TaxTMI 
TaxTMI 
TaxTMI 
2025 (5) TMI 566
X X X X Extracts X X X X
X X X X Extracts X X X X
....shan Lamba, AOR Mr. Kanu Agarwal, Adv. Mr. Ashwin Shanker, Adv. Mr. Sanjay Grover, Adv. Ms. Ridhi Nyati, Adv. Ms. Vanshika Jain, Adv. Mr. Shivlal Singh, Adv. Mr. K.V. Mohan, AOR Mr. Vaibhav Dang, Adv. Mr. Amrendra Kumar Mehta, AOR Ms. Anita Mahapatra, Adv. Ms. Gunjan Kumari, Adv. Mr. Jinendra Jain, AOR Mr. Ajay Jain, Adv. Mr. Krishna Sharma, Adv. Ms. Bijay Lakshmi, Adv. Mr. M.N. Mishra, Adv. Mr. Manoj Gautam, Adv. Mr. Kunaal Sharma, Adv. Mr. Akul Chalia, Adv. Mr. Harshit Batra, Adv. Mr. Mitika Choudhary, Adv. Ms. Shreya Jain, Adv. Mr. Akshat Jain, Adv. Mr. R.C. Bansal, Adv. Mr. T. Harish Kumar, AOR Mr. Bharathi Subramanian, Adv. Mr. Shubham P. Chopra, Adv. Mr. Arvind Datar, Sr. Adv. Mr. Nishanth Patil, AOR Mr. M.V. Mukunda, Adv. Mr. Mithun Shashank, Adv. Mr. M.V. Swaroop, Adv. Ms. Payal Chawla, Adv. Ms. Hina Shaheen, Adv. Mr. Arijit Dey, Adv. Mr. Manish K. Bishnoi, AOR Mr. Khubaib Shakeel, Adv For the Respondent : Mr. Saurabh Kirpal, Sr. Adv. Ms. Manmeet Kaur, Adv. Mr. Debmalya Banerjee, Adv. Mr. Rohan Sharma, Adv. Mr. Gurtej Pal Singh, Adv. Mr. Rohan Anand, Adv. Mr. Jai Dogra, Adv. Ms. Liza Vohra, Adv. Mr. Dhruv, Adv. M/s. Karanjawala & Co., AOR Mr. Naresh Markanda, Sr. Adv. Mr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t Sikri, Adv. Mr. Naman Joshi, Adv. Ms. Ritika Vohra, Adv. Mr. Ajay P. Singh, Adv. Ms. Charu Ambwani, Adv. Mr. Guneet Sidhu, Adv. Mr. Priyal Goyal, Adv. Mr. Rahul, Adv. Ms. Amber Tickoo, Adv. Mr. Shivam Gera, Adv. Mr. Akashdeep Singh, Adv. Mr. Verdaan Jain, Adv. Ms. Manisha Ambwani, AOR Ms. Sukanya Lal, AOR Mr. Saurav Agrawal, Adv. Ms. Sonali Jaitley Bakhshi, Adv. Mr. Jaiyesh Bakhshi, Adv. Mr. Ravi Tyagi, AOR Mr. Mayank Mishra, Adv. Ms. Manmilan Sidhu, Adv. Mr. Manish Bhatt, Adv. Mr. Atharva Koppal, Adv. Ms. Neetu Devrani, Adv. Mr. Abhijay Basu, Adv. Mr. Babit Jamwal, Adv. Ms. Prachi Dubey, Adv. Mr. Anshuman Chowdhury, Adv. Mr. Ajay Sharma, Adv. Ms. Mahek Upadhaya, Adv. Mr. Arya Bhatt, Adv. Ms. Soloni Paliwal, Adv. Mr. Harsh Khabar, Adv. Mr. Sarthak Nayak, Adv. Ms. Anushruti, Adv. Mr. Darius J. Khambata, Sr. Adv. Mr. Aditya Mehta, Adv. Mr. C. Rashmikant, Adv. Mr. Mahesh Agarwal, Adv. Mr. Ankur Saigal, Adv. Ms. S. Lakshmi Iyer, Adv. Mr. Rohan Dakshini, Adv. Ms. Namrata Shah, Adv. Ms. Suprriya Lopes, Adv. Ms. Sailee Dhayalkar, Adv. Mr. Shashwat Singh, Adv. Mr. Jai Sanyal, Adv. Ms. Vidhi Shah, Adv. Mr. E.C. Agrawala, AOR Mr. Gaurav Pachnanda, Sr. Adv. Ms. Garima Bajaj, AOR Mr. Mohit G....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 6 SCC 150 and M.P. Power Generation Co. Ltd. vs. Ansaldo Energia Spa) (2018) 16 SCC 661 and three Judges (in J.C. Budhraja vs. Chairman, Orissa Mining Corporation Ltd., (2008) 2 SCC 444 Tata Hydroelectric Power Supply Co. Ltd. vs. Union of India, (2003) 4 SCC 172 and Shakti Nath vs. 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?" 2. Accordingly, this Bench of five-Judges has been constituted to decide the questions referred. 3. The fulcrum of the legal controversy rests on the following question(s): Are Indian courts jurisdictionally empowered to modify an arbitral award? If so, to what extent? The controversy arises because the Arbitration and Conciliation Act, 1996, Hereinafter referred to as, "1996 Act" does not expressly empower courts to modify or vary an arbitral award. Section 34 of the 1996 Act only confers upon courts the power to set aside an award. Nevertheless, this Court, on several instances, has been compelled to modify arbitral awards, seeking to minimize protracted litigation and foster the ends of justice. In contrast, some judgments have p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and, until provision in that behalf is so made, in such manner as the President may by order prescribe. (2) Subject to the provisions of any law made in this behalf by Parliament, the Supreme Court shall, as respects the whole of the territory of India, have all and every power to make any order for the purpose of securing the attendance of any person, the discovery or production of any documents, or the investigation or punishment of any contempt of itself." to vary the award, reducing the interest from 10% per annum (as awarded by the tribunal) to 7.5% per annum. It felt compelled to do so as there was a significant lapse of time. Two earlier decisions were relied upon: Pure Helium India (P) Limited v. Oil & Natural Gas Commission, (2003) 8 SCC 593 where the rate of interest was reduced from 18% per annum to 6% per annum, and Mukand Ltd. v. Hindustan Petroleum Corpn. Ltd., (2006) 9 SCC 383 where the interest rate was lowered from 11% per annum to 7.5% per annum. 8. In Vedanta Limited v. Shenzhen Shandong Nuclear Power Construction Company Limited, (2019) 11 SCC 465 this Court, in the context of an international award, highlighted the need to consider the differing impact of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aster of evidence. The scope of judicial intervention under Section 34 is confined to the limited grounds expressly provided therein. See Maharashtra State Electricity Distribution Company Limited v. Datar Switchgear Limited and Others, (2018) 3 SCC 133; Parsa Kente Collieries Limited v. Rajasthan Rajya Vidyut Utpadan Nigam Limited, (2019) 7 SCC 236; and M.P. Power Generation Co. Ltd. v. ANSALDO Energia SpA, (2018) 16 SCC 661. The Court does not possess the power to correct errors of fact, reconsider costs, or engage in a review of the merits of the arbitral award. 13. In Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India (NHAI), (2019) 15 SCC 131 a two-judge bench of this Court ruled that interference based on public policy violations under Section 34(2)(b)(ii) is limited to the fundamental policy of Indian law. The court cannot interfere merely because the arbitrator lacked a "judicial approach". For domestic awards made in India, an additional ground of interference is available - patent illegality appearing on the face of the award - in terms of Section 34(2A) of the 1996 Act Albeit in the said case, an issue arose which went beyon....
