Holding

Courts exercising jurisdiction under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 do not have the power to modify an arbitral award; they may only correct clerical/computational errors, sever invalid portions, or remit under Section 34(4).

Summary

The Supreme Court was asked to resolve a long‑standing controversy over whether courts exercising jurisdiction under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 can modify an arbitral award. The issue arose from the earlier decision in Project Director, NHAI v. M. Hakeem, where the Court held that no power to modify exists, a view contested by several judgments of two‑ and three‑judge benches. After a detailed analysis of the statutory language, the legislative intent, comparative foreign law, and the doctrine of severability, the Court held that a Section 34 court may only correct obvious clerical, computational or typographical errors and may sever the invalid portion of an award, but it cannot vary or modify the substantive terms of the award. The Court also clarified the limited scope of Section 34(4) for remanding awards and rejected the use of Article 142 to override the Act. Consequently, the reference was disposed of, confirming that the Hakeem judgment correctly states the law.

Issues considered

Whether the powers of the Court under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996 include the power to modify an arbitral award
Whether such power to modify can be exercised only where the award is severable
Whether the power to set aside an award under Section 34, being a larger power, subsumes the power to modify the award and to what extent
Whether the power to modify can be read into the power to set aside an award under Section 34
Whether the judgment in Project Director, NHAI v. M. Hakeem laid down the correct law

Legislation cited

Arbitration and Conciliation Act, 1996s. 31, s. 33, s. 34, s. 34(2A), s. 34(2)(a)(iv), s. 34(3), s. 34(4), s. 37, s. 43, s. 48, s. 5
Code of Civil Procedure, 1908s. 151
Constitution of Indias. Article 142
Contract Act, 1872s. 28
National Highways Act, 1956

Headnote

Issue for Consideration In ‡M. Hakeem and Anr.’s case, this Court held that while exercising powers u/s.34 of the Arbitration and Conciliation Act, 1996, a Court hearing the petition had no power to “modify” the Award, of two judges and three judges of this Court have either modified or accepted modification of the arbitral awards. In view of the divergent and contrasting judicial opinions as regards the power of the court u/s.34 to modify an arbitral award, the matter has been placed before the Constitution

Subjects

Modification of arbitral awardSection 34Arbitration and Conciliation ActSeverability of awardsArticle 142Post‑award interestNew York ConventionInherent powers of courtParty autonomyRemand under Section 34(4)Judicial intervention in arbitration

Judgment

[2025] 4 S.C.R. 2080 : 2025 INSC 605

Gayatri Balasamy
v.
M/s ISG Novasoft Technologies Limited
(Civil Appeal No(s). 6178-6179 of 2025)
30 April 2025
[Sanjiv Khanna,* CJI, B.R. Gavai, Sanjay Kumar,
K.V. Viswanathan* and Augustine George Masih, JJ.]

Issue for Consideration
In ‡M. Hakeem and Anr.’s case, this Court held that while exercising
powers u/s.34 of the Arbitration and Conciliation Act, 1996, a Court
hearing the petition had no power to “modify” the Award, whereas
other benches of two judges and three judges of this Court have
either modified or accepted modification of the arbitral awards. In
view of the divergent and contrasting judicial opinions as regards
the power of the court u/s.34 to modify an arbitral award, the
matter has been placed before the Constitution Bench to decide
the questions referred.
The questions referred are: whether the powers of the Court
u/ss.34 and 37 of the 1996 Act include the power to modify an
arbitral award; whether such power can be exercised only where
the award is severable, and a part thereof can be modified; whether
the power to set aside an award u/s.34, being a larger power, will
include the power to modify an arbitral award and to what extent;
whether power to modify an award can be read into the power to
set aside an award u/s.34; and whether the judgment of this Court
in ‡M. Hakeem’s case lay down the correct law.

Headnotes†
Arbitration and Conciliation Act, 1996 – s.34 – Application for
setting aside arbitral award – Power of the court to modify an
award – Limited power of modification, if can be located in s.34:
Held: [per Sanjiv Khanna, CJI (for himself and for B.R. Gavai,
Sanjay Kumar and Augustine George Masih, JJ.)] Court has a
limited power u/ss.34 and 37 to modify the arbitral award – This
limited power may be exercised-when the award is severable, by
severing the “invalid” portion from the “valid” portion of the award; by

* Author
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Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited

correcting any clerical, computational or typographical errors which
appear erroneous on the face of the record; by modifying post award
interest in some circumstances; and/or exercise of power u/Art.142
is permitted, albeit, the power must be exercised with great care and
caution and within the limits of the constitutional power. [Para 85]
Held: (per K.V. Viswanathan, J.) (Dissenting) Courts exercising
power u/s.34 and Courts hearing appeals thereunder have no
power to “modify” an award – While modification is not permitted
u/s.34, severance of the award falling foul of s.34 is permissible in
exercise of powers u/s.34 – Power to set aside will not include the
power to modify since power to modify is not a lesser power to that
of the power to set aside – Furthermore, inherent power u/s.151
CPC cannot be used to modify awards as it will be contrary to
the express power mentioned in s.34 – Also there is no scope for
applying the doctrine of implied power to modify awards – Art.142
will not be exercised by this Court to modify awards passed by
arbitrators – Interest awarded also cannot be modified – ‡Hakeem’s
case is not per incuriam, it lays down the correct law insofar as
it held that s.34 Court cannot modify the award and will be read
with the only exception made. [Para 156]

Arbitration and Conciliation Act, 1996 – s.34 – Application for
setting aside arbitral award – Doctrine of merger – New York
Convention Awards – Power of modification u/s.34 – Affect
on International Commercial Arbitration Regime:
Held: [per Sanjiv Khanna, CJI (for himself and for B.R. Gavai,
Sanjay Kumar and Augustine George Masih, JJ.)] Once s.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 – It cannot be said
that court orders partially setting aside or modifying an award
would render the amended award unenforceable under the New
York Convention. [Para 66]
Held: [per K.V. Viswanathan, J. (Dissenting)] In UK, Singapore,
New Zealand and Kenya, 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 would hitherto be read in the modified form – 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
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Conventions – If the award is modified by the s.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 – Enforcement of foreign
judgements and enforcement of foreign awards are distinct legal
concepts – Furthermore, since there is no power u/s.34 court to
modify, in the absence of a statutory enablement, not necessary
to go into the aspect of the applicability of the doctrine of merger.
[Paras 121, 123, 125]

