Madras High Court
Electronics Corporation Of Tamil Nadu vs Icmc Corporation Limited on 17 November, 2025
Author: N.Anand Venkatesh
Bench: N. Anand Venkatesh
2025:MHC:2614
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IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 17-11-2025
CORAM
THE HONOURABLE MR JUSTICE N. ANAND VENKATESH
Original Petition Nos.821 of 2019, 145 of 2017, 454 & 1068 of 2018, 108 of
2019 & OP.No.400 of 2020
OP.No.821 of 2019
Electronics Corporation of Tamil Nadu
Limited,
692, Anna Salai, Nandanam
Chennai 600 035. ...Petitioner
Vs
ICMC Corporation Limited
36, Ambattur Industrial Estate
Chennai 600 0520. ...Respondent
PETITION under Section 34 of the Arbitration and Conciliation Act,
1996 praying to set aside the award dated 22.08.2019 passed by the learned
Arbitrator in the dispute arising out contracts dated 14.2.2013 and
23.07.2013 and award cost.
For Petitioner : Mr.E.Srikanth
For Respondent : Mr.M.S.Krishnan
Senior Counsel for Mr.J.James
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OP.No. 145 of 2017
M/s. Ircon International Limited
(A Government of India Undertaking)
Represented by its Joint General Manager (South)
Ground Floor, DRM Officer Building
Behind DRM Office
South Western Railway
Adjacent to City Railway Station
Bengaluru-560 023. ..Petitioner
.Vs.
The Government of Tamil Nadu
Represented by the Superintending Engineer (H)
SCRD Circle, M.K.S. Building
4A,Kkanthaswamy Lay Out
Second Street, Villupuram 605 002. ..Respondent
PETITION under Section 34 of the Arbitration and Conciliation Act,
1996 praying to to set aside the arbitral award dated 18.05.2016 made in
relation to disputes arising out of contract agreement No.13/98-00 dated
25.2.1999 in so far as it relates to claim No.6 towards idling charges of men
and materials and claim No.8 towards increased cost for material labour and
POL not compensated by normal price variation are concerned.
For Petitioner : Mr.Anirudh Krishnan
for Mr.Adarsh Subramanian
For Respondent : Mr.R.Ramanlal
Additional Advocate General
Asst.By:
Mr.R.Siddharth
Additional Government Pleader
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OP.No. 454 of 2018
The Government of Tamil Nadu
Represented by the Superintending Engineer (H)
SCRD Circle, M.K.S. Building
4A,Kkanthaswamy Lay Out
Second Street, Villupuram 605 002. ..Petitioner
.Vs.
M/s.Ircon International Limited
(A Government of India Undertaking)
Represented by its Joint General Manager (South)
Ground Floor, DRM Officer Building
Behind DRM Office
South Western Railway
Adjacent to City Railway Station
Bengaluru-560 023. ..Respondent
PETITION under Section 34 of the Arbitration and Conciliation Act,
1996 praying to to set aside the impugned Award dated 18.05.2016 passed by
the Sole Arbitrator Justice Mr.K.P.Sivasubramnaim (Retd), High Court,
Madras,
For Petitioner : Mr.R.Ramanlal
Additional Advocate General
Asst.By:
Mr.R.Siddharth
Additional Government Pleader
For Respondent : Mr.Anirudh Krishnan
for Mr.Adarsh Subramanian
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OP No. 1068 of 2018
M/s.URC Construction (P) Ltd
Represented by its Authorized Signatory
Mr.V.Ganesan, Manager,
13(Old No.H-102), Periyar Nagar
Erode-638 001. ..Petitioner
.Vs.
M/s.Airport Authority of India
Represented by its Senior Manager Engg(C)
Project Division-IV,
Chennai Airport Project
Chennai-600 016. ..Respondent
Petition under Section 34 of the Arbitration and Conciliation Act,
1996, praying to set-aside the portions of the award dated 20.08.2018 passed
by the Arbitral Tribunal to an extent, as aggrieved by the Petitioner herein, in
respect of the arbitral proceedings between the Petitioner and the
Respondent.
For Petitioner(s): Mr.P.J.Rishikesh
For Respondent(s): Mr.V.Lokesh Kumar
OP No. 108 of 2019
M/s.Airport Authority of India
Represented by its Senior Manager Engg(C)
Project Division-IV,
Chennai Airport Project
Chennai-600 016. ..Petitioner
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.Vs.
M/s.URC Construction (P) Ltd
Represented by its Authorized Signatory
Mr.V.Ganesan, Manager,
13(Old No.H-102), Periyar Nagar
Erode-638 001. ..Respondent
Petition filed under Section 34 of the Arbitration and Conciliation Act,
1996, praying to set-aside the Award dated 20.08.2018 passed by the learned
Arbitrator, insofar as claims 1, 2, 3 and 6 are concerned.
For Petitioner(s): Mr.V.Lokesh Kumar
For Respondent(s): Mr.P.J.Rishikesh
OP.No.400 of 2020
The Chennai Port Trust
Rep.by its Chief Mechanical Engineer,
Chennai Port Trust,
No.1, Rajaji Salai,
Chennai 600 001. ..Petitioner
.Vs.
Chennai Container Terminal (P) Ltd,,
Rep.by its Managing Director /CEO
Administrative Building,
Chennai Port Trust,
No.1, Rajaji Salai, Chennai 600 001. ..Respondent
Petition under Section 34(2) of the Arbitration and Conciliation Act,
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1996, praying to set aside the majority award dated 06.02.2019 insofar as the
decisions on issues 1 to 5, 9,10,18,19 passed by the Presiding Arbitrator and
Honble Mr.Justice (Retd.) E.Padmanabhan and uphold the minority award
except decisions on issue passed by the Honble Mr.Justice (Retd)
A.K.Rajan.
For Petitioner(s): Ms.Gopika Nambiar
For Respondent(s): Mr.Vinod Kumar
COMMON 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 Arbitration and Conciliation Act,
1996. 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
Section 34 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
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Bench. The Division Bench has remanded these cases to the Section 34
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:
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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
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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 that the impugned order made by Section 34
Court modifies the impugned award.
6. The above takes us to the moot question as to whether an
arbitral award can be modified in a legal drill under Section 34 of
A and C Act. This question was answered by Hon'ble Supreme
Court in Project Director NHAI Vs. M.Hakeem reported in (2021)
9 SCC 1. To be noted, Hon'ble Supreme Court held that
modification of an award by a Section 34 Court in a legal drill
vide Section 34 is impermissible.
7. This takes us to the order of Hon'ble Single Judge i.e.,
Hon'ble 34 Court, which is before us in appeals i.e., captioned
appeals. To be fair to the Hon'ble Single Judge, it is to be noted
that the impugned order is dated 24.01.2020 but Hakeem was
rendered by Hon'ble Supreme Court only on 20.07.2021.