X X X X Extracts X X X X
X X X X Extracts X X X X
....High Courts, emphasizing that allowing modification under Section 34 would go against the legal framework, as only the legislature has the power to change the law. Any expansion of Section 34's powers to include modification would require a legislative amendment. B. ARGUMENTS RAISED I. In Favour of Modification 17. First, it is contended that the judgment in M. Hakeem (supra) warrants reconsideration, as it conflicts with several decisions rendered by Benches of two and three Judges of this Court, in which awards were modified and varied. This Court has also upheld the modification of awards by the High Courts or District Courts on other occasions. Second, it is claimed that the Model Law, based on the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 Hereinafter referred to as, "New York Convention", permits a broader scope of judicial intervention. Several signatory countries to the Model Law have enacted provisions for domestic awards that permit modification and/or variation (Annexure B), in addition to allowing for the setting aside of awards. This international perspective, it is argued, reflects a broader understanding of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uniform and cohesive legal framework. During discussions, it was decided that courts should not have the power to modify awards. If courts had such power, it could result in a situation where a court order or decree replaces the arbitral award, which in arbitration jurisprudence is unacceptable. It may carry international repercussions when awards are sought to be enforced under foreign conventions. 21. For example, under the New York Convention, only arbitral awards are recognized and enforceable, not court decrees/orders that modify those awards. A court decree cannot substitute an arbitral award, especially when the award is examined under the limited jurisdiction of Section 34. Section 36 treats awards as enforceable in the same way as court decrees. However, unless Indian law legislatively empowers courts to modify awards, this power cannot be assumed from the power to set aside an award under Section 34. While some countries have granted courts the specific power to modify or vary an award under their domestic laws, Indian law does not permit the same. 22. It is further submitted that the maxim omne majus continent in se minus - the greater contains the lesser - should ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r of 'recourse' under Section 34 of the 1996 Act. I. Contours of Section 34, 1996 Act 27. Section 5 of the 1996 Act limits judicial intervention in an arbitral award to what is authorized by Part I of the Act. Section 34(1) stipulates that 'recourse' to a court against an arbitral award may be made only by an application for setting aside the award in accordance with Section 34(2) and 34(3). 28. Section 34(2)(a) enumerates specific grounds on which an award can be set aside. These include - the incapacity of a party, invalidity of an arbitration agreement in law, improper notice for appointment of an arbitrator or arbitral proceedings, denying the opportunity to a party to present their case, the award Civil Appeal @ S.L.P.(C) Nos.15336-15337 of 2021 Page 14 of 61 being beyond the scope of submission to arbitration, and the composition of the arbitral tribunal or the arbitral procedure not being by the agreement of the parties in certain circumstances. The proviso to Section 34(2)(a)(iv) outlines the concept of "severability of awards". This has been addressed separately in Part II of our Analysis. 29. Section 34(2)(b) stipulates that an arbitral award may be set aside ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....anding an award to the arbitral tribunal. We have addressed this remand power in Part VI of our Analysis. Section 34(5) outlines notice requirements, while Section 34(6) mandates the expeditious disposal of Section 34 applications, setting a hard outer limit of one year from the date of service of notice on the other party under Section 34(5). 31. The next question that arises is whether the power to set aside an award includes the power to partially set it aside. II. Severability of Awards 32. In the present controversy, the proviso to Section 34(2)(a)(iv) is particularly relevant. It states that if the decisions on matters submitted to arbitration can be separated from those not submitted, only that part of the arbitral award which contains decisions on matters non-submitted may be set aside. The proviso, therefore, permits courts to sever the non-arbitrable portions of an award from arbitrable ones. This serves a two-fold purpose. First, it aligns with Section 16 of the 1996 Act, which affirms the principle of kompetenzkompetenz - that is, the arbitrators' competence to determine their own jurisdiction. Secondly, it enables the court to sever and preserve the "valid" pa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ercised only when the valid and invalid parts of the award can be clearly segregated-particularly in relation to liability and quantum and without any corelation between valid and invalid parts. 37. We would now proceed to examine, the permissibility and scope of the court's modification powers, within the parameters of Section 34 of the 1996 Act. In doing so, we will distinguish the court's power of modification from: (i) the court's power of setting aside an award; (ii) the arbitrator's power under Section 33 to correct, reinterpret, and/or issue an additional award; and (iii) the power of the court to remand the award to the arbitrator under Section 34(4). III. Difference between setting aside and modification 38. This distinction lies at the heart of many arguments canvassed before us. The parties opposing the recognition a power of modification of the courts have strenuously contended that modification and setting aside are distinct and sui generis powers. While modification involves altering specific parts of an award, setting aside does not alter the award but results in its annulment. Their primary concern is that recognizing a power of modification may inv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cessary delays-would defeat the raison d'être of arbitration. This concern is particularly pronounced in India, where applications under Section 34 and appeals under Section 37 often take years to resolve. 42. Given this background, if we were to decide that courts can only set aside and not modify awards, then the parties would be compelled to undergo an extra round of arbitration, adding to the previous four stages: the initial arbitration, Section 34 (setting aside proceedings), Section 37 (appeal proceedings), and Article 136 (SLP proceedings). In effect, this interpretation would force the parties into a new arbitration process merely to affirm a decision that could easily be arrived at by the court. This would render the arbitration process more cumbersome than even traditional litigation. 43. Equally, Section 34 limits recourse to courts to an application for setting aside the award. However, Section 34 does not restrict the range of reliefs that the court can grant, while remaining within the contours of the statute. A different relief can be fashioned as long as it does not violate the guardrails of the power provided under Section 34. In other words, the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iance with specified manner of request, to make an additional award on claims presented before the arbitral proceedings but omitted from the arbitral award. 48. Section 33(7) states that Section 31 (Annexure A) shall apply where correction, interpretation or any addition is made to the arbitral award. Section 31 deals with form and content requirements for arbitral awards. Consequently, an order passed by the arbitral tribunal under Section 33 amounts to an arbitral award. Under Section 34(3), where a request is made under Section 33, the limitation period for filing an application to set aside the award commences from the date on which the arbitral tribunal disposes of the Section 33 request. 49. Notwithstanding Section 33, we affirm that a court reviewing an award under Section 34 possesses the authority to rectify computational, clerical, or typographical errors, as well as other manifest errors, provided that such modification does not necessitate a merits-based evaluation. There are certain powers inherent to the court, even when not explicitly granted by the legislature. The scope of these inherent powers depends on the nature of the provision, whether it pertains to ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the 1996 Act and to avoid the hardship. It would, therefore, be wrong to say that the view expressed by us falls foul of express provisions of the 1996 Act. 53. Under Section 152 of the Code, "152. Amendment of judgments, decrees or orders.- Clerical or arithmetical mistakes in judgments, decrees or orders or errors arising therein from any accidental slip or omission may at any time be corrected by the Court either of its own motion or on the application of any of the parties." a court executing a decree has the power to correct clerical or arithmetic mistakes in judgments, orders, or decrees arising from any accidental slips or omissions. This Court, in Century Textiles Industries Limited v. Deepak Jain and Another, (2009) 5 SCC 634 held that clerical or arithmetical errors may be corrected by the executing court, however, the court must take the decree according to its tenor and cannot go behind the decree. 54. In the same vein as these judgments, we hold that inadvertent errors, including typographical and clerical errors can be modified by the court in an application under Section 34. However, such a power must not be conflated with the appellate jurisdiction of a higher....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ature. This is evident from the use of the word "may" in the provision. The Court may invoke this power when it identifies a defect in the award that could lead to its setting aside. In such cases, the court may seek to prevent this outcome by granting the arbitral tribunal an opportunity to rectify the defect. 58. While it is not appropriate to establish rigid parameters or a straitjacket formula for the exercise of this power, it is clear that Section 34(4) does not authorize the arbitral tribunal to rewrite the award on merits or to set it aside. Rather, it serves as a curative mechanism available to the tribunal when permitted by the court. The primary objective is to preserve the award if the identified defect can be cured, thereby avoiding the need to set aside the award. Accordingly, a court may not grant a remand when the defect in the award is inherently irreparable. A key consideration is the proportionality between the harm caused by the defect and the means available to remedy it. 59. While exercising this power, the court must also remain mindful that the arbitral tribunal has already rendered its decision. If the award suffers from serious acts of omission, comm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tipulated in Section 34(4). Of course, the appellate court, while exercising power under Section 37, should be mindful when the award has been upheld by the Section 34 court. But the Section 37 court still possesses the jurisdiction to remand the matter to the arbitral tribunal. 63. Our reasoning does not breach the principle of party autonomy. Rather, it acknowledges that the parties opting for arbitration also consent to be governed by the applicable statute governing arbitration-in this case, the 1996 Act. Further, principle of party autonomy should not be extended to an extreme to urge that the party misunderstood the law and consequently the consent is invalid. While it is true that a mistake of law may vitiate consent in certain contexts, the interpretation here restricts the court's role to that of limited judicial scrutiny in terms of the 1996 Act. Neither does it confer appellate powers on the courts. Instead, it adheres strictly to the parameters stipulated in Sections 34 and 37 of the 1996 Act. The power of the appellate court in civil proceedings under Order XLI of the Code, is as broad as that of a trial court, both in terms of facts and law. Contrastingly, the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....st be rejected as misconceived. We are of the view that, once Section 34 is reinterpreted to include a limited power to modify awards, this authority will not affect the international commercial arbitration regime or the enforcement of foreign awards. 67. Section 48 of the 1996 Act (Annexure A), which is similarly worded as Article V of the New York Convention, delineates situations when the enforcement of a foreign award may be refused. Section 48(1)(e) states the award may not be enforced when it has not become binding on the parties or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made. In simpler words, the award must become "binding on the parties" in terms of the law of the seat before enforcement. Sub-clause (e) therefore recognizes that, for enforcement, the domestic law of the country where the award is made shall prevail and have supremacy. Thus, this Court's interpretation, reading modification powers into Section 34, would not be at loggerheads with the New York Convention. The Convention requires the enforcement court to consider whether an award has become binding in terms of the law of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in its sum for the award, interest, at such rate it deems reasonable on whole or part of the money for whole or part of the period on which the cause of action arose and the date on which the award is made. In respect of post-award interest, Section 31(7)(b) (Annexure A) states that unless an award provides for interest on a sum directed to be paid by it, the sum will carry an interest at a 2% higher rate than the current rate of interest prevalent on the date of the award, from the date of the award till the date of payment. The explanation defines the expression 'current rate of interest'. 73. There can be instances of violation of Section 31(7)(a), and the pendente lite interest awarded may be contrary to the contractual provision. We are of the opinion that, in such cases, the court while examining objections under Section 34 of the 1996 Act will have two options. First is to set aside the rate of interest or second, recourse may be had to the powers of remand under Section 34(4). 74. For the post award interest in terms of Section 31(7)(b), the courts will retain the power to modify the interest where the facts justify such modification. This is why the standard rate sti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e the rate should be increased due to delays or obstructions in the execution of the award. Interest rates may also fluctuate over time. 78. However, the court, while exercising this power, must be cautious and mindful not to overstep its role by altering the interest rate unless there are compelling and well-founded reasons to do so. In exercising this power, the court is not acting in an appellate capacity, but rather under limited authority. For instance, the 1996 Act stipulates a standard post-award interest rate. When the statute itself benchmarks a standard, unless there are special and specific reasons, the rate of interest stipulated by the statute should be applied. 