Courts Can Modify Arbitral Awards: SC

But 4:1 verdict sets strict conditions for any intervention

- BHAVINI MISHRA

The Supreme Court ruled on Wednesday that courts have the authority to modify arbitral awards, but only within narrow confines.

A five-judge Constitution Bench, in a 4-1 majority decision — by Chief Justice Sanjiv Khanna, and Justices B R Gavai, Sanjay Kumar and A G Masih — held that courts might exercise powers under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, to alter arbitral awards in certain situations.

The majority judgment emphasised that courts should intervene only sparingly — such as correcting clerical or calculation mistakes, adjusting interest, or making similarly limited changes — without nullifying the entire award.

In extraordinary cases, the Bench said, Article 142 of the Constitution, which allows the Supreme Court to pass orders to do "complete justice", may be invoked.

Justice K V Viswanathan dissented with the majority verdict and held that under Section 34 of the Act, courts cannot modify the award unless expressly authorised by the law, since it amounts to exercising a merits review. "If there is any need for modification of interest, the matter has to be remitted back to the Tribunal as this can lead to uncertainties and difficulties in enforcing foreign awards," said Justice Viswanathan.