The limited grounds for challenging an arbitral award under Section 34 of the Arbitration Act and the requirement for an error to go to the root of the matter and be linked with contravention of public policy or public interest to amount to patent illegality.

ORDER

Chandra Dhari Singh, J. (Oral)--The instant petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter "Arbitration Act") has been filed on behalf of the petitioners seeking the following reliefs:

"In light of the aforesaid facts and circumstances it is most respectfully prayed that the award dated 29.01.2020 passed by Sole Arbitrator Shri Anshul Garg, Advocate in Arbitration case titled Hero Fincorp Ltd. Versus M/s Mandal & Associates & Ors. being Case Ref. No. HFCL/AG/2019-20-007 be set aside and quashed for being totally non application of mind and against the public policy.

Pass any other orders or directions as may be deemed fit and proper in the circumstances of the case."

2. The learned counsel for the petitioners submitted that the respondent sanctioned a loan of Rs.3,64,21,000/- in favour of the petitioners vide Sanction Letter bearing reference No. 1779613 dated 28th February 2017. Subsequently, the parties entered into two Loan Agreements dated 28th February 2017 on mutually agreed and acknowledged terms and conditions for disbursement of first tranche of the loan of Rs.3,30,66,000/- of the said loan amount within 180 months along with interest at 10.65% per annum by way of Equated Monthly Installments (hereinafter "EMI"), and the second tranche of loan amount of Rs.33,55,000/- was disbursed on 31st May 2018 after due deduction of process fee and insurance etc.

3. It is submitted that the petitioners were regular in paying the EMI of the loan and also adhered to the terms of repayment qua both the Loan Agreements. It is submitted that due to certain financial difficulties, the petitioners could not pay the EMI for the month of June 2019 and as a result the respondent Company issued a Loan Recall Notice dated 20th June 2019 to the petitioners thereby calling upon them to pay the dues as of 17th June 2019 to the tune of Rs.3,65,57,580/- along with the applicable interest and charges as agreed between the parties.

4. The learned counsel submitted that due to the said disputes, the respondent filed an arbitration claim and arbitration proceedings between the parties were initiated. On 29th January 2020 the learned Arbitrator passed the impugned Award, of which the petitioner is aggrieved and is now before this Court challenging the same.

5. It is submitted that at the time of passing the impugned Award, no cause of action had arisen since the amount pending for payment for June 2019 was duly paid by the petitioners. It is further submitted that the impugned Award and the findings therein are patently illegal, against public policy, against the fundamental policy of India and hence, liable to be set aside. Reliance has been placed upon the judgments passed in Associate Builders vs. Delhi Development Authority, (2015) 3 SCC 49 and ONGC Ltd. vs. Saw Pipes Ltd., (2003) 5 SCC 705.

6. The learned counsel further submitted that the learned Arbitrator did not properly consider the submissions of the parties while passing the Award. The impugned Award is contrary to the substantive provisions of law as well as the terms of the Letters dated 28th August 2020 and 29th August 2020. It is submitted that the impugned Award proceeded primarily on the basis that the petitioners defaulted in payment of loan, which is not the factually correct position as the petitioners have already made the payment of amounts due to respondents, who have accepted the payments with an assurance that the litigations pending against the petitioners will be withdrawn.

7. It is submitted that the impugned Award is unlawful, perverse and has been passed without application of mind and hence, is liable to be set aside.

8. None has been appearing for the respondent despite the order of the Predecessor Bench of this Court whereby the petitioners were directed to communicate a copy of the order dated 4th August 2022 to the respondent and it was also stated that the respondent be represented before the court on the next date. H