Therefore, on the date on which the impugned order was made by
Hon'ble Commercial Division, Gayatri Balaswamy's case, being
Gayatri Balaswamy Vs. ISG Novasoft Technologies Ltd., reported
in 2014 (6) CTC 602 and confirmed by a Division Bench vide
order in a intra-Court appeal reported in 2019 SCC OnLine Mad
15819 was holding the field. However, in Hakeem, Gayatri
Balaswamy was specifically and categorically overruled. This
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means the modification qua legal drill under Section 34 is
impermissible and in Hakeem, Hon'ble Supreme Court has not
resorted to prospective overruling. Therefore, this principle will
apply on and from 22.08.1996 i.e., the date on which A and C Act
kicked in. To be noted, A and C Act {including section 34} was
amended by the Arbitration and Conciliation (Amendment) Act,
2015 (Act 3 of 2016) on and from 23.10.2015 and it was further
amended {including section 34} by the Arbitration and
Conciliation (Amendment) Act, 2019 (Act 33 of 2019) dated
09.08.2019, a conditional legislation wherein 11 out of 16 sections
kicked in, on and from 30.08.2019.
8.In the light of the narrative thus far, if we were to sustain
the award in its entirety by agreeing with the appellant in I OSA
(ICMC), there is no difficulty but if it is going to be the other way,
we would end up modifying the impugned award which is
impermissible as of today. This has led to a peculiar situation in
the instant case on hand as we can neither say that the impugned
order is faulty nor sustain modification of an arbitral award if we
proceed further with the legal drill and find that we are not
persuaded by arguments of appellant in I OSA.
9. Be that as it may, we deem it appropriate to record that
we have noticed Gayatri Balaswamy was carried to Hon'ble
Supreme Court vide SLP.(C) Nos.15336-15337/2021 and a three
member Bench of Hon'ble Supreme Court in and by order dated
20.02.2024 formulated five questions and referred the matter to a
Larger Bench. In this order (making reference) Hon'ble Supreme
Court has categorically held that the issue is whether in exercise
of powers under Section 34 or Section 37 of A and C Act, Courts
are empowered to modify an arbitral award frequently arises in
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proceedings not only before the Supreme Court but also before the
High Courts and the District Courts. This Court being a Section
37 Court is faced with that very question which has been described
as 'peculiar situation' supra. Therefore, both learned counsel i.e.,
senior counsel (on instructions) in I OSA and counsel on record in
II OSA fairly agreed for having the impugned award set aside and
remanded to Section 34 Court.
10. In the light of narrative thus far, we make the following
order :
a) Impugned order dated 24.01.2020 made in OP.No.821 of
2019 is set aside;
b) Impugned order is set aside solely for the purpose of
facilitating a de novo Section 34 legal drill. This means, we make
it clear that we have not expressed any view or opinion on the
merits of the matter. This also means Section 34 will now deal with
the matter on own its merits and in accordance with law i.e., in
accordance with Hakeem as obtaining today;
c) As Hakeem has been referred to a Larger Bench and one
of the questions formulated by Hon'ble Larger Bench vide sub
paragraph (4) of paragraph 3 of Hakeem is 'Whether the power to
modify an award can be read into the power to set aside an award
under section 34 of the Act?', if the Larger Bench renders the
verdict / answers the reference in the interregnum, Section 34
Court will apply the law as declared by the Larger Bench but until
then, Hakeem which overruled Gayatri Balaswamy will be holding
the field and therefore, Hon'ble Single Judge will proceed on that
basis;
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d) Though obvious, for the sake of specificity, we make it
clear that all questions are left open and all options i.e., resorting
to sub section (4) of Section 34, sustaining the award or setting
aside the award or following the verdict of Larger Bench if the
verdict is returned / reference is answered in the interregnum are
all open to Section 34 Court;
The Division Bench has, thereafter, made certain directions for
expediting the disposal of the Section 34 petition which are
omitted since they are not material for the present purposes.
OP.No. 145 of 2017 & OP.No. 454 of 2018
c) The claimant (contractor) before the Arbitral Tribunal is the
petitioner in OP.No. 145 of 2017 and the respondent before the Arbitral
Tribunal is the petitioner in OP.No. 454 of 2018. The challenge is to an
award dated 18.05.2016, where under the contractor was awarded a sum of
Rs.7,05,47,000/- as against the aggregate claim of Rs.14,58,81,219. By a
common order dated 22.01.2020, Mr. Justice Senthilkumar Ramamoorthy
dismissed OP.No. 145 of 2017 and allowed OP.No. 454 of 2018 filed by the
Government on the following terms:
“19. In the result, the Award dated 18.05.2016 is set
aside as regards Claim No.2, Claim Nos.3.2, 3.3, 3.6, 3.7, 3.9,
3.12, 3.14 and 7, whereas it is upheld as regards Claims 1, 3.5,
3.20, 3.21, 4 and 6. These Claims shall carry interest at the
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simple interest rate of 12% per annum in the pre-reference,
pendente lite and Post-Award period but subject to that
revision, no interference is necessary. In addition, the rejection
of Claims 6 and 8 and the other sub-claims in Claim 3 are
upheld. Claim 4 and the award thereon consists of interest for
belated payment and the unpaid principal sum of Rs.5,88,277/-.
As regards the belated payment of retention money of
Rs.47,67,896/-, interest shall be computed thereon at simple
interest of 12% per annum from 19.03.2004 till 12.03.2007 and
paid. Consequently, from 13.03.2007 onwards, including the
Post-Award period, interest will be payable only on the unpaid
principal sum of Rs.5,88,277/- at the simple interest rate of 12%
per annum. Thus, O.P. No.454 of 2018 is disposed of on the
above terms and O.P.No.145 of 2017 is dismissed. No costs.”
d) As against the aforesaid common order, the Government of Tamil
Nadu filed O.S.A (CAD) 51 of 2021 which was directed OP.No.454 of 2018
in so far as it upheld certain claims in favor of the contractor with interest.
OSA 207 & 208 were filed by IRCON challenging the order(s) passed in
OP.No.145 of 2017 and OP.No. 454 of 2018. The OSA’s were disposed by an
order dated 15.07.2024 extracted its earlier order dated 24.06.2024 passed in
the Electronics Corporation of India (ECI) case, and held as under:
“6. This means that there should be a remand to Section
34 Court for a de novo Section 34 legal drill but before we do
that, we deem it appropriate to set out the following two points :
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(i)To be fair to Hon'ble single Judge, who made the
impugned common order dated 22.01.2020 in
O.P.Nos.145 of 2017 and 454 of 2018, Gayatri
Balaswamy's case, [Gayatri Balaswamy Vs. ISG
Novasoft Technologies Ltd., reported in 2014 (6) CTC
602 : 2019 SCC OnLine Madras 15819 ] was holding
the field but post impugned common order i.e., on
20.07.2021 Gayatri Balaswamy was overruled by
Hon'ble Supreme Court in Hakeem case. Therefore,
Hon'ble single Judge has applied the then obtaining
position of law but Hakeem case dates back to
22.08.1996 i.e., the date on which A and C Act dated
16.08.1996 kicked in. Therefore, we need to remand;
(ii) The second point is, the order of reference made by a three
member Hon'ble Bench of Hon'ble Supreme Court being order
dated 20.02.2024 in SLP.(C) Nos.15336-15337/2021 which
reads as follows:
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Paragraph No.3 of aforementioned reference order gives
an adumbration of points of reference and sub-paragraph (1) /
point No.1 is of immense significance and that makes it clear
that the question as to whether the powers of the Court will
include the power to modify an Arbitral Award is not just qua a
Section 34 Court but it is qua a Section 37 Court also i.e., this
Court. Therefore, it is only appropriate that we remand the
matter. As if we sustain the impugned common order after
hearing out both sides that will tantamount to modification in a
Section 37 legal drill.
