Arbitration: India

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The powers of the courts

Courts can’t modify arbitral awards: SC

July 22, 2021: The Times of India

The Supreme Court has said that a judge, while interpreting a law, should try to understand the intent of legislative bodies and quashed the Madras HC verdict which had held that the court’s powers to “set aside” an arbitral award under the arbitration law would also include the power to modify.

“Quite obviously if one were to include the power to modify an award in section 34 (Arbitration Act), one would be crossing the Lakshman Rekha... In interpreting a statutory provision, a judge must put himself in the shoes of the 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,” a bench of Justices R F Nariman and B R Gavai said.

The bench said it is only for the Parliament to amend the provision in the light of the experience of courts in the working of the Arbitration Act, 1996, and bring it in line with other legislations the world over.

The court passed the order on an appeal filed by the Centre against the HC order. Solicitor General Tushar Mehta said the Arbitration Act, 1996, being based on the UN Commission on International Trade Law’s Model Law on International Commercial Arbitration, 1985, has specifically restricted the grounds of challenge and the consequent remedy, which is only to set aside or remit in limited circumstances.

The case pertains to the litigation on land acquisition for national highways 45 and 220. The bench, however, dismissed the appeal on facts. “Givenhat in several similar cases, NHAI has allowed similarly situated persons to receive compensation at a higher rate than awarded, and given the law laid down in Nagpur Improvement Trust, we decline to exercise our jurisdiction under Article 136 in favour of appellants on the facts of these cases,” the bench said.

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