In FAO No. 1383 of 2017 (O&M)-PUNJ HC- There is no power u/s 34 of Arbitration & Conciliation Act to modify arbitral award, reiterates P&H HC while remitting matter for deciding objections u/s 34 afresh
Justice Avneesh Jhingan [01-03-2023]

Read Order: MARKFED REFINED OIL AND ALLIED INDUSTRIES VS M/S SAVI ENGG. PRIVATE LIMITED AND ANOTHER

Mansimran Kaur

Chandigarh, March 2, 2023: The Punjab and Haryana High Court has allowed an appeal against a decision modifying an arbitral award while reiterating that there is no power under Section 34 of the  Arbitration and Conciliation Act, 1996 Act to modify the arbitral award.

The brief facts of this case, before the Bench of Justice Avneesh Jhingan, were such that the appellant placed an order for supply of machinery/equipment, its erection, commissioning and handling for expanding the capacity of 30 TPD to 50 TPD. The terms and conditions agreed between the parties provided for dispute resolution through an arbitration mechanism. The dispute between the parties was referred to the arbitrator. 

The proceedings culminated in an award dated December 22, 2014.  The objections under Section 34 of the Arbitration and Conciliation Act, 1996 filed by the first respondent were partially accepted and the award was modified. In view of the same, the appeal was preferred. 

After considering the submissions, the Court noted that the issue as to whether an arbitral award can be modified or not even if certain objections are under Section 34 of the Act, the award could not be modified is no longer res integra. 

Reference was made to the case of  Kinnari Mullick and another v. Ghanshyam Das Damani wherein the Supreme Court held, “...if the party to the arbitration proceedings fails to request the Court to defer the proceedings pending before it, then it is not open to the party to move an application under Section 34(4) of the Act. For, consequent to disposal of the main proceedings under Section 34 of the Act by the Court, it would become functus officio. In other words, the limited remedy available under Section 34(4) is required to be invoked by the party to the arbitral proceedings before the award is set aside by the Court”. 

Further reference was placed on the case of  Radha Chemicals v. Union of India, 2019(1) Apex Court Judgments (SC) 330,wherein the Supreme Court held, “ This court in a series of judgments culminated in Kinnari Mullick and another v. Ghanshyam Das Damani, held that the court while deciding a Section 34 petition has no jurisdiction to remand the matter to the Arbitrator for a fresh decision. It is, therefore, clear that the learned Single Judge's judgment is contrary to this judgment as a result of which both the judgments of the Single Judge as well as the Division Bench have to be set aside.”

Also relying on the case of Dakshin Haryana Bijli Vitran Nigam Ltd. v. Navigant Technologies Pvt. Ltd, the Apex Court had held, “...there is no power under Section 34 of the Act to modify the arbitral award”. 

Hence, in view of the above cited precedents, the Court was of the opinion that the impugned order needs to be set aside. The matter was thus remitted back for deciding the objections under Section 34 of the Act afresh, in accordance with law and the appeal was accordingly allowed.