Smt. Sulochana Modi vs Sri Pawan Kumar Modi
2021 Latest Caselaw 6726 Ori

                    IN THE HIGH COURT OF ORISSA AT CUTTACK

                                  ARBA NO.15 OF 2017

                  Smt. Sulochana Modi                  ....           Appellant
                                         Mr. Goutam Acharya, Senior Advocate
                                       M/s Arun Kumar Budhia, S. K. Behera,
                                      D. K. Naik, D. P. Mishra & Mrs. A. Panda

                                               -versus-
                  Sri Pawan Kumar Modi                      ....        Respondent
                                                        M/s. Ashok Kumar Panigrahi
                                                           and Bhabani Sankar Das

                             CORAM:
                             JUSTICE K.R.MOHAPATRA
                                      JUDGMENT

Order No. 30.06.2021

02. 1. This matter is taken up by video conferencing mode.

2. This appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (for short, 'the Arbitration Act') has been filed assailing the judgment and order dated 25.09.2017 passed by learned District Judge, Cuttack in ARBP No.43 of 2015 filed by the Appellant under Section 34 of the Arbitration Act, whereby dismissing the Arbitration Petition, learned District Judge confirmed the award dated 14.12.2015 passed by the Arbitration Tribunal, Cuttack in Arbitration Case No.3 of 2013.

2.1 Short narration of facts necessary for proper adjudication of this appeal are that a deed of Partnership at Will was executed between three partners, namely, the Appellant, Respondent and one Binod Kumar Tibrewal. The partnership

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had established a firm in the name and style of M/s. R. M. Mills over Plot Nos.113 and 114, New Industrial Estate, Phase-II, Jagatpur, Cuttack. The firm was manufacturing turmeric powder and spices etc. Subsequently, one of the partners, namely, Binod Kumar Tibrewal retired from the partnership. Thus, a fresh partnership deed was executed on 28.08.2004 between the Appellant and Respondent. The profit and loss sharing of the partners was at 50:50 ratio. Subsequently, the partnership deed was also modified in April, 2009. Initially, the partnership firm availed financial assistance from the State Bank of India, which was ultimately transferred to Axis Bank. The firm had loan liability of Rs.90.00 lakh with Axis Bank towards term loan and Rs.1.30 lakh towards cash credit. The Respondent, being nephew of the Appellant was the Managing Partner and was looking after the management of the firm. Subsequently, dispute arose between the partners, namely, the Appellant and the Respondent. As the partnership was at Will, the Appellant sent a notice to the Respondent expressing her intention to bring an end to the said partnership and for payment of her legitimate dues out of the firm's assets. As the dispute could not be resolved, a Tribunal was constituted on mutual consent of the parties as per the arbitration clause of partnership deed.

2.2 Narrating the aforesaid facts, the Appellant filed her claim statement stating that the Respondent is none other than the son of elder brother of her husband. Thus, the Respondent was allowed to act as Managing Partner of the firm with a remuneration of Rs.1,500/- per month. But taking advantage of the situation, the Respondent started to act whimsically by

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prevailing over the Appellant. The Appellant was not allowed to enter into the firm premises and verify the books of account as well as other business transactions. The Appellant was kept in dark about business of the firm. On the other hand, the Respondent pretended that the firm is sustaining loss in the business. In continuation of his highhanded action, the Respondent also pursued the Appellant to dissolve the partnership to safeguard her investment and other entitlement from the firm's assets. In view of the above, the Appellant lost faith and trust on the Respondent and issued legal notice for dissolution of the partnership. The Respondent also sent his reply on 07.11.2013. Since the dispute could not be resolved, the Appellant invoked arbitration clause of the partnership deed. An Arbitral Tribunal was constituted on mutual consent of the parties. On the aforesaid assertions, the Appellant sought for dissolution of the partnership and payment of her legitimate dues after liquidation of the liabilities of the firm.