Arbitration and Conciliation Act, 1996 – s.34 – Application for
setting aside arbitral award – Post-Award Interest – Power of
the court to declare or modify interest – Use of power u/s.34(4):
Held: [per Sanjiv Khanna, CJI (for himself and for B.R. Gavai,
Sanjay Kumar and Augustine George Masih, JJ.)] For the
post award interest in terms of s.31(7)(b), the courts will retain
the power to modify the interest where the facts justify – In the
absence of grant of post award interest in the award, the court
also possesses the power to grant post award interest – U/s.31(7)
(b), the legislature has established a standard rate of interest to
guide the arbitrator’s discretion to determine the post-award interest
rate – Unless there are special and specific reasons, the rate of
interest stipulated by the statute is to be applied – Furthermore, it
is appropriate for the s.34 court to have the authority to intervene
and modify the post-award interest if the facts and circumstances
justify – Post-award interest can be scrutinized by courts – Court
has power to both increase or decrease the post-award interest
rate – However, the court, 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. [Paras 74, 76-78]
Held: [per K.V. Viswanathan, J. (Dissenting)] 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 u/s.34 cannot modify the interest – 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 – 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. [Para 135]
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Constitution of India – Art.142 – Supreme Court’s power to
do complete justice – Power to modify an arbitral award, if
exercisable u/Art.142:
Held: [per Sanjiv Khanna, CJI. (for himself and for B.R. Gavai,
Sanjay Kumar and Augustine George Masih, JJ.)] Power
u/Art.142 is to be exercised by this Court but with great care
and caution – It enables the court to do complete justice in any
cause or matter pending before it – Exercise of power has to be
in consonance with the fundamental principles and objectives
behind the 1996 Act and not in derogation or in suppression
thereof – 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. [Paras 82, 84]
Held: [per K.V. Viswanathan, J. (dissenting)] In matters arising
out of s.34, Supreme Court will refrain from exercising its power
u/Art.142 as the Art. 142 power cannot be used to give a go by
to the substantive statutory provision – Courts exercising powers
u/s.34, which includes the appellate hierarchy cannot change, vary,
or qualify arbitrary awards – Such an exercise of power would
derogate from the core aspects of the A&C Act and would breach a
pre-eminent prohibition in the said Act – 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 would be
antithetical to arbitration as an alternative and efficacious mode of
dispute resolution – Arbitration and Conciliation Act, 1996 – s.34.
[Paras 113-115, 156]

Arbitration and Conciliation Act, 1996 – s.34, proviso to s.34(2)
(a)(iv) – Severability of awards – Power to set aside an award,
if inclusive of the power to partially set it aside:
Held: [per Sanjiv Khanna, CJI (for himself and for B.R. Gavai,
Sanjay Kumar and Augustine George Masih, JJ.] Proviso to
s.34(2)(a)(iv) permits courts to sever the non-arbitrable portions of
an award from arbitrable ones – Power conferred under the proviso
is clarificatory in nature – Authority to sever the “invalid” portion of
an arbitral award from the “valid” portion, while remaining within
the narrow confines of s.34, is inherent in the court’s jurisdiction
when setting aside an award – Authority to set aside an arbitral
award necessarily encompasses the power to set it aside in part,
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rather than in its entirety – Partial setting aside may not be feasible
when the “valid” and “invalid” portions are legally and practically
inseparable – “Valid” and “invalid” portions must not be inter-
dependent or intrinsically intertwined – Power of partial setting
aside should be exercised only when the valid and invalid parts
of the award can be clearly segregated without any correlation
between valid and invalid parts. [Paras 33-36]
Held: [per K.V. Viswanathan, J. (Supplementing)] Severance
as a concept is recognised intrinsically in s.34 itself – When there
are several claims adjudicated and if awards on a few claims fall
foul of s.34, such standalone claims falling foul of s.34 can be
set aside as long as they are capable of being severed without
affecting the other parts of the award – If the claims falling foul
of s.34 are not inseparably intertwined with the good portion of
the award, the award can be severed – Power to set aside will
include the power to partially set aside the award and sever the
portions of the award which fall foul of s.34 subject to the riders
engrafted. [Paras 146, 153]

Arbitration and Conciliation Act, 1996 – ss.33, 34 – Application
for setting aside arbitral award – Power of the court to
modify an award – Correction of computational, clerical and
typographical errors, or any other error of similar nature –
Actus curiae neminem gravabit:
Held: [per Sanjiv Khanna, CJI. (for himself and for B.R.
Gavai, Sanjay Kumar and Augustine George Masih, JJ.)]
Notwithstanding s.33, a Court reviewing an award u/s.34
possesses the authority to rectify/modify 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 powers inherent to the court, even
when not explicitly granted by the legislature – 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 s.34 – Powers are intrinsically connected as they are part
and parcel of the jurisdiction exercised by the court – Such power
must not be conflated with the appellate jurisdiction of a higher court
or the power to review a judgment of a lower court. [Paras 49, 54]
Held: [per K.V. Viswanathan, J. (Supplementing)] s.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 – Ordinarily computational error, clerical or
[2025] 4 S.C.R. 2085

Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited

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 u/s.33 or having moved the arbitral tribunal has been
obstinate in not correcting, a Court in s.34 to uphold the maxim
actus curiae neminem gravabit can invoke power and correct
computational errors, clerical or typographical errors or any other
similar errors without modifying, altering or adding to the original
award. [Paras 139, 141]

Arbitration and Conciliation Act, 1996 – ss.34(4) and 37 – Power
u/ss.34(4) and 37 – Suo moto exercise of s.34(4) – Modification
versus remitting:
Held: [per Sanjiv Khanna, CJI (for himself and for B.R. Gavai,
Sanjay Kumar and Augustine George Masih, JJ.] If uncertainty
obscures the exercise of modification powers, the courts must not
modify the award, instead, should avail their remedial power and
remand the award to the tribunal u/s.34(4) for reconsideration of
specific aspects – It cannot be said that remand powers make
modification unnecessary – They are distinct powers and are to
be exercised differently – s.34(4) does not authorize the arbitral
tribunal to rewrite the award on merits or to set it aside – Primary
objective is to preserve the award if the identified defect can be
cured, thereby avoiding the need to set aside the award – If the
award suffers from serious acts of omission, commission, substantial
injustice, or patent illegality, the same may not be remedied through
an order of remand – 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. [Paras 55, 56, 58, 60, 62]
Held: [per K.V. Viswanathan, J. (Supplementing)] Ordinarily the
stage of s.34(4) would arise when the Court has put the award
through the test of fire under the prior clauses of s.34 and entertains
the opinion that there are grounds for setting aside the arbitral
award – Power to remit u/s.34(4) can be exercised for undoing
the curable defects – s.34(4) is the safety valve provided in the
1996 Act by the legislature to prevent awards being set aside
and to offer a chance to the arbitral tribunal to adopt a course
correction – Court is even Suo Moto empowered to invoke powers
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u/s.34(4) in accordance with the parameters set out – All that s.34
mentions is a request being made and there is no prescription that
the request should be in writing. [Paras 128, 131, 132, 134, 136]

Arbitration and Conciliation Act, 1996 – s.34 – National
Highways Act, 1956 – Modification of arbitral award under
the NHAI Act – Permissibility:
Held: [per Sanjiv Khanna, CJI (for himself and for B.R. Gavai,
Sanjay Kumar and Augustine George Masih, JJ.)] Jurisdiction
conferred u/s.34 does not distinguish between statutory and
non-statutory arbitration in terms of the scope of courts’ power of
review – Submission that s.34 should be expansively interpreted
to permit modification of awards under the NHAI Act, particularly
court should be allowed to modify quantum of compensation as
the Act involves statutory arbitration, is untenable in law. [Para 70]
Held: [per K.V. Viswanathan, J. (Supplementing)] Interpretation
of s.34 cannot be bifurcated, and one set of interpretations for
commercial arbitrations and another for statutory arbitrations to
which the A&C Act is applicable, cannot be offerred – Submission
that differential interpretation of the A&C Act for some statutory
arbitrations alone is rejected. [Para 119]

Arbitration and Conciliation Act, 1996 – s.34 – Application
for setting aside arbitral award – Post-award settlement, if
allowed – Abandonment of claims for which awards have
been granted, or compromise arrived at between the parties
contrary to the terms of the award – Effect:
Held: [per Sanjiv Khanna, CJI (for himself and for B.R. Gavai,
Sanjay Kumar and Augustine George Masih, JJ.)] Parties are
entitled to enter into an agreement or settlement even after an
award is pronounced – Law of the land does not bar the parties
from entering into a post award or post decree settlement – Such
settlement must be verifiable and in accordance with law, the
settlement is not a result of undue influence, force, fraud, coercion,
etc. [Para 80]
Held: [per K.V. Viswanathan, J. (Supplementing)] In case
of settlements which are not severable, the option would be
to dismiss the s.34 application as not pressed, in view of the
settlement arrived at – If the compromise has the effect only
of severing a standalone portion of the award with it being not
[2025] 4 S.C.R. 2087

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inseparably intertwined with any other portion, s.34 Court can
give effect to compromise and sever that portion of the award in
accordance with the principles of severability – Same principle
would apply with regard to abandonment or giving up of claims by
a successful party – However, if the aspects are not severable and
the abandonment/giving up has the effect of impinging upon the
award and is inseparably intertwined, then the option available to
the s.34 Court is to set aside the award. [Paras 154, 155]
Arbitration and Conciliation Act, 1996 – s.34 – Application for
setting aside arbitral award – Power of recourse to a court
against arbitral award u/s.34 – Scope and ambit – Discussed.
[Paras 27-30]

Arbitration and Conciliation Act, 1996 – s.34 – Application for
setting aside arbitral award – Permissibility and scope of the
court’s modification powers, within the parameters of s.34 –
Difference between setting aside the award and modification
of the award:
Held: [per Sanjiv Khanna, CJI (for himself and for B.R. Gavai,
Sanjay Kumar and Augustine George Masih, JJ.)] Modification
and setting aside of the award have different consequences, the
former alters the award, while the latter annuls it – Recognizing
any modification power will not inevitably lead to an examination
of the merits of the dispute – It completely depends on the extent
of the modification powers recognised. [Para 39]

Arbitration and Conciliation Act, 1996 – s.34 – Application for
setting aside arbitral award – Limited power of modification
in s.34:
Held: [per Sanjiv Khanna, CJI. (for himself and for B.R. Gavai,
Sanjay Kumar and Augustine George Masih, JJ.)] 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 –
s.34 limits recourse to courts to an application for setting aside
the award, however, s.34 does not restrict the range of reliefs
that the court can grant, while remaining within the contours of
the statute – Power cannot contradict the essence or language of
s.34 – 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
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in this manner limited and restricted power of severing an award
implies a power of the court to vary or modify the award – Silence
in the 1996 Act, should not be read as a complete prohibition –
Thus, u/s.34 court can apply the doctrine of severability and modify
a portion of the award while retaining the rest – Power of judicial
review u/s.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 s.34. [Paras 41-46]

Arbitration and Conciliation Act, 1996 – ss.34, 43(4) –
Application for setting aside arbitral award – Limitation period –
Calculation of, within which the fresh arbitration or court
proceedings to be commenced:
Held: [per Sanjiv Khanna, CJI (for himself and for B.R. Gavai,
Sanjay Kumar and Augustine George Masih, JJ.)] Once an award
is set aside, it becomes null and void, but the original dispute may
still require resolution – s.43(4), enables the parties to initiate fresh
arbitration or court proceedings in relation to the dispute – s.43(4)
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 – Time during which the award is in force is not counted –
s.43(4) provides liberty for the parties to invoke either arbitration
or court proceedings, as applicable, following the annulment of
the award – Limitation Act, 1963. [Para 81]

Arbitration and Conciliation Act, 1996 – s.34 – Application
for setting aside arbitral award under – If words “and, to the
extent” and the words “or modified”, and “to the extent”can
be read into s.34:
Held: [per K.V. Viswanathan, J.] It cannot be said that words
“and, to the extent” and the words “or modified”, and “to the
extent” be read into parts of s.34 – 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 – s.34 speaks of ‘recourse’ being taken against
an arbitral award – s.34 clearly states that an arbitral award may
be “set aside” by the Court “only if” the prescribed circumstances
are established – 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 – Combined use of the
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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, is to file an application to set aside
or annul the award by establishing the grounds prescribed therein –
ss.5, 33. [Paras 70, 73-76]

Arbitration and Conciliation Act, 1996 – s.34 – Application
for setting aside arbitral award – Plea that hardship will be
caused if power to modify is not read in s.34:
Held: [per K.V. Viswanathan, J.] Submission that absurdities will
result and hardship will be caused if power to modify is not read in
cannot be accepted since s.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 – 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 – 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.
[Paras 77, 81]

Arbitration and Conciliation Act, 1996 – s.34 – Application for
setting aside arbitral award – Contrast between the appellate
power under Code of Civil Procedure and powers available
to s.34 Court:
Held: [per K.V. Viswanathan, J.] Wide power under CPC is not
available to a Court u/s.34 while entertaining an application to set
aside the arbitral award – Court does not sit in appeal over the
arbitral award – Arbitration has its origin in the contract between
parties where parties have stepped out of the ordinary judicial
process and in that sense there is an ouster of the jurisdiction
of the Court’s power to adjudicate – s.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 –
Code of Civil Procedure, 1908. [Paras 84, 87-89]
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Arbitration and Conciliation Act, 1996 – s.34 – Application for
setting aside arbitral award – Power to ‘modify’, if a lesser power:
Held: [per K.V. Viswanathan, J.] Qualitative nature of an appellate
power is different from the power u/s.34 – 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 – They do not
have similar characteristics – It cannot be said that power to set
aside is larger and power to modify is smaller or lesser without
keeping the context in which s.34 occurs in the Act and without
considering the very ecosystem of the arbitration process – Thus,
the 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”. [Paras 91, 93]

Arbitration and Conciliation Act, 1996 – s.34 – If Court can
lay down guardrails for s.34:
Held: [per K.V. Viswanathan, J.] There are no judicially manageable
standards and this Court cannot venture into formulating guidelines
as myriad situations will arise when s.34 applications are heard
before the appropriate Courts – It would amount to judicial legislation
which the Court is loathe to do. [Para 117]

Arbitration and Conciliation Act, 1996 – s.34 – Application for
setting aside arbitral award – Judgment in ‡Hakeem’s case,
if per incuriam:
Held: [per K.V. Viswanathan, J.] Judgement in Hakeem’s case
rightly interpreted the provisions of A&C Act and is in no manner
conflict with any ratio of a co-equal or larger Bench – It cannot be
said that Hakeem’s case is per incuriam for not noticing Western
Geco’s case – Other judgments prior to Hakeem’s case have not
discussed the aspect whether power to modify exists in a s.34
Court – Hakeem’s case insofar as it held that a s.34 Court has no
power to modify the award, is not per incuriam. [Paras 126, 127]

Judicial process – Contractual ouster of normal judicial process:
Held: [per K.V. Viswanathan, J.] When parties agree to arbitrate,
they consciously agreed to step out of the normal judicial process
and submit their dispute to a third party – Parties are also conscious
that when they agree to arbitrate, their rights and liabilities would
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be governed by the regulating Act, A&C Act – Thus, there is a
contractual ouster subject to the terms of the A&C Act of the normal
judicial process – Arbitration and Conciliation Act, 1996. [Para 82]

Legal maxims – Application, when:
Held: [per K.V. Viswanathan, J.)] Legal maxims to be deployed
after ascertaining context – Mechanical deployment of the legal
maxims unless they apply on all fours to a case to be discouraged –
Legal maxims, no doubt, are very useful tools but its application
has to be with great caution – There would be uncertainity and
sometimes legal maxims if deployed without adequate attention
may lead to pitfalls. [Para 97]

Code of Civil Procedure, 1908 – s.151 – Inherent powers of
the Court u/s.151, if available to modify awards:
Held: [per K.V. Viswanathan, J.] s.34 is couched in clear terms
and the parameters for setting aside the award are clearly laid
out in mandatory terms – Inherent powers under CPC cannot be
exercised in a manner to be in conflict with the expressly provided
powers by the legislature – It cannot be said that s.34 recourse is
taken in the normal Civil Courts as defined in s.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 – Arbitration and Conciliation Act, 1996. [Para 99]

Doctrines – Doctrine of implied power, if vest in s.34 Court a
power to modify the award:
Held: [per K.V. Viswanathan, J.] 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 – No scope for applying
the doctrine of implied power to modify awards – No implied power
needed to effectuate the final power provided u/s.34 and, there is
no impediment to exercise the final power. [Paras 102, 103]

Arbitration – Arbitration process – Concept of party autonomy:
Held: [per K.V. Viswanathan, J.] Party autonomy enables parties
to dispense with technical formalities and procedures of National
Court proceedings, contractually – They agree to abide by the
2092 [2025] 4 S.C.R.

Supreme Court Reports

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 – s.34 Court
cannot be invited to enter into the merits – Limited recourse available
is the one provided u/s.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 s.34 – Arbitration and Conciliation Act, 1996 – s.34. [Para 105]

Case Law Cited

In the judgment of Sanjiv Khanna, CJI
Shilpa Sailesh v. Varun Sreenivasan [2023] 5 SCR 165 : (2023)
14 SCC 231 – followed.
Kinnari Mullick and Another v. Ghanshyam Das Damani [2017] 6
SCR 657 : (2018) 11 SCC 328 – held not correct law.
Gayatri Balasamy v. ISG Novasoft Technologies Limited, 2024
SCC OnLine SC 1681; McDermott International Inc. v. Burn
Standard Co. Ltd. and Others [2006] Supp. 2 SCR 409 : (2006)
11 SCC 181; Pure Helium India (P) Limited v. Oil & Natural Gas
Commission [2003] Supp. 4 SCR 561 : (2003) 8 SCC 593; Mukand
Ltd. v. Hindustan Petroleum Corpn. Ltd. [2006] Supp. 1 SCR 182 :
(2006) 9 SCC 383; Vedanta Limited v. Shenzhen Shandong
Nuclear Power Construction Company Limited [2018] 12 SCR 829 :
(2019) 11 SCC 465; Oil and Natural Gas Corporation Limited v.
Western GECO International Limited [2014] 12 SCR 1 : (2014) 9
SCC 263; Numaligarh Refinery Ltd. v. Daelim Industrial Co. Ltd.
[2007] 9 SCR 724 : (2007) 8 SCC 466; Tata Hydro-Electric Power
Supply Co. Ltd. and Others v. Union of India (2003) 4 SCC 172;
Ssangyong Engineering and Construction Company Limited v.
National Highways Authority of India (NHAI) [2019] 7 SCR 522 :
(2019) 15 SCC 131; Oriental Structural Engineers Private Limited v.
State of Kerala [2021] 4 SCR 137 : (2021) 6 SCC 150; Secretary,
Irrigation Department, Government of Orissa and Others v. G.C. Roy
[1991] Supp. 3 SCR 417 : (1992) 1 SCC 508; ‡Project Director,
National Highways No. 45 E and 220 National Highways Authority
of India v. M. Hakeem and Another [2021] 5 SCR 368 : (2021)
9 SCC 1; Ahmedabad St. Xavier College Society and Another v.
[2025] 4 S.C.R. 2093

Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited

State of Gujarat and Another [1975] 1 SCR 173 : (1974) 1 SCC
717; Pratap Chamaria v. Durga Prasad Chamaria, AIR 1925 PC
293; Grindlays Bank Ltd. v. Central Government Industrial Tribunal
and Others [1981] 2 SCR 341 : (1980) Supp. SCC 420; Budhia
Swain and Others v. Gopinath Deb and Others [1999] 2 SCR 1189 :
(1999) 4 SCC 396; Century Textiles Industries Limited v. Deepak
Jain and Another [2009] 4 SCR 750 : (2009) 5 SCC 634; Dyna
Technologies Private Limited v. Crompton Greaves Limited [2019]
15 SCR 295 : (2019) 20 SCC 1; I-Pay Clearing Services Private
Limited v. ICICI Bank Limited [2022] 2 SCR 893 : (2022) 3 SCC
121; Brace Transport Corporation of Monrovia, Bermuda v. Orient
Middle East Lines Limited, Saudi Arabia and Others [1993] Supp.
3 SCR 227 : (1995) Supp. 2 SCC 280 – referred to.

In the judgment of K.V. Viswanathan, J.
‡
Project Director, National Highways No. 45 E and 220 National
Highways Authority of India v. M. Hakeem and Anr. [2021] 5 SCR
368 : (2021) 9 SCC 1 – held correct law.
R.S.Jiwani v. Ircon International Ltd., 2009 SCC OnLine Bom
2021; Saptarishi Hotels Pvt. Ltd. v. National Institute of Tourism
& Hospitality Management, 2019 SCC OnLine TS 1765; National
Highways Authority of India v. Trichy Thanjavur Expressway Ltd.,
2023 SCC OnLine Del 5183 – approved.
CIT, Central Calcutta v. National Taj Traders [1980] 2 SCR
268 : (1980) 1 SCC 370; Centrotrade Minerals & Metal Inc. v.
Hindustan Copper Ltd. [2016] 9 SCR 83 : (2017) 2 SCC
228 – held inapplicable.
Kinnari Mullick and Another v. Ghanshyam Das Damani [2017] 6
SCR 657 : (2018) 11 SCC 328 – held not correct law.
McDermott International Inc. v. Burn Standard Co. Ltd. [2006]
Supp. 2 SCR 409 : (2006) 11 SCC 181; Interplay Between
Arbitration Agreements under Arbitration and Conciliation Act, 1996
& Stamp Act, 1899, In re (2024) 6 SCC 1; Tata Hydro-Electric Power
Supply Co. Ltd. and Others v. Union of India (2003) 4 SCC 172;
J.C. Budhraja v. Chairman, Orissa Mining Corporation Ltd. and
Another [2008] 1 SCR 821 : (2008) 2 SCC 444; Madhya Pradesh
Power Generation Company Limited and Another v. Ansaldo
Energia Spa and Another (2018) 16 SCC 661; Vedanta Limited v.
Shenzhen Shandong Nuclear Power Construction Company
2094 [2025] 4 S.C.R.

Supreme Court Reports

Limited [2018] 12 SCR 829 : (2019) 11 SCC 465; Shakti Nath
and Others v. Alpha Tiger Cyprus Investment No.3 Limited and
Others (2020) 11 SCC 685; Oriental Structural Engineers Private
Limited v. State of Kerala [2021] 4 SCR 137 : (2021) 6 SCC 150;
Ramesh Rout v. Rabindra Nath Rout [2011] 16 SCR 254 : (2012)
1 SCC 762; Juggilal Kamlapat v. General Fibre Dealers Ltd.,
1961 SCC OnLine SC 402; Dyna Technologies Private Limited v.
Crompton Greaves Limited [2019] 15 SCR 295 : (2019) 20 SCC
1; Shamnsaheb M. Multtani v. State of Karnataka [2001] 1 SCR
514 : (2001) 2 SCC 577; Manohar Lal Chopra v. Rai Bahadur
Rao Raja Seth Hiralal, 1961 SCC OnLine SC 17; Padam Sen v.
State of Uttar Pradesh [1961] 1 SCR 884; Savitri v. Govind Singh
Rawat (1985) 4 SCC 337; Kunhayammed & Others v. State of
Kerala and Another [2000] Supp. 1 SCR 538 : (2000) 6 SCC 359;
National Insurance Co. Ltd. v. Pranay Sethi and Others [2017] 13
SCR 100 : (2017) 16 SCC 680; Oil and Natural Gas Corporation
Ltd. v. Western Geco International Ltd. [2014] 12 SCR 1 : (2014)
9 SCC 263; I-Pay Clearing Services (P) Ltd. v. ICICI Bank Ltd.
[2022] 2 SCR 893 : (2022) 3 SCC 121; Som Datt Builders Ltd. v.
State of Kerala [2009] 14 SCR 611 : (2009) 10 SCC 259; North
Delhi Municipal Corporation v. M/s. S.A. Builders Ltd., 2024 INSC
988; U.P. SRTC v. Imtiaz Hussain [2005] Supp. 5 SCR 725 :
(2006) 1 SCC 380; J.G. Engineers (P) Ltd. v. Union of India &
Anr. [2011] 8 SCR 486 : (2011) 5 SCC 758; Vishaka and Others v.
State of Rajasthan and Others [1997] Supp. 3 SCR 404 : (1997)
6 SCC 241; Oil and Natural Gas Corporation Limited v. Afcons
Gunanusa, JV 2022 SCC OnLine SC 1122; Supreme Court Bar
Association v. Union of India and Another [1998] 2 SCR 795 :
(1998) 4 SCC 409; Shilpa Sailesh v. Varun Sreenivasan [2023]
5 SCR 165 : (2023) 14 SCC 231 – referred to.
Gayatri Balaswamy v. ISG Novasoft Technologies Limited, 2014
SCC OnLine Mad 6568 – referred to.
Berkey v. Third Avenue Railway Co. 244 N.Y, 84; AKN v. ALC
2015 SGCA 63 – referred to.

Books and Periodicals Cited

In the judgment of Sanjiv Khanna, CJI
Sir Michael J. Mustill & Stewart C Boyd QC, Commercial Arbitration,
p. 617 (2nd ed. 2001) – referred to.
[2025] 4 S.C.R. 2095

Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited

In the judgment of K.V. Viswanathan, J.
“Mustill & Boyd” on Commercial Arbitration; P. Ramanatha Aiyar’s
Advanced Law Lexicon Third Edition – referred to.

List of Acts

In the judgment of Sanjiv Khanna, CJI
Arbitration and Conciliation Act, 1996; Constitution of India; National
Highways Act, 1956; Code of Civil Procedure, 1908; Singapore
Arbitration Act, 2001; United Kingdom Arbitration Act, 1996; United
States of America Federal Arbitration Act, 1925; France Code of Civil
Procedure; Australia Commercial Arbitration Act, 2017 (Australian
Capital Territory); New Zealand Arbitration Act, 1996; Canada
Arbitration Act, 1991 Ontario; South Africa Arbitration Act, 42 of 1965;
Hong Kong Arbitration Ordinance; Kenya Arbitration Act, 1995; Brunei
Darussalam Arbitration Order, 2009; Philippines Republic Act No.
9285 (2004); Philippines Alternative Dispute Resolution Act, 2004;
Philippines Republic Act No. 876; Srilanka Civil Procedure Code.

In the judgment of K.V. Viswanathan, J.
Arbitration and Conciliation Act, 1996; Arbitration Act of 1899;
Arbitration Act, 1940; Constitution of India; National Highways
Act, 1956; Code of Civil Procedure, 1908; Contract Act, 1872;
Bharatiya Nagarik Suraksha Sanhita, 2023; English Arbitration Act;
New Zealand Arbitration Act, 1996; Kenyan Arbitration Act, 1995.

List of Keywords

In the judgment of Sanjiv Khanna, CJI
Modification of arbitral award; Omne majus continet in se minus;
Contours of s.34 Arbitration and Conciliation Act, 1996; Severability
of awards; Kompetenz-kompetenz; “Valid” portion of award;
“Invalid” portion of award; Power of partial setting aside; Minimal
judicial interference; Guardrails of power u/s.34 of the A & C Act;
Doctrine of implied power; Remand of award; Hardship to parties;
‡
M. Hakeem’s case; Power to “modify” the award; Divergent and
contrasting judicial opinions as regards the power of the court
u/s.34 to modify arbitral award; Power to set aside an award
u/s.34 of the A & C Act, being larger power; Limited power of
modification; Doctrine of merger; New York Convention Awards;
2096 [2025] 4 S.C.R.

Supreme Court Reports

Power of modification u/s.34; International Commercial Arbitration
Regime; Post-Award Interest; Power to modify an arbitral award,
if exercisable u/Art.142 of the Constitution; Power to set aside
award, if inclusive of the power to partially set it aside; Correction
of computational, clerical and typographical errors, or any other
error of similar nature; Suo moto exercise of s.34(4) of the A & C
Act; Modification of arbitral award under the National Highways
Act; Post-award settlement, if allowed; Power of recourse to a
court against arbitral award; Difference between setting aside
the award and modification of the award; Calculation of limitation
period, within which the fresh arbitration or court proceedings to be
commenced; UNCITRAL Model Law on International Commercial
Arbitration, 1985; United Nations Convention on the Recognition
and Enforcement of Foreign Arbitral Awards, 1958

In the judgment of K.V. Viswanathan, J.
Modification of arbitral award; Principle of Kompetenz-Kompetenz;
Severability of awards; Safety valve; Legislative intent; UNCITRAL
Model law; No casus omissus; ejusdem generis; Hardship to parties;
Contractual ouster of normal judicial process; Omne majus continet
in se minus; Appellate power; Absence of express legislative power;
Lesser power; Ecosystem of arbitration process; Legal maxims;
Inherent powers of Court u/s.151 CPC, if available to modify awards;
Doctrine of implied power; Doctrine of implied power, if vest in s.34
Court a power to modify the award; Computation, typographical
and clerical errors; Remand of award; Party autonomy; Statutory
arbitration; Differential interpretation; New York Convention Awards;
Statutory provisions of other countries; Award of interest; Actus curiae
neminem gravabit; Compromise between parties; Abandonment of
claims; M. Hakeem and Anr.’s case, if per incuriam; Power to modify
an arbitral award u/Art.142 of the Constitution; Power to ‘modify’,
if lesser power; Guardrails for s.34 of the A & C Act.

Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No(s). 6178-6179
of 2025
From the Judgment and Order dated 08.08.2019 of the High Court
of Judicature at Madras in OSA Nos. 59 and 181 of 2015
With
Civil Appeal Nos. 6192, 6180, 6181, 6182-6183, 6308, 6184-6191
of 2025, Civil Appeal Nos. 8183 and 8184 of 2016
[2025] 4 S.C.R. 2097

Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited

Appearances for Parties
Advs. for the Appellant:
Ms. Archana Pathak Dave, A.S.G., Arvind Datar, Sr. Adv., Nishanth
Patil, M.V. Mukunda, Ms. Hina Shaheen, Mithun Shashank, M.V.
Swaroop, Hredai Sriram, Ms. Payal Chawla, Arijit Dey, Sudarshan
Lamba, Tanmay Mehta, Prashant Singh-II, Shyam Gopal, Vishnu
Shankar Jain, Jagdish Chandra, Ms. Astha Singh, Vaibhav Dang,
Amrendra Kumar Mehta, Sahil A. Garg Narwana, Ranpal Awana, D.N.
Ojha, Debmalya Banerjee, Rohan Sharma, Vikas Gogne, Satyam
Chaturvedi, Agastya Shelat, Ms. Tanvi Seth, M/s. Karanjawala & Co.,
T. Harish Kumar, Navneet Dugar, Bharathi Subramanan, Shubham
P. Chopra, Jinendra Jain, Ajay Jain, Krishna Sharma, Ms. Bijay
Lakshmi, M.N. Mishra, Manoj Gautam, Ms. Shreya Jain, Ms. Mitika
Choudhary, Harshit Batra, Manoj, Ashwin Shanker, Sanjay Grover,
Ms. Ridhi Nyati, Ms. Vanshika Jain, Shivlal Singh, K.V. Mohan.
Advs. for the Respondent:
Tushar Mehta, Secretary General, Vikramjit Banerjee, A.S.G.,
Darius J. Khambata, Gaurav Pachnanda, Sumeet Pushkarna,
Ritin Rai, Benny P. Thomas, Gourab Banerji, Saurabh Kirpal,
Prashanto Chandra Sen, Naresh Markanda, Sr. Advs., Kanu
Agarwal, Surjendu Sankar Das, Ms. Annie Mittal, Kanu Agarwal,
Nikilesh Ramachandran, Lovekesh Aggarwal, Sagar Kumar
Pradhan, Saket Agarwal, Ms. Neelam Rathore, Shubham Seth,
Ms. Prakruti Malhotra, Kanu Agarwal, Ankur Mittal, Abhay Gupta,
Ms. Nidhi Mittal, Digvijay Dam, Ms. Ikshita Parihar, Sanjivan
Chakraborty, Rakshit Ranjan, Ms. Jutirani Talukdar, Ankur Sahoo,
Aviraj Pandey, Kaustubh Prakash, Ms. Hita Sharma, Ms. Prachi
Bhatia, Ravi Prakash Singh, Ms. Tanya Singh, Aditya Mehta, C.
Rashmikant, Mahesh Agarwal, Ankur Saigal, Ms. S. Lakshmi Iyer,
Rohan Dakshini, Ms. Namrata Shah, Ms. Suprriya Lopes, Ms.
Sailee Dhayalkar, Shashwat Singh, Jai Sanyal, Ms. Vidhi Shah,
E.C. Agrawala, Ms. Garima Bajaj, Mohit Goel, Sidharth Goel,
Raghavendra Mohan Bajaj, Ms. Karmanya Dev Sharma, Ms.
Aishna Jain, Shashwat Mukherjee, Ishaan Pratap Singh, Ms. Nikita
Jaitly, Siddharth Kapoor, Ms. Shreya Bansal, Nikhilesh Krishnan,
Gaurav Varma, Varun Chugh, Sudeep Vijayan, Abhishek Bhushan
Singh, Swapnil Joshi, Ms. Aishwarya Mishra, Abel Tom Benny,
Aabhas Kshetarpal, Ms. Ritika Sinha, Ms. Ankita Gupta, Dhiliban
Varadarajan, Debasis Jena, Prakash Ranjan Nayak, George Pothan
Poothicote, Ms. Manisha Singh, Ms. Jyoti Singh, Prakarsh Kumar,
2098 [2025] 4 S.C.R.

Supreme Court Reports

Rakesh Talukdar, T.S. Sundaram, Subhro Mukherjee, Mohit Pandey,
Ms. Venkata Supreeth, Ms. Raka Chatterjee, Arunava Mukherjee,
Ms. Manmeet Kaur, Debmalya Banerjee, Rohan Sharma, Gurtej
Pal Singh, Jai Dogra, Ms. Liza Vohra, Dhruv, M/s. Karanjawala
& Co., Sudiep Shrivastava, Pranav Sachdeva, Jatin Bhardwaj,
Ms. Rashi Goswami, Tanmay Yadav, Ms. Smrithi Sreekumar,
Ms. Prerna Mukherjee, Abhay Nair, Atul Sharma, Abhinav Sharma,
Ms. Abhilasha Sharma, Ayush Srivastava, Ankur Sharma, Mayank
Bansal, Alok Tripathi, Sudarshan Lamba, Ms. Sathavi Asthana,
Arun Singh, Paavan Awasthi, Saurabh Pandey, Ms. Manvi Sharma,
Shubhendu Anand, Navanjay Mahapatra, Rohan Markanda, Mrs.
Harsheen Madan Palli, Chritarth Palli, Saket Sikri, Naman Joshi,
Ajay P. Singh Kullar, Ms. Ritika Vohra, Ms. Charu Ambwani,
Ms. Manisha Ambwani, Akash Deep Singh, Ms. Amber Tickoo, Sonal
K Singh, Parth Sidhwani, Ms. Sukanya Lal, Saurav Agrawal, Ms.
Sonali Jaitley Bakhshi, Jaiyesh Bakhshi, Ravi Tyagi, Ms. Manmilan
Sidhu, Manish Bhatt, Atharva Koppal, Ms. Neetu Devrani, Abhijay
Basu, Babit Jamwal, Ms. Prachi Dubey, Anshuman Chowdhury,
Ajay Sharma, Ms. Mahek Upadhaya, Aarya Bhatt, Ms. Soloni
Paliwal, Harsh Khabar, Sarthak Nayak, Ms. Anushruti, Rahul G.
Tanwani, Anantha Narayana M.G., Shubhendu Anand, Tadimalla
Bhaskar Gowtham, Ayush Anand, Sudipto Sircar, Aditya Shekhar,
Rishi Ashok, P.D.V. Srikar, Aman Shukla, Alabhya Dhamija, Aditya
Kashyap, Neeleshwar Pavani, M. Chandrakanth Reddy, Soayib
Qureshi, Suvigya Awasthy, Sameer Jain, Vivek Joshi, Rohan
Gulati, Deepesh Raj, Abhishek Kumar Rao, Shailesh Suman,
Shashibhushan P. Adgaonkar, Pallav Mongia, Abubhav Mishra,
Shashank Dwivedi.

Judgment / Order of the Supreme Court

Judgment

Sanjiv Khanna, CJI

A three-Judge Bench of this Court, vide order dated 20th February
2024, directed that the Special Leave Petitions in Gayatri Balasamy v.
ISG Novasoft Technologies Limited,1 be placed before the Chief

1 2024 SCC OnLine SC 1681.
[2025] 4 S.C.R. 2099

Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited

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
NHAI vs. M. Hakeem,2 followed in Larsen Air Conditioning
and Refrigeration Company vs. Union of India,3 and SV
Samudram vs. State of Karnataka,4 lay down the correct
law, as other benches of two Judges (in Vedanta Limited
vs. Shenzden Shandong Nuclear Power Construction
Company Limited,5 Oriental Structural Engineers Pvt.
Ltd. vs. State of Kerala,6 and M.P. Power Generation Co.
Ltd. vs. Ansaldo Energia Spa)7 and three Judges (in J.C.
Budhraja vs. Chairman, Orissa Mining Corporation Ltd.,8
Tata Hydroelectric Power Supply Co. Ltd. vs. Union of
India,9 and Shakti Nath vs. Alpha Tiger Cyprus Investment
No.3 Ltd.10) of this Court have either modified or accepted
modification of the arbitral awards under consideration?”

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.
8 (2008) 2 SCC 444.
9 (2003) 4 SCC 172.
10 (2020) 11 SCC 685.
2100 [2025] 4 S.C.R.

Supreme Court Reports

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 Act, 1996,11 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.
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. Judicial Divergence on Modification Powers
6. In McDermott International Inc. v. Burn Standard Co. Ltd. and
Others, 12 this Court explained the difference between judicial
interference permitted by the 1996 Act vis-à-vis the Arbitration and
Conciliation Act, 194013. 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

11 Hereinafter referred to as, “1996 Act”.
12 (2006) 11 SCC 181.
13 Hereinafter referred to as, “1940 Act”.
[2025] 4 S.C.R. 2101

Gayatri Balasamy v. M/s ISG Novasoft Technologies Limited

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 under Article 142
of the Constitution14 to vary the award, reducing the interest 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 Gas Commission,15 where the rate of interest was
reduced from 18% per annum to 6% per annum, and Mukand Ltd. v.
Hindustan Petroleum Corpn. Ltd.,16 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 Company Limited,17 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

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
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.
2102 [2025] 4 S.C.R.

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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.
9. In Oil and Natural Gas Corporation Limited v. Western GECO
International Limited,18 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. Daelim Industrial Co. Ltd.,19 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. Ltd. and Others v. Union of India,20 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.
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 therein.21 The Court does not possess

18 (2014) 9 SCC 263.
19 (2007) 8 SCC 466.
20 (2003) 4 SCC 172.
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.
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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.
National Highways Authority of India (NHAI), 22 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 interfere merely because the
arbitrator lacked a “judicial approach”.23 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.
14. In Oriental Structural Engineers Private Limited v. State of
Kerala,24 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 Others v. G.C. Roy,25 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
Highways Authority of India v. M. Hakeem and Another,26 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

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.
24 (2021) 6 SCC 150.
25 (1992) 1 SCC 508.
26 (2021) 9 SCC 1.
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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 Law on International Commercial Arbitration, 1985,27 which
does not allow courts to modify awards. Unlike the broader powers
available under the 1940 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. Arguments Raised

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 of
Foreign Arbitral Awards, 195828, 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.

27 Hereinafter referred to as, “Model Law”.
28 Hereinafter referred to as, “New York Convention”.
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Since Section 34 allows for the setting aside of an 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 v. State of Gujarat and Another,29 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 Highways
Act, 195630. 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 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

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

C. Analysis
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 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.
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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 7531 or Section 8132 of
the 1996 Act; (ii) when it is in contravention with the fundamental
policy of Indian law;33 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.
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.

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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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” part(s)
of the award while setting aside the “invalid” ones.34 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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36. The Privy Council, in Pratap Chamaria v. Durga Prasad Chamaria,35
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 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

35 AIR 1925 PC 293.
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former alters the award, while the latter annuls it.36 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
40. A core principium of arbitration, an Alternative Dispute Resolution37
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 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

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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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 essence
or language of Section 34. The court would not exercise appellate
power, as envisaged by Order XLI of the Code of Civil Procedure,
190838.
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 equivalent to an appellate process.39 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 question of law.40 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 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.

38 Hereinafter referred to as, “Code”.
39 Sir Michael J. Mustill & Stewart C Boyd QC, Commercial Arbitration, p. 617 (2nd ed. 2001).
40 Ibid.
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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 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 Others,41 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

41 (1980) Supp. SCC 420.
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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
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. Gopinath Deb and Others42. 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.
53. Under Section 152 of the Code,43 a court executing a decree has
the power to correct clerical or arithmetic mistakes in judgments,

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.”
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orders, or decrees arising from any accidental slips or omissions.
This Court, in Century Textiles Industries Limited v. Deepak
Jain and Another,44 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 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 in a manner warranted

44 (2009) 5 SCC 634.
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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 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,
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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.
61. This Court, in Kinnari Mullick and Another v. Ghanshyam Das
Damani,45 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.
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.
63. Our reasoning does not breach the principle of party autonomy.46
Neither does it confer appellate powers on the courts. Instead, it
adheres strictly to the parameters stipulated in Sections 34 and 37

45 (2018) 11 SCC 328.
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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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 authority under
Sections 34 and 37 of the 1996 Act is limited by the silhouette of
Section 34.
64. In Dyna Technologies Private Limited v. Crompton Greaves
Limited,47 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.
65. In I-Pay Clearing Services Private Limited v. ICICI Bank
Limited,48 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 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.

47 (2019) 20 SCC 1.
48 (2022) 3 SCC 121.
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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, 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 Limited, Saudi Arabia and Others,49 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) –

49 (1995) Supp. 2 SCC 280.
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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.

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 the award till the date
of payment. The explanation defines the expression ‘current rate
of interest’.
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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 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.
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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, 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
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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) 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.
83. In Shilpa Sailesh v. Varun Sreenivasan,50 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
the fundamental rights, secularism, federalism, and other

50 (2023) 14 SCC 231.
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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.

Conclusions
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;
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.
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Annexure - 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
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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—
(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.
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(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
(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
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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.
Explanation 2.— For the avoidance of doubt, the test as
to whether there is a contravention with the fundamental
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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
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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;
(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
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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—
(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
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(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.
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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Annexure - B

S. Country Relevant Provision
No.
1. Singapore Sections 47 and 49 of the Singapore
Arbitration Act, 2001
47. No judicial review of award
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.
49. Appeal against award
(1) A party to arbitral proceedings may (upon notice to the
other parties and to the arbitral tribunal) appeal to the
Court on a question of law arising out of an award made
in the proceedings.
(2) Despite subsection (1), the parties may agree to exclude
the jurisdiction of the Court under this section and an
agreement to dispense with reasons for the arbitral
tribunal’s award is to be treated as an agreement to
exclude the jurisdiction of the Court under this section.
(3) An appeal must not be brought under this section
except —
(a) with the agreement of all the other parties to the
proceedings; or
(b) with the permission of the Court.
(4) The right to appeal under this section is subject to the
restrictions in section 50.
(5) Permission to appeal is to be given only if the Court is
satisfied that —
(a) the determination of the question will substantially
affect the rights of one or more of the parties;
(b) the question is one which the arbitral tribunal was
asked to determine;
(c) on the basis of the findings of fact in the award—
(i) the decision of the arbitral tribunal on the
question is obviously wrong; or
(ii) the question is one of general public
importance and the decision of the arbitral
tribunal is at least open to serious doubt; and
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(d) 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.
(6) An application for permission to appeal under this section
must identify the question of law to be determined and
state the grounds on which it is alleged that permission
to appeal should be granted.
(7) The permission of the appellate court is required for any
appeal from a decision of the Court under this section
to grant or refuse permission to appeal.
(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.
(10) The decision of the Court on an appeal under this
section is to be treated as a judgment of the Court for
the purposes of an appeal to the appellate court.
(11) The appellate court may give permission to appeal against
the decision of the Court in subsection (10) only if the
question of law before it is one of general importance,
or one which for some other special reason should be
considered by the appellate court.
2. United Section 30, 67(3), 68 and 69(7) of the
Kingdom Arbitration Act, 1996
30. Competence of tribunal to rule on its own
jurisdiction.
(1) Unless otherwise agreed by the parties, the arbitral
tribunal may rule on its own substantive jurisdiction,
that is, as to—
(a) whether there is a valid arbitration agreement,
(b) whether the tribunal is properly constituted, and
(c) what matters have been submitted to arbitration in
accordance with the arbitration agreement.
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(2) Any such ruling may be challenged by any available
arbitral process of appeal or review or in accordance
with the provisions of this Part.
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.
(4) The leave of the court is required for any appeal from
a decision of the court under this section.
68. