Whether the High Court was justified in confirming the order dated 22nd April, 2010 under Section 34 of the Arbitration & Conciliation Act, 1996 passed by the Senior Civil Judge, Sirsi, in Civil Misc. No. 08/2003, whereby the award passed by the learned Arbitrator was modified and the amount awarded was reduced. (Para 1)
It is undisputed that the work as allotted could not be completed by the Claimant-Appellant, for which, he held the authorities of the State responsible as they allegedly did not clear his bills, repeatedly at every stage and also due to delays caused by change of site and in delivery of material for such construction. (Para 2.3)
For settlement and adjudication of disputes, the parties to the contract resorted to the arbitral mechanism and resultantly, in Arbitration Petition dated 31st May, 2002, Mr. S.K Angadi, Chief Engineer (Retd.) stood appointed as the Arbitrator on 30th July, 2002. (Para 2.4)
Assailing the same, the Respondent preferred a petition under Section 34 of the A&C Act in which the learned Civil Judge, Sirsi, found 2 points to be arising for his consideration which he recorded as:
“1. Whether the petitioner made out the proper grounds that the award passed by the arbitrator is not supported by sound reasonings and it is in arbitrary nature and it is liable to be set aside?
2. What order? (Para 7)
The award passed by the learned Arbitrator was modified and the Respondents were directed to pay Rs.3,71,564 (25% of tender amount) along with Rs.10,000/- as costs towards the arbitration @ 9% interest. The reasons supplied for such modification, as they come forth upon a perusal of the judgement are (Para 8)
The High Court, vide its judgement under challenge before us, has confirmed the modification of the arbitral award as has been done by the learned Civil Judge, Sirsi, dismissing the application on part of the Claimant-Appellant. (Para 9)
It is in this background, that we are required to consider whether the modification of the arbitral award as carried out by the learned Civil Judge as confirmed by the High Court, was justified within law? (Para 11)
It would be useful to examine the expositions of this Court on the scope to interfere with arbitral awards under Sections 34 & 37 of the A&C Act. _(Para 12)
The position as to whether an arbitral award can be modified in the proceedings initiated under Sections 34/37 of the A&C Act is no longer res integra. While noting the provisions, more specifically, Section 34(4) of the A&C Act; the decisions rendered by this Court, including the principles of international law enunciated in several decisions recorded in the treatise “Redfern and Hunter on International Arbitration, 6th Edition”, this Court in National Highways Authority of India v. M. Hakeen and Another[(2021) 9 SCC 1 (2-Judge Bench)] , categorically held that any court under Section 34 would have no jurisdiction to modify the arbitral award, which at best, given the same to be in conflict with the grounds specified under Section 34 would be wholly unsustainable in law. The Court categorically observed that any attempt to “modify an award” under Section 34 would amount to “crossing the Lakshman Rekha”. (Para 14)
It is also a settled principle of law that an award passed by a technical expert is not meant to be scrutinised in the same manner as is the one prepared by a legally trained mind (Delhi Airport Metro Express Private Limited v. Delhi Metro Rail Corporation Limited[(2022) 1 SCC 131 (Two Judges Bench)]). (Para 19)
As it is evident from the extracted provisions, as above that prior to the Amending Act, it was open for the Court to examine the award as to whether it was in conflict with, (a) public policy of India; (b) induced or affected by fraud; (c) corruption; and (d) any violation of the provisions of Section 75 and 81 of the A&C Act. (Para 23)
In the instant case, the only provision under which the award could have been assailed was for it to have been in conflict with the public policy of India. This concept has been elaborately considered by this Court in Associate Builders (supra); Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India[(2019) 15 SCC 131 (Para 24)
As the above extracted judgment shows, merits of the award are only to be gone into, if the award is demonstrated to be contrary to the public policy of India. The reasons recorded by the learned Civil Judge for modifying the arbitral award, as reflected from a perusal thereof, have been recorded in an earlier section of the judgment. None of those reasons even so much as allude to the award being contrary to the public policy of India, which would enable the court to look into the merits of the award. (Para 29)
We have carefully perused the award passed by the Arbitrator in which he has not only referred to and considered the materials on record in their entirety but also, after due application of mind, assigned reasons for arriving at this conclusion, either rejecting, accepting or reducing the claim set out by the Claimant-Appellant. Noticeably, during the arbitral proceedings none of the parties raised any objection to the Arbitrator adjudicating the dispute, be it on any ground, including bias. Each one of the claims stands separately considered and dealt with. (Para 30)
We find that the view taken by the Arbitrator is a plausible view and could not have been substituted for its own by the Court. (Para 31)
The reasons assigned by the Court under Section 34 of the A &C Act, to our mind, are totally extraneous to the controversy, to the lis between the parties and not borne out from the record. In fact, they are mutually contradictory. (Para 32)
The learned Single Judge, similar to the learned Civil Judge under Section 34, appears to have not concerned themselves with the contours of Section 37 of the A&C Act. The impugned judgment reads like a judgment rendered by an appellate court, for whom reexamination of merits is open to be taken as the course of action. (Para 39)
We find the Court to have held the award to be perverse and contrary to public policy. The basis for such a finding being the delay on the part of the contractor in completion of the work which “could have been avoided”. Significantly, as we have observed earlier such a finding is not backed by any material on record. (Para 40)
In the absence of compliance with the well laid out parameters and contours of both Section 34 and Section 37 of the A&C Act, the impugned judgement(s) referred to in Para 1 (supra) are required to be set aside. Consequently, the award dated 18th February 2003 of the learned Arbitrator is restored, for any challenge thereto has failed. (Para 47)
SUPREME COURT OF INDIA
2024 STPL(Web) 16 SC
[2024 INSC 17]
S.V. Samudram Vs. State Of Karnataka & Anr
Civil Appeal No. 8067 OF 2019-Decided on 04-01-2024.
https://stpllaw.in/wp-content/uploads/2024/01/2024-STPLWeb-16-SC.pdf
