Gayatri Balasamy vs. M/S Isg Novasoft Technologies Limited

REPORTABLE

IN THE SUPREME COURT OF INDIA
2025 INSC 605

CIVIL APPELLATE JURISDICTION


CIVIL APPEAL NOS. OF 2025
(Arising out of S.L.P.(C) Nos.15336-15337 of 2021)


GAYATRI BALASAMY ..... APPELLANT

VERSUS

M/S. ISG NOVASOFT TECHNOLOGIES LIMITED ..... RESPONDENT



W I T H

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(Arising out of S.L.P.(C) No.21301 of 2024)

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(Arising out of S.L.P.(C) No.17941 of 2019)

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(Arising out of S.L.P.(C) Nos.4961-4962 of 2024)

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(Arising out of S.L.P.(C) Nos.18656-18663 of 2024)

CIVIL APPEAL NO.8183 OF 2016

CIVIL APPEAL NO.8184 OF 2016




Signature Not Verified
Digitally signed by
Deepak Guglani
Date: 2025.05.09
17:47:48 IST
Reason:

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J U D G M E N T

SANJIV KHANNA, CJI.

th
A three-Judge Bench of this Court, vide order dated 20 February 2024,
directed that the Special Leave Petitions in Gayatri Balasamy v. ISG
1
Novasoft Technologies Limited , be placed before the Chief Justice of India
for an appropriate order. The matter was to be examined to determine the need
to refer the following questions of law to a larger Bench:

“1. Whether the powers of the Court under Sections 34
and 37 of the Arbitration and Conciliation Act 1996 will
include the power to modify an arbitral award?

2. If the power to modify the award is available, whether
such power can be exercised only where the award is
severable, and a part thereof can be modified?

3. Whether the power to set aside an award under Section
34 of the Act, being a larger power, will include the power
to modify an arbitral award and if so, to what extent?

4. Whether the power to modify an award can be read into
the power to set aside an award under Section 34 of the
Act?

5. Whether the judgment of this Court in Project Director
2
NHAI vs. M. Hakeem, followed in Larsen Air Conditioning
3
and Refrigeration Company vs. Union of India, and SV
4
Samudram vs. State of Karnataka, lay down the correct
law, as other benches of two Judges (in Vedanta Limited
vs. Shenzden Shandong Nuclear Power Construction
5
Company Limited, Oriental Structural Engineers Pvt. Ltd.
6
vs. State of Kerala, and M.P. Power Generation Co. Ltd.
7
vs. Ansaldo Energia Spa) and three Judges (in J.C.

1
2024 SCC OnLine SC 1681.
2
(2021) 9 SCC 1.
3
(2023) 15 SCC 472.
4
(2024) 3 SCC 623.
5
(2019) 11 SSC 465.
6
(2021) 6 SCC 150.
7
(2018) 16 SCC 661.

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8
Budhraja vs. Chairman, Orissa Mining Corporation Ltd.,
Tata Hydroelectric Power Supply Co. Ltd. vs. Union of
9
India, and Shakti Nath vs. Alpha Tiger Cyprus Investment
10
No.3 Ltd. ) of this Court have either modified or accepted
modification of the arbitral awards under consideration?”


2. Accordingly, this Bench of five-Judges has been constituted to decide the
questions referred.

3. The fulcrum of the legal controversy rests on the following question(s): Are
Indian courts jurisdictionally empowered to modify an arbitral award? If so, to
what extent? The controversy arises because the Arbitration and Conciliation
11
Act, 1996, does not expressly empower courts to modify or vary an arbitral
award. Section 34 of the 1996 Act only confers upon courts the power to set
aside an award. Nevertheless, this Court, on several instances, has been
compelled to modify arbitral awards, seeking to minimize protracted litigation
and foster the ends of justice. In contrast, some judgments have posited that
Indian courts cannot modify awards, due to the narrowly defined scope of
Section 34. Therefore, divergent and contrasting judicial opinions exist on this
question.

4. Annexure A to this judgment reproduces Section 34, and other pertinent
provisions of the 1996 Act – namely Sections 5, 31, 33, 37, 43 and 48.
Annexure B provides a compilation of prevailing stances adopted by foreign
jurisdictions vis-à-vis the question of modification.


8
(2008) 2 SCC 444.
9
(2003) 4 SCC 172.
10
(2020) 11 SCC 685.
11
Hereinafter referred to as, “1996 Act”.

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5. Before addressing the arguments raised, it would be useful to capture the
divergence of judicial opinions on the question of modification. These
conflicting judgments provide context to the legal controversy and the
arguments presented.

A. J UDICIAL D IVERGENCE ON M ODIFICATION P OWERS

12
6. In McDermott International Inc. v. Burn Standard Co. Ltd. and Others ,
this Court explained the difference between judicial interference permitted by
13
the 1996 Act vis-à-vis the Arbitration and Conciliation Act, 1940 . The 1996
Act limits the supervisory role of the court to specific grounds under Section
34, while the 1940 Act gave courts broader powers under Sections 30 and 33.
The Court clarified that under Section 34, the court does not act as an appellate
authority for factual findings, evidence, or questions of law dealt with by the
arbitral tribunal. At the same time, the 1996 Act mandates that arbitrators issue
a reasoned award, which was not a requirement under the 1940 Act.

7. Further, the judgment clarifies the role of arbitrators in determining claims and
counterclaims. The court cannot correct the arbitrator's mistakes, whether
factual or legal. Rather, its role is confined to setting aside the award, leaving
the parties the option to initiate fresh arbitration proceedings if they wish.
However, when it came to the rate of interest, the Court invoked its power
14
under Article 142 of the Constitution to vary the award, reducing the interest

12
(2006) 11 SCC 181.
13
Hereinafter referred to as, “1940 Act”.
14
“ 142. Enforcement of decrees and orders of Supreme Court and orders as to discovery, etc.—
(1) The Supreme Court in the exercise of its jurisdiction may pass such decree or make such order as
is necessary for doing complete justice in any cause or matter pending before it, and any decree so
passed or order so made shall be enforceable throughout the territory of India in such manner as may

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from 10% per annum (as awarded by the tribunal) to 7.5% per annum. It felt
compelled to do so as there was a significant lapse of time. Two earlier
decisions were relied upon: Pure Helium India (P) Limited v. Oil & Natural
15
Gas Commission , where the rate of interest was reduced from 18% per
annum to 6% per annum, and Mukand Ltd. v. Hindustan Petroleum Corpn.
16
Ltd. , where the interest rate was lowered from 11% per annum to 7.5% per
annum.

8. In Vedanta Limited v. Shenzhen Shandong Nuclear Power Construction
17
Company Limited , this Court, in the context of an international award,
highlighted the need to consider the differing impact of interest rates when the
parties operate in different currencies. The rate of interest had to be aligned
with the applicable currency of each party. Accordingly, the Court held that
applying a uniform interest rate for both the INR and Euro components was not
justified. While maintaining the interest rate at 9% per annum for the INR
component, the interest on the Euro component was modified to the London
Interbank Offered Rate (LIBOR) rate plus 3 percentage points. Furthermore,
the Court deleted the interest rate of 15% per annum, which was applicable if
the awarded sum was not paid within 120 days. Significantly, this judgment did
not reference the Court's power under Article 142 of the Constitution.

be prescribed by or under any law made by Parliament and, until provision in that behalf is so made,
in such manner as the President may by order prescribe.
(2) Subject to the provisions of any law made in this behalf by Parliament, the Supreme Court shall, as
respects the whole of the territory of India, have all and every power to make any order for the purpose
of securing the attendance of any person, the discovery or production of any documents, or the
investigation or punishment of any contempt of itself.”
15
(2003) 8 SCC 593.
16
(2006) 9 SCC 383.
17
(2019) 11 SCC 465.

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9. In Oil and Natural Gas Corporation Limited v. Western GECO International
18
Limited , a three Judge Bench of this Court observed that when an arbitral
tribunal, upon considering the facts presented before it, fails to draw an
inference that ought to have been drawn or, conversely, draws an inference
that is manifestly untenable, resulting in a gross miscarriage of justice, such an
award becomes amenable to challenge. In such circumstances, the award may
be set aside or modified, depending on whether the offending part of the award
is severable or not.

10. Earlier, a two-Judges Bench of this Court in Numaligarh Refinery Ltd. v.
19
Daelim Industrial Co. Ltd. , held that courts should ordinarily refrain from
substituting their interpretation for that of the arbitrator. However, where the
parties, with full knowledge, have consented to refer the matter to arbitration,
the court may intervene and modify the award when it is demonstrably and
reasonably justified. For example, when an arbitrator acts without jurisdiction
or adopts an interpretation that is contrary to established law, the court has the
authority to interfere and set the matter right.

11. In an earlier decision of this Court in Tata Hydro-Electric Power Supply Co.
20
Ltd. and Others v. Union of India , this Court exercised its power to modify
the effective date from which the awarded interest would apply. However,
similar to Numaligarh Refinery Ltd. (supra), this decision did not specifically
address the restricted grounds of Section 34.

18
(2014) 9 SCC 263.
19
(2007) 8 SCC 466.
20
(2003) 4 SCC 172.

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12. In a catena of judgments of this Court, it has been consistently held that the
arbitral tribunal is the master of evidence. The scope of judicial intervention
under Section 34 is confined to the limited grounds expressly provided
21
therein. The Court does not possess the power to correct errors of fact,
reconsider costs, or engage in a review of the merits of the arbitral award.

13. In Ssangyong Engineering and Construction Company Limited v.
22
National Highways Authority of India (NHAI) , a two-judge bench of this
Court ruled that interference based on public policy violations under Section
34(2)(b)(ii) is limited to the fundamental policy of Indian law. The court cannot
23
interfere merely because the arbitrator lacked a “judicial approach”. Albeit in
the said case, an issue arose which went beyond the narrow scope of Section
34. The fundamental principle of justice was stated to be violated due to a
unilateral change or addition to the contract by the arbitral tribunal. The Court
emphasized that such changes, made without the affected party’s consent,
cannot be allowed. As a result, the majority award was set aside, along with
the judgments of the Single Judge and the Division Bench of the High Court
that had upheld the award. To ensure full justice, this Court, using its power
under Article 142 of the Constitution, upheld the minority award and the interest
it stipulated.

21
See Maharashtra State Electricity Distribution Company Limited v. Datar Switchgear Limited and
Others, (2018) 3 SCC 133; Parsa Kente Collieries Limited v. Rajasthan Rajya Vidyut Utpadan Nigam
Limited, (2019) 7 SCC 236; and M.P. Power Generation Co. Ltd. v. ANSALDO Energia SpA, (2018)
16 SCC 661.
22
(2019) 15 SCC 131.
23
For domestic awards made in India, an additional ground of interference is available – patent illegality
appearing on the face of the award – in terms of Section 34(2A) of the 1996 Act.

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24
14. In Oriental Structural Engineers Private Limited v. State of Kerala , this
Court upheld the award for being in consonance with the contract but
intervened to modify the interest rate. It was observed that the principles laid
down in Secretary, Irrigation Department, Government of Orissa and
25
Others v. G.C. Roy , for determining the interest rate would be equally
applicable to the 1996 Act. In fact, Section 31(7)(a) of the 1996 Act,
incorporates this principle. Simple interest at the rate of 8% per annum was
directed to be paid on the sum left unpaid.

15. In Project Director, National Highways No. 45 E and 220 National
26
Highways Authority of India v. M. Hakeem and Another , a two-judge
bench of this Court held that Section 34 allows arbitral awards to be set aside
only on the limited grounds specified in sub-sections (2) and (3). When a right
is limited, its enforceability is coterminous with its limited nature, i.e., it can only
be enforced in line with those limitations. As a result, the award can either be
set aside or remanded to the arbitral tribunal. Section 34(4) facilitates such
remand by allowing the court to adjourn the proceedings, and hence providing
the arbitral tribunal a chance to eliminate the grounds for setting it aside. Here
again, the tribunal’s opinion is key in determining whether the grounds for
setting aside have been resolved.

16. The Court also noted that Section 34 is modelled on the UNCITRAL Model
27
Law on International Commercial Arbitration, 1985, which does not allow
courts to modify awards. Unlike the broader powers available under the 1940

24
(2021) 6 SCC 150.
25
(1992) 1 SCC 508.
26
(2021) 9 SCC 1.
27
Hereinafter referred to as, “Model Law”.

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Act, the court’s powers under the 1996 Act are narrower. The Court cited
previous judgments of this Court and various High Courts, emphasizing that
allowing modification under Section 34 would go against the legal framework,
as only the legislature has the power to change the law. Any expansion of
Section 34’s powers to include modification would require a legislative
amendment.

B. A RGUMENTS R AISED

I. In Favour of Modification

17. First, it is contended that the judgment in M. Hakeem (supra) warrants
reconsideration, as it conflicts with several decisions rendered by Benches of
two and three Judges of this Court, in which awards were modified and varied.
This Court has also upheld the modification of awards by the High Courts or
District Courts on other occasions. Second, it is claimed that the Model Law,
based on the United Nations Convention on the Recognition and Enforcement
28
of Foreign Arbitral Awards, 1958 , permits a broader scope of judicial
intervention. Several signatory countries to the Model Law have enacted
provisions for domestic awards that permit modification and/or variation
( Annexure B ), in addition to allowing for the setting aside of awards. This
international perspective, it is argued, reflects a broader understanding of the
court’s powers in arbitrations. Lastly, the principle that a greater power includes
a lesser power is invoked. Since Section 34 allows for the setting aside of an

28
Hereinafter referred to as, “New York Convention”.

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award, it is argued that this power inherently includes the ability to modify the
award, as modification is seen as a lesser form of intervention than annulment.

18. Reference is made to Ahmedabad St. Xavier College Society and Another
29
v. State of Gujarat and Another , where a nine-Judge Bench of this Court
applied the maxim “ omne majus continent in se minus” – the greater contains
the lesser. Applying this maxim, it is contended that the power to set aside will
include power to modify or partially set aside an award. It is also submitted that
the power to modify and set aside an award can be exercised when the award
is in conflict with public policy in terms of Section 34(2)(b)(ii) or to the extent it
is vitiated by patent illegality in terms of Section 34(2A) of the 1996 Act. This
approach aligns with the jurisprudence of other jurisdictions such as the United
Kingdom, Australia, Singapore, and other countries ( Annexure B ), where
similar powers are vested in the courts.

19. Three additional and ancillary arguments were raised. The first argument was
that the expression, 'recourse', used in Section 34, is broad in scope, and it
can include any action to enforce a right. Thus, the recourse to set aside an
award includes within its ambit the recourse to modify or vary it. The second
argument relates to the public law aspect of land acquisition under the National
30
Highways Act, 1956 . As this Act mandates arbitration on public law issues, it
is contended that commercial considerations can neither be factored in nor
applied. Further, the court, while examining a petition under Section 34, has
the power to enhance compensation for acquired land. Lastly, it was contended

29
(1974) 1 SCC 717.
30
Hereinafter referred to as, “NHAI Act”.

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that the power to grant, reduce, or increase interest should be read into Section
34, without requiring the parties to go through a fresh arbitration process. The
granting of interest does not necessitate an elaborate inquiry that would justify
the need for re-arbitration.

II. Against Modification

20. The learned counsel opposing the court’s power of modification argue that the
Model Law was the result of a collective effort by several countries to establish
a uniform and cohesive legal framework. During discussions, it was decided
that courts should not have the power to modify awards. If courts had such
power, it could result in a situation where a court order or decree replaces the
arbitral award, which in arbitration jurisprudence is unacceptable. It may carry
international repercussions when awards are sought to be enforced under
foreign conventions.

21. For example, under the New York Convention, only arbitral awards are
recognized and enforceable, not court decrees/orders that modify those
awards. A court decree cannot substitute an arbitral award, especially when
the award is examined under the limited jurisdiction of Section 34. Section 36
treats awards as enforceable in the same way as court decrees. However,
unless Indian law legislatively empowers courts to modify awards, this power
cannot be assumed from the power to set aside an award under Section 34.
While some countries have granted courts the specific power to modify or vary
an award under their domestic laws, Indian law does not permit the same.


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22. It is further submitted that the maxim omne majus continent in se minus – the
greater contains the lesser – should not be applied in the present case. The
power to set aside an award is a sui generis power, which is intrinsically
different from the modification power. Further, when an award is set aside, it
results in the annulment of the award. Annulment means that the award no
longer exists. Something that does not exist cannot be modified or altered.
Similarly, it is submitted that the arbitral tribunal after rendering an award,
becomes functus officio. Thus, the exercise of any modification, would lead to
the courts adopting appellate powers. Without appellate powers, which the
court does not possess, an award cannot be modified. Therefore, assuming
modification powers would be contrary to both the express language and the
intent behind Section 34 of the 1996 Act.

23. Lastly, it is submitted that the doctrine of merger does not apply to court
modifications of an arbitral award. The nature and scope of the power of a
court, being distinct from an arbitral tribunal, the modifications will not merge
with the arbitral award. In simpler words, any modification or variation made by
the court to the arbitral award would not be subsumed into the arbitral award.
For instance, if the court modifies the rate of interest decided by a tribunal, the
original award will not be deemed to have been amended to reflect this new
interest rate. This could cause issues at the enforcement stage, as the New
York Convention allows only the enforcement of an arbitral award, not a court's
judgment/order.




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C. A NALYSIS
24. Given this background, we have to determine whether, and under what
circumstances, the courts have the power to modify or vary arbitral awards.

25. We recognize that the legal controversy carries significant implications. The
arguments canvassed symbolize the longstanding conflict between equity and
justice, on the one hand, and the fetters imposed by the court’s jurisdictional
limits, on the other. Therefore, in addressing the questions referred, it is crucial
to adopt a balanced approach. While we may favour an equitable and
pragmatic view, our interpretation must not be at odds with the express or
implied legislative intent underlying the 1996 Act. The question therefore is –
to what extent can we weave the principles of equity and justice while not
offending the jurisdictional fabric of Section 34?

26. We begin by examining the scope and ambit of the power of ‘recourse’ under
Section 34 of the 1996 Act.

I. Contours of Section 34, 1996 Act

27. Section 5 of the 1996 Act limits judicial intervention in an arbitral award to what
is authorized by Part I of the Act. Section 34(1) stipulates that ‘recourse’ to a
court against an arbitral award may be made only by an application for setting
aside the award in accordance with Section 34(2) and 34(3).

28. Section 34(2)(a) enumerates specific grounds on which an award can be set
aside. These include – the incapacity of a party, invalidity of an arbitration
agreement in law, improper notice for appointment of an arbitrator or arbitral
proceedings, denying the opportunity to a party to present their case, the award

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being beyond the scope of submission to arbitration, and the composition of
the arbitral tribunal or the arbitral procedure not being by the agreement of the
parties in certain circumstances. The proviso to Section 34(2)(a)(iv) outlines
the concept of “severability of awards”. This has been addressed separately in
Part II of our Analysis .

29. Section 34(2)(b) stipulates that an arbitral award may be set aside when the
subject matter of the dispute cannot be settled by arbitration per the applicable
law or if the arbitral award conflicts with the public policy of India. Explanation
I clarifies that an award can conflict with public policy of India only if (i) the
award is induced or affected by fraud, corruption or is in violation of Section
31 32
75 or Section 81 of the 1996 Act; (ii) when it is in contravention with the
33
fundamental policy of Indian law; or (iii) when it conflicts with the most basic
notions of morality or justice. Explanation 2 mandates that no review on the
merits shall be undertaken when determining a contravention of the
fundamental policy of Indian law.


31
“ 75. Confidentiality. — Notwithstanding anything contained in any other law for the time being in
force, the conciliator and the parties shall keep confidential all matters relating to the conciliation
proceedings. Confidentiality shall extend also to the settlement agreement, except where its disclosure
is necessary for purposes of implementation and enforcement.”
32
“ 81. Admissibility of evidence in other proceedings.— The parties shall not rely on or introduce
as evidence in arbitral or judicial proceedings, whether or not such proceedings relate to the dispute
that is the subject of the conciliation proceedings,—
(a) views expressed or suggestions made by the other party in respect of a possible settlement of the
dispute;
(b) admissions made by the other party in the course of the conciliation proceedings;
(c) proposals made by the conciliator;
(d) the fact that the other party had indicated his willingness to accept a proposal for settlement made
by the conciliator.”
33
In Ssangyong Engineering and Construction Company Limited v. National Highways Authority of
India (NHAI) , (2019) 15 SCC 131 the scope of the public policy ground for setting aside awards was
narrowed and confined to violations of the fundamental policy of Indian law.

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30. Section 34(2-A) stipulates that an award may be set aside when it is vitiated
by patent illegality appearing on the face of the award. The proviso clarifies
that such determination shall not be made solely because there is an
erroneous application of law or through reappreciation of evidence. Section
34(3) provides timelines which needs to be adhered to while filing an
application under Section 34. Section 34(4) stipulates the court’s power of
remanding an award to the arbitral tribunal. We have addressed this remand
power in Part VI of our Analysis . Section 34(5) outlines notice requirements,
while Section 34(6) mandates the expeditious disposal of Section 34
applications, setting a hard outer limit of one year from the date of service of
notice on the other party under Section 34(5).

31. The next question that arises is whether the power to set aside an award
includes the power to partially set it aside.

II. Severability of Awards

32. In the present controversy, the proviso to Section 34(2)(a)(iv) is particularly
relevant. It states that if the decisions on matters submitted to arbitration can
be separated from those not submitted, only that part of the arbitral award
which contains decisions on matters non-submitted may be set aside. The
proviso , therefore, permits courts to sever the non-arbitrable portions of an
award from arbitrable ones. This serves a two-fold purpose. First, it aligns with
Section 16 of the 1996 Act, which affirms the principle of kompetenz-
kompetenz — that is, the arbitrators’ competence to determine their own
jurisdiction. Secondly, it enables the court to sever and preserve the “valid”

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34
part(s) of the award while setting aside the “invalid” ones. Indeed, before us,
none of the parties have argued that the court is not empowered to undertake
such a segregation.

33. We hold that the power conferred under the proviso to Section 34(2)(a)(iv) is
clarificatory in nature. The authority to sever the “invalid” portion of an arbitral
award from the “valid” portion, while remaining within the narrow confines of
Section 34, is inherent in the court’s jurisdiction when setting aside an award.

34. To this extent, the doctrine of omne majus continet in se minus —the greater
power includes the lesser—applies squarely. The authority to set aside an
arbitral award necessarily encompasses the power to set it aside in part, rather
than in its entirety. This interpretation is practical and pragmatic. It would be
incongruous to hold that power to set aside would only mean power to set aside
the award in its entirety and not in part. A contrary interpretation would not
only be inconsistent with the statutory framework but may also result in valid
determinations being unnecessarily nullified.

35. However, we must add a caveat that not all awards can be severed or
segregated into separate silos. Partial setting aside may not be feasible when
the “valid” and “invalid” portions are legally and practically inseparable. In
simpler words, the “valid” and “invalid” portions must not be inter-dependent or
intrinsically intertwined. If they are, the award cannot be set aside in part.

34
The “validity” and “invalidity”, as used here, does not refer to legal validity or merits examination, but
validity in terms of the proviso to Section 34(2)(a)(iv) of the 1996 Act.

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35
36. The Privy Council, in Pratap Chamaria v. Durga Prasad Chamaria ,
addressed this issue with the following pertinent observations:

“…If, however, the pronouncement of the arbitrators is
such that matters beyond the scope of the suit are
inextricably bound up with matters falling within the
purview of the litigation, in that case, the court would be
unable to give effect to the award because of the difficulty
that it cannot determine to what extent the decision of the
subject-matter of the litigation has been affected and
coloured by the decision of the arbitrators in regard to
matters beyond the ambit of the suit….”


Thus, the power of partial setting aside should be exercised only when the valid
and invalid parts of the award can be clearly segregated—particularly in
relation to liability and quantum and without any corelation between valid and
invalid parts.

37. We would now proceed to examine, the permissibility and scope of the court’s
modification powers, within the parameters of Section 34 of the 1996 Act. In
doing so, we will distinguish the court's power of modification from: (i) the
court’s power of setting aside an award; (ii) the arbitrator's power under Section
33 to correct, reinterpret, and/or issue an additional award; and (iii) the power
of the court to remand the award to the arbitrator under Section 34(4).

III. Difference between setting aside and modification

38. This distinction lies at the heart of many arguments canvassed before us. The
parties opposing the recognition a power of modification of the courts have
strenuously contended that modification and setting aside are distinct and sui

35
AIR 1925 PC 293.

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generis powers. While modification involves altering specific parts of an award,
setting aside does not alter the award but results in its annulment. Their
primary concern is that recognizing a power of modification may invite judicial
interference with the merits of the dispute—something arguably inconsistent
with the framework of the 1996 Act.

39. We agree with this argument, but only to a limited extent. It is true that
modification and setting aside have different consequences: the former alters
36
the award, while the latter annuls it. However, we do not concur with the view
that recognizing any modification power will inevitably lead to an examination
of the merits of the dispute. It will completely depend on the extent of the
modification powers recognised by us. In the following part of our Analysis ,
we outline the contours of this limited power and explain why, in our view,
recognizing it will ultimately yield more just outcomes.

IV. A Limited Power of Modification Can Be Located in Section 34

37
40. A core principium of arbitration, an Alternative Dispute Resolution
mechanism, is to provide a quicker and cost-effective alternative to courtroom
litigation. While this suggests minimal judicial interference, the role of domestic
courts remains crucial, as they function in a supportive capacity to facilitate

36
The words used in the statute must be interpreted contextually, taking into account the purpose,
scope, and background of the provision. Many words and expressions have both narrow and broad
meanings and thereby open to multiple interpretations. Legal interpretation should align with the object
and purpose of the legislation. Therefore, we may not strictly apply a semantic differentiation while
interpreting the words "modification" or "setting aside". Instead, a holistic and purposive interpretation
of these words will be consistent with the intent behind the provision and the 1996 Act. Linguistically
and even jurisprudentially, a distinction can be drawn between the expressions – modification, partial
setting aside, and setting aside of an arbitral award in its entirety. However, we must note that the
practical effect of partially setting aside an award is the modification of the award.
37
Hereinafter referred to as, “ADR”.

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and expedite the resolution of disputes. Therefore, it follows that judicial
intervention is legitimate and necessary when it furthers the ends of justice,
including the resolution of disputes.

