Summary
In this 2021 decision, the Court held that Section 34 did not authorise modification of an arbitral award, including a compensation award under the National Highways Act. It rejected the High Court’s contrary legal reasoning. Nevertheless, it dismissed NHAI’s appeals on the facts: the awards relied perversely on guideline values, similarly situated owners had received enhanced compensation without challenge, and a fresh arbitration after seven to ten years would cause injustice.
Issues
- Whether Section 34 permitted a court to modify an arbitral award to enhance compensation under the National Highways Act.
- Whether the Supreme Court should nevertheless leave the enhanced compensation undisturbed in exercise of its discretionary jurisdiction.
Provisions considered
- Section 34, particularly subsections (1) and (4), Arbitration and Conciliation Act, 1996The Court construed the provision in this decision as permitting setting aside on limited grounds and an appropriate opportunity for the tribunal to cure defects, rather than judicial modification of the award. (¶¶ 13, 14, 17, 21, 23, 29, 39, 40, 41, 42, 46)
- Section 3G(5), (6) and (7), National Highways Act, 1956Statutory appointment of the arbitrator by the Central Government did not enlarge Section 34 jurisdiction; compensation still required consideration of market value and the other prescribed factors. (¶¶ 10, 12, 42, 47, 48, 53)
- Article 136, Constitution of IndiaDespite correcting the legal position, the Court declined discretionary interference with the compensation actually awarded on the particular facts. (¶¶ 47, 48, 54, 55, 56, 57, 58)
Held
- Section 34 was treated as a limited supervisory remedy, rather than a merits appeal. Subsection (4) allows the tribunal an opportunity to eliminate grounds for setting aside, rather than allowing the reviewing court itself to determine and enhance the award. The non-consensual character of statutory highway arbitration did not change that interpretation. (¶¶ 13, 14, 17, 21, 23, 25, 29, 39, 40, 42, 46)
- The contrary reasoning in Gayatri Balaswamy was rejected and the Single Judge decision overruled. Supreme Court orders modifying awards without deciding this statutory question, including exercises of Article 142 power, did not establish a Section 34 power of modification. (¶¶ 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 41)
- The compensation awards perversely adopted guideline values relevant to stamp duty instead of sale deeds reflecting market value. The constitutional validity of the 1997 amendment was not challenged, and the Court did not decide that wider issue. (¶¶ 47, 48, 53, 54, 55, 56, 57)
- NHAI had accepted enhanced compensation in similar acquisitions. In light of that unequal treatment and the seven-to-ten-year lapse since most awards, the Court declined interference under Article 136 and refused to send the owners to a fresh statutory arbitration. The appeals were dismissed on facts despite rejection of the High Court’s legal reasoning. (¶¶ 57, 58)
Result
Appeals dismissed on facts, with no order as to costs; the High Court’s interpretation permitting modification under Section 34 was rejected.