Court cannot modify award of arbitrator: SC

SC said it is only for Parliament to amend the aforesaid provision and bring it in line with other legislations.
Supreme Court (Photo| EPS)
Supreme Court (Photo| EPS)

NEW DELHI:  The power of a court under the provision of the Arbitration and Conciliation Act, 1996 to “set aside” an award of an arbitrator does not include the power to modify such an award, the Supreme Court said on Tuesday.

A bench of Justice R F Nariman and B R Gavai said 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.

“Quite obviously if one were to include the power to modify an award in Section 34 of the Act, 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,” the bench said.

The top court said that,“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.

" The apex court was hearing an appeal against the order of Division Bench of the Madras High Court which held that at least insofar as arbitral awards made under the National Highways Act, 1956, Section 34 of the Arbitration Act must be so read as to permit modification of an arbitral award made under the National Highways Act so as to enhance compensation awarded by a Arbitrator.

The top court noted that arbitral awards in these cases are given by a government servant appointed by the Central Government, the result being the rubber stamping of compensation awarded on a completely perverse basis.

"Given the fact that, in these petitions at least, the constitutional validity of the NH Amendment Act, 1997 has not been challenged, we must proceed on the basis that grave injustice would be done if we were to interfere on facts, set aside the awards and remand the matter to the very government servant who took into account depressed land values which were relevant for purposes of stamp duty only," it said.

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