41. To deny courts the authority to modify an award—particularly when such a
denial would impose significant hardships, escalate costs, and lead to
unnecessary delays—would defeat the raison d'être of arbitration. This
concern is particularly pronounced in India, where applications under Section
34 and appeals under Section 37 often take years to resolve.

42. Given this background, if we were to decide that courts can only set aside and
not modify awards, then the parties would be compelled to undergo an extra
round of arbitration, adding to the previous four stages: the initial arbitration,
Section 34 (setting aside proceedings), Section 37 (appeal proceedings), and
Article 136 (SLP proceedings). In effect, this interpretation would force the
parties into a new arbitration process merely to affirm a decision that could
easily be arrived at by the court. This would render the arbitration process more
cumbersome than even traditional litigation.

43. Equally, Section 34 limits recourse to courts to an application for setting aside
the award. However, Section 34 does not restrict the range of reliefs that the
court can grant, while remaining within the contours of the statute. A different
relief can be fashioned as long as it does not violate the guardrails of the power
provided under Section 34. In other words, the power cannot contradict the

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essence or language of Section 34. The court would not exercise appellate
38
power, as envisaged by Order XLI of the Code of Civil Procedure, 1908 .

44. We are of the opinion that modification represents a more limited, nuanced
power in comparison to the annulment of an award, as the latter entails a more
severe consequence of the award being voided in toto . Read in this manner,
the limited and restricted power of severing an award implies a power of the
court to vary or modify the award. It will be wrong to argue that silence in the
1996 Act, as projected, should be read as a complete prohibition.

45. We are thus of the opinion that the Section 34 court can apply the doctrine of
severability and modify a portion of the award while retaining the rest. This is
subject to parts of the award being separable, legally and practically, as
stipulated in Part II of our Analysis .

46. Mustill and Boyd have observed that an order varying an award is not
39
equivalent to an appellate process. The authors suggest that a modification
order would only be appropriate where the modification, including any
adjustment of costs, follows inevitably from the tribunal’s determination of a
40
question of law. This approach would be beneficial, as it would reduce costs
and delays. The courts need not engage in any fact-finding exercise. By
acknowledging the Court’s power to modify awards, the judiciary is not
rewriting the statute. We hold that the power of judicial review under Section

38
Hereinafter referred to as, “Code”.
39 nd
Sir Michael J. Mustill & Stewart C Boyd QC, Commercial Arbitration, p. 617 (2 ed. 2001).
40
Ibid.

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34, and the setting aside of an award, should be read as inherently including a
limited power to modify the award within the confines of Section 34.

V. Court can modify the award despite Sections 33 and 34(4)

47. Section 33 of the 1996 Act ( Annexure A ) empowers an arbitrator, upon
request, to correct and/or re-interpret the arbitral award, on limited grounds.
This includes the correction of computational, clerical or typographical errors,
as well as giving interpretation on a specific point or a part of the award, when
mutually agreed upon by the parties. Section 33(3) enables the tribunal to suo
moto correct any errors within thirty days of delivering the award. Section 33(4)
grants wider powers. It permits the arbitral tribunal, upon compliance with
specified manner of request, to make an additional award on claims presented
before the arbitral proceedings but omitted from the arbitral award.

48. Section 33(7) states that Section 31 ( Annexure A ) shall apply where
correction, interpretation or any addition is made to the arbitral award. Section
31 deals with form and content requirements for arbitral awards. Consequently,
an order passed by the arbitral tribunal under Section 33 amounts to an arbitral
award. Under Section 34(3), where a request is made under Section 33, the
limitation period for filing an application to set aside the award commences
from the date on which the arbitral tribunal disposes of the Section 33 request.

49. Notwithstanding Section 33, we affirm that a court reviewing an award under
Section 34 possesses the authority to rectify computational, clerical, or
typographical errors, as well as other manifest errors, provided that such
modification does not necessitate a merits-based evaluation. There are certain

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powers inherent to the court, even when not explicitly granted by the
legislature. The scope of these inherent powers depends on the nature of the
provision, whether it pertains to appellate, reference, or limited jurisdiction as
in the case of Section 34. The powers are intrinsically connected as they are
part and parcel of the jurisdiction exercised by the court.

50. In Grindlays Bank Ltd. v. Central Government Industrial Tribunal and
41
Others , this Court has held that every tribunal or court is endowed with
certain ancillary or incidental powers which are necessary to discharge its
functions effectively for the purpose of doing justice between the parties. In
that case, the simple question was whether an ex parte award passed on
merits, when sought to be set aside by an application showing sufficient cause,
amounts to seeking a review on merits of the dispute. The Court held that a
procedural review differs from a review on merits of the dispute. The former is
a power inherent in every court or tribunal and inadvertent errors committed by
another tribunal can be corrected by the court/tribunal. This would not amount
to a review on merits. The reasoning distinguishing between procedural and
merits review is reproduced below:

“The expression “review” is used in the two distinct senses,
namely (1) a procedural review which is either inherent or
implied in a court or Tribunal to set aside a palpably
erroneous order passed under a misapprehension by it,
and (2) a review on merits when the error sought to be
corrected is one of law and is apparent on the face of the
record. It is in the latter sense that the court in Patel Narshi
Thakershi case held that no review lies on merits unless a
statute specifically provides for it. Obviously when a review
is sought due to a procedural defect, the inadvertent error
committed by the Tribunal must be corrected ex debito

41
1980 Supp SCC 420.

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justitiae to prevent the abuse of its process, and such
power inheres in every court or Tribunal.”


51. Reference may also be made to the power of recall, which every court
possesses, as recognized by this Court in Budhia Swain and Others v.
42
Gopinath Deb and Others . The availability of this power enables the court
to address various situations efficiently, rather than remanding the matter to
the arbitral tribunal under Section 34(4). Lastly, one may also refer to the power
of granting interim relief if the circumstances so warrant.

52. The doctrine of implied power is to only effectuate and advance the object of
the legislation, i.e., the 1996 Act and to avoid the hardship. It would, therefore,
be wrong to say that the view expressed by us falls foul of express provisions
of the 1996 Act.

43
53. Under Section 152 of the Code, a court executing a decree has the power to
correct clerical or arithmetic mistakes in judgments, orders, or decrees arising
from any accidental slips or omissions. This Court, in Century Textiles
44
Industries Limited v. Deepak Jain and Another , held that clerical or
arithmetical errors may be corrected by the executing court, however, the court
must take the decree according to its tenor and cannot go behind the decree.

54. In the same vein as these judgments, we hold that inadvertent errors, including
typographical and clerical errors can be modified by the court in an application
under Section 34. However, such a power must not be conflated with the

42
(1999) 4 SCC 396.
43
“ 152. Amendment of judgments, decrees or orders. — Clerical or arithmetical mistakes in
judgments, decrees or orders or errors arising therein from any accidental slip or omission may at any
time be corrected by the Court either of its own motion or on the application of any of the parties.”
44
(2009) 5 SCC 634.

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appellate jurisdiction of a higher court or the power to review a judgment of a
lower court. The key distinction between Section 33 and Section 34 lies in the
fact that, under Section 34, the court must have no uncertainty or doubt when
modifying an award. If the modification is debatable or a doubt arises regarding
its appropriateness, i.e., if the error is not apparent on the face of the record,
the court will be left unable to proceed, its hands bound by the uncertainty. In
such instances, it would be more appropriate for the party to seek recourse
under Section 33 before the tribunal or under Section 34(4).

VI. To Modify or to Remit? Addressing the court’s quandary.

55. As elucidated above, if a fog of uncertainty obscures the exercise of
modification powers, the courts must not modify the award. Instead, they
should avail their remedial power and remand the award to the tribunal under
Section 34(4). Under the sub-section, either party—whether the one
challenging the award under Section 34 or the one defending against such a
challenge—may request the court to adjourn the proceedings for a specified
period. If the court deems it appropriate, it may grant such an adjournment,
allowing the arbitral tribunal to resume proceedings or take necessary
corrective measures to eliminate the grounds for setting aside the award. Thus,
Section 34(4) provides a second opportunity for a party to seek recourse
through arbitral channel.

56. However, the power of remand permits the court only to send the award to the
tribunal for reconsideration of specific aspects. It is not an open-ended
process; rather, it is a limited power, confined to limited circumstances and
issues identified by the court. Upon remand, the arbitral tribunal may proceed

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in a manner warranted by the situation – including recording additional
evidence, affording a party an opportunity to present its case if previously
denied, or taking any other corrective measures necessary to cure the defect.
In contrast, the exercise of modification powers does not allow for such
flexibility. Courts must act with certainty when modifying an award – like a
sculptor working with a chisel, needing precision and exactitude. Therefore,
the argument that remand powers make modification unnecessary is
misconceived. They are distinct powers and are to be exercised differently.

57. Section 34(4), derived from the Model Law, is discretionary in nature. This is
evident from the use of the word “may” in the provision. The Court may invoke
this power when it identifies a defect in the award that could lead to its setting
aside. In such cases, the court may seek to prevent this outcome by granting
the arbitral tribunal an opportunity to rectify the defect.

58. While it is not appropriate to establish rigid parameters or a straitjacket formula
for the exercise of this power, it is clear that Section 34(4) does not authorize
the arbitral tribunal to rewrite the award on merits or to set it aside. Rather, it
serves as a curative mechanism available to the tribunal when permitted by
the court. The primary objective is to preserve the award if the identified defect
can be cured, thereby avoiding the need to set aside the award. Accordingly,
a court may not grant a remand when the defect in the award is inherently
irreparable. A key consideration is the proportionality between the harm
caused by the defect and the means available to remedy it.

59. While exercising this power, the court must also remain mindful that the arbitral
tribunal has already rendered its decision. If the award suffers from serious

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acts of omission, commission, substantial injustice, or patent illegality, the
same may not be remedied through an order of remand. Clearly, there cannot
be a lack of confidence in the tribunals’ ability to come to a fair and balanced
decision when an order of remit is passed.

60. Thus, an order of remand should not be passed when such order would place
the arbitral tribunal in an invidious or embarrassing position. Additionally,
remand may be inappropriate when it does not serve the interests of the
parties, particularly in time-sensitive matters or where it would lead to undue
costs and inefficiencies. Once an order of remand is granted, the arbitral
tribunal has the authority to vary, correct, review, add to, or modify the award.
Notably, under Section 34(4), the tribunal’s powers, though confined, remain
nonetheless substantial. This stands in contrast to the court’s narrow role
under the rest of Section 34.

45
61. This Court, in Kinnari Mullick and Another v. Ghanshyam Das Damani,
referred to and laid down the preconditions for exercising the power of remand
under Section 34(4). It held that the court cannot exercise the power of remand
suo motu in the absence of a written request by one of the parties. Secondly,
once an application under Section 34(1) has been decided and the award set
aside, the court becomes functus officio and cannot thereafter remand the
matter to the arbitral tribunal. Consequently, the power under Section 34(4)
cannot be invoked after the court has disposed of the Section 34(1) application.



45
(2018) 11 SCC 328.

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62. We are unable to accept the view taken in Kinnari Mullick (supra), which
insists that an application or request under Section 34(4) must be made by a
party in writing. The request may be oral. Nevertheless, there should be a
request which is recorded by the court. We are also unable to agree that the
request must be exercised before the application under Section 34(1) is
decided. Section 37 ( Annexure A ) permits an appeal against any order setting
aside or refusing to set aside an arbitral award under Section 34. To this extent,
the appellate jurisdiction under Section 37 is coterminous with, and as broad
as, the jurisdiction of the court deciding objections under Section 34. Hence,
the contention that the tribunal becomes functus officio after the award is set
aside is misplaced. The Section 37 court still possesses the power of remand
stipulated in Section 34(4). Of course, the appellate court, while exercising
power under Section 37, should be mindful when the award has been upheld
by the Section 34 court. But the Section 37 court still possesses the jurisdiction
to remand the matter to the arbitral tribunal.

46
63. Our reasoning does not breach the principle of party autonomy. Neither does
it confer appellate powers on the courts. Instead, it adheres strictly to the
parameters stipulated in Sections 34 and 37 of the 1996 Act. The power of the
appellate court in civil proceedings under Order XLI of the Code, is as broad
as that of a trial court, both in terms of facts and law. Contrastingly, the court’s

46
Rather, it acknowledges that the parties opting for arbitration also consent to be governed by the
applicable statute governing arbitration—in this case, the 1996 Act. Further, principle of party
autonomy should not be extended to an extreme to urge that the party misunderstood the law and
consequently the consent is invalid. While it is true that a mistake of law may vitiate consent in certain
contexts, the interpretation here restricts the court's role to that of limited judicial scrutiny in terms of
the 1996 Act.

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authority under Sections 34 and 37 of the 1996 Act is limited by the silhouette
of Section 34.

47
64. In Dyna Technologies Private Limited v. Crompton Greaves Limited , this
Court emphasized that the issuance of a reasoned award is not a mere
formality under the 1996 Act. For an award to be termed “reasoned”, it must
meet three essential yardsticks: it must be proper, intelligible, and adequate.
The purpose behind Section 34(4) is clear: it allows for an award to become
enforceable after granting the tribunal an opportunity to cure any defects. This
power is exercisable when the arbitral tribunal has failed to give any reasoning
or the award exhibits gaps in reasoning and these defects can be cured,
thereby preventing unnecessary challenges. The underlying intent is to provide
an effective, expeditious forum for addressing curable defects, which Section
34(4) facilitates.

48
65. In I-Pay Clearing Services Private Limited v. ICICI Bank Limited , this
Court clarified that Section 34(4) does not grant the authority to review or
reconsider previous findings or conclusions. As discussed earlier in this
judgment, the scope of the power under Section 34(4) is not to be restricted to
a rigid, straitjacket formula. Rather, it depends on the specific facts and
circumstances of each case. Being a discretionary power, it is to be exercised
by the Court judiciously, keeping in mind the grounds raised in the application
under Section 34(1). The Court should be prima facie satisfied that the wrong
and illegality in the award are curable. While doing so, the Court need not

47
(2019) 20 SCC 1.
48
(2022) 3 SCC 121.

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record the final finding on the contentious issue at hand; however, not every
request for such relief is warranted. The discretion must be exercised with
caution, and only when it is evident that an adjournment will allow the arbitral
tribunal to resolve the issues and remove the grounds for setting aside the
award. However, Section 34(4) is an enabling provision—it does not compel
the tribunal to take corrective action, leaving it free to either amend or refuse
to amend the award.

VII. Doctrine of Merger and the New York Convention

66. The reliance placed on doctrine of merger, coupled with the argument that
court orders partially setting aside or modifying an award would render the
amended award unenforceable under the New York Convention, is unfounded
and must be rejected as misconceived. We are of the view that, once Section
34 is reinterpreted to include a limited power to modify awards, this authority
will not affect the international commercial arbitration regime or the
enforcement of foreign awards.

67. Section 48 of the 1996 Act ( Annexure A ), which is similarly worded as Article
V of the New York Convention, delineates situations when the enforcement of
a foreign award may be refused. Section 48(1)(e) states the award may not be
enforced when it has not become binding on the parties or has been set aside
or suspended by a competent authority of the country in which, or under the
law of which, that award was made. In simpler words, the award must become
“binding on the parties” in terms of the law of the seat before enforcement.
Sub-clause (e) therefore recognizes that, for enforcement, the domestic law of
the country where the award is made shall prevail and have supremacy. Thus,

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this Court’s interpretation, reading modification powers into Section 34, would
not be at loggerheads with the New York Convention. The Convention requires
the enforcement court to consider whether an award has become binding in
terms of the law of the seat.

68. In any case, the New York Convention, as explained by this Court in Brace
Transport Corporation of Monrovia, Bermuda v. Orient Middle East Lines
49
Limited, Saudi Arabia and Others , speaks of “recognition and enforcement”
of an award. An award may be recognized without being enforced; but if it is
enforced, then it is necessarily recognized. Recognition may act as a shield
against re-agitation of issues which the award deals with. A party successful in
arbitration, may seek and rely upon recognition, if proceedings are brought
against him on issues already dealt with by an award. A defensive shield is
then erected on the award.

69. Based on the above discussion, the argument that several countries like
Singapore, Kenya, and the United Kingdom ( Annexure B ) – though originally
following the Model Law – now allow courts to modify an award in limited
cases, while the 1996 Act does not, is only linguistically correct. However, it is
not convincing jurisprudentially or in principle. The limited power under Section
34 allows the court to vary or modify the award. The effect thereof is that the
award would be read as modified by the judgment/order.






49
1995 Supp (2) SCC 280.

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VIII. NHAI Act – Expansive Modification of Arbitral Awards is Impermissible

70. It has been argued that Section 34 should be expansively interpreted to permit
modification of awards under the NHAI Act. In particular, it is suggested that
courts should be allowed to modify the quantum of compensation awarded, as
the Act involves statutory arbitration. This argument is, however, untenable.
The jurisdiction conferred under Section 34 does not distinguish between
statutory and non-statutory arbitration in terms of the scope of courts’ power of
review. Hence, this argument stands rejected.

71. We refrain from expressing any opinion on the validity of the provisions under
the NHAI Act, which is presently under judicial consideration in a separate writ
petition. Neither do we adjudicate upon whether or in what manner awards
issued by statutory authorities may be challenged.

IX. Post-Award Interest

72. The next question that arises is: do courts possess the power to declare or
modify interest, especially post award interest? In respect of pendente lite
interest, Section 31(7)(a) ( Annexure A ), states that unless otherwise agreed
by the parties, the arbitral tribunal may include in its sum for the award, interest,
at such rate it deems reasonable on whole or part of the money for whole or
part of the period on which the cause of action arose and the date on which
the award is made. In respect of post-award interest, Section 31(7)(b)
( Annexure A ) states that unless an award provides for interest on a sum
directed to be paid by it, the sum will carry an interest at a 2% higher rate than
the current rate of interest prevalent on the date of the award, from the date of

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the award till the date of payment. The explanation defines the expression
‘current rate of interest’.

73. There can be instances of violation of Section 31(7)(a), and the pendente lite
interest awarded may be contrary to the contractual provision. We are of the
opinion that, in such cases, the court while examining objections under Section
34 of the 1996 Act will have two options. First is to set aside the rate of interest
or second, recourse may be had to the powers of remand under Section 34(4).

74. For the post award interest in terms of Section 31(7)(b), the courts will retain
the power to modify the interest where the facts justify such modification. This
is why the standard rate stipulated in clause (b) applies when the award itself
does not specify the applicable post award interest. There can be a situation
where the party to be paid money is at fault and is guilty of delay which may
require a modification in the rate of interest. In the absence of grant of post
award interest in the award, the court also possesses the power to grant post
award interest. Clearly, as per the legislative mandate, it is not the sole
prerogative of the arbitrator.

75. Compare Section 31 of the 1996 Act with Section 31 of the Model Law. While
both sections are titled similarly – “Form and Contents of Award” – only the
1996 Act addresses interest in Section 31(7). The Model Law does not provide
standards governing the determination of interest rates. Thus, Section 31(7) is
a unique creation of the Indian legislature. It was not borrowed from the Model
Law. Specifically, under Section 31(7)(b), the legislature has established a
standard rate of interest to guide the arbitrator’s discretion when it comes to
determining the post-award interest rate. While the arbitrator retains his

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flexibility based on facts and circumstances of the case, the standard set by
the legislature must weigh in on their consideration. Further, as there is a
standard prescribed by the legislature, the post-award interest awarded can be
scrutinized by courts against the standards prescribed.

76. Our reasoning is bolstered when considering the practical aspects. Arbitral
tribunals, when determining post-award interest, cannot foresee future issues
that may arise. Post award interest is inherently future-oriented and depends
on facts and circumstances that unfold after the award is issued. Since the
future is unpredictable and unknown to the arbitrator at the time of the award,
it would be unreasonable to suggest that the arbitrator, as a soothsayer, could
have anticipated or predicted future events with certainty. Therefore, it is
appropriate for the Section 34 court to have the authority to intervene and
modify the post-award interest if the facts and circumstances justify such a
change.

77. Inherent in the discussion above, is the court's power to both increase or
decrease the post-award interest rate. It would be incorrect to state that the
court's power to interfere with this interest rate is limited solely to decreasing
the interest rate. Situations may arise where the rate should be increased due
to delays or obstructions in the execution of the award. Interest rates may also
fluctuate over time.

78. However, the court, while exercising this power, must be cautious and mindful
not to overstep its role by altering the interest rate unless there are compelling
and well-founded reasons to do so. In exercising this power, the court is not
acting in an appellate capacity, but rather under limited authority. For instance,

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the 1996 Act stipulates a standard post-award interest rate. When the statute
itself benchmarks a standard, unless there are special and specific reasons,
the rate of interest stipulated by the statute should be applied.

79. Nevertheless, this limited power is significant, as it can help avoid further
rounds of litigation. Without it, the court may be forced to set aside the entire
award or order a fresh round of arbitration because of an erroneous interest
rate rather than simply adjusting this rate.

X. Post-Award Settlements

80. We are also of the opinion that the parties are entitled to enter into an
agreement or settlement even after an award is pronounced. Such a settlement
should be in accordance with the provisions of Order XXIII of the Code. The
law of the land does not bar the parties from entering into a post award or post
decree settlement. The only legal requirement is that such settlement must be
verifiable and in accordance with law i.e., the settlement is not a result of undue
influence, force, fraud, coercion, etc.

XI. Limitation Period – Section 34

81. This brings us to Section 43(4) ( Annexure A) of the 1996 Act. It clarifies the
legal position re limitation and setting aside. For context, once an award is set
aside, it becomes null and void, but the original dispute may still require
resolution. The 1996 Act, vide Section 43(4), enables the parties to initiate
fresh arbitration or court proceedings in relation to the dispute. However, the
question that arises is: how do we calculate the limitation period within which
the fresh arbitration or court proceedings are to be commenced? Section 43(4)

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stipulates that the period between the commencement of arbitration and the
Court’s order setting aside the award is excluded for the purposes of
calculating the limitation period under the Limitation Act, 1963. In essence, the
time during which the award is in force is not counted. We are also cognizant
that there could be a situation that, on setting aside of the award, the entire
dispute gets resolved and decided. However, we need not go into this question.
What is relevant is that Section 43(4) provides liberty for the parties to invoke
either arbitration or court proceedings, as applicable, following the annulment
of the award.

XII. Supreme Court’s Power to Do Complete Justice

82. As far as the applicability of Article 142 of the Constitution is concerned, this
power is to be exercised by this Court with great care and caution. Article 142
enables the Court to do complete justice in any cause or matter pending before
it. The exercise of this power has to be in consonance with the fundamental
principles and objectives behind the 1996 Act and not in derogation or in
suppression thereof.

50
83. In Shilpa Sailesh v. Varun Sreenivasan, a Constitution Bench of this Court
summarized the scope of its power under Article 142 of the Constitution as
follows:
“19. Given the aforesaid background and judgments of this
Court, the plenary and conscientious power conferred on
this Court under Article 142(1) of the Constitution of India,
seemingly unhindered, is tempered or bounded by
restraint, which must be exercised based on fundamental
considerations of general and specific public policy.
Fundamental general conditions of public policy refer to

50
(2023) 14 SCC 231.

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the fundamental rights, secularism, federalism, and other
basic features of the Constitution of India. Specific public
policy should be understood as some express pre-eminent
prohibition in any substantive law, and not stipulations and
requirements to a particular statutory scheme. It should
not contravene a fundamental and non-derogable principle
at the core of the statute. Even in the strictest sense, it was
never doubted or debated that this Court is empowered
under Article 142(1) of the Constitution of India to do
“complete justice” without being bound by the relevant
provisions of procedure, if it is satisfied that the departure
from the said procedure is necessary to do “complete
justice” between the parties.”

84. While exercising power under Article 142, this Court must be conscious of the
aforesaid dictum. In our opinion, the power should not be exercised where the
effect of the order passed by the court would be to rewrite the award or modify
the award on merits. However, the power can be exercised where it is required
and necessary to bring the litigation or dispute to an end. Not only would this
end protracted litigation, but it would also save parties’ money and time.

C ONCLUSIONS

85. Accordingly, the questions of law referred to by Gayatri Balasamy (supra) are
answered by stating that the Court has a limited power under Sections 34 and
37 of the 1996 Act to modify the arbitral award. This limited power may be
exercised under the following circumstances:

I. when the award is severable, by severing the “invalid” portion from the
“valid” portion of the award, as held in Part II of our Analysis .

II. by correcting any clerical, computational or typographical errors which
appear erroneous on the face of the record, as held in Part IV and V of
our Analysis ;

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III. post award interest may be modified in some circumstances as held in
Part IX of our Analysis ; and/or

IV. Article 142 of the Constitution applies, albeit , the power must be exercised
with great care and caution and within the limits of the constitutional
power as outlined in Part XII of our Analysis .


…….......................................CJI.
(SANJIV KHANNA)



…….…......................................J.
(B.R. GAVAI)



…….…......................................J.
(SANJAY KUMAR)



…….…......................................J.
(AUGUSTINE GEORGE MASIH)

NEW DELHI;
APRIL 30, 2025.


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A NNEXURE - A

“ 5. Extent of judicial intervention .— Notwithstanding anything
contained in any other law for the time being in force, in matters
governed by this Part, no judicial authority shall intervene except
where so provided in this Part.

31. Form and contents of arbitral award .— (1) An arbitral award
shall be made in writing and shall be signed by the members of
the arbitral tribunal.
(2) For the purposes of sub-section (1), in arbitral proceedings
with more than one arbitrator, the signatures of the majority of all
the members of the arbitral tribunal shall be sufficient so long as
the reason for any omitted signature is stated.
(3) The arbitral award shall state the reasons upon which it is
based, unless—
( a ) the parties have agreed that no reasons are to be given; or
( b ) the award is an arbitral award on agreed terms under Section
30.
(4) The arbitral award shall state its date and the place of
arbitration as determined in accordance with Section 20 and the
award shall be deemed to have been made at that place.
(5) After the arbitral award is made, a signed copy shall be
delivered to each party.
(6) The arbitral tribunal may, at any time during the arbitral
proceedings, make an interim arbitral award on any matter with
respect to which it may make a final arbitral award.
(7)( a ) Unless otherwise agreed by the parties, where and in so
far as an arbitral award is for the payment of money, the arbitral
tribunal may include in the sum for which the award is made
interest, at such rate as it deems reasonable, on the whole or any
part of the money, for the whole or any part of the period between
the date on which the cause of action arose and the date on which
the award is made.
( b ) A sum directed to be paid by an arbitral award shall, unless
the award otherwise directs, carry interest at the rate of two per
cent higher than the current rate of interest prevalent on the date
of award, from the date of award to the date of payment.
Explanation .—The expression “current rate of interest” shall have
the same meaning as assigned to it under clause ( b ) of
Section 2 of the Interest Act, 1978 (14 of 1978).
(8) The costs of an arbitration shall be fixed by the arbitral tribunal
in accordance with Section 31-A.


