Judgment : 1. By this petition filed under Section 34 of the Arbitration and Conciliation Act 1996, Petitioner seeks to challenge award of the sole Arbitrator directing the Petitioner to pay an amount of Rs.52,35,842/- to the Respondents. 2. The dispute is relating to a tripartite agreement between the Central Warehousing Corporation - the Respondent No.1 Essar Oils Limited – the Petitioner, and State Trading Corporation of India Limited – the Respondent No.2. The tripartite agreement was executed on 18 May 2004. The agreement was signed in Mumbai. Under the agreement the State Trading Corporation had agreed for import of High Speed Diesel Oil- HSD and Motor Spirit -MS from foreign suppliers and domestic supplier from time to time and sell the same on high seas basis to Essar Oils as per the terms and conditions of Memorandum of Understanding dated 27 April 2004. It was provided under the agreement that Adani Port Limited Mundra, Indian Oil Trading Limited, Jawaharlal Nehru Port Trust and Ganesh Benzoplast Limited Goa, will provide tanks at their respective places which was to be specially ear-marked for storage of the HSD and MS to State Trading Corporation-STC for operating and management at the warehouse on behalf of State Trading Corporation. The above mentioned entities were also to furnish office space etc. Under the tripartite agreement the modalities regarding the material in the designated warehouses were specified. It was provided that supervision for discharging, unloading, loading and delivery from designated warehouse was to be done by Central Warehousing Corporation at the cost of Essar Oils. Independent surveyors were to be appointed who would send daily reports to State Trading Corporation. It was the responsibility of Central Warehousing Corporation to keep the pledged material safe. There were other particulars under the agreement which are not germane to the present controversy. 3. The present controversy centres around a clause pertaining to warehousing management charges. The warehouse Management charges were specified at Rs.14/-per metric ton to be paid by Essar Oil mills to State Trading Corporation by 3rd of each calendar month who would in turn pay the same to Central Warehousing Corporation by 7th of every calendar month. In the tripartite agreement there was a handwritten insertion that the said charges of Rs.14/- per metric ton were per month. There is a serious dispute between the parties as regards this handwritten insertion. In the tripartite agreement there was a handwritten insertion that the said charges of Rs.14/- per metric ton were per month. There is a serious dispute between the parties as regards this handwritten insertion. The said tripartite agreement contained an arbitration clause. As per the Agreement invoices were raised and bills were received. The bills were cleared by the Essar Oil Mills in the initial months. Thereafter dispute arose between the parties. The arbitration clause was invoked by Central Warehousing Corporation and an arbitrator was appointed. 4. The Central Warehousing Corporation filed it's Statement of Claim before the Arbitrator on 20 August 2007. The Central Warehousing Corporation narrated Tripartite Agreement in the contents thereof. According to the Central Warehousing Corporation the agreement stipulated that Essar Oils will pay storage charges for the management at the rate of Rs.14/- per metric ton per month on the entire quantity till the last consignment or part thereof was delivered. It was stated that the Agreement was for minimum one year and on 28 July 2004, an addendum was signed extending the provisions of the Agreement to the units in Goa, Kolkata, Visakhapatnan, JNPT, Cochin. The Central Warehousing Corporation pleaded that stocks have been received and bills were raised which were initially cleared by Essar Oils, however, thereafter Essar Oils did not clear all the dues and total amount of dues were of Rs.65,84,855/-. The Central Warehousing Corporation pleaded that operations have been carried out in good faith even though Essar Oils defaulted in payments. It was stated that the Essar Oils initially filed a petition in this Court which the Essar Oils withdrew upon deposit of bank guarantee and subsequently took delivery of the stock. The Central Warehousing Corporation also referred to the plea taken by Essar Oils that the handwritten corrections were not countersigned by them and stated that Essar Oils should have pointed out this fact earlier. The Central Warehousing Corporation gave details of the various amounts due from the Essar Oils at different places. Accordingly, the Central Warehousing Corporation claimed an amount of Rs.65,84,855/-. 5. The Essar Oils contended that when the tripartite agreement was first sent for it's signature, it was mentioned in the agreement that the storage charges for management with the warehouse would be Rs.14/- per metric ton and it is on that understanding that Essar Oils signed the agreement. Accordingly, the Central Warehousing Corporation claimed an amount of Rs.65,84,855/-. 