ORDER S. Muralidhar, J. 1. The challenge in this petition under Section 34 of Arbitration and Conciliation Act, 1996 (`Act') is to an Award passed by the sole Arbitrator in the disputes between the Petitioner Union of India and Respondent No. 1, M/s Mashbra Industries Pvt. Ltd. 2. The background to the present petition is that an agreement was entered on 31st January 2002 between the Petitioner and Respondent No. 1 for free printing and supply of eight crores Railway Reservation/Cancellation Forms in the size of 20 cms. X 10 cms. The terms and conditions of the agreement were that Respondent No. 1 was to be given the exclusive commercial publicity rights for exhibiting commercial advertisements (`ads') on the reservation forms as per the number and area specified. The advertisers willing to insert ads had to directly deal with Respondent No. 1. In consideration of the above facility, Respondent No. 1 was to keep a security deposit of Rs. 80,000 with the Petitioner for satisfactory fulfilment of the terms and conditions of the agreement. Fifty per cent of the royalty amount quoted by Respondent No. 1 i.e. Rs. 8 lakhs had to be deposited within fifteen days of the date of the acceptance of the offer and the balance 50% within six months. In the event of breach of any of the conditions mentioned in the agreement, the Petitioner was given the right to terminate the agreement without assigning any reasons. In the event of the Railways terminating the agreement for breach of conditions by Respondent No. 1, the security deposit could be forfeited. Where it was on account of the unsatisfactory working of Respondent No. 1 then the latter was not entitled to any damage or compensation other than the proportionate abatement of the royalty on balance quantity. 3. Admittedly Respondent No. 1 could not complete the supply of eight crore forms. While Respondent No. 1 claims that it completed supply of ten lakh forms, the case of the Petitioner is that only six lakh forms were supplied. The Petitioner claims to have issued show cause notices to Respondent No. 1 to explain why action should not be taken to terminate the contract. Meanwhile extensions were granted to Respondent No. 1 for completion of the supplies with the last extension expiring on 31st July 2004. 4. Admittedly the Petitioner never really terminated the contract. The Petitioner claims to have issued show cause notices to Respondent No. 1 to explain why action should not be taken to terminate the contract. Meanwhile extensions were granted to Respondent No. 1 for completion of the supplies with the last extension expiring on 31st July 2004. 4. Admittedly the Petitioner never really terminated the contract. On its part, Respondent No. 1 wrote to the Petitioner on 16th September 2005 demanding the refund of the royalty amount of Rs. 8 lakhs paid by it to the Petitioner. Thereafter the arbitration clause was invoked and Respondent No. 1 lodged four claims before the learned Arbitrator. Respondent No. 1 claimed the refund of Rs. 7.9 lakhs of the royalty amount, refund of Rs 80,000 as security deposit, interest on the aforementioned amounts and Rs. 50,000 towards costs. 5. On its part, the Petitioner filed counter claims. It claimed royalty for the period 20th February 2003 till 31st July 2004 in the total sum of Rs. 12.2 lakhs. It also claimed Rs. 1,09,95,369 crores towards losses on account of the failure of Respondent No. 1 to supply the requisite number of reservation forms in terms of the agreement. The Petitioner claimed 18% interest on the aforementioned amounts. 6. The learned Arbitrator noted that the Petitioner had not issued any order for termination of the agreement. It also not refused to refund the royalty amount as claimed by Respondent No. 1. After discussing the evidence produced by the parties, the learned Arbitrator concluded that at best the Petitioner could only claim to retain the security deposit of Rs. 80,000 towards the losses and damages. It was held that Respondent No. 1 was not entitled to refund of security deposit. As regards the royalty, the learned Arbitrator noted that the attempt at having the forms printed by permitting the Contractor to claim the advertisement charges from prospective advertisers was a failed experiment. It was held that it would not be fair in the circumstances to let the Petitioner retain the entire royalty amount. Since Clause 12 of the contract provided for proportionate abatement of royalty, the learned Arbitrator considered it appropriate to direct part refund of the royalty amount. Accordingly, the learned Arbitrator held that the Petitioner was liable to refund to Respondent No. 1 a sum of Rs. 4 lakhs of the royalty amount deposited. 7. None appears for the Petitioner. Since Clause 12 of the contract provided for proportionate abatement of royalty, the learned Arbitrator considered it appropriate to direct part refund of the royalty amount. Accordingly, the learned Arbitrator held that the Petitioner was liable to refund to Respondent No. 1 a sum of Rs. 4 lakhs of the royalty amount deposited. 7. None appears for the Petitioner. This Court has heard the submissions of Mr. Rajesh Banati, learned counsel appearing for Respondent No. 1. The grounds urged in the petition under Section 34 of the Act by the Petitioner have been examined. 8. It is contended by the Petitioner in the grounds that the impugned Award is opposed to the public policy of India inasmuch as the learned Arbitrator permitted part refund of royalty amount despite holding that Respondent No. 1 had withdrawn from the contract and, therefore, committed a breach. Secondly, it is submitted that in directing partial refund of the royalty amount the learned Arbitrator had decided matters beyond the scope of the reference. 9. It is clear that under Claim No. 1, Respondent No. 1 sought only refund of the royalty amount. The caption to the statement of claims reads: "Statement of claims for refund of royalty of Rs. 8 lakhs and security deposit along with interest etc." Admittedly the Petitioner never terminated the contract. Therefore, in one sense the occasion for the proportionate abatement of the royalty amount did not arise. It, therefore, cannot be said that in deciding the claim for refund of royalty, the learned Arbitrator was travelling beyond the terms of the reference. What the learned Arbitrator was, however, required to decide was the amount of refund to which Respondent No. 1 was entitled. After deducting a proportionate royalty of Rs. 10,000 towards the forms already supplied, Respondent No. 1 had claimed a refund of royalty in the sum of Rs. 7.9 lakhs. The learned Arbitrator has not awarded the sum as claimed. In fact, the learned Arbitrator negatived the claim of Respondent No. 1 for refund of security deposit of Rs. 80,000. To that extent, Respondent No. 1 has not challenged the impugned Award. In the circumstances, the decision of the learned Arbitrator to award Respondent No. 1 only approximately 50% of the royalty amount of Rs. 8 lakhs was a reasonable one and could not be said to be suffering from any patent illegality. 10. 80,000. To that extent, Respondent No. 1 has not challenged the impugned Award. In the circumstances, the decision of the learned Arbitrator to award Respondent No. 1 only approximately 50% of the royalty amount of Rs. 8 lakhs was a reasonable one and could not be said to be suffering from any patent illegality. 10. Indeed it was not just or fair for the Petitioner to retain the entire royalty amount when only ten lakh forms (or even six lakh forms as claimed by the Petitioner) were supplied and with no expenses whatsoever to the Petitioner. With the Petitioner not terminating the agreement, it could not have made good its claim for losses and damages suffered by it beyond forfeiting the security deposit. This is exactly what has been decided by the learned Arbitrator. 11. This Court does not find any grounds having been made out to interfere with the impugned Award. It is however directed that the Petitioner should pay the Respondent No. 1 simple interest at 9% per annum on the awarded amount from today till the date of payment. 12. The petition is disposed of in the above terms with no order as to costs.