JUDGMENT S.P. Srivastava, J.
1. Feeling aggrieved by the order passed by the District Judge, Kanpur Nagar, dismissing the objections preferred under Section 34 of the Arbitration and Conciliation Act, 1996, against the award dated 17.11.1997, the objector appellant has now come up in appeal before this Court, seeking redress praying for setting aside the impugned order passed by the District Judge.
2. We have heard the learned counsel for the objector appellant. The learned counsel representing the contesting respondent, who has put in appearance at this stage, has also been heard.
3. As jointly requested by the learned counsel for the parties, this appeal is being finally disposed of at this stage.
4. The facts shorn of details and necessary for the disposal of this appeal lie in a narrow compass. M/s. Atul Kanodia and company, a proprietorship firm through its proprietor Mr. Atul Kanodia had approached the U. P. Stock Exchange Association Ltd., Kanpur Nagar, seeking arbitration reference raising a claim against the present appellant Vipul Agarwal who had various business dealings in diverse capacities with M/s. Atul Kanodia and company in respect whereof on balance being struck, a sum of Rs. 26,18,364.90 paise was found due and recoverable from the present appellant. Since Sri Vipul Agarwal, the present appellant inspite of demand, had refused to pay, hence the arbitration reference was sought for praying for a direction to pass an award against the present appellant requiring him to pay a sum of Rs. 26,18,364 together with interest at the rate of 24% per annum calculated w.e.f. 28.11.1997 till its actual payment.
5. The U. P. Stock Exchange Association Ltd. on the aforesaid reference made by M/s. Atul Kanodia and company through its proprietor Mr. Atul Kanodia, a member of the U. P. Stock Exchange Association Ltd. had appointed Sri G. D. Sarada as an Arbitrator. The U. P. Stock Exchange sent the prescribed form to the present appellant requesting him to appoint an Arbitrator of his choice within 7 days from the date of receipt of the notice and also submit his reply to the case set up or counter claimed together with the arbitration fee. Inspite of receipt of the notice on 13.8.1997 Sri Vipul Agarwal neither appointed any Arbitrator nor submitted any reply, etc. On his failure to appoint an Arbitrator, the President of the U. P. Stock Exchange Association Ltd. appointed Sri M.L. Jain to be an Arbitrator. Subsequently, on 4.4.1997 both the Arbitrators appointed Sri Gopi Shyam Nigam an advocate to be the third Arbitrator.
6. The Arbitrators after entering upon the reference informed the present appellant about the proceedings requiring him to appear on 20.9.1997 before them along with his reply, complete books of account and evidence, etc. in support of his case, if any. The appellant was also informed that he may himself appear either personally or through a duly authorised representative failing which the hearing will proceed ex parte. The appellant did not put in appearance before the Arbitrator. However, a letter dated 4.9.1997 signed by Sri Jai Prakash Bajpayee, advocate on his behalf was sent. Copy of the aforesaid letter was served on the proprietor of Atul Kanodia and the next date fixed was 27.9.1997. Information of this date was also given to the present appellant again informing him that if he did not turn up, the case would be heard ex parte. The present appellant did not appear nor he moved any application. However, again a notice dated 29.9.1997 by Jai Prakash on behalf of the plaintiff-appellant through Jai Prakash Bajpayee challenging the authority of the Arbitrator and showing lack of confidence in them was sent.
7. The Arbitrators disposed of the objections observing that the contracts and the transactions which were between the petitioner Kanodia and Company and Sri Vipul Agarwal amounted to a valid agreement and clearly fell within the purview of the U. P. Stock Exchange Association Ltd., were subject to arbitration as per Rules, Bye-laws, and Regulations of the U. P. Stock Exchange Association Ltd. and the dispute pertaining to which, if any, are subject to arbitration as per Rules, Bye-laws and Regulations as laid down by the U. P. Stock Exchange Association Ltd.
8. So far as the notices signed by Sri Jai Prakash, Advocate were concerned, observing that none had come forward to press the allegations made therein, the objections were rejected relying upon the assertion of denial by Atul Kanodia on oath.
