Allahabad High Court: The Arbitral Tribunal Cannot Recall or Modify its Award Under Section 33 of the Arbitration and Conciliation Act 1996

On 6th May the High Court of Judicature at Allahabad set aside multiple awards issued by an Arbitrator concerning a land acquisition dispute involving the National Highways Authority of India (NHAI) and several landowners. The case, titled National Highways Authority of India v. Musafir and Others, was adjudicated under Section 37 of the Arbitration and Conciliation Act, 1996.

The dispute originated from a notification issued on January 23, 2015, under Section 3A(1) of the National Highways Act, 1956, for acquiring land to widen NH-29 (now NH-24) between Varanasi and Gorakhpur. The notification was published in two daily newspapers on March 6, 2015, inviting objections from interested parties within 21 days, as per Section 3C(1). An award was subsequently made on August 17, 2016.

The landowners, dissatisfied with the compensation, filed objections under Section 3G(5) before the Arbitrator. On March 15, 2018, the Arbitrator set aside the initial award and remanded the matter to the Competent Authority, instructing the formation of a Joint Committee to re-evaluate the land value through a spot inspection and determine compensation per Act No. 30 of 2013. This decision remained unchallenged and thus attained finality.

Following the remand, a fresh award was made on June 4, 2018. On November 15, 2018, NHAI agreed to a tiered compensation scheme. However, the Arbitrator issued multiple awards in 2019 and 2020, each modifying the compensation structure, which prompted NHAI to file an objection under Section 34 of the Arbitration Act. The District Judge, Mau, rejected NHAI’s objections, leading to the current appeal.

Justice Shekhar B. Saraf heard the appeal. Representing the appellant, Sri Divakar Rai Sharma contended that the Arbitrator exceeded his statutory authority. The respondents were represented by Sri Ashish Kumar Singh and Sri Dharamveer Singh.

Justice Saraf critically examined the Arbitrator’s actions against the provisions of the Arbitration and Conciliation Act. Highlighting Section 33, he noted, “The arbitral tribunal can only correct and interpret an award. An additional award can be made only in respect of claims omitted from the arbitral award. However, none of these provisions empower the arbitral tribunal to recall and modify its award.”

Justice Saraf emphasized the principle of functus officio, stating, “Once an award has been rendered, the tribunal’s jurisdiction over the dispute is terminated. The Arbitrator in this case erred in passing the awards dated December 27, 2019, May 19, 2020, and May 28, 2020, since no statutory authority empowers the arbitral tribunal to review or modify its award.”

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Citing the court’s responsibility to oversee arbitral proceedings, he remarked, “While courts generally afford deference to arbitral tribunals and uphold the finality of arbitral awards, they also have a duty to intervene when arbitrators exceed their authority or act improperly.”

The court set aside the awards dated December 27, 2019, May 19, 2020, and May 28, 2020, and annulled the District Judge’s dismissal of NHAI’s Section 34 objections. Justice Saraf directed the Arbitrator to decide the matter de novo within six months, taking into account the order dated March 15, 2018, and the report submitted under it.

Case Name: NATIONAL HIGHWAYS AUTHORITY OF INDIA Vs. MUSAFIR AND OTHERS

Case No.: APPEAL UNDER SECTION 37 OF ARBITRATION AND CONCILIATION ACT 1996 No. – 41 of 2021 

Bench: Justice Shekhar B. Saraf

Order Dated: 06.5.2024

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