2.3 The Respondent on his appearance filed statement of defence/counter claim denying the allegations made in the claim statement. He specifically denied the allegations and contended that he did nothing to affect the interest of the partnership firm. He has never mis-conducted himself, as alleged, in breach of terms of the deed of partnership. He has never done anything to achieve personal gain using firm's assets. The net worth of the firm was negative. So, it would not satisfy the liability of the firm. He always acted in the interest of the partnership as well as firm and had invested substantial amount in the firm's business besides his labour and services. In view of the above, he also

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claimed his legitimate share as that of the Appellant in the firm's assets in case of dissolution of the partnership. It was his allegation that the Appellant herself put lock in the factory premises on 24.09.2013 and also communicated the Bank to stop operation of the bank account for which the firm suffered immensely for three months. He accordingly refuting the claims made by the Appellant, more particularly closure of the unit, prayed for compensating him adequately due to the action of the Appellant.

3. Taking into consideration the rival contentions of the parties, the Arbitral Tribunal framed as many as five issues which are as follows:-

i) Whether the claim petition is maintainable, and the claimant has any cause of action?

ii) Whether the claimant has no access to the Books of Account in breach of the Deed of Partnership?

iii) Whether the Respondent was diverting raw material, finished goods etc. from the factory and manipulating accounts for his personal gain?

iv) Whether the assets of the firm have been overestimated and liabilities undervalued?

v) Whether relief, if any, the claimant is entitled to?

The award in the Arbitration Case No.3 of 2013 was passed on 14.12.2015 (Annexure-9) in which the majority view was as follows:-

"In view of the foregoing discussions and on due consideration of the respective claims of the parties including the evidence brought on record on their sides, the proceedings is allowed and disposed of on merit and the partnership "R.M.MILLS" dated 01.04.2009 between the parties accordingly stands dissolved.

The claimant is entitled to a sum of Rs.1,12,33,517.73, the respondent on the other

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hand to take over the assets and liabilities of the firm including the bank loans (debtors, creditors other loans etc.) and shall pay Rs.1,12,33,517.73 to the claimant towards her share within a period of 12 months in six equal monthly installment and the first of such installment shall commence six months after the date of the award (i.e. on 13.07.2015, 13.08.2016, 13.09.2016, 13.10.2016, 13.11.2015 and 13.12.2016 respectively). The respondent on the other hand is at liberty to make the necessary changes in the constitution of the firm including in the bank account on production of a copy of this award and the claimant shall execute all necessary document or documents in favour of the respondent and shall give all papers/consent concerning Bank and the business to him so that there shall be no difficulties to operate the Bank's account and to run the business.

In case the claimant's entitlement as mentioned above are not paid within the stipulated time as stated above, she is entitled, interest on the said amount of each installment @ Rs.18,72,252.96 (Rs.1,12,33,517.73 divided by 6 installment) @12% per annum from the date of the respective date of installment due, for payment till realization. In the circumstances the parties to bear their own cost."

Whereas the minority view of the Arbitrator, namely, Dr. Subash Chandra Hota, was as follows:-

"The claim amounts as laid out in the Arbitration Petition is allowed in part on contest against the respondent with interest and costs. The Claimant is entitled to an amount of Rs.1,33,15,500/- (Capital Investment, Rs.67,27,559.10/- + 50% share in Net Assets, Rs.60,87,940.89/- + 50% share in the Firm Goodwill, Rs.5,00,000/-) payable by three months hence. She is entitled to interest both pendente lite and future @ 12 p.a. on her capital investment amounting to Rs.67,27,559/-, and in case of respondent's failure to make payment within the timeline only future interest at the aforesaid rate on

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her 50% share in the Net Assets, Rs.60,87,941/-, and Goodwill, Rs.5,00,000/- from date of this order till date of realization. Claimant may also move appropriate authority for realization of her dues if the order passed is not complied with."

4. Assailing the same, the Appellant filed a petition under Section 34 of the Arbitration Act before the learned District Judge, Cuttack, which was registered as ARBP No.43 of 2015. Amongst other, the Appellant claimed that majority view of the Arbitral Tribunal is per se illegal, as the award is opposed to the public policy of India. Non-consideration of the claim of the Appellant to award interest and reduction of the valuation of the land to Rs.1.00 crore, non-consideration of loss of Goodwill, allowing the Respondent to run the firm without reconstitution of the partnership and to make payment to the Appellant in six equal monthly installment after six months of passing of the award itself disclosed the arbitrariness and mala fide on the part of the Arbitrators. Although Dr. Hota, the Arbitrator dealt with all the issues independently but the majority view had not dealt with the same independently and passed an award which is prejudicial to the Appellant.

