The Supreme Court has decided to refer a crucial issue to a larger bench, revolving around the powers vested in the Court under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996. The specific question under scrutiny is whether these powers include the authority to modify an arbitral award. 

This decision comes in light of conflicting interpretations and decisions on this matter, creating a need for a comprehensive and authoritative clarification.

A three judge bench of Justice Dipankar Datta, Justice K.V. Viswanathan, and Justice Sandeep Mehta expressed the importance of addressing the recurrent question of whether Courts, in the exercise of their powers under Sections 34 or 37 of the Arbitration and Conciliation Act, 1996, are empowered to modify an arbitral award. 

The conflicting decisions within the judiciary have given rise to ambiguity, making it essential to establish a clear stance for the guidance of Courts at various levels.

Senior Advocate Arvind Datar represented the petitioners, while Senior Advocate Siddharth Bhatnagar appeared for the respondents during the proceedings. The bench has not only directed the consideration of the Madras High Court's order but has also outlined several key aspects for examination during the larger bench deliberations.

The bench will delve into various facets of the issue, including:

• Is the power to modify an arbitral award encompassed within the ambit of Sections 34 and 37 of the Arbitration and Conciliation Act, 1996?

• If the authority to modify exists, is it contingent upon the arbitrator's award being severable, allowing for partial amendments?

• Does the power to set aside an award under Section 34 encompass the power to modify it, and if so, to what extent?

• Can the power to modify an award be inferred from the provisions allowing for the setting aside of awards under Section 34?

These pivotal questions underscore the need for a definitive judicial pronouncement to provide clarity and guidance to the courts grappling with similar issues on a regular basis.

The Supreme Court's decision in this regard is poised to have far-reaching implications, not only for the legal fraternity but also for the broader landscape of arbitration and dispute resolution in India.

The court's consideration of past judgments, including the notable case of Project Director NHAI v. M. Hakeem, along with its scrutiny of contradictory decisions from different benches, underscores the complexity of the issue at hand. While the precedent set by M. Hakeem emphasized the absence of a statutory power to modify arbitral awards under Section 34, subsequent judgments have deviated from this stance, leading to a jurisprudential quagmire that necessitates resolution.

Case: GAYATRI BALASAMY vs. M/S ISG NOVASOFT TECHNOLOGIES LIMITED,

Petitions for Special Leave to Appeal (C) Nos.15336-15337/2021.

Click to read/download order.