79. Nevertheless, this limited power is significant, as it can help avoid further rounds of litigation. Without it, the court may be forced to set aside the entire award or order a fresh round of arbitration because of an erroneous interest rate rather than simply adjusting this rate. X. Post-Award Settlements 80. We are also of the opinion that the parties are entitled to enter into an agreement or settlement even after an award is pronounced. Such a settlement should be in accordance with the prov....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... seemingly unhindered, is tempered or bounded by restraint, which must be exercised based on fundamental considerations of general and specific public policy. Fundamental general conditions of public policy refer to the fundamental rights, secularism, federalism, and other basic features of the Constitution of India. Specific public policy should be understood as some express pre-eminent prohibition in any substantive law, and not stipulations and requirements to a particular statutory scheme. It should not contravene a fundamental and non-derogable principle at the core of the statute. Even in the strictest sense, it was never doubted or debated that this Court is empowered under Article 142(1) of the Constitution of India to do "complete justice" without being bound by the relevant provisions of procedure, if it is satisfied that the departure from the said procedure is necessary to do "complete justice" between the parties." 84. While exercising power under Article 142, this Court must be conscious of the aforesaid dictum. In our opinion, the power should not be exercised where the effect of the order passed by the court would be to rewrite the award or modify the award on me....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) The arbitral award shall state its date and the place of arbitration as determined in accordance with Section 20 and the award shall be deemed to have been made at that place. (5) After the arbitral award is made, a signed copy shall be delivered to each party. (6) The arbitral tribunal may, at any time during the arbitral proceedings, make an interim arbitral award on any matter with respect to which it may make a final arbitral award. (7)(a) Unless otherwise agreed by the parties, where and in so far as an arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made. (b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of two per cent higher than the current rate of interest prevalent on the date of award, from the date of award to the date of payment. Explanation.-The expression "current rate of i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction (2) and sub-section (3). (2) An arbitral award may be set aside by the Court only if- (a) the party making the application establishes on the basis of the record of the arbitral tribunal that- (i) a party was under some incapacity; or (ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or (iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v) the composition of the arbitral tribunal or the arbitral procedure ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....proceedings or to take such other action as in the opinion of arbitral tribunal will eliminate the grounds for setting aside the arbitral award. (5) An application under this section shall be filed by a party only after issuing a prior notice to the other party and such application shall be accompanied by an affidavit by the applicant endorsing compliance with the said requirement. (6) An application under this section shall be disposed of expeditiously, and in any event, within a period of one year from the date on which the notice referred to in sub-section (5) is served upon the other party. 37. Appealable orders.- (1) Notwithstanding anything contained in any other law for the time being in force, an appeal shall lie from the following orders (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the order, namely:- (a) refusing to refer the parties to arbitration under Section 8; (b) granting or refusing to grant any measure under Section 9; (c) setting aside or refusing to set aside an arbitral award under Section 34. (2) Appeal shall also lie to a court from....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ase; or (c) the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be enforced; or (d) the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or (e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made. (2) Enforcement of an arbitral award may also be refused if the Court finds that- (a) the subject-matter of the difference is not capable of settlement by arbitration under the law of India; or (b) the enforcement of the award would be contrary to the public policy ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rmine; (c) on the basis of the findings of fact in the award- (i) the decision of the arbitral tribunal on the question is obviously wrong; or (ii) the question is one of general public importance and the decision of the arbitral tribunal is at least open to serious doubt; and (d) Despite the agreement of the parties to resolve the matter by arbitration, it is just and proper in all the circumstances for the Court to determine the question. (6) An application for permission to appeal under this section must identify the question of law to be determined and state the grounds on which it is alleged that permission to appeal should be granted. (7) The permission of the appellate court is required for any appeal from a decision of the Court under this section to grant or refuse permission to appeal. (8) On an appeal under this section, the Court may by order - (a) confirm the award; (b) vary the award; (c) remit the award to the arbitral tribunal, in whole or in part, for reconsideration in the light of the Court's determination; or (d) set aside the award in whole or in part. (9) The Court is not to exercise its power to set aside an award, in whole or in part, unless it is satisfied ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urt challenging an award in the proceedings on the ground of serious irregularity affecting the tribunal, the proceedings or the award. A party may lose the right to object (see section 73) and the right to apply is subject to the restrictions in section 70(2) and (3). (2) Serious irregularity means an irregularity of one or more of the following kinds which the court considers has caused or will cause substantial injustice to the applicant- (a) failure by the tribunal to comply with section 33 (general duty of tribunal); (b) the tribunal exceeding its powers (otherwise than by exceeding its substantive jurisdiction: see section 67); (c) failure by the tribunal to conduct the proceedings in accordance with the procedure agreed by the parties; (d) failure by the tribunal to deal with all the issues that were put to it; (e) any arbitral or other institution or person vested by the parties with powers in relation to the proceedings or the award exceeding its powers; (f) uncertainty or ambiguity as to the effect of the award; (g) the award being obtained by fraud or the award or the way in which it was procured being contrary to public policy; (h) failure to comply with the requirement....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lleged that leave to appeal should be granted. (5) The court shall determine an application for leave to appeal under this section without a hearing unless it appears to the court that a hearing is required. (6) The leave of the court is required for any appeal from a decision of the court under this section to grant or refuse leave to appeal. (7) On an appeal under this section the court may by order- (a) confirm the award, (b) vary the award, (c) remit the award to the tribunal, in whole or in part, for reconsideration in the light of the court's determination, or (d) set aside the award in whole or in part. The court shall not exercise its power to set aside an award, in whole or in part, unless it is satisfied that it would be inappropriate to remit the matters in question to the tribunal for reconsideration. (8) The decision of the court on an appeal under this section shall be treated as a judgment of the court for the purposes of a further appeal. But no such appeal lies without the leave of the court which shall not be given unless the court considers that the question is one of general importance or is one which for some other special reason should be considered by the Cou....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 4. France Article 1502 of Code of Civil Procedure Article 1502 Application for revision of an arbitral award may be made in the circumstances provided in Article 595 for court judgments, and under the conditions set forth in Articles 594, 596, 597 and 601 through 603. Application shall be made to the arbitral tribunal. However, if the arbitral tribunal cannot be reconvened, application shall be made to the Court of Appeal which would have had jurisdiction to hear other forms of recourse against the award. Article 595 An application for revision of a judgment may be made only where: 1. it comes to light, after the judgment is handed down, that it was obtained fraudulently by the party in whose favour it was rendered; 2. decisive evidence that had been withheld by another party is recovered after the judgment was handed down; 3. the judgment is based on documents that have since been proven or have been held by a court to be false; 4. the judgment is based on affidavits, testimonies or oaths that have been held by a court to be false. In all four cases, an application for revision shall be admissible only where the applicant was not able, through no fault of his or her ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uld be inappropriate to remit the matters in question to the arbitral tribunal for reconsideration. (9) Where the award is remitted under subsection (7) (c) the arbitrator must, unless the order otherwise directs, make the award within 3 months after the date of the order. (10) The court may make any leave which it grants under subsection (3) (c) subject to the applicant complying with any conditions it considers appropriate. (11) Where the award of an arbitrator is varied on an appeal under this section, the award as varied has effect (except for this section) as if it were the award of the arbitrator. 6 New Zealand Section 5 and 6 of Schedule 2 (Additional optional rules applying to arbitration), Arbitration Act, 1996 5. Appeals on questions of law (1) Notwithstanding anything in articles 5 or 34 of Schedule 1, any party may appeal to the High Court on any question of law arising out of an award- (a) if the parties have so agreed before the making of that award; or (b) with the consent of every other party given after the making of that award; or (c) with the leave of the High Court. (2) The High Court shall not grant leave under subclause (1)(c) unless it considers t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....upported by any evidence or any sufficient or substantial evidence; and (ii) the arbitral tribunal drew the correct factual inferences from the relevant primary facts. 7 Canada Section 45 of the Arbitration Act, 1991 Ontario 45. Appeals Appeal on question of law (1) If the arbitration agreement does not deal with appeals on questions of law, a party may appeal an award to the court on a question of law with leave, which the court shall grant only if it is satisfied that, (a) the importance to the parties of the matters at stake in the arbitration justifies an appeal; and (b) determination of the question of law at issue will significantly affect the rights of the parties. 1991, c. 17, s. 45 (1). Idem (2) If the arbitration agreement so provides, a party may appeal an award to the court on a question of law. 1991, c. 17, s. 45 (2). Appeal on question of fact or mixed fact and law (3) If the arbitration agreement so provides, a party may appeal an award to the court on a question of fact or on a question of mixed fact and law. 1991, c. 17, s. 45 (3). Powers of court (4) The court may require the arbitral tribunal to explain any matter. 1991, c. 17, s. 45 (4). Idem (5) The....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the tribunal must make a fresh award in respect of the matters remitted- (a)within 3 months of the date of the order for remission; or (b)within a longer or shorter period that the Court may direct. (7) The Court must not exercise its power to set aside an award, in whole or in part, unless it is satisfied that it would be inappropriate to remit the matters in question to the arbitral tribunal for reconsideration. (8) The leave of the Court or the Court of Appeal is required for any further appeal from an order of the Court under subsection (5). (9) Leave to further appeal must not be granted unless- (a)the question is one of general importance; or (b)the question is one which, for some other special reason, should be considered by the Court of Appeal. (10) Sections 6 and 7 of this Schedule also apply to an appeal or further appeal under this section. 10. Kenya Section 39 of Arbitration Act, 1995 39. Questions of law arising in domestic arbitration (1) Where in the case of a domestic arbitration, the parties have agreed that- (a) an application by any party may be made to a court to determine any question of law arising in the course of the arbitration; or (b) an appea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ies to the proceedings; or (b) with the leave of the Court. (4) The right to appeal under this section is subject to the restrictions in section 50. (5) Leave to appeal is to be given only if the Court is satisfied that - (a) the determination of the question will substantially affect the rights of one or more of the parties; (b) the question is one which the arbitral tribunal was asked to determine; (c) on the basis of the findings of fact in the award- (i) the decision of the arbitral tribunal on the question is obviously wrong; or (ii) the question is one of general public importance and the decision of the arbitral tribunal is at least open to serious doubt; and (d) Despite the agreement of the parties to resolve the matter by arbitration, it is just and proper in all the circumstances for the Court to determine the question. (6) An application for leave to appeal under this section shall identify the question of law to be determined and state the grounds on which it is alleged that leave to appeal should be granted. (7) The leave of the Court shall be required for any appeal from a decision of the Court under this section to grant or refuse leave to appeal. (8) On an appeal un....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Dispute Resolution Act of 2004 46. Appeal from Court Decisions on Arbitral Awards A decision of the regional trial court confirming, vacating, setting aside, modifying or correcting an arbitral award may be appealed to the Court of Appeals in accordance with the rules of procedure to be promulgated by the Supreme Court. The losing party who appeals from the judgment of the court confirming an arbitral award shall required by the appellant court to post counterbond executed in favour of the prevailing party equal to the amount of the award in accordance with the rules to be promulgated by the Supreme Court. 31. Award may be made an order of court (1) An award may, on the application to a court of competent jurisdiction by any party to the reference after due notice to the other party or parties, be made an order of court. (2) The court to which application is so made, may, before making the award an order of court, correct in the award any clerical mistake or any patent error arising from any accidental slip or omission. (3) An award which has been made an order of court may be enforced in the same manner as any judgment or order to the same effect. 13 Sri Lanka Section 68....
