An arbitration award that ignores contract terms and relevant evidence violates Section 28(3) of the Arbitration and Conciliation Act, rendering it patently illegal.

ORDER :

The above Arbitration Original Petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996, seeking to set aside the award dated 08.01.2021 in Arbitration Matter No.MCX/ARB/5138A/20.

2. I have heard Mr.P.Arumuga Rajan, learned counsel appearing for the petitioner and Mr.C.K.M.Appaji, learned counsel appearing for the respondent.

3. Mr.P.Arumuga Rajan, learned counsel for the petitioner would submit that the dispute between the parties arises out of on-line trading transactions. He would invite my attention to the various agreed terms and conditions between the petitioner and the respondent, especially the conditions which according to the learned counsel for the petitioner would squarely cover the dispute before the Arbitral Tribunal. He would further submit that the Arbitral Tribunal has grossly disregarded the terms and conditions agreed upon between the parties in writing and therefore there is a clear violation of mandate of Section 28 (3) of the Arbitration and Conciliation Act, 1996.

4. The learned counsel for the petitioner would also take me through the various correspondence between the parties to fortify his contentions. He would also invite my attention to the judgment of the Division Bench of this Court in similar circumstances in Shri.Jeeva Ratnam Vangari Vs. M/s.Alice Blue Financial Services Private Limited dated 13.08.2024 in O.S.A.(CAD).No.36 of 2023, where the Hon'ble Division Bench referring to Section 28 (3) of the Arbitration and Conciliation Act, 1996 and also applying the ratio laid down by the Hon'ble Supreme Court in Associate Builders Vs. Delhi Development Authority reported in 2015 (3) SCC 49 and in Ssangyong Engineering & Constructions Company Limited Vs. National Highways Authority of India reported in (2019) 15 SCC 131 , held that giving a go by to the terms of the contract is clearly impermissible in law and the award rendered contrary to the mandate of Section 28 (3) of the Arbitration and Conciliation Act would be patently illegal. He would therefore pray for the petition being allowed.

5. Per contra, Mr.C.K.M.Appaji, learned counsel appearing for the respondent would submit that the petitioner, without the knowledge or authorization of the respondent, had went ahead with the on-line trading and upon being put on notice, the respondent has lodged a complaint on 24.02.2020, in respect of the transactions that took place on 20.02.2020. He would further submit that the petitioner had traded to the tune of Rs.40,00,000/- on behalf of the respondent as against the existing margin of Rs.9,00,000/- alone available in an account. He would further submit that the petitioner also did not intimate the respondent about the system issue i.e., the alleged reason which is said to have caused the loss to the respondent.

6. Referring to the award itself, the learned counsel for the respondent would submit that the Arbitral Tribunal has rightly found that the petitioner had admittedly done a trade for Rs.40,00,000/- as against the existing margin of Rs.9,00,000/- in the account and therefore, the trade was unauthorized, besides also not reflecting in the respondent's account thereby resulting in a loss to the respondent. He would therefore pray that the award be sustained.

7. I have carefully considered the submissions