SANJIV KHANNA, J.:

1. The present petition under Section 34 of the Arbitration and Conciliation Act,1996 (hereinafter referred to as the Act, for short) filed by Union of India and India Tourism Development Corporation challenges and questions the award dated 28th April, 2006. The respondents herein M/s Sanghu Chakra Hotels Private Limited (hereinafter referred to as Sanghu Hotels, for short) have purchased share holding of the petitioners in Madurai Hotels Private Limited (hereinafter referred to as Madurai Hotels, for short) under the share purchase Agreement dated 31st January, 2002. Madurai Hotels, the respondent No. 2, was incorporated on 23rd August, 2001 with Hotel Madurai Ashok located at Madurai, Tamil Nadu as its asset under the scheme for demerger, which was approved by the Department of Company Affairs on 9th November, 2001.

2. For the purpose of inviting bids and disinvesting Madurai Hotels, balance sheet as on 31st March, 2001 was prepared and the same formed the basis for inviting bids and accepting the offer. What was transferred were the shares held by the Union of India in Madurai Hotels. Liabilities payable by Madurai Hotels continued to be payable and did not extinguish.

3. Sanghu Hotels submitted their tender for acquisition of shares of Madurai Hotels on 6th November, 2001 and their financial bid was approved on 13th November, 2001 and thereafter on 31st January, 2002, a share purchase agreement was entered into and the entire share holding of the petitioners in Madurai Hotels was transferred to Sanghu Hotels.

4. Madurai Hotels had continued to operate and do business during the period after 31st March, 2001. This obviously meant there would be changes in the balance sheet and the financial position of Madurai Hotels after 31st March, 2001, on the basis of which bids were given and accepted. To deal with this and to neutralize the effect of operations between 31st March, 2001 and 31st January, 2002, the share purchase agreement had Clauses with regard to post- closing adjustments, viz. Clause 2.2 which is as under:- 2.2 Post-Closing Adjustments (a) The purchaser acknowledges and agrees that it has reviewed the balance sheet of the Unit included in the Audited Financial Statements (the Last Balance Sheet ), and that the value of the Current Assets reflected on the Last Balance Sheet is Rs.8,10,894/- (Rupees Eight Lakhs Ten Thousand Eight Hundred and Ninety Four Only) (the 2000/2001 Net Current Assets Amount ). The Purchaser further acknowledges and agrees that it has had the opportunity to review and is familiar with the accounting principles and specific calculations used to prepare the Last Balance Sheet and the 2000/2001 Net Current Assets Amount and accepts as true and correct both the Last Balance Sheet and the 2000/2001Net Current Assets Amount. As used in this Agreement, the term Net Current Assets means those current assets of the Company under the accounting principles used to prepare the Last Balance Sheet less those liabilities of the Company reflected on the Last Balance Sheet that constitute current liabilities of the Company under the accounting principles used to prepare the Last Balance Sheet. (b) The Purchaser acknowledge and agrees that it has reviewed the Last Balance Sheet and that the value of the debt of the Unit in respect of borrowings from banks, other financial institutions and the Government reflected on the Last Balance Sheet is Nil (the 2000/2001 Debt Amount ). The Purchaser further acknowledges and agrees that it has had the opportunity to review and is familiar with the accounting principles and specific calculations used to prepare the last Balance Sheet and the compute the 2000/2001 Debt Amount and accepts the true and correct the 2000/2001 Debt Amount. (c) Within twenty one (21) days following the Closing Date, the Government and the Purchaser shall jointly select and cause to be appointed an accounting firm from the CAG panel ( Auditor ) to prepare and deliver to each o

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