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What is the news?
- The Supreme Court has recently quashed a Madras High Court verdict on the court’s power to set aside an arbitration award under Section 34 of the Arbitration act.
- The High Court had held that the court’s powers to “set aside” an arbitral award also included the power to modify.
About the Case:
- The court passed the order on an appeal filed by the Centre against the HC order.
- The solicitor general said that the Arbitration Act, 1996 was based on the UN Commission on International Trade Law’s Model Law on International Commercial Arbitration, 1985.
- It has specifically restricted the grounds of challenge and the consequent remedy, which is only to set aside or remit in limited circumstances.
Why did the SC quash HC’s verdict?
- As per SC, including the power to modify an award in section 34 would be an encroachment in the domain of the legislature, thereby violating the separation of powers.
- In interpreting a statutory provision, a judge must put himself in the shoes of the Parliament and then ask whether Parliament intended this result.
- The Parliament had very clearly intended that no power of modification of an award existed in section 34 of the Arbitration Act.
- The bench said it is only for the Parliament to amend the provision in the light of the experience of courts in the working of the Arbitration Act, 1996.