A. K. BANERJEE, J. ( 1 ) PRINCIPLES of law relating to an award under the new Arbitration Law although under the new Arbitration Law, arbitrator is bound to disclose reasons, the scope of judicial scrutiny of an award has come in a very narrow campus under the present law. Under the present law, on merits an award can be impugned only if it is found that the arbitrator has travelled beyond the scope of reference of if the same is illegal being contrary to the laws of the land. The award can also be impugned if it is in conflict with the public policy of the country being affected by fraud or corruption or in violation of section 75 or 81 of the Arbitration and Conciliation Act, 1996. ( 2 ) SINCE fraud, corruption or violation of section 75 or 81 are absent here the only question calls for my determination is to whether the subject award is devoid of reason or whether the award or any part thereof is contrary to settled principles of law. 2. 1. ?reason? in an award has been defined by Supreme Court of India in two illusions judgments being the case of Indian Oil Corporation Ltd. and in the case of Gujarat Water Supplies reported in AIR 1988, Supreme Court, page 1340 and AIR 1989, Supreme Court, page 973. Considering the proposition of law decided by the said two Apex Court judgments our Division Bench in a recent decision in the matter of Union of India v. Royal Construction reported in 2001 (suppl.) Arbitration Law Reporter, page 488 has given clear meaning of ?reasons?. Paragraph 20 of the said judgment is quoted below:-?the law as it appears from the above authorities and especially the two last ones referred to above is as follows:- (i)to make a reasoned award the Arbitrator has to make his mind known on the basis which he has acted. (ii)statement of reasons is not the same thing as the giving of a detailed judgment. (iii)reasons are short and intelligible indications of the Arbitrator's mind, no more. (iv) the reasons must have such connection with the conclusions reached by the Arbitrator as to show that the Arbitrator has not acted irrelevantly, unreasonably or capriciously. (v)the reasons should deal with the substantial points raised in the reference. ? (iii)reasons are short and intelligible indications of the Arbitrator's mind, no more. (iv) the reasons must have such connection with the conclusions reached by the Arbitrator as to show that the Arbitrator has not acted irrelevantly, unreasonably or capriciously. (v)the reasons should deal with the substantial points raised in the reference. ? ( 3 ) TO find out whether the subject award is devoid of logical reasons based on the well settled principles of law, I would apply the test laid down by Their Lordships in the said Division Bench judgment in the instant case shortly hereinafter. Facts of the case ( 4 ) THE petitioner entered into a contract for supply of industrial salt to the respondents. In terms of clause 2 of the said agreement the salt was to be supplied on ?f. O. R. on Price? basis. Under clause 5 of the contract the supplies were subject to weighment at the respondent's mill whereas under clause 6 the materials were subject to testing at the respondent's mill. First three consignments were despatched under the contract. The third consignment was despatched just before the expiry of the contractual period. At the request of the respondent 4th consignment was sent at a modified reduced price. On the basis of a ?said to contain? railway receipt 90% of the price of the despatched materials were received by the claimant. Disputes arose when the respondents alleged short delivery and refused payment of the balance 10% on such ground. Reference to Arbitration ( 5 ) THE matter was referred to arbitration before the Arbitrator The Hon'ble Mr. Justice Prabir Kumar Majumder (Retd.) in terms of the arbitration clause. The claimant in their statement of claim claimed balance 10% of the price of salt covered under the ?said to contain? railway receipt whereas the respondent made a counter claim for refund of freight covering the quantity of salt short delivered as well as for damages. Points urged before the Arbitrator ( 6 ) BEFORE the Arbitrator the claimant raised two issues:- (I)since the goods were covered under ?f. O. R. ? basis the claimant was entitled the price of the entire goods despatched and they were not in any way responsible for any short delivery. Points urged before the Arbitrator ( 6 ) BEFORE the Arbitrator the claimant raised two issues:- (I)since the goods were covered under ?f. O. R. ? basis the claimant was entitled the price of the entire goods despatched and they were not in any way responsible for any short delivery. (II)the factum of passing of the title of the goods upon the respondent on despatch would be supported by the fact that the respondent had insured the goods and lodged appropriate insurance claim with the insurance company and obtained a partial claim. Since the title of the goods passed simultaneously with the despatch of the goods the claimant should not be held responsible for short delivery and the claimant was entitled to get balance of price. 6. 1. On behalf of the respondents it was contended that under the contract the total supply could only be determined after actual weighment at the respondent's mill under clause 5 of the contract. As such the respondent was only obliged to make payment of the price of goods received by them. 6. 