5. Learned District Judge, Cuttack on consideration of the rival contentions of the parties came to hold that although Dr. Hota dealt with the issues separately, but the view taken by the majority Arbitrators cannot be termed to be illegal as they have taken into consideration all the issues simultaneously and passed the award. Although there is no material on record to show that the valuation of the property to be not less than rupees one crore as held by the majority Arbitrators, but it was incumbent upon

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the Appellant to produce convincing materials in support of valuation of the property. He further observed that when the Appellant sought for dissolution of the partnership for getting her legitimate share in the firm's assets, the Respondent made his wish to continue with the business. Thus, the Appellant is not entitled to get compensation for Goodwill. So far as prayer of the Appellant for cost is concerned, on perusal of the award goes to show that the Appellant has been awarded a sum of Rs.1,12,22,517.73 and the majority Arbitrators have also awarded default interest to the Appellant. Thus, there is no substantive reason to award cost. Further, the Appellant was a sleeping partner and the firm was managed by the Respondent. Thus, the majority Arbitrators rightly did not award any cost. On the aforesaid observations and findings, the impugned judgment dated 25.09.2017 under Section 34 of the Arbitration Act has been passed under Annexure-1. Assailing the same, the Appellant filed this Appeal.

6. Mr. Acharya, learned Senior Advocate for the Appellant assailing the award passed by the majority of the Arbitrators as well as the impugned judgment passed under Section 34 of the Arbitration Act contended that the award is opposed to the public policy of India. Learned Tribunal did not take a unanimous view in the impugned award. While the Arbitrator, Dr. Hota passed an award of Rs.1,33,15,500/- payable within three months along with both pendente lite and future interest at the rate of 12% p. a. on the capital investment made by the Appellant to the tune of Rs.67,27,559/- along with Rs.5.00 lakh for loss of goodwill, the majority Arbitrators had passed an

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award of Rs.1,12,33,507.73, but did not allow any interest on the same. They have however awarded a default interest in the event the Respondent fails to make the payment as per the payment schedule starting after six months of the award. While interpreting the terms 'opposed to public policy of India', the Hon'ble Supreme Court has enlarged the scope to a great extent by holding that in case an award is illegal and against the settled position of law and on the face of it appears to be erroneous and unreasonable, then the same will squarely fall within the aforesaid definition and the award can be set aside under Section 34 of the Arbitration Act. In support of his case, he relied upon the following case laws:-

i) (2015) 14 SCC 21 (National Highways Authority of India Vs. ITD Cementation India Limited)

ii) (2014) 9 SCC 263 (Oil and Natural Gas Corporation Limited Vs. Western GECO International Limited)

iii) (2008) 13 SCC 94 (PNB Finance Limited Vs. Commissioner of Income Tax I, New Delhi)

iv) AIR 2003 SC 2629 (Oil and Natural Gas Corporation Limited Vs. SAW Pipes Ltd.)

v) (2006) 11 SCC 181 (Mc Dermott International Inc Vs. Burn Standard Co. Ltd. and others)

He further contended that grant of interest by the Arbitrators are well within their powers even if the contract otherwise stipulates so. In the present case, there is a specific clause with regard to payment of interest in the deed of partnership itself. When Arbitrator, Dr. Hota granted both pendente lite and future interest at the rate of 12% p.a., the majority Arbitrators failed to

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exercise the power in granting so. It is his contention that grant of interest should be the rule unless there is any exceptional circumstances to deny the same. The majority Arbitrators having failed to exercise the power vested with them and the learned District Judge having failed to give any finding on the issue of award of interest, it is a fit case to be interfered with in this appeal under Section 37 of the Arbitration Act. In support of his case, he relied upon the case law in the case of Secretary, Irrigation Department, Government of Orissa and others Vs. G.C.Roy, reported in (1992) 1 SCC 508. Although majority Arbitrators have accepted the observations and views given by the Arbitrator (Dr.Hota), but have grossly failed to award interest as well as compensation on goodwill.