7. To be noted, both sides i.e., Mr.Anirudh Krishnan,
learned counsel for Ircon and Mr.P.S.Raman, learned Advocate
General for State of Tamil Nadu consented for an order of
remand.
8. In the light of the narrative thus far, the following
order is made:
(a) Impugned common order dated 22.01.2020 made in
O.P.Nos.145 of 2017 and 454 of 2018 on the file of the
Commercial Division is set aside;
(b) Impugned common order is set aside only for
facilitating de novo Section 34 legal drill. This means that we
make it clear that we have not expressed any view or opinion on
the merits of the matter. This also means that Section 34 Court
will now deal with the matter on its own merits and in
accordance with law i.e., in accordance with Hakeem case law
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as obtaining today;
(c) As Hakeem has been referred to a Larger Bench (to be
noted reference order dated 20.02.2024 has been scanned and
reproduced supra) and two of the questions formulated by
Larger Bench vide sub-paragraphs (1) and (4) of paragraph No.3
are of immense significance qua Section 34 and 37 Courts and if
the Larger Bench renders a verdict i.e., answers reference in the
interregnum, Section 34 Court will apply the law as declared by
the Larger Bench but until then Hakeem case which has
overruled Gayatri Balaswamy will be holding the field and
therefore, Hon'ble single Judge will proceed on that basis;
(d) Though obvious, for the sake of specificity, we make
it clear that all questions are left open and all options i.e.,
resorting to sub-section (4) of Section 34 of A and C Act,
sustaining the award or setting aside the award or following the
verdict of the Larger Bench if the verdict is returned / reference
is answered in the interregnum, are all open to Section 34 Court;
(e) As regards time line for disposal by Section 34 Court,
sub-section (6) of Section 34 of A and C Act prescribes one year
from the date on which notice under sub-section (5) of Section
34 of A and C Act is served upon the other party. To be noted,
sub-section (6) of Section 34 A and C Act also makes it clear
that an application under Section 34 of A and C Act shall be
disposed of expeditiously. In this regard, we deem it appropriate
to refer to Bhumi Vikas Bank case [State of Bihar Vs. Bihar
Rajya Bhumi Vikas Bank Samiti reported in (2018) 9 SCC 472]
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and remind ourselves of paragraph Nos.25 and 26 thereat which
read as follows:
'25. We come now to some of the High Court judgments.
The High Courts of Patna [Bihar Rajya Bhumi Vikas Bank
Samiti v. State of Bihar, 2016 SCC OnLine Pat 10104], Kerala
[Shamsudeen v. Shreeram Transport Finance Co. Ltd., 2016
SCC OnLine Ker 23728] , Himachal Pradesh [Madhava
Hytech Engineers (P) Ltd. v. Executive Engineers, 2017 SCC
OnLine HP 2212] , Delhi [Machine Tool India Ltd. v. Splendor
Buildwell (P) Ltd., 2018 SCC OnLine Del 9551] , and Gauhati
[Union of India v. Durga Krishna Store (P) Ltd., 2018 SCC
OnLine Gau 907] have all taken the view that Section 34(5) is
mandatory in nature. What is strongly relied upon is the object
sought to be achieved by the provision together with the
mandatory nature of the language used in Section 34(5).
Equally, analogies with Section 80 CPC have been drawn to
reach the same result. On the other hand, in Global Aviation
Services (P) Ltd. v. Airport Authority of India [Global Aviation
Services (P) Ltd. v. Airport Authority of India, 2018 SCC
OnLine Bom 233] , the Bombay High Court, in answering
Question 4 posed by it, held, following some of our judgments,
that the provision is directory, largely because no consequence
has been provided for breach of the time-limit specified. When
faced with the argument that the object of the provision would
be rendered otiose if it were to be construed as directory, the
learned Single Judge of the Bombay High Court held as under :
(SCC OnLine Bom para 133) “133. Insofar as the submission of
the learned counsel for the respondent that if Section 34(5) is
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considered as directory, the entire purpose of the amendments
would be rendered otiose is concerned, in my view, there is no
merit in this submission made by the learned counsel for the
respondent. Since there is no consequence provided in the said
provision in case of non-compliance thereof, the said provision
cannot be considered as mandatory. The purpose of avoiding
any delay in proceeding with the matter expeditiously is already
served by insertion of appropriate rule in the Bombay High
Court (Original Side) Rules. The Court can always direct the
petitioner to issue notice along with papers and proceedings
upon other party before the matter is heard by the Court for
admission as well as for final hearing. The vested rights of a
party to challenge an award under Section 34 cannot be taken
away for non-compliance of issuance of prior notice before
filing of the arbitration petition.” The aforesaid judgment has
been followed by recent judgments of the High Courts of
Bombay [Maharashtra State Road Development Corpn. Ltd. v.
Simplex Gayatri Consortium, 2018 SCC OnLine Bom 805] and
Calcutta [Srei Infrastructure Finance Ltd. v. Candor Gurgaon
Two Developers and Projects (P) Ltd., 2018 SCC OnLine Cal
5606]. 26. We are of the opinion that the view propounded by
the High Courts of Bombay and Calcutta represents the correct
state of the law. However, we may add that it shall be the
endeavour of every court in which a Section 34 application is
filed, to stick to the time-limit of one year from the date of
service of notice to the opposite party by the applicant, or by the
Court, as the case may be. In case the Court issues notice after
the period mentioned in Section 34(3) has elapsed, every court
shall endeavour to dispose of the Section 34 application to what
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has been provided in Section 14 of the Commercial Courts,
Commercial Division and Commercial Appellate Division of
High Courts Act, 2015. This will give effect to the object sought
to be achieved by adding Section 13(6) by the 2015 Amendment
Act.'
(f) As sub-section (5) of Section 34 of A and C Act has
been held to be directory and not mandatory qua sub-section (6)
of Section 34 of A and C Act, one of us sitting single
(M.Sundar,J.,) in Section 34 Court vide order dated 10.12.2020
in O.P.No.527 of 2020 [M.Subbiah Vs. Daimler Financial
Services India Pvt. Ltd., and another] has held that reckoning
date will be the date of presentation of Section 34 petition. To be
noted, ICMC case supra, (order dated 24.06.2024) as a
Division Bench it has held this Daimler Financial Services
principle to be correct law / good law and therefore the same
i.e., Daimler Financial Services is now a Division Bench order;
(g) In the case on hand, considering the trajectory the
matter has taken, the time frame qua sub-section (6) of Section
34 of A and C Act will run from today. We make it clear that we
are not fixing any time frame for Hon'ble single Judge but only
referring to the provisions of law and obtaining position of law
qua judgment of Hon'ble Supreme Court in Bhumi Vikas Bank
case in Division Bench of this Court vide Daimler Financial
Services.
