IMPORTANT POINT
The main legal point established is the requirement for arbitral awards to be reasoned and based on credible evidence, and the court's limited scope of interference with arbitral awards.

JUDGMENT

1. The present petition under Section 34 of the Arbitration and Conciliation Act, 19961 has been filed assailing the arbitral award dated 06.12.2011 read with order dated 10.01.2012 under Section 33 of the Act.

Factual Background

2. The factual background in the context of which the present petition has been filed is briefly enumerated as under:

3. A company i.e. Samtel Colors Limited (herein referred to as borrower) availed from the petitioner an Inter-Corporate Deposit (ICD) facility for a sum of Rs. 1,70,00,00,000/- on 12.02.2007. The same was granted subject to the borrower furnishing a surety/pledge of 11 lakh shares held by the respondent in the borrower company, as a security for repayment of the outstanding amount under the ICD. It is the case of the petitioner that the said surety was given as a security for repayment of all outstanding amounts not only under the ICD but also "any other existing or future agreement".

4. It was the case of the respondent (claimant) that the borrower repaid the ICD on 19.11.2007 and thereby the borrower stood discharged. Consequently, the respondent (claimant) being the surety, automatically stood discharged and the petitioner herein was bound to return the shares pledged by the respondent (claimant). It was the case of the respondent (claimant) in the arbitration proceedings that the petitioner herein instead of returning the shares, unlawfully retained the same. In the above background, the respondent (claimant) herein invoked arbitration seeking to raise the following claims:

(i) Claim no.1: For return of 11,00,000 (Eleven Lakh) shares pledged to the petitioner.

(ii) Claim no. 2: Claim of Rs. 44,00,000/- on the averment that as on 26.04.2007 (the date when the pledged shares should have been returned), the market value of the shares was Rs. 21 per share whereas the market value of the shares on the date of the filing of the claims was Rs. 17 per share, resulting in a loss of Rs. 4 per share. In support of the said claims, the statement of claim contained the following averments :-

"Claim No.2

Claim of Rs. 44,00,000 (Rupees Forty Four Lacs Only) since as on 26/4/2007 when the shares should have been returned the average market value of Borrower's Shares was Rs. 21 per share. First Party had the opportunity to sell the Shares as on that date. The market value of Shares as on date of filing of claims is Rs. 17 per share, hence loss of Rs. 4 per share amounts to Rs. 44,00,000/- (Rupees forty four lacs only). The charts downloaded from the Internet showing the details of prices of Shares of First Party as on 25/4/2007 and as on date of filing of the present statement of claims are annexed hereto and marked as ANNEXURE-F (COLLY). However, this claim may be modified when the shares are actually returned by the Second Party to the First Party depending on the market value of the Shares;"

(iii) Claim no. 3: Claim of Rs. 1,24,74,000/- being interest @18% p.a. from April 2007 (when the pledged shares ought to have been returned) till the date of filing of the statement of claim. This claim was raised on the basis that the average price per share was Rs. 21 as on 26.04.2007 when, according to the respondent the shares were liable to be returned to it.

(iv) Claim no. 4 : The claim for future loss on the shares along with the future interest @ 18% p.a.

(v) Claim no. 5: Direction seeking that the petitioner be directed to return the shares to the respondent/claimant.

5. Parallel to the arbitration which is the subject matter of the present petition, the petitioner also initiated arbitration proceedings against the borrower in respect of unpaid dues under a bill discounting facility dated 09.11.2004. The said proceedings culminated in an Award dated 06.12.2011 in terms of which certain money was awarded to the petitioner recoverable from Samtel Color Limited (borrower). The said Award is subject matter of separate proceedings under Section 34 of the Arbitration and Conciliation Act, 1996 resulting in ju