6.1 It is further contended that the majority Arbitrators have committed error of law in reducing valuation of land and building without assigning any valid reason thereto. The Respondent in his statement of defence/counter claim has categorically admitted that the value of the land and building to be Rs.2.00 crore and have also stated so in the written note of argument. As such, the Arbitrators are bound under law to accept such figure and under no circumstance could have reduced the same to Rs.1.00 crore. Such reduction of valuation is absurd one as there is no basis for arriving at such figure by the majority Arbitrators which speaks volume about the illegality and mala fide on their part. As such, the view taken by the Arbitrator, Dr. Hota with regard to valuation of the land and building at Rs.2.00 crore should be accepted. Mr. Acharya, learned Senior Advocate further contended that the business

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having run successfully from 2004 till the arbitral award was passed and it had made profit which goes to show that the firm was having reputation in the market, compensation towards goodwill should have been awarded by the majority Arbitrators. Considering the above, Dr. Hota, has awarded a compensation of Rs.10.00 lakh towards goodwill which appears to be justified. As such, the Appellant being a partner having 50% share in the firm is entitled to Rs.5.00 lakh towards compensation for the loss of goodwill.

7. The arbitration proceeding before the Tribunal continued over a period of two years and more than forty seven meetings were held. The Arbitrators were also paid their fees accordingly. Thus, it is a just case where cost of litigation should be awarded in favour of the Appellant. Arbitrator Dr. Hota considering the same awarded cost which is just and reasonable.

8. The partnership being 'at Will' can be dissolved by either of the partners at his/her will. The Appellant having lost faith on the Respondent/partner had sent notice for dissolution of partnership. Taking into consideration the same, the Arbitrators unanimously concluded that the partnership should come to an end, but allowing the Respondent to continue with the business after dissolution of the partnership firm by taking over the liability is contrary to law. Further, the Respondent was shown unwarranted leniency by the majority Arbitrators by allowing him to make all payment in six equal monthly installments, the first of which would begin after six months of passing of the award, which itself exhibits the arbitrariness and

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mala fide of the said Arbitrators. Further, till date no payment has been made by the Respondent to the Appellant as per the award. On the contrary, the Respondent has further availed loan from Kotak Bank representing him to be the Proprietor of RM Mills, which is not only illegal but also amounts to misrepresentation of facts. Law is well-settled that once a partnership is dissolved, the outgoing partner should receive his/her share from the business of the firm immediately after dissolution and other partner can reconstitute the firm by taking over the liability of the firm and not before that. It being the legal position, grant of six months time to the Respondent after taking over the assets and liability for making payment is illegal and unreasonable and is liable to be set aside. The Appellant had given her consent for taking over of assets and liabilities of the firm for Rs.1.75 crore, but the award passed by the Arbitrators is quite less which was not taken into consideration either by the Tribunal or by the learned District Judge. As such, the same warrants interference by this Court in this appeal.

9. Although five issues were framed by the Tribunal, but the majority Arbitrators did not deal with the issues independently. However, Arbitrator-Dr. Hota, considered all the issues independently and has given categorical finding on all the issues. As such, the impugned award suffers from non- application of judicial mind.

9.1 On the aforesaid grounds, Mr. Acharya, learned Senior Advocate for the Appellant prayed for setting aside the award passed by the majority Arbitrators and to uphold the findings arrived at by the Arbitrator-Dr. Hota.

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10. Mr. Panigrahi, learned counsel for the Respondent contended that the arguments raised by Mr. Acharya, learned Senior Advocate do not fall within the parameters of Section 34 (2) of the Arbitration Act, hence need no consideration. This Court cannot re-appreciate the evidence as an appellate Court and substitute its own findings. The allegations and contentions raised by Mr. Acharya, learned Senior Advocate are all based on surmises and conjectures. Thus, the appeal under Section 37 of the Arbitration Act is not maintainable. An award which is contrary to substantive provisions of law including the provisions of Arbitration Act or against the terms of the agreement, is patently illegal and affects the rights of the parties, as available under Section 34 (2) of the Arbitration Act, is only open to challenge. Thus, the impugned award should be scrutinized keeping in view the aforesaid provision of the Arbitration Act. There is also no allegation of violation of any mandatory procedure prescribed under Sections 24, 28 or 31 (3) of the Arbitration Act, which affects the rights of the parties. Sub-section 1(a) of Section 28 mandates that in an arbitration other than an international commercial arbitration, the arbitral tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India which include the Indian Contract Act, Transfer of Property Act and other laws in force. Similarly, Sub-section (3) of Section 28 prescribes that while deciding and making an award, the Arbitral Tribunal shall, in all cases, take into account the terms of the contract and trade usages applicable to the transactions. It can also be interfered with when an award is found to be a cryptic and non-speaking one. On bare perusal of