X X X X Extracts X X X X
X X X X Extracts X X X X
....RS.....................................................81 viii. DOCTRINE OF IMPLIED POWERS................................................................83 ix. PARTY AUTONOMY....................................................................................85 x. CAN ARTICLE 142 POWERS BE EXERCISED TO MODIFY? .............................87 xi. LAYING DOWN GUARDRAILS FOR SECTION 34 - IS IT AN OPTION FOR THIS COURT? ...................................................................................................92 xii. SUBMISSIONS BASED ON PECULIARITIES IN STATUTORY ARBITRATIONS ...94 xiii. COMPLICATIONS DUE TO MODIFICATIONS IN NEW YORK CONVENTION AWARDS ..................................................................................................96 xiv. IS HAKEEM (SUPRA) PER INCURIAM? ..........................................................99 xv. POWERS UNDER SECTION 33 AND 34 (4) OF THE A&C ACT - THE 'SAFETY VALVES' .................................................................................................100 xvi. AWARD OF INTEREST- USE OF SECTION 34(4) POWER ................................107 xvii. SUO MOTO EXERCISE OF SECTION 34(4) P....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urt and contended that in exercise of powers under Section 34, no modification could be made since it was not a challenge on the merits of the award. The contentions of NHAI were that powers under Section 34 were qualitatively different from an appellate power and the only option open was to set aside the award or remit the award under Section 34 (4) in the event of the contingencies provided thereon arising. A contrast was made with the provisions of the Arbitration Act, 1940 which contained express provisions to modify the award under Section 15 therein. NHAI further argued that since the A&C Act was based on the UNCITRAL Model Law on International Commercial Arbitration, 1985, the grounds of challenge were restricted. The land losers in Hakeem (Supra) contended that power to set aside in Section 34 included a "power to modify" and relied on the judgment of the learned Single Judge of the Madras High Court in Gayatri Balaswamy Vs. ISG Novasoft Technologies Limited, 2014 SCC OnLine Mad 6568. [Coincidentally, Gayatri Balaswamy (supra) is the first case in this reference after travelling through the Division Bench of the High Court.] 5. This Court in Hakeem (Supra) held as under:....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "2. 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. 3. We are of the considered view that the following questions need to be referred to a larger Bench for answers: "1. Whether the powers of the Court under section 34 and 37 of the Arbitration and Conciliation Act, 1996, will include the power to modify an arbitral award? 2. If the power to modify the award is available, whether such power can be exercised only where the awa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....od to mean "to separate" and "disjoin". Parties have also canvassed arguments based on that distinction. While the rival parties were at daggers drawn on the aspect of the power to "modify" in a Section 34 Court, there was unanimity on the power to "sever" subject to conditions compatible with severability. CONTENTIONS FAVOURING THE POWER TO MODIFY: - 9. Mr. Arvind Datar, learned Senior Counsel made bold to suggest that the Court read words into Section 34. According to the learned Senior Counsel, the words "and, to the extent" be read as opening words in Section 34(2) (b) and further that the words "or modified, and "to the extent" be added in Section 34(2)(a). According to the learned Senior Counsel, the Court is not powerless to add words and cited a large number of authorities where, according to the counsel, words have been added to avoid irreconcilable conflict and in situations where absurdity and injustice had to be averted. The learned Senior Counsel further contended that Hakeem (supra) is per incuriam as it is contrary to several three-Judge and two-Judge Bench judgments of this Court. Learned Senior Counsel further contended that the only option of setting aside t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wer to modify. Learned Senior Counsel contended that if the modification required reconsideration of facts on merits, Courts' ought to remit the award under Section 34(4), if the remission is to be on narrowly defined issues for pure application to facts. Learned Senior counsel contended that if remission is to be allowed, the correct position of law should be determined by the Court and after recording a finding the remission ought to be made. Learned Senior Counsel contended that severability is well accepted during the course of exercise of power under Section 34, which according to the counsel, was after all a facet of modification and there is no reason why power to modify generally cannot be read into Section 34. 13. Mr. Shekhar Naphade, learned Senior Counsel contended that if impugned award grants reliefs which cannot be granted due to factors specified in sub-clauses (i), (ii), (iv) and (v) of clause (a) of Section 34(2) and sub-clause (i) of clause (b) of Section 34(2), then there was no question of modifying or substituting an award. According to the learned Senior Counsel, the only option then was to set aside the award. Learned Senior Counsel contends that if the aw....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er reiterated that there is no prohibition to modify in the Act. Mr. Ritin Rai submitted that if the conclusion to modify axiomatically follows a finding, then modification should be allowed. 17. Mr. Prashanto Chandra Sen, Dr. Manish Singhvi, Learned Senior Counsels and Mr. Abhishek Kumar Rao, learned Counsel reiterated the arguments of other Senior Counsels. Dr. Manish Singhvi, learned Senior Counsel argued that competent authorities under the NHAI are not legally trained minds and the compensation granted by them cannot be treated as final and the Section 34 Court should have power to enhance. Learned Senior Counsel contended that restrictive parameters should not be available for compulsory arbitration as opposed to consensual arbitration. 18. Mr. Sumeet Pushkarna, learned Senior Counsel, M/s Ashwin Shanker, Vaibhav Dang, Amit George and Jinendra Jain by and large reiterated the submissions of Mr. Datar and Mr. Khambata. Mr. Vaibhav Dang and Mr. Jinendra Jain supplemented the submissions by adding that substantial cost will be incurred if re-arbitration is to commence and that Hakeem (supra) did not consider modification by mutual consent and correction of computation and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h Report of the Law Commission on the Arbitration Act to contend that no power to modify was recommended even though the precursor Act, namely, the 1940 Act had in Section 15 a specific power to modify. Learned SG contended that the scope of setting aside proceedings are not akin to Appellate proceedings where evidence is re-evaluated and decision is examined for its correctness on merits. According to the learned SG, the power of modification cannot be subsumed in the power to "set aside" as both exist on different judicial planes requiring application of differing judicial parameters. 21. Learned SG particularly emphasized on Section 5 of the A&C Act to canvass for limited judicial intervention in a manner provided in the statute and nothing more. Learned SG referred to Section 34(4) as the solution, provided the grounds mentioned in the Section are made out. The learned SG distinguished the cases where this Court had exercised power to modify. Learned SG contended that Article 142 power cannot be exercised in contravention of statutory power and not being a situation similar to the one in Vishaka and Others Vs. State of Rajasthan and Others, (1997) 6 SCC 241, no guardrails ca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....setting aside" of awards; that countries which have derogated from the Model Law have specifically empowered the Courts to modify, confirm or vary an award in whole or in part, in addition to powers of setting aside; that power to annul is inconsistent with a power to appeal; that no judicially manageable standards exist to determine the contours of modification and the only way forward is by legislation. The learned senior counsel contended that the A&C Act was based on the UNCITRAL Model Law and provides finality and binding nature of the award and minimal judicial intervention. Learned Senior Counsel further contended that the statutory scheme under the A&C Act, 1996 differs from that of the Act of 1940; that Section 34 does not provide a merits challenge nor is it an appellate jurisdiction; that parties consciously opt to exclude the Court's jurisdiction and choose arbitration for its expediency and finality and that the "limited remedy" under Section 34 is co-terminus with the "limited right" to set aside or remit within the meaning of Section 34(4). According to the learned Senior Counsel, the consequence of a complete annulment is recommencement of proceedings and any new su....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g nature of the awards. Learned Senior Counsel contended that reading in guardrails would amount to judicial legislation. According to the learned Senior Counsel, permitting modification would compel the Court to do a two-fold exercise, namely, first to decide whether award suffers from any infirmity and then to decide what the correct outcome would be on the facts of the case. 27. Learned senior counsel contends that the power of modification, if permitted, the original award will be rendered incapable of enforcement, particularly in the New York Convention awards and cited how other jurisdictions have handled it by incorporating specific provisions, namely, Section 71 of the English Arbitration Act, Section 5(7) of Schedule 2 of the New Zealand Arbitration Act, 1996 and Section 39(5) of the Kenyan Arbitration Act, 1995. According to the learned Senior Counsel, absent such legislative shield, India seated arbitrations would be vulnerable and unattractive and the awards would potentially be in breach of the New York Convention. 