33. Correction and interpretation of award; additional
award .— (1) Within thirty days from the receipt of the arbitral
award, unless another period of time has been agreed upon by
the parties—


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( a ) a party, with notice to the other party, may request the
arbitral tribunal to correct any computation errors, any
clerical or typographical errors or any other errors of a
similar nature occurring in the award;

( b ) if so agreed by the parties, a party, with notice to the other
party, may request the arbitral tribunal to give an
interpretation of a specific point or part of the award.

(2) If the arbitral tribunal considers the request made under sub-
section (1) to be justified, it shall make the correction or give the
interpretation within thirty days from the receipt of the request and
the interpretation shall form part of the arbitral award.

(3) The arbitral tribunal may correct any error of the type referred
to in clause ( a ) of sub-section (1), on its own initiative, within thirty
days from the date of the arbitral award.

(4) Unless otherwise agreed by the parties, a party with notice to
the other party, may request, within thirty days from the receipt of
the arbitral award, the arbitral tribunal to make an additional
arbitral award as to claims presented in the arbitral proceedings
but omitted from the arbitral award.

(5) If the arbitral tribunal considers the request made under sub-
section (4) to be justified, it shall make the additional arbitral
award within sixty days from the receipt of such request.

(6) The arbitral tribunal may extend, if necessary, the period of
time within which it shall make a correction, give an interpretation
or make an additional arbitral award under sub-section (2) or sub-
section (5).

(7) Section 31 shall apply to a correction or interpretation of the
arbitral award or to an additional arbitral award made under this
section.

34. Application for setting aside arbitral award .— (1)
Recourse to a Court against an arbitral award may be made only
by an application for setting aside such award in accordance with
sub-section (2) and sub-section (3).

(2) An arbitral award may be set aside by the Court only if—

( a ) the party making the application establishes on the basis of
the record of the arbitral tribunal that—

( i ) a party was under some incapacity; or


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( ii ) the arbitration agreement is not valid under the law to
which the parties have subjected it or, failing any
indication thereon, under the law for the time being in
force; or

( iii ) the party making the application was not given proper
notice of the appointment of an arbitrator or of the
arbitral proceedings or was otherwise unable to present
his case; or

( iv ) the arbitral award deals with a dispute not contemplated
by or not falling within the terms of the submission to
arbitration, or it contains decisions on matters beyond
the scope of the submission to arbitration:

Provided that, if the decisions on matters submitted to
arbitration can be separated from those not so
submitted, only that part of the arbitral award which
contains decisions on matters not submitted to
arbitration may be set aside; or

( v ) the composition of the arbitral tribunal or the arbitral
procedure was not in accordance with the agreement of
the parties, unless such agreement was in conflict with
a provision of this Part from which the parties cannot
derogate, or, failing such agreement, was not in
accordance with this Part; or

( b ) the Court finds that—

( i ) the subject-matter of the dispute is not capable of
settlement by arbitration under the law for the time
being in force, or

( ii ) the arbitral award is in conflict with the public policy of
India.

[ Explanation 1 .— For the avoidance of any doubt, it is clarified
that an award is in conflict with the public policy of India, only if,—

( i ) the making of the award was induced or affected by fraud or
corruption or was in violation of Section 75 or Section 81; or

( ii ) it is in contravention with the fundamental policy of Indian law;
or

( iii ) it is in conflict with the most basic notions of morality or justice.


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Explanation 2 .— For the avoidance of doubt, the test as to
whether there is a contravention with the fundamental policy of
Indian law shall not entail a review on the merits of the dispute.

[(2-A) An arbitral award arising out of arbitrations other than
international commercial arbitrations, may also be set aside by
the Court, if the Court finds that the award is vitiated by patent
illegality appearing on the face of the award:

Provided that an award shall not be set aside merely on the
ground of an erroneous application of the law or by reappreciation
of evidence.

(3) An application for setting aside may not be made after three
months have elapsed from the date on which the party making
that application had received the arbitral award or, if a request
had been made under Section 33, from the date on which that
request had been disposed of by the arbitral tribunal:

Provided that if the Court is satisfied that the applicant was
prevented by sufficient cause from making the application within
the said period of three months it may entertain the application
within a further period of thirty days, but not thereafter.

(4) On receipt of an application under sub-section (1), the Court
may, where it is appropriate and it is so requested by a party,
adjourn the proceedings for a period of time determined by it in
order to give the arbitral tribunal an opportunity to resume the
arbitral proceedings or to take such other action as in the opinion
of arbitral tribunal will eliminate the grounds for setting aside the
arbitral award.

(5) An application under this section shall be filed by a party only
after issuing a prior notice to the other party and such application
shall be accompanied by an affidavit by the applicant endorsing
compliance with the said requirement.

(6) An application under this section shall be disposed of
expeditiously, and in any event, within a period of one year from
the date on which the notice referred to in sub-section (5) is
served upon the other party.


37. Appealable orders.— (1) Notwithstanding anything
contained in any other law for the time being in force, an appeal
shall lie from the following orders (and from no others) to the
Court authorised by law to hear appeals from original decrees of
the Court passing the order, namely:—

(a) refusing to refer the parties to arbitration under Section 8;

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(b) granting or refusing to grant any measure under Section 9;

(c) setting aside or refusing to set aside an arbitral award under
Section 34.

(2) Appeal shall also lie to a court from an order of the arbitral
tribunal—

(a) accepting the plea referred to in sub-section (2) or sub-section
(3) of Section 16; or

(b) granting or refusing to grant an interim measure under Section
17.

(3) No second appeal shall lie from an order passed in appeal
under this section, but nothing in this section shall affect or take
away any right to appeal to the Supreme Court.


43. Limitations. — (1) The Limitation Act, 1963 (36 of 1963), shall
apply to arbitrations as it applies to proceedings in court.

(2) For the purposes of this section and the Limitation Act, 1963
(36 of 1963), an arbitration shall be deemed to have commenced
on the date referred in Section 21.

(3) Where an arbitration agreement to submit future disputes to
arbitration provides that any claim to which the agreement applies
shall be barred unless some step to commence arbitral
proceedings is taken within a time fixed by the agreement, and a
dispute arises to which the agreement applies, the Court, if it is
of opinion that in the circumstances of the case undue hardship
would otherwise be caused, and notwithstanding that the time so
fixed has expired, may on such terms, if any, as the justice of the
case may require, extend the time for such period as it thinks
proper.

(4) Where the Court orders that an arbitral award be set aside,
the period between the commencement of the arbitration and the
date of the order of the Court shall be excluded in computing the
time prescribed by the Limitation Act, 1963 (36 of 1963), for the
commencement of the proceedings (including arbitration) with
respect to the dispute so submitted.

48. Conditions for enforcement of foreign awards.— (1)
Enforcement of a foreign award may be refused, at the request
of the party against whom it is invoked, only if that party furnishes
to the Court proof that—


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(a) the parties to the agreement referred to in Section 44 were,
under the law applicable to them, under some incapacity, or the
said agreement is not valid under the law to which the parties
have subjected it or, failing any indication thereon, under the law
of the country where the award was made; or

(b) the party against whom the award is invoked was not given
proper notice of the appointment of the arbitrator or of the arbitral
proceedings or was otherwise unable to present his case; or

(c) the award deals with a difference not contemplated by or not
falling within the terms of the submission to arbitration, or it
contains decisions on matters beyond the scope of the
submission to arbitration:

Provided that, if the decisions on matters submitted to arbitration
can be separated from those not so submitted, that part of the
award which contains decisions on matters submitted to
arbitration may be enforced; or

(d) the composition of the arbitral authority or the arbitral
procedure was not in accordance with the agreement of the
parties, or, failing such agreement, was not in accordance with
the law of the country where the arbitration took place; or

(e) the award has not yet become binding on the parties, or has
been set aside or suspended by a competent authority of the
country in which, or under the law of which, that award was made.

(2) Enforcement of an arbitral award may also be refused if the
Court finds that—

(a) the subject-matter of the difference is not capable of
settlement by arbitration under the law of India; or

(b) the enforcement of the award would be contrary to the public
policy of India.

Explanation 1.—For the avoidance of any doubt, it is clarified that
an award is in conflict with the public policy of India, only if,—

(i) the making of the award was induced or affected by fraud or
corruption or was in violation of Section 75 or Section 81; or

(ii) it is in contravention with the fundamental policy of Indian law;
or

(iii) it is in conflict with the most basic notions of morality or justice.


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Explanation 2.—For the avoidance of doubt, the test as to
whether there is a contravention with the fundamental policy of
Indian law shall not entail a review on the merits of the dispute.]

(3) If an application for the setting aside or suspension of the
award has been made to a competent authority referred to in
clause (e) of sub-section (1) the Court may, if it considers it
proper, adjourn the decision on the enforcement of the award and
may also, on the application of the party claiming enforcement of
the award, order the other party to give suitable security.”






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A NNEXURE - B

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REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. ___ __ 2025
(@ SPECIAL LEAVE PETITION (CIVIL) NOS. 15336-15337 OF 2021)

GAYATRI BALASAMY APPELLANT(S)
VERSUS
M/S ISG NOVASOFT
TECHNOLOGIES LIMITED RESPONDENT(S)
With
CIVIL APPEAL NO. ___ __ 2025
(@ SLP(C) No. 21301/2024)
CIVIL APPEAL NO. ___ __ 2025
(@ SLP(C) No. 17941/2019)
CIVIL APPEAL NO. ___ __ 2025
(@ SLP(C) No. 7973/2022)
CIVIL APPEAL NOS. ___ __ 2025
(@ SLP(C) Nos. 4961-4962/2024)
CIVIL APPEAL NO. ___ __ 2025
(@ SLP (C) No. 2025)
(@ Diary No. 7789/2024)

CIVIL APPEAL NOS. ___ __ 2025
(@ SLP(C) Nos. 18656-18663/2024)
CIVIL APPEAL NO. 8183 OF 2016
AND
CIVIL APPEAL NO. 8184 OF 2016
1



J U D G M E N T
K.V. VISWANATHAN, J.

A. HOLDING IN PROJECT DIRECTOR, NHAI VS. M. HAKEEM AND ANR ……... 5
B. ORDER OF REFERENCE…………………………………………………………... 9
C. CONTENTION OF LEARNED COUNSELS…………………………………….... 10
i. CONCEPTUAL DISTINCTION BETWEEN “MODIFICATION” AND “SEVERANCE” .. 11
ii. CONTENTIONS FAVOURING THE POWER TO MODIFY………………………………..12
iii. CONTENTIONS OPPOSING THE POWER TO MODIFY……………………………….....19

D. THE ECO SYSTEM OF ARBITRATION …………………………………………………..29
i. HISTORICAL, TEXTUAL AND THE CONTEXTUAL SETTING………………………….29
ii. SCHEME OF THE A&C ACT, 1996……………………………………………………………33
E. SOME CASES CITED IN THE REFERRAL ORDER…………………………… 51

F. ANALYSIS OF THE CONTENTIONS AND REASONING……………………... 57
i. CAN WORDS BE READ INTO SECTION 34? ……………………………………………...57
ii. THE FALLACY IN THE ‘HARDSHIP’ ARGUMENT………………………………………60
iii. CONTRACTUAL OUSTER OF THE NORMAL JUDICIAL PROCESS………………….65
iv. CONTRAST WITH THE APPELLATE POWER UNDER CPC…………………………...66
v. IS POWER TO ‘MODIFY’ A LESSER POWER? …………………………………………..70
vi. LEGAL MAXIMS – TO BE DEPLOYED AFTER ASCERTAINING CONTEXT………..80
2


vii. THE ARGUMENT ON INHERENT POWERS……………………………………………..81
viii. DOCTRINE OF IMPLIED POWERS……………………………………………………….83
ix. PARTY AUTONOMY………………………………………………………………………...85
x. CAN ARTICLE 142 POWERS BE EXERCISED TO MODIFY? ………………………..87
xi. LAYING DOWN GUARDRAILS FOR SECTION 34 – IS IT AN OPTION FOR THIS
COURT? ……………………………………………………………………………………...92
xii. SUBMISSIONS BASED ON PECULIARITIES IN STATUTORY ARBITRATIONS …94
xiii. COMPLICATIONS DUE TO MODIFICATIONS IN NEW YORK CONVENTION
AWARDS ……………………………………………………………………………………..96
xiv. IS HAKEEM (SUPRA) PER INCURIAM? …………………………………………….......99
xv. POWERS UNDER SECTION 33 AND 34 (4) OF THE A&C ACT – THE ‘SAFETY
VALVES’ …………………………………………………………………………………….100
xvi. AWARD OF INTEREST- USE OF SECTION 34(4) POWER …………………………..107
xvii. SUO MOTO EXERCISE OF SECTION 34(4) POWER ………………………………..108
xviii. COMPUTATION, CLERICAL AND TYPOGRAPHICAL ERROR OR ANY OTHER
ERROR OF SIMILAR NATURE - ACTUS CURIAE NEMINEM GRAVABIT
PRINCIPLE…………………………………………………………………………………109
xix. SEVERABILITY UNDER SECTION 34 …………………………………………………113
xx. ABANDONMENT OF CLAIMS - COMPROMISE ARRIVED AT BETWEEN THE
PARTIES……………………………………………………………………………………..124

G. CONCLUSION…………………………………………………………………... 125
H. ANSWERS TO THE REFERENCE……………………………………………. 127
3


1. Delay in refiling the Special Leave Petition is condoned.
2. Leave granted.
3. This reference to a Bench of five judges is primarily to decide the
correctness of the judgment of this Court in Project Director, National
Highways No. 45 E and 220 National Highways Authority of India
Vs. M. Hakeem and Anr., (2021) 9 SCC 1. In the said judgment, this
Court held that while exercising powers under Section 34 of the
Arbitration and Conciliation Act, 1996 (‘A&C Act’ for short), a Court
hearing the petition had no power to “Modify” the Award. A three-
Judge Bench of this Court on 20.02.2024, after noticing that there are
decisions of this Court which have either modified the awards of the
Arbitral Tribunals or upheld orders challenging modified awards and
after observing that an authoritative pronouncement is required on this
issue, placed the matter before the Hon’ble Chief Justice for
constitution of an appropriate Bench. On 23.01.2025, by an order, this
Court directed the matter to be placed before a Constitution Bench and
that is how the matter has presented itself.

4


THE HOLDING IN HAKEEM (SUPRA) :-
4. The facts in Hakeem (Supra) were that pursuant to the
notifications issued under the provisions of the National Highways Act,
1956 for acquisition of lands by the National Highways Authority of
India (NHAI), awards came to be passed by the competent authority
under the said Act. A Petition under Section 34 of the A&C Act resulted
in enhancement of the award by the District Court which was upheld
on further appeal with only a remand to determine compensation for
certain trees and crops. The NHAI challenged the same before this
Court and contended that in exercise of powers under Section 34, no
modification could be made since it was not a challenge on the merits
of the award. The contentions of NHAI were that powers under Section
34 were qualitatively different from an appellate power and the only
option open was to set aside the award or remit the award under Section
34 (4) in the event of the contingencies provided thereon arising. A
contrast was made with the provisions of the Arbitration Act, 1940
which contained express provisions to modify the award under Section
15 therein. NHAI further argued that since the A&C Act was based on
the UNCITRAL Model Law on International Commercial Arbitration,
5


1985, the grounds of challenge were restricted. The land losers in
Hakeem (Supra) contended that power to set aside in Section 34
included a “power to modify” and relied on the judgment of the learned
Single Judge of the Madras High Court in Gayatri Balaswamy Vs. ISG
Novasoft Technologies Limited, 2014 SCC OnLine Mad 6568 .
[Coincidentally, Gayatri Balaswamy (supra) is the first case in this
reference after travelling through the Division Bench of the High
Court.]
5. This Court in Hakeem (Supra) held as under:-
(i) Section 34 of the A&C Act was different from a
provision of appeal since the Section contemplates
setting aside awards on very limited grounds provided
in the sub-Sections thereof. (Para 16)
(ii) “Recourse” in Section 34 meant enforcement or
method of enforcing a right and where the right itself is
truncated, enforcement of such right would also be only
limited in nature. (Para 16)
6


(iii) That enforcement is truncated was further clear
from Section 34(4) which provides that on receipt of an
application under Section 34(1), the Court may, where
it is appropriate and it is so requested by a party, adjourn
for a period of time the Section 34 proceedings to give
the Arbitral Tribunal an opportunity to resume the
Arbitral proceedings or to take such other action as in
the opinion of the Arbitral Tribunal will eliminate the
grounds for setting aside the Arbitral Award. It was the
opinion of the Arbitral Tribunal which ultimately
counted in order to eliminate the grounds for setting
aside the award, which may be indicated by the Court.
(Para 16)
(iv) That Section 34 was modelled on the UNCITRAL
Model Law and no power to modify was given to the
Court. (Para 17)
(v) Eminent authors like Redfern and Hunter have
opined that the Reviewing Court can neither alter the
7


terms of an award nor can it decide the dispute based on
its own vision of the merits. (Para 18)
(vi) Minimal judicial interference is called for in
Arbitral Awards under the UNCITRAL Model Law and
unlike the 1940 Act there is no power to modify. (Para
19 & 20)
(vii) In a challenge under Section 34, there is no
challenge to the merits of the award as held in a long
line of judgments of this Court (Para 23, 24)
(viii) This Court in McDermott International Inc. Vs.
Burn Standard Co. Ltd., (2006) 11 SCC 181 has held
that Court cannot correct the errors of the Arbitrators
and that it can only quash the award leaving the parties
free to begin the arbitration afresh. (Para 25)
(ix) That in England, the United States, Canada,
Australia and Singapore there are express legislative
provisions permitting the varying of an Award, unlike
Section 34 of the A&C Act. (Para 43)
8


ORDER OF REFERENCE: -
6. In the referral order of 20.02.2024, this Court, while framing
certain questions for consideration, observed as under:-
“2. Whether or not the Courts in exercise of power
under sections 34 or 37 of the Arbitration and
Conciliation Act, 1996 are empowered to modify an
arbitral award is a question which frequently arises in
proceedings not only before this Court but also before
the High Courts and the District Courts. While one line
of decisions of this Court has answered the aforesaid
question in the negative, there are decisions which have
either modified the awards of the arbitral tribunals or
upheld orders under challenge modifying the awards. It
is, therefore, of seminal importance that through an
authoritative pronouncement clarity is provided for the
guidance of the Courts which are required to exercise
jurisdiction under the aforesaid sections 34 and 37, as
the case may be, day in and day out.
3. We are of the considered view that the following
questions need to be referred to a larger Bench for
answers:
"1. Whether the powers of the Court under section 34
and 37 of the Arbitration and Conciliation Act, 1996,
will include the power to modify an arbitral award?
2. If the power to modify the award is available, whether
such power can be exercised only where the award is
severable and a part thereof can be modified?
3. Whether the power to set aside an award under
section 34 of the Act, being a larger power, will include
9


the power to modify an arbitral award and if so, to what
extent?
4. Whether the power to modify an award can be read
into the power to set aside an award under section 34 of
the Act?
5. Whether the judgment of this Court in Project
Director NHAI vs. M. Hakeem (2021) 9 SCC 1,
followed in Larsen Air Conditioning and
Refrigeration Company vs. Union of India , (2023)
SCC OnLine SC 982 and SV Samudram vs. State of
Karnataka, (2024) SCC OnLine SC 19 lay down the
correct law, as other benches of two Judges (in Vedanta
Limited vs. Shenzden Shandong Nuclear Power
Construction Company Limited , (2019) 11 SCC 465,
Oriental Structural Engineers Pvt. Ltd. vs. State of
Kerala, (2021) 6 SCC 150 and M.P. Power Generation
Co. Ltd. vs. Ansaldo Energia Spa , (2018) 16 SCC 661
and three Judges (in J.C. Budhraja vs. Chairman,
Orissa Mining Corporation Ltd. (2008) 2 SCC 444,
Tata Hydroelectric Power Supply Co. Ltd. vs. Union of
India, (2003) 4 SCC 172 and Shakti Nath vs. Alpha
Tiger Cyprus Investment No.3 Ltd. , (2020) 11 SCC
685) of this Court have either modified or accepted
modification of the arbitral awards under
consideration?”
4. The special leave petitions may be placed before the
Hon’ble the Chief Justice of India for an appropriate
order.”
CONTENTIONS OF LEARNED COUNSELS: -
7. Wide ranging arguments have been canvassed to contend that a
Court under Section 34 of the A&C Act has the power to “modify” the
award and equally strong arguments were canvassed contending for the
10


position that Hakeem (Supra) is correctly decided and there was no
power in the Section 34 Court to modify. The only unanimity in the
submission was with regard to the power under Section 34 to sever
parts of the award subject to the condition that the Severed part is a
standalone part and is not inseparably intertwined with the other parts
of the award.
CONCEPTUAL DISTINCTION BETWEEN “MODIFICATION”
AND “SEVERANCE”: -
8. This judgment approaches the issue by maintaining the
conceptual distinction between “modification” and “severance”.
Wherever modification is discussed, it is to examine whether a Section
34 Court can change, vary or qualify an award. Wherever severance is
discussed it has to be understood to mean “to separate” and “disjoin”.
Parties have also canvassed arguments based on that distinction. While
the rival parties were at daggers drawn on the aspect of the power to
“modify” in a Section 34 Court, there was unanimity on the power to
“sever” subject to conditions compatible with severability.

11


CONTENTIONS FAVOURING THE POWER TO MODIFY: -
9 . Mr. Arvind Datar, learned Senior Counsel made bold to suggest
that the Court read words into Section 34. According to the learned
Senior Counsel, the words “ and , to the extent ” be read as opening
words in Section 34(2) (b) and further that the words “ or modified,
and “to the extent ” be added in Section 34(2)(a). According to the
learned Senior Counsel, the Court is not powerless to add words and
cited a large number of authorities where, according to the counsel,
words have been added to avoid irreconcilable conflict and in situations
where absurdity and injustice had to be averted. The learned Senior
Counsel further contended that Hakeem (supra) is per incuriam as it is
contrary to several three-Judge and two-Judge Bench judgments of this
Court. Learned Senior Counsel further contended that the only option
of setting aside the award will cause enormous hardship to the litigants
as that will result in recommencement of the arbitration proceedings.
Learned Senior Counsel further argued that power to “set aside” the
award will include power to modify as the larger power would include
the smaller power. Learned Counsel relied on the legal maxim omne
majus continet in se minus which meant the greater contains the less.
12


10 . Mr. Darius Khambata, learned Senior Counsel contended that
certain foreign jurisdictions have statutorily enabled Courts to modify
awards including on a question of law. Referring to passages from
“Mustill & Boyd” on Commercial Arbitration, learned Senior Counsel
contended that it would be unjust for an obviously wrong decision on
an important question of law not to be put right by the Court and any
variation which inevitably flows from the Court’s determination of the
question of law would be perfectly justified. Learned Senior Counsel
reiterated the submission that power to modify, if available to the Court,
would ensure resolution of dispute in a speedy, effective, inexpensive
and expeditious manner. Learned Senior Counsel referred to the Expert
Committee Report headed by Dr. T.K. Viswanathan to contend that
even the Committee has recommended legislative changes to permit
modification of the award. Learned Senior Counsel contended that
none of the provisions in the Act including Section 34 prohibit Courts
from modifying the award and argued that silence in the Act cannot be
read as a prohibition.
11 . Learned Senior Counsel canvassed that Courts should have the
power to iron out the creases and supported the submission that the
13


larger power of setting aside ought to include the limited power to
modify when such modification inevitably flows from the correction of
illegality within the confines of Section 34. Illustrative cases where this
Court exercised powers under Article 142 were referred to.
12 . Learned Senior Counsel sought to peg the power to modify under
Section 151 of the Code of Civil Procedure which saved the inherent
powers of Court and contended that inherent powers were always
available to a Civil Court exercising powers under Section 34. Learned
Senior Counsel contended that any fear that power to modify will result
in Section 34 power being turned into an appellate power can be
checked, by prescribing guardrails to prevent abuse of the power to
modify. Learned Senior Counsel contended that if the modification
required reconsideration of facts on merits, Courts’ ought to remit the
award under Section 34(4), if the remission is to be on narrowly defined
issues for pure application to facts. Learned Senior counsel contended
that if remission is to be allowed, the correct position of law should be
determined by the Court and after recording a finding the remission
ought to be made. Learned Senior Counsel contended that severability
is well accepted during the course of exercise of power under Section
14


