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Judgment
Sudhanshu Dhulia, J
(1) This is an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 against the judgment and order dated 8.12.2011 passed by the
District           Judge, Dehradun in an arbitration application filed under Section 34 of the Arbitration and Conciliation Act, 1996.
(2) Appellant before this Court is a Government Corporation. On 15.7.2003, the appellant and the respondent entered into a contract which admittedly
had an arbitration clause. The appellant was engaged in drilling activities at a place called Sunder Nagar in Himachal Pradesh. The other party i.e. the
respondent was to provide catering and housekeeping services for the workers of the appellant Corporation who were engaged in the drilling activities
at the site. Under Clause IX(2) of the Contract, it was stipulated that irrespective of the number of workers engaged on a particular day, the
Corporation will pay daily rates for catering and housekeeping services for a minimum number of 40 persons per site w.e.f. commencement of work.
However, this minimum guarantee was not to be given during the period of rig movement i.e. when the drilling was to stop in Sunder Nagar and was
to shift at another place for a fresh commencement of drilling. During this period, the payment was to be made as per the actual meals taken on a pro-
rata basis.
(3) Now, the admitted position is that a dispute arose between the parties on the issue of payment of minimum guarantee for a particular period.
According to the appellant, the drilling at Sunder Nagar stopped on 7.9.2003, but the rig could not be shifted to the new place on account of an
agitation by the local people. The only question therefore was whether the caterer was entitled to payment of minimum guarantee for this period,
where on the one hand there was no effective drilling going on at Sunder Nagar, but on the other hand, there was no movement of rig as well, as was
stipulated in Clause IX(2) of the contract referred to hereinabove.Â
(4) Since the claim of minimum guarantee was not given to the respondent caterer, an arbitrator was appointed by the Corporation, in terms of the
arbitration clause. The arbitrator passed an award dated 8.5.2008 holding that there was no movement of rig between 6.9.2003 to 30.9.2004, for a
period of 13 months, although the drilling work was stopped, but the rig remained stationed at Sunder Nagar during this period and actual
transportation/movement of the rig from Sunder Nagar started only after 30.9.2004 and, therefore, the caterer was liable to be given minimum
guarantee for the period up to 30.9.2004. Accordingly, an award amounting to Rs. 10,78,639/- was passed in favour of the caterer. On this amount,
interest @ 18 per cent per annum w.e.f. the date the amount became due was also awarded by the arbitrator.Â
(5) The Corporation challenged the award by moving an application under Section 34 of the Arbitration and Conciliation Act, 1996 before the learned
District Judge, Dehradun for setting aside the award. The Court partly allowed the application, but as Clause XII(2) of contract specifically provided
that neither party to the contract would be entitled to any interest on the amount of award, therefore the interest part was disallowed. In view of the
provisions of Section 31 of the Arbitration and Conciliation Act, the learned District Judge came to the conclusion that though normally interest is paid
on the amount of award, but since there is specific condition stipulated in the contract itself in terms of which there was specific bar on the payment of
interest, the award of the arbitrator as regards the interest is not in conformity with the Arbitration and Conciliation Act and, consequently, the District
Judge partly allowed the application under Section 34 of the Act with reference to the award of interest. At the same time, the District Judge
accepted the award of the arbitral tribunal on the payment of minimum guarantee inasmuch as for the period of almost 13 months, the rig remained
stationed at Sunder Nagar and no movement of the rig started during this period.Â
(6) The scope of interference in an arbitral award is extremely narrow. The grounds for interfering with an arbitral award are limited to those
mentioned in Section 34 of the Act, which reads as under:Â Â Â
“34 Application for setting aside arbitral award. â€
(1) Recourse to a Court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2)
and sub-section (3).
(2) An arbitral award may be set aside by the Court only ifâ€
(a) the party making the application furnishes proof thatâ€
(i) a party was under some incapacity; or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the
time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise
unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions
on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from
those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement
was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part;
or
(b) the Court finds thatâ€
(i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
Explanation 1. â€"For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,-
(i) the making of the award was inducted or affected by fraud or corruption or was in violation of Section 75 or Section 81; or
(ii) it is in contravention with the fundamental policy of Indian law; or (iii) it is in conflict with most basic notions of morality or justice.Â
Explanation 2. â€"For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail
a review on the merits of the dispute.Â
(2-A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the court, if the court finds
that the award is vitiated by patent illegality appearing on the face of the award:
 Provided than an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence.Â
(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had
received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral
tribunal:Â
Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three
months it may entertain the application within a further period of thirty days, but not thereafter.
(4) On receipt of an application under subsection (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings
for a period of time determined by it in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action
as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award.
(5) An application under this section shall be filed by a party only after issuing a prior notice to the other party and such application shall be
accompanied by an affidavit by the applicant endorsing compliance with the said requirement.Â
(6) An application under this section shall be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice
referred to in sub-section (5) is served upon the other party.â€
(7) In view of the above, it is absolutely clear that the learned District Judge has passed the impugned judgment and order within the four-corners of
Section 34 of the Act and after going into each and every aspect of the matter. This Court is satisfied with the reasons given by the court below.
Hence, no interference is called for in the matter by this Court. Consequently, this appeal is hereby dismissed.  Â
(8) On an application moved by the respondent before the Registrar General of the Court, the amount of rupees ten lakhs, deposited in compliance of
the order dated 10.4.2012 passed by a coordinate Bench of this Court, shall be released along with the interest which has so far accumulated on the
deposited amount.Â