5. The Essar Oils contended that when the tripartite agreement was first sent for it's signature, it was mentioned in the agreement that the storage charges for management with the warehouse would be Rs.14/- per metric ton and it is on that understanding that Essar Oils signed the agreement. It was asserted that however subsequently, while the agreement was being signed by the Central Warehousing Corporation, the words 'per month (p.m)' were inserted in the agreement by hand after the words 'per M.T'. It was stated that the handwritten insertions were not signed by Essar Oil. It was also the case of Essar Oils that by adding the words 'per month' a completely different interpretation on the agreement was sought to be put by the Central Warehousing Corporation. It was contended that in the letter dated 26 June 2004 written by Central Warehousing Corporation to Essar Oils, it was mentioned that the management charges would be Rs.50,000/- per month or Rs.14/- per M.T. to be calculated on the actual stock received during the month whichever higher, and there was no mention of the words 'per month'. This letter was relied to point out that subsequent to the date of tripartite agreement the Central Warehousing Corporation itself considered the charges as Rs.14/- per M.T. and not Rs.14/- per M.T. 'per month'. It was stated that initially Essar Oils did not realise the fraud and inadvertently made payments for some of the bills, and thereafter when it was revealed that wrong interpretation was being placed on the basis of handwritten insertions Essar Oils raised a dispute. It was asserted by Essar Oils that if the interpretation placed by the Central Warehousing Corporation was to be rejected then no amount is due and payable from Essar Oils. The reply filed by Essar Oils also dealt with the other aspects of the dispute between the parties. The Essar Oils accordingly sought dismissal of the claim of the Central Warehousing Corporation. 6. The learned Arbitrator noted that the dispute between the parties was that Central Warehousing Corporation on one hand was claiming an amount of Rs.14 per M.T. per month as payable for the “entire stock” received while it was the stand of Essar Oils that, charge of Rs.14 per M T per month was payable on the “available stock”. 6. The learned Arbitrator noted that the dispute between the parties was that Central Warehousing Corporation on one hand was claiming an amount of Rs.14 per M.T. per month as payable for the “entire stock” received while it was the stand of Essar Oils that, charge of Rs.14 per M T per month was payable on the “available stock”. The second issue noted by the learned Arbitrator was whether it was the liability of Essar Oils or State Trading Corporation to pay the management charges to the Central Warehousing Corporation. The learned Arbitrator noted the contentions of the parties pertaining to different allegations, and by his Award dated 28 August 2009 allowed the claim of the Central Warehousing Corporation and directed Essar Oils to pay an amount of Rs.52,35,842/-. This award is challenged in the present petition by Essar Oils. 7. I have heard learned counsel Dr.Birendra Saraf for Petitioner – Essar Oils and learned counsel Ms. Shah for the Respondent No.1 – Central Warehousing Corporation. 8. An preliminary objection was raised by Ms Shah for Central Warehousing Corporation, regarding the jurisdiction of this Court, which will have to be considered before the merits of the rival contentions are looked into. In the petition, the petitioner Essar Oils has stated that Tripartite Agreement dated 18 May 2004 was executed in Mumbai. Material and substantial part of cause of action had arisen in Mumbai and therefore, this Court has jurisdiction. In the reply Central Warehousing Corporation has stated that the material part of cause of action has not arisen in Mumbai. It is submitted that the agreement was signed by the Executive Director, Central Warehousing Corporation in New Delhi. The Central Warehousing Corporation invoked arbitration clause by making a reference to the Registrar, Indian Council Association and sole arbitrator was appointed in New Delhi and hearing of the arbitration case took place in New Delhi. It is stated that the Central Warehousing Corporation was in charge of Management of storage tanks in different places which were being controlled by the Office of the Central Warehousing Corporation in New Delhi. A re-joinder has been filed by Essar Oils in which it is asserted that Essar Oils had filed an arbitration petition under Section 9 of the Act in pursuant of interim reliefs in this Court. A re-joinder has been filed by Essar Oils in which it is asserted that Essar Oils had filed an arbitration petition under Section 9 of the Act in pursuant of interim reliefs in this Court. It is stated that the Central Warehousing Corporation filed a reply in this proceeding, however did not raise the issue of jurisdiction. It is stated that agreement was signed by Essar Oils in Mumbai invoices, agreement and payments were received in Mumbai. Reliance is placed on the decision of the Apex Court in the case of A.B.C. Laminart Pvt. Ltd. and another Vs. A.P. Agencies, Salem – reported in AIR 1989 Supreme Court 1239. 