The functus officio rule that killed three arbitral awards in one hearing.

When an Arbitrator Changed His Mind Three Times, the High Court Said: Stop.

The National Highways Authority of India needed land to widen NH-29 between Varanasi and Gorakhpur. It acquired plots from several landholders. The compensation was fixed. The landholders objected. An Arbitrator was appointed. What followed was not arbitration — it was a one-man show of second-guessing, recall, and revision. By the time the dust settled, the Arbitrator had passed three contradictory awards, recalled his own decision, and left the NHAI with no choice but to appeal all the way to the High Court of Judicature at Allahabad.

The stakes were not small. The NHAI faced paying compensation at a uniform rate — a figure the Arbitrator had himself fixed, then recalled, then re-fixed. The landholders, meanwhile, had been waiting since 2016 for a final determination. Everyone lost time. Everyone lost certainty. And Justice Shekhar B. Saraf, sitting singly, had to answer one question: can an arbitral tribunal change its award after it has been rendered?

The Acquisition That Started It All

On an unspecified date, a notification under Section 3A(1) of the National Highways Act, 1956 was issued for the acquisition of land for widening NH-29. The Competent Authority under the Act passed an award on August 17, 2016, determining the compensation payable to the landholders. Dissatisfied, the landholders challenged the award before an Arbitrator under Section 3G(5) of the same Act.

The Arbitrator, on March 15, 2018, set aside the award and remanded the matter for re-valuation by a Joint Committee, directing that the valuation be done in accordance with Act No. 30 of 2013. That order attained finality — neither side challenged it.

The Joint Committee submitted its report. On June 4, 2018, the Competent Authority passed a fresh award. Still, the landholders were not satisfied. The matter went back to the Arbitrator.

The Consent That Unravelled

On November 15, 2018, something unusual happened. The NHAI agreed to pay compensation at three different rates depending on the location of the land. This was recorded as a consent order. Both sides appeared to have reached a workable compromise.

Then the Arbitrator passed an award on December 27, 2019, fixing the compensation exactly as per those three slabs. That should have been the end.

It was not.

The Recall That Broke the Rules

On May 19, 2020 — nearly five months later — the Arbitrator passed another award. This time, he recalled his own award of December 27, 2019. He directed that payment be made in accordance with an amended award dated March 25, 2018. That amended award, however, had never been produced. The Arbitrator was effectively rewriting history.

Then, on May 28, 2020, the Arbitrator passed a third award. This one fixed a uniform rate for all landholders — discarding the three-slab structure the NHAI had consented to.

The NHAI had had enough.

The Section 34 Court That Saw the Problem but Did Nothing

The NHAI moved an application under Section 34 of the Arbitration and Conciliation Act, 1996 before the District Judge, Mau. The District Judge, in an order dated November 5, 2020, acknowledged that the Arbitrator had acted improperly. The judge noted that the Arbitrator had no power to recall or modify his own award. Yet, the District Judge dismissed the NHAI's challenge.

Why? The judgment does not record a clear reason. The District Judge appears to have taken the view that since the net result — a higher compensation — was not entirely unreasonable, the procedural impropriety could be overlooked. That was a mistake.

The High Court's Core Finding: Functus Officio Is Not Optional

The NHAI appealed under Section 37 of the Arbitration Act. Justice Saraf examined the record and found that the Arbitrator had crossed a line that no arbitral tribunal is permitted to cross.

The Court reproduced Section 33 of the Arbitration Act in full. That provision allows an arbitral tribunal to do only three things after rendering an award: correct computational, clerical, or typographical errors; give an interpretation of a specific point upon a party's request; or make an additional award for claims that were presented but omitted from the award. That is the entire menu. There is no item called "recall the award and start over."

The Court held that the awards dated December 27, 2019, May 19, 2020, and May 28, 2020 were void ab initio. The Arbitrator had become functus officio after passing the first award. He had no jurisdiction to revisit it.

THE RULE: Once an arbitral tribunal renders an award, its jurisdiction over the dispute terminates. It cannot recall, modify, or replace that award unless Section 33 expressly permits it. Any such act is void from the start.

The Court also observed that arbitral tribunals are not courts of law. They do not possess inherent powers. They derive their authority solely from the arbitration agreement and the Arbitration Act. The principle of kompetenz-kompetenz — which allows tribunals to rule on their own jurisdiction — does not grant them a roving licence to do whatever they please.

Why the District Judge's Order Could Not Stand

The High Court was blunt about the Section 34 court's failure. When a court recognizes that an arbitrator has acted beyond statutory authority, it has a duty to intervene. Dismissing the challenge merely because the outcome appeared acceptable undermines the integrity of the arbitral process. The District Judge, Mau, had noted the impropriety but done nothing about it. That was an error that required correction.

The Court set aside the District Judge's order of November 5, 2020, along with all three arbitral awards. The matter was remanded to the Arbitrator for a de novo decision, to be rendered within six months, taking into account the order dated March 15, 2018 and the report submitted pursuant to it.

What This Means for Practitioners

This judgment is a clean, sharp reminder of a rule that is often forgotten in the heat of litigation: an arbitral tribunal cannot keep changing its mind. Once an award is pronounced, the tribunal is done. It cannot recall it. It cannot modify it. It cannot replace it with a better version.

For advocates representing parties in arbitration, the takeaway is simple. If the opposing side's arbitrator attempts to revisit a concluded award, move immediately under Section 34. Do not wait for a third or fourth award. The High Court has now made it clear that such awards are void ab initio — they have no legal existence from the moment they are passed.

For CFOs and founders, the message is equally important. Arbitration is supposed to bring finality. If your arbitrator starts issuing multiple awards, recalling them, and issuing new ones, you are not in arbitration anymore. You are in a loop. The High Court has now given you a tool to break that loop: an appeal under Section 37, relying on the principle of functus officio.

The Bottom Line

An arbitral tribunal that recalls or modifies its own award without statutory authority acts without jurisdiction, and any court that notices this impropriety must set aside the award — not look the other way.