Section 34 of the Arbitration Act: Supreme Court’s Stand on Modifying an Award under Section 34

Introduction

The Supreme Court recently delivered a significant judgment on the modification of an award under Section 34 of the Arbitration & Conciliation Act, 1996. The case is referred to as S.V. Samudram Vs. State of Karnataka and Anr.

The Case and Its Context

The Hon’ble Bench, presided over by Mr. Justice Abhay Shreeniwas Oka and Mr. Justice Sanjay Karol, examined the provisions of the Arbitration & Conciliation Act, 1996, specifically Section 34 and Section 37.

The Judgment on modify an award under Section 34

The Court held that:

1. The position as to whether an arbitral award can be modified in the proceedings initiated under Sections 34/37 of the A&C Act is no longer res integra.
2. The Court categorically observed that any attempt to “modify an award” under Section 34 would amount to “crossing the Lakshman Rekha”.
3. It is a settled principle of law that arbitral proceedings are per se not comparable to judicial proceedings before the Court.
4. It is also a settled principle of law that an award passed by a technical expert is not meant to be scrutinised in the same manner as is the one prepared by a legally trained mind.
5. Observation of the court, advisory in nature, for the contractor to have commenced the work for one part of the contract is unwarranted and uncalled for, in fact perverse.
6. For it is no business of the Court to consider the burden on the exchequer.
7. Accounting for the legal position, the court could have at best set aside the award and could not modify the same.
8. The Court under Section 37 had only three options:- (a) Confirming the award of the Arbitrator; (b) Setting aside the award as modified under Section 34; and © Rejecting the application(s) under Section 34 and 37.

Conclusion on Section 34 of the Arbitration Act

This judgment provides valuable insights into the interpretation of Section 34 of the Arbitration & Conciliation Act, 1996. It underscores the importance of understanding the nature of arbitral proceedings and the role of the Court in scrutinizing an award. The ruling serves as a crucial reminder for all stakeholders in the arbitration process to adhere to the principles and procedures laid down by the law.