9. The Arbitrators had found that M/s. Atul Kanodia and Company and Vipul Agarwal in his diverse capacities as an individual as well as the Director of "Sri Girdhar Investments and Shares Pvt. Ltd.", a company belonging to him had been dealing with M/s. Atul Kanodia and Company in respect of sale and purchase of shares. M/s. Atul Kanodia and Company had filed true copies of all contracts and statement of transactions/Bills pertaining to all transactions done by the respondent which had been duly received and acknowledged by the reception counter, under the seal of the office of Vipul Agarwal and the affidavit of Atul Kanodia stating on oath that the transactions were in consonance with the statutory requirements of the U. P. Stock Exchange Association Ltd. It was observed from the contracts that apart from other terms and conditions mentioned therein, there is mention that the "Contract is made subject to Rules, Bye-laws and Regulations and usages of the U. P. Stock Exchange Association Ltd., Kanpur" and further that in the event of any claim (whether admitted or not), difference or dispute arising between you and us (the parties) out of the transactions, the matter shall be referred for Arbitration in Kanpur as provided in the rules, Bye-laws and Regulations of the U. P. Stock Exchange Association Ltd., Kanpur. This contract constitutes and shall be deemed to constitute an agreement between the parties. The Arbitrators also found that all the acknowledged documents were duly signed under the itamp of M/s. Sri Girdhar Investment and Shares Pvt. Ltd., and were sufficient service, knowledge and acceptance of the contract and other documents on the part of Sri Vipul Agarwal. The Arbitrators were further of the view that the transactions had been duly entered into by Sri Vipul Agarwal. In support of the aforesaid view, the Arbitrators also referred to two hand written letters of Vipul Agarwal duly signed by the proprietor of Atul Kanodia and Company by his first name which exhibits close personal association between the parties and admitting the liability. The letters, it was observed, proved the genuineness of the claim of M/s. Atul Kanodia and Company and indicating that there was business transactions on account of sale and purchases of shares between the parties and further that the payment was due from the present appellant to M/s. Atul Kanodia and Company, the respondent on 29.1.1997, the date of the said letter. It was also found that no money was ever received on account of the Badla as claimed by the appellant. The cheques of M/s. V. K. Financiers had been received by M/s. Atul Kanodia and Company from Sri Vipul Agarwal in his account and not in the account of M/s. V.K. Financiers, of which he happened to be the proprietor. The aforesaid amount had been duly credited to the account of Sri Vipul Agarwal and was so reflected in the account. The Arbitrators finding the claim of the Atul Kanodia and Company to be genuine and legally valid, made an award in his favour as against the present appellant for an amount of Rs. 26,18,364.90, on which interest was payable at the rate of 18% per annum from 28.1.1997 till the date of actual payment.
10. Feeling aggrieved by the aforesaid award, Sri Vipul Agarwal, the present appellant filed a petition under Section 34 of the Arbitration and Conciliation Act, 1996, challenging the said award on various grounds.
11. The learned District Judge vide his impugned judgment and order upheld the award negativing the objections raised by the present appellant.
12. A perusal of the impugned order passed by the learned District Judge indicates that he was of the view that the materials on record clearly indicated that Vipul Agarwal was trading with M/s. Atul Kanodia and Company under both his own name as well as in the name of Sri Girdhar Investments and Shares Pvt. Ltd. The contracts by him were also made in his personal capacity. Further M/s. V. K. Financiers was the sole proprietorship firm of Sri Vipul Agarwal and he had paid a sum of Rs. 13 lacs to M/s. Atul Kanodia and Company. The learned District Judge observed that from the materials on record by the appellant that each and every contract between the parties performs relating to the deal between the parties contained an arbitration clause stipulating that the dispute would be decided by the Arbitration and the Arbitration would be in accordance with the bye-laws of the U. P. Stock Exchange and further that the contracts were subject to the rules, bye-laws and Regulations of the U. P. Stock Exchange Association Ltd. The court below negatived the assertions of the present appellant to the effect that there was no agreement in between the parties. Observing further that the record proved that there did exist a valid arbitration between the parties, it was also found that Sri Gopi Shyam Nigam, the third Arbitrator was a member of the arbitration committee and his appointment as an Arbitrator was valid.
