Arbitrators must adhere to contractual terms and assign reasons for decisions; failure to do so renders an award void for patent illegality, contradicting principles of natural justice.

JUDGMENT

(Judgment of the Court was made by MUMMINENI SUDHEER KUMAR, J.)

The present appeal has been filed under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act, 1996’), aggrieved by an order dated 02.08.2021 passed in O.P.No.41 of 2018, filed under Section 34 of the Act, 1996, by a learned Single Judge of this court.

2. For better appreciation, the few facts, which are relevant and undisputed are noted hereunder.

2.1. The State Industrial Promotion Corporation of Tamil Nadu Limited (hereinafter referred to as the 'SIPCOT') developed an Information Technology Park at Siruseri for the promotion and development of industries. One company by name M/s.DATS (India) Limited (hereinafter referred to as the ‘DATS’) has applied for the allotment of a plot for their industrial unit in the said IT park. By an Allotment order dated 05.03.2004, Plot Nos.A-23, A- 24, A-25, A-34 and A-35, totally admeasuring 4.57 acres, was allotted in favour of the DATS, subject to various terms and conditions, and the DATS was required to convey its acceptance of the terms and conditions within 15 days. In terms of the said order of allotment, the DATS is required to pay, in all, an amount of Rs.72,87,000/-, after adjusting the deposit amount of Rs.24,000/- already paid by it, within 90 days from the date of the order of allotment i.e., 05.03.2004. Further, allotment order requires execution of the lease deed in the prescribed format within 15 days of payment of the plot cost. The construction is required to be commenced within six months and completed within 24 months from the date of the order of allotment, and any failure will entail cancellation of the allotment order and forfeiture of the initial deposit and development charges paid. Thus, in all, 30 months from the date of allotment order was allowed for commencement of construction and completion of the construction of the factory building. In turn, the DATS addressed a letter dated 06.04.2004, seeking certain clarifications, including clarification on Clause 9 of the allotment order dated 05.03.2004. The said Clause 9 reads as under:-

“9. The plot is allotted on the specific condition that the allottee shall not assign, sub-let, transfer or part with his interest in the allotted plot either in whole or in part except with the prior written consent of SIPCOT. In the event of the allottee seeking approval for change in constitution, or change in the management or control or amalgamation, with any other company or transfer of interest to any third party either in whole or in part, SIPCOT shall grant approval provided, the allottee or any person is claiming under him agrees to pay the cost determined by SIPCOT and the cost determined by SIPCOT shall be final and binding on the allottee or any person, claiming under him and cannot be questioned in any Court of Law.”

2.2. It was thereafter, the DATS addressed a letter, dated 16.04.2004 requesting for extension of time for submission of the acceptance letter for allotment. It was thereafter, the SIPCOT, by its letter dated 30.04.2004, clarified Clause 9 stating that the terms and conditions of the allotment of land will be in terms of the allotment order, however, the same will be examined on receipt of specific request under Clause 9 based on the terms prevailing at that time. In response thereto, the DATS conveyed its acceptance with a caveat that the cost to be paid to SIPCOT with respect to issues arising out of Clause 9 of the allotment order only if the cost determined by SIPCOT is reasonable and commensurate with the actual cost incurred by SIPCOT to effect necessary changes.

2.3. At this stage, the DATS informed the SIPCOT that the name of DATS has been changed to iMetriex Technologies Ltd., and sought for approval of the same. Accordingly, the same was approv