34, which according to the counsel, was after all a facet of modification
and there is no reason why power to modify generally cannot be read
into Section 34.
13 . Mr. Shekhar Naphade, learned Senior Counsel contended that if
impugned award grants reliefs which cannot be granted due to factors
specified in sub-clauses (i), (ii), (iv) and (v) of clause (a) of Section
34(2) and sub-clause (i) of clause (b) of Section 34(2), then there was
no question of modifying or substituting an award. According to the
learned Senior Counsel, the only option then was to set aside the award.
Learned Senior Counsel contends that if the award is passed in
violation of natural justice then the question would arise as to what the
Court ought to do. Equally so with regard to awards infested with
corruption and wrongful rejection of claims, learned Senior Counsel
contends that mere setting aside would not put an end to the lis . Merely
setting aside the award in such circumstances would defeat the purpose
of resolving disputes expeditiously, contends Mr. Naphade. According
to the learned Senior Counsel, it will also be contrary to fundamental
notions of justice since there should be some remedy for every wrong
and the consequence will be that the proceedings will revive and
15


continue ‘ ad infinitum ’ involving enormous delay and huge costs.
According to the learned Senior Counsel the only possible solution
therefore, is that after setting aside the award the Court itself either
modifies or substitutes the award and when the Court does so, it is only
passing an order which the arbitral Tribunal ought to have passed and
being a final step in the proceeding it is consistent with the scheme of
the Act.
14 . Learned Senior Counsel contends that since a Section 34
application is heard by a Court as defined in Section 2(1)(e), the general
principle that every Civil Court has inherent jurisdiction to deal with
matters of civil nature and pass such orders as are permissible in law
ought to apply. According to learned Senior Counsel, under Section 151
C.P.C., a Court is competent to pass such orders as are necessary to
meet the ends of justice.
15 . Mr. Naphade contends that rules of statutory interpretation
require the Court to make every endeavour to avoid a case of casus
omissus . Drawing particular attention to the provisions of the NHAI
Act and the acquisition made thereunder, learned Senior Counsel
contends that such matters involved public law elements unlike
16


contractual arbitration which involves commercial considerations.
Hence, where lands are acquired with paltry compensation and with no
remedy to seek a reference for enhancement like under the normal Land
Acquisition Laws, the only remedy available is to enable the Section
34 Court to enhance compensation and a restricted view of Section 34
in Statutory arbitrations like in NHAI would render the Section itself
ultra vires Article 14.
16 . Mr. Ritin Rai, learned senior counsel reiterated the submission
that ‘recourse’, is a wider term. He further reiterated that there is no
prohibition to modify in the Act. Mr. Ritin Rai submitted that if the
conclusion to modify axiomatically follows a finding, then
modification should be allowed.
17 . Mr. Prashanto Chandra Sen, Dr. Manish Singhvi, Learned Senior
Counsels and Mr. Abhishek Kumar Rao, learned Counsel reiterated the
arguments of other Senior Counsels. Dr. Manish Singhvi, learned
Senior Counsel argued that competent authorities under the NHAI are
not legally trained minds and the compensation granted by them cannot
be treated as final and the Section 34 Court should have power to
enhance. Learned Senior Counsel contended that restrictive parameters
17


should not be available for compulsory arbitration as opposed to
consensual arbitration.
18 . Mr. Sumeet Pushkarna, learned Senior Counsel, M/s Ashwin
Shanker, Vaibhav Dang, Amit George and Jinendra Jain by and large
reiterated the submissions of Mr. Datar and Mr. Khambata. Mr. Vaibhav
Dang and Mr. Jinendra Jain supplemented the submissions by adding
that substantial cost will be incurred if re-arbitration is to commence
and that Hakeem (supra) did not consider modification by mutual
consent and correction of computation and clerical errors by the Section
34 Court. It was further argued by Mr. Amit George that power to grant
interest, reduce or increase interest should be read into Section 34
without relegating parties for fresh arbitration. It was argued that if the
award of the Tribunal is contrary to the agreement between the parties
on interest, modifying the same would not require any elaborate
inquiry. Learned Counsel also argues that if in an enquiry under Section
34, the Court finds that modifying the award was the only one
conclusion possible, it will be a useless formality to set aside and let
parties reagitate in arbitration. It was contended that the word
18


“recourse” to Court will include the power to modify as, “recourse” is
a method of enforcement of right”.
19 . Mr. Pallav Mongia, learned Counsel contended that any
modification should only be through the mechanism of Section 34(4).
Learned counsel canvassed the application of the principle of
proportionality as modification through the mechanism of Section
34(4) would be a better option than setting aside the award in entirety.
Learned Counsel contended that the procedural preconditions
mentioned in Section 34(4) should be read as discretionary.
CONTENTIONS OPPOSING THE POWER TO MODIFY: -
20 . Mr. Tushar Mehta, learned Solicitor General (SG), who, in fact,
opened the arguments at the reference contended that the power to
modify has to be statutorily conferred and cannot be exercised
otherwise. The learned Solicitor General, referred to several statutes of
other jurisdictions to contend that wherever power to modify was to be
recognized, such powers were expressly conferred by the legislature.
Learned SG referred to the provisions in UK, USA, Singapore, Canada
and a whole host of other countries to demonstrate the existence of
19


specific power to modify/vary in their respective arbitration statutes.
According to the learned SG, Section 34 of the Arbitration Act has a
strong resemblance with the UNCITRAL Model Law, both of which
delineate limited grounds for setting aside an Arbitral award. The
learned SG made extensive reference to the debates during the
preparation of the Model Law to contend that setting aside was the only
recourse available in India as at present and that the power to remit
under Section 34(4) is intended to prevent annulment on grounds
th
specified therein. Learned SG referred to the 76 Report of the Law
Commission on the Arbitration Act to contend that no power to modify
was recommended even though the precursor Act, namely, the 1940 Act
had in Section 15 a specific power to modify. Learned SG contended
that the scope of setting aside proceedings are not akin to Appellate
proceedings where evidence is re-evaluated and decision is examined
for its correctness on merits. According to the learned SG, the power of
modification cannot be subsumed in the power to “set aside” as both
exist on different judicial planes requiring application of differing
judicial parameters.
20


21 . Learned SG particularly emphasized on Section 5 of the A&C Act
to canvass for limited judicial intervention in a manner provided in the
statute and nothing more. Learned SG referred to Section 34(4) as the
solution, provided the grounds mentioned in the Section are made out.
The learned SG distinguished the cases where this Court had exercised
power to modify. Learned SG contended that Article 142 power cannot
be exercised in contravention of statutory power and not being a
situation similar to the one in Vishaka and Others Vs. State of
Rajasthan and Others, (1997) 6 SCC 241, no guardrails can be laid
down by the Court. Learned SG referred to the cardinal rule of
interpretation that the words should be given their plain and natural
meaning and that it was not the duty of the Court to enlarge the
language of the provision where the provision is otherwise plain and
unambiguous. Learned SG concluded by contending that the exclusion
of the power to modify in the UNCITRAL Model law was a conscious
decision and it was left to the respective countries to incorporate a
provision if it was so desired and that in the absence of any power to
modify the only option was to set aside or pending the proceedings,
remit under Section 34(4). Learned SG submitted that even the Expert
21


Committee, namely, the Vishwanathan Committee had only
recommended the statutory amendment.
22 . Mr. Saurabh Kirpal, learned Senior Advocate contended that
Courts cannot modify clear words of the Statute. According to the
counsel, there was no reason to consider the provisions of the A&C Act
as unworkable since, it has worked well for the past three decades.
Reiterating the application of the golden rule of interpretation, learned
Senior Counsel urged that the plain meaning be given to Section 34.
According to the learned Senior Counsel, ‘setting aside’ clearly meant
quashing the decision. According to the learned senior counsel,
granting power of modification may only further delay the proceedings
by never ending appeals and the question of speedy justice is a matter
for Parliament to decide. According to the learned senior counsel,
letting in power to modify into Section 34 will cause uncertainty which
is an anathema to business and commerce. Learned Senior Counsel
contends that party autonomy and non-interference by Court is a golden
thread that runs through the Act and that granting power to modify will
drag the Courts into a merits review, which the parties have chosen not
to opt, when they decided to arbitrate. Learned Senior Counsel
22


contends that the principle that greater power will include lesser power
has no application and such a principle will apply only if the scope of
law is of the same genus. According to the learned Senior Counsel, this
Court has already held before the judgment in Hakeem (supra) that
Section 34 does not encompass the power to modify.
23 . Mr. Gourab Banerji, learned Senior Counsel contended that the
UNCITRAL Model Law and the A&C Act permit only “setting aside”
of awards; that countries which have derogated from the Model Law
have specifically empowered the Courts to modify, confirm or vary an
award in whole or in part, in addition to powers of setting aside; that
power to annul is inconsistent with a power to appeal; that no judicially
manageable standards exist to determine the contours of modification
and the only way forward is by legislation. The learned senior counsel
contended that the A&C Act was based on the UNCITRAL Model Law
and provides finality and binding nature of the award and minimal
judicial intervention. Learned Senior Counsel further contended that
the statutory scheme under the A&C Act, 1996 differs from that of the
Act of 1940; that Section 34 does not provide a merits challenge nor is
it an appellate jurisdiction; that parties consciously opt to exclude the
23


Court’s jurisdiction and choose arbitration for its expediency and
finality and that the “limited remedy” under Section 34 is co-terminus
with the “limited right” to set aside or remit within the meaning of
Section 34(4). According to the learned Senior Counsel, the
consequence of a complete annulment is recommencement of
proceedings and any new submission will have to be argued before the
new Tribunal.
24 . Learned senior counsel contended that the setting aside of the
award would not affect the validity of the Arbitration agreement.
Adverting to Section 34(4), learned Senior Counsel contended that
curing defects is limited to cases where award provides no reasoning or
there are gaps in reasoning or those which can otherwise be cured to
avoid a setting aside. Learned Senior Counsel contends that Section
34(4) excludes reconsideration of the award for the purpose of
eliminating the grounds on which the award can be set aside. Dealing
with severability, learned senior counsel contended that an award can
be segregated and upheld after exclusion of the infirmity, where there
are multiple claims and counter claims which are severable and not
inter-dependent. The Court in Section 34 can set aside or uphold the
24


Arbitrator’s decision on individual and severable claims, without
setting aside the whole award, depending upon the facts and
circumstances of the case.
25 . Learned Senior Counsel flagged a very important concern if
power to modification is permitted. According to the learned Senior
Counsel, it will lead to enforcement issues under the New York
Convention, apart from other anomalies. Learned Senior Counsel
contends that parties clamoring for modification are treating an award
akin to a judgment and Section 34 proceedings akin to an appeal.
Before the Arbitrator, even the misapplication or misinterpretation of
law would bind the parties. Learned Senior Counsel argued that
internationally various forms of recourse are recognized and referred to
the power to confirm present in the English Act; the power to vary; the
power to correct; the power to remit and powers to set
aside/annul/vacate. According to the learned Senior Counsel, once the
award is set aside, it is quashed, and it never exists in the eye of law.
This would mean that parties would be relegated to their original
litigating position.
25


26 . According to the learned Senior Counsel, the argument that grave
injustice will occur if there is no power to modify is a misconceived
submission. Learned Senior Counsel submits that having taken a
conscious decision to exclude Court’s jurisdiction, it does not lie in the
mouth of the parties to draw this red herring and contended that any
sanction of power to modify would affect finality and binding nature of
the awards. Learned Senior Counsel contended that reading in
guardrails would amount to judicial legislation. According to the
learned Senior Counsel, permitting modification would compel the
Court to do a two-fold exercise, namely, first to decide whether award
suffers from any infirmity and then to decide what the correct outcome
would be on the facts of the case.
27 . Learned senior counsel contends that the power of modification,
if permitted, the original award will be rendered incapable of
enforcement, particularly in the New York Convention awards and
cited how other jurisdictions have handled it by incorporating specific
provisions, namely, Section 71 of the English Arbitration Act, Section
5(7) of Schedule 2 of the New Zealand Arbitration Act, 1996 and
Section 39(5) of the Kenyan Arbitration Act, 1995. According to the
26


learned Senior Counsel, absent such legislative shield, India seated
arbitrations would be vulnerable and unattractive and the awards would
potentially be in breach of the New York Convention.
28 . Dealing with statutory arbitrations, learned Senior Counsel
contends that solutions to the maladies of the statutory arbitrations must
be sourced to the respective statutes mandating these arbitrations and
not to the A&C Act and suggests that public law remedies like writ
jurisdiction in those cases may provide appropriate remedy.
29 . Mr. Gaurav Pachnanda, learned Senior Advocate contended that
only if the portion is severable could the court under Section 34 sever
the award, and even here, according to the learned Senior Counsel, an
exercise has to be undertaken to examine whether the good parts of the
award can be separately identified both in terms of liability and
quantum without any correlation to the bad parts of the award.
According to the learned Senior Counsel, if good parts are intermingled
with the bad parts of the award in a manner that it is impossible to sever
the bad parts, then principles of severability cannot be applied. To
illustrate, the learned Senior Counsel contends that if a final award is
arrived at by netting of claims and counter claims, principles of
27


severability cannot be applied. According to the learned Senior
Counsel, netting of claims and counter claims results in composite
awards where a single amount is enforceable by the successful parties.
According to the learned Senior Counsel, this would also impact the
Stamp duty.
30 . Learned Senior Counsel argued that the doctrine of merger does
not apply to an order of the Court under Section 34. Arguing from that
perspective, learned Senior Counsel contended that jurisdiction under
Section 34 does not extend to modification, variation or reversal of the
Arbitral Tribunal award and the Court can only efface or annul the
arbitral award. According to the Learned Senior Counsel, doctrine of
merger would not apply if the nature and scope of the power of the
superior forum is not identical with the nature and scope of power of
the subordinate fora. Learned Senior Counsel contended that a statutory
scheme of merger is recognized in UK and Singapore and the same is
absent in our country. Learned Senior Counsel contended that the
power under Section 151 CPC cannot be resorted to when the mandate
of Section 34 is clear.
28


31 . These submissions have been reiterated by Ms. Archana Pathak
Dave, learned ASG, Mr. Naresh Markanda, Mr. Surjendu Sankar Das,
Mr. Saurav Agarwal, Mr. Saket Sikri and Mr. Rahul G. Tanwani,
learned counsels.
32 . Both sides referred to a large number of authorities in support of
their respective positions.
THE ECO SYSTEM OF ARBITRATION:-
HISTORICAL, TEXTUAL AND THE CONTEXTUAL
SETTING:
33. Before the core issue is answered, certain fundamental concepts
highlighting the difference between the adjudication of disputes by the
procedure in Courts and the procedure in Arbitration needs to be
emphasized. The judicial power of the State is exercised by the
judiciary and disputes are adjudicated through the mechanism of the
Courts at different hierarchical levels. If disputes were to be
adjudicated in Courts, normal procedural laws would govern the
disposal. For example, while the Code of Criminal Procedure, 1973
(The Bharatiya Nagarik Suraksha Sanhita, 2023) would govern the
29


procedure in Criminal Courts, the Code of Civil Procedure of 1908
amended in 1976 and thereafter, would govern the procedure in the
Civil Courts.
34. The Indian Contract Act, 1872, while otherwise holding that
Agreements in restraint of legal proceedings would be void in Section
28, saves Arbitration references. For the sake of convenience, relevant
portions of Section 28 of the Contract Act, are set out hereinbelow:-
“ 28. Agreements in restraint of legal proceedings, void .—
Every Agreement,-
(a) by which any party thereto is restricted absolutely from
enforcing his rights under or in respect of any contract, by the
usual legal proceedings in the ordinary tribunals, or which limits
the time within which he may thus enforce his rights; or
(b) which extinguishes the rights of any party thereto, or
discharges any party thereto from any liability, under or in
respect of any contract on the expiry of a specified period so as
to restrict any party from enforcing his rights, is void to that
extent.
Exception 1 .— Saving of contract to refer to arbitration
dispute that may arise.— This section shall not render illegal a
contract, by which two or more persons agree that any dispute
which may arise between them in respect of any subject or class
of subjects shall be referred to arbitration, and that only the
amount awarded in such arbitration shall be recoverable in
respect of the dispute so referred.
Exception 2. — Saving of contract to refer questions that have
already arisen.— Nor shall this section render illegal any
contract in writing, by which two or more persons agree to refer
to arbitration any question between them which has already
arisen, or affect any provision of any law in force for the time
being as to references to arbitration”.
30



35 . It is by virtue of this provision that Arbitration clauses in contracts
by which parties voluntarily agreed to step out of the process of normal
legal proceedings through Courts and decide to refer to Arbitration their
disputes, is saved. The logic behind the provision is that when two
parties with open eyes agree to submit their dispute to a third party in
whom they have confidence, such contracts should not be held as void.
36. The earliest statute which exclusively dealt with Arbitration was
the Indian Arbitration Act of 1899. Thereafter came the Arbitration Act
of 1940 (‘1940 Act’ for short), which has since been replaced by the
A&C Act. What is important to note is that contracts referring parties
to Arbitration were regulated by statutes. Parties contracting with open
eyes were aware that once they opt for Arbitration, the parameters for
Arbitration were to be governed by the statute regulating the same and
that the normal remedies available to a litigant who is resorting to the
existing Courts could not be applicable and a different procedure would
govern the same.
37. The 1940 Act dealt with:- Arbitration without intervention of a
Court (Sections 3 to 19); Arbitration with intervention of a Court where
31


there is no suit pending (Section 20); Arbitration in suits (Sections 21
to 25) and further Section 27 enabled the Arbitrator to make an interim
award and in Section 30 grounds for setting aside the award were
provided. What is important to note is that Section 15 of the Act of 1940
provided for a power in the Court to modify the award and Section 16
reserved an express power to remit the award.
38. Sections 15 and 16 of the 1940 Act read as under:-
“15. Power of Court to modify award .-The Court may by
order modify or correct an award-
(a) where it appears that a part of the award is upon a matter not
referred to arbitration and such part can be separated from the
other part and does not affect the decision on the matter referred;
or
(b) where the award is imperfect in form, or contains any
obvious error which can be amended without affecting such
decision; or
(c) where the award contains a clerical mistake or an error
arising from an accidental slip or omission.
16. Power to remit award .-(1) The Court may from time to
time remit the award or any matter referred to arbitration
to the arbitrators or umpire for reconsideration upon such
terms as it thinks fit-
(a) where the award has left undetermined any of the matters
referred to arbitration, or where it determines any matter not
referred to arbitration and such matter cannot be separated
without affecting the determination of the matters referred; or
(b)where the award is so indefinite as to be incapable of
execution; or
32


(c)where an objection to the legality of the award is apparent
upon the face of it.”
(Emphasis supplied)

39. Thereafter, in Section 30 of the 1940 Act, grounds for setting aside the
award were provided. Section 30 reads as follows:-
30. Grounds for setting aside award .-An award shall not be
set aside except on one or more of the following grounds,
namely:-
(a) that an arbitrator or umpire has misconducted himself or the
proceedings;
(b) that an award has been made after the issue of an order by
the Court superseding the arbitration or after arbitration
proceedings have become invalid under section 35;
(c) that an award has been improperly procured or is otherwise
invalid.
(Emphasis supplied)

40. It is important to note that Section 30 of the 1940 Act opened with
the phrase “ an award shall not be set aside except on one or more of
the following grounds ”. These words are exhaustive and limit the
setting aside to the three grounds set out therein.
SCHEME OF THE A&C ACT, 1996: -
41. Reverting to the A&C Act, the Statement of Objects and Reasons
sets out that the UNCITRAL Model Law and Rules harmonize the
concepts on arbitration and conciliation of different legal systems of
33


the world and contain provisions for universal application; though the
UNCITRAL Model Law and Rules are intended to deal with
international commercial arbitration and conciliation, they could with
appropriate modifications also serve as a model for legislation on
domestic arbitration and conciliation; that the present Bill sought to
consolidate and amend the law relating to domestic arbitration,
international commercial arbitration, enforcement of foreign arbitral
awards and to define the law relating to conciliation, taking into
account the UNCITRAL Model Law and Rules. Among the main
objectives set out were to minimize the role of the courts in the arbitral
process. The Statement of Objects and Reasons of the 1996 Act is
extracted herein below:-
“ STATEMENT OF OBJECTS AND REASONS
1. The law on arbitration in India is at present substantially
contained in three enactments, namely, the Arbitration Act, 1940, the
Arbitration (Protocol and Convention) Act, 1937 and the Foreign
Awards (Recognition and Enforcement) Act, 1961. It is widely felt
that the 1940 Act, which contains the general law of arbitration, has
become outdated. The Law Commission of India, several
representative bodies of trade and industry and experts in the field of
arbitration have proposed amendments to this Act to make it more
responsive to contemporary requirements. It is also recognised that
our economic reforms may not become fully effective if the law
dealing with settlement of both domestic and international
commercial disputes remains out of tune with such reforms. Like
arbitration, conciliation is also getting increasing worldwide
34


recognition as an instrument for settlement of disputes. There is,
however, no general law on the subject in India.

2. The United Nations Commission on International Trade Law
(UNCITRAL) adopted in 1985 the Model Law on International
Commercial Arbitration. The General Assembly of the United
Nations recommended that all countries give due consideration to the
said Model Law, in view of the desirability of uniformity of the law
of arbitral procedures and the specific needs of international
commercial arbitration practice. The UNCITRAL also adopted in
1980 a set of Conciliation Rules. The General Assembly of the
United Nations recommended the use of these Rules in cases where
the disputes arise in the context of international commercial relations
and the parties seek amicable settlement of their disputes by recourse
to conciliation. An important feature of the UNCITRAL Model Law
and Rules is that they have harmonised concepts on arbitration and
conciliation of different legal systems of the world and thus contain
provisions which are designed for universal application.
3. Though the said UNCITRAL Model Law and Rules are
intended to deal with international commercial arbitration and
conciliation, they could, with appropriate modifications, also serve
as a model for legislation on domestic arbitration and conciliation.
The present Bill seeks to consolidate and amend the law relating to
domestic arbitration, international commercial arbitration,
enforcement of foreign arbitral awards and to define the law relating
to conciliation, taking into account the said UNCITRAL Model Law
and Rules.
4. The main objectives of the Bill are as under:-
(i) to comprehensively cover international commercial arbitration
and conciliation as also domestic arbitration and conciliation;

(ii) to make provision for an arbitral procedure which is fair, efficient
and capable of meeting the needs of the specific arbitration;
(iii) to provide that the arbitral tribunal gives reasons for its arbitral
award;
(iv) to ensure that the arbitral tribunal remains within the limits of its
jurisdiction;
35


(v) to minimise the supervisory role of courts in the arbitral
process;
(vi) to permit an arbitral tribunal to use mediation, conciliation or
other procedures during the arbitral proceedings to encourage
settlement of disputes;
(vii) to provide that every final arbitral award is enforced in the
same manner as if it were a decree of the court;
(viii) to provide that a settlement agreement reached by the parties as
a result of conciliation proceedings will have the same status and
effect as an arbitral award on agreed terms on the substance of the
dispute rendered by an arbitral tribunal; and
(ix) to provide that, for purposes of enforcement of foreign awards,
every arbitral award made in a country to which one of the two
international Conventions relating to foreign arbitral awards to which
India is a party applies, will be treated as a foreign award.
5. The Bill seeks to achieve the above objects.
(Emphasis supplied)
The Act has since been amended in 2015, 2019 and 2021.
42. It is time now to analyse the conspectus of the legal provisions of
the A&C Act that are relevant for answering the issue at hand. Section
5 is an important provision which reads as under:-
“5. Extent of judicial intervention. —Notwithstanding anything
contained in any other law for the time being in force, in matters
governed by this Part, no judicial authority shall intervene except
where so provided in this Part. (Emphasis Supplied)
43 . It will be noticed that the section begins with a non-obstante
clause and states that notwithstanding anything contained in any other
law for the time being in force, in matters governed by Part-I, no
judicial authority shall intervene except where so provided in Part-I.
36


Section 7 defines “arbitration agreement” and mandates that it shall be
in writing in the manner as provided in sub-clause (4) therein. Section
8 is an important section, which mandates that a judicial authority
before which an action is brought in a manner which is subject to
arbitration agreement shall, if a party to the arbitration agreement or
any person claiming through or under him, so applies in the
circumstance set out therein, the judicial authority shall refer the parties
to arbitration unless it finds that prima facie no valid arbitration
agreement exists; Section 9 deals with interim measures; Section 10
deals with number of arbitrators and Section 11 provides for the method
of appointment of arbitrators. Sections 12 and 13 deal with bias and
procedure for challenging the continuance of an arbitrator.
44. What is important to notice is where a challenge to an arbitrator
on the grounds of bias fails, the Arbitral Tribunal is mandated to
continue the arbitral proceedings. Section 13(5) provides that where an
arbitral award is made under sub-section (4), the party challenging the
arbitrator may make an application for setting aside such an arbitral
award in accordance with Section 34. The point to be noted is that
judicial intervention is postponed till the conclusion of the arbitral
37


proceedings and courts are kept at bay from interfering before the
making of an award. This is in line with the mandate of Section 5 which
states that except where so provided it shall be a judicial hands-off.
45. Section 14 deals with failure or impossibility of the arbitrator to
act and Section 15 deals with termination of mandate and substitution
of arbitrator. Section 16 deals with the competence of the Arbitral
Tribunal to rule on its own jurisdiction. This section, based on the
Principle of Kompetenz- Kompetenz, vests the arbitral tribunal to
decide upon its own jurisdiction, including ruling on any objections
with respect to the existence or validity of the arbitration agreement.
Section 16(2) mandates that a plea that the arbitral tribunal does not
have jurisdiction is to be raised not later than the submission of the
statement of defence; sub-section (5) of Section 16 states that where
the arbitral tribunal takes a decision rejecting the objection under sub-
sections (2) and (3) it shall continue with the arbitral proceedings and
make the award and any such decision upholding the jurisdiction or
authority is challengeable only at the stage of Section 34 and no court
will intervene pending the proceedings before the arbitrator. However,
Section 37(2) provides an appeal to the court in case the arbitrator
38


upholds the objection to jurisdiction or authority. Here again judicial
hands-off is specifically provided and wherever intervention was
permitted it took care to make specific provisions for the same. Section
29A is a specific instance in point where Courts’ intervention is
provided for in the context of extension of time for completion of
proceedings. Thereafter, for the purpose of this reference, the next set
of sections that would merit discussion is Sections 31 to 43.
46. Section 31 deals with form and contents of arbitral award. Sub-
section (1) mandates that the arbitral award shall be made in writing
and signed by the members of the arbitral tribunal. Sub-section (4)
states that the award shall state its date and the place of arbitration.
Sub-section 7(a) deals with manner of award of post-award interest.
Sub-section 7(b) states that unless the award otherwise directs any sum
directed to be paid by the tribunal shall carry interest at the rate of two
per cent higher than the current rate of interest prevalent on the date of
award. Sub-section (8) states that the costs of arbitration shall be fixed
by the arbitral tribunal in accordance with Section 31A. Sub-section
(3) of Section 32 states that subject to Section 33 and sub-section (4) of
39