Captioned three OSAs are disposed of in the aforesaid manner
with the aforementioned observations / directives.
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Consequently, captioned CMPs thereat are disposed of as
closed albeit with liberty to the petitioner in CMPs to
resuscitate the same before Section 34 Court but we also make
it clear that Section 34 Court would take a call at his discretion
on its own merits and in accordance with law and all questions
are left open for this purpose. There shall be no order as to
costs.”
OP.No. 1068 of 2018 & OP.No. 108 of 2019
e) These OP’s arose out of an arbitral award dated 20.08.2018 which
was assailed by the contractor in OP.No. 1068 of 2018 and by the Airports
Authority of India (AAI) in OP.No. 108 of 2019. By a common order dated
23.01.2020, the petitions were disposed by Mr. Justice Senthilkumar
Ramamoorthy on the following terms:
“In the result, the amount awarded in respect of Claim 2
shall be re-worked, as indicated above, and interest on Claims 1
and 3 shall apply at the rate of 12% per annum from the dates
specified above, in respect of each Claim, in the pre-reference,
pendente lite and post Award period. Except to the extent indicated
above, the respective Petitioners have failed to make out a case to
interfere with the Award, as per principles laid down in
Ssyangyong, including in paragraphs 35 and 42 thereof.
Consequently, O.P. No.108 of 2019 is dismissed and O.P. No. 1068
of 2018 is disposed of on the terms indicated above. No costs.
Consequently, connected Application is closed”.
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f) As against the dismissal of OP.No. 108 of 2019, the AAI filed two
OSA’s viz., OSA.Nos. 195 and 196 of 2021 which were disposed by the
Division Bench by a common dated 15.07.2024. The Division Bench once
again makes a reference to its order dated 24.06.2024 passed in the ICMC
Corporation case, extracts the same and has gone on to observe as follows:
6. This means that there should be a remand to Section
34 Court for a de novo Section 34 legal drill but before we do
that, we deem it appropriate to set out the following two points :
(i) To be fair to the Hon'ble single Judge i.e., the Section
34 Court which made the impugned common order dated
23.01.2020 in O.P.Nos.1068 of 2018 and 108 of 2019, Gayatri
Balaswamy's case, [Gayatri Balaswamy Vs. ISG Novasoft
Technologies Ltd., reported in 2014 (6) CTC 602 : 2019 SCC
OnLine Madras 15819 ] was holding the field but post
impugned common order i.e., on 20.07.2021 Gayatri
Balaswamy was overruled by Hon'ble Supreme Court in
Hakeem case. Therefore, Hon'ble single Judge has applied the
then obtaining position of law but Hakeem case dates back to
22.08.1996 i.e., the date on which A and C Act dated
16.08.1996 kicked in. Therefore, we have no option other than
resorting to remand;
(ii) The second point is, the order of reference made by a three
member Hon'ble Bench of Hon'ble Supreme Court being order
dated 20.02.2024 in SLP.(C) Nos.15336-15337/2021 reads as
follows:
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Paragraph No.3 of aforementioned reference order gives
an adumbration of points of reference and sub-paragraph (1) /
point No.1 is of immense significance as that makes it clear that
the question as to whether the powers of the Sections 34 and 37
Courts will include the power to modify an Arbitral Award. In
other words it is not just qua a Section 34 Court but it is qua a
Section 37 Court also i.e., this Court. Therefore, we have no
option other than resorting to remand as, if we set aside the
impugned order there would not be any issue but if we sustain
the impugned common order after hearing out both sides on
merits that will tantamount to modification in a Section 37 legal
drill when the neat question as to whether power of a Section 37
Court will include power to modify an arbitral award has been
referred to a Larger Bench by a three member Bench of Hon'ble
Supreme Court.
7. To be noted, owing to the aforementioned obtaining
position, both sides i.e., Mr.M.S.Krishnan learned Senior
Counsel for AAI and Mr.P.J.Rishikesh, learned counsel for
respondent consented for an order of remand.
8. In the light of the narrative thus far, the following
order is made:
(a) Impugned common order dated 23.01.2020 in
O.P.Nos.1068 of 2018 and 108 of 2019 on the file of the
Commercial Division is set aside;
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(b) Impugned common order is set aside only for
facilitating de novo Section 34 legal drill. This means that we
make it clear that we have not expressed any view or opinion on
the merits of the matter. This also means that Section 34 Court
will now deal with the matter on its own merits and in
accordance with law i.e., in accordance with Hakeem case law
as obtaining today;
(c) As Hakeem has been referred to a Larger Bench (to
be noted reference order dated 20.02.2024 has been scanned
and reproduced supra) and two of the questions formulated by
Larger Bench vide sub-paragraphs (1) and (4) of paragraph
No.3 are of immense significance qua Section 34 and 37 Courts
and if the Larger Bench renders a verdict i.e., answers reference
in the interregnum, Section 34 Court will apply the law as
declared by the Larger Bench but until then Hakeem case which
has overruled Gayatri Balaswamy will be holding the field and
therefore, Hon'ble single Judge will proceed on that basis;
(d) Though obvious, for the sake of specificity, we make it
clear that all questions are left open and all options i.e.,
resorting to sub-section (4) of Section 34 of A and C Act,
sustaining the award or setting aside the award or following the
verdict of the Larger Bench if the verdict is returned / reference
is answered in the interregnum, are all open to Section 34
Court;
9. We are informed by both sides that a sum of Rs.80
Lakhs is lying to the credit of captioned OSAs the same having
been deposited pursuant to Court orders as a condition for an
interim order.
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10. In the light of the order we propose to make, this sum
of Rs.80 Lakhs will continue to lie in the deposit but will be
lying to the credit of OPs i.e., O.P.Nos.1068 of 2018 and 108 of
2019. Therefore, we also make it clear that Section 34 Court
can take a call as regards this deposit and any request by either
of the parties with regard to this deposit, we further make it
clear that all rights and contentions of both sides are preserved
in this regard also.
11. Captioned two OSAs are disposed of in the aforesaid
manner with the aforementioned observations / directives.
Consequently, captioned CMPs thereat are disposed of as
closed albeit with liberty to the petitioner in CMPs to
resuscitate the same before Section 34 Court but we also make
it clear that Section 34 Court would take a call at its discretion
on its own merits and in accordance with law and all questions
are left open for this purpose. There shall be no order as to
costs.
OP 400 of 2020
g)This petition is filed by the Chennai Port Trust against an impugned
arbitral award dated 06.02.2019 passed by three-member Arbitral Tribunal.
This petition was partly allowed by Mr. Justice N. Sathish Kumar, by an
order dated 22.10.2021, on the following terms:
“40. In such a view of the matter, the Award relating to
the Issue No.1 to 5 decided in the Arbitral Tribunal and it is
reclassified as Issue No.3 by this Court while sending notice
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alone is set aside. It is open to the parties to go for fresh
arbitration only in respect of the interpretation of contract
relating to the charges to be paid for supply of the power alone.
