Can A Court U/S 34 & 37 Of Arbitration & Conciliation Act Modify An Arbitral Award? Supreme Court Larger Bench To Examine

Accordingly, the special leave petitions challenging an order of the Madras High Court were directed to be placed before the Chief Justice of India for referring this matter before a larger bench.

A bench of Justice Dipankar Datta, Justice K.V. Viswanathan and Justice Sandeep Mehta observed, “Whether or not the Courts in exercise of power under sections 34 or 37 of the Arbitration and Conciliation Act, 1996 are empowered to modify an arbitral award is a question which frequently arises in proceedings not only before this Court but also before the High Courts and the District Courts. While one line of decisions of this Court has answered the aforesaid question in the negative, there are decisions which have either modified the awards of the arbitral tribunals or upheld orders under challenge modifying the awards. It is, therefore, of seminal importance that through an authoritative pronouncement clarity is provided for the guidance of the Courts which are required to exercise jurisdiction under the aforesaid sections 34 and 37, as the case may be, day in and day out”.

Senior Advocate Arvind Datar appeared for the petitioners and Senior Advocate Siddharth Bhatnagar appeared for the respondents.

The bench will also consider:

-If the power to modify the award is available, whether such power can be exercised only where the award is severable and a part thereof can be modified?

-Whether the power to set aside an award under section 34 of the Act, being a larger power, will include the power to modify an arbitral award and if so, to what extent?

-Whether the power to modify an award can be read into the power to set aside an award under section 34 of the Act?

-Whether the judgment of the Supreme Court in Project Director NHAI v. M. Hakeem (2021) 9 SCC 1 followed in Larsen Air Conditioning and Refrigeration Company v. Union of India (2023) SCC Online SC 982 and SV Samudram v. State of Karnataka (2024) SCC Online SC 19 lay down the correct law, as other benches of two Judges (in Vedanta Limited v Shenzden Shandong Nuclear Power Construction Company Limited (2019) 11 SCC 465, Oriental Structural Engineers Pvt. Ltd. v. State of Kerala (2021) 6 SCC 150 and M.P. Power Generation Co. Ltd. v. Ansaldo Energia Spa (2018) 16 SCC 661) and three Judges (in J.C. Budhraja v. Chairman, Orissa Mining Corporation Ltd. (2008) 2SCC 444 , Tata Hydroelectric Power Supply Co. Ltd. v. Union of India (2003) 4 SCC 172 and Shakti Nath v. Alpha Tiger Cyprus Investment No.3 Ltd. (2020) 11 SCC 685) of this Court have either modified or accepted modification of the arbitral awards under consideration.

In M. Hakeem, it was held that no power of modification of an award exists in Section 34 of the Arbitration Act. It is only for Parliament to amend the provision in the light of the experience of the courts in the working of the Arbitration Act, 1996, and bring it in line with other legislations the world over. The court noted that there are three judges bench judgments which have either modified or accepted modification of the arbitral awards under consideration.

Appearance:

Petitioners: Senior Advocate Arvind Datar, Advocates M.V Mukunda, Hina Shaheen, Mithun Shashank, M.V Swaroop, Hredai Sriram, AOR Nishanth Patil

Respondents: Senior Advocate Siddharth Bhatnagar, Advocates Debmalya Banerjee, Manmeet Kaur, Rohan Sharma, Gurtej Pal Singh, Abhishek Rana, Ananya Khanna, Aditya Sidhra, AORM/S. Karanjawala & Co.

Cause Title: Gayatri Balasamy v. M/S Isg Novasoft Technologies Limited