Separability of arbitration clause and limited section 34 review sustain the award, with only interest rate reduced.

An arbitration clause is treated as independent of the underlying agency contract under the separability principle, so termination of the substantive agreement does not automatically extinguish the arbitration agreement or invalidate a reference to arbitration. A factual award rejecting a refund counterclaim based on alleged mistaken payment of commission will not be interfered with under section 34 where it is supported by evidence and discloses no recognised ground such as conflict with public policy. The interest component may still be moderated if the rate is found excessive on the facts, even though the award otherwise survives scrutiny.

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Issues: (i) Whether the arbitration agreement survived termination of the underlying agency contract and whether the reference to arbitration was valid; (ii) whether the arbitral award rejecting the counterclaim for refund of commission warranted interference under section 34; (iii) whether the award of interest at 18% per annum required reduction.

Issue (i): Whether the arbitration agreement survived termination of the underlying agency contract and whether the reference to arbitration was valid

Analysis: The arbitration clause was held to be independent of the substantive contract by virtue of the statutory rule of separability. Termination of the agency agreement therefore did not extinguish the arbitration agreement. The correspondence between the parties also showed that the petitioner could not object to the respondent's invocation of the Chamber's appointment mechanism after having taken the stand that no arbitration survived at all. No prejudice was shown from the reference being made through the Chamber.

Conclusion: The objection to jurisdiction and to the validity of the reference failed, and the challenge was rejected against the petitioner.

Issue (ii): Whether the arbitral award rejecting the counterclaim for refund of commission warranted interference under section 34

Analysis: The refund claim turned on whether commission paid on direct sales had been paid under mistake. The arbitrator found, on evidence, that such payments were made consciously as a business decision and in the context of the parties' commercial relationship. That finding was factual and evidence-based. Within the narrow limits of section 34, no ground for interference was made out, and the award did not offend public policy.

Conclusion: The rejection of the counterclaim was upheld, and no interference was called for.

Issue (iii): Whether the award of interest at 18% per annum required reduction

Analysis: The rate of interest was considered excessive on the facts of the case. While the award otherwise survived scrutiny, the rate of interest warranted moderation.

Conclusion: The interest component was modified by reducing it from 18% to 15% per annum, in favour of the petitioner.

Final Conclusion: The award was substantially sustained, with only a limited modification to the rate of interest, and the petition was otherwise unsuccessful.

Ratio Decidendi: An arbitration clause survives termination of the underlying contract as an independent agreement, and a factual award supported by evidence will not be interfered with under section 34 absent a recognized ground such as conflict with public policy.

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