The Supreme Court has reserved its verdict on the contentious issue of whether courts have the authority to modify arbitral awards under the Arbitration and Conciliation Act of 1996. The question, pivotal to the arbitration landscape in India, has captured the attention of the legal community, prompting a three-day hearing before a Constitution bench.
The bench, led by Chief Justice Sanjiv Khanna and comprising Justices B R Gavai, Sanjay Kumar, K V Viswanathan, and Augustine George Masih, deliberated on submissions from a panel of senior lawyers. Among them were Solicitor General Tushar Mehta, and advocates Arvind Datar, Darius Khambata, Shekhar Napahade, and Ritin Rai, each presenting differing views on the judicial powers over arbitral decisions.
Solicitor General Tushar Mehta, representing the Centre, argued on February 13 that the modification of arbitral awards should remain within the legislative domain to meet the evolving arbitration needs of the country. In contrast, advocate Arvind Datar supported the idea that courts, already vested with the authority to set aside arbitral awards on specific grounds, should logically possess the capability to modify them as well.
Advocate Shekhar Napahade agreed with Datar, advocating for judicial intervention in arbitration to extend to modifications of awards. This position highlights a significant divide in legal opinion regarding the balance between judicial oversight and the autonomy of arbitral tribunals.
The issue was escalated to the Constitution bench following a January 23 decision by a three-judge panel, which recognized the complexities and broad implications of the question. Arbitration, as defined by the Arbitration and Conciliation Act, is intended to minimize court interference, allowing private arbitration panels to resolve disputes efficiently.
Section 34 of the Act restricts courts from overturning arbitral awards except in cases of procedural discrepancies, breaches of public policy, or jurisdictional errors. Similarly, Section 37 outlines the appellate process concerning arbitration decisions, emphasizing limited judicial interference except in exceptional circumstances.