Section 34, the mandate of the arbitral tribunal was to terminate with
the termination of the arbitral proceedings.
47 . Section 33 deals with correction and interpretation of award;
additional award. Section 33 is extracted herein below:-
“ 33. Correction and interpretation of award; additional
award.— (1) Within thirty days from the receipt of the arbitral award,
unless another period of time has been agreed upon by the parties—
(a) a party, with notice to the other party, may request the arbitral
tribunal to correct any computation errors, any clerical or
typographical errors or any other errors of a similar nature occurring
in the award;
(b) if so agreed by the parties, a party, with notice to the other party,
may request the arbitral tribunal to give an interpretation of a specific
point or part of the award.
(2) If the arbitral tribunal considers the request made under sub-
section (1) to be justified, it shall make the correction or give the
interpretation within thirty days from the receipt of the request and
the interpretation shall form part of the arbitral award.
(3) The arbitral tribunal may correct any error of the type referred to
in clause (a) of sub-section (1), on its own initiative, within thirty
days from the date of the arbitral award.
(4) Unless otherwise agreed by the parties, a party with notice to the
other party, may request, within thirty days from the receipt of the
arbitral award, the arbitral tribunal to make an additional arbitral
award as to claims presented in the arbitral proceedings but omitted
from the arbitral award.
(5) If the arbitral tribunal considers the request made under sub-
section (4) to be justified, it shall make the additional arbitral award
within sixty days from the receipt of such request.
(6) The arbitral tribunal may extend, if necessary, the period of time
within which it shall make a correction, give an interpretation or
make an additional arbitral award under sub-section (2) or sub-
section (5).
40


(7) Section 31 shall apply to a correction or interpretation of the
arbitral award or to an additional arbitral award made under this
section.”
48. A careful reading of Section 33 would indicate that post the award
and subject to the conditions prescribed therein,
(a) either party after notice to the other may request the arbitral tribunal
to correct any computation errors and any clerical or typographical
errors or any errors of a similar nature occurring in the award;
(b) if so agreed by the parties, any party, with notice to the other party,
may request the arbitral tribunal to give an interpretation of a specific
point or part of the award;
(c) such requests, as mentioned above, is to be dealt with by the arbitral
tribunal within 30 days from the date of receipt of request and any such
interpretation given shall form part of the award;
(d) that on its own initiative, the arbitral tribunal may correct any error
or nature of a computation clerical or typographical error within 30
days from the date of the award;
(e) Subject to any contract to the contrary, a party with notice to the
other party within 30 days from the receipt of the arbitral award, request
41


the tribunal to make an additional arbitral award as to claims presented
in the arbitral proceedings but omitted from the arbitral award;
(f) such additional award shall be made within 60 days from the receipt
of such request; that the tribunal may extend the period of time within
which it shall make correction, give an interpretation and make an
additional award under sub-Section (2) of sub-Section (5)
(g) for such correction or interpretation of the arbitral award or to an
additional award, Section 31 was to apply.
49 . This section is set out only for the reason that after the award is
made, situations necessitating correction of computation errors, clerical
or typographical errors are provided for to be remedied by approaching
the arbitrator. This will have a bearing while interpreting Section 33 &
Section 34(4) together, a little later in this judgment.
50. While Section 34 deals with application for setting aside arbitral
award, Section 35 speaks of finality of arbitral awards and Section 36
speaks of enforcement. The epicenter for this reference, however, is
Section 34, the scope, sweep and ambit of which this reference is
directly concerned.
42


51. Section 34 occurs in Chapter VII under the heading “Recourse
against arbitral award”, which reads as under:-
“ 34. Application for setting aside arbitral award.—( 1) Recourse to
a Court against an arbitral award may be made only by an
application for setting aside such award in accordance with sub-
section (2) and sub-section (3).
(2) An arbitral award may be set aside by the Court only if —
(a) the party making the application establishes on the basis of the
record of the arbitral tribunal that—
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which
the parties have subjected it or, failing any indication thereon,
under the law for the time being in force; or
(iii) the party making the application was not given proper notice
of the appointment of an arbitrator or of the arbitral proceedings
or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or
not falling within the terms of the submission to arbitration, or it
contains decisions on matters beyond the scope of the submission
to arbitration: Provided that, if the decisions on matters submitted
to arbitration can be separated from those not so submitted, only
that part of the arbitral award which contains decisions on
matters not submitted to arbitration may be set aside ; or
(v) the composition of the arbitral tribunal or the arbitral procedure
was not in accordance with the agreement of the parties, unless
such agreement was in conflict with a provision of this Part from
which the parties cannot derogate, or, failing such agreement, was
not in accordance with this Part; or
(b) the Court finds that—
(i) the subject-matter of the dispute is not capable of settlement by
arbitration under the law for the time being in force, or
(ii) the arbitral award is in conflict with the public policy of India.
Explanation 1 .—For the avoidance of any doubt, it is clarified that
an award is in conflict with the public policy of India, only if,—
43


(i) the making of the award was induced or affected by fraud or
corruption or was in violation of section 75 or section 81; or (ii) it
is in contravention with the fundamental policy of Indian law; or
(iii) it is in conflict with the most basic notions of morality or
justice.
Explanation 2 .—For the avoidance of doubt, the test as to whether
there is a contravention with the fundamental policy of Indian law
shall not entail a review on the merits of the dispute.
(2A) An arbitral award arising out of arbitrations other than
international commercial arbitrations, may also be set aside by the
Court, if the Court finds that the award is vitiated by patent illegality
appearing on the face of the award:
Provided that an award shall not be set aside merely on the ground
of an erroneous application of the law or by reappreciation of
evidence.
(3) An application for setting aside may not be made after three
months have elapsed from the date on which the party making that
application had received the arbitral award or, if a request had been
made under section 33, from the date on which that request had been
disposed of by the arbitral tribunal:
Provided that if the Court is satisfied that the applicant was prevented
by sufficient cause from making the application within the said period
of three months It may entertain the application within a further period
of thirty days, but not thereafter.
(4) On receipt of an application under sub-section (1), the Court may,
where it is appropriate and it is so requested by a party, adjourn
the proceedings for a period of time determined by it in order to give
the arbitral tribunal an opportunity to resume the arbitral proceedings
or to take such other action as in the opinion of arbitral tribunal
will eliminate the grounds for setting aside the arbitral award.
(5) An application under this section shall be filed by a party only after
issuing a prior notice to the other party and such application shall be
accompanied by an affidavit by the applicant endorsing compliance
with the said requirement.
(6) An application under this section shall be disposed of
expeditiously, and in any event, within a period of one year from the
date on which the notice referred to in sub-section (5) is served upon
other party.” (Emphasis Supplied)
44


52 . A careful reading of the section reveals that it provides the
procedure and grounds for filing an application for setting aside arbitral
awards. It opens with the phrase “recourse to a Court against an
arbitral award which is to be made only by an application for setting
aside in accordance with sub-section (2) and (3)” . “Hence, an
application can only be for setting aside” the award which should be in
accordance with the grounds under sub-section (2) and (3). Sub-section
(2) opens with the phrase “an arbitral award may be set aside by the
court” and “ only if ” the party make out the grounds set out therein.
53. Section 34(2)(a) deals with parties being under some incapacity;
arbitration agreement not being valid under the law to which the parties
have subjected it or under the law for the time being in force; no proper
notice of the appointment of arbitrator or the arbitral proceedings being
given or the party being otherwise unable to present the case or that the
arbitral award dealt with disputes not contemplated by or not falling
within the terms of the submission to arbitration or it contained
decisions on matters beyond the scope of arbitration;
54. Section 34(2)(a)(iv) has an important proviso which states that if
the decisions on matters submitted to arbitration can be separated from
45


those not so submitted, only that part of the arbitral award which
contained decisions on matters not submitted to arbitration may be set
aside; Section 34(2)(a)(v) deals with the composition of the arbitral
tribunal or the arbitral procedure not being in accordance with the
agreement of the parties, unless such agreement itself was in conflict
with a provision of Part-I from which parties cannot derogate or failing
such agreement was not in accordance with Part-I.
55. Section 34 (2)(b) enables awards to be set aside if the subject-
matter of the dispute is not capable of settlement by arbitration under
the law for the time being in force or the arbitral award is in conflict
with the public policy of India. Explanation I sets out the clarification
as to when the award will be in conflict with the public policy of India
and it states that if the making the award was induced or affected by
fraud or corruption or was in violation of Section 75 (confidentiality in
conciliation) or Section 81 (adducing evidence contrary to the mandate
of Section 81); where the award is contrary to the fundamental policy
of India or was in conflict with the most basic notions of morality or
justice. Explanation II clarifies that the test as to whether there is a
46


contravention with the fundamental policy of India shall not entail a
review on the merits of the dispute.
56. Section 34(2A) is significant since it permits patent illegality
appearing on the face of the award as a ground to set aside the award
for domestic arbitrations and does not extend the said ground for
international commercial arbitrations. The proviso appended clarifies
that the award was not to be set aside merely on the ground of an
erroneous application of the law or by re-appreciation of evidence.
57 . Section 34(4) is a very significant section which came in for
considerable deliberation at the hearing. Under this provision, a “safety
valve” is provided to prevent awards from being set aside by the
Section 34 court by providing an opportunity to the arbitral tribunal to
resume the arbitral proceedings or to take such other action as in the
opinion of the arbitral tribunal will eliminate the grounds for setting
aside the award. This section has come in for judicial interpretation
and will be discussed later in the course of this judgment.
47


58 . One other Section which ought to be referred to is Section 43(4)
which deals with the situation post the setting aside of the award.
Section 43(4) reads as under:-
“Section 43(4)- Where the Court orders that an arbitral award be set
aside, the period between the commencement of the arbitration and
the date of the order of the Court shall be excluded in computing the
time prescribed by the Limitation Act, 1963 (36 of 1963), for the
commencement of the proceedings (including arbitration) with
respect to the dispute so submitted.”
59. The overarching note of restraint in judicial intervention as set out
in Section 5; the proscription for intervention set out in Section 13(5)
and 16(5); the range of options under Section 33 for the parties and the
arbitrator to carry out repairs to the award in the manner set out there
in; the limited option to seek recourse to set aside on prescribed grounds
with the shackle “only if” in Section 34(2) and the further safety valve
available in Section 34(4), to go back to the arbitrator under
circumstances mentioned therein are clear pointers about the acutely
circumscribed nature of the power in the Section 34 court. This, viewed
in the background of the fact that parties have with open eyes
contracted to go for arbitration and subject themselves to the
parameters prescribed in the act after ousting the normal judicial
process, clearly indicates that parties were conscious of the limited role
48


for courts in the review of arbitral awards. The absence of express
powers to modify for a court hearing objections against the
award, when such a power existed in the Precursor act also points to
the legislative intent. It is in this background that the arguments of the
parties clamouring for a reading in of the power of modification, needs
to be tested.
60 . A Seven-Judge Bench of this Court in Interplay Between
Arbitration Agreements under Arbitration and Conciliation Act, 1996
& Stamp Act, 1899, In re, [(2024) 6 SCC 1] interpreting Section 5 of
the A&C Act had the following to say:
“81. One of the main objectives of the Arbitration Act is to
minimise the supervisory role of Courts in the arbitral process.
Party autonomy and settlement of disputes by an Arbitral
Tribunal are the hallmarks of arbitration law. Section 5 gives
effect to the true intention of the parties to have their disputes
resolved through arbitration in a quick, efficient and effective
manner by minimising judicial interference in the arbitral
proceedings. [ Food Corpn. of India v. Indian Council of
Arbitration , (2003) 6 SCC 564.] Parliament enacted Section 5 to
minimise the supervisory role of Courts in the arbitral process
to the bare minimum, and only to the extent “so provided”
under the Part I of the Arbitration Act . In doing so, the
legislature did not altogether exclude the role of Courts or judicial
authorities in arbitral proceedings, but limited it to circumstances
where the support of judicial authorities is required for the
successful implementation and enforcement of the arbitral
process. [ Union of India v. Popular Construction Co. , (2001) 8
49


SCC 470; P. Anand Gajapathi Raju v. P.V.G. Raju , (2000) 4 SCC
539] The Arbitration Act envisages the role of Courts to “ support
arbitration process ” [ Swiss Timing Ltd. v. Commonwealth Games
2010 Organising Committee , (2014) 6 SCC 677 : (2014) 3 SCC
(Civ) 642] by providing necessary aid and assistance when
required by law in certain situations.
86. Similar to Article 5 of the Model Law, Section 5 uses the
expression “in matters governed by this Part”. The use of this
expression circumscribes the scope of judicial intervention to
matters expressly governed by Part I of the Arbitration Act. The
matters governed by Part I inter alia include:
86.1. Section 8 which mandates judicial authorities to refer parties
to arbitration when prima facie there is a valid arbitration
agreement;
86.2. Section 9 which allows Courts to issue interim measures on
an application made by a party to an arbitration agreement;
86.3. Section 11 which empowers the Supreme Court or the High
Courts to appoint arbitrators on an application made by parties to
an arbitration agreement;
86.4. Section 27 which allows the Arbitral Tribunal to request the
Court for assistance in taking evidence; and
86.5. Section 34 which empowers the Court to set aside an arbitral
award on the basis of the limited grounds mentioned therein.
87. Section 5 has two facets — positive and negative. The positive
facet vests judicial authorities with jurisdiction over arbitral
proceedings in matters expressly allowed in or dealt with under
Part I of the Arbitration Act. The flip side to this approach is that
judicial authorities are prohibited from intervening in arbitral
proceedings in situations where the Arbitral Tribunal has been
bestowed with exclusive jurisdiction. This is the negative facet of
Section 5. The non obstante clause limits the extent of judicial
intervention in respect of matters expressly provided under the
Arbitration Act. [Secur Industries Ltd. v. Godrej & Boyce
Mfg. Co. Ltd., (2004) 3 SCC 447] In Bhaven
50


Construction v. Sardar Sarovar Narmada Nigam Ltd. [Bhaven
Construction v. Sardar Sarovar Narmada Nigam Ltd., (2022) 1
SCC 75 : (2022) 1 SCC (Civ) 374] , a Bench of three Judges of
this Court observed that the : (Bhaven Construction case [Bhaven
Construction v. Sardar Sarovar Narmada Nigam Ltd., (2022) 1
SCC 75 : (2022) 1 SCC (Civ) 374] , SCC p. 82, para 12)
“12. … non obstante clause is provided to uphold the intention of
the legislature as provided in the Preamble to
adopt UNCITRAL Model Law and Rules, to reduce excessive
judicial interference which is not contemplated under the
Arbitration Act.”
89. Section 5 is of aid in interpreting the extent of judicial
interference under Sections 8 and 11 of the Arbitration Act.
Section 5 contains a general rule of judicial non-interference.
Therefore, every provision of the Arbitration Act ought to be
construed in view of Section 5 to give true effect to the legislative
intention of minimal judicial intervention.”
(Emphasis supplied)
SOME CASES CITED IN THE REFERRAL ORDER:-
61 . Before the contentions of the respective parties are addressed, the
deck needs to be cleared by discussing the judgments set out in question
No.5 in the referral order of 20.02.2024, particularly those cases
referred to therein where modification of the award was ordered or an
imprimatur was put on the modifications already made, to understand
the circumstances under which they came to be done. Considering that
this is a Bench of five, those judgments would not be binding. However,
51


the endeavour here is to understand the rationale behind the said
judgments to see whether it will be of any assistance herein.
62 . The earliest case referred is Tata Hydro-Electric Power Supply
Co. Ltd. and Others vs. Union of India , (2003) 4 SCC 172. In the said
judgment, while setting aside the judgment of the High Court and
upholding the Award, a three-Judge Bench of this Court without
discussing the legal issue as to whether the power to modify existed in
a Section 34 Court or not, modified the date of commencement of
interest from the awarded date of August, 1993 to 30.03.1998, which
was the date when the Award came to be passed. This authority is of
little help since the issue that arises for consideration was not debated
and it was on the assumption that the power existed.
63 . Insofar as the judgment in J.C. Budhraja vs. Chairman, Orissa
Mining Corporation Ltd. and Another , (2008) 2 SCC 444 is
concerned, that case arose under the Arbitration Act, 1940. In the said
case, the Arbitrator awarded a sum of Rs.1,02,66,901.36 (which was
more than the claim of Rs. 95,96,616.00) with interest @ 12% p.a. from
01.08.1997 till date of Award and future interest @ 6% p.a. from the
expiry of one month from the date of the Award till date of decree. The
52


Award was in respect of 35 claims. Claim Nos. 1-16 related to the
schedule of items under the contract and claim Nos. 17 to 34 were in
respect of work which did not form part of the contract schedule and
Claim No. 35 related to escalation in cost of labour and material on
account of delay in execution. The Civil Judge (Senior Division)
Bhubaneshwar, overruling the objections of the award debtor made the
award a rule of the court. While the award debtor filed Misc. Appeal
challenging the decision of the Civil Judge in the High Court, the
contractor also filed Misc. Appeal and Civil Revision claiming future
interest from the date of decree as the judgment of the Civil Court was
silent. By a common judgment, the High Court held that claims of the
contractor to be barred by limitation and set aside the Award. It allowed
the award debtor’s appeal and dismissed the award holders appeal and
revision. On further appeal to this Court, this Court held that out of the
total claim of Rs.95,96,616.00 the claim for only Rs.28,32,128.00 was
within time. The remaining claims aggregating to Rs.67,44,488.00
were fresh claims which were not pending claims in respect of which
the acknowledgement was made. Therefore, the fresh claims were held
barred by limitation. Therafter, this Court in para 34 held as under:-
53


“34. Does it mean that the entire award should be set aside? The
answer is, no. That part of the award which is valid and separable
can be upheld. That part relates to the claims which were validly
made before the arbitrator, which were part of the existing or
pending claims of Rs 50,15,820 and which were not barred by
limitation. As stated above they were the claims which were
existing or pending in 1978, 1979 and 1980 (considered by the
committee and payment made by OMC) which were carried
before the arbitrator to an extent of Rs 28,32,128. Only the
amounts awarded by the arbitrator against those claims can be
considered as award validly made in arbitration, falling within
jurisdiction. They are clearly severable from the other portions of
the award.

64 . It is clear that apart from the fact that the said judgment arose
under the old Act, it was a case where the principle of severability was
applied. In any event, being a matter under the 1940 Act, power to
modify clearly existed. Hence, the judgment cannot be of any help in
deciding the scope of power under Section 34 of the A&C Act.
65 . Insofar as the judgment in Madhya Pradesh Power Generation
Company Limited and Another vs. Ansaldo Energia Spa and
Another , (2018) 16 SCC 661 is concerned, as is clear from paras 38 &
39 of the said judgment, this Court on the finding that the bank
guarantees dated 22.02.2000 and 23.02.2000 were towards the amounts
advanced by the Board to the contractor severed the amounts involved
54


in the bank guarantee of the said two dates. Paras 38 & 39 read as
under:-
“38. The bank guarantee given on 24-2-2000 was a
performance bank guarantee and the claimant is entitled for
return of the amount for which the bank guarantee was given.
The Arbitral Tribunal, however, failed to take notice of the fact
that the other two bank guarantees were given for the amounts
to be advanced by the Board. In fact, the Board had advanced
the said amounts to the claimants. We are of the opinion that the
claimant is not entitled for return of the amounts involved in the
bank guarantees dated 22-2-2000 and 23-2-2000 as they were
towards the amounts advanced by the Board. The rejection of
the claim pertaining to the damages mentioned in Ext. HH of
the statement of claim which includes loss of profit, overheads
and loss of commercial opportunities clearly indicates that the
Arbitral Tribunal never intended to grant any damages to the
claimant. The claims allowed by the Arbitral Tribunal pertained
only to the return of the claimants' money involved in the bank
guarantees and the amounts actually spent by the claimants.

39. We uphold the award of the Arbitral Tribunal with the
modification that the claimants are not entitled for the amounts
involved in the bank guarantees dated 22-2-2000 and 23-2-2000
given by the claimants.”

66 . Since the severed portion was a standalone portion not
inseparably intertwined with other portions of the award, this Court had
no difficulty in severing. Hence, really it is not a case of modification
of any portion of the award but a case of severance.
67 . Now coming to the judgment in Vedanta Limited vs. Shenzhen
Shandong Nuclear Power Construction Company Limited , (2019) 11
SCC 465, this Court modified the interest with regard to the EUR
55


component and held that in respect of the award rate of 9% on the EUR
component, the award debtor will be liable to pay interest @ LIBOR
rate + 3 percentage points, prevailing on the date of the award. The
question as to whether interest can be modified, has been dealt with in
the later part of this judgment.
68 . Shakti Nath and Others vs. Alpha Tiger Cyprus Investment
No.3 Limited and Others , (2020) 11 SCC 685 was a case where, by
consent of parties, the interest and penal interest was modified. Para 4
of the said judgment reads as follows:-
“4. After having heard the counsel appearing for all the
parties, the challenge to the ICC award is hereby
rejected. With respect to the amount awarded towards
interest and penal interest under the award, the same has
been modified by consent of parties, as a prudent
commercial decision, …”

69 . Oriental Structural Engineers Private Limited vs. State of
Kerala , (2021) 6 SCC 150 was against a case where interest was
modified from 12% to 8% which is an aspect discussed hereinbelow.



56


ANALYSIS OF THE CONTENTIONS AND REASONING: -
CAN WORDS BE READ INTO SECTION 34?
70 . The contention that the words “ and, to the extent ” and the words
“ or modified ” , and “ to the extent ” be read into parts of Section 34 is
only to be stated to be rejected. The justification for this argument that
the Court can iron out the creases is not appealing at all because what
is sought to be done is virtual mutilation of the fabric and not just the
ironing out of the creases. It is also very well settled that where the
language is plain and clear, the Court will prefer the plain meaning rule
and when there is no casus omissus, the Court cannot interpret a statute
as to create one.
71 . This Court in CIT, Central Calcutta vs. National Taj Traders,
(1980) 1 SCC 370 has lucidly captured this, in the following words :-
“10. Two principles of construction — one relating to casus
omissus and the other in regard to reading the statute as a whole
— appear to be well settled. In regard to the former the following
statement of law appears in Maxwell on Interpretation of
Statutes (12th Edn.) at p. 33:
“Omissions not to be inferred.—It is a corollary to the general
rule of literal construction that nothing is to be added to or taken
from a statute unless there are adequate grounds to justify the
inference that the legislature intended something which it
57


omitted to express. Lord Morsey said: ‘It is a strong thing to read
into an Act of Parliament words which are not there, and in the
absence of clear necessity it is a wrong thing to do’ . ‘We are not
entitled’, said Lord Loreburn L.C., ‘to read words into an Act of
Parliament unless clear reason for it is to be found within the four
corners of the Act itself’. A case not provided for in a statute is not
to be dealt with merely because there seems no good reason why
it should have been omitted, and the omission appears in
consequence to have been unintentional.”
In regard to the latter principle the following statement of law appears
in Maxwell at p. 47:
“A statute is to be read as a whole.—It was resolved in the case of
Lincoln College [(1595) 3 Co. Rep. 58b at p. 59b] that the good
expositor of an Act of Parliament should ‘make construction on all
the parts together, and not of one part only by itself’. Every clause of
a statute is to ‘be construed with reference to the context and other
clauses of the Act, so as, as far as possible, to make a consistent
enactment of the whole statute’.” (Per Lord Davey in Canada Sugar
Refining Co. Ltd. v.R., 1898 AC 735.)”
(Emphasis supplied)
72 . The case law cited by Mr. Datar, learned Senior Counsel to read
words into have no application to the present case. As the cited cases
indicate they were done in situations where irreconcilable conflict was
to be avoided; where failure to do so would have resulted in absurdities
and injustice; where it was needed to bring the provision in consonance
with reason and justice and where parts of the statute would otherwise
have been rendered ineffective and meaningless. That is not the
situation here.
58


73 . Section 34 speaks of ‘Recourse’ being taken against an arbitral
award. The word ‘Recourse’ has been defined in P. Ramanatha Aiyar’s
Advanced Law Lexicon Third Edition to mean:
“the act of seeking help or advice; enforcement or
method of enforcing a right.”
Further, Section 34 of the A&C Act clearly states that an arbitral award
may be “ Set aside ” by the Court “ only if ” the prescribed circumstances
are established.
74 . The expression “ Set aside ” has been defined in P. Ramnatha
Aiyar’s Advanced Law Lexicon (third edition) to mean
“to annul, quash, render, void or negatory”.
75 . Further, the phrase “ only if ” in the context in which it is used
makes it amply clear that only if the grounds prescribed are established
could the award be set aside. The word “only” has been interpreted by
this Court to mean to be a phrase ordinarily used as an exclusionary
term and it has been held that in ascertaining its meaning its placement
is material, as also the context in which the word is used (See Ramesh
Rout v. Rabindra Nath Rout, (2012) 1 SCC 762 ).
59


76 . The combined use of the phrase “set aside” and “only if” read
with the phrase “recourse” makes it amply clear that the only manner
of interfering with the award as permitted in the Act and as reinforced
by Section 5 of the said Act is to file an application to set aside or annul
the award by establishing the grounds prescribed therein. As already
pointed out, Section 5 mandates that no judicial authority is to intervene
except where so provided under the A&C Act.
THE FALLACY IN THE ‘HARDSHIP’ ARGUMENT: -
77 . The argument that absurdities will result and hardship will be
caused if power to modify is not read in has no merit. There are at least
two compelling reasons to hold so. The A&C Act in Section 43(4) itself
contemplates that on the setting aside of the award the option is to
commence proceedings including arbitration with respect to the
dispute. The law makers are fully conscious of the situation that setting
aside of the award will result in the dispute continuing to be thrown
open at large since notwithstanding the setting aside of the award the
legal position is that the arbitration agreement survives, except in
situations where the order setting aside has findings impinging on the
validity of the arbitration agreement itself.
60


78 . Though said in the context of Section 19 of the 1940 Act, Juggilal
Kamlapat v. General Fibre Dealers Ltd., 1961 SCC OnLine SC 402 ,
reinforces the point that the arbitration agreement can survive the
setting aside of award. It was said that when a court sets aside an arbitral
award, it retains the discretion to either supersede the reference to
arbitration or allow it to continue, a power peculiar to the arbitration
Act of 1940. If the court decides to supersede the reference, it must also
order that the arbitration agreement ceases to have effect concerning
the dispute referred. However, if the court does not supersede the
reference, both the arbitration agreement and the reference remain
valid, enabling the parties to proceed with further arbitration. This
Court in Juggilal Kamlapat (supra) observed:

……It will thus be seen that the discretion vested in the court
under Section 19 depends upon the nature of the arbitration
agreement in particular cases and it is on a consideration of those
terms that the court may decide in one case to supersede the
61

(Emphasis supplied)
79 . This Court in Mcdermott International Inc. (Supra) pertinently
observed that “The court cannot correct errors of the arbitrators. It can
only quash the award leaving the parties free to begin the arbitration
again if it is desired.” (Emphasis supplied)
80 . Chief Justice, Sundaresh Menon of the Supreme Court of
Singapore explains this concept in AKN vs. ALC, 2015 SGCA 63 , thus:
“51. There is simply nothing to warrant the conclusion that where
an award has been set aside, the tribunal which made that award
would somehow resume the ability and mandate to determine
afresh the matters that had been dealt with in the award. But, as
alluded to above, this goes to the mandate of that particular
tribunal. The fact that the award has been set aside would not,
in and of itself, affect the continued validity and force of the
arbitration agreement between the parties, save in the
situation where the award was set aside on the ground that
there was no arbitration agreement between the parties. In L
W Infrastructure (HC), Belinda Ang J described this as
“Situation 2” and observed as follows (at [48]): Similarly,
where an arbitral award is “beyond power” in the sense that
the tribunal lacks jurisdiction to deal with the dispute
62

(a) It is possible that a limitations defence might have accrued
by the time the fresh set of proceedings is commenced. This
possibility also has been alluded to in some of the academic
commentaries that we have referred to above. We note that it
is possible for this to be addressed in appropriate
circumstances pursuant to s 8A(2) of the IAA, which
empowers the court in the exercise of its discretion to extend
63

(Emphasis supplied)
81 . Hence, recommencement of proceedings including arbitration
proceedings- wherever legally maintainable- being expressly
contemplated in the statute the same cannot be brushed aside on the
grounds of causing hardship to the parties. Parties, no doubt, will have
all contentions and defences open as are available to them in law.
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CONTRACTUAL OUSTER OF THE NORMAL JUDICIAL
PROCESS: -
82 . The second reason is equally compelling. As briefly discussed
earlier, when parties agree to arbitrate, they consciously with open eyes
agree to step out of the normal judicial process and submit their dispute
to a third party. Parties then are also conscious that when they agree to
arbitrate their rights and liabilities will be governed by the regulating
Act, which in this case is the A&C Act. In that sense, there is a
contractual ouster subject to the terms of the A&C Act of the normal
judicial process and the said course of action is sanctified under Section
28 of the Contract Act since such agreements are expressly held not to
be opposed to public policy.
83 . In the normal judicial process, the dispute would be adjudicated
by the Court of first instance and appeals as provided in the Code of
Civil Procedure, 1908 (C.P.C. for short) would ordinarily have been
available to the aggrieved parties.


