Court Cannot Modify Arbitral Awards or Reclassify Land under Section 34 of the Arbitration Act

The Appellant challenged an order dated September 18, 2025, passed by a Section 34 Court under the Arbitration and Conciliation Act, 1996.

The Section 34 Court had set aside an Arbitral Award dated April 4, 2024, concerning land acquisition under the Maharashtra Highways Act, 1955, on the grounds that the Award was arbitrary.

Specifically, the Section 34 Court found that the Arbitrator failed to properly consider the classification of the land (agricultural vs. non-agricultural) and the treatment of adjoining lands.

However, the Appellant contended that the Section 34 Court, instead of remanding the matter, should have modified the Award itself by applying the non-agricultural land rates to rectify the "computational error".

1. Whether a Court exercising jurisdiction under Section 34 of the Arbitration and Conciliation Act, 1996, has the power to modify an Arbitral Award or if it is restricted to setting it aside.

2. Whether the misclassification of land (agricultural vs. non-agricultural) in a statutory arbitration award constitutes a mere "computational error" amenable to correction by the Court.

Section 34 and Section 37 of the Arbitration and Conciliation Act, 1996, regarding the limited scope of judicial interference in arbitral awards.

The precedent established by the Supreme Court Constitution Bench in Gayatri Balasamy v. ISG Novasoft Technologies Limited (2025), which clarifies that the power to set aside an award under Section 34 does not include the power to modify or rewrite the award, even in cases of statutory arbitration under Acts like the National Highways Act.

The Court rejected the Appellant’s argument that the Section 34 Court should have modified the compensation amount rather than remanding the matter.

Justice Sundaresan reasoned that land classification (changing "agricultural" to "non-agricultural") is not a "computational error" but a "foundational qualitative change" to the Award.

The Court observed that the Section 34 Court properly directed a de novo consideration because resolving the dispute required leading fresh evidence on sale instances, potentiality, and factors under the 2013 Land Acquisition Act.

Following the mandate in Gayatri Balasamy, the Court held that Section 34 does not distinguish between statutory and non-statutory arbitration regarding the scope of review; thus, the Court cannot substitute its judgment for that of the Arbitral Tribunal.

The Court affirmed that judicial intervention under Section 34 is restricted to either upholding or setting aside an award, and any modification of the quantum or classification of land would be an impermissible rewriting of the award.

No intervention was warranted against the Impugned Judgment.