41. Accordingly, the Original Petition allowed in part.
Consequently the Application No.2155 of 2020 is closed.”
h) Against the said order, the respondent ie., Chennai Container
Terminal Private Limited filed OSA (CAD).No. 146 of 2021 which was
disposed by the Division Bench by an order dated 10.06.2024 on the
following terms:
“9. Adverting to aforementioned impugned order, learned
Senior counsel for appellant CCTPL and learned Solicitor very fairly
agreed that the impugned order tantamounts to modification of the
impugned award as it has interfered with only part of the impugned
award and therefore, the same is contrary to the Hakeem principle,
namely ratio laid down by Hon'ble Supreme Court in Project
Director NHAI Vs. M.Hakeem reported in (2021) 9 SCC 1 wherein it
was laid down that modification of an arbitral award is
impermissible in a Section 34 legal drill.
10. A three member Bench of the Hon'ble Supreme Court
doubting the correctness of Hakeem, formulated five questions and
directed the same to be placed before the Hon'ble Chief Justice of
India for an appropriate order. This is vide proceedings /orders dated
20.02.2024 in Special Leave to Appeal (c) Nos.15336-15337/2021
and the order reads as follows:
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11. We are informed by both sides that the reference is
before a Constitution Bench and therefore, a Constitution Bench
of Hon'ble Supreme Court is in seizin of the question, more
particularly the five questions qua Hakeem, which are subject
matter of reference.
12. When a matter is under reference and in seizin qua a
Larger Bench, the original order will continue to hold the field
until the reference is answered one way or the other. In this view
of the matter, both sides fairly agreed that the matter is to be
remitted back to Section 34 Court albeit leaving all questions
open including resorting to sub-section (4) of Section 34 of A
and C Act. Therefore, on the short point of Hakeem principle,
the same being under reference and in the light of the consensus
between the two sides, we make the following order:
i) Impugned order dated 22.10.2021 made in O.P.No.400 of
2020 and A.No.2155 of 2020 thereat is set aside and the matter
is remanded back to the Section 34 Court;
ii) It is made clear that the impugned order is set aside solely
for the purpose of a de novo Section 34 legal drill and this
means that this Section 37 Court has not expressed any view or
opinion on the merits of the matter;
iii) All questions before Section 34 Court are left open;
iv) For adding specificity, we make it clear that it is open
to the Section 34 Court either to resort to sub-section (4) of
Section 34 or hear out Section 34 petition on merits and sustain
or dislodge the award. If the reference is answered in the
interregnum, obviously Hakeem ratio as answered in reference
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by Hon'ble Supreme Court will govern the proceedings; .
v) In the light of sub-section (6) of Section 34, we deem it
appropriate to request Section 34 Court to dispose of the matter
which is remanded back to it as expeditiously as the business of
Section 34 Court would permit. vi) In this regard, we deem it
appropriate to refer to paragraph 25 of State of Bihar Vs. Bihar
Rajya Bhumi Vikas Bank Samiti reported in (2018) 9 SCC 472
and order dated 10.12.2020 in O.P.No.527 of 2020 [M.Subbiah
Vs. Daimler Financial Services India Pvt. Ltd., and another]
made by a Section 34 Court wherein in the light of sub-section
(5) being held to be directory, the reckoning date in cases when
a Section 34 protagonist approaches the Section 34 Court
without issue of sub-section (5) notice would become the date of
presentation. In other words, time line qua sub-section (6) of
Section 34 is the reminder as regards Section 34 legal drill that
is to ensue.
Captioned OSA and captioned CMPs are disposed of with the
aforementioned directives. There shall be no order as to costs.”
4.The learned counsel on either side did not canvass the legality of the
aforesaid orders. However, this Court entertained a doubt as to whether a de-
novo hearing could be conducted when the Division Bench had simply
remanded these cases without interfering with the findings on merits.
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5.The common thread that runs across all of the aforesaid orders of the
Division Bench is that an order of remand by consent was passed taking into
consideration the pendency of the reference to a Larger Bench in Gayatri
Balasamy’s case, where the correctness of the view taken in NHAI v. M.
Hakeem, (2021) 9 SCC 1 was being examined. In Hakeem’s case, the Hon'ble
Supreme Court held, following its earlier decision in McDermott
International Inc. v. Burn Standard Co. Ltd., (2006) 11 SCC 181, that the
Section 34 Court had no power to modify the award of the Arbitrator.
6.In McDermott International Inc. v. Burn Standard Co. Ltd., (2006)
11 SCC 181, the Supreme Court had observed:
“The 1996 Act makes provision for the supervisory role of
courts, for the review of the arbitral award only to ensure
fairness. Intervention of the court is envisaged in few
circumstances only, like, in case of fraud or bias by the
arbitrators, violation of natural justice, etc. The court cannot
correct errors of the arbitrators. It can only quash the award
leaving the parties free to begin the arbitration again if it is
desired. So, the scheme of the provision aims at keeping the
supervisory role of the court at minimum level and this can be
justified as parties to the agreement make a conscious decision
to exclude the court's jurisdiction by opting for arbitration as
they prefer the expediency and finality offered by it.”
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Following the said decision, the Supreme Court in NHAI v. M.
Hakeem, (2021) 9 SCC 1, held as under:
“It is important to remember that Section 34 is modelled on
the UNCITRAL Model Law on International Commercial
Arbitration, 1985, under which no power to modify an award
is given to a court hearing a challenge to an award. “
The aforesaid position of law held the field till 30.04.2025
when the Supreme Court delivered its decision in Gayatri
Balasamy v. ISG Novasoft Technologies Ltd., (2025) 7 SCC 1. In
the said decision, the majority view set out in the judgment of
Sanjiv Khanna, CJ held that the jurisdiction under Section 34
included the power to modify an award under certain limited
circumstances. The limited circumstances, indicated in the
judgment, are as follows:
I.When the award is severable, by severing the
“invalid” portion from the “valid” portion of the award
ie., the power of partial setting aside should be exercised
only when the valid and invalid parts of the award can
be clearly segregated—particularly in relation to liability
and quantum and without any corelation between valid
and invalid parts.
II.By correcting any clerical, computational or
typographical errors which appear erroneous on the face
of the record.
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III.Post-award interest may be modified in some
circumstances.
IV.The fourth head is the power to modify under Article
142 of the Constitution which has no application when
the matter is before the High Court.
7.It is well settled that the jurisdiction of the appellate Court under
Section 37 is co-extensive with that of the Court under Section 34. This is
because the jurisdiction of the appellate court is confined to what the Court
can do in a petition under Section 34. This has been recently reiterated by the
Supreme Court in Punjab State Financial Corporation Limited v Sanman
Rice Mills, 2024 SCC Online SC 2632, where it was observed as under:
“It is seen that the scope of interference in an appeal under
Section 37 of the Act is restricted and subject to the same
grounds on which an award can be challenged under Section 34
of the Act. In other words, the powers under Section 37 vested
in the court of appeal are not beyond the scope of interference
provided under Section 34 of the Act.”
