S.V. SAMUDRAM versus STATE OF KARNATAKA & ANR

Citation: [2024] 1 S.C.R. 281 · Decided: 04-01-2024 · Supreme Court of India · Bench: ABHAY S. OKA · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · cites 11 · see the full citation network in Lexace

Judgment (excerpt)

* Author
[2024] 1 S.C.R. 281 : 2024 INSC 17
S.V. Samudram
v.
State of Karnataka & Anr
(Civil Appeal No. 8067 of 2019)
04 January 2024
[Abhay S. Oka and Sanjay Karol*, JJ.]
Issue for Consideration
The Civil Judge modified the award passed by the Arbitrator 
reducing the amount awarded as also interest thereupon, i.e., 
Rs.14,68,239/- @ 18% to only 25% of the tender amount which 
equals to Rs.3,71,564/- and the interest percentage thereon was 
reduced to 9%. Whether the modification of the arbitral award as 
carried out by the Civil Judge as confirmed by the High Court, 
was justified within law.
Headnotes
Arbitration and Conciliation Act, 1996 – s. 34 – The award 
passed by the Arbitrator was modified by the Civil Judge 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 – Propriety:
Held: It is settled that any court u/s. 34 would have no jurisdiction 
to modify the arbitral award, which at best, given the same to 
be in conflict with the grounds specified u/s. 34 would be wholly 
unsustainable in law – Also, the Arbitrator’s view, generally is 
considered to be binding upon the parties unless it is set aside on 
certain specified grounds – In the instant case, award passed on 
18.02.2003 was prior to the amendment brought in Section 34 by 
virtue of the Arbitration and Conciliation (Amendment) Act, 2015 
– 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 s.75 and s.81 of the Act – In the given 
situation, 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 – A perusal of the judgment and order of the Civil Judge 
does not reflect fidelity to the text of the statute – Nowhere does 
282
[2024] 1 S.C.R.
Digital Supreme Court Reports
it stand explained, as to, under which ground(s) mentioned u/s. 
34 of the Act, did the Court find sufficient reason to intervene – In 
fact, quite opposite thereto, the Court undertook a re-appreciation 
of the matter, and upon its own view of the evidence, modified the 
order – None of the reasons recorded 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 – 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 – The view taken by the Arbitrator is a plausible view and 
could not have been substituted for its own by the Court – Thus, 
the modification of the arbitral award by the Civil Judge does not 
stand scrutiny, and must be set aside. [Paras 28, 29, 30, 31, 33]
Arbitration and Conciliation Act, 1996 – s. 37 – The High Court 
upheld the modification of the arbitral award by the Civil Judge 
u/s. 37 of the Act – Propriety:
Held: The Single Judge of the High Court, similar to the Civil Judge 
u/s. 34, appears to have not concerned themselves with the contours 
of s.37 of the Act – The Court u/s. 37 had only three options:- (a) 
Confirming the award of the Arbitrator; (b) Setting aside the award 
as modified u/s. 34; and (c) Rejecting the application(s) u/s. 34 and 
37 – The single Judge has examined the reasoning adopted by the 
Arbitrator in respect of certain claims (claims 3 and 7, particularly) 
and held that allowing a claim for escalation of cost, was without 
satisfactory material having been placed on record and is “perverse 
and contrary to the public policy” – However, it appears that such 
a holding on part of the Judge is without giving reasons therefor 
– It has not been discussed as to what the evidence was before 
the single Judge to arrive at such conclusion – In the absence of 
compliance with the well laid out parameters and contours of both 
s.34 and s.37 of the Act, the impugned judgments are set aside 
– Consequently, the award dated 18.02.2003 of the Arbitrator is 
restored. [Paras 39, 42, 43, 47] 
Case Law Cited
National Highways Authority of India v. M. Hakeen and 
Another (2021) 9 SCC 1; Dakshin Haryana Bijli Vitran 
Nigam Limited v. Navigant Technologies Private Limi

Excerpt shown. Read the full judgment & AI analysis in Lexace.