Parties are bound by the arbitration agreement they enter into, and interest is to be paid in accordance with the contract.

1. By this order I shall dispose of above three petitions challenging common award passed by the learned Arbitrator against the petitioner Modi Rubber Ltd. and its two directors.

2. Brief facts relevant for purpose of deciding these petitions are that the petitioners approached respondent company for grant of Inter Corporate Deposit. The respondent agreed to grant Rs. 5 crore of amount as Inter Corporate Deposit with interest @ 21% per annum. Both the parties entered into an agreement dated 20.3.2001. On the same date the documents like demand promissory note, letter of continuity and Inter Corporate Deposit receipt were executed in favour of the respondent by the two petitioners namely Mr. V.K.Modi and Mr. B.K. Modi who were Directors of Modi Rubber Ltd. and they also executed deeds of personal guarantee in favour of the respondent. The respondent gave cheque of Rs.5 crores dated 20th March, 2001 drawn on Housing Development Finance Corporation (HDFC) Bank Ltd., New Delhi. As per agreement this amount was to be repaid within 90 days. The amount was not paid back in terms of agreement instead letters dated 17.6.01 & 19.9.01 were written by Modi Rubber Ltd. for extension of time for payment of amount. The respondent however expressed its inability to give further time and asked for refund of the Inter Corporate Deposit. The respondent thereafter wrote letters dated 26.7.01, 19.9.07, 10.10.01, 17.10.01 and 3.12.01 requesting for refund of amount. The cheques issued by the petitioner initially for repayment of loan were deposited by the respondent in the account but got dishonoured. The respondent in terms of the agreement appointed a sole Arbitrator and informed the petitioner about the appointment of Arbitrator and filed a claim of Rs.6,72,63,015/- before the Arbitrator inclusive of the interest upto the date against the petitioners. The petitioners took a stand before the Arbitrator that there was no valid arbitration agreement between the parties and the appointment of Arbitrator was not legally valid under the terms of agreement. However, petitioners also staked a counter claim of Rs.50 lakhs against the respondent as cost of time spent by management and staff on the proceedings and one crore as damages and loss of goodwill and reputation of the petitioners due to the proceedings initiated by the respondent.

3. The learned Arbitrator after considering the evidence and documents, passed an award holding that the respondent was entitled to receive jointly and severally Rs.6,72,63,015/- upto the date of reference and thereafter the respondent would be entitled to interest at the contractual rate of 21% per annum from the date of reference till the date of award and thereafter from the date of award till payment, simple interest at the rate of 18% per annum would be payable. However, a concession was given that if the entire payment was made within 3 months from the date of award, the rate of interest from the date of award till the date of payment shall stand reduced to 12% per annum.

4. The petitioner company namely Modi Rubber Ltd. in the meantime filed an application before BIFR for declaring it as a sick company and the proceedings before BIFR were continuing even after passing of arbitration award.

5. The petitioners assailed the arbitration award on the ground that the arbitration clause was invalid as the arbitration agreement was one sided and misleading. The arbitration clause vested a right in respondent of appointing an Arbitrator and the clause does not give mutual rights to both the parties for appointing an Arbitrator each of their choice. The award was therefore liable to be set aside.

6. The petitioners had entered into contract with open eyes. The petitioners were at liberty not to enter into the contract if the arbitration clause was not agreeable to them. Moreover, such a clause as is contained in the arbitration agreement is not an unusual or illegal clause. The respondent had provided in the clause