8.In OP.No. 454 of 2017 & OP.No. 454 of 2018, the Division Bench
has observed as under:
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Paragraph No.3 of aforementioned reference order gives
an adumbration of points of reference and sub-paragraph (1) /
point No.1 is of immense significance and that makes it clear
that the question as to whether the powers of the Court will
include the power to modify an Arbitral Award is not just qua a
Section 34 Court but it is qua a Section 37 Court also i.e., this
Court. Therefore, it is only appropriate that we remand the
matter. As if we sustain the impugned common order after
hearing out both sides that will tantamount to modification in a
Section 37 legal drill.”
The aforesaid observations are truly intriguing. If there existed a
legal embargo to modify an award in Section 37 jurisdiction by
virtue of Hakeem’s case then perforce, such an embargo would
apply to the Section 34 Court as well. If the Division Bench
could not modify an award, as the law then stood, the embargo
would equally apply to a single judge under Section 34. What
then was the purpose of remand? To make things even more
complicated it appears that in all these cases an order of remand
was made even without going into the merits of the case. For
instance in OSA 118 of 2020 & OSA 218 of 2021, the Division
Bench has observed:
“In the light of the narrative thus far, if we were to sustain the
award in its entirety by agreeing with the appellant in I OSA
(ICMC), there is no difficulty but if it is going to be the other
way, we would end up modifying the impugned award which is
impermissible as of today. This has led to a peculiar situation in
the instant case on hand as we can neither say that the
impugned order is faulty nor sustain modification of an arbitral
award if we proceed further with the legal drill…..”
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It has finally concluded:
“Impugned order is set aside solely for the purpose of
facilitating a de novo Section 34 legal drill. This means, we
make it clear that we have not expressed any view or opinion on
the merits of the matter.”
9.To be noted, this Court having pondered and fervently perambulated
within the statutory perimeters of the legal position as regards remand,
finally finds itself in a legal conundrum since now a very unfortunate
situation has arisen where the “de-novo legal drill” contemplated by the
Division Bench simply cannot be given effect to. To explain the extreme
difficulty and impossibility in implementing the order passed by the Division
Bench, it is perhaps necessary to take a quick look at the jurisdiction of the
appellate Court while passing an order of remand.
10.At the outset, it is necessary to bear in mind that the remand was
not made in the course of an appeal under Clause 15 of the Letters Patent
against an order made in exercise of jurisdiction under Article 226. Section
141 of the Code makes it clear that the provisions of the Code do not apply
in writ petition although the general principles have been applied, and orders
of remand to administrative authorities are made routinely without
expressing any opinion on merits since they are unfortunately misconstrued
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as the views of the Court.
11.However, in this case the appeal was being heard by the Division
Bench in its civil appellate jurisdiction. Before a Civil Court, the scope of
remand is confined to the provisions of Order 41 Rule 23, 23-A and 25 of the
Code of Civil Procedure, 1908. The power of remand is confined to these
three provisions and there exists no inherent power of remand as was held by
the Supreme Court in P. Purushottam Reddy v. Pratap Steels Ltd., (2002) 2
SCC 686. Order XLI Rule 23 deals with a case where the case is disposed by
the trial court on a preliminary issue, and Rule 25 deals with a situation
where the appellate court retains control of the appeal and calls for a finding
from the trial court on specific issues to facilitate the disposal of the appeal.
Both these situations do not apply to the case on hand. The other provision is
Order XLI Rule 23-A which contemplates a remand when the “decree is
reversed on appeal” and a “re-trial is considered necessary”. The expression
“decree is reversed on appeal” is extremely important for it underscores the
need for the appellate court to enter into the merits of the judgment of the
trial court and set aside the same to facilitate fresh disposal of the matter by
way of a re-trial. Thus, where the appellate court does not enter into the
merits of the matter and orders re-trial the order of remand would be, apart
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from being wholly illegal, completely unworkable since the findings on
merits would remain and is not vacated so as to allow the trial court to
examine the issue afresh by way of a re-trial.
12.The legal position in this regard is well settled by a series of
decisions. In P. Purushottam Reddy v. Pratap Steels Ltd., (2002) 2 SCC
686, the Supreme Court had the occasion to observe as under:
“In 1976, Rule 23-A has been inserted in Order 41 which
provides for a remand by an appellate court hearing an appeal
against a decree if (i) the trial court disposed of the case
otherwise than on a preliminary point, and (ii) the decree is
reversed in appeal and a retrial is considered necessary. On
twin conditions being satisfied, the appellate court can exercise
the same power of remand under Rule 23-A as it is under Rule
23. After the amendment, all the cases of wholesale remand are
covered by Rules 23 and 23-A. In view of the express provisions
of these Rules, the High Court cannot have recourse to its
inherent powers to make a remand because, as held
in Mahendra Manilal Nanavati v. Sushila Mahendra
Nanavati [AIR 1965 SC 364 : 66 Bom LR 681] (AIR at p. 399),
it is well settled that inherent powers can be availed of ex debito
justitiae only in the absence of express provisions in the Code. It
is only in exceptional cases where the court may now exercise
the power of remand dehors Rules 23 and 23-A. To wit, the
superior court, if it finds that the judgment under appeal has not
disposed of the case satisfactorily in the manner required by
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Order 20 Rule 3 or Order 41 Rule 31 CPC and hence it is no
judgment in the eye of law, it may set aside the same and send
the matter back for rewriting the judgment so as to protect
valuable rights of the parties. An appellate court should be
circumspect in ordering a remand when the case is not covered
either by Rule 23 or Rule 23-A or Rule 25 CPC. An
unwarranted order of remand gives the litigation an undeserved
lease of life and, therefore, must be avoided.”
The above decision was followed by A.S Chandurkar, J (as he then was) in
Rampyare Ram v. Usha Prasad, (2017) 5 Mah LJ 378, where it was held:
“Under the provisions of Order XLI, Rule 23-A of the Code, the
Appellate Court can direct remand of the proceedings after it
reverses the decree and further finds that a fresh trial is necessary.
For said purpose, the Appellate Court would have to first go into the
merits of the adjudication by the trial Court and only on being
satisfied that the decree is liable to be reversed and fresh trial is
considered necessary that such order of remand can be passed. In P.
Purushottam Reddy (supra), the Hon'ble Supreme Court has held that
it is only in exceptional cases and where the conditions stipulated by
provisions of Order XLI, Rule 23-A of the Code are satisfied that such
order of remand can be passed. In the present case, the Appellate
Court without entering into merits of the adjudication by the trial
Court merely remanded the proceedings so as to give one opportunity
to the respondent to contest the proceedings. In absence of the
conditions stipulated under Order XLI, Rule 23-A of the Code being
satisfied such order of remand could not have been passed.”
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In A. Ramaiah v. A Pedda Sayanna Sailoo, 1988 SCC OnLine AP 162 :
(1989) 1 AP LJ 391, the Andhra Pradesh High Court has held as under:
“From a plain reading of Rule 23-A it is evident when the suit is
decreed otherwise than on a preliminary issue and retrial is
considered necessary, it is only then that the case has to be
remanded. In other words, it is only after the judgment under has
been reversed on merits when the question of relief falls for
consideration, if the appellate court comes to the conclusion that
retrial is necessary, than it can remand the case. The approach to
reverse the decree merely to order remand is contrary to letter and
spirit of Rule 23-A C.P.C. In this case, it appears to me that the
learned Judge has reversed the judgment merely with a view
remand the case which is not permissible under Order 41 Rule 23-
A C, P.C.”