28. Dealing with statutory arbitrations, learned Senior Counsel contends that solutions to the maladies of the statutory arbitrations must be sourced ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... THE ECO SYSTEM OF ARBITRATION:- HISTORICAL, TEXTUAL AND THE CONTEXTUAL SETTING: 33. Before the core issue is answered, certain fundamental concepts highlighting the difference between the adjudication of disputes by the procedure in Courts and the procedure in Arbitration needs to be emphasized. The judicial power of the State is exercised by the judiciary and disputes are adjudicated through the mechanism of the Courts at different hierarchical levels. If disputes were to be adjudicated in Courts, normal procedural laws would govern the disposal. For example, while the Code of Criminal Procedure, 1973 (The Bharatiya Nagarik Suraksha Sanhita, 2023) would govern the procedure in Criminal Courts, the Code of Civil Procedure of 1908 amended in 1976 and thereafter, would govern the procedure in the Civil Courts. 34. The Indian Contract Act, 1872, while otherwise holding that Agreements in restraint of legal proceedings would be void in Section 28, saves Arbitration references. For the sake of convenience, relevant portions of Section 28 of the Contract Act, are set out hereinbelow:- "28. Agreements in restraint of legal proceedings, void.- Every Agreement,- ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 1940 Act dealt with:- Arbitration without intervention of a Court (Sections 3 to 19); Arbitration with intervention of a Court where there is no suit pending (Section 20); Arbitration in suits (Sections 21 to 25) and further Section 27 enabled the Arbitrator to make an interim award and in Section 30 grounds for setting aside the award were provided. What is important to note is that Section 15 of the Act of 1940 provided for a power in the Court to modify the award and Section 16 reserved an express power to remit the award. 38. Sections 15 and 16 of the 1940 Act read as under:- "15. Power of Court to modify award .-The Court may by order modify or correct an award- (a) where it appears that a part of the award is upon a matter not referred to arbitration and such part can be separated from the other part and does not affect the decision on the matter referred; or (b) where the award is imperfect in form, or contains any obvious error which can be amended without affecting such decision; or (c) where the award contains a clerical mistake or an error arising from an accidental slip or omission. 16. Power to remit award .-(1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ze the role of the courts in the arbitral process. The Statement of Objects and Reasons of the 1996 Act is extracted herein below:- "STATEMENT OF OBJECTS AND REASONS 1. The law on arbitration in India is at present substantially contained in three enactments, namely, the Arbitration Act, 1940, the Arbitration (Protocol and Convention) Act, 1937 and the Foreign Awards (Recognition and Enforcement) Act, 1961. It is widely felt that the 1940 Act, which contains the general law of arbitration, has become outdated. The Law Commission of India, several representative bodies of trade and industry and experts in the field of arbitration have proposed amendments to this Act to make it more responsive to contemporary requirements. It is also recognised that our economic reforms may not become fully effective if the law dealing with settlement of both domestic and international commercial disputes remains out of tune with such reforms. Like arbitration, conciliation is also getting increasing worldwide recognition as an instrument for settlement of disputes. There is, however, no general law on the subject in India. 2. The United Nations Commission on International ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt agreement reached by the parties as a result of conciliation proceedings will have the same status and effect as an arbitral award on agreed terms on the substance of the dispute rendered by an arbitral tribunal; and (ix) to provide that, for purposes of enforcement of foreign awards, every arbitral award made in a country to which one of the two international Conventions relating to foreign arbitral awards to which India is a party applies, will be treated as a foreign award. 5. The Bill seeks to achieve the above objects. (Emphasis supplied) The Act has since been amended in 2015, 2019 and 2021. 42. It is time now to analyse the conspectus of the legal provisions of the A&C Act that are relevant for answering the issue at hand. Section 5 is an important provision which reads as under : - "5. Extent of judicial intervention.-Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part. (Emphasis Supplied) 43. It will be noticed that the section begins with a non-obstante clause and states that notwithstand....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e the arbitral tribunal takes a decision rejecting the objection under subsections (2) and (3) it shall continue with the arbitral proceedings and make the award and any such decision upholding the jurisdiction or authority is challengeable only at the stage of Section 34 and no court will intervene pending the proceedings before the arbitrator. However, Section 37(2) provides an appeal to the court in case the arbitrator upholds the objection to jurisdiction or authority. Here again judicial hands-off is specifically provided and wherever intervention was permitted it took care to make specific provisions for the same. Section 29A is a specific instance in point where Courts' intervention is provided for in the context of extension of time for completion of proceedings. Thereafter, for the purpose of this reference, the next set of sections that would merit discussion is Sections 31 to 43. 46. Section 31 deals with form and contents of arbitral award. Subsection (1) mandates that the arbitral award shall be made in writing and signed by the members of the arbitral tribunal. Sub-section (4) states that the award shall state its date and the place of arbitration. Sub-section 7(a)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ime within which it shall make a correction, give an interpretation or make an additional arbitral award under sub-section (2) or subsection (5). (7) Section 31 shall apply to a correction or interpretation of the arbitral award or to an additional arbitral award made under this section." 48. A careful reading of Section 33 would indicate that post the award and subject to the conditions prescribed therein, (a) either party after notice to the other may request the arbitral tribunal to correct any computation errors and any clerical or typographical errors or any errors of a similar nature occurring in the award; (b) if so agreed by the parties, any party, with notice to the other party, may request the arbitral tribunal to give an interpretation of a specific point or part of the award; (c) such requests, as mentioned above, is to be dealt with by the arbitral tribunal within 30 days from the date of receipt of request and any such interpretation given shall form part of the award; (d) that on its own initiative, the arbitral tribunal may correct any error or nature of a computation clerical or typographical error within 30 days from....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or (b) the Court finds that- (i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or (ii) the arbitral award is in conflict with the public policy of India. Explanation 1.-For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,- (i) the making of the award was induced or affected by fraud or corruption or was in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cation for setting aside arbitral awards. It opens with the phrase "recourse to a Court against an arbitral award which is to be made only by an application for setting aside in accordance with sub-section (2) and (3)". "Hence, an application can only be for setting aside" the award which should be in accordance with the grounds under sub-section (2) and (3). Sub-section (2) opens with the phrase "an arbitral award may be set aside by the court" and "only if" the party make out the grounds set out therein. 53. Section 34(2)(a) deals with parties being under some incapacity; arbitration agreement not being valid under the law to which the parties have subjected it or under the law for the time being in force; no proper notice of the appointment of arbitrator or the arbitral proceedings being given or the party being otherwise unable to present the case or that the arbitral award dealt with disputes not contemplated by or not falling within the terms of the submission to arbitration or it contained decisions on matters beyond the scope of arbitration; 54. Section 34(2)(a)(iv) has an important proviso which states that if the decisions on matters submitted to arbitration can be ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to is Section 43(4) which deals with the situation post the setting aside of the award. Section 43(4) reads as under:- "Section 43(4)- Where the Court orders that an arbitral award be set aside, the period between the commencement of the arbitration and the date of the order of the Court shall be excluded in computing the time prescribed by the Limitation Act, 1963 (36 of 1963), for the commencement of the proceedings (including arbitration) with respect to the dispute so submitted." 59. The overarching note of restraint in judicial intervention as set out in Section 5; the proscription for intervention set out in Section 13(5) and 16(5); the range of options under Section 33 for the parties and the arbitrator to carry out repairs to the award in the manner set out there in; the limited option to seek recourse to set aside on prescribed grounds with the shackle "only if" in Section 34(2) and the further safety valve available in Section 34(4), to go back to the arbitrator under circumstances mentioned therein are clear pointers about the acutely circumscribed nature of the power in the Section 34 court. This, viewed in the background of the fact that parties have with ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cial intervention to matters expressly governed by Part I of the Arbitration Act. The matters governed by Part I inter alia include: 86.1. Section 8 which mandates judicial authorities to refer parties to arbitration when prima facie there is a valid arbitration agreement; 86.2. Section 9 which allows Courts to issue interim measures on an application made by a party to an arbitration agreement; 86.3. Section 11 which empowers the Supreme Court or the High Courts to appoint arbitrators on an application made by parties to an arbitration agreement; 86.4. Section 27 which allows the Arbitral Tribunal to request the Court for assistance in taking evidence; and 86.5. Section 34 which empowers the Court to set aside an arbitral award on the basis of the limited grounds mentioned therein. 