The Supreme Court has referred the matter regarding the powers of courts to modify an arbitral award under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996, to a five-judge Bench.
The order was passed by the three-judge Bench of Chief Justice of India Sanjay Kumar and Justice KV Viswanathan.
On February 20, 2024, the Bench of Justice Dipankar Datta, Justice KV Viswanathan and Justice Sandeep Mehta, while hearing a batch of petitions {SLP(C) Nos.15336-15337/2021 titled ‘Gayatri Balasamy v M/s ISG Novasoft Technologies Limited’}, had framed questions for reference to be decided by a larger Bench subject to the orders of the CJI.
Appearing for the Respondents, Senior Advocate Saurabh Kirpal, assisted by Advocates from Karanjawala & Company in the lead matter, submitted that it would be appropriate to refer the question to a five-judge Bench.
This would ensure that the issue was brought to a quietus since the reference was being made by a three-judge Bench itself, he added.
The Senior Counsel submitted that all decisions of the Apex Court holding that the courts did not have the powers for modification of an award under Sections 34 and 37 of the Act were rendered by two-judge Benches.
On the other hand, various three-judge Benches had modified the award without an express finding on whether the courts could exercise powers of modification under Article 142.
Senior Advocate Kirpal also mentioned another line of judgments, wherein the modification was presumably by use of powers under Article 142 of the Constitution of India.
Representing the petitioner in the lead matter, Senior Advocate Arvind Datar agreed with the suggestion that a five-judge Bench may be constituted for answering the reference.
The Apex Court ruled that while examining the powers of the courts to modify an arbitral award, the constituted Bench would further examine the contours and scope of powers of the court under Sections 34 and 37 of the Act.
In case the powers of modifications existed, the five-judge Bench would decide on the extent and scope of such powers, along with severability of an award.
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