13. The District Judge had observed that from the record, it was apparent that the present appellant had been informed by the Arbitrators at every stage of the proceedings. The present appellant, however, neither appeared before the Arbitrators nor filed any written statement despite of having full knowledge of the arbitration proceedings and he deliberately kept himself away.
14. The District Judge in his order impugned in this appeal has observed :
"It has not been disputed that the petitioner Sri Vipul Agarwal and his firm Sri Girdhar Investments and Shares Pvt. Ltd. were clients of respondent firm and were having business dealings with the opposite party firm under the statutory requirement of U. P. Stock Exchange Association Ltd. and were dealing with shares and securities of different companies through opposite party firm."
It has again been observed :
"It has not been disputed that Sri Vipul Agarwal was the Managing Director of Sri Glrdhar Investments and Shares Pvt. Ltd. but contracts by him were also made in his individual capacity and were duly sent to him as is evident from paper Nos. 86 to 99 of the arbitration file."
It has further been observed :
"It is also an admitted fact that Vipul Agarwal had paid about Rs. 13 lacs by various cheques issued by V. K. Financiers, the sole proprietorship firm of Sri Vipul Agarwal."
15. It may be noticed at this stage that the Apex Court in its decision in the case of State of Maharashtra v. Ramdas Shrinivas Nayak and Anr. AIR 1982 SC 1249, had observed as follows :
"......................we are bound to accept the statement of the Judges recorded in their Judgment, as to what transpired in Court. It cannot allow the statement of the Judges to be contradicted by statements of bar or by affidavit and other evidence. If the Judges say in their judgment that something was done, said or admitted before them, that has to be the last word on the subject. The principle is well-settled that statements of fact as to what transpired at the hearing, recorded in the judgment of the Court, are conclusive of the facts so stated and no one can contradict such statements by affidavit or other evidence. If a party thinks that the happenings in Court have been wrongly recorded in a judgment, it is incumbent upon the party, while the matter is still fresh in the minds of the Judges, to call the attention of the every Judges who have made the record to the fact that the statement made with regard to his conduct was a statement that had been made in error. That is the only way to have the record corrected. If no such step is taken, the matter must necessarily end there."
16. In the aforesaid view of the matter, the statement of facts occurring in the impugned Judgment indicating that there was no dispute about those facts have to be accepted as correct.
17. The learned counsel for the appellant has strenuously urged that there was no arbitration agreement as defined under Section 7 of the Act and the constitution of the Arbitral Tribunal comprising of D.D. Sarda, M.L. Jain and Shri Gopi Shyam Nigam not being in accordance with law the aforesaid Arbitrators had no jurisdiction to give the award fastening a liability on the present appellant. It is further urged in this connection that the appellant had no confidence in the Arbitrators and in spite of having been informed about this fact they had proceeded with the arbitration culminating in the impugned award which could not be sustained in law as the appellant had Justifiable doubts as to the independence and impartiality of the Arbitrators.
