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 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]