2. On the issue of insurance the respondent contended that the insurance policy was obtained as agreed by the and between the parties and whatever amounts had been received as and by way of partial claim had been given due credit for. The respondent claimed that since despite payment of freight the respondent did not receive the entire goods they were entitled to claim refund of the freight to the extent of the quantity not received by them. The respondent further claimed that due to short delivery they suffered loss and damages which the claimant was obliged to compensate. Contents of the award ( 7 ) THE Arbitrator while dealing with the points raised by the parties held that since the contract was F. O. R. on price basis the price prevalent at the time of despatch would be the price payable for the consignment and had nothing to do with the quantity delivered. According to His Lordship under clause 5 of the contract the claimants were only entitled to price of the goods received by the respondents and not for the quantity of the goods certified by the ?said to contain? railway receipts. According to His Lordship under clause 5 of the contract the claimants were only entitled to price of the goods received by the respondents and not for the quantity of the goods certified by the ?said to contain? railway receipts. Deciding such issue His Lordship relied on the decision of this Court reported in AIR 1949, Calcutta, page 472 as well as of the Apex Court decision reported in AIR 1990, Supreme Court, page 1735. On the issue of entitlement His Lordship held that since the respondent was only obliged to make payment of the price of goods received by them they were entitled to refund of the freight paid by them for the quantity which was not received. On the issue of damage His Lordship was of the view that the same was not proved. His Lordship ultimately had given award for refund of freight for the quantity not delivered less the sum received by the respondent from the insurance company and the balance of price payable to the claimant. His Lordship awarded interest @ 18% per annum on the awarded amount of Rs. 16,14,010. 00 and directed payment of the same within three months and in default further interest @ 15% per annum. Grounds of challenge ( 8 ) ALTHOUGH several grounds had been raised in the application for setting aside the principles ground on which the learned counsel appearing for the petitioner emphasized, was that since the title of the goods had passed on the respondents in terms of clause 2 of the contract being F. O. R. on price basis and since the respondent submitted proof of despatch being the railway receipt they were not responsible for any short delivery. To elaborate such issue it was contended that the very fact that the goods on transit were insured by the respondent would presume that the title of the goods passed on the railways. Insurance claim can only be had by a party who has an insurable interest in the goods. My decision on the issue raised by the petitioner ( 9 ) I have carefully examined the award. It is not only well reasoned but also is devoid of any legal infirmity. Insurance claim can only be had by a party who has an insurable interest in the goods. My decision on the issue raised by the petitioner ( 9 ) I have carefully examined the award. It is not only well reasoned but also is devoid of any legal infirmity. His Lordship not only considered all points and issues raised before him but also had taken pain to examine the claims of the parties from various angles applying the test laid down by the well settled principles of law. The said award, in my view, possess all the above tests with flying colours save and except one or two small areas which I would discuss shortly hereinafter. 9. 1. The Arbitrator while dealing with the issues on the question of passing of title held that the F. O. R. on price basis postulated fixation of price at the despatch level and had nothing to do with the quantity of despatch. His Lordship further held that assuming clause 2 of the contract related to fixation of the despatch quantity, on reading of the later clauses being clause 5 and 6 following the Rule of Interpretation the interpretation suggested by the claimant was not tenable. His Lordship further held that the issue of insurance was not a relevant factor and could not be said to be the only relevant factor for determining the definition of clause 2. His Lordship, discussing the principles of law laid down, came to a conclusion that ?said to contain? did not give clean chit to the petitioner on the question of quantity. Whether I agree with His Lordship or not is totally irrelevant herein inasmuch as I am not sitting on appeal over the said award. Only and the only issue is whether such decision of His Lordship can be said to be devoid of reason or contrary to the laws of the land or in conflict with the public policies. I do not find any such infirmity in the said award on that score. 9. 2. In any event the said award is not only well reasoned (barring one or two small areas) but also is a balanced one. His Lordship had considered all the issues those were raised before His Lordship while publishing his award. Hence, the submission of the petitioner on that score is not acceptable to me. 9. 2. In any event the said award is not only well reasoned (barring one or two small areas) but also is a balanced one. His Lordship had considered all the issues those were raised before His Lordship while publishing his award. Hence, the submission of the petitioner on that score is not acceptable to me. Points of difference ( 10 ) AS I have just now said that the said award is well reasoned, with all humility and with due respect to His Lordship may I just point out two small areas where I find the scope of interference. 10. 