18. The learned counsel for the contesting respondent, however, has asserted that clinching evidence had been produced by the contesting respondent indicating in unmistakable terms that both the parties had agreed upon the settlement of the dispute by arbitration in accordance with bye-laws of the U. P. Stock Exchange Association Limited. The learned District Judge has also recorded categorical finding about the existence of the arbitration agreement in accordance with which the Arbitral Tribunal had been constituted. It has further been urged that in spite of ample opportunity having been provided at every stage of the proceedings before the Arbitrators, the appellant had deliberately failed to put in appearance before them and had deliberately refused to take part in the proceedings. He had not filed any written statement challenging the constitution of the Arbitral Tribunal or setting up any challenge to any of the Arbitrators on any ground envisaged under Section 12(3)(a) of the Arbitration and Conciliation Act, 1996. The Arbitral Tribunal, however, acting in a most fair manner had taken cognizance of the notice purported to have been sent on the instruction of the appellant by a counsel Sri Jai Prakash Bajpaee dated 4.9.1997 and the other notice dated 29.9.1997 which notices were addressed to the Manager, Grievances and Complaints, U. P. Stock Exchange Association Limited. In the aforesaid notice it had been indicated that Shri Vipul Agrawal had neither accepted any Arbitrator of U. P. Stock Exchange Association nor had any confidence in any official of the said Association. The Arbitrators had been requested to desist from the alleged proceedings indicating that Shri Vipul Agrawal will not be bound by them. It was so indicated in the notice dated 4.9.1997 and in the other notice dated 29.9.1997. What had been urged was that Shri D.D. Sarda and Shri M.L. Jain had been arbitrarily appointed as Arbitrators without the consent of Shri Vipul Agrawal and he had no confidence and trust in them. In such a situation it was further urged that there could not be any occasion for the appointment of Shri Gopal Shyam Nigam, advocate, as the third Arbitrator. Noticing that date for the hearing had been fixed by the Arbitrators, they were requested to desist from mala fide conduct and stop the illegal arbitration proceedings for which Shri Vipul Agrawal had not given any consent indicating further that he had no confidence in so called Arbitrators Shri M.L. Jain or Shri D.D. Sharda. A copy of the notice was also sent to Shri Gopi Shyam Nigam requesting him not to initiate any arbitration proceedings informing him that Shri Vipul Agrawal had not given any consent for the same and he could not be compelled to participate in such frivolous arbitration proceedings.
19 . The Arbitral Tribunal after affording an opportunity of being heard to Shri Vipul Agarwal had, however, taken a decision negativing his contentions and had refused to withdraw. They had further found that the Arbitral Tribunal had been validly constituted in accordance with law and had returned a finding against Shri Vipul Agarwal as contemplated under Section 16(5) of the Act upholding the competence of the Arbitral Tribunal to enter upon the reference and give the award.
20. In the aforesaid view of the matter, it is urged that the submissions made by the learned counsel for the appellant are not at all sustainable in law.
21. We have given our anxious consideration to the rival submissions made by the learned counsel for the parties and have carefully examined the record as well as the various provisions of the Arbitration and Conciliation Act, 1996.
22. Before proceeding further, it will be useful to refer to the relevant provisions contained in Sections 12, 13, 16, 25 and 34 of the Act :
"12. Grounds for challenge.--(1) ...............................................
(2) .........................................
(3) An Arbitrator may be challenged only if;
(a) circumstances exist that give rise to justifiable doubts as to his independence or impartiality ; or
(b) he does not possess the qualifications agreed to by the parties.
(4) A party may challenge an Arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made.
13. Challenge procedure.--(1) ...............
.................
.................
(2) Failing any agreement referred to in Sub-section (1), a party who intends to challenge an Arbitrator shall, within fifteen days after becoming aware of the constitution of the Arbitral Tribunal or after becoming aware of any circumstances referred to in Sub-section (3) of Section 12, send a written statement of the reasons for the challenge to the Arbitral Tribunal.
(3) Unless the Arbitrator challenged under Sub-section (2) withdraws from his office or the other party agrees to the challenge, the Arbitral Tribunal shall decide on the challenge.
(4) If a challenge under any procedure agreed upon by the parties or under the procedure under Sub-section (2) is not successful, the Arbitral Tribunal shall continue the arbitral proceedings and make an arbitral award.
(5) Where an arbitral award is made under Sub-section (4), the party challenging the Arbitrator may make an application for setting aside such an arbitral award In accordance with Section 34.
(6) .........................................
16. Competence of Arbitral Tribunal to rule on its jurisdiction.--(1) The Arbitral Tribunal may rule on its own Jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose :
(a) an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract ; and
(b) a decision by the Arbitral Tribunal that the contract is null and void shall not entail ipso Jure the invalidity of the arbitration clause.
(2) A plea that the Arbitral Tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence ; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an Arbitrator.
(3) A plea that the Arbitral Tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings.
(4) .........................................
(5) The Arbitral Tribunal shall decide on a plea referred to in Sub-section (2) or Sub-section (3) and, where the Arbitral Tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award.
(6) A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award fn accordance with Section 34.
