“28. Insofar as the award of arbitral costs is concerned, apart from the fact that the respondent had claimed costs only of Rs.1 lac, the fact that the learned Arbitrator offers no break-up, quantification, reason or rationale for award of costs of Rs.4 lacs against the petitioners cannot be ignored. It is clear from a bare reading of pre-amendment section 31(8) of the A&C Act, that even under that provision, costs are meant to be „reasonable costs‟ relating to fee and expenses of arbitrator and witnesses; legal fee and expenses; administration fee of institution supervising the arbitration and any other expenses incurred in connection with the arbitration proceedings and the arbitral award. Absent any heads under which costs have been quantified or awarded, and absent any reasoning therefor, the award of costs of Rs.4 lacs must be held to be arbitrary. It may be observed here that the mandate contained in section 31(3), that an arbitral award shall state the reasons on which it is based, must pervade all and every aspect of the award, including award of costs. Awarding costs by a stroke of the pen, without stating reasons therefor, would fly in the face of section 31(3), apart from being opposed to well accepted canons of fairness and justice.
