A single Bench of Justice Vinod Chatterji Koul while dealing with Cross appeals against the judgment passed by the trial court under Section 34 of Arbitration and Conciliation Act has held that the court while dealing with a portion under Section 34 or Appeal under section 37 of the Act has no power or jurisdiction to Modify an Arbitral Award.
The Moot question before the Court was “Whether the Court below in an application under section 34 of J&K Arbitration Act can modify an Arbitral Award?”
While answering the said question in negative the court observed that the law about modifying an Award has been settled by the Supreme Court in a catena of cases; some of which are: National Highways Authority of India v. M. Hakeen and another, (2021) 9 SCC 1 ; Dakshin Haryana Bijli Vitran Nigam Limited v. Navigant Technologies Private Limited, (2021) 7 SCC 667 ; National Highways Authority of India v. Sri P. Nagaraju @ Cheluvaiah & another, 2022 LiveLaw (SC) 584 ; M/s Larsen Air Conditioning and R e frig e ration Company v. Union of India and others,2023 LiveLaw (SC) 631; Civil Appeal No.8067 of 2019 titled as S. V. Samudram v. State of Karnataka dated 4 th January 2024 . It has been expounded that even if an error is found in the award, it would not be possible for the Court entertaining the petition under Section 34 or for the appellate court under Section 37 of the Act, to modify the award. Holding further that any court under Section 34 would have no jurisdiction to modify the arbitral award, which at best, given the same to be in conflict with the grounds specified under Section 34 would be wholly unsustainable in law and any attempt to “modify an award” under Section 34 would amount to “crossing the Lakshman Rekha ”. It has also been held that where the court sets-aside an award passed by arbitral tribunal, the underlying disputes would require to be decided afresh in an appropriate proceeding. Under Section 34, the court may either dismiss objections filed, and uphold the award, or set-aside the award if the grounds contained in Subsections (2) and (2-A) of Section 34 are made out. There is no power to modify an arbitral award. The court cannot correct errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired.
The court while referring to the judgement of Supreme Court in “ONGC Ltd vs Saw pipes Ltd (2003) 5 SCC 705” observed that an award could be set aside if it is patently illegal, and if it is contrary to fundamental policy of Indian law or the interest of India or justice or morality and that the illegality must go to the root of the matter. Further, the Award could be set aside if it is so unfair and unreasonable that it shocks the conscience of the court.
The court while taking note of the fact that the court below in exercise of jurisdiction under section 34 has modified the award, which view of the Law laid down as above could not have been done, set aside the judgement and reminded the matter back to the court below to decide the matter in light of settled legal position .