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the majority view of the impugned award it appears that the majority Arbitrators in their wisdom have discussed in detail the contentions of the parties and complying with provisions of law have passed the award. Thus, the impugned award needs no interference. The definition of public policy of India envisaged under Section 34 of the Arbitration Act is required to be given a wider meaning. It can be stated that the concept of public policy comes when some matters which concerned public good and public interest has been raised for consideration. The impugned award on the face of it cannot be held to be in violation of public policy of India as it does not affect any public policy or public interest. Taking into consideration the same learned District Judge has rightly dismissed ARBP No.43 of 2015 filed under Section 34 of the Arbitration Act upholding the award passed by the Arbitral Tribunal in Arbitration Case No.3 of 2013.

11. Award of interest is the discretion of the Tribunal and it has exercised its discretion in a particular manner. Thus, the same requires no interference. Further, non-consideration of the claim of the Appellant for award of cost and compensation towards goodwill cannot be the grounds to interfere with the impugned award in an appeal under Section 37 of the Arbitration Act. The scope of appeal under Section 37 of the Arbitration Act is very limited and the power should be exercised sparingly only when requirements of Section 34 (2) of the Arbitration Act are satisfied and that being conspicuously absent in this appeal, the impugned judgment and order warrants no interference. As such, the appeal is liable to be dismissed.

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12. Heard learned counsel for the parties at length and scrutinized the materials placed before this Court. In order to examine the legality of the impugned award as well as the order passed by learned District Judge, Cuttack, I feel that each of the contentions raised by learned counsel for the parties has to be considered with reference to the law prevailing as well as materials on record.

13. A plea is taken by Mr. Acharya, learned Senior Advocate for the Appellant that findings of the majority Arbitrators are per se illegal. It was his contention that although five issues were framed taking into consideration the rival pleadings of the parties, when Arbitrator-Dr. Hota dealt with all the issues independently and recorded his findings therein, the majority Arbitrators did not discuss the issues independently and gave independent finding thereto.

13.1 In order to test the veracity of the aforesaid argument, this Court went through the award under Annexure-9. True it is that, Arbitrator-Dr. Hota dealt with all the issues independently but, the majority Arbitrators passed a separate award dealing with all the issues simultaneously. On perusal of paragraphs-11 to 14 of the findings of majority Arbitrators, it appears that after discussing the pleadings, attending circumstances as well as evidence of the parties, they have arrived at a finding that since the claimant (Appellant) had lost faith and trust on the Respondent in running the partnership business she served a notice on the Respondent for her retirement from the partnership and also for her legitimate share and dues. As such, the dissolution of the firm can be acted upon. Accordingly, they

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came to a categorical finding that the partnership is no longer in existence and the same accordingly stands dissolved. Dr. Hota is also of the same opinion. Thereafter, going through the balance sheet of financial year 2012-13 and the audit report (Ext. C/2) for the relevant period, they came to hold that by end of the financial year 2012-13, the claimant/Appellant had invested capital of Rs.67,27,559.10 including withdrawal and accrued interest and other payments thereon during that period. Likewise, they held capital investment of the Respondent to be Rs.66,10,664.10.

13.2 While assessing the cost of the land of the firm, they observed that at the time of purchase, the original price of the land was Rs.8,68,726.20 in the year 2004. Although the claimant/Appellant produced the valuation report of the land (Ext. C/5), they did not agree with the same holding that the valuation report in absence of evidence of its author cannot be relied upon. Although CW-3 had made a statement to the effect that he got the land valued through a registered valuer, but the details of the registered valuer being withheld from the Tribunal the said report inspired no evidence for which the evidence with regard to valuation was not accepted. Thus, majority Arbitrators relying upon the case law in Swastik Agency and others -V- State Bank of India, Bhubaneswar and others, reported in AIR 2009 Ori 147, came to hold that the valuation of the property would not be less than Rs.1.00 crore. It is held in Swastik Agency (supra) that the authority concerned has to take an independent view on the valuation of the property by applying

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mind. They should not blindly rely upon the material produced by the parties.

