The main legal point established in the judgment is that mere allegations of fraud or malpractice are not sufficient to divest the arbitral Tribunal of jurisdiction.

(Dr. D.Y. Chandrachud, J.

The appeal arises from a judgment of a Learned Single Judge rejecting a Petition under Section 34 of the Arbitration and Conciliation Act, 1996. The Petition sought to challenge an award of an arbitral Tribunal consisting of three arbitrators.

2. The claim in arbitration arose out of an agreement dated 12 April 2002that was entered into between the Appellant and the Respondent. The agreement envisaged that the Appellant proposed to organise “thirteen star studded” events which were to be produced and shot at Film City between June 2002 and February 2003. Under the agreement, the Respondent was to secure exclusive rights in respect of each of those events on the terms and conditions stipulated by the parties. Clause 1(b) of the agreement defines the expression “events” to mean and include thirteen shows, each of a duration of a minimum of three hours scheduled to be shot at Film City during the period between June 2002 and February 2003. The rights contemplated by the agreement under clause 1(c) include rights to record each event on any format, media sponsorship and the exhibition of the events, among other things. Clause 4 of the agreement stipulated as follows:

“4. MFSCDC agrees and acknowledges that the consideration payable by SET to MFSCDC in terms of this Agreement shall be paid by SET to MFSCDC in the following manner:

i) Rs.1,30,00,000/- (Rupees One crore thirty lakhs only) on execution of this agreement.

ii) Rs.1,70,00,000/- (Rupees One crore Seventy lakhs only) on or after fifteen (15) days after execution of this Agreement.

iii) Rs.75,23,000/- (Rupees Seventy Five Lakhs Twenty Three thousand only) for each of the Events, on or after seven (7) days after delivery of technically and creatively accepted master tapes for each of the Events and subject to MFSCDC furnishing to SET consents from all the participants and the NOC's required from relevant authorities for conducting the Event. The cheque should be drawn in favour of Hum Ek Hain Film City.”

Clause 7(a) provides that a person by the name of Shahab Ahmed of Montage would be fully responsible for the coordination and execution of the project. Admittedly, one event was produced and shot. The Respondent made a total payment of Rs.3.60 crores.

3. The Appellant passed a resolution on 16 January 2003 and thereafter, issued a notice on 10 February 2003, disowning the agreement. The Respondent invoked arbitration and an arbitral Tribunal consisting of three former Judges of this Court was constituted. The Tribunal ruled on its jurisdiction under Section 16 on 19 October 2006 and having held that its jurisdiction was not ousted, rendered an arbitral award on 28 July 2008. The Appellant participated in the arbitral proceedings when the issue of jurisdiction was decided and thereafter, cross-examined in part one of the witnesses whose evidence was sought to be adduced by the Respondent. The Appellant thereafter withdrew from the arbitral proceedings. By its award dated 28 July 2008, the Tribunal (i) ordered and directed the Appellant to pay to the Respondent an amount of Rs.3,16,30,770/- together with interest at the rate of 12% per annum; this being a refund of the amount of Rs.3.60 crores advanced by the Respondent, after adjusting an amount of Rs.43.69 lakhs in respect of the first event which was produced; (ii) allowed the claim of the Respondent for the payment of a sum of Rs.1,61,27,759/-towards damages for the loss of profits. Interest has been awarded by the arbitral Tribunal at the rate of 12% per annum.

4. The Learned Single Judge upheld the arbitral award while dismissing the Arbitration Petition, but reduced the interest awarded from 12 per cent to 9 per cent.

5. On behalf of the Appellant, the following submissions have been urged in support of the appeal: (i) The agreement dated 12 April 2002 was not valid and was disowned by the Board of Directors for want of approval by the Board. The agreement contained hand written inserti