The Court ruled that an arbitral award may be set aside if it exceeds the contracting parties' intentions and distorts the terms of the agreement, emphasizing adherence to the specific language of the arbitration clauses.

JUDGMENT :

P.B. Suresh Kumar, J.

1. This appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (the Act) is directed against the order dated 20.10.2020 in O.P. (Arbitration) No.557 of 2015 on the files of the Court of the Third Additional District Judge, Thrissur. The appellants were the petitioners in the said proceedings.

2. There were two partnership firms namely, Moonwalk Polymers and Butterfly Micro Polymers in which the appellants and respondent were partners. The case of the respondent is that he being a person working abroad, the affairs of the firms were being looked after by the appellants; that when the firms could not carry on their business due to paucity of funds, he made advances to the appellants on different occasions commencing from 02.07.2009 totalling to Rs.1.62 crores for the business on an understanding that the appellants will return the same with interest and that he has come to know in course of time that the appellants have practised fraud on him by diverting the amounts given to them for the business of the firms. It is also the case of the respondent that an agreement was arrived at in the said circumstances between the parties on 19.11.2010, in terms of which the appellants have agreed to return Rs.1.62 crores advanced to them for the business of the firms on or before 01.05.2012. It is the further case of the respondent that although three cheques were issued by the appellants to the respondent for discharging the said liability, the same were dishonoured on presentation. The deeds of partnership provide for resolution of disputes between the partners by recourse to arbitration. The respondent has therefore, invoked the arbitration clauses contained in the deeds of partnership and claimed an award directing the appellants to return Rs.1.62 crores with interest by sale of the assets of the partnership firms as also the personal assets of the appellants. He also claimed an award for dissolution of the partnership firms and for directing the appellants to render accounts of the firms.

3. The appellants denied execution of the agreement dated 19.11.2010. According to the appellants, the agreement dated 19.11.2010 is one concocted by the respondent making use of the blank signed stamp papers obtained from them forcefully. The appellants did not, however, raise any objection against the dissolution of the firms.

4. The Arbitral Tribunal found that the agreement dated 19.11.2010 which was part of the records as Ext.A3, is one duly executed by the parties and since the appellants are unable to make available the accounts of the firms, the firms are liable to be dissolved. In the light of the said findings, the Arbitral Tribunal passed an award permitting the respondent to realise a sum of Rs.1.62 crores with interest from the date of Ext.A3 agreement together with costs of the arbitral proceedings from the appellants by sale of the assets of the firms as also the personal assets of the appellants. The Arbitral Tribunal also, in terms of the award, dissolved the firms with effect from the date of the award. Though the appellants challenged the award of the Arbitral Tribunal in O.P. (Arbitration) No.557 of 2015 invoking Section 34 of the Act, the court repelled the challenge and affirmed the award. As noted, the appellants are aggrieved by the decision of the court below.

5. It is seen that the court below did not have the privilege to peruse the records of the Arbitral Tribunal in the matter of passing the impugned order as the arbitrator passed away after the award and the parties could not trace the whereabouts of his family for securing the records of the case. In the said circumstances, when the matter was taken up on an earlier occasion, the learned counsel for the parties agreed that they would reconstruct the records with the help of their parties and the matter was accordingly adjourned to be taken up after the reconstruction of the records.

6. Later, in the course of the proceedings, the