13.3 A plea was taken by Mr. Acharya, learned Senior Advocate that the Respondent in his statement of defence/counter claim has admitted the value of the land to be Rs.2.00 crore. As such, there was no other option on the part of the Tribunal but to accept the same. Learned District Judge, while discussing the said contention came to hold that the Appellant herself having made prayer for arbitration, it is incumbent upon her to produce convincing materials in support of valuation of the property and when she failed to adduce cogent evidence in support of valuation of the property, learned Tribunal in its prudence determined the value of the property to be not less than Rs.1.00 crore. He, thus, refused to interfere with the finding with regard to valuation of the property. In fact, in para-10 of the written Statement of defence, the Respondent stated that valuation of the land and building under distress sale as determined by the Bank, would be Rs. 2.00 crore. But, that cannot be said to be the admission of the Respondent or conclusive proof of valuation of the land. Claimant/Appellant has to succeed on the strength of her own case. Even though, it is assumed that the Respondent had admitted the valuation of the property to be Rs.2.00 crore, but in view of the ratio in Swastik Agency (supra) a duty is cast on the Tribunal to take an independent and pragmatic view on the valuation of the property. The valuation report (Ext. C/5) produced by the Claimant in respect of her case was disbelieved by the Tribunal for the reasons stated above. In that view of the matter, learned

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Tribunal has committed no error in taking an independent view on the valuation of the land. Hence, this Court has no scope to interfere with the same.

13.4 So far as other heads of claim are concerned, it reveals that the closing stock of the firm including the raw materials and packing materials as shown in the balance sheet as well as taking into consideration the perishable nature of the raw materials and accepting the audit report, the majority Arbitrators accepted the closing stock to be Rs.1,75,93,820/-. Discussing about the debts of the firm, the majority Arbitrators came to hold at paragraph-22 of their findings that the total liability of the firm as shown in the balance sheet was Rs.5,22,13,114.85, out of which Rs.1,33,38,223.27 is capital amount of both the partners. Rs.2,11,84.583.64 is the secured loan to be paid to the Bank, Rs.16.00 lakh is un-secured loan to be paid to the private money lenders, Rs.1,51,28,137.94 to be paid to the creditor for goods supplied, Rs.9,62,170.00 to be paid to the sundry creditors and others. All these figures are shown under the heading "current liabilities and provision". Thus, the majority Arbitrators accepted the same to be the liabilities of the firm.

14. In view of the above, it appears that the majority Arbitrators have gone into details of the materials and have formed opinion on an assessment of those materials. It is also held by the majority Arbitrators that some of the claims, i.e., purchase of electrical transformer and some other machinery worth of Rs.52.00 lakh stated to have been purchased after 31st March, 2013 could not be accepted in absence of any conclusive material in support of the same.

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15. Further, on perusal of the award passed by Dr. Hota- Arbitrator, it reveals that discussing the issue in detail, he determined the entitlement of the claimant/Appellant to be Rs.1,33,15,500, whereas the majority Arbitrators have held that the Claimant/Appellant is entitled to Rs.1,12,33,517.73. Thus, there is no much difference between the amount awarded by two sets of Arbitrators. It also appears that the findings of Dr. Hota as well as the majority Arbitrators are more or less the same. They only differ on the question of entitlement of the Appellant. Thus, it appears that although the majority Arbitrators did not discuss the issues independently, but they have discussed the materials on record and also partly allowed the claim of the Appellant. Mr. Acharya could not point out any patent illegality committed by the majority Arbitrators by not discussing the issues independently. In that view of the matter, the contentions raised by Mr. Acharya, learned Senior Advocate to this effect cannot be accepted.

15.1 It is contended by Mr. Acharya, learned Senior Advocate that the majority Arbitrators have failed to exercise their power by not awarding interest on the claim amount. It is contended that the deed of partnership contains a specific clause with regard to payment of interest. It states that "That the capital of the firm shall consist of the amount invested by the parties of the 1st and 2nd part as shall be reflected in their personal account in the books of accounts of the firm and shall be in such proportion as may be agreed upon between the parties hereto from time to time. Such capital invested by the partner shall bear simple interest at the rate of 10% per annum. Such interest