9. Firstly under the tripartite agreement the parties have not agreed that one Court alone shall have jurisdiction. Even assuming the Courts in Delhi will have jurisdiction the question is whether Court in Mumbai do not have jurisdiction. In the case of A.B.C Laminart (supra), the Apex Court has clarified that in matters of contract there may exist cause of action of various kind. In suit for damages for breach of contract, suit may be filed either in the place where contract is made or where it should have been performed. While explaining different causes of action, the Apex Court in this decision has negatived that where the payment is to be made or is made can be considered as a place where cause of action arose. Part of cause of action arises when money is expressly payable in the contract. In the rejoinder the Essar Oils has asserted that it had signed the contract in Mumbai. Invoices were received and payments were made in Mumbai and the agreement was terminated by Essar Oils in Mumbai and the Central Warehousing Corporation has it's office in Mumbai. 10. Apart from this position the Essar Oils had filed an arbitration petition under Section 9 of the Act. It had prayed that it may be allowed to take delivery of the products lying in the tanks at Mundra Port. By anad-interim order passed on 7 April 2005, this Court had directed Essar Oils to furnish a bank guarantee for taking custody of the goods. It is asserted by Essar Oils to which there is no denial, that after furnishing this bank guarantee the Essar Oils lifted the goods. Thereafter the arbitration petition on 25 July 2005 was permitted to be withdrawn. 11. It is asserted by Essar Oils to which there is no denial, that after furnishing this bank guarantee the Essar Oils lifted the goods. Thereafter the arbitration petition on 25 July 2005 was permitted to be withdrawn. 11. In view of these facts which are uncontroverted, it is clear that the Essar Oils had withdrawn the petition filed under Section 9 of the Act since it had worked itself out because of the lifting of goods upon furnishing the bank guarantee. At that time the Central Warehousing Corporation did not take any objection as regards the jurisdiction of this Court. Dr.Saraf for Essar Oils has therefore rightly relied upon Section 42 of the Act. The petition was not simplicitor withdrawn on the first date. Ad-interim order was passed, reply was filed and thereafter it was withdrawn as it had worked itself out. This fact has not been denied by the Respondents. Furthermore, at the time of admission of present petition the Central Warehousing Corporation had filed a reply taking contention regarding the jurisdiction and after hearing all concerned the present petition was admitted and it was not stated in the order admitting the petition that the issue of jurisdiction is kept open. Even assuming, it was kept open, in view of the above mentioned facts, there is no substance in this objection. 12. Now turning to the merits of the award. The Arbitrator prefixed his discussion by specifying the question involved. Before proceeding to discuss the rival contentions he crystalised the issues in paragraph 4 as under - “4. The claimant on one hand is claiming that amount of Rs.14/- per ton per month was payable by EOL for the entire stocks received in a particular month whereas the stand of the Respondent, EOL, that the charge of Rs.14/- per ton per month was payable on the available stocks i.e. after adjusting the stocks released to EOL. The second issue is whether it was the liability of EOL or the liability of STCIL to pay the Management Charges to the claimant”. Thus the dispute before the Arbitrator revolved around the following two issues - (a) Interpretation of the clause regarding payment of charges as to whether they should be paid on available stock or entire stock. Ancillary issues being the authenticity of the handwritten insertions and the implication of the letter dated 25 June 2006. Thus the dispute before the Arbitrator revolved around the following two issues - (a) Interpretation of the clause regarding payment of charges as to whether they should be paid on available stock or entire stock. Ancillary issues being the authenticity of the handwritten insertions and the implication of the letter dated 25 June 2006. (b) Whether it was liability of Essar Oils to pay the charges or it was the liability of the State Trading Corporation. 13. The learned Arbitrator proceeded to direct the Essar Oils to pay management charges to Central Warehousing Corporation at different places as such Mundra, Gandhidham, Visakhapatnam, Navi Mumbai, Cochin and Goa. These amounts were calculated based upon the interpretation placed on the clause in the Tripartite Agreement by the Central Warehousing Corporation regarding the charge. What was the interpretation of this clause was really the main dispute between the parties. Serious grievance is made by Dr.Saraf for Essar Oils that the Arbitrator has not adverted to this issue at all and has proceeded to pass the Award without discussing the interpretation of the contract and without considering the case of Essar Oils based on the letter dated 25 June 2004. Ms Shah for Central Warehousing Corporation has sought to contend that the fact that these amounts have been granted would mean that the interpretation of the Central Warehousing Corporation has been accepted. 14. Taking as second issue first as to whether it was liability of the Essar Oils or liability of State Trading Corporation to pay the Central Warehousing Corporation, the Arbitrator has held that it was the liability of Essar Oils. There cannot be any serious objection to this finding. The Tripartite Agreement clearly places liability on Essar Oils to first pay the amount to State Trading Corporation which STC will thereafter pay to Central Warehousing Corporation. The Arbitrator noted that the Essar Oils had paid the charges to Central Warehousing Corporation and thus not only there was a clear term of the Tripartite Agreement but conduct of the Essar Oils showed that it was it's primary duty to pay the management charges. Therefore, this part of the Award is unquestionable. 