SC: Section 34 Of Arbitration Act Does Not Give Power To Modify Arbitral Reward

FACTS

• Awards were issued by the competent authority under the notifications issued by the National Highways Act, 1956 and the value of the awards was very less.
• Unsatisfied with the award amount, the claimants filed an application before the District and Sessions Judge under Section 34 of the Arbitration Act and the Court increased the award amount and therefore modified it under its jurisdiction under Section 34 of the Act.
• The said modification was challenged before the Division Bench of Madras High Court and the modification order was upheld.

CASE BEFORE SUPREME COURT

• The National Highway Authority of India filed an appeal before the Supreme Court challenging the order of the Madras High Court.
• The question before the Court was whether the power of the Court to set aside an arbitral award under Section 34 of the Arbitration Act would also include the power to modify the award.

JUDGEMENT

• Observing Section 34 of the Arbitration Act, the Court stated that the Section is not of appellate nature and it only provides setting aside of award on the grounds mentioned in Sub-sections (2) and (3).
• The Court also noticed Sections 15 and 16 of the Arbitration Act, 1940. The Court held that the Court has been given the power to modify an award under Section 15 and power to remit under Section 16.
• The Bench of Justices RF Nariman and BR Gavai also disapproved of the approach of the High Court, where it integrated Section 115 of CPC and Section 34 of the Arbitration Act and stated that Section 115 gives authority to the Court to make orders as it deems fit, whereas it is not the case under Section 34.

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