The court ruled that modification of arbitral awards under Section 34 is impermissible, emphasizing the strict limitations placed by Supreme Court precedent.

ORDER :

These batch of cases raise an unusual and unprecedent legal conundrum. These petitions under Section 34 of the Arbitration and Conciliation Act, 1996 have been placed before this Court pursuant to various orders of remand passed by a Division Bench of this Court in statutory appeals under Section 37 of the . The grievance of the appellants before the Division Bench was that the learned single judges, whose orders were on appeal, had modified/severed certain portions of the award which was impermissible in a legal drill under in view of the decision in NHAI Vs. M.Hakeem (2021) 9 SCC 1 . At the relevant point of time when these cases were disposed by the Division Bench the decision in M. Hakeem, was pending reference before a Larger Bench. The Division Bench has remanded these cases to the Court for a de-novo hearing without going into the merits of the respective cases.

2.At the outset, this Court is aware that the orders of remand have been passed by consent. They have not and cannot be challenged. In normal circumstances, the Court to which the remand is made cannot defy the order of remand. But this is not a normal or usual case. The difficulty arises since the order of remand has been made without going into the merits. This implies that the findings expressed on merits by the Section 34 Court in the earlier round have not been vacated/set aside. In this backdrop the following question of law falls for consideration:

“Whether an order of de-novo remand can be implemented by the Section 34 Court when the appellate court in an appeal under Section 37 has not gone into the merits and set aside/vacated the same?

3.To appreciate the controversy, a brief backdrop of the trajectory of the respective cases is necessary. They are as follows:

OP.No. 821 of 2019

a) This is a petition under Section 34 of the Arbitration and Conciliation Act, 1996 filed by the Electronics Corporation of India challenging an award dated 22.08.2019. The OP was partly allowed by a learned single judge of this Court (Mr. Justice Senthilkumar Ramamoorthy) by an order dated 24.01.2020, on the following terms:

“22. In the result, the Arbitral Award dated 22.08.2019 is partly set aside with regard to the declaration that the imposition of LD under the Second Contract is illegal and the consequential direction for the payment of amounts withheld as LD under the Second Contract along with interest thereon. In all other respects, no interference is warranted with the Award. Consequently, Application No.7830 of 2019 is disposed of by vacating the order of interim stay of the Award and by directing the Petitioner to release the bank guarantees provided in terms of the order. The Petitioner shall also bear the bank charges associated with the extension of the bank guarantee for Rs.26,37,07,807.55 after setting off the proportionate bank charges for the sum of Rs.2,18,00,000/- with interest thereon at 15% per annum from the date of payment thereof to the Respondent. Consequently, application No.7832 of 2019 is closed. No costs.”

b) This order was assailed by the contractor in OSA.No. 118 of 2020 and by the ECI in OSA.No. 218 of 2021 in appeals under Section 37 of the Act. By a common order dated 24.06.2024, the appeals were disposed on the following terms:

“5. Mr.M.S.Krishnan, learned Senior Advocate instructed by Mr.J.James, learned counsel on record for ICMC and Mr.M.Vijayan of M/s.King and Partridge [Law Firm] assisted by Ms.Bensi Rema of M/s.King and Partridge for ELCOT submitted in one voice in unison t