The Delhi High Court has held that when an Arbitral Award is challenged by the parties under Section 34 of the Arbitration and Conciliation Act, 1996, the Court is not empowered to modify the award, but can partially set aside severable parts of the Arbitral Award.
The decision in National Highways Authority of India v. Trichy Thanjavur Expressway Ltd. passed on August 21, 2023 follows the judgment rendered by the Hon’ble Supreme Court in National Highways Authority of India v. M. Hakeem dated July 20, 2021.
The Findings Of The Court On Partial Setting Aside Of The Award Were:
- The power originates from Section 34(2)(a)(iv) of the Arbitration Act. The proviso to Section 34(2)(a)(iv) is not only an acknowledgment of partial setting aside of the award but also indicates that parts of an award can be viewed as separate and distinct.
- As long as the claim is not subordinate, in the sense of being entwined/independent of another claim, a decision rendered by the Arbitral Tribunal would constitute an award in itself.
- It should not be contrary to the judgment of M. Hakeem which discussed modification of the award.
- It should not lead to a component of the award being rendered vulnerable or unsustainable, and if so, it will fall under the ambit of modification of the award and will be in conflict with M. Hakeem's judgment.
- If an award addresses multiple claims based on distinct facts, and each claim is separate, complete and self-contained, partial setting aside is allowed even if some claims are found invalid, while others stand valid.