The court emphasized the limited grounds for setting aside an arbitral award and the principles guiding the court's interference with an arbitrator's decision.

1. Petition filed under section 34 of the Arbitration and Conciliation Act, 1996 to set aside the award dated 9.1.97 passed by the Arbitrator.

2. The case in brief is as follows:

The petitioner Corporation had floated a tender on 15.4.94 the purchase of massor dhall, good quality delivery at the Civil Supplies Godown in Madras City. The respondent participated and quoted the lowest rate of l3,490 per M.T. and offered to supply 10,000 M.Ts. The necessary security deposit amount was also remitted by the respondent on 19.5.9 and agreement was executed on 20.5.94. The Corporation has issued orders for supply of 10,000 M.Ts. of masoor dhall. 50% has to be supplied on or before 14.6.94 and the remaining 50% has to be supplied before 14.7.94. However, the respondent supplied 348.187 tonnes before 14.6.94 and 58.576 tonne were supplied before 14.7.94 The total quantity of supply made by him was 406.763 tonnes only. However, respondent was applying for extension of the period of supply quoting various reasons. The extension has been granted from time to time till 25.7.94,........10.8.94, 30.8.94 and 30.9.94. Inspite of this, the respondent has not supplied the entire quantity. There is a clause in the agreement itself empowering the Corporation to cancel the contract or to extend the period with a penalty cut. It is also open to the Corporation to make an alternative arrangement to get supply from other places at the risk and responsibility of the respondent and to claim any loss suffered by the Corporation besides forfeiting the security deposit as per clause 6 (il). 10 (i) and 10 (ii) of the Agreement. The respondent again applied for extension of time upto 30.11.94 on various grounds and after consideration of all the facts and circumstances, the corporation extended the period subject to cut off Rs. 100 per M. T., which would be recovered from out of the payment to be made against his bills as per clause 10 (ii). It was clearly informed that no further extension of time would be granted to him under any circumstance. Again on 3.11.94, the respondent had pleaded for extension of time upto April, 95 and also for reduction of the penalty from Rs.100 to Rs 10 per M.T. The respondent was called upon to show cause within 15 days from the date of receipt of the notice dated 7.12.94 for taking action under various clauses of the agreement. The respondent represented to the Board of Directors and sought extension of time upto 30.4.95....... The Board also extended the time, confirming the penalty cut of Rs, 100 per M.T. The respondent preferred an appeal to the Government against the Board resolution, and requesting extension of time till May'95. Extension was also granted upto 31.5.95, to supply the defaulted quantity of 5465 tonnes of dhall at the approved rate with the existing conditions. The respondent had supplied 7636 tonnes only upto 31.5.95.

3. Due to the failure on the part of the respondent to supply the required dhall in the stipulated time, orders were placed with number of suppliers at Bombay and Calcutta and the consequential loss was worked out to Rs.96,22,705. The petitioner Corporation issued show cause notice to the respondent on 10.9.95 and 27.12.95 as to why the security deposit should not be forfeited as per the clauses in the agreement. The dispute was referred for arbitration and the arbitrator allowed the claim application filed by the respondent that forfeiture of the security deposit of Rs.26,98,000 has to be refunded and the proposed action to recover the balance of consequential loss was dropped. The petitioner, therefore, filed this petition to set aside the award dated 9.1.97.

4. The respondent filed a counter, denying the various allegations. The petitioner has not made out any reason to set aside this award. There is a specific finding that the calculation of the petitioner is in-correct and no loss is caused to the Corporation. The Corporation having accepted the supply during the extended perio