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shall be a charge to the Profit and Loss Account for determination of the Net Profit and Loss. If there is any debit balance in the account of any partner, interest at the same rate shall be payable by him/her." Thus, the Claimant/Appellant is entitled to interest on the capital investment by her. It is his contention that Dr. Hota-Arbitrator had granted both pendente lite and future interest at the rate of 12% per annum, but the majority Arbitrators did not adhere to the same. In support of his case, he relied upon the ratio decided in the case of Secretary, Irrigation Department (supra), wherein it is held that where the agreement between the parties does not prohibit grant of interest and a party claims interest and that dispute (along with the claim for principal amount or independently) is referred to the arbitrator, he shall have the power to award interest pendente lite. This is for the reason that in such a case, it must be presumed that interest was an implied term of the agreement between the parties and therefore when the parties refer all their disputes or refer the dispute as to interest as such to the Arbitrator, he shall have the power to award interest. He therefore, submitted that the majority Arbitrators have mis- conducted themselves by not awarding pendente lite interest as claimed by the Appellant. They further deferred the payment of future interest by six months with a default clause, which amounts to denial of future interest also. Mr. Panigrahi, learned counsel for the Respondent vehemently objected to the same and submits that grant of interest is the discretion of the Tribunal and taking into consideration the facts and circumstances of the case, the Tribunal has also awarded interest although deferring it by six months in case of default on the part

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of the Respondent to make the payment as directed. Thus, the Claimant/Appellant cannot have any grievance on the same.

16. Although no specific issue is framed with regard to grant/payment of interest, but in view of the ratio in the case of Secretary, Irrigation Department (supra), it is well within the domain/power of the Tribunal to grant interest both pendente lite and future. It appears that majority Arbitrators have dealt with the issue of grant of interest at paragraph-28 of their findings. It is observed that audit report (Ext. C/2) indicates payment of interest on the capital account of each partner, i.e., Rs.8,23,476.06 at the end of the financial year 2012-13. It is also held that the Claimant/Appellant has neither prayed for interest nor claimed interest in her notice under the Arbitration Act. She has only prayed for dissolution of the firm by terminating partnership and to pay her legitimate share and dues. It is further held that the capital investment of both the Appellant and the Respondent includes the accrued interest for each year which amount to Rs.8,20,821.10 for the year 2012-13. Thus, they refused to entertain the prayer for grant of any further interest. It is further categorically held in the concluding paragraph of the order that if the Claimant's entitlement as held are not paid within the stipulated time, i.e., within a period of 12 months in six equal installments, first of which to commence after six months from the date of the award, she would be entitled to interest on the said amount of each installment of Rs.18,72,252.96 at the rate of 12% per annum from the respective dates when the installment becomes due for payment till realization. Thus, it cannot be totally denied that the

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Claimant/Appellant has not been granted any pendente lite and future interest as alleged. On perusal of the claim statement it also reveals that although the Claimant has made claim of interest at the rate of 18% interest p.a., but the amount column is kept blank. However, when the Tribunal taking into consideration the facts and circumstances of the case, more particularly taking into consideration the fact that the Claimant has received interest on her capital investment as per the audit report and has also granted 12% interest in default of making payment as per the direction made therein I am not inclined to interfere with the same as it does not fall within the scope of Section 34(2) of the Arbitration Act.

17. The next question that arises for consideration is as to whether the award is opposed to public policy of India. It is contended by Mr. Acharya, learned Senior Advocate that if an award is illegal and against the settled position of law and on the face of it appears to be erroneous and unreasonable then the same squarely falls within the definition of 'Opposed to Public Policy of India', and the award is not sustainable in the eyes of law. A lengthy argument was made by Mr. Acharya, learned Senior Advocate stating that the award is opposed to public policy of India. The terms/phrases 'Opposed to Public Policy of India' has been discussed in detail in the case of National Highways Authority of India (supra), wherein it has been held as follows:-

"19. In a recent decision in Associate Builders Vs. DDA(2015) 3 SCC 49 while discussing "the public policy of India" contained in Section 34(2) (b) (ii) of the Arbitration Act, 1996 this Court dealt with each of the heads contained in Saw Pipes Judgment (Supra) in the light of three distinct

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and fundamental juristic principles added in ONGC Ltd. Vs. Western Geco. International Ltd. (Supra). "Patent-

illegality" which is one of the heads contained in Saw Pipes judgment (Supra) was then elaborated and we quote paras 42 to 42.3:-

