Statutory arbitral awards cannot be retrospectively nullified by legislation; competence and mala fides challenges fail

Arbitration being a concurrent subject, the State amendment was within competence because it had Presidential assent, so the competence challenge failed. Allegations of legislative mala fides did not invalidate a law otherwise within competence, so that challenge also failed. Awards of Special Arbitration Tribunals did not merge into court decrees merely because they were made rules of court, as that step served enforcement only. However, the legislature could not retrospectively nullify those statutory adjudications, since that would amount to impermissible exercise of judicial power. The amendment was therefore unconstitutional to the extent it invalidated the awards.

---

---

Issues: (i) Whether the State Legislature lacked competence to enact the impugned amendment on the subject of arbitration despite the Central enactment; (ii) whether the amendment was unconstitutional for alleged mala fides; (iii) whether awards of Special Arbitration Tribunals merged in the judgments and decrees of courts when made rules of court; and (iv) whether the amendment was unconstitutional for nullifying such awards and thereby encroaching upon judicial power.

Issue (i): Whether the State Legislature lacked competence to enact the impugned amendment on the subject of arbitration despite the Central enactment.

Analysis: Arbitration is a concurrent subject. A State law on a concurrent subject can operate within the State when it has received Presidential assent, even if it is repugnant to an earlier Parliamentary enactment on the same field. The impugned amendment had received such assent.

Conclusion: The challenge based on legislative incompetence failed.

Issue (ii): Whether the amendment was unconstitutional for alleged mala fides.

Analysis: A law made within legislative competence is not invalid merely because improper motive is alleged against the legislature. Legislative motive does not render a valid law mala fide in the constitutional sense.

Conclusion: The challenge based on mala fides failed.

Issue (iii): Whether awards of Special Arbitration Tribunals merged in the judgments and decrees of courts when made rules of court.

Analysis: Making an award a rule of court is only a step for enforcement through the court machinery. The court does not decide the underlying dispute afresh in such proceedings, and its decree does not subsume the arbitral award as a judicial decision on merits.

Conclusion: The awards did not merge in the judgments and decrees of the courts.

Issue (iv): Whether the amendment was unconstitutional for nullifying such awards and thereby encroaching upon judicial power.

Analysis: The Special Arbitration Tribunals were constituted by statute and exercised adjudicatory power conferred by the legislature itself, following judicial norms and giving reasoned awards. The impugned amendment sought to invalidate awards already made in exercise of that adjudicatory power. A legislature cannot annul earlier judicial decisions by declaring them ineffective or invalid, because that would amount to an exercise of judicial power. Since the awards were not merely court decrees on the underlying dispute but statutory adjudications, the amendment impermissibly abrogated them.

Conclusion: The amendment, to the extent it nullified those arbitral awards, was unconstitutional.

Final Conclusion: The constitutional challenge substantially succeeded, and the impugned amendment was struck down insofar as it invalidated the awards made by the Special Arbitration Tribunals.

Ratio Decidendi: A legislature may not, by retrospective deeming or nullification, invalidate adjudicatory decisions made by a statutory tribunal exercising judicial power conferred by law.

---