87. Section 5 has two facets - positive and negative. The positive facet vests judicial authorities with jurisdiction over arbitral proceedings in matters expressly allowed in or dealt with under Part I of the Arbitration Act. The flip side to this approach is that judicial authorities are prohibited from intervening in arbitral proceedings in situat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he date of commencement of interest from the awarded date of August, 1993 to 30.03.1998, which was the date when the Award came to be passed. This authority is of little help since the issue that arises for consideration was not debated and it was on the assumption that the power existed. 63. Insofar as the judgment in J.C. Budhraja vs. Chairman, Orissa Mining Corporation Ltd. and Another, (2008) 2 SCC 444 is concerned, that case arose under the Arbitration Act, 1940. In the said case, the Arbitrator awarded a sum of Rs.1,02,66,901.36 (which was more than the claim of Rs. 95,96,616.00) with interest @ 12% p.a. from 01.08.1997 till date of Award and future interest @ 6% p.a. from the expiry of one month from the date of the Award till date of decree. The Award was in respect of 35 claims. Claim Nos. 1-16 related to the schedule of items under the contract and claim Nos. 17 to 34 were in respect of work which did not form part of the contract schedule and Claim No. 35 related to escalation in cost of labour and material on account of delay in execution. The Civil Judge (Senior Division) Bhubaneshwar, overruling the objections of the award debtor made the award a rule of the court.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... guarantee of the said two dates. Paras 38 & 39 read as under:- "38. The bank guarantee given on 24-2-2000 was a performance bank guarantee and the claimant is entitled for return of the amount for which the bank guarantee was given. The Arbitral Tribunal, however, failed to take notice of the fact that the other two bank guarantees were given for the amounts to be advanced by the Board. In fact, the Board had advanced the said amounts to the claimants. We are of the opinion that the claimant is not entitled for return of the amounts involved in the bank guarantees dated 22-2-2000 and 23-2-2000 as they were towards the amounts advanced by the Board. The rejection of the claim pertaining to the damages mentioned in Ext. HH of the statement of claim which includes loss of profit, overheads and loss of commercial opportunities clearly indicates that the Arbitral Tribunal never intended to grant any damages to the claimant. The claims allowed by the Arbitral Tribunal pertained only to the return of the claimants' money involved in the bank guarantees and the amounts actually spent by the claimants. 39. We uphold the award of the Arbitral Tribunal with the modifica....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ders, (1980) 1 SCC 370 has lucidly captured this, in the following words :- "10. Two principles of construction - one relating to casus omissus and the other in regard to reading the statute as a whole - appear to be well settled. In regard to the former the following statement of law appears in Maxwell on Interpretation of Statutes (12th Edn.) at p. 33: "Omissions not to be inferred.-It is a corollary to the general rule of literal construction that nothing is to be added to or taken from a statute unless there are adequate grounds to justify the inference that the legislature intended something which it omitted to express. Lord Morsey said: 'It is a strong thing to read into an Act of Parliament words which are not there, and in the absence of clear necessity it is a wrong thing to do'. 'We are not entitled', said Lord Loreburn L.C., 'to read words into an Act of Parliament unless clear reason for it is to be found within the four corners of the Act itself'. A case not provided for in a statute is not to be dealt with merely because there seems no good reason why it should have been omitted, and the omission appears in consequence to have been unintentional." ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d as permitted in the Act and as reinforced by Section 5 of the said Act is to file an application to set aside or annul the award by establishing the grounds prescribed therein. As already pointed out, Section 5 mandates that no judicial authority is to intervene except where so provided under the A&C Act. THE FALLACY IN THE 'HARDSHIP' ARGUMENT: - 77. The argument that absurdities will result and hardship will be caused if power to modify is not read in has no merit. There are at least two compelling reasons to hold so. The A&C Act in Section 43(4) itself contemplates that on the setting aside of the award the option is to commence proceedings including arbitration with respect to the dispute. The law makers are fully conscious of the situation that setting aside of the award will result in the dispute continuing to be thrown open at large since notwithstanding the setting aside of the award the legal position is that the arbitration agreement survives, except in situations where the order setting aside has findings impinging on the validity of the arbitration agreement itself. 78. Though said in the context of Section 19 of the 1940 Act, Juggilal Kamlapat v. General Fibr....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Chief Justice, Sundaresh Menon of the Supreme Court of Singapore explains this concept in AKN vs. ALC, 2015 SGCA 63, thus: "51. There is simply nothing to warrant the conclusion that where an award has been set aside, the tribunal which made that award would somehow resume the ability and mandate to determine afresh the matters that had been dealt with in the award. But, as alluded to above, this goes to the mandate of that particular tribunal. The fact that the award has been set aside would not, in and of itself, affect the continued validity and force of the arbitration agreement between the parties, save in the situation where the award was set aside on the ground that there was no arbitration agreement between the parties. In L W Infrastructure (HC), Belinda Ang J described this as "Situation 2" and observed as follows (at [48]): Similarly, where an arbitral award is "beyond power" in the sense that the tribunal lacks jurisdiction to deal with the dispute altogether (for instance, where there is no valid agreement to arbitrate, where a party to the arbitration agreement was under some incapacity or where the arbitral tribunal has not been properly appointed) ... tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of such agreement, there remains the possibility that objections might yet be taken by one of the parties to any attempt by the other to re-appoint a member of the previous tribunal, on the grounds that there exist justifiable doubts as to the impartiality of the prospective appointee by reason of his or her prior involvement in the matter and in the award that has been set aside. This will plainly be a fact-sensitive inquiry and we say no more about this. (c) We think it is inevitable that in attempting to commence a fresh arbitration, consideration will have to be given to the issue of res judicata. We deal with this in the next section of this judgment. (Emphasis supplied) 81. Hence, recommencement of proceedings including arbitration proceedings- wherever legally maintainable- being expressly contemplated in the statute the same cannot be brushed aside on the grounds of causing hardship to the parties. Parties, no doubt, will have all contentions and defences open as are available to them in law. CONTRACTUAL OUSTER OF THE NORMAL JUDICIAL PROCESS: - 82. The second reason is equally compelling. As briefly discussed earlier, when parties agree to arbit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Contents, date and signature of judgment.-The judgment of the Appellate Court shall be in writing and shall state- (a) the points for determination; (b) the decision thereon; (c) the reasons for the decision; and (d) where the decree appealed from is reversed or varied, the relief to which the appellant is entitled; and shall at the time that it is pronounced be signed and dated by the Judge or by the Judges concurring therein. 32. What judgment may direct.-The judgment may be for confirming, varying or reversing the decree from which the appeal is preferred, or, if the parties to the appeal agree as to the form which the decree in appeal shall take, or as to the order to be made in appeal, the Appellate Court may pass a decree or make an order accordingly. 33. Power of Court of Appeal.-The Appellate Court shall have power to pass any decree and make any order which ought to have been passed or made and to pass or make such further or other decree or order as the case may require, and this power may be exercised by the Court notwithstanding that the appeal is as to part only of the decree and may be exercised in favour of all or any of the respondents or parties, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erversity of the award goes to the root of the matter without there being a possibility of alternative interpretation which may sustain the arbitral award. Section 34 is different in its approach and cannot be equated with a normal appellate jurisdiction. The mandate under Section 34 is to respect the finality of the arbitral award and the party autonomy to get their dispute adjudicated by an alternative forum as provided under the law. If the courts were to interfere with the arbitral award in the usual course on factual aspects, then the commercial wisdom behind opting for alternate dispute resolution would stand frustrated. 25. Moreover, umpteen number of judgments of this Court have categorically held that the courts should not interfere with an award merely because an alternative view on facts and interpretation of contract exists. The courts need to be cautious and should defer to the view taken by the Arbitral Tribunal even if the reasoning provided in the award is implied unless such award portrays perversity unpardonable under Section 34 of the Arbitration Act." 88. There is a sound jurisprudential reason for the same. Arbitration has its origin in the contract....
