Section 34 review of arbitration award protects plausible findings, but unsupported interest and quantified claims were reduced or set aside.

In Section 34 review of an arbitral award, a plausible contractual interpretation on liability for unpaid export invoices and ECGC cover was left undisturbed, but unsupported monetary components were not. The court found 24% interest on the invoice claims excessive and reduced it to a reasonable rate above 12% was not sustained. Liability for loss of six kgs of gold was upheld, yet the excess quantification lacked evidentiary basis and was trimmed to the admitted contemporaneous value. The deferred payment interest claim was also set aside for want of particulars, computation details, and contractual support. The decision reiterates that arbitral findings based on a possible view are protected, but quantified awards must rest on discernible evidence.

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Issues: (i) Whether the arbitral award on the claims arising from unpaid export invoices and ECGC cover suffered from patent illegality or perversity; (ii) whether the award of interest at 24% per annum on the invoice claims was sustainable; (iii) whether the award on account of six kgs of gold confiscated by the Customs Authorities was justified in principle and in quantum; and (iv) whether the award of Rs.17,07,198 towards deferred payment interest, and interest thereon, could be sustained.

Issue (i): Whether the arbitral award on the claims arising from unpaid export invoices and ECGC cover suffered from patent illegality or perversity?

Analysis: The export arrangement placed responsibility on the unit to route exports, prepare documents, and secure MMTC against the export proceeds. The Court held that the arbitral view that Glitter remained responsible for realisation of sale proceeds was a possible view on the contractual terms and the contemporaneous correspondence. The Court also held that the tribunal's view on ECGC cover was not so implausible as to warrant interference under Section 34, even though other awards had taken a different view on similar clauses.

Conclusion: The award on the principal liability arising from the unpaid invoices was upheld and no interference was made on the issue of ECGC cover.

Issue (ii): Whether the award of interest at 24% per annum on the invoice claims was sustainable?

Analysis: The contract did not contain a basis for such a high rate of interest, and the material on record did not justify awarding interest at 24% per annum. The Court found the rate excessive and accepted the concession that the interest should be reduced to a reasonable level.

Conclusion: The award of interest beyond 12% per annum was set aside.

Issue (iii): Whether the award on account of six kgs of gold confiscated by the Customs Authorities was justified in principle and in quantum?

Analysis: The Court upheld the finding that Glitter was liable for the loss of the gold because it failed to export the jewellery within the stipulated period and did not return or buy the gold. However, the quantified sum awarded by the tribunal had no discernible basis in the pleadings or evidence, beyond the admitted contemporaneous value of the gold at Rs.31,26,326.

Conclusion: The finding of liability was sustained, but the award was reduced to Rs.31,26,326 and the excess amount was set aside.

Issue (iv): Whether the award of Rs.17,07,198 towards deferred payment interest, and interest thereon, could be sustained?

Analysis: The Court found that the claim lacked supporting particulars as to the underlying consignments, the computation, and the contractual basis. The tribunal had accepted the claim without properly establishing the liability, and the dishonoured cheques did not by themselves establish an enforceable debt on the material placed before the tribunal.

Conclusion: The award towards deferred payment interest and the interest on that sum was set aside.

Final Conclusion: The petition succeeded in part. The award was interfered with only to the extent of the excessive interest, the unsupported excess quantification of the gold claim, and the deferred payment interest claim, while the core finding of liability on the main invoice-based claim was left undisturbed.

Ratio Decidendi: In proceedings under Section 34 of the Arbitration and Conciliation Act, an arbitral award will not be disturbed if the tribunal's contractual interpretation is a plausible view, but quantified monetary awards must still be supported by a discernible evidentiary basis and cannot rest on unsupported assumptions.

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