Appellate Court Cannot Modify Arbitral Award U/s 34; Only Power is to Set Aside Award: SC

The Apex Court has ruled that u/s 34 of the Arbitration and Conciliation Act appellate court can’t modify an arbitral award.

A Bench comprising Hon’ble Justice RF Nariman and Hon’ble Justice Br Gavai observed that if a court were to include the power to modify an award u/s 34, it would be crossing Lakshman Rekha.

In the instant case, the Bench was considering NHAI’s appeals against a Madras HC judgement that held that regarding awards made under the National Highways Act, Section 34 of Arbitration Act must be read to permit modification of an arbitral award made under National Highways Act to enhance compensation awarded by the Arbitrator.

One of the issues considered was whether the power of Court u/s 34 of the Arbitration Act to set aside an arbitrator’s award would include the power to modify the award.

The NHAI contended that a court’s limited power under this Section was unlike the power of an Appellate Court under the Land Acquisition Act. This power is limited to either remitting or setting aside the award u/s 34(4) to eliminate any ground of challenge u/s 34.

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The Court court addressed this concern and referred to Section 34 and opined that it provides only for setting aside awards on limited grounds, and such grounds are contained under sub-section (2) and (3) of Section 34. The Bench further noted that as per Sections 15 and 16 of the Arbitration Act, the Court has the power to correct or modify an award under the circumstances mentioned in Section 15.

As per the Court, the High Court’s approach of assimilating Section 34 jurisdiction with revisional jurisdiction u/s 115 of CPC. the Bench further noted that the Parliament very clearly intended that modification power does not exist in Section 34 of the Arbitration Act.

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