An arbitral award may be set aside if it ignores the express terms of the governing agreement or imposes obligations not agreed upon, constituting a patent illegality.

JUDGMENT :

AVNEESH JHINGAN, J.

1. This petition under Section 34 of the Arbitration & Conciliation Act, 1996 (for short 'the Act') is filed aggrieved of the arbitral award dated 14.12.2022.

2. The petitioner is a Company incorporated under the Companies Act, 1956 and engaged in the business of manufacturing Compressed Natural Gas (CNG), Liquefied Petroleum Gas (LPG) and Gas Cylinders. The petitioner approached a foreign collaborator RT Chemical Technologies and Composite Materials, a Joint Stock Company for manufacturing Polymer Composite Gas Balloons/Cylinders for storage and transportation of CNG & LPG. On 02.09.2016 Memorandum on Joint Participation in Investment Project (for short 'MOJP') was executed between the petitioner and the foreign collaborator. The MOJP was valid for two years and could be terminated earlier with mutual consent. A Memorandum of Understanding (for brevity 'MOU') dated 03.08.2017 was entered between the respondent and the petitioner. The respondent was to be instrumental in execution of the Joint Venture Agreement (JVA) between the petitioner and the foreign collaborator; to arrange funds; to provide consultancy for establishment of the plant in India pursuant to the JVA and to assist in the successful implementation of the project as well as in ensuring regulatory compliances. The remuneration of the respondent was on commission basis as mutually agreed between the parties under clause 3 of the MOU.

3. The first instalment of sixty lakhs plus taxes towards commission was paid against Invoice no. 1 dated 06.09.2017. The JVA was not signed and on 08.06.2018 the MOJP was terminated by the petitioner. The arbitration proceedings were initiated at the instance of the petitioner for seeking refund of first instalment along with interest. The respondent filed a counter claim for release of second and third instalments. The arbitrator framed following issues:-

(i) Whether the respondent is guilty of violating the express terms and conditions of the MoU dated 03.08.2017 (SOC)? OPC

(ii) Whether the respondent is liable to refund the 1^st instalment of commission paid to him on 03.08.2017 along-with the interest from the date of default till the date of realization? If so, at what rate (SOC)? OPC.

(iii) Whether the payment of Rs. 60 lakhs along with GST was made by the claimant to the respondent as advance or towards DSS Fee? OPR.

(iv) Whether the respondent is entitled to pro rata commission amount of progress of project? OPR.

(v) Whether the respondent is entitled to 2^nd and 3^rd instalment of commission under MoU dated 03.08.2017? OPR.

(vi) Whether the claimant can seek refund of GST after having taken the benefit of the input credit in pursuance thereto? OPR.

(vii) Whether the respondent is entitled to interest on the counter claim? If so at what rate and for what period? OPR.

(viii) Whether the claimant is liable to pay Arbitration cost & other legal expenses to the respondent?

(ix) Relief.

4. The issue nos. 1 & 2 were considered together and the claim of the petitioner for refund of sixty lakhs plus GST was rejected holding that the payment of first instalment was an advance of commission payable to the respondent. Issue nos. 4 & 5 pertaining to the counter claims of the respondent were allowed. It was concluded that the respondent had provided services including negotiating price of plant and machinery for the project and there was no failure on part of the respondent in rendering services as agreed under the MOU. The issue with regard to refund of GST was de