LexM/S LARSEN AIR CONDITIONING AND REFRIGRATION COMPANY versus UNION OF INDIA AND ORS.
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[2023] 11 S.C.R. 86 : 2023 INSC 708 86 CASE DETAILS M/S LARSEN AIR CONDITIONING AND REFRIGRATION COMPANY v. UNION OF INDIA AND ORS. (Civil Appeal No. 3798 of 2023) AUGUST 11, 2023 [S. RAVINDRA BHAT AND DIPANKAR DATTA, JJ.] HEADNOTES Issue for consideration : Whether the High Court erred in modifying the arbitral award to the extent of reducing the interest, from compound interest of 18% to 9% simple interest per annum. Arbitration and Conciliation Act, 1996 – s.31 – Modifi cation of interest by the High Court – Propriety of: Held : In the instant case, given that the arbitration commenced in 1997, i.e., after the Act of 1996 came into force on 22.08.1996, the arbitrator, and the award passed by them, would be subject to this statute – Under the enactment, i.e. s.31(7), the statutory rate of interest itself is contemplated at 18% p.a. – This is in the event the award does not contain any direction towards the rate of interest – Therefore, there is little to no reason, for the High Court to have interfered with the arbitrator’s fi nding on interest accrued and payable – Unlike in the case of the old Act, the court is powerless to modify the award and can only set aside partially, or wholly, an award on a fi nding that the conditions spelt out u/s. 34 of the 1996 Act have been established. [Para 13] Arbitration and Conciliation Act, 1996 – s.34 – Jurisdiction under: Held : The limited and extremely circumscribed jurisdiction of the court u/s. 34 of the Act, permits the court to interfere with an award, sans the grounds of patent illegality, i.e., that “illegality must go to the root of the matter and cannot be of a trivial nature”; and that the tribunal “must decide in accordance with the terms of the contract, but if an arbitrator construes a term of the contract in a reasonable manner, it will not mean that the 87 M/S LARSEN AIR CONDITIONING AND REFRIGRATION COMPANY v. UNION OF INDIA award can be set aside on this ground”– The other ground would be denial of natural justice. [Para 15] Arbitration and Conciliation Act, 1996 – s.37 – Scope of Appellate Court to review fi ndings: Held : In appeal, s.37 of the Act grants narrower scope to the appellate court to review the fi ndings in an award, if it has been upheld, or substantially upheld u/s. 34 – It is important to notice that the old Act contained a provision which enabled the court to modify an award – However, that power has been consciously omitted by Parliament, while enacting the Act of 1996 – This means that the Parliamentary intent was to exclude power to modify an award, in any manner, to the court. [Para 15] LIST OF CITATIONS AND OTHER REFERENCES K. Marappan v. Superintending Engineer TBPHLC Circle Anantapur [2019] 5 SCR 152; M/s Raveechee & Co. v. Union of India [2018] 5 SCR 138; Ambica Construction v. Union of India (2017) 14 SCC 323; Shahi v. State of UP & Ors. [2019] 11 SCR 640; Secretary, Irrigation Department, State of Orissa v. G.C. Roy [1991] Supp. 3 SCR 417; Municipal Corporation of Greater Mumbai and Anr v. Pratibha Industries Ltd. & Ors. [2018] 14 SCR 1143; Oriental Structural Engineers Pvt. Ltd. v. State of Kerala [2021] 4 SCR 137; Post Graduate Institute of Medical Education and Research, Chandigarh v. Kalsi Construction Company (2019) 8 SCC 726; Associate Builders v. Delhi Development Authority [2014] 13 SCR 895; Ssangyong Engineering Construction Co. Ltd v. National Highways Authority of India (NHAI) [2019] 7 SCR 522; Delhi Airport Metro Express Pvt. Ltd. v Delhi Metro Rail Corporation Ltd [2021] 5 SCR 984; National Highways Authority of India v M. Hakeem [2021] 5 SCR 368 – referred to. OTHER CASE DETAILS INCLUDING IMPUGNED ORDER AND APPEARANCES CIVIL APPELLATE JURISDICTION : Civil Appeal No.3798 of 2023. From the Judgment and Order dated 17.07.2019 of the High Court of Judicature at Allahabad in FAFO No.1227 of 2003. 88 SUPREME COURT REPORTS [2023] 11 S.C.R. Appearances: R.K. Singh, Mrs. Neeraj Singh, Kumar Gaurav, Ajay Chaudhary, Praveen Pathak, Aman Rastogi, Sanjay Rastogi, Advs. for the Appellant. Vikramjeet Banerjee, A.S.G., A K Kaul, Nachiketa Joshi, Bhuvan Mishra, Akshit Pradhan, Sachin Sharma, Siddhartha Sinha, Shivam Singhania, N. Chamwibo Zeliang, Suraj Mishra, Ms. Akansha, Arvind Kumar Sharma, Advs. for the Respondents. JUDGMENT / ORDER OF THE SUPREME COURT JUDGMENT S. RAVINDRA BHAT, J. 1. Aggrieved by the impugned judgment1 of the Allahabad High Court, the appellant has approached th
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