The court emphasized the importance of amicable settlements and discouraged challenging settlements on flimsy grounds, highlighting the public policy of India.

( 1 ) THIS petition under Section 34 and Section 16 of the arbitration and Conciliation Act, 1996 (hereinafter called "the Act" only) is directed against an Award dated 29. 11. 2002 passed by the named Arbitrator in favour of the claimant-respondent No. 1. By the said Award, the learned arbitrator held that the respondent No. 1 is entitled to recover a sum of Rs. 10,92,990/- from the petitioner along with interest in the sum of Rs. 27,28,450/- up to 28. 11. 2002 @ 3% per month with monthly rest from 12. 4. 1999. Future interest also was awarded from the date of the Award till the date of payment @ 3% per month.

( 2 ) THE facts relevant for the disposal of the objection petition, briefly stated, are that on 27. 3. 1998 the petitioner had taken an Inter-Corporate deposit of Rs. 1 crore from respondent No. 1 on interest @ 21. 5% per annum. This loan was for a period of 90 days. The agreement provided that so long the loan amount remained unpaid after the due date of payment the petitioner would be liable to pay penal interest @ 3% per month. The agreement contained an arbitration clause also. On 25. 6. 1998 in pursuance of the agreement, the petitioner issued a cheque for Rs1 crore dated 25. 6. 1998 in favour of respondent no. 1 and also issued a demand promissory note. Later on, it made a request for extension of time for payment due to financial constraints which request was not acceded to by respondent No. 1 and the cheque was presented for payment. The cheque was dishonoured with the remarks "funds insufficient".

( 3 ) THE respondent No. 1 filed a complaint under Section 138 of the negotiable Instruments Act in the Court of Metropolitan Magistrate, Mumbai. Simultaneously, the respondent No. 1 initiated winding up proceedings also against the petitioner company in the High Court at Chennai. This petition was registered as Company Petition No. 307/1998. The High Court at Chennai dismissed the Company petition filed by respondent No. 1 for winding up the petitioner company against which the respondent No. 1 file an appeal (OSA no. 5/1999 ). In the course of the proceedings in the appeal a settlement was arrived at between the parties. On 27. 1. 1999, the hearing was adjourned after recording that the petitioner had undertaken to pay a sum of Rs. 1,15,00,000/- to respondent No. 1 on or before 2. 2. 1999 subject to the right of the appellant to work out his remedy for the balance in accordance with law. The interim orders dated 25. 1. 1999 were vacated. On 1. 2. 1999, the petitioner paid a sum of Rs. 1,13,95,000/- to respondent No. 1 by a pay order after deducting tds from the interest payment. The respondent No. 1 issued receipt dated 1. 2. 1999 acknowledging the receipt of the pay order and saying that, subject to the realization of the payment, the same will be treated as having received in full and final settlement of petitioner s liabilities towards its Inter-Corporate deposit, it was also stated that on realization of the payment as aforesaid, the respondent No. 1 agrees to withdraw all cases whatsoever pending before the courts for recovery of its Inter-Corporate Deposit dues. In the receipt also attached to the letter dated 1. 2. 1999 issued by respondent No. 1, it was stated that this payment was being accepted in full and final settlement of all dues against Inter-Corporate Deposit advanced by respondent No. 1. Thereafter, the OSA No. 5/1999 came up for hearing before the Court on 11. 2. 1999 on which date the High Court at Chennai passed orders that the Counsel for respondent No. 1 submits that the matter has been settled out of Court and as such, the appeal is being withdrawn. The appeal was accordingly dismissed as withdrawn.

( 4 ) THE respondent No. 1, however, appointed the Arbitrator thereafter and initiated arbitral proceedings claiming the balance amount of Inter-Corporate deposit. The petitioner appeared before the Arbitrator and pleaded that he has no jurisdiction to enter upon the reference in