2024 Supreme(SC) 18

SUPREME COURT OF INDIA
Abhay S. Oka, Sanjay Karol, JJ.
S.V. Samudram - Appellant
Versus
State of Karnataka & Anr. – Respondents
Civil Appeal No. 8067 of 2019
Decided On : 04-01-2024

IMPORTANT POINTS
(1) Appeal against modified arbitral award – Merits of award are only to be gone into, if award is demonstrated to be contrary to public policy of India.
(2) Arbitral proceedings are per se not comparable to judicial proceedings before Court – Arbitrator’s view, generally is considered to be binding upon parties unless it is set aside on certain specified grounds.

Headnote:

(A) Arbitration and Conciliation Act, 1996 – Sections 34 and 37 – Appeal against modified arbitral award – Dispute arising from work contract – Any court under Section 34 would have no jurisdiction to modify arbitral award – Arbitral proceedings are per se not comparable to judicial proceedings before Court – Arbitrator’s view, generally is considered to be binding upon parties unless it is set aside on certain specified grounds – If view taken by Arbitrator is a plausible view, no interference on specified grounds is warranted – Award passed by a technical expert is not meant to be scrutinised in same manner as is one prepared by a legally trained mind – In instant case, only provision under which award could have been assailed was for it to have been in conflict with public policy of India. (Paras 14, 17, 19 and 21)

(B) Arbitration and Conciliation Act, 1996 – Sections 34 and 37 – Appeal against modified arbitral award – Dispute arising from work contract – Merits of award are only to be gone into, if award is demonstrated to be contrary to public policy of India – None of reasons recorded by Civil Judge for modifying arbitral award, even so much as allude to award being contrary to public policy of India which would enable court to look into merits of award – Each one of claims stands separately considered and dealt with – View taken by Arbitrator is a plausible view and could not have been substituted for its own by Court – Reasons assigned by Court under Section 34 are mutually contradictory – It is no business of Court to consider burden on exchequer – All that is required by Court is to see as to whether contracting parties have agreed to bind themselves to terms with only supervisory jurisdiction of Court to consider breach thereof, in light of grounds specified under Section 34 – Modification of arbitral award by Civil Judge does not stand scrutiny and must be set aside. (Paras 29, 30, 31, 32, 32.5 and 33)

(C) Arbitration and Conciliation Act, 1996 – Section 37 – Appeal against arbitral award – Dispute arising from work contract – Transaction being commercial in nature, no reason as to why claimant could not be entitled to interest in terms of rate quantified by Arbitrator which includes period of pre-arbitration, pendente lite and future – Claimant-Appellant is entitled to 9% interest – Award of Arbitrator restored. (Paras 46, 47 and 48)

Facts of the case:

Issue arising for consideration in this Civil Appeal, which lays challenge to a judgment and order dated 7th February, 2017 passed by High Court of Karnataka (Dharwad Bench) in MFA No. 24507 of 2010 (AA) under Section 37(1) of Arbitration and Conciliation Act, 1996, is whether High Court was justified in confirming order dated 22nd April, 2010 under Section 34 of Arbitration & Conciliation Act, 1996 passed by Senior Civil Judge, Sirsi, in Civil Misc. No. 08/2003, whereby award passed by Arbitrator was modified and amount awarded was reduced.

Findings of Court:

It cannot be doubted that the Claimant-Appellant is entitled to interest. Arbitrator has awarded 18% interest and the same stood reduced by Courts below to 9% without any legal basis therefor.

Result : Appeal allowed.