Introduction
The Hon’ble Allahabad High Court, in a recent judgement in the case of National Highway Authority of India v. Musafir & Ors., clarified that the arbitral tribunal does not have the inherent power to recall and modify its award and can only correct and interpret it.

Facts of the Case
On 23rd January 2015, a notification was issued by the National Highways Authority of India under Section 3A(1) of the National Highways Act, 1956 (“the Act”) for the acquisition of land to widen NH-29 (now NH-24) between Varanasi and Gorakhpur, and the same was published in daily newspapers seeking objections within 21 days.

Pursuant to the objections, the Competent Authority under the Act passed an award dated 17th August 2016, which was objected to by the aggrieved parties before the Arbitrator appointed by the Central Government under Section 3G(5) of the Act. Thereafter, the Arbitrator set aside the award via an order dated 15th March 2018 and remitted the matter to the Competent Authority, directing them to form a Joint Committee (“the NHAI”) and get the concerned land re-valued and determine the compensation as per the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013. The Competent Authority then passed a fresh award dated 4th June 2018.

On 15th November 2018, the NHAI agreed to pay the compensation in three slabs depending upon the area, at the rate of Rs.3600/-, Rs.1400/-, and Rs.800/- per square meter, and the Arbitrator formalized the same by passing a fresh award dated 27th December 2019. However, the Arbitrator later “recalled” this award on 19th May 2020 and passed an “amended” award dated 28th May 2020, setting a single rate of Rs.3600/- per square meter. The NHAI challenged the award before the the District Judge, Mau in a proceeding u/s 34 of the Arbitration and Conciliation Act, 1996 (“the Arbitration Act”). Against the order of the District Judge, NHAI filed an Appeal u/s 37 of the Arbitration Act.

Issue for consideration
The issue for consideration before the Hon'ble Allahabad High Court was whether the arbitral tribunal had the power to recall and modify its award.

Court’s Analysis
The Hon’ble High Court observed that Section 33 of the Arbitration Act clearly empowers the arbitral tribunal to correct and interpret its award, however, the provision does not empower the tribunal to recall and modify its award. As per the provision, the arbitral tribunal can, “correct any computation errors, any clerical or typographical errors, or any other errors of a similar nature”. The Court further clarified that arbitral tribunals are not courts of law which are bestowed with inherent powers and that Arbitrators are required to act within the confines of the arbitration agreement, and the framework enshrined in the Arbitration Act. As a result, any act by the arbitral tribunal that it is not empowered to do under the Arbitration Act is void ab initio.

The Hon’ble Court also observed that the principle of kompetenz-kompetenz, which empowers arbitral tribunals to rule on their own jurisdiction, is not a carte blanche for unlimited authority. Rather, it underscores the tribunals' duty to determine its jurisdiction within the confines of the arbitration agreement and applicable law. The Court held that the authority of arbitral tribunals to correct, interpret, or supplement their awards does not extend to revisiting the merits of the dispute or reconsidering substantive issues that have already been decided. Arbitral tribunals are bound by the principle of functus officio, which holds that once an award has been rendered, the tribunal's jurisdiction over the dispute is terminated, and it lacks authority to revisit or modify its decision in the absence of specific statutory provisions to the contrary.

Having regard to this position, the Hon’ble Court held that the Arbitrator erred in passing the awards dated 27th December, 2019, 19th May, 2020, and 28th May, 2020, since no statutory authority empowers the arbitral tribunal to review or modify its award. Therefore, the said orders were void ab initio and were set aside, along with the order dated 5th November, 2020, passed by the District Judge, Mau. The Court, while allowing the appeal, directed the Arbitrator to decide the matter de novo.

The Hon’ble Court also expressed concern regarding the role of the judiciary in overseeing arbitral proceedings and ensuring compliance with the principles of arbitration law. In the instant case, the Section 34 Court, despite noting that such recall and modification by the Arbitrator was beyond the statutory confines and improper, proceeded to dismiss the application, which may be seen as a missed opportunity to uphold the integrity of the arbitral process. The Court was of the view that while courts generally afford deference to arbitral tribunals and uphold the finality of arbitral awards, they also have a duty to intervene when Arbitrators exceed their authority or act improperly¹.

By - Chaitanyaa Bhandarkar and Gurdev Singh Tung