Appellate Court Cannot Modify Arbitral Award U/s 34; Only Power is to Set Aside Award: SC
The appellate court can’t modify an arbitral award and this was ruled by the apex court under section 34 of the arbitration and conciliation act.it was observed by the bench which is comprising of two judges Hon’ble Justice RF Nariman and Hon’ble Justice Br Gavai that if in any of the cases the court were to include the power to modify an award which is under section 34, then that would be crossing Lakshman Rekha.
In this case, the Bench was reviewing NHAI's appeals against a Madras High Court decision that found that Section 34 of the Arbitration Act must be read to allow modification of an arbitral award made under the National Highways Act to increase compensation given by the Arbitrator.
There were many more issues which were arising in the case but the one and the most important issue which was considered was whether the power of the court which is given under section 34 of the arbitration act to only set aside an arbitrator’s award than would that power will also include the power to modify the award. So, this was the main issue which was considered. As we know that under section 34 of the arbitration act there were given many subs sections under which it clearly mentioned that what is included and what is not included. Then after all these things happened it was contended by the NHAI that as we know that the courts have limited power under this section unlike the power of an appellate court which is given under the land acquisition act. So, the power of both the section and the act is totally different from each other. And we also know that this power is limited to either remitting or setting aside the award which is given under section 34 sub-clause 4 and also to eliminate any ground of challenge which is given under section 34.
Then this concern was addressed by the court and the court has referred to section 34 of the arbitration Act and also opined that it provides only for setting aside awards on limited grounds, and also such type of grounds is contained under sub-section (2) and (3) of Section 34 of the Arbitration Act. as per the section 15 and also 16 of the Arbitration Act further it was noted by the bench that the court has the power to correct or to modify an award under the circumstances which are mentioned under section 15 of the act.
According to the Court, the High Court's approach of combining Section 34 jurisdiction with revisional jurisdiction under Section 115 of the CPC was incorrect. Then further it was noted by the bench that the parliament very clearly intended under section 34 of the Arbitration Act the power of the modification does not exist.