The main legal point established in the judgment is that the petitioners failed to prove that the respondent's refusal to execute necessary documents for creation of pari passu charge upon the assets of the petitioners led to the withdrawal of financial facility by the UTI Bank and the Bank of India.

NAVIN CHAWLA, J.

1. This petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act) challenging the Arbitral Award dated 25.06.2015 passed by the Sole Arbitrator adjudicating the disputes that have arisen between the parties in relation to the Loan Agreement dated 30.08.2000 and the Supplementary Agreement dated 05.05.2005 executed between the parties.

2. The respondent/Technology Development Board has been constituted by the Government of India under the provisions of the Technology Development Board Act, 1995 for assisting and disbursing loan to the Companies/Organizations engaged in development and commercialization of indigenous technology and adaptation of imported technologies for wider domestic applications.

3. By the Loan Agreement dated 30.08.2000 the respondent granted a loan assistance of Rs. 850 lakhs against the project cost of Rs. 1750.11 lakhs under Phase-I and Rs. 525 lakhs against the project cost of Rs. 1049.45 lakhs under Phase-II to the petitioner for implementing the two phases of the Project of Development and Commercialization of Technology in Radiation Therapy and Allied Sciences by the petitioner.

4. The Loan Agreement provides for the repayment of the principal amount of the loan assistance due in nine half yearly installments commencing from 01.05.2003. The petitioners were also to pay interest on the amount of the loan assistance at the rate of 6% p.a. from the date of first disbursement of the loan assistance. The interest was to be paid alongwith half yearly installments.

5. Clause 1.4 of the Loan Agreement further provides that in the event of any default in repayment of the installments of the principal amount or interest, the petitioners would pay an additional interest of 10% p.a. over and above the prescribed rate of interest.

6. By way of the Supplementary Agreement dated 05.05.2005, on the representation of the petitioners that there had been an increase in the cost of the project as also delay in completion of the project, the payment schedule and the rate of interest was modified. The installments for repayment were now rescheduled to begin from 01.02.2007 and the rate of interest was reduced to 5% p.a.

7. The respondent, claiming that there had been a default in repayment of the loan amount as also interest and royalty component, filed its claim before the Arbitrator claiming an amount of Rs. 15,24,09,467/- alongwith interest at the rate of 24% p.a.

8. The petitioners, apart from defending the claim, raised counter claim against the respondent on the ground that due to refusal of the respondent to execute necessary documents for creation of pari passu charge upon the assets of the petitioners, financial facility extended by the UTI Bank (now known as Axis Bank) and the Bank of India stood withdrawn resulting in losses being suffered by the petitioners. This submission of the petitioners has been reiterated before this Court as a challenge to the Arbitral Award.

9. The Sole Arbitrator by the Impugned Award has rejected the defence of the petitioners and held that the petitioners had been unable to prove that non completion of the project was due to any action or inaction of the respondent thereby justifying the non-payment of loan installments by the petitioners. The Arbitrator, while rejecting the claim of the respondent for royalty charge, has upheld the claim of the respondent for repayment of the loan amount alongwith interest at the rate of 15% p.a.

10. Learned counsel for the petitioners has placed reliance on the Clause 11 of the Loan Agreement which reads as under:

"ARTICLE XI

HYPOTHECATION

11.1 Any and all equipment, apparatus, machineries, machineries spares, tools and other accessories, goods and/or the other movable property of the Borrower present and future, shall be hypothecated to the Board and if so required by the Board, the Borrower shall execute such Deed of Hypothecation and/or any such other document in fa