Point of law: Arbitration Award - It must clearly be understood that when a court is applying the "public policy" test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected.

JUDGMENT :

C.S. Sudha, J.

The present appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter, 'the Act') is directed against the order dated 15th of March 2019 passed by the Additional District Judge-IV, Thiruvananthapuram. By the said order, the District Court had rejected the application filed by the appellants herein under Section 34 of the Act. The appellants allege that Annexure A9 award is in violation of Section 34(2)(a) (iv), 2(b)(ii) and Section 34(2-A) of the Act; that it is in conflict with the fundamental policy of Indian law; that there is patent illegality appearing on the face of the award, and that it is against the basic notions of morality and justice, apart from being perverse.

2. The facts germane for deciding the present appeal are as follows - The parties herein entered into three separate agreements dated 26.10.2011, viz., Exts. C5, C6 and C7, whereby the respondent/claimant was awarded the contract for putting up advertisements in Kollam, Ernakulam and Thrissur railway stations for a period of 5 years. As per the agreement, the respondent was to remit Rs.64,00,000/- to the appellants/Railways by way of four quarterly instalments towards annual license fee. However, the respondent failed to pay the instalments as agreed and the appellants terminated the contract on 15.06.2012. The respondent thereafter challenged the termination of the contract by way of W.P.(C)No.14877/2012 filed before this Court and a Single Judge of this Court dismissed the same vide judgment dated 05.07.2012, pursuant to which, the respondent preferred W.A.No.1293/2012 wherein a Division Bench of this Court, while declining to interfere with the termination of the contract, directed the Railways to consider the issue and pass orders on the representation filed by the respondent. Subsequently, the respondent’s representation was considered and the contract was re-awarded to the respondent on 09.08.2012. The revised terms of the contract were accepted by the respondent. Even thereafter the respondent was unable to make timely payments of the license fee. This resulted in another round of litigation before this Court wherein the respondent undertook to clear all outstanding dues to the tune of Rs.105.6 Lakhs by 26.04.2013. The respondent did not honour his promise which prompted the appellants to terminate the contract on 27.04.2013.

3. Soon thereafter, an Arbitrator was appointed to settle the dispute between the parties, by this Court on 27.01.2014, on an application preferred by the respondent herein. The Arbitrator vide award dated 24.09.2016 held that the termination of the contract is illegal and awarded a compensation of Rs.2,11,20,000/- for such illegal termination along with interest at the rate of 12% p.a. from 27.01.2014 (the date of the order on arbitration request), till the date of the award and thereafter at the rate of 18% per annum till the date of realization with costs of Rs.3,00,000/-. It was also held that the appellants herein are entitled to realise a sum of Rs.64,00,000/- with future interest at 12% per annum from the date of the arbitration request and the same was deducted from the compensation awarded to the respondent/claimant. Effectively, the respondent/claimant was held entitled to realise a sum of Rs.1,47,20,000/- along with interest.

4. The respondent challenged the award under Section 34 of the Act. The District Court set aside the award on the ground that the award has been passed in violation of Annexures A6 and A8 judgments of this Court and that the Arbitrator did not have the jurisdiction to nullify the judgments passed by this Court. On appeal, this Court allowed the same and remanded the matter to the District Court for fresh consideration in the light of the Arbitration and Conciliation Amendment Act, 2015. On remand, the District Court dismissed the application under section 34 vide Annexure A11 order.

5. Heard Sri. Dinesh Rao A., learned counsel for the appellants and Sr