42. In the 1996 Act, this principle is substituted by the 'patent illegality' principle which, in turn, contains three sub heads:

42.1 (a) A contravention of the substantive law of India would result in the death knell of an arbitral award. This must be understood in the sense that such illegality must go to the root of the matter and cannot be of a trivial nature. This again is a really a contravention of Section 28(1)(a) of the Act, which reads as under:

"28. Rules applicable to substance of dispute.-- (1) Where the place of arbitration is situated in India,--

(a) in an arbitration other than an international commercial arbitration, the arbitral tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India;" 42.2 (b) a contravention of the Arbitration Act itself would be regarded as a patent illegality- for example if an arbitrator gives no reasons for an award in contravention of section 31(3) of the Act, such award will be liable to be set aside. 42.3(c) Equally, the third sub-head of patent illegality is really a contravention of Section 28 (3) of the Arbitration Act, which reads as under:

"28. Rules applicable to substance of dispute.- (1) -- (2) * * * (3) In all case, the arbitral tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction."

This last contravention must be understood with a caveat. An arbitral tribunal must decide in accordance with the terms of the contract, but if an arbitrator construes a term of the contract in a reasonable manner, it will not mean that the award can be set aside on this ground. Construction of the terms of a contract is primarily for an arbitrator to decide unless the arbitrator construes the contract in such a way that it could be said to be something that no fair minded or reasonable person could do.

20. It is thus well settled that construction of the terms of a contract is primarily for an arbitrator to decide. He is entitled to take the view which he holds to be the correct one after considering the material before him and after interpreting the provisions of the contract. The court while considering challenge to an arbitral award does not sit in appeal over the findings and decisions unless the arbitrator construes the contract in such a way that no fair minded or reasonable person could do." (emphasis supplied)

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Hon'ble Supreme Court in the aforesaid case law has discussed the ratio decided in Mc Dermott International (supra), Western GECO International Ltd. (supra) and SAW Pipes (supra) and came to the aforesaid findings. On a critical analysis of the facts and circumstances of the case discussed above and on perusal of the impugned award, I am of the considered opinion that this Court does not sit in appeal over the findings and decision of the Tribunal. When the Arbitrator construes the contract in such a way that no fair minded person could do, this Court can entertain an appeal. In the facts and circumstances of the case and by no stretch of imagination, it can be said that majority Arbitrators have construed the contract in a manner which no fair minded and reasonable person could have done. With their wisdom, the majority Arbitrators have discussed the materials in detail. It further appears that they have agreed to the findings of Dr. Hota-Arbitrator, but while discussing the materials on record they have arrived at a conclusion which is not acceptable to the Appellant. The Appellant also in her note of argument has accepted the same. In view of the above as well as the ratio in National Highways Authority of India (supra), it cannot be said that the impugned award is either patently illegal or opposed to public policy of India. As such, I find no infirmity in the impugned award under Annexure-1 as well as the order passed by the learned District Judge, Cuttack in the petition under Section 34 of the Arbitration Act.

18. So far as the claim for cost and goodwill is concerned, I am of the considered opinion that had those been entertained,

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the Claimant/Appellant would have received an amount of Rs.5 to 10 lakh more. The same cannot be a ground to interfere with the impugned award, as it will amount to reassessment of evidence and materials on record. Thus, the impugned award warrants no interference.

19. The plea taken by Mr. Acharya, learned Senior Advocate for the Appellant to the effect that although the Appellant had offered to run the business, the same was not considered by the Arbitrators. On perusal of the statement of claim it appears that no such plea has been taken in the statement of claim. There is also no material to the effect that such a plea was raised either before the Tribunal or before the learned District Judge. As such, the same requires no consideration.

20. Accordingly, the appeal being devoid of any merit stands dismissed, but in the facts and circumstances of the case there shall be no order as to costs.

21. As the restrictions due to resurgence of COVID-19 situation are continuing, learned counsel for the parties may utilize a printout of the order available in the High Court's website, at par with certified copy, subject to attestation by the concerned Advocate, in the manner prescribed vide Court's Notice No. 4587 dated 25th March, 2020 as modified by Court's Notice No. 4798 dated 15th April, 2021.

(K.R. Mohapatra) Judge s.s.satapathy