25. Default of a party,--Unless, otherwise agreed by the parties, where without, showing sufficient cause :
(a) ........................................
(b) ........................................
(c) A party fails to appear at an oral hearing or to produce documentary evidence, the arbitral Tribunal may continue the proceedings and make the arbitral award on (he evidence before it.
34. Application for setting aside arbitral award.--(1) ..............................
(2) An arbitral award may be set aside by the Court only if :
(a) The party making the application furnishes proof that:
(i) a party was under some incapacity ; or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force ; or
(iii) the party making the application was not given proper notice of the appointment of an Arbitrator or of the arbitral proceedings or was otherwise unable to present his case ; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration ; or
(v) the composition of the Arbitral Tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this part; or
(b) the Court finds that :
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force ; or
(ii) the arbitral award is in conflict with the public policy of India.
(3) .........................................
(4) .........................................
23. In the present case, it is not disputed that apart from the notices dated 4.9.1997 and 29.9.1997 addressed to the Manager, Grievances and Complaints, U. P. Stock Exchange Association Limited which notices had not been signed by the present appellants in spite of having full knowledge about the appointment of the Arbitrators, commencement of the arbitration proceedings as well as the dates fixed by the Arbitrators in these proceedings for the appearance of the present appellant, he had not submitted his statement of defence. It may be noticed that the provisions contained in Section 23 of the Arbitration and Conciliation Act, 1996, clearly stipulate the submission of defence in respect of facts disclosed by the claimant in support of his claim and the relief or remedy sought. The provisions contained in Section 25 of the said Act also contemplates that if the respondent fails to communicate his statement of defence in accordance with Sub-section (1) of Section 23, the Arbitral Tribunal shall continue the proceedings without treating that failure in itself as an admission of the allegations by the claimant but where a party fails to appear at an oral hearing or to produce documentary evidence, the arbitral Tribunal may continue the proceedings and make the arbitral award on the evidence before it.
24. In the aforesaid circumstances, the Arbitral Tribunal proceeded to determine its competence and own jurisdiction and also the objections raised in the notices. It has been observed by the Arbitral Tribunal that the present appellant had been directed for his personal presence and/or through a duly authorised representative at the appointed time, date and place, failing which hearing will proceed and the reference may be decided ex parte on merits on the basis of the material available to the Arbitrators on record but in spite of the notice having been duly served, he did not appear nor made any application for his non-appearance. After going through the evidence produced by the claimant and in the absence of any objection on any of the facts and assertion made by the claimant, the Arbitrators proceeded to hold that the contract and the transaction were between the claimant and the present appellant and there was a valid agreement and further considering the implication arising under the Bye-laws and Regulations of the U. P. Stock Exchange Association Limited and were convinced about the legality of the constitution of the Arbitral Tribunal.
25. The learned counsel for the appellant in support of his submissions has urged that the circumstances existed that gave rise to justifiable doubts as to the independence and impartiality of the Arbitrators and in such a situation, the impugned award was not liable to be sustained on account of the Arbitrators being biased. So far as the aforesaid aspect is concerned, as has already been indicated hereinabove, the appellant had not submitted any written defence in opposition to the claim set up by the present respondent. No factual foundation had been laid in support of the plea of bias. There was neither any plea about the existence of any circumstances which could give rise to justifiable doubt as to independence or impartiality of the Arbitrators or their having lacked the qualification to be appointed as Arbitrators. The notices sent by Shri Jai Prakash Bajpaee, an advocate, dated 4.9.1997 and 29.9.1997 were addressed to the Manager, Grievances and Complaints, U. P. Stock Exchange Association Limited and could not by any stretch of imagination be taken to be a defence as contemplated under Section 23 of the Act. The Arbitrators, therefore, could as provided under Section 25(c) of the Act continue the proceedings and make the arbitral award on the evidence before them. However, with all fairness and impartiality, the Arbitral Tribunal proceeded to consider the grievance raised in those notices but in the absence of any pleading laying factual foundation of evidence whatsoever having been led on the part of the present appellant, considering the evidence and the materials brought on record by the claimant which were found to be acceptable, the Arbitral Tribunal continued with the proceedings and gave the award.
