Court cannot reduce rate of interest awarded in an arbitration award and is powerless to modify award and can only set aside partially or wholly – M/s. Larsen Air Conditioning and Refrigration Company Vs. Union of India & Ors. – Supreme Court

The question in this case is whether the High Court erred in modifying the arbitral award to the extent of reducing the interest, from compound interest of 18% to 9% simple interest per annum. Hon’ble Supreme Court held that: (i) There is little to no reason, for the High Court to have interfered with the arbitrator’s finding on interest accrued and payable. (ii) Unlike in the case of the old Act, the court is powerless to modify the award and can only set aside partially, or wholly, an award on a finding that the conditions spelt out under Section 34 of the 1996 Act have been established. (iii) The old Act contained a provision which enabled the court to modify an award. However, that power has been consciously omitted by Parliament, while enacting the Act of 1996. (iv) The limited and extremely circumscribed jurisdiction of the court under Section 34 of the Act, permits the court to interfere with an award, sans the grounds of patent illegality. The other ground would be denial of natural justice. (v) In appeal, Section 37 of the Act grants narrower scope to the appellate court to review the findings in an award, if it has been upheld, or substantially upheld under Section 34.

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