# Sushil Kumar Mishra v. State of U.P. & Anr. Opp. Parties

- **Citation:** (2024) 2 ILRA 1288
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-01-19
- **Bench:** Shekhar B. Saraf
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/sushil-kumar-mishra-v-state-of-u-p-anr-opp-parties-51336
- **Pages:** 5

## Headnote

Civil Law - Arbitration and Conciliation
Act, 1996 - Section 34 - Instant appeal
preferred
by
claimant/award
holder
against order of District Judge whereby
appeal was partly allowed and rate of
interest
awarded
by
Arbitrator
was
reduced from 14% to 6% p.a - Held, it is
well settled by catena of Supreme Court
decisions that court has no power u/s 34
of Act, 1996 to modify award - Under
Section 34(2), court may only set aside
award, wholly or in part, if severable,
without affecting remaining award - In
Larsen Air Conditioning and Refrigeration
Co. (infra), Supreme Court held that
modification of rate of interest u/s 34 is
impermissible - Thus, rate of interest that
was awarded to be paid on principle sum
was 14% p.a from 25.3.2000 till payment
was made - In impugned order , rate of
interest reduced to 6% without providing
any cogent reasons for same - Reduction
of interest is nothing but modification of
original arbitration award, accordingly
same is illegal and against principles
established by Supreme Court. (Para 1, 7,
8)
2 All. Sushil Kumar Mishra Vs. State of U.P. & Anr.
1289
Appeal allowed. (E-13)

List of Cases cited:

## Text

1288 INDIAN LAW REPORTS ALLAHABAD SERIES
then presumption under Section 27 of the
General Clause The act will automatically
come into the picture.

26. In view of above analysis and
the legal position discussed above,
this Court is of the view that in the
present case, the complaint was filed
after the expiry of 15 days of service
of
notice
upon
the
applicant.
Therefore, there is no defect in the
complaint.
Hence,
there
is
no
illegality in the summoning order.

27. This Court also feels it
appropriate to issue following directions to
all learned Magistrates/Courts:-

(i) Where complaint under N.I.
Act is filed, then the concerned Magistrate/
Court will emphasis for filing the post
tracking report along with the complaint, if
sent through Registered Post, so as to leave
no scope for the dishonest drawer of
cheque from taking the plea of non-service
of statutory notice of 15 days.

(ii). Notice sent through 'email or
WhatsApp' , if it fulfils the requirement
of Section 13 of I.T. Act will also be a
valid notice under Section 138 N.I. Act
to the drawer of cheque, and same will
be deemed to be served on the date of
dispatch, itself.

28.
 Accordingly,
the
present
application is dismissed. However, the
applicant is free to raise the issue of
service during the trial of the complaint
in question.

29. Registrar (Compliance) is
directed to circulate a copy of this order
to all learned District Judges of the
state of Uttar Pradesh, for further
appraisal to concerned Magistrate/Court.
----------
(2024) 2 ILRA 1288
APPELLATE JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 19.01.2024

BEFORE

THE HON'BLE SHEKHAR B. SARAF, J.

Appeal U/s 37 of Arbitration & Conciliation Act
1996 NO. 874 of 2023

Sushil Kumar Mishra ...Appellant
Versus
State of U.P. & Anr. ...Opp. Parties

Counsel for the Appellant:
Sri Vinod Sinha, Sri Mahesh Sharma, Sri Sharad
Sinha

Counsel for the Opp. Parties:
S.C.

Civil Law - Arbitration and Conciliation
Act, 1996 - Section 34 - Instant appeal
preferred
by
claimant/award
holder
against order of District Judge whereby
appeal was partly allowed and rate of
interest
awarded
by
Arbitrator
was
reduced from 14% to 6% p.a - Held, it is
well settled by catena of Supreme Court
decisions that court has no power u/s 34
of Act, 1996 to modify award - Under
Section 34(2), court may only set aside
award, wholly or in part, if severable,
without affecting remaining award - In
Larsen Air Conditioning and Refrigeration
Co. (infra), Supreme Court held that
modification of rate of interest u/s 34 is
impermissible - Thus, rate of interest that
was awarded to be paid on principle sum
was 14% p.a from 25.3.2000 till payment
was made - In impugned order , rate of
interest reduced to 6% without providing
any cogent reasons for same - Reduction
of interest is nothing but modification of
original arbitration award, accordingly
same is illegal and against principles
established by Supreme Court. (Para 1, 7,
8)
2 All. Sushil Kumar Mishra Vs. State of U.P. & Anr.
1289
Appeal allowed. (E-13)

List of Cases cited:

1. Project Director Vs M. Hakeem reported in
2021 (9) SCC 1, (Para 46)

2. S.V. Samudram Vs St. of Karn. & anr., Civil
Appeal No. 8067 of 2019, dated January 4,
2024, (Paras 14 to 16, 42)

3. Larsen Air Conditioning and Refrigration
Company Vs U.O.I. & ors. reported in 2023 SCC
Online SC 982, (Paras 13 to 16)

(Delivered by Hon'ble Shekhar B. Saraf, J.)