26. It should not be lost sight of that when persons approach a domestic Tribunal and want their matter to be determined by arbitration, they have every choice as to the person whom they should select as Arbitrator, and, therefore, it is clear that the highest faith should be shown by the Arbitrator. It also follows that the Arbitrator must disclose to the parties all the facts which are likely or calculated to bias him in any way in favour of one or the other party. A circumstance or a fact may in fact, not bias or influence the decision of the Arbitrator. The Arbitrator may have too strong a character, too deep a sense of justice to be influenced by any consideration extraneous to or foreign to the evidence which he has got to consider. But the question is not what is likely in fact to happen but what is likely to tend or is calculated to tend to a particular result. It is most fundamental principle of justice that a Judge or a Tribunal should not decide a dispute if there is a probability that he would be biased in the case. The test is whether he is likely to be biased. Actual bias need not be proved.
27. Bias may be defined as a preconceived opinion or a predisposition or pre-determination to decide a case or an issue in a particular manner, so much as that such predisposition does not leave the mind open to conviction. It is, in fact, a condition of mind, which sways judgments and renders the Judge unable to exercise impartiality in a particular case.
28. Further, it is an elementary rule of natural justice that a person who tries a case should be able to deal with the matter before him objectively, fairly and impartially. The 'biased' person does not hold his opinion as it is the opinion that holds him and. therefore, he cannot have an impartial mind.
29. In the present case, however, absolutely no evidence had been led which could lead to any inference that the Arbitrators were biased or were interested in the matter. No such material was brought on record which could be taken to produce a bias in their minds.
30. It may further be noticed that the scope of interference on an application contemplated under Section 34 of the Act for setting aside arbitral award is very limited. An arbitral award may be set aside by the Court only on satisfying the requisite conditions contemplated under Section 34(2) of the Act. The use of the word "only" is quite significant and it excludes a ground of attack on the arbitral award other than those contemplated under Section 34(3)(a) and (b) of the Act.
31. It has been urged that the ground envisaged under Section 12(3) of the Act can be raised even in the proceedings under Section 34 of the Act. However, Section 13(5) of the Act indicates otherwise. In spite of the objection having been raised as contemplated under Section 12(3) of the Act in case the challenge made is not successful, the Arbitral Tribunal can continue with the arbitral proceedings and make an arbitral award. The said award can only be challenged in accordance with Section 34.
32. It may be noticed that under the scheme underlying the various provisions of the Arbitration and Conciliation Act, 1996, in cases where the plea about the competence of Arbitral Tribunal on the ground that it had no jurisdiction to enter upon the arbitration, if raised, the Arbitral Tribunal has to decide such a plea. The Arbitral Tribunal is also bound to decide the question. If raised, regarding its exceeding the scope of its authority. The decisions of the Arbitral Tribunal in cases where such pleas are accepted, have been made appealable under Section 37(2) of the Act. But in case the pleas are not accepted, in that event, party aggrieved by the arbitral award may make an application for setting aside such an arbitral award in accordance with Section 34 of the Act only. The remedy is of a very limited scope of interference. This position is clear from the provisions of Sections 16 and 37 of the aforesaid Act.
33. It is, therefore, obvious that the decision of the Arbitrator contemplated under Section 13(3) of the Act or a decision of the Arbitrators about the competence of the Arbitral Tribunal upholding its jurisdiction as contemplated under Section 16(5) of the Act has to be taken to be final which cannot be reopened in the proceedings under Section 34 of the Act except on limited grounds as envisaged thereunder.
34. This indicates that the legislative intent underlying the provisions of the Act is that the decision of the Arbitrator against whom allegations have been made attracting the challenge of the nature as indicated in Section 12(3) of the Act, if negatived by the Arbitrators, has to be taken to be final and not open to challenge in the proceedings under Section 34.
35. Taking into consideration the facts and circumstances of the present case as brought on record, we are clearly of the opinion that the submissions urged by the learned counsel for the appellant are totally devoid of merit and are not at all acceptable.
