The Karnataka High Court set aside an order of the District Judge modifying the claims in an arbitral matter and observed that the Court of District Judge is not the Appellate Authority over the award passed by the arbitral tribunal.

The Appeal before the High Court challenged the order passed by the Court of District Judge.

The Single Bench of Justice Hanchate Sanjeevkumar asserted, “The Court of District Judge is not the Appellate Authority over the award passed by the arbitral tribunal. Interference with the award passed by the arbitral tribunal shall only be in accordance with the stipulations enumerated under Section 34 of Arbitration and Conciliation Act, 1996, otherwise not. If there are any grounds to set aside the arbitral award that shall be in consonance with the conditions enumerated under Section 34 of Arbitration and Conciliation Act, 1996, otherwise not.

Advocate Kushal Gowda represented the Petitioner, while Advocate K. Sathyanarayana Raju represented the Respondent.

Factual Background

The dispute between the appellant and the respondents was referred to arbitration, and the Arbitrator passed the award allowing the claims made by the respondents. The first Respondent, being a railway contractor, had challenged the arbitral award before the Court of District by invoking Section 34 of the Arbitration and Conciliation Act, 1996. The Court of District Judge passed the order modifying three claims by enhancing the amount.

Reasoning

The Bench explained that the District Judge is not sitting as the Appellate Authority on the award passed by the arbitral tribunal. “The grounds for setting aside the order of arbitral tribunal are as per the stipulations enumerated under Section 34 of Arbitration and Conciliation Act, 1996, but not on other grounds. There is no power vested with the learned District Judge to modify the award passed by the arbitral tribunal”, it said.

The Bench noted that as per Section 34 of Arbitration and Conciliation Act, 1996, the Court of District Judge has to consider the arbitration suit in accordance with the grounds enumerated in the said provision, otherwise not. “There is no power vested with the Court of District Judge to modify or alter the arbitral award as if could be done in the appeal. Therefore, the Court of District Judge while considering the arbitration suit filed under Section 34 of Arbitration and Conciliation Act, 1996, as if considered it as an appeal against the arbitral award that is not permissible as per law”, the Bench held.

Thus, allowing the appeal, the Bench set aside the impugned order.

Cause Title: The Union Of India v. Kothari Subbaraju (Neutral Citation: 2025:KHC:10507)

Appearance:

Petitioner: Advocates Kushal Gowda, Abhinay. Y.T.

Respondent: Advocate K. Sathyanarayana Raju

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Karnataka High CourtJustice Hanchate Sanjeevkumar

Tulip Kanth

Assistant Editor

Tulip Kanth is an Assistant Editor at Verdictum having over 5 years of experience in the field of legal journalism and editing. She extensively covers judgments of the Supreme Court, High Courts as well as Tribunals. She has previously worked with a legal publishing website where she oversaw the work of other editors and has also created updates on notifications of different Government Ministries. She holds an English Honours Degree from SGTB Khalsa College, Delhi University and has completed her LLB course with specialisation in Corporate Law from Amity University.