13.In Municipal Corpn., Hyderabad v. Sunder Singh, (2008) 8 SCC
485, the Hon'ble Supreme Court categorically observed that to justify a
remand, the appellate court must disagree with the findings of the trial court.
Only when a decree is to be reversed in appeal, and when the appellate court
considers it necessary it can remand the case in the interest of justice. It was
also held:
“It is not to be exercised by the appellate court only because
it finds it difficult to deal with the entire matter. If it does not agree
with the decision of the trial court, it has to come with a proper
finding of its own. The appellate court cannot shirk its duties.”
The aforesaid position was reiterated in Shivakumar v.
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Sharanabasappa, (2021) 11 SCC 277, where it was observed:
“It gets perforce reiterated that the occasion for remand would arise
only when the factual findings of the trial court are reversed and a
retrial is considered necessary by the appellate court.”
14.In the context of appeals under Section 37 of the Arbitration and
Conciliation Act, 1996, the Hon'ble Supreme Court in Bombay Slum
Redevelopment Corpn. (P) Ltd. v. Samir Narain Bhojwani, (2024) 7 SCC
218, has construed the scope of remand to be even narrower and has held as
follows:
“There may be exceptional cases where remand in an
appeal under Section 37 of the Arbitration Act may be
warranted. Some of the exceptional cases can be stated by way
of illustration:
(a) Summary disposal of a petition under Section 34 of
the Arbitration Act is made without consideration of merits;
(b) Without service of notice to the respondent in a
petition under Section 34, interference is made with the award;
and
(c) Decision in proceedings under Section 34 is rendered
when one or more contesting parties are dead, and their legal
representatives have not been brought on record.”
Grounds (b) and (c) are procedural infirmities warranting
remand whereas ground (a) is when the appellate court is
constrained to remand as its appellate powers cannot be
exercised effectively when there is no order on merits by the
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Court under Section 34. Here the position is converse. The
appellate court had before it a fully reasoned order of the
Section 34 Court on merits. The grievance was one of
modification of the award under Section 34. A remand was
however made not because it could not decide the issue by
applying the law as it stood then but it because the Division
Bench chose not to decide the matter as the reference was
pending before the Supreme Court. However, the law, as pointed
out by the Division Bench itself, is that the judgment under
reference continues to be the law till it is reversed (Iveco
Magirus Brandschutztechnik GMBH v. Nirmal Kishore
Bhartiya, (2024) 2 SCC 86). The order of remand does not fall
within any of the “exceptionable circumstances” indicated by
the Supreme Court.
15.In in Bombay Slum Redevelopment Corpn. (P) Ltd. v. Samir
Narain Bhojwani, (2024) 7 SCC 218, the Supreme Court observed that
Order 41 has not been made applicable to appeals under Section 37. On
facts, the appeal was from an order of the Bombay High Court. The position
in the Madras High Court is slightly different and is governed by the Madras
High Court Arbitration Rules, 2020.
16.In the context of exercise of appellate jurisdiction, it should be
pointed out that Section 37 only contains the substantive right of appeal as
against the orders enumerated therein. It stipulates that an appeal lies to “the
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Court authorised by law to hear appeals from original decrees of the
Court.” Having stipulated the forum the 1996 Act does not contain provision
which provides the procedure as to how such appeals are to be heard and
dealt with. The principle that is to be applied in such situations is explained
by the Constitution Bench of the Supreme Court in National Sewing Thread
Co. Ltd. v. James Chadwick & Bros. Ltd., (1953) 1 SCC 794, wherein it
was held:
“The Trade Marks Act does not provide or lay down any
procedure for the future conduct or career of that appeal in the
High Court, indeed Section 77 of the Act provides that the High
Court can if it likes make rules in the matter. Obviously after the
appeal had reached the High Court it has to be determined
according to the rules of practice and procedure of that Court
and in accordance with the provisions of the Charter under
which that Court is constituted and which confers on it power in
respect to the method and manner of exercising that
jurisdiction. The rule is well settled that when a statute directs
that an appeal shall lie to a Court already established, then that
appeal must be regulated by the practice and procedure of that
Court. This rule was very succinctly stated by Viscount
Haldane, L.C. in National Telephone Co. Ltd. v. Postmaster
General [National Telephone Co. Ltd. v. Postmaster General,
1913 AC 546 (HL)] , in these terms : (AC p. 552)
“… When a question is stated to be referred to an established
Court without more, it, in my opinion, imports that the ordinary
incidents of the procedure of that Court are to attach, and also
that any general right of appeal from its decisions likewise
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attaches.”
17.In the context of intra-Court appeals in the Madras High Court, the
procedure is governed by the Madras High Court (Arbitration) Rules, 2020
which have been framed under Section 82 of the Arbitration and Conciliation
Act, 1996. Rule 9 deals with procedure in relation to appeals under Sections
37,50 & 59. Sub-Rule (v) of Rule 9 is as follows:
“The Code, the Civil Rules of Practice, the Madras High
Court Appellate Side Rules and the Madras High Court
Original Side Rules shall apply, to the extent applicable, to the
filing and hearing of appeals under Sections 37, 50 and 59.”
Thus, the procedure in the Code for regulating the procedure for
hearing appeals under Section 37 has been expressly made
applicable to intra-court appeals in the Madras High Court.
Therefore, there is no escape from the consequence that even if
a remand is to be tested with reference to provisions in the CPC
it must come within the four corners of Rule 23, 23-A and 25 of
Order 41. As stated supra, a remand could not have been made
for de-novo hearing without going into the merits and setting
aside the same.
18.It is for the above reason that it has been consistently held that the
doctrine of merger would not apply where the appellate court does not
affirm/reverse or modify the decree on merits. If the Division Bench had
vacated the findings on merits, and then remanded the case for fresh
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disposal, the doctrine of merger would apply and the Section 34 Court would
be free to decide the cases afresh. However, the converse position does not
obtain. This has been made clear in a recent judgment of the Supreme Court
in Vishnu Vardhan v State of UP, 2025 SCC Online SC 1501, wherein it was
held as under:
“108. In MRF Ltd. v. Manohar Parrikar (2010) 11 SCC
374, a two-Judge Bench held that the doctrine of merger does
not apply when the higher court has not adjudicated the issues
on merits, and the controversy between the parties has not been
looked into.”
19. From the above discussion the following aspects become clear:
•To order a wholesale remand, the Division Bench was required to
enter the merits of the dispute and reverse the same before ordering
a fresh de-novo hearing.
•The Division Bench while remanding the cases has not ventured
into or expressed any opinion on merits in any of the cases. In other
words, the findings of the learned single judges remain intact on
merits. In one case, the Division Bench has even observed that the
impugned order cannot be faulted.
•Consequently, the doctrine of merger contemplating merger of the
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order of the Section 34 Court with that of the appellate court does
not apply.
