In Brief
The State of Chhattisgarh challenged an arbitral award that had directed refund of 'supervision charges' recovered from a company under a Sal seeds supply agreement spanning over two decades. The Supreme Court held that the arbitrator committed patent illegality by ignoring express contractual provisions and a State Circular authorizing recovery of 10% supervision charges. The Court ruled that an arbitrator's failure to decide in accordance with the contract's terms violates Section 28(3) of the Arbitration Act and constitutes illegality going to the root of the matter. The award was partly quashed and the direction to refund supervision charges was set aside, upholding the State's right to levy such charges under the agreement.
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