Trial Court's Overreach in Modifying Arbitral Award Reversed, Case Remanded for Fresh Consideration
In a significant ruling, the Karnataka High Court (Dharwad Bench) has set aside a judgment by the Principal District and Sessions Court, Haveri, which had modified an arbitral award in a land acquisition dispute involving the National Highways Authority of India (NHAI). The High Court, comprising Justices S. Sunil Dutt Yadav and K.G. Shanthi, emphasized that under Section 34 of the Arbitration and Conciliation Act, 1996, a court does not have the jurisdiction to modify an arbitral award but can only confirm or set it aside.
The case arose from the acquisition of lands at Devagiri-Yellapur village for a four-lane project by NHAI. Dissatisfied with the compensation awarded, the claimants had moved the arbitrator, who ruled in their favor. However, NHAI challenged the arbitrator's decision before the trial court, which later modified the award. The landowners subsequently sought a review, leading to further complications.
The High Court's decision to annul the trial court's modification aligns with prior judgments by the Supreme Court, including the landmark case of Project Director, National Highways Authority of India v. M. Hakeem, which clarified the limited remit of Section 34. The judges reiterated that any attempt to modify an arbitral award under this section amounts to judicial overreach, or "crossing the Lakshman Rekha."
The court's decision underscores the principle that arbitral awards can only be set aside on specific grounds such as contravention of public policy or patent illegality, but not altered or revised. The matter has been remanded for fresh consideration, reinforcing the judiciary's adherence to the statutory framework governing arbitration.
Bottom line:-
Arbitration - Court under Section 34 of Arbitration and Conciliation Act, 1996 has no jurisdiction to modify arbitral award; can only confirm or set aside the award and remand the matter back to arbitrator.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Section 34
