Basic principles of fairness and established principles of evidence are required to be followed by the arbitrator.

R.Jayasimha Babu,J.

1. The appellant’s prayer to set aside the award that had been made against the appellant having been rejected and a decree having been made in terms of the award by the learned single Judge, these appeals have been filed.

2. A claim was made against the present appellant by the 1st respondent company, claiming a sum of Rs.6,78,578, together with future interest thereon at 15% p.a. from 1.10.1995. It was alleged that that amount was payable to the claimant in view of the default committed by the appellant of its obligation under an agreement dated 1.6.1979, to which the claimant as also the appellant were parties. The claimant had alleged that under that agreement, the unit which was owned by the claimant at Bangalore had been handed over to the appellant and it was the obligation of the appellant inter alia to discharge a loan which was outstanding and due to the Bank. It was alleged that default had been committed by the appellant and, therefore, the agreement was terminated with effect from 31.7.1984 and the unit repossessed on 1.8.1984. It was alleged that for the period from June 1979 to July 1984, the appellant owed a sum of Rs.6,18,037, which was in default. The amount due as on 30.9.1985 was stated to be Rs.6,78,578. Along with the claim, the claimant had filed a tripartite agreement among the claimant, the appellant and the Indian Bank to whom the claimant had owed monies and which liability the appellant was required to discharge, as also the statement showing the calculations of the amounts claimed by the claimant from the appellant. That was marked as Annexure III and it set out all the transactions between the claimant and the appellant giving details of the date of the transaction, the particulars of the transaction, the amount of the debit and the amount of the credit. That statement of account ran into 18 pages.

3. In the statement of objections filed by the appellant, the appellant put forth a theory that the agreement was only a make believe and that it did not disclose the real transactions which had occurred. It was also contended that far from the claimant company being entitled to any amount as claimed, the appellant firm was entitled to get a sum of not less than rupees five lakhs. The variation in the manner in which certain amounts were described in Annexure III to the claim were also pointed out and it was alleged that the claimant had no consistent case. It was also asserted that no reliance could be placed upon the statement of account filed by the claimant.

4. Before the arbitrator CHOSEN BY THE PARTIES, the parties agreed to mark the documents produced by them. The learned arbitrator has noted that the counsel before him did not dispute “the proof or admissibility of the documents” filed in the case. No oral evidence was let in by the parties. The arbitrator, thereafter, rightly noted that the decision of the case depended upon the documentary evidence substantial portion of which was the correspondence between the parties.

5. In the award it was noted that the point to be decided was whether the agreement dated 1.6.1979 is enforceable and intended to be acted upon or was brought into existence only for the purpose of helping the claimant to run the concern for the claimant’s benefit till the concern was disposed of. After having perused the documents carefully and after hearing the arguments, the arbitrator came to the conclusion that the agreement dated 1.6.1979 was acted upon and given effect to by the parties.

6. The arbitrator, thereafter, dealt with the amount to which the claimant would be entitled. The manner in which he dealt with that issue may be set out in his own words, which are as follows:-

“Though the 1st respondent at earlier stages was making profits and was making payments to the Indian Bank regularly for two years, later it was not able to run the business as probably expected by it, and it was not getting enough financial assistance from the ba