X X X X Extracts X X X X
X X X X Extracts X X X X
...."when a person is charged with an offence consisting of several particulars". The section permits the court to convict the accused "of the minor offence, though he was not charged with it". Sub-section (2) deals with a similar, but slightly different situation. "222. (2) When a person is charged with an offence and facts are proved which reduce it to a minor offence, he may be convicted of the minor offence, although he is not charged with it." 16. What is meant by "a minor offence" for the purpose of Section 222 of the Code? Although the said expression is not defined in the Code it can be discerned from the context that the test of minor offence is not merely that the prescribed punishment is less than the major offence. The two illustrations provided in the section would bring the above point home well. Only if the two offences are cognate offences, wherein the main ingredients are common, the one punishable among them with a lesser sentence can be regarded as minor offence vis-à-vis the other offence. 17. The composition of the offence under Section 304-B IPC is vastly different from the formation of the offence of murder under Section 302 IPC ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... now) from the stage of defence evidence. He is put to notice that unless he disproves the presumption, he is liable to be convicted under Section 304-B IPC." ( Emphasis supplied ) 93. Hence, power to modify which would include the Court entering the arena of adjudicating the dispute on merits when parties have contractually agreed to go to the arbitrator, cannot be said to be subsumed in the power to "set aside". It will be a different matter if the power to modify or power to vary is conferred by the legislature itself. Post the UNCITRAL Convention when the participating countries legislated, while India did not recognize in the statute the power to modify or vary, several jurisdictions like U.K. and Singapore positively legislated. The provision in the U.K. State Arbitration Act and the Singapore Arbitration Act are set out hereinbelow to bring home the point. Relevant provisions under the English Arbitration Act, 1996 "67. Challenging the award: substantive jurisdiction. (1)A party to arbitral proceedings may (upon notice to the other parties and to the tribunal) apply to the court- (a)challenging any award of the arbitral tribunal as to its ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion. (4)An application for leave to appeal under this section shall identify the question of law to be determined and state the grounds on which it is alleged that leave to appeal should be granted. (5)The court shall determine an application for leave to appeal under this section without a hearing unless it appears to the court that a hearing is required. (6)The leave of the court is required for any appeal from a decision of the court under this section to grant or refuse leave to appeal. (7)On an appeal under this section the court may by order- (a)confirm the award, (b) vary the award, (c)remit the award to the tribunal, in whole or in part, for reconsideration in the light of the court's determination, or (d)set aside the award in whole or in part. The court shall not exercise its power to set aside an award, in whole or in part, unless it is satisfied that it would be inappropriate to remit the matters in question to the tribunal for reconsideration. (8) The decision of the court on an appeal under this section shall be treated as a judgment of the court for the purposes of a further ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the arbitral award can be varied, having regard to the arbitral records. Needless to state, any such modification to the arbitral award can only be ordered by the Court if the strict parameters for setting aside the arbitral award under section 34 of the Act are made out, and there is no need to adduce fresh evidence. 3.25.11 An express provision incorporated in the Act is likely to streamline the process, saving time, effort, and resources for all the parties involved. Thus, granting the Courts the authority to modify awards within well-defined limits would help strike a balance between preserving finality of the arbitral process and ensuring fairness. 3.25.12 The Committee recommends amendment to sub-sections (2) and (2A) of section 34 to substitute the words "set aside by the Court", with the words "set aside in whole or in part by the Court" and to add the following proviso, namely "Provided that in cases where the Court sets aside the arbitral award in whole or in part, the Court may make consequential orders varying the award only in exceptional circumstances to meet the ends of justice.". Recommendation It is proposed to amend section 34....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on as they prefer the expediency and finality offered by it." (Emphasis supplied) 96. Notwithstanding the fact that there have been three occasions for the Parliament to amend the A&C Act in 2015, 2019 and 2021, the power to modify has not been incorporated. Hence, for the Court to read the power would be completely untenable and the submissions on that score are rejected. LEGAL MAXIMS - TO BE DEPLOYED AFTER ASCERTAINING CONTEXT: 97. It is apt to observe herein that mechanical deployment of the legal maxims unless they apply on all fours to a case should be discouraged. Legal maxims, no doubt, are very useful tools but its application has to be with great caution, for in law things are not cut and dried and nicely weighed in all situations. There will be shades of grey and sometimes legal maxims if deployed without adequate attention may lead to pitfalls. Justice Benjamin Cardozo, in Berkey Vs. Third Avenue Railway Co., 244 N.Y, 84, speaking of metaphors in law had the following caution to administer:- "Metaphors in law are to be narrowly watched, for starting as devices to liberate thought, they end often by enslaving it." What Cardozo J. said of meta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of the Code as has been specifically stated in s. 151 itself. But those powers are not to be exercised when their exercise may be in conflict with what had been expressly provided in the Code or against the intentions of the Legislature. This restriction, for practical purposes, on the exercise of these powers is not because these powers are controlled by the provisions of the Code but because it should be presumed that the procedure specifically provided by the Legislature for orders in certain circumstances is dictated by the interests of justices." (Emphasis supplied) Nothing more needs to be said on this aspect of the matter. DOCTRINE OF IMPLIED POWERS:- 100. Undeterred, an attempt was made to fall back upon the doctrine of implied powers to somehow vest in Section 34 Court a power to modify the award. It is well settled that if a statute conferring a power to be exercised on certain conditions, the conditions prescribed are normally held to be mandatory and a power inconsistent with those conditions is impliedly negatived. No doubt, there is a principle in law that a Court must as far as possible adopt a construction which effectuates the legislative intent....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rdship will cause to the parties. PARTY AUTONOMY:- 104. It is time now to discuss the concept of party autonomy, which is the underlying theme of the arbitration process. Gary B. Born, in his commentary "International Commercial Arbitration", South Asian Reprint Edition published by Wolters Kluwer discussed the concept of party autonomy in the following terms. "A further objective, and perceived advantage, of international commercial arbitration is the effort to maximize party autonomy and provide procedural flexibility. As discussed below, leading international arbitration conventions and national laws accord parties broad autonomy to agree upon the substantive laws and procedures applicable to "their" arbitrations. This emphasis on the importance of party autonomy parallels applications of the doctrine throughout the field of contemporary private international law, and commercial law more generally, but has particular significance in the field of international commercial arbitration. One of the principal reasons that this procedural autonomy is granted is to enable the parties and arbitrators to dispense with the technical formalities and procedures of national cou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rcentage of interest awarded by the arbitrators. The aspect of award of interest is discussed hereinbelow, while dealing with Section 34(4). In this segment of the judgment the only question considered is whether power under Article 142 of the Constitution would be exercised by this Court to modify in any manner an arbitral award when matters come up after initiation of proceedings under Section 34. 109. A Constitution Bench of this Court in Supreme Court Bar Association vs. Union of India and Another, (1998) 4 SCC 409, while delving on the scope of this Court's power under Article 142, held that the power under Article 142 cannot be used to "supplant" substantive law applicable to the case or cause under consideration of the Court. It has been held that express statutory provisions cannot be ignored and Article 142 cannot be used to achieve indirectly what cannot be achieved directly. It has been held that to balance the equities between conflicting claims of the litigating parties "ironing out the creases" in a cause or matter before it could be done but, in no circumstance will substantive statutory provision dealing with the subject matter be given a go bye. It has been c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....with a contempt of court case by suspending his licence to practice, a power otherwise statutorily available only to the Bar Council of India, on the ground that the contemner is also an advocate, is, therefore, not permissible in exercise of the jurisdiction under Article 142. The construction of Article 142 must be functionally informed by the salutary purposes of the article, viz., to do complete justice between the parties. It cannot be otherwise. As already noticed in a case of contempt of court, the contemner and the court cannot be said to be litigating parties. 48. "The Supreme Court in exercise of its jurisdiction under Article 142 has the power to make such order as is necessary for doing complete justice "between the parties in any cause or matter pending before it". The very nature of the power must lead the Court to set limits for itself within which to exercise those powers and ordinarily it cannot disregard a statutory provision governing a subject, except perhaps to balance the equities between the conflicting claims of the litigating parties by "ironing out the creases" in a cause or matter before it. Indeed this Court is not a court of restricted jurisdic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....c policy. Amplifying further, it was held that specific public policy should be understood as some express preeminent prohibition in any substantive law and not mere stipulations and requirements to a particular statutory scheme. 113. From the reasons stated in the earlier part of the judgment, it is crystal clear that Courts exercising powers under Section 34, which will include the appellate hierarchy cannot change, vary, or qualify "arbitrary awards" as it strikes at the very core and root of the ethos of the arbitration process. Such an exercise of power will derogate from the core aspects of the A&C Act and will breach a pre-eminent prohibition in the said Act. 114. Apart from the above, if power is reserved for this Court to modify, at the fag end of the litigation, contracting parties will have grave uncertainties as they would not be sure of how the matter will play out when it reaches the apex Court. It will be antithetical to arbitration as an alternative and efficacious mode of dispute resolution. 115. Hence, in matters arising out of Section 34 of the A&C Act, this Court will refrain from exercising its power under Article 142, in view of the law laid down in S....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... plea, the Court ruled that there was no sanction for the same in terms of the A&C Act. The guidelines for ad-hoc arbitrations were only on the modalities for arriving at the consensus and there was no deviation from the statute. That case has no relevance here. SUBMISSIONS BASED ON PECULIARITIES IN STATUTORY ARBITRATIONS:- 118. Submissions were made that if power to modify is not recognised in Section 34, enormous hardship will be caused in cases where the A&C Act has been made applicable to some statutes. Example of the National Highways Authority Act was given. It was contended that against the order awarding compensation for acquisition by the competent authority, reference is made to the arbitrator appointed by the Central Government and against his award only a recourse to Section 34 is available. The contention was that, these are compulsory arbitrations and not consensual arbitrations. Learned Senior Counsel Mr. Gourab Banerji, responded to this submission by arguing that the interpretation to the A&C Act has to be uniform and if there are any maladies in the other statutes by which arbitrators are appointed, the solution will have to be found by addressing the grieva....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in part, the court may also order that any provision that an award is a condition precedent to the bringing of legal proceedings in respect of a matter to which the arbitration agreement applies, is of no effect as regards the subject matter of the award or, as the case may be, the relevant part of the award." (Emphasis supplied) 123. It will be noticed that in the United Kingdom and certain other countries, clear statutory provisions exist stating that where the award is varied the variation has the effect as part of the Tribunal's award. It will be noticed that to give effect to the New York Convention, like the A&C Act has provisions in Part II, several other countries have also adopted statutory provisions for recognition and enforcement of foreign awards. Learned Senior Counsels submit that if the award is modified by the Section 34 Court in India, any enforcement brought abroad will run into complications as objections will be taken that what is sought to be enforced is not the award but the judgment of the Court. There is merit in the submission and this is one another reason why these matters are best left for the legislature to be comprehensively addressed. En....
