Supreme Court Weighs in on Arbitral Award Modification Power

The Supreme Court is hearing arguments on whether it has the authority to modify arbitral awards under the Arbitration and Conciliation Act, 1996. A five-judge Constitution bench is examining the power of modification under Sections 34 and 37, amid calls for clarity on this significant legal issue.

The Supreme Court's five-judge bench initiated hearings on a pivotal legal question: do courts possess the authority to modify arbitral awards under the 1996 Arbitration and Conciliation Act? This discussion unfolds against the backdrop of minimal court interference traditionally upheld in these processes.

The Act's Section 34 permits setting aside arbitral awards only on specified grounds, such as procedural anomalies or public policy breaches. Section 37 continues this minimal intervention stance, warranting judicial oversight in exceptional scenarios. Earlier, in January, a three-judge panel had elevated this issue's importance by referring it to the broader bench.

On Thursday, the Supreme Court focused on revisiting the precedent set in Project Director, NHAI vs M Hakeem, deliberating if the court holds modification powers under Sections 34 and 37. This stems from the case of Gayatri Balasamy v. ISG Novasoft Technologies Ltd., highlighting the need for judicial clarity amidst traditionally narrow interpretations.