The arbitral tribunal's discretion in awarding dual interest rates is upheld, affirming the validity of the arbitral award under the Arbitration and Conciliation Act.

JUDGMENT :

JYOTI SINGH, J. 

1. This petition is filed on behalf of the Petitioner under Section 34 of the Arbitration and Conciliation Act, 1996 (‘1996 Act’) laying a challenge to arbitral award dated 02.11.2022 passed by the learned sole Arbitrator.

2. Factual matrix to the extent relevant is that Petitioner is the sole proprietor of M/s. SMSK Minerals Trading Company and is engaged in supply of iron ore to the Respondent in Karnataka for the last several years. During 06.01.2011 and 01.02.2011, Respondent desired to procure about 44,000 MT of iron ore for a total value of Rs.16,11,60,000/- and had paid the said amount to the Petitioner at the time of placing the said purchase orders. Pursuant to the said arrangement between the parties, Petitioner supplied iron ore worth Rs.8,94,42,415/- to the Respondent by 31.05.2011 and balance quantity, as averred in the petition, was to be supplied in due course.

3. It is stated that by the Petitioner that pursuant to directions of the Supreme Court dated 07.09.2012 in SLP (C) No. 562/2009 in case titled ‘Samaja Parivartan Samudaya & Others v. State of Karnataka’, investigations were carried out by Central Bureau of Investigation (‘CBI’) against several persons including the Petitioner pertaining to alleged discrepancies in procurement of iron ore and as a result, bank accounts of the Petitioner were frozen and properties were attached by Income Tax Authorities. While the investigation was on-going, Respondent through one of its agents got a Deed of Settlement dated 22.07.2013 signed by the Petitioner along with the covering letter of the same date as also a Promissory Note dated 22.07.2013. As per the Deed of Settlement, it was inter alia agreed between the parties that balance amount of Rs.7.23 crores would be refunded to the Respondent by the Petitioner immediately after vacation of order of attachment of bank accounts of the Petitioner.

4. It is averred that despite the execution of Deed of Settlement and Petitioner’s assurance to the Respondent that balance amount will be refunded after lifting of the attachment order, Respondent continued to adopt pressure tactics to recover the amount and also sent a legal notice dated 23.05.2016 to the Petitioner demanding the amount with interest, failing which Respondent would invoke the arbitration clause incorporated in the Deed of Settlement. Petitioner responded to the notice reminding the Respondent of the terms of Settlement and stating that the demand was premature. Regardless of this position, Respondent unilaterally appointed a sole Arbitrator on 17.06.2016 exercising its right under the arbitration clause incorporated in the Deed of Settlement.

5. It is further averred that Petitioner filed an application under Section 16 of the 1996 Act before the Arbitrator which was allowed and proceedings were closed on 22.09.2017 holding that claims of the Respondent were premature. Respondent, however, filed an arbitration petition being ARB. P. 685/2017 before this Court under Section 11(5) of the 1996 Act, which was allowed vide order dated 20.03.2018 and sole Arbitrator was appointed. Respondent filed its statement of claim on 21.04.2018 and Petitioner filed an application under Section 16 of the 1996 Act, which was allowed by the Arbitrator on 15.10.2019 closing the proceedings on the ground that claims of the Respondent were premature. This order was assailed by the Respondent in this Court by filing an appeal under Section 37(2)(a) of the 1996 Act being ARB. A. (COMM) 10/2020. The appeal was allowed on 23.03.2022 recording the concession of the Petitioner that he was not opposing the appeal and Court may set aside the impugned order and refer the parties back to arbitration, which the Petitioner now claims was a concession given by his counsels without his consent, instructions and knowledge.

6. It is stated in the petition that after disposal of the appeal and as a c