65


CONTRAST WITH THE APPELLATE POWER UNDER CPC: -
84 . A perusal of the conspectus of the scope of the appellate power
under the C.P.C. would bring the contrast between the normal appellate
power and the powers available to a Section 34 Court under the A&C
Act. Part VII of the Code of Civil Procedure, 1908, as amended in 1976,
read with Order XLI sets out the scope of the power of an Appellate
Court. Section 107 and 108 reads as under:
“107. Powers of Appellate Court .—(1) Subject to such conditions
and limitations as may be prescribed, an Appellate Court shall have
power—
(a) to determine a case finally;
(b) to remand a case;
(c) to frame issues and refer them for trial;
(d) to take additional evidence or to require such evidence to be
taken.
(2) Subject as aforesaid, the Appellate Court shall have the same
powers and shall perform as nearly as may be the same duties
as are conferred and imposed by this Code on Courts of original
jurisdiction in respect of suits instituted therein.
108. Procedure in appeals from appellate decrees and orders .—
The provisions of this Part relating to appeals from original decrees
shall, so far as may be, apply to appeals—
(a) from appellate decrees, and
(b) from orders made under this Code or under any special or local
law in which a different procedure is not provided.”
(Emphasis supplied)
66


85 . Order XLI of the CPC prescribes certain rules, some of which are
relevant herein. Rule 31, 32 and 33 are extracted hereinbelow:
31. Contents, date and signature of judgment .—The judgment of
the Appellate Court shall be in writing and shall state— (a) the points
for determination; (b) the decision thereon; (c) the reasons for the
decision; and (d) where the decree appealed from is reversed or
varied, the relief to which the appellant is entitled; and shall at
the time that it is pronounced be signed and dated by the Judge
or by the Judges concurring therein.
32. What judgment may direct.—The judgment may be for
confirming, varying or reversing the decree from which the
appeal is preferred, or, if the parties to the appeal agree as to the
form which the decree in appeal shall take, or as to the order to
be made in appeal, the Appellate Court may pass a decree or
make an order accordingly.
33. Power of Court of Appeal .—The Appellate Court shall have
power to pass any decree and make any order which ought to have
been passed or made and to pass or make such further or other decree
or order as the case may require, and this power may be exercised by
the Court notwithstanding that the appeal is as to part only of the
decree and may be exercised in favour of all or any of the respondents
or parties, although such respondents or parties may not have filed
any appeal or objection, and may, where there have been decrees in
cross-suits or where two or more decrees are passed in one suit, be
exercised in respect of all or any of the decrees, although an appeal
may not have been filed against such decrees:
Provided that the Appellate Court shall not make any order under
section 35A, in pursuance of any objection on which the Court from
whose decree the appeal is preferred has omitted or refused to make
such order.”
(Emphasis supplied)
67


86 . It will be noticed that an Appellate Court under the normal
judicial process has powers coextensive with the original Court
(Section 107(2) CPC). The respondent in an appeal can challenge the
findings against him (Order XLI Rule 22). The Appellate Court can
confirm, vary, reverse the decree and if the parties to the appeal agree
as to the form which the decree in appeal is to take or as to the order to
be made in appeal, the Appellate Court may pass a decree or make an
order (order XLI Rule 31 and 32) and the Appellate Court shall have
the power to pass any decree and make any order which ought to have
been passed or made and pass or make such further or other decree or
order. Further, the Appellate Court may exercise the power
notwithstanding that the appeal was only to a part of the decree and
may be exercised in favour of all or any of the respondents or parties,
although such respondents or parties may not have filed any appeal or
objection (Order XLI Rule 33).
87 . This wide power is not available to a Court under Section 34 of
the A&C Act while entertaining an application to set aside the arbitral
award. The word ‘modify’ has been defined in P. Ramanatha Aiyar’s
Advanced Law Lexicon Third Edition to mean:
68


‘To change, or vary, to qualify or reduce’ .
The position that the Court does not sit in appeal over the arbitral
award is well- settled by now. This Court in Dyna Technologies Private
Limited v. Crompton Greaves Limited, (2019) 20 SCC 1 , observed:-
“24. There is no dispute that Section 34 of the Arbitration Act limits
a challenge to an award only on the grounds provided therein or as
interpreted by various courts. We need to be cognizant of the fact
that arbitral awards should not be interfered with in a casual and
cavalier manner, unless the court comes to a conclusion that the
perversity of the award goes to the root of the matter without there
being a possibility of alternative interpretation which may sustain
the arbitral award. Section 34 is different in its approach and
cannot be equated with a normal appellate jurisdiction . The
mandate under Section 34 is to respect the finality of the arbitral
award and the party autonomy to get their dispute adjudicated by
an alternative forum as provided under the law. If the courts were
to interfere with the arbitral award in the usual course on factual
aspects, then the commercial wisdom behind opting for alternate
dispute resolution would stand frustrated.
25. Moreover, umpteen number of judgments of this Court have
categorically held that the courts should not interfere with an award
merely because an alternative view on facts and interpretation of
contract exists. The courts need to be cautious and should defer to
the view taken by the Arbitral Tribunal even if the reasoning
provided in the award is implied unless such award portrays
perversity unpardonable under Section 34 of the Arbitration Act.”

88 . There is a sound jurisprudential reason for the same. Arbitration
has its origin in the contract between parties where parties have stepped
69


out of the ordinary judicial process and in that sense there is an ouster
of the jurisdiction of the Court’s power to adjudicate.
89 . In view of this, the Section 34 Court unless expressly authorized
by law cannot modify or vary the award since it will be tantamount to
exercising the power of merits review, when parties have contracted to
have their disputes referred to a third party outside the normal judicial
process, for adjudication by arbitration.
90 . It will be difficult to countenance the argument that words be read
into, to confer that power to modify, as it will tantamount to exercising
legislative power. Modification or variation of the award in the absence
of an express legislative sanction would tantamount to courts usurping
the power of the arbitrator when there is no legislative sanction for the
same.
IS POWER TO ‘MODIFY’ A LESSER POWER?
91 . Parties have contended that the power to set aside is a larger
power and hence a power to modify is after all a lesser power which
should be subsumed in the larger power. They have relied on the legal
maxim omne majus continet in se minus :- the greater contains the less.
70


At first blush, though the argument seems attractive, a close scrutiny
reveals that the argument has really no substance. As explained
hereinabove, the qualitative nature of an appellate power is different
from the power under Section 34. The two operate in different spheres
and are not of the same genus. They do not have similar characteristics.
It cannot be said just on a first blush understanding that power to set
aside is larger and power to modify is smaller or lesser without keeping
the context in which Section 34 occurs in the Act and without
considering the very ecosystem of the arbitration process.
92. There is a useful authority albeit from the criminal jurisdiction
which brings out this concept. In Shamnsaheb M. Multtani vs. State
of Karnataka, (2001) 2 SCC 577, a question arose whether an accused
charged under Section 302 Indian Penal Code could be at the trial
convicted for offences under Section 304-B of the Indian Penal Code
and as to whether Section 304-B could be said to be a minor offence.
Answering in the negative, this Court, speaking through K.T. Thomas,
J., felicitously explained the principle thus.
“15. Section 222(1) of the Code deals with a case “when a person
is charged with an offence consisting of several particulars”. The
section permits the court to convict the accused “of the minor
71


offence, though he was not charged with it”. Sub-section (2) deals
with a similar, but slightly different situation.
“222. (2) When a person is charged with an offence and facts
are proved which reduce it to a minor offence, he may be
convicted of the minor offence, although he is not charged with
it.”
16. What is meant by “a minor offence” for the purpose of Section
222 of the Code? Although the said expression is not defined in
the Code it can be discerned from the context that the test of minor
offence is not merely that the prescribed punishment is less than
the major offence. The two illustrations provided in the section
would bring the above point home well. Only if the two offences
are cognate offences, wherein the main ingredients are
common, the one punishable among them with a lesser
sentence can be regarded as minor offence vis-à-vis the other
offence.
17. The composition of the offence under Section 304-B IPC is
vastly different from the formation of the offence of murder
under Section 302 IPC and hence the former cannot be
regarded as minor offence vis-à-vis the latter. However, the
position would be different when the charge also contains the
offence under Section 498-A IPC (husband or relative of husband
of a women subjecting her to cruelty). As the word “cruelty” is
explained as including, inter alia, “harassment of the woman
where such harassment is with a view to coercing her or any person
related to her to meet any unlawful demand for any property or
valuable security or is on account of failure by her or any person
related to her to meet such demand”.
18. So when a person is charged with an offence under Sections
302 and 498-A IPC on the allegation that he caused the death of a
bride after subjecting her to harassment with a demand for dowry,
within a period of 7 years of marriage, a situation may arise, as in
this case, that the offence of murder is not established as against
the accused. Nonetheless, all other ingredients necessary for the
offence under Section 304-B IPC would stand established. Can the
72


accused be convicted in such a case for the offence under Section
304-B IPC without the said offence forming part of the charge?
34. In such a situation, if the trial court finds that the prosecution
has failed to make out the case under Section 302 IPC, but the
offence under Section 304-B IPC has been made out, the court has
to call upon the accused to enter on his defence in respect of the
said offence. Without affording such an opportunity to the accused,
a conviction under Section 304-B IPC would lead to real and
serious miscarriage of justice. Even if no such count was included
in the charge, when the court affords him an opportunity to
discharge his burden by putting him to notice regarding the prima
facie view of the court that he is liable to be convicted under
Section 304-B IPC, unless he succeeds in disproving the
presumption, it is possible for the court to enter upon a conviction
of the said offence in the event of his failure to disprove the
presumption.
35. As the appellant was convicted by the High Court under
Section 304-B IPC, without such an opportunity being granted to
him, we deem it necessary in the interest of justice to afford him
that opportunity. The case in the trial court should proceed against
the appellant (not against the other two accused whose acquittal
remains unchallenged now) from the stage of defence evidence.
He is put to notice that unless he disproves the presumption, he is
liable to be convicted under Section 304-B IPC.”
(Emphasis supplied)
93 . Hence, power to modify which would include the Court entering
the arena of adjudicating the dispute on merits when parties have
contractually agreed to go to the arbitrator, cannot be said to be
subsumed in the power to “set aside”. It will be a different matter if the
power to modify or power to vary is conferred by the legislature itself.
Post the UNCITRAL Convention when the participating countries
73


legislated, while India did not recognize in the statute the power to
modify or vary, several jurisdictions like U.K. and Singapore positively
legislated. The provision in the U.K. State Arbitration Act and the
Singapore Arbitration Act are set out hereinbelow to bring home the
point.
Relevant provisions under the English Arbitration Act, 1996
“67. Challenging the award: substantive jurisdiction.
(1)A party to arbitral proceedings may (upon notice to the other
parties and to the tribunal) apply to the court—
(a)challenging any award of the arbitral tribunal as to its
substantive jurisdiction; or
(b)for an order declaring an award made by the tribunal on the
merits to be of no effect, in whole or in part, because the tribunal
did not have substantive jurisdiction.
A party may lose the right to object (see section 73) and the right
to apply is subject to the restrictions in section 70(2) and (3).
(2)The arbitral tribunal may continue the arbitral proceedings and
make a further award while an application to the court under this
section is pending in relation to an award as to jurisdiction.
(3)On an application under this section challenging an award of
the arbitral tribunal as to its substantive jurisdiction, the court may
by order—
(a)confirm the award,
(b)vary the award, or
(c)set aside the award in whole or in part.
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(4)The leave of the court is required for any appeal from a decision
of the court under this section.
69. Appeal on point of law.
(1)Unless otherwise agreed by the parties, a party to arbitral
proceedings may (upon notice to the other parties and to the
tribunal) appeal to the court on a question of law arising out of an
award made in the proceedings.
An agreement to dispense with reasons for the tribunal’s award
shall be considered an agreement to exclude the court’s
jurisdiction under this section.
(2)An appeal shall not be brought under this section except—
(a)with the agreement of all the other parties to the proceedings,
or
(b)with the leave of the court.
The right to appeal is also subject to the restrictions in section
70(2) and (3).
(3)Leave to appeal shall be given only if the court is satisfied—
(a)that the determination of the question will substantially affect
the rights of one or more of the parties,
(b)that the question is one which the tribunal was asked to
determine,
(c)that, on the basis of the findings of fact in the award—
(i)the decision of the tribunal on the question is obviously wrong,
or
(ii)the question is one of general public importance and the
decision of the tribunal is at least open to serious doubt, and
(d)that, despite the agreement of the parties to resolve the matter
by arbitration, it is just and proper in all the circumstances for the
court to determine the question.
75


(4)An application for leave to appeal under this section shall
identify the question of law to be determined and state the grounds
on which it is alleged that leave to appeal should be granted.
(5)The court shall determine an application for leave to appeal
under this section without a hearing unless it appears to the court
that a hearing is required.
(6)The leave of the court is required for any appeal from a decision
of the court under this section to grant or refuse leave to appeal.
(7)On an appeal under this section the court may by order—
(a)confirm the award,
(b) vary the award,
(c)remit the award to the tribunal, in whole or in part, for
reconsideration in the light of the court’s determination, or
(d)set aside the award in whole or in part.
The court shall not exercise its power to set aside an award, in
whole or in part, unless it is satisfied that it would be
inappropriate to remit the matters in question to the tribunal
for reconsideration.
(8) The decision of the court on an appeal under this section shall
be treated as a judgment of the court for the purposes of a further
appeal.
But no such appeal lies without the leave of the court which shall
not be given unless the court considers that the question is one of
general importance or is one which for some other special reason
should be considered by the Court of Appeal.”

Relevant provisions of the Singapore Arbitration Act, 2001:-
“No judicial review of award
47. The Court does not have jurisdiction to confirm, vary, set aside
or remit an award on an arbitration agreement except where so
provided in this Act.
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Appeal against award
(8) On an appeal under this section, the Court may by order —
(a) confirm the award;
(b) vary the award;
(c) remit the award to the arbitral tribunal, in whole or in part,
for reconsideration in the light of the Court’s determination; or
(d) set aside the award in whole or in part.
(9) The Court is not to exercise its power to set aside an award,
in whole or in part, unless it is satisfied that it would be
inappropriate to remit the matters in question to the arbitral
tribunal for reconsideration.”
(Emphasis supplied)
94 . The Act of 1940 in our country had an express power to modify.
When the A&C Act was enacted, for reasons best known to the
legislature, the power was not incorporated. Dr. T.K. Viswanathan
Committee which examined reforms to the A&C Act has recommended
for the incorporation of the provision in its report but as yet the
legislature has not enacted a provision to modify. The relevant portions
are extracted herein below –
“3.25.8 The Committee has examined the proposal to permit courts
to modify or vary an award, while setting aside such an award in
exercise of its section 34 jurisdiction. This is proposed to be achieved
by amending sub-section (2) and sub-section (2A) of section 34.
3.25.9 Such orders must, however, be made only in exceptional
circumstances to meet the ends of justice. This will enable a section
34 Court to provide a quietus to the matter, so as to avoid further
77


litigation. It is proposed to substitute the words “set aside by the
Court” with the words “set aside in whole or in part by the Court”
and add a proviso for partly varying the award in exceptional
circumstances.
3.25.10 The Committee feels that the proposed amendment will
provide relief to parties in situations where the findings in the arbitral
award can be varied, having regard to the arbitral records. Needless
to state, any such modification to the arbitral award can only be
ordered by the Court if the strict parameters for setting aside the
arbitral award under section 34 of the Act are made out, and there is
no need to adduce fresh evidence.
3.25.11 An express provision incorporated in the Act is likely to
streamline the process, saving time, effort, and resources for all the
parties involved. Thus, granting the Courts the authority to modify
awards within well-defined limits would help strike a balance
between preserving finality of the arbitral process and ensuring
fairness.
3.25.12 The Committee recommends amendment to sub-sections (2)
and (2A) of section 34 to substitute the words “set aside by the
Court”, with the words “set aside in whole or in part by the Court”
and to add the following proviso, namely “Provided that in cases
where the Court sets aside the arbitral award in whole or in part, the
Court may make consequential orders varying the award only in
exceptional circumstances to meet the ends of justice.”.
Recommendation
It is proposed to amend section 34-
(i) to insert a new sub section(1A) to provide that an application for
setting aside an award under sub-section (1) shall be accompanied by
the original award and where the parties have not been given the
original award, they may file a copy of the award signed by the
arbitrators;
(ii) in sub-section (2) - (a) for the words “An arbitral award may be
set aside by the Court”, the words “An arbitral award may be set aside
in whole or in part by the Court” be substituted; (b) after clause (b)
and before Explanation 1 the following proviso shall be inserted,
namely:- Provided that in cases where the Court sets aside the arbitral
award in whole or in part, the Court may make consequential orders
78


varying the award only in exceptional circumstances to meet the ends
of justice”
(iii) in sub-section (2-A)- (a) for the words “An arbitral award arising
out of arbitrations other than international commercial arbitrations,
may also be set aside by the court”, the words “An arbitral award
arising out of arbitrations other than international commercial
arbitrations, may also be set aside in whole or in part by the Court”
shall be substituted. (b) after the proviso the following proviso shall
be inserted namely: -
“Provided further that in cases where the Court sets aside the arbitral
award in whole or in part, the Court may make consequential orders
varying the award only in exceptional circumstances to meet the ends
of justice”

95 . In a 2006 judgment of this Court in Mcdermott International Inc.
(supra) , itself this Court expressly observed that there is no power in a
Section 34 Court to modify. The relevant passage from Mcdermott
(supra) reads as follows:
“52. The 1996 Act makes provision for the supervisory role of courts,
for the review of the arbitral award only to ensure fairness.
Intervention of the court is envisaged in few circumstances only, like,
in case of fraud or bias by the arbitrators, violation of natural justice,
etc. The court cannot correct errors of the arbitrators. It can only
quash the award leaving the parties free to begin the arbitration
again if it is desired. So, the scheme of the provision aims at
keeping the supervisory role of the court at minimum level and
this can be justified as parties to the agreement make a conscious
decision to exclude the court's jurisdiction by opting for
arbitration as they prefer the expediency and finality offered by
it.”
(Emphasis supplied)
79


96 . Notwithstanding the fact that there have been three occasions for
the Parliament to amend the A&C Act in 2015, 2019 and 2021, the
power to modify has not been incorporated. Hence, for the Court to
read the power would be completely untenable and the submissions on
that score are rejected .
LEGAL MAXIMS – TO BE DEPLOYED AFTER
ASCERTAINING CONTEXT:
97 . It is apt to observe herein that mechanical deployment of the legal
maxims unless they apply on all fours to a case should be discouraged.
Legal maxims, no doubt, are very useful tools but its application has to
be with great caution, for in law things are not cut and dried and nicely
weighed in all situations. There will be shades of grey and sometimes
legal maxims if deployed without adequate attention may lead to
pitfalls. Justice Benjamin Cardozo, in Berkey Vs. Third Avenue
Railway Co., 244 N.Y, 84, speaking of metaphors in law had the
following caution to administer:-
“Metaphors in law are to be narrowly watched, for starting as devices
to liberate thought, they end often by enslaving it.”
What Cardozo J. said of metaphors is equally true of legal maxims.
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THE ARGUMENT ON INHERENT POWERS: -
98 . Parties in support of the power to modify sought to seek refuge in
Section 151 of the Code of Civil Procedure which saved the inherent
powers of the Court. Section 151 CPC reads as under:
“ 151. Saving of inherent powers of Court.— Nothing in this Code
shall be deemed to limit or otherwise affect the inherent power of the
Court to make such orders as may be necessary for the ends of justice
or to prevent abuse of the process of the Court.”

99 . The contention was that Section 34 recourse is taken in the normal
Civil Courts as defined in Section 2(e) of the A&C Act and those Courts
being Civil Courts of Original jurisdiction or the High Courts the
inherent power vested in them should be available to modify awards.
There is no merit in this submission. As the discussion hereinabove
would reveal Section 34 is couched in clear terms and the parameters
for setting aside the award are clearly laid out in mandatory terms.
Could inherent powers under CPC be exercised in a manner to be in
conflict with the expressly provided powers by the legislature? The
answer has to be an emphatic ‘No’. Almost six decades ago, a four-
Judge Bench of this Court in Manohar Lal Chopra Vs. Rai Bahadur
Rao Raja Seth Hiralal, 1961 SCC OnLine SC 17, speaking through
81


Raghubar Dayal J. following the holding in Padam Sen Vs. State of
Uttar Pradesh, (1961) 1 SCR 884, made the following telling
observations:
“21. A similar question about the powers of the Court to issue a
commission in the exercise of its powers under s. 151 of the Code in
circumstances not covered by s. 75 and Order XXVI, arose in Padam
Sen v. The State of Uttar Pradesh (1) and this Court held that the
Court can issue a commission in such circumstances. It observed at
page 887 thus:
"The inherent powers of the Court are in addition to the
powers specifically conferred on the Court by the Code. They
are complementary to those powers and therefore it must be
held that the Court is free to exercise them for the purpose
mentioned in s. 151 of the Code when the exercise of those
powers is not in any way in conflict with what has been
expressly provided in the Code or against the intentions
of the Legislature."
These observations clearly mean that the inherent powers are not in
any way controlled by the provisions of the Code as has been
specifically stated in s. 151 itself. But those powers are not to be
exercised when their exercise may be in conflict with what had
been expressly provided in the Code or against the intentions of
the Legislature. This restriction, for practical purposes, on the
exercise of these powers is not because these powers are
controlled by the provisions of the Code but because it should be
presumed that the procedure specifically provided by the
Legislature for orders in certain circumstances is dictated by the
interests of justices.”
(Emphasis supplied)
Nothing more needs to be said on this aspect of the matter.