15. Now turning to the first and the main point. For this purpose one will have to look at the pleadings to appreciate as to what was the main dispute between the parties. Therefore, this part of the Award is unquestionable. 15. Now turning to the first and the main point. For this purpose one will have to look at the pleadings to appreciate as to what was the main dispute between the parties. The entire dispute revolved around interpretation of the clause, relating to payment of storage charges and the handwritten insertions made in the Agreement. Thus the dispute between the parties was regarding the interpretation of the clause in respect of the storage charges and the allegation of Essar Oils that handwritten insertions in the Agreement were without their authority. The assertion of Essar Oils that if the interpretation on behalf of Essar Oils is accepted then no amount is payable has gone unchallenged. Thus resolution of this rival interpretations was crucial. The relevant clause in the Agreement reads as under:- “The Storage charge rate for this Management General Warehouse shall be Rs. 14/- per ton (p.m.) [(disputed)] which shall be payable by EOL to CWC through STC. Security arrangement for the Management General Warehouse will be provided by CWC round the clock to ensure safety and security of the stock and the charges for the same are included in the Management charges payable by EOL to CWS through STC”. 16. The Arbitrator was aware that the Central Warehousing Corporation was claiming an amount of Rs.14/- per ton per month for the entire stock whereas Essar Oil was contending that the charge was Rs.14/- per ton per month on the available stock. One would then naturally assume that the Arbitrator will proceed to decide this central issue. The entire case hinged on this decision. The Essar Oils were relying on the letter of 25 June 2004 in their support to show that Central Warehousing Corporation had itself admitted the interpretation. The Essar Oils also had contended that the insertion of word 'p.m' was without their consent. Unless this question was addressed and decided by the Arbitrator there was no question of proceeding with the quantification that the claim of Central Warehousing Corporation. There was no escape from deciding this issue as this was the very dispute which was referred to the Arbitrator. Both the parties were fully aware that this was the main contest between them for which Arbitrator was appointed. Even the Arbitrator knew that this was the issue to be decided. 17. There was no escape from deciding this issue as this was the very dispute which was referred to the Arbitrator. Both the parties were fully aware that this was the main contest between them for which Arbitrator was appointed. Even the Arbitrator knew that this was the issue to be decided. 17. I have gone through the entire award with the assistance of the learned counsel, examining every sentence. The Arbitrator has in the initial part of the Award narrated submission of the parties and has proceeded to list his conclusions and discussions under the heading 'Award'. Ms Shah, for the Central Warehousing Corporation after launching a futile attempt to discover reasons, ultimately advanced only one contention that, the fact that the claim of the Central Warehousing Corporation has been granted means the interpretation of Central Warehousing Corporation has been accepted. I am afraid that task of the Arbitrator was not as perfunctory as that. The Arbitrator had to and had no option but to decide the central issue. The Arbitrator could not have simply side-stepped the main dispute and proceeded to calculate only the dues and declare an Award. 18. There is no doubt that the Arbitrator is not expected to write a detailed judgment, but at the same time, the parties are entitled to know why the Arbitrator has given an award against them. This was a question of interpretation of a clause of the contract. There had to be a discussion as to why interpretation to one party was being accepted. The parties would expect the Arbitrator to inform them why the clause was interpreted in the manner done by the Arbitrator. Section 31 (3) of the Act lays down that Arbitral Award shall state the reasons upon which it is based unless parties agree that no reasons be given. It is not the case of either of the parties that parties agreed that no reasons be given. 19. There are series of decisions laying down that the Arbitrator has to give reasons for the award. In the Act of 1996, unlike the Act of 1940, provision as such Section 31(3) has been introduced. The provision is inserted to prevent unfairness and arbitrariness in the arbitral process. A party, more particularly a losing party, is entitled to know the reasons. In the Act of 1996, unlike the Act of 1940, provision as such Section 31(3) has been introduced. The provision is inserted to prevent unfairness and arbitrariness in the arbitral process. A party, more particularly a losing party, is entitled to know the reasons. Reasons are also necessary to understand the mind of the arbitrator when a challenge is laid to the Award under Section 34 of the Act. The arbitrator is not expected to analyse the law and facts in great detail and deliver an elaborate judgment, but least that is expected that he should explain what his findings are and how he arrived at the conclusions. This Court is not expected to proceed like a archaeologist to excavate through the award in search of reasons. 