X X X X Extracts X X X X
X X X X Extracts X X X X
....). The other judgments prior to Hakeem (supra) have not discussed the aspect whether power to modify exists in a Section 34 Court. Hence, we reject the argument of parties that Hakeem (supra) is per incuriam. Hakeem (supra) insofar as it held that a Section 34 Court has no power to modify the award, is not per incuriam. POWERS UNDER SECTION 33 AND 34 (4) OF THE A&C ACT - THE 'SAFETY VALVES':- 128. As to what errors could be corrected and how it could be done has been first provided for in Section 33 of the A&C Act. Section 33 deals with correction and interpretation of award and making of additional award by the arbitrator. The provision has already been discussed in the earlier part of this judgment. Section 33(i)(a) deals with correction of computation error, clerical or typographical error or any other error of a similar nature occurring in the award. This provision is akin to Section 15 (b) and (c) of the 1940 Act. Power is also there in the arbitral Tribunal to Suo Moto correct these errors. Even in the Code of Civil Procedure, Section 152 provides for a similar power for the Courts. Section 152 is set out hereinbelow: "152. Amendment of judgments, decrees or or....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e under the prior clauses of Section 34 and entertains the opinion that there are grounds for setting aside the arbitral award. At this stage, in given cases where it considers appropriate and a request is made by a party even orally, the Court may adjourn the proceeding for a period of time in order to give the arbitral Tribunal an opportunity to resume the arbitral proceeding or to take such other action as in the opinion of the arbitral Tribunal will eliminate the grounds for setting aside the award. The Court shall in the order indicate its reasons for entertaining the opinion and as to why it considers that there are grounds for setting aside the arbitral award. Ordinarily, it will be the award holder, who will be the respondent in the Section 34 application, who will be interested in sustaining the award. The very fact that he is stoutly defending the award is a clear indication that he wants the award to be sustained and grounds, if any, which exist to set aside the award are eliminated. The grounds may be of different hues. 133. To illustrate, Section 31 which speaks of form and contents of the arbitral award has the following prescription:- (i) The award shall be signed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y the learned Senior Counsel appearing for the respondent in the judgment in ITO v. Murlidhar Bhagwan Das [ITO v. Murlidhar Bhagwan Das, AIR 1965 SC 342] . It is clear from the aforesaid judgment that "finding is a decision on an issue". Further, in the judgment in J. Ashoka v. University of Agricultural Sciences [J. Ashoka v. University of Agricultural Sciences, (2017) 2 SCC 609 : (2017) 1 SCC (L&S) 517], this Court has held that "reasons are the links between the materials on which certain conclusions are based and the actual conclusions". 38. In absence of any finding on Point 1, as pleaded by the respondent and further, it is their case that relevant material produced before the arbitrator to prove "accord and satisfaction" between the parties, is not considered, and the same amounts to patent illegality, such aspects are to be considered by the Court itself. It cannot be said that it is a case where additional reasons are to be given or gaps in the reasoning, in absence of a finding on Point 1 viz. "whether the contract was illegally and abruptly terminated by the respondent?". 39. Further, Section 34(4) of the Act itself makes it clear that it is the discret....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he arbitral proceedings. 43. Further, as rightly contended by the learned counsel appearing for the respondent, that on the plea of "accord and satisfaction" on further consideration of evidence, which is ignored earlier, even if the Arbitral Tribunal wants to consciously hold that there was "accord and satisfaction" between the parties, it cannot do so by altering the award itself, which he has already passed." ( Emphasis supplied ) It is clear from the above that the power to remit under Section 34(4) can be exercised for undoing the curable defects. AWARD OF INTEREST- USE OF SECTION 34(4) POWER:- 135. Equally, in a given case where the Court feels that interest has not been awarded or interest beyond the terms of the agreement have been awarded or excessive interest have been awarded or abysmally low interest is awarded, the Court under Section 34 cannot modify the interest. The course of action to be adopted would be to record reasons in the order and remit the matter to the arbitrator for the arbitral Tribunal to make the necessary course correction. It is true that if only on account of interest if awards are to be set aside, the whole exercise will....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pographical error or any other errors of similar nature. Section 33(3) enables the arbitral Tribunal itself to correct any of those errors. No doubt, a time limit of 30 days has been prescribed for the parties to move unless there is a contract to the contrary. Equally, sub-Section 2 of Section 33 directs that the correction should be made within 30 days and sub-Section 6 of Section 33 states that the arbitral Tribunal may if necessary extend the period of time within which it shall make a correction. 138. In this regard, it is useful to refer to the recent judgment of this Court in North Delhi Municipal Corporation v. M/S. S.A. Builders Ltd., 2024 INSC 988, wherein it was held as under: "45.1. As per sub-Section (1), within 30 days from the date of receipt of the arbitral award, a party with notice to the other party, may request the arbitral tribunal to correct any computation errors, any clerical or typographical errors or any other errors of a similar nature occurring in the award. Further, if the parties agree, a party with notice to the other party, may request the arbitral tribunal to give an interpretation of a specific point or part of the award. The period of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 33 or having moved the arbitrator has mechanically rejected the correction? 140. With regard to Section 152 CPC, this Court after holding that Section 152 is founded on the maxim - actus curiae neminem gravabit speaking through Dr. Arijit Pasayat J. in U.P. SRTC vs. Imtiaz Hussain, (2006) 1 SCC 380 lucidly explained the position thus. "8. The basis of the provision under Section 152 of the Code is founded on the maxim "actus curiae neminem gravabit" i.e. an act of court shall prejudice no man. The maxim "is founded upon justice and good sense; and affords a safe and certain guide for the administration of the law", said Cresswell, J. in Freeman v. Tranah [12 CB 406 : 138 ER 964] (ER p. 967). An unintentional mistake of the court which may prejudice the cause of any party must and alone could be rectified. In Master Construction Co. (P) Ltd. v. State of Orissa [(1966) 3 SCR 99 : AIR 1966 SC 1047] it was observed that the arithmetical mistake is a mistake of calculation, a clerical mistake is a mistake in writing or typing whereas an error arising out of or occurring from accidental slip or omission is an error due to careless mistake on the part of the court liable to b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n award is recognised in Section 34(2)(a)(iv) which reads as under. "34(2)(a)(iv). the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside;" 144. A reading of the above sub-Section reveals that where the arbitral award deals with disputes not contemplated by or not falling within the terms of the submission to arbitration or it contains decision on matters beyond the scope of the submission to arbitration, the award can be set aside. 145. However, the proviso states that if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside. 146. So, severance as a concept is recognised intrinsically in Section 34 itself on the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....th in terms of variability and quantum without any co-relation to the bad parts of the award. The submission was that if the good parts are intermingled with the bad parts of the award in a manner that it is impossible to sever the bad parts, the principle of severability cannot be applied. Mr. Gaurav Pachnanda, learned Senior Counsel illustrated the submission by submitting that if a final award is arrived by netting off claims and counter claims, principles of severability cannot be applied as what is available in the award was a composite award with a single amount mentioned therein enforceable by the successful party. There is merit in this submission and such prerequisites are essential while severing parts of the award. 150. A Full Bench of the High Court of Judicature at Bombay, in R.S. Jiwani vs. Ircon International Ltd., 2009 SCC OnLine Bom 2021, held as under. "20. The cases would be different where it is not possible or permissible to sever the award. In other words, where the bad part of the award was intermingled and interdependent upon the good parts of the award there it is practically not possible to sever the award as the illegality may affect the award....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsibly conceivable situation where while some parts of the award may have dealt with non-arbitrable issues or disputes falling outside the scope of the reference, its other components or parts constitute an adjudication which could have been validly undertaken by the AT. The Proviso thus seeks to address such a situation and redeems as well as rescues the valid parts of an award. This saves the parties from the spectre of commencing arbitral proceedings all over and from scratch in respect of all issues including those which could have validly formed part of the arbitration. 39. The grounds for setting aside encapsulated in Section 34(2)(b) on the other hand relate to the merits of the challenge that may be raised in respect of an award and really do not deal with fundamental invalidity. However, the mere fact that the Proviso found in sub-clause (iv) of Section 34(2)(a) is not replicated or reiterated in clause (b) of that provision would not lead one to conclude that partial setting aside is considered alien when a court is considering a challenging to an award on a ground referable to that clause. In fact, the Proviso itself provides a befitting answer to any interpreta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ard in itself. This, according to learned counsels, clearly flows from the power of the AT to not just render a final award but also and in the course of arbitral proceedings render interim awards in respect of various claims. It was rightly pointed out by learned counsels that each such decision on a claim could stand independently and be final and binding in itself. Those findings or decisions in relation to various claims that stand placed before the AT may each constitute an award itself and the operative directions framed representing the disposition of all such claims. As was rightly contended by Mr. Mukhopadhaya, the declaration with respect to entitlement and the award of a money claim consequent thereto would be liable to be viewed as independent Arbitral Awards. Mr. Sood had chosen to describe such a disposition of claims as being an "agglomeration" of awards. The Court accords its emphatic and wholehearted acceptance to the aforenoted submissions and comes to the conclusion that an award is thus liable to be viewed and understood accordingly. It thus comes to conclude that each such decision rendered by an AT could be validly viewed as the decision rendered on a particul....
X X X X Extracts X X X X
X X X X Extracts X X X X
....so wielded would continue to remain one confined to "setting aside" as the provision bids one to do and would thus constitute a valid exercise of jurisdiction under Section 34 of the Act. L. The power to partially sever an offending part of the award would ultimately depend on whether the said decision is independent and distinct and whether an annulment of that part would not disturb or impact any other finding or declaration that may have been returned by the AT. The question of severability would have to be decided bearing in mind whether the claims are interconnected or so intertwined that one cannot be segregated from the other. This for the obvious reason that if the part which is sought to be set aside is not found to stand independently, it would be legally impermissible to partially set aside the award. A partial setting aside should not lead to a component of the award being rendered vulnerable or unsustainable. It is only when the award relates to a claim which is found to stand on its own and its setting aside would not have a cascading impact that the Court could consider adopting the aforesaid mode. M. The Court is thus of the firm opinion that the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s been stated in the judgment that the power must be exercised with caution. Here again, I am not able to agree with the said view for the reasons stated in my judgment. CONCLUSION:- (a) The Courts exercising power under Section 34 and Courts hearing appeals thereunder have no power to "modify" an award. (b) The power to modify is not a lesser power to that of the power to set aside, as the two operate in separate spheres and are not of the same genus. (c) The inherent power under Section 151 C.P.C. cannot be used to modify awards as it will be contrary to the express power mentioned in Section 34. Similarly, there is no scope for applying the doctrine of implied power to modify awards. (d) Article 142 of the Constitution of India will not be exercised by this Court to modify awards passed by arbitrators as it is well settled that the Article 142 power cannot be used to give a go by to the substantive statutory provision. (e) Interest awarded also cannot be modified in exercise of powers of setting aside and the course of action under Section 34(4) will have to be adopted as discussed in the judgment. (f) Hakeem (supra) is no....