•As doctrine of merger does not apply, the findings in the original
order on merits stands. Consequently, to implement the directions
of the Division Bench by conducting a de-novo hearing, this Court
must either re-write the order of the Division Bench by construing
it as having set aside the order of the learned single judge on merits
despite the Division Bench indicating to the contrary or assume for
itself that the findings on merits rendered by the learned single
judge have judicially vaporized and vanished into thin air leaving
this Court to decide the matter de-novo as indicated by the Division
Bench.
•It is in this context that an unusual and unprecedent situation has
been created where this Court is constrained to say that the “de-
novo drill” as indicated by the Division Bench is not capable of
being implemented.
20.The other aspect is that all these orders of remand have been passed
by consent. Consent may preclude the party giving consent from challenging
the correctness of the order. Indeed, to be fair to the learned senior
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counsel/counsel it is not the case of the parties before the Court that they are
challenging the correctness of the consent made before the Division Bench.
That does not solve the problem of this Court in finding ways to implement
the order in the face of unsurmountable legal obstacles and contradictory
directions. In all six cases, the Division Bench has passed identical directions
making it clear that:
i.That it has not expressed any view or opinion on the merits of the
matter;
ii.That the impugned order is set aside solely for the purpose of a de
novo Section 34 legal drill;
iii.All questions before Section 34 Court are left open;
iv.That the Section 34 Court can either to resort to sub-section (4)
of Section 34 or hear out Section 34 petition on merits and sustain
or dislodge the award.
v.If the reference as regards Hakeem is answered in the
interregnum, the ratio as answered in reference by Hon'ble
Supreme Court will govern the proceedings.
21.The real issue in implementing (ii) to (v) is because (i) states that
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the Court has not gone into the merits. As has been pointed out above, this
means the Court has not vacated the findings in the order on merits. Under
Order XLI Rule 23-A, which must be taken to be applicable to intra-Court
appeals by virtue of Rule 9(v) of the Madras High Court Arbitration Rules,
2020, no order of remand can be passed unless the appellate court reverses
the judgment of the learned single judge on merits. The interpretation of
Rule 23-A of Order XLI by the Hon'ble Supreme Court has made it clear that
the appellate court must go into the merits, set aside/vacate the findings and
then order de-novo proceedings. This is the real impediment in this case as
the merits have been left completely untouched while passing the order of
remand.
22.In the light of the above discussion, this Court must necessarily
find a way out of this conundrum. The learned single judges whose orders
were assailed in the appeals leading to the order of remand, have
painstakingly gone through the records, spent several hours hearing the
matter and writing a detailed judgment. In these times, when judicial time is
severely scarce it would seem to be a complete waste of time to repeat the
exercise which has already been undertaken earlier but which has been
knocked off by a sidewind by the order of remand without pointing out any
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perversity or error in reasoning.
23. This Court must also factor in the fact that the litigant has also
spent a considerable sum of money towards court fees, and an even more
considerable sum of money to have their respective stands defended. In the
opinion of this Court, when litigants come to the highest Court in this State,
they are entitled to a certain standard and quality of justice. Hakeem’s case
was the only apparent obstacle. The Division Bench ought to have either
applied Hakeem and set aside the modification, if the same was erroneous or
awaited the outcome of the reference. It did neither. In the interregnum,
Hakeem has been overruled and the question of severability has been
answered holding that a partial modification is permissible. This means that
the procedure adopted by Justice N. Sathish Kumar and Justice Senthilkumar
Ramamoorthy in severing/modifying the award cannot be faulted now. The
correctness of those orders as to whether such severance was correct or not
was never tested by the Division Bench. If this Court were to reiterate the
conclusions of the Section 34 Court or differ from it either of the parties will
be aggrieved and a fresh round of appeals will once again commence. This
undesirable result must, therefore, be avoided.
24.In this unusual and unprecedent backdrop, this Court is of the
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considered opinion that its hands are tied by an unsurmountable legal
obstacle and the only effective remedy for the parties is to necessarily
approach the Division Bench by way of appropriate applications to review
the various orders of remand passed in the OSA’s. In this connection it may
be worthwhile to notice that in Accord Advertising Pvt Limited, v Airports
Director, AAI, 2019 SCC Online Cal 9462, it was held:
“The court which passes an order in relation to an
appeal under section 37 of the Act in its civil appellate
jurisdiction can also review its own order. This power is not
expressly excluded in the Act. All courts, unlike Tribunals,
inheres the power of review of its own order, unless such
power is expressly excluded.”
25.Even otherwise, this Court being a Court of Record can always review its
own orders. In Municipal Corpn. of Greater Mumbai v. Pratibha Industries Ltd.,
(2019) 3 SCC 203, it was held:
“It is clear that these constitutional courts, being courts of
record, the jurisdiction to recall their own orders is inherent
by virtue of the fact that they are superior courts of record.
This has been recognised in several of our judgments.”
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By adopting such a course, the Division Bench could
examine the difficulty expressed by this Court in
implementing the order of remand and have the benefit of
examining the latest decision in Gayatri Balasamy v. ISG
Novasoft Technologies Ltd., (2025) 7 SCC 1 which may now
render a further remand unnecessary.
26.In the result, the following order is passed:
a.The petitioners/respondents who were the appellants in their
respective OSA’s ie., OSA Nos.118, 207 & 208 of 2020, OSA Nos. 218, 195,
196, 146 & 53 of 2021, before the Division Bench are granted liberty to
approach the Division Bench by way of applications seeking review of the
common orders/orders passed in their respective appeals.
b.If such review applications are filed within four weeks from the date
of receipt of a copy of this order, the Registry shall entertain and number the
same without any objection as to limitation.
c)Depending on the outcome of the review applications, the petitioners
are granted liberty to revive these OP’s if the need or circumstances so arise.
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26.The Original Petitions are closed with the aforesaid liberty and
directions. There shall be no order as to costs.
17.11.2025
Index : Yes
Neutral Citation : Yes
kp
To
1.ICMC Corporation Limited
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36, Ambattur Industrial Estate
Chennai 600 0520.
2.The Government of Tamil Nadu
Represented by the Superintending Engineer (H)
SCRD Circle, M.K.S. Building
4A,Kkanthaswamy Lay Out
Second Street, Villupuram 605 002.
3.M/s.Ircon International Limited
(A Government of India Undertaking)
Represented by its Joint General Manager (South)
Ground Floor, DRM Officer Building
Behind DRM Office
South Western Railway
Adjacent to City Railway Station
Bengaluru-560 023.
4.M/s.Airport Authority of India
Represented by its Senior Manager Engg(C)
Project Division-IV,
Chennai Airport Project
Chennai-600 016.
5.M/s.URC Construction (P) Ltd
Represented by its Authorized Signatory
Mr.V.Ganesan, Manager,
13(Old No.H-102), Periyar Nagar
Erode-638 001.
N.ANAND VENKATESH J.
kp
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Original Petition Nos.821 of 2019, 145 of 2017, 454
& 1068 of 2018, 108 of 2019 & OP.No.400 of 2020
17.11.2025
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