Courts under Section 34 Cannot Modify Arbitral Awards: Delhi High Court
In a significant ruling on November 2, 2023, the High Court, comprising of Justices YASHWANT VARMA and DHARMESH SHARMA, emphasized the limited scope of interference with arbitral awards under the Arbitration and Conciliation Act, 1996.
The case revolved around an appeal by the National Projects Constructions Corporation Ltd. (NPCC) against a judgment that partially set aside an arbitral award concerning liquidated damages. The appellant and respondent, M/S AAC India Pvt. Ltd., had entered into an agreement for the installation of a Fire Protection System. Due to project delays, the matter went into arbitration.
In its observation, the Court stated, “The jurisdiction under Section 34 is neither appellate nor revisional,” underscoring that an award can only be set aside on limited grounds specified in the Act. The Court further highlighted that there is no power vested in the Court to modify an award under Section 34.
The High Court also scrutinized the contractual clauses related to liquidated damages. It found that the learned ADJ had misconstrued evidence and correspondence between the parties. The Court observed, “The finding given by the learned ADJ that imposition of LD was only being negotiated upon is absolutely flawed.”
High Court set aside the order of the learned ADJ to the extent it struck down the award dated 29 August 2016 regarding payment of liquidated damages. The award passed by the Arbitrator was upheld in its entirety.
The ruling is expected to have significant implications for arbitration proceedings and the scope of judicial interference in such matters.
Date of Decision: o2 November 2023
NATIONAL PROJECTS CONSTRUCTIONS CORPORATION LTD. (NPCC) VS M/S AAC INDIA PVT. LTD.
