Courts cannot amend or modify arbitral awards

In an appeal against the impugned judgment of a court under section 34 of Arbitration and Conciliation Act, 1996, the Hon’ble Delhi High Court held that it cannot amend or modify an Arbitral Award nor can it give additional reliefs, it can only set aside the award.

In the recent case of Angel Broking Ltd. v Sharda Kapur LNIND 2017 DEL 1568, the Hon’ble Delhi High Court was faced with two appeals, both by the original claimant and the respondent against the impugned judgment of the court below, in the proceedings under section 34 of the Arbitration and Conciliation Act, 1996. The FAO No. 435/2016 was filed by Angel Broking Ltd. (the appellant in FAO No. 435/2016) impugning the judgment dated 06.05.2016 of the court below which while dismissing the objections filed by Ms. Sharda Kapur under Section 34 of the Act, (the respondent in FAO No.435/2016) seeking relief of the return of the shares, granted interest at the rate of 18% per annum with annual rest w.e.f. 31.08.2012 till realization on the principal amount of INR 21,70,143/- and which relief was not granted by the arbitration award. The court below also awarded compensation of INR 5,00,000/- to the respondent Ms. Sharda Kapur, and this relief was not granted by the award.

The FAO No.492/2016 was filed by Ms. Sharda Kapur, the objector in the court below under Arbitration and Conciliation Act, 1996, s 34. Objections under this section were filed pleading that the arbitral award should not have granted the monetary amount but instead the arbitral tribunal through the award should have directed return of the shares which were illegally traded and sold by the broking firm M/s Angel Broking Ltd.

The sole issue in this case was whether the court below or the Hon’ble High Court of Delhi had power under Arbitration and Conciliation Act, 1996, s 34, to modify the award and grant additional reliefs not granted by the original award or grant the alternative reliefs which were prayed for in the arbitration proceedings but were denied in the award that was originally passed.

The Hon’ble Delhi High Court stated that it was a settled position in law that civil courts hearing objections under Arbitration and Conciliation Act, 1996, s 34, only have the power to set aside the award and thereafter, parties are free to invoke arbitration proceedings again to seek the reliefs which have been denied to them.

It was therefore, clear that the court below while passing the impugned judgment could not have granted interest and compensation which was granted in as much as this would result in the court modifying the arbitral award by granting reliefs which were not granted by the original award.

The Hon’ble Court hence, held that the court below had wrongly granted interest and compensation to Ms. Sharda Kapur by the impugned judgment and also that this court could not grant the relief sought by her in FAO No. 492/2016.

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