1. This is an appeal filed by the
claimant/award holder against the order
passed by the District Judge, Kaushambi
dated January 15, 2008, wherein the appeal
was partly allowed and the rate of interest
awarded by the Arbitrator was reduced
from 14% to 6% per annum.

2. Counsel appearing on behalf of the
appellant submits that the Court does not
have the power to modify an award and to
buttress his arguments reliance has been
placed on the judgements of the Supreme
Court in the case of Project Director Vs.
M. Hakeem reported in 2021 (9) SCC 1
and in S.V. Samudram Vs. State of
Karnataka & Anr. in Civil Appeal No.
8067 of 2019 dated January 4, 2024.
Specific reference is placed on paragraph
no.46 of the judgement in Project Manager
(Supra), which is quoted below:-

"46. Quite obviously if one were
to include the power to modify an award in
Section 34, one would be crossing the
Lakshman Rekha and doing what, according
to the justice of a case, ought to be done. In
interpreting a statutory provision, a Judge
must put himself in the shoes of Parliament
and then ask whether Parliament intended
this result. Parliament very clearly intended
that no power of modification of an award
exists in Section 34 of the Arbitration Act,
1996. It is only for Parliament to amend the
aforesaid provision in the light of the
experience of the courts in the working of the
Arbitration Act, 1996, and bring it in line
with other legislations the world over."

3. He further referred to paragraph
nos.14, 15 and 16 and 42 of the judgement in
S.V. Samudram (Supra), which are quoted
below :-

"14. The position as to whether an
arbitral award can be modified in the
proceedings initiated under Sections 34/37 of
the A&C Act is no longer res integra. While
noting the provisions, more specifically,
Section 34(4) of the A&C Act; the decisions
rendered by this Court, including the
principles of international law enunciated in
several decisions recorded in the treatise
"Redfern and Hunter on International
Arbitration, 6th Edition", this Court in
National Highways Authority of India v. M.
Hakeen and Another, categorically held that
any court under Section 34 would have no
jurisdiction to modify the arbitral award,
which at best, given the same to be in conflict
with the grounds specified under Section 34
would be wholly unsustainable in law. The
Court categorically observed that any
attempt to "modify an award" under Section
34 would amount to "crossing the Lakshman
Rekha".

15. On the exact same issue we may
also note another opinion rendered by this
Court in Dakshin Haryana Bijli Vitran
Nigam Limited v. Navigant Technologies
Private Limited in the following terms:-

"44. In law, where the court sets
aside the award passed by the majority
1290 INDIAN LAW REPORTS ALLAHABAD SERIES
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. In McDermott
International Inc. v. Burn Standard Co.
Ltd. [McDermott International Inc. v.
Burn Standard Co. Ltd., (2006) 11 SCC
181] , this Court held as under : (SCC p.
208, para 52).

"52.
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."

(Emphasis Supplied)

16. The principle stands reiterated as late
as 2023 in Larsen Air Conditioning and
Refrigration Company v. Union of India &
Others.

42. In our considered opinion, the
court while confirming the modification of the
award committed the very same mistake which
the Court under Section 34 of the A&C Act,
made.

The Court under Section 37 had only
three options:-

(a) Confirming the award of the
Arbitrator;

(b) Setting aside the award as
modified under Section 34; and

(c) Rejecting the application (s)
under Section 34 and 37."

4. One may also examine the Apex Court
judgement in Larsen Air Conditioning and
Refrigration Company Vs. Union of India and
others reported in 2023 SCC Online SC 982,
where the court was examining as to whether
the High Court erred in modifying the arbitral
award to the extent of reducing the interest,
from compound interest of 18% to 9% simple
interest per annum. The Supreme Court
delineated on the issue of modification as
follows :-

"13. In the present case, given that
the arbitration commenced in 1997, i.e., after
the Act of 1996 came into force on 22.08.1996,
the arbitrator, and the award passed by them,
would be subject to this statute. Under the
enactment, i.e. Section 31(7), the statutory rate
of interest itself is contemplated at 18% per
annum. Of course, this is in the event the award
does not contain any direction towards the rate
of interest.

Therefore, there is little to no reason,
for the High Court to have interfered with the
arbitrator's finding on interest accrued and
payable. Unlike in the case of the old Act, the
court is powerless to modify the award and can
only set aside partially, or wholly, an award on
a finding that the conditions spelt out under
Section 34 of the 1996 Act have been
established.

The scope of interference by the
court, is well defined and delineated [refer
to Associate Builders v. Delhi Development
Authority,
Ssangyong
Engineering
Construction Co. Ltd v. National Highways
Authority of India (NHAI) and Delhi
2 All. Sushil Kumar Mishra Vs. State of U.P. & Anr.
1291
Airport Metro Express Pvt. Ltd. v Delhi
Metro Rail Corporation Ltd].

14.
The
reliance
on
Kalsi
Construction Company (supra) by the
respondent-state, is inapt, given that this
court had exercised its Article 142
jurisdiction in light of three pertinent
factors - the award had been passed 20
years prior, related to construction of a
Paediatrics Centre in a medical institute,
and that the parties in that case had left the
matter to the discretion of the court.