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DOCTRINE OF IMPLIED POWERS:-
100 . Undeterred, an attempt was made to fall back upon the doctrine
of implied powers to somehow vest in Section 34 Court a power to
modify the award. It is well settled that if a statute conferring a power
to be exercised on certain conditions, the conditions prescribed are
normally held to be mandatory and a power inconsistent with those
conditions is impliedly negatived. No doubt, there is a principle in law
that a Court must as far as possible adopt a construction which
effectuates the legislative intent and purpose and that an express grant
of a statutory power carries with it by necessary implication the
authority to use all reasonable means to make such grant effective.
101 . In Savitri Vs. Govind Singh Rawat, (1985) 4 SCC 337, Justice E.
S. Venkataramiah (as the learned Chief Justice then was) set out the
principle thus:-
“Every court must be deemed to possess by necessary intendment all
such powers as are necessary to make its orders effective. This
principle is embodied in the maxim "ubi aliquid conceditur,
conceditur et id sine quo res ipsa esse non potest" (Where anything
is conceded, there is conceded also anything without which the thing
itself cannot exist). [Vide Earl Jowitt's Dictionary of English Law,
1959 Edn., p. 1797.] Whenever anything is required to be done by
law and it is found impossible to do that thing unless something
83


not authorised in express terms be also done then that something
else will be supplied by necessary intendment. Such a
construction though it may not always be admissible in the
present case however would advance the object of the legislation
under consideration. A contrary view is likely to result in grave
hardship to the applicant, who may have no means passed to
subsist until the final order is passed.
(Emphasis supplied)
102 . As is clear, the doctrine of implied powers is invoked to effectuate
the final power. Where it is impossible to effectuate the final power
unless something not authorized in express terms be also done, in such
an event, the power will be supplied by necessary intendment as an
exception. The exceptional situation is to advance the object of the
legislation under consideration and to avoid grave hardship.
103 . This doctrine has no application to the question under
consideration herein. The objects of the statute are very clear and have
been elucidated hereinabove. The difference between the normal
judicial procedure and the arbitration process contractually agreed
upon with all its qualitative differences is also well established. No
implied power is needed to effectuate the final power provided under
Section 34 and, as set out earlier, there is no impediment to exercise the
final power. In the teeth of the legislature expressly contemplating fresh
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arbitrations and other legal proceedings under Section 43(4), it cannot
be said on some conjectured assumptions that hardship will cause to
the parties.
PARTY AUTONOMY:-
104 . It is time now to discuss the concept of party autonomy, which is
the underlying theme of the arbitration process. Gary B. Born, in his
commentary “International Commercial Arbitration”, South Asian
Reprint Edition published by Wolters Kluwer discussed the concept of
party autonomy in the following terms.
“A further objective, and perceived advantage, of international
commercial arbitration is the effort to maximize party autonomy
and provide procedural flexibility. As discussed below, leading
international arbitration conventions and national laws accord parties
broad autonomy to agree upon the substantive laws and procedures
applicable to "their" arbitrations. This emphasis on the importance of
party autonomy parallels applications of the doctrine throughout the
field of contemporary private international law, and commercial law
more generally, but has particular significance in the field of
international commercial arbitration. One of the principal reasons
that this procedural autonomy is granted is to enable the parties
and arbitrators to dispense with the technical formalities and
procedures of national court proceedings and instead fashion
procedures tailored to particular disputes. Thus, technically-
complex disputes can include specialized procedures for testing and
presenting expert evidence, or "fast track" procedures can be adopted
where time is of the essence, or tailor-made dispute resolution
mechanisms can be adopted in particular commercial markets. More
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generally, parties are typically free to agree upon the existence and
scope of discovery or disclosure, the modes for presentation of fact
and expert evidence, the length of the hearing, the timetable and other
matters. The parties' ability to adopt (or, failing agreement, the
tribunal's power to prescribe) flexible procedures is a central
attraction of international arbitration - again, as evidenced by
empirical research and commentary.”
(Emphasis Supplied)
105 . As would be clear, party autonomy enables parties to dispense
with technical formalities and procedures of National Court
proceedings, contractually. They agree to abide by the terms of the
statute regulating arbitration which they perceive as advantageous.
Having done so, they cannot be allowed to cry afoul, when it does not
suit their needs and clamor for certain procedures which are
legislatively not sanctioned in the arbitration process and are available
in the normal machinery of the Courts.
106 . Further, as held earlier, a Section 34 Court cannot be invited to
enter into the merits. The limited recourse available is the one provided
under Section 34 and when the Section is plain and clear the historical,
textual and the contextual interpretation does not permit the reading in
of any implied power to expand the scope of Section 34.
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107 . The Judgment in Centrotrade Minerals & Metal Inc. vs.
Hindustan Copper Ltd., (2017) 2 SCC 228 cited by learned Senior
Counsel, Mr. Darius Khambata that it is not always that acts not
mentioned in the statute are impermissible has no application herein. In
that case, this Court was concerned with not any Statutory Court
procedure but with an appeal procedure mutually agreed upon by the
parties in a contract, which the Court sanctioned inter alia referring to
principles of party autonomy.
CAN ARTICLE 142 POWERS BE EXERCISED TO MODIFY?
108 . Parties have referred to cases where this Court in some cases
exercised powers under Article 142 in modifying the award particularly
the percentage of interest awarded by the arbitrators. The aspect of
award of interest is discussed hereinbelow, while dealing with Section
34(4).
In this segment of the judgment the only question considered is whether
power under Article 142 of the Constitution would be exercised by this
Court to modify in any manner an arbitral award when matters come
up after initiation of proceedings under Section 34.
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109 . A Constitution Bench of this Court in Supreme Court Bar
Association vs. Union of India and Another, (1998) 4 SCC 409, while
delving on the scope of this Court’s power under Article 142, held that
the power under Article 142 cannot be used to “supplant” substantive
law applicable to the case or cause under consideration of the Court. It
has been held that express statutory provisions cannot be ignored and
Article 142 cannot be used to achieve indirectly what cannot be
achieved directly. It has been held that to balance the equities between
conflicting claims of the litigating parties “ironing out the creases” in a
cause or matter before it could be done but, in no circumstance will
substantive statutory provision dealing with the subject matter be given
a go bye. It has been clarified that though the powers of this Court
cannot be controlled by any statutory provisions, however, when the
exercise of power comes directly in conflict with what has been
expressly provided in a statute, the power under Article 142 is not to be
exercised.
110 . We need to do nothing more than to extract Para 47 and 48 of the
judgment in Supreme Court Bar Association (supra).
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“47. “The plenary powers of this Court under Article 142 of the
Constitution are inherent in the Court and are complementary to
those powers which are specifically conferred on the Court by
various statutes though are not limited by those statutes. These
powers also exist independent of the statutes with a view to do
complete justice between the parties. These powers are of very wide
amplitude and are in the nature of supplementary powers. This power
exists as a separate and independent basis of jurisdiction apart from
the statutes. It stands upon the foundation and the basis for its
exercise may be put on a different and perhaps even wider footing,
to prevent injustice in the process of litigation and to do complete
justice between the parties. This plenary jurisdiction is, thus, the
residual source of power which this Court may draw upon as
necessary whenever it is just and equitable to do so and in particular
to ensure the observance of the due process of law, to do complete
justice between the parties, while administering justice according to
law. There is no doubt that it is an indispensable adjunct to all other
powers and is free from the restraint of jurisdiction and operates as a
valuable weapon in the hands of the Court to prevent “clogging or
obstruction of the stream of justice”. It, however, needs to be
remembered that the powers conferred on the Court by Article 142
being curative in nature cannot be construed as powers which
authorise the Court to ignore the substantive rights of a litigant while
dealing with a cause pending before it. This power cannot be used
to “supplant” substantive law applicable to the case or cause
under consideration of the Court. Article 142, even with the
width of its amplitude, cannot be used to build a new edifice
where none existed earlier, by ignoring express statutory
provisions dealing with a subject and thereby to achieve
something indirectly which cannot be achieved directly.
Punishing a contemner advocate, while dealing with a contempt of
court case by suspending his licence to practice, a power otherwise
statutorily available only to the Bar Council of India, on the ground
that the contemner is also an advocate, is, therefore, not permissible
in exercise of the jurisdiction under Article 142. The construction of
Article 142 must be functionally informed by the salutary purposes
of the article, viz., to do complete justice between the parties. It
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cannot be otherwise. As already noticed in a case of contempt of
court, the contemner and the court cannot be said to be litigating
parties.
48. “The Supreme Court in exercise of its jurisdiction under Article
142 has the power to make such order as is necessary for doing
complete justice “between the parties in any cause or matter pending
before it”. The very nature of the power must lead the Court to
set limits for itself within which to exercise those powers and
ordinarily it cannot disregard a statutory provision governing a
subject, except perhaps to balance the equities between the
conflicting claims of the litigating parties by “ironing out the
creases” in a cause or matter before it. Indeed this Court is not a
court of restricted jurisdiction of only dispute-settling. It is well
recognised and established that this Court has always been a law-
maker and its role travels beyond merely dispute-settling. It is a
“problem-solver in the nebulous areas” but the substantive statutory
provisions dealing with the subject-matter of a given case cannot be
altogether ignored by this Court, while making an order under Article
142. Indeed, these constitutional powers cannot, in any way, be
controlled by any statutory provisions but at the same time these
powers are not meant to be exercised when their exercise may
come directly in conflict with what has been expressly provided
for in a statute dealing expressly with the subject”.
111 . Recently, a Constitution Bench of this Court, while sounding a
note of caution on the exercise of powers under Article 142 in Shilpa
Sailesh vs. Varun Sreenivasan, (2023) 14 SCC 231, had the following
to say.
“19. Given the aforesaid background and judgments of this
Court, the plenary and conscientious power conferred on this
Court under Article 142(1) of the Constitution of India,
seemingly unhindered, is tempered or bounded by restraint,
which must be exercised based on fundamental considerations of
general and specific public policy. Fundamental general conditions
90


of public policy refer to the fundamental rights, secularism,
federalism, and other basic features of the Constitution of India.
Specific public policy should be understood as some express pre-
eminent prohibition in any substantive law, and not stipulations
and requirements to a particular statutory scheme. It should not
contravene a fundamental and non-derogable principle at the
core of the statute. Even in the strictest sense, it was never doubted
or debated that his Court is empowered under Article 142(1) of the
Constitution of India to do “complete justice” without being bound
by the relevant provisions of procedure, if it is satisfied that the
departure from the said procedure is necessary to do “complete
justice” between the parties.”
112 . A careful reading of the above paragraph reveals that the power
under Article 142 will not be exercised if it would contravene a
fundamental and non-derogable principle at the core of a statute.
Further, it has been held that the power under Article 142 is to be
tempered or bounded by restraint based on fundamental considerations
of general and specific public policy. Amplifying further, it was held
that specific public policy should be understood as some express pre-
eminent prohibition in any substantive law and not mere stipulations
and requirements to a particular statutory scheme.
113 . From the reasons stated in the earlier part of the judgment, it is
crystal clear that Courts exercising powers under Section 34, which will
include the appellate hierarchy cannot change, vary, or qualify
“arbitrary awards” as it strikes at the very core and root of the ethos of
91


the arbitration process. Such an exercise of power will derogate from
the core aspects of the A&C Act and will breach a pre-eminent
prohibition in the said Act.
114 . Apart from the above, if power is reserved for this Court to
modify, at the fag end of the litigation, contracting parties will have
grave uncertainties as they would not be sure of how the matter will
play out when it reaches the apex Court. It will be antithetical to
arbitration as an alternative and efficacious mode of dispute resolution.
115. Hence, in matters arising out of Section 34 of the A&C Act, this
Court will refrain from exercising its power under Article 142, in view
of the law laid down in SCBA (supra) and Shilpa Shailesh(supra).
LAYING DOWN GUARDRAILS FOR SECTION 34 – IS IT AN
OPTION FOR THIS COURT?
116 . Parties aspiring for the power to modify to be vested in Section
34 contend that any possible abuse of power to modify, if vested in a
Court hearing a Section 34 application, can be checked by prescription
of guardrails. Learned counsels have contended that any modification
or variation which inevitably flows from the Courts determination of
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the question of law should be permitted. Equally, learned counsels
contended that modification should be permitted to align the award
with the contractual provision. Counsels have referred to the theory of
useless formality, where in certain scenarios only one conclusion is
possible and implore this Court to lay down parameters for
modification.
117 . The contention is without merit. As has been rightly contended
by the learned Solicitor General, the situation here is not a situation
akin to what arose in Vishaka (supra) . In Vishaka (supra) noticing the
absence of any enacted law to provide for effective enforcement of
basic human rights of gender equality and guarantee against sexual
harassment and abuse at workplaces and in exercise of powers under
Article 32 for enforcement of fundamental rights, this Court, pending
enactment of a statute, laid down guidelines to prevent sexual
harassment at the workplace. The interpretation of the A&C Act is not
akin to the situation that obtained in Vishaka (supra) and other cases
where recognising certain positive obligations in the State, this Court
filled the gap by setting out guidelines. Further, as rightly contended by
Mr. Gourab Banerji, learned Senior Counsel, there are no judicially
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manageable standards and this Court cannot venture into formulating
guidelines as myriad situations will arise when Section 34 applications
are heard before the appropriate Courts. Further, as rightly contended
by the learned Senior Counsel, it would amount to judicial legislation
which we are loathe to do. Learned Counsel for the parties, in support
of their plea to lay down guardrails, referred to a judgment of this Court
in Oil and Natural Gas Corporation Limited vs. Afcons Gunanusa JV,
2022 SCC OnLine SC 1122 . We have carefully examined the
judgment. That case concerned the rights of arbitrator(s) to unilaterally
fix fees for their sittings in arbitration. Negating the plea, the Court
ruled that there was no sanction for the same in terms of the A&C Act.
The guidelines for ad-hoc arbitrations were only on the modalities for
arriving at the consensus and there was no deviation from the statute.
That case has no relevance here.
SUBMISSIONS BASED ON PECULIARITIES IN STATUTORY
ARBITRATIONS:-
118 . Submissions were made that if power to modify is not recognised
in Section 34, enormous hardship will be caused in cases where the
A&C Act has been made applicable to some statutes. Example of the
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National Highways Authority Act was given. It was contended that
against the order awarding compensation for acquisition by the
competent authority, reference is made to the arbitrator appointed by
the Central Government and against his award only a recourse to
Section 34 is available. The contention was that, these are compulsory
arbitrations and not consensual arbitrations. Learned Senior Counsel
Mr. Gourab Banerji, responded to this submission by arguing that the
interpretation to the A&C Act has to be uniform and if there are any
maladies in the other statutes by which arbitrators are appointed, the
solution will have to be found by addressing the grievances prevalent
in those statutes and not by truncating the interpretation of the A&C
Act.
119 . By no stretch of imagination can we bifurcate the interpretation
of Section 34 and offer one set of interpretations for commercial
arbitrations and another for statutory arbitrations to which the A&C Act
is applicable. Hence, the submission for a differential interpretation of
the A&C Act for some statutory arbitrations alone is rejected.
120 . Equally, for this reason, the submissions of Mr. Darius Khambata,
learned Senior Counsel that power to modify be at least restricted to
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domestic arbitrations where patent illegality is found in the award
cannot be accepted. There is neither any scope nor any legal basis for
such a course of action to be adopted.
COMPLICATIONS DUE TO MODIFICATIONS IN NEW YORK
CONVENTION AWARDS:-
121 . Mr. Gourab Banerji, learned Senior Counsel and Mr. Gaurav
Pachnanda, learned Senior Counsel drew the attention of this Court to
certain specific statutory provisions obtaining in the UK, Singapore,
New Zealand and Kenya. This was to drive home the point that not only
were there express provisions to modify awards in those statutes by the
Court hearing the setting aside application, there are also express
provisions recognising that the award will hitherto be read in the
modified form. Learned Senior Counsels contended that in the absence
of similar statutory regime serious complications will arise in
enforcement of New York Convention awards and will constitute a
serious threat to India seated arbitrations under the New York
Conventions.
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122 . In particular, attention was drawn to Section 71 of the UK English
Arbitration Act which we deem it appropriate to set out hereinbelow:-
“ 71. Challenge or appeal: effect of order of court .
(1) The following provisions have effect where the court makes an
order under section 67, 68 or 69 with respect to an award.
(2) Where the award is varied, the variation has effect as part of
the tribunal’s award.
(3) Where the award is remitted to the tribunal, in whole or in part,
for reconsideration, the tribunal shall make a fresh award in
respect of the matters remitted within three months of the date of
the order for remission or such longer or shorter period as the court
may direct.
(4) Where the award is set aside or declared to be of no effect, in
whole or in part, the court may also order that any provision that
an award is a condition precedent to the bringing of legal
proceedings in respect of a matter to which the arbitration
agreement applies, is of no effect as regards the subject matter of
the award or, as the case may be, the relevant part of the award.”
(Emphasis supplied)
123 . It will be noticed that in the United Kingdom and certain other
countries, clear statutory provisions exist stating that where the award
is varied the variation has the effect as part of the Tribunal’s award. It
will be noticed that to give effect to the New York Convention, like the
A&C Act has provisions in Part II, several other countries have also
adopted statutory provisions for recognition and enforcement of
foreign awards. Learned Senior Counsels submit that if the award is
97


modified by the Section 34 Court in India, any enforcement brought
abroad will run into complications as objections will be taken that what
is sought to be enforced is not the award but the judgment of the Court.
There is merit in the submission and this is one another reason why
these matters are best left for the legislature to be comprehensively
addressed. Enforcement of foreign judgements and enforcement of
foreign awards are distinct legal concepts and hence, the argument
cannot be characterized as not convincing jurisprudentially or in
principle.
124 . Learned Senior Counsel, Mr. Gaurav Pachnanda, pressed the
argument that when a Section 34 Court passes an order there is no
application of the doctrine of merger. This Court in Kunhayammed &
Others Vs. State of Kerala and Another, (2000) 6 SCC 359, has
discussed the doctrine of merger and held that doctrine of merger is not
a doctrine of universal or unlimited application.
125 . Considering the holding in this judgment that there is no power
under Section 34 court to modify, in the absence of a statutory
enablement, it is not considered necessary to go into the aspect of the
applicability of the Doctrine of merger.
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IS HAKEEM (SUPRA) PER INCURIAM?
126 . In National Insurance Co. Ltd. Vs. Pranay Sethi and Others,
(2017) 16 SCC 680, a Constitution Bench of this Court held as follows:
a decision or judgment can be per incuriam if any provision in a statute,
rule or regulation was not brought to the notice of the court. (Para 28)
It was also held that a decision or judgment can be per incuriam if it is
not possible to reconcile its ratio with that of a previously pronounced
judgement of a co-equal or a larger bench. We find that the judgement
in Hakeem (supra ) has rightly interpreted the provisions of A&C Act
and is in no manner conflicting with any ratio of a co-equal or larger
Bench. In the earlier parts of the judgement, we have distinguished the
other judgements referred to in the referral order. Hakeem (supra ) itself
distinguished certain other earlier pronouncements. Hakeem (supra )
will now be read in accordance with the ratio laid down in the present
judgment.
127 . Reliance was placed on Oil and Natural Gas Corporation Ltd.
vs. Western Geco International Ltd., (2014) 9 SCC 263, to contend
that Hakeem (supra) did not consider the said judgment. It was argued
that power to modify in Section 34 Court was recognised in Western
99


Geco (supra) . A close reading of Para 40 of Western Geco (Supra),
indicates that though the word ‘modified’ occurs in the judgment, it was
clearly in the context of severability, an aspect Hakeem (supra) was
not concerned with. Hence, it cannot be said that Hakeem (supra) is
per incuriam for not noticing Western Geco (supra) . The other
judgments prior to Hakeem (supra) have not discussed the aspect
whether power to modify exists in a Section 34 Court. Hence, we reject
the argument of parties that Hakeem (supra ) is per incuriam. Hakeem
(supra) insofar as it held that a Section 34 Court has no power to
modify the award, is not per incuriam.
POWERS UNDER SECTION 33 AND 34 (4) OF THE A&C ACT
– THE ‘SAFETY VALVES’:-
128 . As to what errors could be corrected and how it could be done has
been first provided for in Section 33 of the A&C Act. Section 33 deals
with correction and interpretation of award and making of additional
award by the arbitrator. The provision has already been discussed in the
earlier part of this judgment. Section 33(i)(a) deals with correction of
computation error, clerical or typographical error or any other error of
a similar nature occurring in the award. This provision is akin to Section
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15 (b) and (c) of the 1940 Act. Power is also there in the arbitral
Tribunal to Suo Moto correct these errors. Even in the Code of Civil
Procedure, Section 152 provides for a similar power for the Courts.
Section 152 is set out hereinbelow:
“152. Amendment of judgments, decrees or orders.—Clerical or
arithmetical mistakes in judgments, decrees or orders or errors
arising therein from any accidental slip or omission may at any time
be corrected by the Court either of its own motion or on the
application of any of the parties.”
129 . Even if any claim is not adjudicated, parties could move to
arbitral Tribunal for the same and an additional award can be made.
130 . Now turning to Section 34(4), it reads as follows:-
“34.(4) On receipt of an application under sub-section (1), the Court
may, where it is appropriate and it is so requested by a party, adjourn
the proceedings for a period of time determined by it in order to give
the arbitral tribunal an opportunity to resume the arbitral
proceedings or to take such other action as in the opinion of arbitral
tribunal will eliminate the grounds for setting aside the arbitral
award.”
Section 34(4) occurs in sequence after 34(1), 34(2), 34(2A), 34(3).
After recourse is made under Section 34(1) and the Court has applied
the rigors of 34(1), (2), (2A), the Court would be fairly clear as to
whether any ground has been made out for setting aside the arbitral
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award or not. At this stage, Section 34(4) comes into the picture and
provides that:-
(i) On receipt of an application under sub-section (1), the Court may;
(ii) Where it is appropriate and it is so requested by a party;
(iii) Adjourn the proceedings for a period of time determined by it;
(iv) In order to give the arbitral Tribunal an opportunity;
(v) To resume the arbitral proceedings or to take such other action as in
the opinion of arbitral Tribunal will eliminate the grounds for setting
aside the arbitral award.
131 . It must be noticed that all that the Section mentions is a request
being made and there is no prescription that the request should be in
writing. In this regard, the holding in Kinnari Mullick & Anr. vs.
Ghanshyam Das Damani, (2018) 11 SCC 328 to the effect that
discretion available under Section 34(4) to give an opportunity to the
arbitrator can be exercised only upon a written application made in that
behalf by a party is not the correct legal position. To that extent Kinnari
Mullick (supra) does not lay down the correct law.
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132 . It cannot be disputed that ordinarily the stage of Section 34(4)
would arise when the Court has put the award through the test of fire
under the prior clauses of Section 34 and entertains the opinion that
there are grounds for setting aside the arbitral award. At this stage, in
given cases where it considers appropriate and a request is made by a
party even orally, the Court may adjourn the proceeding for a period of
time in order to give the arbitral Tribunal an opportunity to resume the
arbitral proceeding or to take such other action as in the opinion of the
arbitral Tribunal will eliminate the grounds for setting aside the award.
The Court shall in the order indicate its reasons for entertaining the
opinion and as to why it considers that there are grounds for setting
aside the arbitral award. Ordinarily, it will be the award holder, who
will be the respondent in the Section 34 application, who will be
interested in sustaining the award. The very fact that he is stoutly
defending the award is a clear indication that he wants the award to be
sustained and grounds, if any, which exist to set aside the award are
eliminated. The grounds may be of different hues.
133 . To illustrate, Section 31 which speaks of form and contents of the
arbitral award has the following prescription:- (i) The award shall be
103


signed by the members of the Tribunal. (ii) The award shall state the
reasons. (iii) The award shall state the date and place of arbitration. (iv)
The costs of the arbitration to be fixed in accordance with Section
31(A). (v) The award may deal with disputes not contemplated or
falling within the terms of the submissions to arbitration. (vi) The
award may have decision on matters beyond the scope of submissions
of arbitration. In a given case any of the above aspects could be
attracted.
134 . The above are only illustrative aspects. This Court in I-Pay
Clearing Services (P) Ltd. v. ICICI Bank Ltd., (2022) 3 SCC 121
quoted the decisions in Dyna Technologies (P) Ltd. v. Crompton
Greaves Ltd., (2019) 20 SCC 1 and Som Datt Builders Ltd. v. State of
Kerala, (2009) 10 SCC 259 and held as follows:-
“34. In the judgment in Dyna Technologies (P) Ltd. v. Crompton
Greaves Ltd. [Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd.,
(2019) 20 SCC 1] , it was a case where there was no inquiry under
Section 34(4) of the Act and in the said case, this Court has held that
the legislative intention behind Section 34(4) of the Act, is to make
the award enforceable, after giving an opportunity to the Tribunal to
undo the curable defects. It was not a case of patent illegality in the
award, but deficiency in the award due to lack of reasoning for a
finding which was already recorded in the award. In the very same
case, it is also clearly held that when there is a complete perversity
104


in the reasoning, then the same is a ground to challenge the award
under Section 34(1) of the Act.
35.Som Datt Builders Ltd. v. State of Kerala [Som Datt Builders Ltd.
v. State of Kerala, (2009) 10 SCC 259 : (2009) 4 SCC (Civ) 153] is
also a case where no reasons are given for the finding already
recorded in the award, as such, this Court held that in view of Section
34(4) of the Act, the High Court [State of Kerala v. Somdatt Builders
Ltd. Arbitration Appeal No. 16 of 2005, order dated 3-6-2005 (Ker)]
ought to have given the Arbitral Tribunal an opportunity to give
reasons.”


In para 37 to 43 in I-Pay (supra), this Court held as under:-

“37. In our view, Section 34(4) of the Act can be resorted to record
reasons on the finding already given in the award or to fill up the
gaps in the reasoning of the award. There is a difference between
“finding” and “reasons” as pointed out by the learned Senior Counsel
appearing for the respondent in the judgment in ITO v. Murlidhar
Bhagwan Das [ITO v. Murlidhar Bhagwan Das, AIR 1965 SC 342] .
It is clear from the aforesaid judgment that “finding is a decision on
an issue”. Further, in the judgment in J. Ashoka v. University of
Agricultural Sciences [J. Ashoka v. University of Agricultural
Sciences, (2017) 2 SCC 609 : (2017) 1 SCC (L&S) 517] , this Court
has held that “reasons are the links between the materials on which
certain conclusions are based and the actual conclusions”.
38. In absence of any finding on Point 1, as pleaded by the respondent
and further, it is their case that relevant material produced before the
arbitrator to prove “accord and satisfaction” between the parties, is
not considered, and the same amounts to patent illegality, such
aspects are to be considered by the Court itself. It cannot be said that
it is a case where additional reasons are to be given or gaps in the
reasoning, in absence of a finding on Point 1 viz. “whether the
contract was illegally and abruptly terminated by the respondent?”.
39. Further, Section 34(4) of the Act itself makes it clear that it is
the discretion vested with the Court for remitting the matter to
105


Arbitral Tribunal to give an opportunity to resume the
proceedings or not. The words “where it is appropriate” itself
indicate that it is the discretion to be exercised by the Court, to
remit the matter when requested by a party. When application is
filed under Section 34(4) of the Act, the same is to be considered
keeping in mind the grounds raised in the application under Section
34(1) of the Act by the party, who has questioned the award of the
Arbitral Tribunal and the grounds raised in the application filed under
Section 34(4) of the Act and the reply thereto.
40. Merely because an application is filed under Section 34(4) of the
Act by a party, it is not always obligatory on the part of the Court to
remit the matter to Arbitral Tribunal. The discretionary power
conferred under Section 34(4) of the Act, is to be exercised where
there is inadequate reasoning or to fill up the gaps in the reasoning,
in support of the findings which are already recorded in the award.
41. Under the guise of additional reasons and filling up the gaps in
the reasoning, no award can be remitted to the arbitrator, where there
are no findings on the contentious issues in the award. If there are no
findings on the contentious issues in the award or if any findings are
recorded ignoring the material evidence on record, the same are
acceptable grounds for setting aside the award itself. Under the guise
of either additional reasons or filling up the gaps in the reasoning, the
power conferred on the Court cannot be relegated to the arbitrator. In
absence of any finding on contentious issue, no amount of reasons
can cure the defect in the award.
42. A harmonious reading of Sections 31, 34(1), 34(2-A) and 34(4)
of the Arbitration and Conciliation Act, 1996, make it clear that
in appropriate cases, on the request made by a party, Court can
give an opportunity to the arbitrator to resume the arbitral
proceedings for giving reasons or to fill up the gaps in the
reasoning in support of a finding, which is already rendered in
the award. But at the same time, when it prima facie appears that
there is a patent illegality in the award itself, by not recording a
finding on a contentious issue, in such cases, Court may not accede
to the request of a party for giving an opportunity to the Arbitral
Tribunal to resume the arbitral proceedings.
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43. Further, as rightly contended by the learned counsel appearing for
the respondent, that on the plea of “accord and satisfaction” on
further consideration of evidence, which is ignored earlier, even if
the Arbitral Tribunal wants to consciously hold that there was
“accord and satisfaction” between the parties, it cannot do so by
altering the award itself, which he has already passed.”
(Emphasis supplied)
It is clear from the above that the power to remit under Section 34(4)
can be exercised for undoing the curable defects.
AWARD OF INTEREST- USE OF SECTION 34(4) POWER:-
135 . Equally, in a given case where the Court feels that interest has not
been awarded or interest beyond the terms of the agreement have been
awarded or excessive interest have been awarded or abysmally low
interest is awarded, the Court under Section 34 cannot modify the
interest. The course of action to be adopted would be to record reasons
in the order and remit the matter to the arbitrator for the arbitral
Tribunal to make the necessary course correction. It is true that if only
on account of interest if awards are to be set aside, the whole exercise
will have to be undertaken again. If the Court in a Section 34
proceeding (which will include the courts in that appellate hierarchy)
is of the opinion that interest aspect needs a relook, the correct course
of action to be adopted is to remit the matter under Section 34(4) for
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the purpose of enabling the arbitrator to take a call. If thereafter again,
when the matter comes back to the Court, the Court feels that the
grounds for setting aside the award are not eliminated, it will have no
choice except to set aside the award.
SUO MOTO EXERCISE OF THE SECTION 34(4) POWER:-
136 . Section 34(4) is the safety valve provided in the A&C Act by the
legislature to prevent awards being set aside and to offer a chance to
the arbitral Tribunal to adopt a course correction. In this regard,
considering the purpose for which Section 34(4) was intended, and
since the respondent is defending the award and attempting to sustain
it, if the Court deems it appropriate after arriving at an opinion with
reasons recorded in writing, that there exists ground for setting aside
the arbitral award the Court is even Suo Moto empowered to invoke
powers under Section 34(4) in accordance with the parameters set out
hereinabove. There is nothing in Section 34(4) which detracts from
such an interpretation. There will be on record an application under
Section 34(1) by the applicant to set aside the award and the award
holder invariably is stoutly defending the award and is straining every
nerve to uphold the same. After the court has passed through the
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motions of Section 34(2)(a) (b) and 2 A, it would have arrived at an
opinion as to whether the award is susceptible or whether it is
sustainable. If it arrives at an opinion that the award is vulnerable and
the threat of setting aside is looming large and if within the parameters
laid down in Section 34(4) the grounds for setting aside can be
eliminated - the case is appropriate and time is ripe for exercise of
power under Section 34(4). The need for an application oral or in
writing is really directory and does not militate against the exercise of
Suo Moto powers in given cases by the Court.
COMPUTATION, CLERICAL AND TYPOGRAPHICAL
ERROR OR ANY OTHER ERROR OF SIMILAR NATURE -
ACTUS CURIAE NEMINEM GRAVABIT PRINCIPLE:-
137 . Section 33 enables parties to move the Arbitral Tribunal to correct
any computational error, any clerical error or typographical error or any
other errors of similar nature. Section 33(3) enables the arbitral
Tribunal itself to correct any of those errors. No doubt, a time limit of
30 days has been prescribed for the parties to move unless there is a
contract to the contrary. Equally, sub-Section 2 of Section 33 directs
that the correction should be made within 30 days and sub-Section 6 of
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Section 33 states that the arbitral Tribunal may if necessary extend the
period of time within which it shall make a correction.
138 . In this regard, it is useful to refer to the recent judgment of this
Court in North Delhi Municipal Corporation v. M/S. S.A. Builders
Ltd., 2024 INSC 988 , wherein it was held as under:
“45.1. As per sub-Section (1), within 30 days from the date of receipt
of the arbitral award, a party with notice to the other party, may
request the arbitral tribunal to correct any computation errors, any
clerical or typographical errors or any other errors of a similar nature
occurring in the award. Further, if the parties agree, a party with
notice to the other party, may request the arbitral tribunal to give an
interpretation of a specific point or part of the award. The period of
30 days contemplated under subSection (1) may stand extended to
another period of time if agreed upon by the parties. Therefore,
ordinarily the time limit for correction of errors or for interpretation
of a specific point or part of the award is 30 days from the date of
receipt of the arbitral award. However, the limitation of 30 days can
be waived for another period of time, if agreed upon by the
parties . Question for consideration is what would be the contours of
the expression unless another period of time has been agreed upon
by the parties, as appearing in sub-Section (1) of Section 33.
45.2. Sub-Section (7) of Section 33 clarifies that correction or
interpretation of arbitral award or passing of additional arbitral award
would attract Section 31 of the 1996 Act as discussed supra.
Therefore, the language of sub-Section (1) of Section 33 makes it
abundantly clear that the period of 30 days as provided in Section
33(1) is not an inflexible period. If the parties agree, the said period
can be extended.
45.3. There is no dispute to the proposition of law laid down in
Harshad Chiman Lal Modi (supra), relied upon by the appellant, that
where a court has no jurisdiction over the subject matter of the suit
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by reason of any limitation imposed by the statute, charter or
commission, it cannot take up the cause or matter; an order passed
by the court having no such jurisdiction is a nullity. Question is
whether such a proposition would have any application to the facts
and circumstances of the present case. As we have seen, there was no
embargo on the Arbitral Tribunal to exercise jurisdiction over the
subject matter. The only limitation was that the correction and/or
interpretation of the award should be done within 30 days from
the date of receipt of the arbitral award unless another period of
time has been agreed upon by the parties. Therefore, the
expression unless another period of time has been agreed upon
by the parties assumes critical significance.”
(Emphasis supplied)

139 . With regard to computational errors, clerical or typographical
error or any other error of similar nature – (the expression any other
error of similar nature will be read ejusdem generis and will apply to
errors similar to computational errors, clerical or typographical errors),
what should be the course of action if the party has not moved under
Section 33 or having moved the arbitrator has mechanically rejected
the correction?
140 . With regard to Section 152 CPC, this Court after holding that
Section 152 is founded on the maxim - actus curiae neminem gravabit
speaking through Dr. Arijit Pasayat J. in U.P. SRTC vs. Imtiaz Hussain,
(2006) 1 SCC 380 lucidly explained the position thus.
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“8 . The basis of the provision under Section 152 of the Code is
founded on the maxim “actus curiae neminem gravabit” i.e. an
act of court shall prejudice no man. The maxim “is founded upon
justice and good sense; and affords a safe and certain guide for
the administration of the law”, said Cresswell, J. in Freeman v.
Tranah [12 CB 406 : 138 ER 964] (ER p. 967). An unintentional
mistake of the court which may prejudice the cause of any party
must and alone could be rectified. In Master Construction Co.
(P) Ltd. v. State of Orissa [(1966) 3 SCR 99 : AIR 1966 SC 1047]
it was observed that the arithmetical mistake is a mistake of
calculation, a clerical mistake is a mistake in writing or typing
whereas an error arising out of or occurring from accidental slip
or omission is an error due to careless mistake on the part of the
court liable to be corrected. To illustrate this point it was said that
in a case where the order contains something which is not mentioned
in the decree, it would be a case of unintentional omission or mistake
as the mistake or omission is attributable to the court which may say
something or omit to say something which it did not intend to say or
omit. No new arguments or rearguments on merits can be
entertained to facilitate such rectification of mistakes. The
provision cannot be invoked to modify, alter or add to the terms
of the original order or decree so as to, in effect, pass an effective
judicial order after the judgment in the case.”
(Emphasis supplied)
141 . Ordinarily errors of the nature set out above like computational
error, clerical or typographical error or any other error of a similar
nature would not be objected by other party. However, in the unlikely
event of an objection and in a scenario where the arbitrator has not been
moved under Section 33 or having moved the Arbitral Tribunal has
been obstinate in not correcting, a Court in Section 34 to uphold the
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maxim actus curiae neminem gravabit can invoke the power and
correct computational errors, clerical or typographical errors or any
other errors of similar nature without modifying, altering or adding to
the original award. It should not be forgotten that under Section 35
finality is granted to the arbitral awards subject to the provisions in part
I and under Section 36 where the time for making an application to set
aside the arbitral award under Section 34 has expired, then subject to
the provisions of sub-Section 2 such award shall be enforced in
accordance with the provisions of the Code of Civil Procedure in the
same manner as it were a decree of the Court. Hence, a limited
exception alone to the holding in Hakeem (supra) is made.
SEVERABILITY UNDER SECTION 34:-
142 . If there was one aspect on which there was a chorus among the
rival factions, it was on the aspect of Section 34 Court having power to
sever that part of the award which fell foul of Section 34 from the good
part.
143 . According to P. Ramanatha Aiyar’s Advanced Law Lexicon
(third edition):
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“ Sever – ‘to separate; to insist upon a plea distinct from that
of other co-defendants; to disjoin and
severable – ‘capable to being separated’,”
A bare perusal of Section 34 indicates that the power to sever an
award is recognised in Section 34(2)(a)(iv) which reads as
under.
“34(2)(a)(iv). the arbitral award deals with a dispute not
contemplated by or not falling within the terms of the submission
to arbitration, or it contains decisions on matters beyond the scope
of the submission to arbitration:
Provided that, if the decisions on matters submitted to arbitration
can be separated from those not so submitted, only that part of the
arbitral award which contains decisions on matters not submitted
to arbitration may be set aside;”
144 . A reading of the above sub-Section reveals that where the arbitral
award deals with disputes not contemplated by or not falling within the
terms of the submission to arbitration or it contains decision on matters
beyond the scope of the submission to arbitration, the award can be set
aside.
145 . However, the proviso states that if the decisions on matters
submitted to arbitration can be separated from those not so submitted,
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only that part of the arbitral award which contains decisions on matters
not submitted to arbitration may be set aside.
146 . So, severance as a concept is recognised intrinsically in Section
34 itself on the aspect mentioned hereinabove. But the question is when
there are several claims adjudicated and if awards on a few claims fall
foul of Section 34 and if each of the claims which fall foul of Section
34 are capable of separation could the awards on those claims be set
aside? This issue was not discussed in Hakeem (supra). However, the
consistent view of this Court has been that such standalone claims
falling foul of Section 34 can be set aside as long as they are capable of
being severed without affecting the other parts of the award. In other
words, if the claims falling foul of Section 34 are not inseparably
intertwined with the good portion of the award, the award can be
severed.
147 . In J.G. Engineers (P) Ltd. vs. Union of India & Anr., (2011) 5
SCC 758, R.V. Raveendran J. speaking for the Court clearly set out the
principle as follows:-
“25. It is now well settled that if an award deals with and decides
several claims separately and distinctly, even if the court finds that
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the award in regard to some items is bad, the court will segregate
the award on items which did not suffer from any infirmity and
uphold the award to that extent. As the award on Items 2, 4, 6, 7,
8 and 9 was upheld by the civil court and as the High Court in
appeal did not find any infirmity in regard to the award on those
claims, the judgment of the High Court setting aside the award in
regard to Claims 2, 4, 6, 7, 8 and 9 of the appellant, cannot be
sustained. The judgment to that extent is liable to be set aside and
the award has to be upheld in regard to Claims 2, 4, 6, 7, 8 and 9.”
148 . This Court in Madhya Pradesh Power Generation Company
(supra) had severed the award with regard to the return of amounts
ordered on the Bank guarantees dated 22.02.2000 and 23.02.2000
which pertained towards the amount advanced by the award debtor
therein.
149 . During the course of the submissions, the concern expressed by
the several learned counsels were that severability should be carefully
invoked and the exorcised portion of the award should not be
inseparably intertwined with the other portions which are upheld and
ought not to be inter dependent on the good parts of the award. The
further concern expressed was that the Section 34 Court wanting to
sever portions of the award should perform an exercise to see whether
the good part of the award can be separately identified both in terms of
variability and quantum without any co-relation to the bad parts of the
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award. The submission was that if the good parts are intermingled with
the bad parts of the award in a manner that it is impossible to sever the
bad parts, the principle of severability cannot be applied. Mr. Gaurav
Pachnanda, learned Senior Counsel illustrated the submission by
submitting that if a final award is arrived by netting off claims and
counter claims, principles of severability cannot be applied as what is
available in the award was a composite award with a single amount
mentioned therein enforceable by the successful party. There is merit
in this submission and such prerequisites are essential while severing
parts of the award.
150 . A Full Bench of the High Court of Judicature at Bombay, in R.S.
Jiwani vs. Ircon International Ltd., 2009 SCC OnLine Bom 2021,
held as under.
“20. The cases would be different where it is not possible or
permissible to sever the award. In other words, where the bad part
of the award was intermingled and interdependent upon the good
parts of the award there it is practically not possible to sever the
award as the illegality may affect the award as a whole. In such
cases, it may not be possible to set aside the award partially.
However, there appears to be no bar in law in applying the doctrine
of severability to the awards which are severable.”
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151 . Sanjay Kumar J., (as His Lordship then was) in the High Court of
Judicature at Hyderabad for the State of Telangana in Saptarishi Hotels
Pvt. Ltd. vs. National Institute of Tourism & Hospitality
Management, 2019 SCC OnLine TS 1765, following J.G. Engineers
(supra) held as follows.
“33. In J.G. ENGINEERS PVT. LTD. v. UNION OF INDIA, the
Supreme Court observed that it is now well settled that if an Award
deals with and decides several claims separately and distinctly and
if such Award is found to be bad in regard to some items, the Court
would be entitled to segregate the Award on the items which did
not suffer from any infirmity so that it could be upheld to that
extent.”
152 . A learned Single Judge of the Delhi High Court addressing the
issue of severability in National Highways Authority of India vs.
Trichy Thanjavur Expressway Ltd., 2023 SCC OnLine Del 5183, set
out the principle thus.
“38. In our considered opinion, therefore, the answer to the
question which stands posed would have to be rendered on an
interpretation of the phrase “setting aside” as ultimately
adopted and forming part of Section 34. As was noticed
hereinbefore, Section 34(2)(a)(iii) does speak of an award
being set aside in part. We find that the key to understanding
the intent underlying the placement of the Proviso in sub-
clause (iv) of Section 34(2)(a) is in the nature of the grounds
for setting aside which are spoken of in clause (a). As would
be manifest from a reading of the five sub-clauses which are
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positioned in Section 34(2)(a), those constitute grounds which
would strike at the very heart of the arbitral proceedings. The
grounds for setting aside which are set forth in clause (a) strike
at the very foundation of validity of arbitration proceedings.
Sub-Clauses (i) to (v) thus principally constitute grounds
which would render the arbitration proceedings void ab initio.
Although the Section 34(2)(a)(iv) ground for setting aside also
falls in the same genre of a fundamental invalidity, the
Legislature has sought to temper the potential fallout of the
award being set aside in toto on that score. The Proviso to sub-
clause (iv) seeks to address a comprehensibly conceivable
situation where while some parts of the award may have dealt
with non-arbitrable issues or disputes falling outside the scope
of the reference, its other components or parts constitute an
adjudication which could have been validly undertaken by the
AT. The Proviso thus seeks to address such a situation and
redeems as well as rescues the valid parts of an award. This
saves the parties from the spectre of commencing arbitral
proceedings all over and from scratch in respect of all issues
including those which could have validly formed part of the
arbitration.
39. The grounds for setting aside encapsulated in Section
34(2)(b) on the other hand relate to the merits of the challenge
that may be raised in respect of an award and really do not
deal with fundamental invalidity. However, the mere fact that
the Proviso found in sub-clause (iv) of Section 34(2)(a) is not
replicated or reiterated in clause (b) of that provision would
not lead one to conclude that partial setting aside is considered
alien when a court is considering a challenging to an award on
a ground referable to that clause. In fact, the Proviso itself
provides a befitting answer to any interpretation to the
contrary. The Proviso placed in Section 34(2)(a)(iv) is not
only an acknowledgment of partial setting aside not being a
concept foreign to the setting aside power but also of parts of
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the award being legitimately viewed as separate and distinct.
The Proviso itself envisages parts of an award being
severable, capable of segregation and being carved out. The
Proviso is, in fact, the clearest manifestation of both an award
being set aside in part as well as an award comprising of
distinct components and parts.
40. Undoubtedly, an award may comprise a decision rendered
on multiple claims. Each claim though arising out of a
composite contract or transaction may be founded on distinct
facts and flowing from separate identifiable obligations. Just
as claims may come to be preferred resting on a particular
contractual right and corresponding obligation, the decision
which an AT may render on a particular claim could also be
based on a construction of a particular covenant and thus stand
independently without drawing sustenance on a decision
rendered in the context of another. If such claims be separate,
complete and self-contained in themselves, any decision
rendered thereon would hypothetically be able to stand and
survive irrespective of an invalidity which may taint a
decision on others. As long as a claim is not subordinate, in
the sense of being entwined or interdependent upon another, a
decision rendered on the same by the AT would constitute an
award in itself. While awards as conventionally drawn,
arranged and prepared may represent an amalgam of decisions
rendered by the AT on each claim, every part thereof is, in fact,
a manifestation of the decision rendered by it on each claim
that may be laid before it. The award rendered on each such
claim rules on the entitlement of the claimant and the right
asserted in that regard. One could, therefore, validly, subject
of course to the facts of a particular case, be entitled to view
and acknowledge them as binding decisions rendered by the
AT on separate and distinct claims.
41. The Court notes in this regard that Mr. Mukhopadhaya,
Mr. Rajshekhar Rao, learned senior counsels as well as Mr.
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Ashim Sood had urged that while an award as ultimately
rendered may contain findings on numerous claims, the
decision rendered in respect of each such claim is entitled to
be viewed as an award in itself. This, according to learned
counsels, clearly flows from the power of the AT to not just
render a final award but also and in the course of arbitral
proceedings render interim awards in respect of various
claims. It was rightly pointed out by learned counsels that each
such decision on a claim could stand independently and be
final and binding in itself. Those findings or decisions in
relation to various claims that stand placed before the AT may
each constitute an award itself and the operative directions
framed representing the disposition of all such claims. As was
rightly contended by Mr. Mukhopadhaya, the declaration with
respect to entitlement and the award of a money claim
consequent thereto would be liable to be viewed as
independent Arbitral Awards. Mr. Sood had chosen to describe
such a disposition of claims as being an “agglomeration” of
awards. The Court accords its emphatic and wholehearted
acceptance to the aforenoted submissions and comes to the
conclusion that an award is thus liable to be viewed and
understood accordingly. It thus comes to conclude that each
such decision rendered by an AT could be validly viewed as
the decision rendered on a particular claim and thus
constituting an independent award in itself.
42. Once an award is understood as comprising of separate
components, each standing separately and independent of the
other, there appears to be no hurdle in the way of courts
adopting the doctrine of severability and invoking a power to
set aside an award partly. The power so wielded would
continue to remain one confined to “setting aside” as the
provision bids one to do and would thus constitute a valid
exercise of jurisdiction under Section 34 of the Act.
Conclusion:
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G. Undoubtedly, an award may comprise a decision rendered
on multiple claims. Each claim though arising out of a
composite contract or transaction may be founded on distinct
facts and flowing from separate identifiable obligations. Just
as claims may come to be preferred resting on a particular
contractual right and corresponding obligation, the decision
which an AT may render on a particular claim could also be
based on a construction of a particular covenant and thus stand
independently without drawing sustenance on a decision
rendered in the context of another. If such claims be separate,
complete and self-contained in themselves, any decision
rendered thereon would hypothetically be able to stand and
survive irrespective of an invalidity which may taint a
decision on others. As long as a claim is not subordinate, in
the sense of being entwined or interdependent upon another, a
decision rendered on the same by the AT would constitute an
award in itself.
H. While awards as conventionally drawn, arranged and
prepared may represent an amalgam of decisions rendered by
the AT on each claim, every part thereof is, in fact, a
manifestation of the decision rendered by it on each claim that
may be laid before it. The award rendered on each such claim
rules on the entitlement of the claimant and the right asserted
in that regard. One could, therefore, validly, subject of course
to the facts of a particular case, be entitled to view and
acknowledge them as binding decisions rendered by the AT on
separate and distinct claims.
I. Once an award is understood as consisting of separate
components, each standing separately and independent of the
other, there appears to be no hurdle in the way of courts
adopting the doctrine of severability and invoking a power to
set aside an award partly. The power so wielded would
continue to remain one confined to “setting aside” as the
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provision bids one to do and would thus constitute a valid
exercise of jurisdiction under Section 34 of the Act.
L. The power to partially sever an offending part of the
award would ultimately depend on whether the said
decision is independent and distinct and whether an
annulment of that part would not disturb or impact any
other finding or declaration that may have been returned
by the AT. The question of severability would have to be
decided bearing in mind whether the claims are
interconnected or so intertwined that one cannot be
segregated from the other. This for the obvious reason that
if the part which is sought to be set aside is not found to
stand independently, it would be legally impermissible to
partially set aside the award. A partial setting aside should
not lead to a component of the award being rendered
vulnerable or unsustainable. It is only when the award
relates to a claim which is found to stand on its own and
its setting aside would not have a cascading impact that
the Court could consider adopting the aforesaid mode.
M. The Court is thus of the firm opinion that the power to set
aside an award in part would have to abide by the
considerations aforenoted mindful of the imperatives of
walking a line which would not dislodge or disturb another
part of the award. However as long as the part which is
proposed to be annulled is independent and stands unattached
to any other part of the award and it could be validly incised
without affecting the other components of the award, the
recourse to partial setting aside would be valid and justified.
(Emphasis supplied)

153 . The views expressed in the judgment, referred to hereinabove, are
correct and the power to set aside will include the power to partially set
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aside and sever the portions of the award which fall foul of Section 34
subject to the riders engrafted hereinabove.
ABANDONMENT OF CLAIMS - COMPROMISE ARRIVED AT
BETWEEN THE PARTIES:
154 . Situation may arise where claims for which awards have been
granted may be abandoned or parties may arrive at compromises
contrary to the terms of the award. If the compromise has the effect
only of severing a standalone portion of the award with it being not
inseparably intertwined with any other portion, a Section 34 Court can
give effect to compromise and sever that portion of the award in
accordance with the principles of severability set out hereinabove.
155 . Equally, with regard to abandonment or giving up of claims by a
successful party, the same principle will apply. However, if the aspects
are not severable and the abandonment/giving up has the effect of
impinging upon the award and is inseparably intertwined and
permeates the warp and woof of the award, then the option available to
the Section 34 Court is to set aside the award. In case of settlements
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which are not severable, the option will be to dismiss the Section 34
application as not pressed, in view of the settlement arrived at.
156. I have since had the benefit of reading the judgment of the
Hon’ble Chief Justice. In my judgment, I have independently given my
reasons on each of the issues arising herein. The judgment of the
Hon’ble Chief Justice grants power to the Section 34 Court to modify
the post-award interest. I am not able to agree with the said view for
the reasons stated hereinabove. Equally, the judgment of the Hon’ble
Chief Justice permits the exercise of power under Article 142 of the
Constitution of India to modify the award, though it has been stated in
the judgment that the power must be exercised with caution. Here
again, I am not able to agree with the said view for the reasons stated
in my judgment.
CONCLUSION :-
(a) The Courts exercising power under Section 34 and Courts hearing
appeals thereunder have no power to “modify” an award.
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(b) The power to modify is not a lesser power to that of the power to
set aside, as the two operate in separate spheres and are not of the same
genus.
(c) The inherent power under Section 151 C.P.C. cannot be used to
modify awards as it will be contrary to the express power mentioned in
Section 34. Similarly, there is no scope for applying the doctrine of
implied power to modify awards.
(d) Article 142 of the Constitution of India will not be exercised by
this Court to modify awards passed by arbitrators as it is well settled
that the Article 142 power cannot be used to give a go by to the
substantive statutory provision.
(e) Interest awarded also cannot be modified in exercise of powers of
setting aside and the course of action under Section 34(4) will have to
be adopted as discussed in the judgment.
(f) Hakeem (supra) is not per incuriam insofar as it held that a
Section 34 Court cannot modify the award and will be read with the
only exception made in this judgment now. On the principle of actus
curiae neminem gravabit (act of Court shall prejudice no one)
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computation, clerical and typographical errors or other errors of similar
nature is permissible to be corrected by the Section 34 Court, in terms
of the holding above.
(g) Kinnari Mullick (supra) does not lay down the correct law
insofar as it holds that the request under Section 34(4) to the Court by
a party to grant an opportunity to the Arbitral Tribunal to resume
proceedings or to take such other action has to be in writing. Even an
oral request under Section 34(4) can be entertained by the Court.
(h) The power under Section 34(4) can be exercised by the Court Suo
Moto also under the circumstances set out hereinabove.
(i) A Court under Section 34 and the Courts hearing appeals
thereafter have the power to “sever” parts of the award in exercise of
the powers of setting aside awards under Section 34. However, while
severing, the parameters set out hereinabove and flowing from the
judicial precedents discussed therein have to be followed.
ANSWERS TO THE REFERENCE:-
157. In view of the discussion hereinabove, the reference is answered
in the following terms.
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Question No. 1 - As set out in the body of the judgment, while
exercising power under Section 34 of the A&C Act and consequently
the Courts in the appellate hierarchy do not have the power to modify
the arbitral award.
Question No. 2 - Modification and severance are two different
concepts while modification is not permitted under Section 34,
severance of the award falling foul of Section 34 is permissible in
exercise of powers under Section 34. Such a power of severance is also
available to the courts in the appellate hierarchy to the Section 34
Court.
Question No. 3 & 4 - The power to set aside will not include the power
to modify since the power to modify is not a lesser power subsumed in
the power to set aside and, as held hereinabove, the power to set aside
and power to modify do not emanate from the same genus and are
qualitatively different powers in the context of the A&C Act.
Question No. 5 - The judgment in Hakeem (supra) , insofar as it holds
that a Section 34 Court has no power to modify the award, lays down
the correct law. The only exception made in this judgment is with
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regard to the power to carry out corrections in computational errors,
clerical errors or typographical errors and any other errors of similar
nature. This is based on the principle of actus curiae neminem gravabit
(act of court shall prejudice no one).
158 . Appreciation is recorded for the painstaking efforts put in by the
learned Solicitor General and all the Learned Senior
Counsels/Counsels who addressed arguments and to the teams assisting
them.
159 . The reference is disposed of in the above terms.

……….........................J.
[ K. V. VISWANATHAN ]


New Delhi,
th
30 April, 2025.

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