SC insists on the power of the court to amend arbitral awards in limited circumstances

The Supreme Court Chief Justice Sanjiv Khanna and the General Justices BR Gavai, PV Sanjay Kumar, KV Viswanathan and Augustine George Masih were held in New Delhi by Chief Justice Sanjiv Khanna and Frions Br Gavai, PV Sanjay Kumar, KV Viswanathan and Augustine George Masih. |Picture source: ANI

The Supreme Court held in a majority judgment that the court had the right to amend the arbitral award in limited circumstances.

Chief Justice of India, Sanjiv Khanna, led five judges, and wrote the majority 4:1 view that under Article 34 of the Arbitration and Mediation Act 1996, authorized the court to authorize the court to change the arbitration award on limited grounds.

The amendment of the court is allowed to be invalid parts of the reward from its valid portion, or to get rid of the obvious printing, calculation, documentary errors in the reward, or after changing the reward interest if required.

The majority judgment says: “The scope of judicial intervention under Article 34 is limited to a limited reason clearly stipulated. The court has no authority to correct factual errors, reconsider the cost or review the merits of an arbitral award.”

Chief Justice Khanna ruled that the Supreme Court has the right to grant it inherent powers in the case of an arbitral award under Article 142 of the Constitution. However, the judgment warns that such power must be exercised with caution and caution within the scope of constitutional powers.

“For article 142 of the Constitution, the exercise of such power must be consistent with the basic principles and objectives behind the 1996 Act, rather than derogatory or suppression,” Chief Justice Khanna pointed out.

In opposition, KV Justice Viswanathan believes that the arbitration award cannot be modified unless expressly permitted by the arbitration regulations.

Judge Viswanathan believes that “the powers exercised under Section 34 of the 1996 Act, therefore, the courts in the appeal hierarchy have no right to amend the arbitral award.”

Justice Viswanasan’s views reflect the views of the Centre represented by lawyer Tushar Mehta, which had argued that the power to modify must be granted statutory authorization.

Attorneys who oppose the court’s right to amendment said this would lead to court orders and statutes to succeed the arbitral award. They said allowing courts to change the arbitral award would result in international rewards that would have an international impact when seeking a award under foreign conventions. They believe that: “The court order cannot replace an arbitral award, especially when the award is examined under the limited jurisdiction of Article 34.”

Justice Viswanathan’s minority opinion says Article 34 deals with “shelf” only, rather than amending the arbitral award through a court order.

Viswanathan Judicial noted: “The power of shelving will not include the power of modification, because the power of modification is not the power of shelving contains less power.”

Article 34 allows the parties to revoke the arbitration award with the court for several reasons, including the discovery that the award violates public policy or the basic policy of Indian law, or is caused by fraud or corruption, or is contrary to the basic concepts of morality and justice.

However, most judgments refer to several situations in which the Supreme Court itself was forced to amend the arbitral award to minimize lasting litigation and promote judicial purposes. EOM