SECTION 34 OF THE ARBITRATION ACT GIVES NO AUTHORITY TO CHANGE AN ARBITRAL AWARD- THE APEX COURT


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In the case of Project Director, National Highways vs. M. Hakeem the court was considering NHAI’s appeals against a Madras High Court decision that held that, at least insofar as arbitral awards made under the National Highways Act, 1956 are concerned, Section 34 of the Arbitration Act, 1996 must be read in such a way as to allow modification of an arbitral award made under the National Highways Act in order to increase compensation awarded by an Arbitrator. One of the questions raised in the appeal was whether a court’s ability to set aside” an arbitrator’s decision under Section 34 of the Arbitration and Conciliation Act also included the jurisdiction to alter such an award. The main argument of NHAI was that a court’s limited power under the said Section is completely different from an appellate court’s power under the Land Acquisition Act, and thus such power is limited to either setting aside or remitting the award to the arbitrator under Section 34(4) in order to eliminate any challenge under Section 34.
In response to this argument, the bench pointed to Section 34, noting that it only allows for the setting aside of awards on extremely limited grounds, as specified in sub-sections (2) and (3) of Section 34. A reading of the stated clauses suggests that an application can only be made to set aside an award, given the restricted grounds of challenge under sub-sections (2) and (3). This becomes even easier to understand when we look at subsection (4), which states that if the court receives an application under subsection (1) of Section 34, it may adjourn the Section 34 proceedings and give the arbitral tribunal the opportunity to resume the arbitral proceedings or take such action as will remove the grounds for setting aside the arbitral award. The court further pointed out that under Sections 15 and 16 of the Arbitration Act, 1940, the court has the authority to amend or correct an award in the conditions set forth in Section 15, as well as the authority to remit the award under Section 16. A Section 34 process, on the other hand, does not include any challenge to the award’s merits, according to the bench. Referring to various judgements on this aspect the court noted that even if the judicial trend appears to favour an interpretation that reads into Section 34 the power to modify, revise, or vary the award, it would be ignoring the previous law contained in the 1940 Act, as well as the fact that the 1996 Act was enacted based on the UNCITRAL Model Law on International Commercial Arbitration, 1985, which, as pointed out in Redfern, was enacted based on the UNCITRAL Model Law on International Commercial Arbitration, 1985. The court also rejected the High Court’s approach of combining Section 34 authority with Section 115 of the Code of Civil Procedure, 1908’s revisional jurisdiction. Assimilation of Section 34 jurisdiction with Section 115 of the Code of Civil Procedure, 1908 (the “CPC”) revisional jurisdiction is also incorrect. Section 115 of the CPC specifically outlines the three grounds for a revision, followed by the statement that the High Court may make whatever ruling it sees suitable.
Given the legislative architecture of the Arbitration Act of 1996, these last sentences are omitted from Section 34.

SAAMYA GAUTAM
UNIVERSITY OF LUCKNOW


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Manish Tiwari

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