1. While dealing with the price factor of the 3rd consignment His Lordship held that although the 3rd consignment was sent under the contract the price payable to the claimant should not be the price what was provided in the contract and should be at the rate of the 4th consignment. On this issue two paragraphs of the said award dealing with the subject matter are quoted below:-?it is claimed by the claimant that the order for the 3rd consignment was placed on the claimant on 15th May, 2000, Salt Authorities granted permission on 17th May, 2000. The freight was paid by the respondent on 26th May, 2000, but finally the goods were consigned on 16th June, 2000. It is the explanation of the claimant that after receiving the freight the claimant registered the railway wagon on 30th May, 2000 but the wagon was made available on 15th June, 2000. There is no document disclosed in support of this contention. One alleged certificate from the authority had been disclosed but that will also not indicate which authority issued such certificate and what was the designation of that officer. On the contrary, the respondent has produced in course of hearing a certificate from the proper Railway authorities, which would clearly show that the despatch was made on 3. 6. 2000 i. e. after 31st May, 2000. A copy of such certificate has also been forwarded to the claimant. In any event from the claimant's letter dated 16th June, 2001, it will appear that the dispatch was made on 16th June, 2001 after the expiry of the contract period. It is also an accepted position that the ruling price per metric ton after the expiry of the said rate contract was Rs. In any event from the claimant's letter dated 16th June, 2001, it will appear that the dispatch was made on 16th June, 2001 after the expiry of the contract period. It is also an accepted position that the ruling price per metric ton after the expiry of the said rate contract was Rs. 411/- per metric ton, which was the new rate contract price and it will also appear that in respect of the 4th consignment taking place after the said contract period the claimant charged @ Rs. 411/ -. It is, however, contended by the claimant that was a special case but no such case has been made out. In the premises I therefore hold that the rate for said 3rd consignment should be Rs. 411/- and as such I am of the view that the claimant is not entitled to the agreed contractual rate of Rs. 625/- per metric ton as claimed by the claimant. ?10. 2. In the first paragraph quoted supra it would appear that His Lordship had relied on the facts that the despatch of the 3rd consignment was made after the expiry of the contractual period and since the despatch was made after the expiry of the contractual period the rate prevalent under the contract could not be made applicable and the claimant would be entitled to the price @ 4th consignment which was less than the contractual value. I have carefully read the aforesaid two paragraphs quoted supra and again with all humility and with due respect to His Lordship I could not find out any reason in awarding the claim of the claimant for the price of the 3rd consignment at the rate of the 4th consignment. It might be true that His Lordship held the claimant responsible for delayed despatch and thereby disallowed price at the contractual rate. His Lordship had however not given any reason why the claimant would be entitled to the price prevalent for the 4th consignment. 10. 3. The matter can be viewed from another angle. It might be true that His Lordship held the claimant responsible for delayed despatch and thereby disallowed price at the contractual rate. His Lordship had however not given any reason why the claimant would be entitled to the price prevalent for the 4th consignment. 10. 3. The matter can be viewed from another angle. To come to a conclusion that the price of the 4th consignment should the guiding factor for the 3rd consignment His Lordship should have come to a conclusion (a) That the claimant was at fault for delayed despatch, (b) Claimant was not entitled to the contractual value because of such delay, (c) The claimant was entitled to the price of the 4th consignment and not any other price. Some reason on such score especially on clause (c) above, again with all humility and due respect to His Lordship should have been there in the award. 10. 4. The second area of my interference would be the rate of interest. It is well known factor that due to the prevalent fiscal policy of the Government the rate of interest prevalent in commercial transaction is being curtailed down for last 5/6 years. The prevalent Bank lending rate at the relevant point of time should have been the guiding factor for His Lordship while awarding interest @ 18% per annum. No reason has been given while awarding interest at the said rate. 10. 5. With all humility and due respect to His Lordship, His Lordship should consider such aspects afresh. Conclusion ( 11 ) THE application for setting aside the award succeeds in part. The award is set aside to the extent which dealt with the price of the 3rd consignment being 2 paragraphs quoted supra as well as the rate of interest awarded by His Lordship. The matter is remanded back to His Lordship on the limited scope for reconsideration on the aforesaid two issues. His Lordship may, subject to His Lordship's convenience, reconsider the issue as observed herein within a period of 4 months from the date of communication of the order. The parties are directed to render all necessary assistance and cooperation to His Lordship as also to pay the remuneration, cost and expenses for such reference afresh. There would be, however, no order as to costs. Urgent xerox certified copy would be given to the parties, if applied for. Application succeeds in part