O R D E R

This Arbitration Original Petition has been filed seeking to set aside the award passed by the learned Arbitrator, Chennai dated 02.02.2022 in the Arbitration Case No.A.C.P (CNICA) No.2 of 2019.

2. Heard the learned counsels for the petitioner and respondent and perused the materials available on record.

Petition in brief:-

3. The petitioner and the respondent have signed a Memorandum of Understanding on 01.06.2017 in connection with a project of the respondent’s school; the agreement was for six years; as per the Memorandum of Understanding, 500 students would be admitted into the programme on a fee of Rs.5,000/- each; however a dispute arose between the petitioner and the respondent with regard to the payments; since the Memorandum of Understanding contained an arbitration clause, a sole Arbitrator was appointed; during the arbitration proceedings, the respondent had filed an Application in I.A.No.1 of 2019 and challenged that the Memorandum of Understanding that it is insufficiently stamped; the then learned Arbitrator dismissed the application and proceeded with the arbitration; the said order was not challenged by the respondent; the Memorandum of Understanding has been marked as Ex.C.1; however the subsequent Arbitrator had concluded that the substantive agreement is inadmissible in law due to deficit stamping and held that the respondent is liable to pay a sum of Rs.8,16,666/- to the claimant with interest at the rate of 9% per annum from 15.02.2018.

3.1. The learned Arbitrator without considering the materials placed by the petitioner had chosen to reject the claim in view of the deficit fee; aggrieved by the said award, the petitioner had filed this Arbitration Original Petition to set aside the award dated 02.02.2022 made in Arbitration Case No.A.C.P (CNICA) No.2 of 2019 in entirety.

Submissions of the petitioner:-

4. The learned counsel for the petitioner submitted that the award of the learned sole Arbitrator is erroneous, contrary to law and facts. The award was passed without application of mind and evaluating the evidence in right perspective. The arbitration clause is independent to that of Memorandum of Understanding; the Memorandum of Understanding ought not to have been rejected on the allegation of deficit stamp duty; the very same question was raised by the respondent before the earlier Arbitrator by way of filing an Application in I.A.No.1 of 2019 and the same was dismissed and the order of dismissal was not challenged so far.

4.1. Even if the Memorandum of Understanding is insufficiently stamped, the learned Arbitrator ought to have directed the petitioner to produce the original Memorandum of Understanding and directed the petitioner to pay the necessary stamp duty by invoking Sections 34 and 35(b) of the Indian Stamps Act, 1899 and penalty could have been levied under Section 38 of the Indian Stamp Act. Without giving an opportunity to resolve the stamp duty issue, the Memorandum of Understanding should not have been rejected. Since the arbitral award passed by the learned Arbitrator is erroneous on the face of it, it is liable to be set aside.

Submissions of the respondent:-

5. The learned counsel for the respondent submitted that the award does not fall within any of the exceptions contemplated under Section 34 of the Arbitration Act for getting it set aside. An arbitral award cannot be set aside merely on the ground of erroneous application of law or misappreciation of evidence. The petitioner had filed the claim application seeking compensation of an amount for the services provided to the respondent. Since a dispute had arisen, it was referred to mediation. Even though the Memorandum of Understanding dated 25.02.2017 was not properly stamped, in view of the independent nature of the arbitration clause, the learned Arbitrator has decided to proceed with the proceedings. The learned Arbitrator has correctly found that the Memorandum of Understanding was not properly stamped and that it cannot be