JUDGMENT

RAJU DORAISWAMY, J.

(1) A skeletal reference to the facts, without much emphasis on the details of merits of the case, would help to appreciate certain submissions, at the time of actual consideration of the claims projected before us.

(2) THE respondent, State of Sikkim, and the appellant, M/s Sikkim Subba Associates (referred throughout as appellants), claimed to be a firm of Partnership, entered into an agreement on 22 -1-1991 under which the appellants have been appointed as the "organising agents" for its lotteries enumerated therein subject to the terms and conditions more fully set out .therein regulating the rights and obligations of the parties. It needs to be kept in view that since running of private lotteries would constitute a criminal offence, some of the States have allowed parties, to put on the apparel of the State in return for a stipulated fee to mobilise funds, in public interest to undertake public works. Disputes and misunderstanding arose which led to the termination of the agreement resulting in the appellants seeking recourse to litigation by getting an Arbitrator appointed invoking the powers under Section 8 of the Arbitration Act, 1940 (hereinafter referred to as the Act).

(3) AS against the order dated 24/6/1992 of the District Judge, Gangtok, (Sikkim), appointing the sole Arbitrator, the respondent challenged the same before the High Court by filing an appeal which came to be dismissed on 23/11/1992. The matter was pursued further before this Court inSpecial Leave Petition(C) No. 26 of 1993 and by an order dated 26/4/1993 the same was, by the agreement of parties, dismissed subject to the observation that the Arbitrator shall give a speaking order and, therefore, there was no need to go into the controversy raised. The appellants filed their statement of claim before the Arbitrator for a sum of Rs.81,84,679.45 with further relief for the the refund of Rs.76.00 lacs, said to have been realised by the State by encashing two bank guarantees, with interest at 18 p.a. from 23-9-1992, the date of encashment. The respondent State filed its reply opposing the claims made by the appellants and asserted a counter claim against the appellants for a sum of Rs.8,64,81,445.00 with future interest and costs. Both parties marked documents and adduced oral evidence. Thereupon, the Arbitrator made an Award on 8-2-1994 determining the amount payable by the State to the appellants at Rs.37,75,00,000.00 and the amount payable by the appellants to the State by way of counter claim at Rs.4,61,35,24.00 and after adjusting the amounts due to the State towards its counter claim, determined the net amount payable to the appellants by the State at Rs.33,13,54,758.00 Proportionate costs were awarded and future interest was also granted at the rate of 12 p.a. on the sum of Rs.33,13,54,758.00.

(4) AGGRIEVED, the State filed an application under Section 30 of the Act to set aside the Award. The District Judge by his decision dated 27/10/1994 overruled the objections of the State and made the Award the rule of Court by passing a decree in terms of the Award. The State challenged the same before the High Court by filing an appeal under Section 39 of the Act. The matter was heard in the High Court by a Division Bench consisting of the learned Chief Justice (Justice S.N. Bhargava) and Justice R. Dayal. In a judgment dated 29/9/1995 the learned Chief Justice agreed with the contentions raised on behalf of the State and sustained the challenge made to the Award by setting aside the Award as well as the Judgment of the learned District Judge, thereby allowing the appeal with costs. Dayal, J. rendered a separate dissenting judgment by coming to the ultimate conclusion that the quantum of damages arrived at by the Arbitrator suffered an illegality apparent on its face and, therefore, in his view the matter required to be remitted for reconsideration of the matter afresh to the Arbitr