Judgement Name: Project Director, National Highways v. M. Hakeem & Anr.

Citation: Special Leave Petition (Civil) No. 13020 of 2020

Court: Supreme Court of India

Coram: Rohinton F. Nariman & B. R. Gavai, JJ.

Date: 20th July 2021

Keywords: Modification of Arbitral Award, Section 37, Section 34(4)

Overview

The order of the Madras High Court, which disposed of a number of petitions under Section 37 of the Arbitration and Conciliation Act (“Act”), stated that an arbitral award can be modified by the courts under Section 34 of the Act when read with the provisions of the National Highways Act (“N.H.A.”). The Supreme Court adjudicated on the matter and stated that an order could not be modified under the Section. This is because the grounds for setting aside awards are limited and are contained in sub-sections (2) and (3) of Section 34.

Facts

The Supreme Court, in Project Director, National Highways v. M. Hakeem & Anr., heard several civil appeals and adjudicated on whether an award can be modified by a civil court under Section 34 of the Act. The case concerned the notifications which were issued from the year 2009 onwards, under the N.H.A. and the awards which were passed by a Special District Revenue Officer under the same. The compensation was determined as per Section 3G of N.H.A., and all the awards were made on the lands’ ‘guideline value’ instead of the sale deeds of similar lands. Hence, the authority granted an extremely low amount as compensation in all the cases. As the District Collector is an appointee of the government, no infirmity was found in the awards made by him. Therefore, the same amount of compensation was granted to each claimant. When the claimants filed a petition before the District Judge under Section 34 of the Act, the amounts were enhanced, and the award set by the Collector was modified under Section 34 of the Act.

The Madras High Court disposed of the appeals filed under Section 37 of the Act, stating Section 34 of the Act needs to be read while modifying the award passed under the N.H.A., at least, to enhance the awards passed by the Arbitrator. The modifications were upheld by the High Court, and a remand order was passed to adjudicate the compensation for crops and trees on the lands. However, when the case was presented before the Supreme Court, it was argued that Section 34 of the Act does not grant jurisdiction like the one allocated to the appellate Court under the Land Acquisition Act. It was held that the Court is entitled to only set aside the award or remit it to the arbitrator under Section 34(4) of the Act.

Issue

Whether the power of a court under Section 34 of the Act to “set aside” an award of an arbitrator would include the power to modify such an award?

Decision

The Apex Court stated that Section 34 of the Act is not an appellate provision and only allows the setting aside awards on limited grounds. Such as those under Section 34(2) and (3). The Section mentions that a “recourse” against an award can only be available by an application made under the above-mentioned provisions. The Court stated that as per Section 34(4) and (1) of the Act, the “recourse” granted is also limited as the arbitral tribunal seems to get an opportunity to resume the proceedings, after an adjournment passed by the Civil Court and adjudicate on the grounds of setting aside the award. Therefore, making the opinion of the tribunal paramount with respect to Section 34 of the Act. The Court pointed out that the Act has been developed on the basis of the UNCITRAL Model Law and the limited remedy under Section 34 is “coterminous” with the “limited right”, that is, the Section allows setting aside the award, or remanding it under the Section.

The Court stated that Section 34 of the Act and the revisionary jurisdiction under Section 115 of the Code of Civil Procedure, 1908 (“C.P.C.”) could not be equated. Section 115 of the C.P.C. states three grounds for revision and explains that a revision may be allowed if the High Court deems fit. The Apex Court stated that these words are missing in Section 34 of the Act and hence cannot be applicable. The Court goes on to specify that the inclusion of the powers of modification under Section 34 of the Act would mean “crossing the Lakshman Rekha”. The Court stated that the judge needs to think from the perspective of the Parliament while imagining the intended result. Hence, it is the duty of the Parliament to align the provisions of the Act with those around the world and explicitly allow modification under the said Section.