M/S. Backbone Projects vs Airports Authority Of India
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THE HON'BLE THE CHIEF JUSTICE SATISH CHANDRA SHARMA
                                   AND
    THE HON'BLE SRI JUSTICE ABHINAND KUMAR SHAVILI



                     C.M.A.No.439 of 2018

JUDGMENT:     (Per the Hon'ble the Chief Justice Satish Chandra Sharma)


     The present appeal is arising out of an order dated

01.09.2017 passed by the learned Judge, Commercial

Court-cum-XXIV Additional Chief Judge, City Civil Court,

Hyderabad, in COP No.85 of 2016.

     Learned counsel for the appellant, at the outset, has

argued before this Court that the Commercial Court has

modified the award and has exercised the power not vested

in it while modifying the award.

     Learned counsel for the parties have fairly stated

before this Court that the award has certainly been

modified.

     The operative portion of the order passed in COP

No.85 of 2016 is reproduced as under:-

            "IN THE RESULT, the Award passed by the
    Arbitrator is modified as follows:-
             The petitioner is entitled for liquidated damages
    of Rs.14,45,208/- with interest @ 18% per annum from
                                         2




        the date of claim before arbitrator till realization. For the
        rest of the claim the petitioner is not entitle.

                  The respondent No.1 is not entitled for counter

claim No.2 (refund of bank guarantee) and also not entitle for counter claim No.8 (work done but not paid). The respondent No.1 also not entitle for counter claim No.9 i.e., (Rs.5 Lakh towards cost for arbitration proceedings). The respondent No.1 as only entitle for the counter claim No.3 i.e., (Rs.10 Lakh with interest @ 18% per annum from the date of counter claim till realization).

Accordingly, the award passed by the Arbitrator is modified and both the parties has to bear their own costs."

The aforesaid makes it very clear that the Court

below has modified the award.

Learned counsel for the parties have drawn the

attention of this Court towards the judgment delivered in

the case of Project Director, National Highways No.45 E

and 220 National Highways Authority of India v.

M.Hakeem and another1. Paragraphs 31, 41 and 42 of

the said decision read as under:-

"31. Thus, there can be no doubt that given the law laid down by this Court, Section 34 of the Arbitration Act, 1996 cannot be held to include within it a power to modify an

(2021) 9 SCC 1

award. The sheet anchor of the argument of the respondents is the judgment of the learned Single Judge in Gayatri Balaswamy v. ISG Novasoft Technologies Ltd. (2014 SCC Online Madras 6568). This matter arose out of a claim for damages by an employee on account of sexual harassment at the workplace. The learned Single Judge referred to the power to modify or correct an award under Section 15 of the Arbitration Act, 1940 in para 29 of the judgment.

Thereafter, a number of judgments of this Court were referred to in which awards were modified by this Court, presumably under the powers of this Court under Article 142 of the Constitution of India. In para 34, the learned Single Judge referred to para 52 in McDermott International INC. Burn Standard Co. Ltd. ((2006) 11 SCC

181) and then concluded that since the observations made in the said para were not given in answer to a pointed question as to whether the court had the power under Section 34 to modify or vary an award, this judgment cannot be said to have settled the answer to the question raised finally.

41. As has been pointed out by us hereinabove, McDermott (supra) has been followed by this Court in Kinnari Mullick v. Ghanshyam Das Damani ((2018) 11 SCC 328). Also, in Dakshin Haryana Bijli Vitran Nigam Ltd. v. Navigant Technologies Pvt. Ltd., ((2021) 7 SCC

657), a recent judgment of this Court also followed McDermott (supra) stating that there is no power to modify an arbitral award under Section 34 as follows (Dakshin Haryana Bijli Vitran Nigam Ltd. (supra), p.676, para 44): -

"44. In law, where the Court sets aside the award passed by the majority members of the

tribunal, the underlying disputes would require to be decided afresh in an appropriate proceeding. Under Section 34 of the Arbitration Act, the Court may either dismiss the objections filed, and uphold the award, or set aside the award if the grounds contained in sub-sections (2) and (2-A) are made out. There is no power to modify an arbitral award.

42. It can therefore be said that this question has now been settled finally by at least 3 decisions (McDermott, Kinnari Mullick and Dakshin Haryana Bijli Vitran Nigam Ltd. (supra)) of this Court. Even otherwise, to state that the judicial trend appears to favour an interpretation that would read into Section 34 a power to modify, revise or vary the award would be to ignore the previous law contained in the 1940 Act; as also to ignore the fact that the 1996 Act was enacted based on the UNCITRAL Model Law on International Commercial Arbitration, 1985 which, as has been pointed out in Redfern and Hunter on International Arbitration, makes it clear that, given the limited judicial interference on extremely limited grounds not dealing with the merits of an award, the 'limited remedy' under Section 34 is co- terminus with the 'limited right', namely, either to set aside an award or remand the matter under the circumstances mentioned in Section 34 of the Arbitration Act, 1996."

In the light of the aforesaid, the impugned order

passed by the Court below is set aside and the matter is

remanded back to the Court below with a request to decide

the matter as expeditiously as possible, preferably within a

period of three months from today.

The appeal is accordingly allowed.

The miscellaneous applications pending, if any, shall

stand closed. There shall be no order as to costs.

______________________________________ SATISH CHANDRA SHARMA, CJ

______________________________________ ABHINAND KUMAR SHAVILI, J 18.04.2022 vs