36. The findings returned by the District Judge are amply supported and warranted by the evidence and material on record and the impugned award cannot be held to be vitiated in law as claimed.
37. Learned counsel for the appellant has tried to urge that the Arbitrator had no jurisdiction to award interest. So far as this aspect of the matter is concerned, a perusal of the impugned award indicates that the interest awarded is @ 18% per annum. Section 31(7)(b) of the Act clearly stipulates that a sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest @ 18% per annum from the date of the award to the date of payment.
38. In view of the aforesaid statutory provision, it is apparent that the impugned award cannot be held to be vitiated in law for providing payment of interest @ 18% per annum from 28.1.1997 till the date of actual payment.
39. In its decision in the case of Narayan Prasad Lohiya v. Nikunj Kumar Lohiya and Ors., JT 2002 (2) SC 222, the Hon'ble Supreme Court had indicated that the Arbitration and Conciliation Act, 1996, had been enacted to consolidate and amend the law relating to domestic and international commercial arbitration and for matters connected therewith and incidental thereto. It was further pointed out that one of the objects of the said Act was to minimise the role of Courts in the arbitration process. So far as Section 34 of the aforesaid Act was concerned, it was indicated that the said section categorically provides that the award could be set aside by the Court only on the grounds mentioned therein.
40. It was also indicated that even though the aforesaid Act is now an integrated law on the subject of arbitration, it cannot and does not provide for all the contingencies. An arbitration being a creature of agreement between the parties, it would be impossible for the Legislature to cover all aspects.
41. The learned counsel for the appellant has on the strength of the observations made in paragraph 18 of the aforesaid decision in the case of Narayan Prasad Lohiya (supra), has urged that in the proceedings under Section 34 of the Act the grounds available under Sections 12 and 16 of the Act can also be urged while challenging the arbitral award. In paragraph 18 of its decision in the aforesaid case, the Apex Court had observed that under the Act, the grounds of challenge to an arbitral award were very limited and an award could be set aside only on a ground of challenge under Sections 12, 13 and 16 provided such a challenge is first raised before the Arbitral Tribunal and has been rejected by the Arbitral Tribunal. The only other provision is Section 34 of the said Act.
42. Learned counsel for the appellant has tried to infer from the aforesaid observations that the grounds available under Sections 12 and 16 of the Act are also available in the proceedings under Section 34 of the Act in spite of the use of the word "only" restricting the grounds of attack on an arbitral award to the grounds specifically mentioned in Section 34.
43. So far as the aforesaid aspect of the matter is concerned, from a perusal of the judgment in the case of Narayan Prasad Lohiya (supra), it is apparent that the question which had arisen in that case was as to whether Section 10 of the Act was a non-derogable provision and further in regard to the implications arising under Section 34(2)(a)(u) of the Act, it was held that so long as the composition of the Arbitral Tribunal or the arbitral procedure are in accordance with the agreement of the parties, Section 34 does not permit that challenge to the award merely on the ground that the composition of the Arbitral Tribunal was in conflict with part I of the said Act. Thus, it was clarified that Section 10 is a derogable provision. In paragraph 20 of the Judgment, the Apex Court had held that the respondent Nos. 1 and 2 in that case not having not raised any objection to the composition of the Arbitral Tribunal, as provided in Section 16 of the Act must be deemed to have waived their right to object.
44. It may be noticed that the Apex Court in its decision in the case of State of Orissa v. Sudhansu Sekhar Misra and Ors., AIR 1968 SC 647, had clearly indicated as follows :
"A decision is only an authority for what it actually decides. What is of the essence in a decision is its ratio and not every observation found therein nor what logically follows from the various observations made in it."
45. It its aforesaid decision, the Hon'ble Supreme Court, while quoting various observations made in the case of Quinn v. Leathem, 1901 AC 495, had indicated that it is not a profitable task to extract a sentence here and there from a judgment and to build upon it. The decision in the case of Narayan Prasad Lohiya (supra), cannot come to the rescue of the appellant.
46. In view of our conclusions indicated hereinabove, this appeal being devoid of merits deserves to be and is hereby dismissed.
47. There shall, however, be no order as to costs.