20. Not only the Arbitrator has not disclosed why he accepted interpretation of Central Warehousing Corporation but there is absolutely no discussion at all regarding the allegations made by Essar Oil that the handwritten words were without their initials. This was a serious imputation of forgery. The Central Warehousing Corporation may have had an explanation, but the Arbitrator never called upon Central Warehousing Corporation to explain this position. Again the Arbitrator has side-stepped this serious contest. 21. The reliance is placed by Essar Oils on the letter dated 25 June 2004 issued by Central Warehousing Corporation to Essar Oils. In this letter Central Warehousing Corporation informed the Respondent as under: “The Management charges should be Rs.50,000.00 p.m. or Rs.14.00 per M.T to be calculated on the actual stock received during a month whichever is higher keeping in view of CWC establishment cost for maintenance of 2 (two) officials who are to be deputed for carrying out the transaction from 8.30 AM to 5.30 PM assigned during the course of discussion. Even the transaction may be continued till night 9 PM”. 22. In view of the stand taken by the Essar Oils, the letter of 25 June 2004 issued by the Central Warehousing Corporation had assumed importance. This letter stated that Central Warehousing Corporation had decided to charge on per metric ton basis. Since it is the case of Essar Oils that this letter supported it's interpretation, it formed a vital piece of evidence. There is no reference to this letter at all in the entire award. This letter stated that Central Warehousing Corporation had decided to charge on per metric ton basis. Since it is the case of Essar Oils that this letter supported it's interpretation, it formed a vital piece of evidence. There is no reference to this letter at all in the entire award. The award contains only calculations and proceeds as if the interpretation and the clause regarding payment had no contest. There is a complete dereliction of duty by the Arbitrator to arbitrate on the core issues referred to him. Dr.Saraf for the Petitioner relied upon the decisions of the Apex Court in the case of Oil and Natural Gas Corporation Ltd. Vs Garware Shipping Corporation Limited - (2007) 13 Supreme Court Cases 434; Sumitomo Heavy Industries Limited Vs Oil and Natural Gas Corporation Ltd. -(2010) 11 Supreme Court Cases 296 to press into service the above grounds. 23. In the case of ONGC Ltd. (supra) the Apex Court held that there is no proposition that Court will be slow to interfere with arbitraror's award even if the award is perverse and even if the very basis of the arbitrator's award is wrong. In the case of Sumitomo (supra) Apex Court considered what can be called as perverse and held that finding of the arbitrator which is not only against the weight of evidence but altogether against evidence would be called as a perverse. The Apex Court held that it will be a perverse finding if the relevant material is not considered at all. In the case of Municipal Committee Hoshiarpur Vs Punjab State Electricity Board and others -(2010) 13 Supreme Court Cases 216 while considering the case arising out of Section 100 of the Civil Procedure Code, the Apex Court laid down that the finding of fact is arrived at by ignoring or excluding relevant material would be termed as perverse finding. 24. Apart from this settled position, if the parties went before the Arbitrator with a specific dispute to be resolved and the arbitrator simply passes an award accepting the case of one of the parties without disclosing any reason at all to the losing party, then such award would be also in the breach of principles of natural justice. It is part of the principles of natural justice that a losing party is informed the reason why an order was passed against it. It is part of the principles of natural justice that a losing party is informed the reason why an order was passed against it. It could also be said that the arbitrator, by not deciding the very crux of the dispute, has committed legal misconduct. Proceeding in this manner the Arbitrator has fallen foul of various heads of challenge. The award is without reasons; the award does not disclose application of mind, award does not consider relevant material; the award is in breach of principles of natural justice, Arbitrator has sidestepped the main issues; Arbitrator has committed legal misconduct. Case for exercise of powers under Section 34 of the Act is therefore made out. 25. During the course of the hearing none of the parties made a request that the matter be sent back to the Arbitrator therefore, in absence of any such submission or consent, I have no other option but to set aside the Award. Accordingly the Arbitration Petition is allowed. The Award dated 28 August 2009 is quashed and set aside. No order as to costs.