2017 (12) TMI 559 - SC - Indian Laws

Award under Arbitration proceedings - High Court while setting aside the said award directing to carry out the modifications required by it at the risk and costs of the appellants(respondents firm) and in terms of the agreement, the costs thereafter shall be recovered from the earnest money or pending payment - Held that - The subject matter covered by the aforesaid impugned direction of the High Court was not one of the items of reference to the Arbitrator. If that is so, after setting aside the award the High Court under Section 37 of the Arbitration and Conciliation Act, 1996 was not competent to issue the direction in question in respect of a subject which was not the subject matter of reference to arbitration. Accordingly, while maintaining the order of the High Court insofar as setting aside the award is concerned, the aforesaid direction, extracted above, is interfered with.

Summary

Issues:
Jurisdiction of the High Court to issue directions beyond the scope of arbitration award.

Analysis:
The Supreme Court granted leave and discussed the award set aside by the High Court, which included payment terms and costs of arbitration. The High Court directed the appellants to carry out modifications at their own cost, recoverable from their earnest money or pending payment, with any disputes to be resolved by the Arbitrator. The appeal contended that the High Court exceeded its jurisdiction in issuing such a direction. The Supreme Court held that the High Court, under the Arbitration and Conciliation Act, lacked the authority to issue directions on matters not referred to arbitration. While upholding the setting aside of the award, the Supreme Court interfered with the High Court's direction. Consequently, the appeals were allowed to the extent of setting aside the direction, and all amounts deposited by the appellants were ordered to be returned promptly.