made
no endeavour to rebut the evidence before
the Arbitrator. As a matter of fact, the
Arbitrator, just not awarded, what was
claimed by the claimant, but only awarded,
what was substantiated by the evidence on
record.

33. Counsel for the appellants further
argued that partially the claim (in respect of
profit w.e.f. 2000 to September 2003) was
barred by limitation, he submitted that in
the present case, the notice invoking
arbitration
necessary
for
the
commencement of arbitral proceedings
under Section 21 was issued on 11th
October,
2006.
Section
43
of
the
Arbitration Act provides as follows:-

"Section 43: Limitations - (1) The
Limitation Act, 1963 (36 of 1963), shall
apply to arbitrations as it applies to
proceedings in Court.

(2) For the purposes of this
section and the Limitation Act, 1963 (36 of
1963), an arbitration shall be deemed to
have commenced on the date referred in
section 21......"

Hence, the claim sought and
granted for the period January 2000 to
September, 2003 by the Ld. Arbitrator is
barred by limitation under Article 137 of
the Schedule to The Limitation Act, 1963.

34. In reply to it, counsel for the
respondents submitted that the claim was
not barred by limitation.

35. Article 5, Article 113 and Article
137 of the Schedule which have bearing on
the issue, are as follows :-

Description
of
Suit
Period
of
Limitation
Time from
which
period
begins
to
run
5.
For an account
and a share of
the profits of a
dissolved
partnership.
Three years.
The date of
the
dissolution
.
113.
Any
suit
for
which no period
of limitation is
provided
elsewhere in this
Schedule.
Three years
When the
right to sue
accrues.
137.
Any
other
application
for
which no period
of limitation is
provided
elsewhere in this
division.
Three years
When the
right
to
apply
accrues.
6 All. Sri Deviram Singhal & Ors. Vs. Sri Manjeet Singh & Anr.
41

36. In an action for an account and a
share of the profits of a dissolved
partnership firm, the time begins to run for
purposes of calculating the limitation from
the date of dissolution of the partnership.
Under Article 113 and Article 137, the time
starts running when the right to sue / apply
accrues.

37. Lindley in his treatise on the Law
of Partnership, Fifteenth Edition, while
considering as to what would be the period
for which account could be taken or carried
back states that "the time from which an
account is to begin will, in a general
account
of
partnership
dealings
and
transactions, be the commencement of the
partnership, unless some account has since
that time been settled by the partners, in
which case the last settled account will be
the point of departure". The limitation
prescribed for bringing an action for
accounts is not the same as the period for
which account can be sought. Under Article
5, the time begins to run from the date of
dissolution of partnership firm. Under
Article 113/137, time begins to run from
the date right to sue /apply accrues. The
right to sue/apply under Article 113/137
would accrue when account is demanded
but is denied or where the account is to be
rendered periodically in terms of a specific
stipulation in that behalf in the agreement
and the same is not adhered to. In the
instant case, the latter was not applicable
and therefore, the right to sue/apply
accrued when the account was demanded
but was denied. It is not the case of the
appellant that the claim as a whole was
barred by limitation. What is alleged is that
the claim for accounting in respect of the
period January 2000 - September 2003 was
barred by limitation. It is based on the
premise that profit and loss was to be
accounted for every year. Therefore, the
time started running at the end of every
year and after three years the claim for
accounting for that particular year would be
beyond limitation. However, as noted
above, in the absence of any stipulation for
sharing of profits/loss at the end of every
year or on any specified date, we are unable
to accept the contention. Infact the plea
taken
in
this
behalf
is
seemingly
paradoxical. The appellant had opposed the
relief relating to accounting, as noted in
earlier part of the judgment, by contending
that the claim was pre-mature in the
absence of any specific date in the
agreement for accounting.

38. While it is impermissible to reopen a settled account, there is no legal
impediment in claiming profit/loss of the
account for the entire period for which the
account had not been rendered, unless any
such bar could be inferred from the term of
the partnership agreement. We thus find no
merit in the contention that the claim in
respect of profit w.e.f. 2000 to September,
2003 was barred by limitation.

39. The Counsel for the appellants
argued that Arbitrator did not have the
power to grant interest @ 15 % per annum
consolidated. This argument was opposed
by the counsel for the respondents.

40. Hon'ble Supreme Court in the
matter of Renusagar Power Co. Ltd vs
General Electric Co.6, has held that
Award of compounding interest by an
Arbitral Tribunal is not against the public
policy of India. This portion as laid down
was codified in the Arbitration Act, 1996.

41. Earlier a Division Bench of the
Hon'ble Supreme Court in State of
Haryana vs. S.L. Arora and Company7,
had held that Arbitral Tribunal does not
42 INDIAN LAW REPORTS ALLAHABAD SERIES
have the power to award compound interest
unless specifically provided in the contract
or in the statute.

