Supreme Court to deliver verdict today on whether courts could modify arbitral awards

New Delhi: A five-judge Constitution bench of the Supreme Court is scheduled to deliver on Wednesday its verdict on the question whether courts could modify arbitral awards under the 1996 law on arbitration and conciliation.

A bench comprising Chief Justice Sanjiv Khanna and Justices B R Gavai, Sanjay Kumar, K V Viswanathan and Augustine George Masih on February 19 reserved its verdict in the case, the outcome of which could impact domestic and international arbitral awards.

The top court had commenced the final hearing on February 13 after the issue was referred to it by a three-judge bench on January 23.

Solicitor General Tushar Mehta aside from senior advocates Arvind Datar, Darius Khambata, Shekhar Napahade, Ritin Rai, Saurabh Kirpal and Gourab Banerji had argued in the case.

Lawyers led by Datar had argued that the courts, which were empowered under section 34 of the Arbitration and Conciliation Act, 1996 to set aside the arbitral awards on certain grounds, could also modify it as their powers included the smaller discretion.

Another set of lawyers had argued that the term "modify" which was not there in the statute couldn't be read into it to assume the non-existent powers.

The solicitor general had said the 1996 law was a "comprehensive and tailored" code dealing with every eventuality arising out of the arbitration proceedings and "reading something into it for finding a solution to the problem" should not be done.

The law officer had said not providing the power to modify the arbitral awards was a "conscious legislative choice".

Mehta had said, "The Act is a complete code. The omission of modification powers in the 1996 Act was a conscious departure, intended to streamline judicial intervention within a limited supervisory paradigm."

Datar had argued that the courts empowered to set aside arbitral awards could have the power to modify these decisions.

The Centre previously said the issue of power to modify arbitral awards should be left to the legislature keeping in mind the evolving arbitration requirements of the nation.

Arbitration is an alternative mode of dispute resolution under the Arbitration and Conciliation Act, 1996 and it minimises the role of courts to interfere with the awards by the tribunals.

While section 34 of the Act provides for setting aside of an arbitral award on limited grounds such as procedural irregularities, violation of public policy, or lack of jurisdiction, section 37 governs appeals against orders related to arbitration, including those refusing to set aside an award.