Awarded Amount Cannot Be Enhanced Under Section 34 Of Arbitration Act: Karnataka High Court

Brief Facts:

The dispute arose between the appellant and respondents was referred to the arbitration. The Arbitrator passed the award allowing the claims made by the respondents. Respondent No.1 challenged the arbitral award before the Court of District Judge by invoking Section 34 of the Arbitration Act.

The Court of District Judge in A.S.No.39/2008 passed the order modifying claim Nos.3, 4 and 5 by enhancing the amount. Thus, the order passed by the arbitral tribunal is partly set aside and modified in respect of claim Nos.3, 4 and 5.

Against the above order, the present appeal under section 37 of the Arbitration Act has been filed.

Contentions:

The Appellant submitted that the District Judge while deciding the petition under Section 34 of Arbitration Act, does not have power to modify the arbitral award and except the grounds enumerated under Section 34 of Arbitration Act, the arbitral award cannot be set aside or modified. Reliance was placed on S.V.Samudram Vs. State of Karnataka.

Observations:

The court at the outset observed that the District Judge is not an appellate authority for the purpose of deciding the petition under section 34 of the Arbitration Act therefore it cannot modify the arbitral award. The award can only be set aside on the limited grounds specified under Section 34 of the Arbitration Act.

The Supreme Court in S.V.Samudram (supra) has categorically held that a court under Section 34 of the Arbitration Act, has no jurisdiction to modify an arbitral award. If the award conflicts with any of the grounds mentioned under Section 34, it may be set aside, but cannot be altered or modified. Any attempt to modify it would amount to "crossing the Lakshman Rekha."

Based on the above, the court concluded that the District Judge was not empowered to modify or alter an arbitral award as if sitting in appeal. Treating a petition under Section 34 of the Arbitration Act as an appeal is impermissible in law.

Accordingly, the present appeal was allowed and the order passed by the District Judge was set aside.

Case Title:The Union Of India and Anr. Versus Sri. Kothari Subbaraju

Case Number: MFA No. 6525 Of 2016

Judgment Date: 12/03/2025

For Appellants: Sri. Kushal Gowda Advocate For Sri. Abhinay. Y.T., Advocate

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