COURTS CAN ONLY SET ASIDE AN AWARD AND REMIT THE MATTER BACK TO THE TRIBUNAL: (NATIONAL HIGHWAYS AUTHORITY OF INDIA v SRI P NAGARAJU & ANR)1
An arbitral award can be set aside under §34 of the Arbitration and Conciliation Act 1996 on limited grounds and a further appeal lies under §37. The Supreme Court has recently held that if such challenges are successful, then the Court cannot modify the award but only set aside the award and remand the matter back to the Tribunal.
Facts
Notifications were issued under the National Highways Act 1956 (NH Act) for land acquisition pursuant to which a Special Land Acquisition Officer was appointed to determine the compensation for land acquired. Disputes arose between the Respondents and the Appellant in relation to quantum of the compensation payable. As per §3G(7) of the NH Act, an arbitrator was appointed to determine compensation. The arbitrator increased the amount of compensation to be paid to the Appellant. In appeal, both the District and Sessions Court as well as the Karnataka High Court upheld the award. The Appellant then approached the Supreme Court.
Decision
The Supreme Court allowed the appeal and relied on National Highway Authority of India v M Hakeem & Anr2. The Supreme Court held that since the scope of interference by a court is limited, it would not be open to the court to modify an award and alter the compensation payable. The appropriate course to be adopted in such event is to set aside the award and remit the matter back to the Tribunal in terms of §34(4) of the Act.
Conclusion
In a challenge to an arbitral award, a court cannot modify the award but can only set it aside and remit the matter back to the Tribunal.
Footnotes
1. Decision dated 11 July 2022 passed by the Supreme Court in Civil Appeal No. 4671 of 2022
2. 2021 SCC OnLine SC 473
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