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Informist, Wednesday, Apr. 30, 2025

 

--SC says courts have limited powers to modify arbitral awards 

--SC: Courts can correct typographical mistakes in arbitral awards 

--SC: Courts can correct post arbitral award interest in some cases 

 

NEW DELHI – A five-judge Constitution bench of the Supreme Court ruled Wednesday in a 4:1 majority judgment that courts in India have only limited powers to modify arbitral awards. This power can be exercised when an arbitral award is "severable" or when there are certain types of errors in the award, the bench headed by Chief Justice of India Sanjiv Khanna said.

 

An arbitral award is severable when it addresses multiple, distinct claims, and a part of the award is found to be invalid or illegal while the remaining parts are valid and enforceable. In essence, courts can then uphold the valid portions while setting aside the invalid ones.

 

Further, the bench said courts can modify arbitral awards to correct typographical or clerical errors. Post-award interest on arbitral awards can also be corrected in some circumstances, the bench said. Justice B.R. Gavai, Justice Sanjay Kumar, and Justice Augustine George Masih concurred with the chief justice.

 

The Supreme Court also said it can use Article 142 of the Constitution to modify arbitral awards to do complete justice. However, this power should be exercised with caution, it added. Article 142 of the Constitution empowers the Supreme Court to pass "any decree or order necessary for doing complete justice in any case or matter pending before it" within the country.

 

In his dissenting opinion, Justice K.V. Viswanathan said the top court cannot use Article 142 to modify arbitral awards. He held that courts cannot modify arbitral awards as that would hit the core aspect of arbitration. On the issue of post-award interest, too, Justice Viswanathan did not agree with the majority and said the issue ought to be referred back to arbitration.

 

In 2024, a three-judge bench of the top court had referred the issue to a five-judge Constitution bench after noting differing opinions in previous rulings. Solicitor General of India Tushar Mehta, appearing for the government, had said that under Section 34 of the Arbitration and Conciliation Act, 1996, the courts do not have the power to modify arbitral awards. They can only set aside an arbitral award as per a literal reading of Section 34 of the Act, Mehta had argued.  End

 

Reported by Surya Tripathi

Edited by Rajeev Pai

 

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