Arbitral award modification power under Sections 34 and 37 to be examined by Constitution Bench, including severability.

The Supreme Court directed a Constitution Bench to examine whether M. Hakeem should be reconsidered on the power to modify an arbitral award under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, including the scope of judicial power and whether any modification power exists. The Bench is also to consider the extent of such power, if recognised, and the related question of severability. Pending that consideration, the deposited amount was ordered to be placed in an interest-bearing fixed deposit with auto-renewal, subject to further orders and the final outcome of the appeals.

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Issues: Whether the Court should reconsider the ratio in M. Hakeem on the power to modify an arbitral award under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, and the connected questions relating to the scope of judicial power and severability.

Analysis: The amount deposited with the Registrar, High Court of Judicature at Madras, was directed to be converted into an interest-bearing fixed deposit for six months with auto-renewal, to remain subject to further orders and the final outcome of the appeals. The matter was directed to be re-listed before a Constitution Bench, which will first hear arguments supporting reconsideration of the existing ratio and thereafter hear the opposing view. The Constitution Bench will also examine the contours and scope of power under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, including whether any power of modification exists and, if so, the extent of its exercise, along with the question of severability.

Outcome: Interim directions issued and the matter posted for consideration by a Constitution Bench.

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