The Supreme Courtroom on Wednesday held that appellate courts can modify arbitral awards beneath the Arbitration and Conciliation Act, 1996, however ought to achieve this with “nice care and warning”.
In a 4:1 majority ruling, the SC bench comprising Chief Justice of India Sanjiv Khanna and Justices BR Gavai, Sanjay Kumar and AG Masih held that courts have “restricted energy” beneath Part 34 and 37 of the Act to change arbitral awards. Part 34 of the Arbitration Act offers with functions for setting apart an arbitral award, whereas part 37 offers with the circumstances wherein an enchantment would lie in opposition to the order in an arbitral dispute.
Studying out the order, the CJI mentioned that “this restricted energy” can be utilized solely when the award is severable — by separating the invalid portion from the legitimate portion of the award, to appropriate any clerical, computational or typographical errors which seem inaccurate on the face of the document, and to change post-award curiosity in some circumstances.
The SC may additionally modify awards by exercising powers beneath Article 142 of the Structure, the bench mentioned, including that it “should be exercised with nice care and warning and inside the limits of Constitutional energy.”
Justice KV Viswanathan delivered a dissenting opinion within the case, disagreeing with the bulk on sure facets.
He held that courts exercising powers beneath Part 34 and the courts listening to appeals therefrom beneath Part 37 haven’t any energy to change an award.
“Energy to change isn’t a lesser energy than the facility to put aside as the 2 function in separate spheres. The inherent energy beneath Part 151 CPC can’t be used to change awards, as it’s in opposition to the categorical provision of Part 34. Equally, there isn’t any scope to invoke the doctrine of implied powers to indicate the facility to change the award. Article 142 of the Structure can’t be exercised to change an award, as it’s effectively settled that Article 142 can’t be used to go by the substantive statutory provisions,” Justice Viswanathan additional mentioned.
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The 5 judges had been answering a query raised by a three-judge bench in February 2024 on whether or not courts can modify arbitral awards.
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