An arbitrator lacks jurisdiction to enhance compensation under Section 34 of the Arbitration and Conciliation Act, reaffirmed by precedent.

Competent Authority for Land Acquisition, (National Highways-7) Collectorate Buildings, Madurai-625 020. ... Respondents PRAYER : Arbitration Appeal is filed under Section 37 (1) and 2 of Arbitration and Conciliation Act, 1996 , praying this Court to call for the record and set aside the order made in Arbitration O.P.No.27 of 2013, dated 23.10.2024 on the Principal District Judge, Madurai.

For Petitioner : Mr.P.Karthick For Respondent : Mr.M.Lingadurai, (for R5)

Special Government Pleader, No appearance (for R1 to R4)

ORDER

This arbitration appeal is filed before this Court against the award passed by the learned Principal District Judge, Madurai, in Arbitration O.P.No.27 of 2013, dated 23.10.2024.

2.Even though notice has been served to the respondents 1 to 4, none appeared on behalf of them.

3.The only contention raised by the appellant before this Court is that the arbitrator is not having power to enhance the compensation, for which, he relied the judgment passed by the Hon'ble Division Bench of this Court in Arb Appeal(MD).No.44 of 2025, dated 16.04.2025, wherein it is held as under:

3.The only question that calls for determination is whether the District Judge could have enhanced the compensation amount and thus modified the arbitral award while exercising jurisdiction under Section 34 of the Act. We are conscious that the issue is presently pending reference before the Hon'ble Constitution Bench of Supreme Court of India in Gayathri Balasamy Vs M/s.ISG Novasoft Technologies Limited case. Orders have been reserved. But the position that prevailed on the date when the impugned orders under Section 34 was passed was that modification cannot be made.

4.We, therefore, hold that the impugned order is clearly bad in law. We are therefore inclined to set aside the same and we accordingly set aside the same.

5.The learned counsel appearing for the NHAI, on instructions from NHAI, submitted that this Court may adopt the very same approach adopted in C.M.A.No.2763 of 2023 dated 15.12.2023 by the Hon'ble Division Bench of this Court. He has no objection for setting aside the arbitral award impugned in the petition filed under Section 34 of the Act. Accordingly, the award passed by the District Collector is also set aside. The matter is remitted to the file of the arbitrator (jurisdictional District Collectors). The arbitrator shall conclude the proceedings within four months from the date of receipt of a copy of this order. The erstwhile land owners are entitled to plead that the arbitrator shall apply the principle of parity. NHAI is also entitled to place materials in support of their contention that the compensation amount does not deserve to be enhanced as claimed by the erstwhile land owners. In the event of the Hon'ble Supreme Court while answering the reference in Gayathri Balasamy holding that the District Court is entitled to modify the awards in exercise of jurisdiction under Section 34 of the Arbitration and Conciliation Act, the respondents herein are given liberty to reopen these proceedings. If any application is filed, we make it clear that this Arbitration Appeal will stands reopened and the matter will be heard on merits.

6.This Arbitration Appeal is allowed accordingly. There shall be no order as to costs. Consequently, connected miscellaneous petition is closed.

4.The issue raised in this appeal has already been settled by the Division Bench of this Court in Arbitration Appeal (MD).No.44 of 2025, dated 16.04.2025. Therefore, this Court is of the considered opinion that the arbitrator has no power to enhance the compensation.

5.Accordingly, this arbitration appeal is allowed by remitting the matter back for reconsideration to the learned Principal District Judge, Madurai. The said