42. Thereafter, the Law Commission
of India in its 246th Report clarified that
the terms of Section 31 (7) of the
Arbitration Act are of vital impact. As per
the report, the Scheme of the relevant
provisions of the Arbitration Act indicated
that the award of interest is not only
permitted but is also the norm. The
Commission was of the opinion that the
decision of SL Arora needs to be revisited.

43. Thereafter, the ratio laid down by
Hon'ble Supreme Court in S.L. Arora
(supra) was over-ruled by a Full Bench of
Hon'ble Supreme Court in M/S Hyder
Consulting (UK) Ltd. vs Governor, State
Of Orissa through Chief Engineer8,
wherein it was held that Section 31 (7) of
the Arbitration Act uses ''sum'. This would
entail both principle and interest. Once
interest is included in the sum, for which
the award is made, the original sum and
intent cannot be segregated or seen as
independent of each other.

44. The Hon'ble Supreme Court again,
in the matter of UHL Power Company
Limited Vs. State of Himachal Pradesh
has reiterated the ratio laid down in Hyder
Consulting and has allowed the award
containing interest in award.

45. In view of above mentioned ratio
laid down by the Hon'ble Supreme Court, it
is held that the Arbitrator has power to
grant interest in a pre award period to be
compounded annually, hence, we find no
force in the argument of the appellants on
the issue of grant of interest to be
compounded annually for the pre award
period.

46. We are well aware by scope of
interference in an appeal under Section 37
of the Arbitration and Conciliation Act,
1996, which arise out of Section 34
proceedings in the Arbitration Act. Though,
Hon'ble Supreme Court in the J.G.
Engineers (P) Ltd. v. Union of India,
Associate Builders v. Delhi Development
Authority, SSangyong Engineering and
Construction Company Pvt. Ltd. v.
NHAI has held that the scope of
interference under Sections 34 and 37 of
the Arbitration Act is very narrow. Keeping
this view in mind, we do not intend to sit in
appeal and look into the documents and reappreciate the evidence.

47.
Learned
counsel
for
the
respondents relied upon the judgment of
Hon'ble Supreme Court in the matter of
ONGC Ltd. v. Saw Pipes Ltd.9 wherein,
it was held that a court can set aside an
award under Section 34(2)(b)(ii) of the
Arbitration Act, if it is in conflict with the
public policy of India, or if it is contrary to
the fundamental policy of Indian law; or
contrary to the interests of India; or
contrary to justice or morality; or patently
illegal. The Court further explained that to
hold an award to be opposed to public
policy, the patent illegality should go to the
very root of the matter and not a trivial
illegality. It is also observed that an award
could be set aside if it is so unfair and
unreasonable that it shocks the conscience
of the Court, as then it would be opposed to
public policy.

48. In the matter of J.G. Engineers
(P) Ltd. v. Union of India, the Hon'ble
Supreme
Court
has,
demarcated
the
boundary while explaining the ambit of
Section 34(2) of the Arbitration Act, this
boundary so demarcated has to be strictly
followed.
6 All. Sri Deviram Singhal & Ors. Vs. Sri Manjeet Singh & Anr.
43

49. The Hon'ble Supreme Court in the
matter of Associate Builders v. Delhi
Development
Authority,
has
further
clarified the scope of judicial intervention
under the appeal in the Arbitration Act held
as under :-

"It must clearly be understood
that when a court is applying the "public
policy" test to an arbitration award, it does
not act as a court of appeal and
consequently errors of fact cannot be
corrected. A possible view by the arbitrator
on facts has necessarily to pass muster as
the arbitrator is the ultimate master of the
quantity and quality of evidence to be relied
upon when he delivers his arbitral award.
Thus, an award based on little evidence or
on evidence which does not measure up in
quality to a trained legal mind would not
be held to be invalid on this score[1]. Once
it is found that the arbitrators approach is
not arbitrary or capricious, then he is the
last word on facts."

50. The law is well settled that, where
the Arbitrator has assessed the material and
evidence placed before him in detail, the
court while considering the objections
under Section 34 of the said Arbitration Act
does not sit as a court of appeal and is not
expected
to
re-appreciate
the
entire
evidence and reassess the case of the
parties. The jurisdiction under Section 34 is
not appellate in nature and an award passed
by an Arbitrator cannot be set aside on the
ground that it was erroneous. It is not open
to the Court to interfere with the award
merely because in the opinion of the Court,
another view is possible. The duty of the
Court in these circumstances is to see
whether the view taken by the Arbitrator is
a plausible view on the fact, pleadings and
evidence before the Arbitrator.

51. The extent of judicial scrutiny
under Section 34 of the Arbitration Act is
limited and scope of interference is narrow.
Under Section 37, the extent of judicial
scrutiny and scope of interference is further
narrower. An appeal under Section 37 is
like a second appeal, the first appeal being
to the court by way of objections under
Section 34. Where there are concurrent
findings of facts and law, first by the
Arbitral Tribunal which are then confirmed
by the court while dealing with objections
under Section 34, in an appeal under
Section 37, the Appellate Court would be
very cautious and reluctant to interfere in
the findings in the award by the Arbitral
Tribunal and confirmed by the court under
Section 34.

52. As a matter of fact, the arbitrator in
his award had very categorically stated that
it was an endeavour of the appellants to
delay the hearing. They did not co-operate,
and time and again only created hurdles in
the arbitration proceedings. The Arbitrator
on the basis of documents and other
evidence on record has passed well
reasoned award.

53. In view of the aforesaid facts, we
come
to
the
conclusion
that
the
Commercial
Court,
Agra
had
jurisdiction to entertain the application
filed under Section 34 of the Arbitration
Act challenging the award. However,
we find no ground to interfere in the
matter. The instant appeal filed under
Section 13 (1-A) of the Commercial
Court Act, 2015 which infact are the
appeals enumerated under Section 37 of
the Arbitration Act. Accordingly, the
order passed by the Commercial Court
under Section 34 of the Arbitration Act
is upheld.
44 INDIAN LAW REPORTS ALLAHABAD SERIES

54.
The
appeal
is
accordingly
dismissed.
----------
(2023) 6 ILRA 44
APPELLATE JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 31.05.2023

BEFORE

THE HON'BLE KRISHAN PAHAL, J.

Criminal Misc. Bail Cancellation Application No.
172 of 2022

Smt. Shanti Rani Agarwal ...Applicant
Versus
State of U.P. & Anr. ...Opposite Parties

Counsel for the Applicant:
Sri Ashish Kumar Singh, Sri Imran Ullah

Counsel for the Opposite Parties:
G.A., Sri Nand Lal Pandey, Sri Suyash
Pandey

Criminal Law - Criminal Procedure Code,
1973 - Section 173(2) & 482 - Indian
Penal Code, 1860 - Sections 147, 387,
420, 467, 468, 471, 447, 504 & 506 -
Constitution of India,1950 - Article 21 -
Application for Bail Cancellation - FIR -
Chargesheet
-
cognizance
was
taken
-
Anticipatory Bail was granted by court till the
filing of charge-sheet - court finds that, it is
admitted to both parties that before order of
bail charge-sheet was already filed - Doctrine of
clean hand - held, any order taken by
suppressing facts is bad and cannot be
sustained as the very foundation is weak, any
subsequent order based on it also cannot be
accorded any sanctity and is also unsustainable
- as such, anticipatory bail order is set aside -
accordingly, instant Bail cancellation application
is allowed.
(Para - 29, 31, 32)

Bail Allowed. (E-11)

List of Cases cited:
1. Shivam Vs St. of U.P. & anr., AIR Online 2021 All.
484,

2. S.P. Chengalvaraya Naidu Vs Jagannath, 1994 AIR
853 SC,

3. A.V. Papayya Sastry & ors.Vs Govt. of A.P. & ors.,
Appeal (Civil) No. 5097 of 2004

4. Puran Vs Rambilas & anr., 2001 SCC (Cri) 1124,

5. Satender Kumar Antil Vs Central Bureau of
Investigation & anr., 2022 SCC Online SC 825,

6. Gurcharan Singh Vs St. (Delhi Admn.) reported in
AIR 1978 SC 179,

7. Nityanand Rai Vs St. of Bihar & anr., (2005) 4 SCC
178,

8. Manoj Kumar Khokhar Vs St. of Raj., (2022) 3 SCC
501,

9. Jagjeet Singh Vs Ashish Mishra @ Monu, AIR 2022
SC 1918,

10. Deepak Yadav Vs St. of U.P., AIR 2022 SC 2514,

11. Dolat Ram & ors. Vs St. of Har., (1995) 1 SCC
349,

12. Neeru Yadav Vs St. of U.P.& anr., (2016) 15 SCC
422,

13. Mahipal v. Rajesh Kumar Alias Polia & anr., AIR
2020 SC 670,

14. Colby Furniture Comp., Inc. Vs Belinda J.
Overton, 299 So.3d 259,

15. Holy Family Catholic School Vs Boley 847 So.2d
371 (2002).

(Delivered by Hon'ble Krishan Pahal, J.)

1. Heard Sri Imran Ullah, learned
counsel for the applicant, Sri Nand Lal
Pandey, learned counsel for the opposite
party no. 2 and Sri V.K.S. Parmar, learned
A.G.A. for the State.