Similarly, in Oriental Structural
Engineers (supra) this court held that since
the contract stipulated interest entitlement
on delayed payments, but contained no
mention of the rate of interest applicable -
the Tribunal ought to have applied the
principles laid down in G.C. Roy (supra),
and therefore, in exercise of Article 142,
this court reduced the rate of interest
awarded by the tribunal on the sum left
unpaid.

The
judgment
in
Municipal
Corporation of Greater Mumbai (supra) no
doubt discusses the inherent powers of the
High Court as a superior court of record,
but relates specifically to the jurisdiction to
recall its own orders, and offers little
assistance in the present dispute.

15. The limited and extremely
circumscribed jurisdiction of the court
under Section 34 of the Act, permits the
court to interfere with an award, sans the
grounds of patent illegality, i.e., that
"illegality must go to the root of the matter
and cannot be of a trivial nature"; and that
the tribunal "must decide in accordance
with the terms of the contract, but if an
arbitrator construes a term of the contract
in a reasonable manner, it will not mean
that the award can be set aside on this
ground" [ref: Associate Builders (supra)].

The other ground would be denial
of natural justice. In appeal, Section 37 of
the Act grants narrower scope to the
appellate court to review the findings in an
award,
if
it
has
been
upheld,
or
substantially upheld under Section 34. It is
important to notice that the old Act
contained a provision which enabled the
court to modify an award. However, that
power has been consciously omitted by
Parliament, while enacting the Act of 1996.

This
means
that
the
Parliamentary intent was to exclude power
to modify an award, in any manner, to the
court. This position has been iterated
decisively by this court in Project Director,
National Highways No. 45E and 220
National Highways Authority of India v M.
Hakeem:

"42. It can therefore be said that
this question has now been settled finally
by at least 3 decisions [McDermott
International Inc. v. Burn Standard Co.
Ltd., (2006) 11 SCC 181] , [Kinnari
Mullick v. Ghanshyam Das Damani, (2018)
11 SCC 328 : (2018) 5 SCC (Civ) 106] ,
[Dakshin Haryana Bijli Vitran Nigam Ltd.
v. Navigant Technologies (P) Ltd., (2021) 7
SCC 657] 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 coterminous with the "limited
right", namely, either to set aside an award
or
remand
the
matter
under
the
1292 INDIAN LAW REPORTS ALLAHABAD SERIES
circumstances mentioned in Section 34 of
the Arbitration Act, 1996."

16. In view of the foregoing
discussion,
the
impugned
judgment
warrants interference and is hereby set aside to
the extent of modification of rate of interest for
past, pendente lite and future interest.

The 18% per annum rate of interest,
as awarded by the arbitrator on 21.01.1999 (in
Claim No. 9) is reinstated. The respondent-state
is hereby directed to accordingly pay the dues
within 8 weeks from the date of this judgment."

5. Counsel appearing on behalf of the
respondents has submitted that the modification
is only in terms of the interest and reasons have
been provided in the impugned order for
reducing the same.

6. I have perused the documents and the
judgements cited by counsel appearing on
behalf of the petitioner.

7. It is trite law, settled by a catena of
Supreme Court judgements that the Court does
not have the power under Section 34 of
Arbitration
and
Conciliation Act,
1996
(hereinafter referred to as "the Act") to modify
an award. The Court under Section 34(2) of the
Act has the power to sever parts of the award
and set aside the same in toto, if the severance
does not impact the remaining award that is
upheld under Section 34 of the Act. The
principle expounded by the Supreme Court in
Larsen Air Conditioning and Refrigration
Company (supra) is specifically on the point of
the modification of the rate of interest and
Supreme Court has categorically held that no
such modification is permissible under Section
34 of the Act.

8. In the present case, I find that the rate
of interest that was awarded to be paid on the
principle sum was 14% per annum from
25.3.2000 till the payment was made. In the
impugned order this rate of interest has been
reduced to 6% without providing any cogent
reasons for the same. Reduction of interest is
nothing but a modification of the original
arbitration award, and accordingly, the
same is illegal and against the principles
established by the Supreme Court.

9. In the light of the above findings,
the impugned judgement and order is
quashed and set aside. The appeal is,
accordingly, allowed.
----------
(2024) 2 ILRA 1292
APPELLATE JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 25.01.2024

BEFORE

THE HON'BLE SAMEER JAIN, J.

Crl. Misc. Anticipatory Bail Application U/S 438
Cr.P.C. No. 280 of 2024

Rajesh Kumar ...Applicant
Versus
State of U.P. & Anr. ...Respondents

Counsel for the Applicant:
Sri Sujeet Kumar, Ms. Chhaya Gupta

Counsel for the Respondents:
G.A.

Anticipatory
Bail-Applicant
was
District
Social Welfare Officer-allegation-he with
the help of his four private computer
operators
misappropriated
the
public
money- FIR was lodged after due enquiry
conducted by three members committeeand after enquiry- committee found the
Applicant
misappropriated
the
public
money -the Court should consider the
nature
of
allegation-
severity
of
punishment,
status/
position
of
the
accused and magnitude of offence alleged
to
have
been
committed-Application
dismissed.
(E-9)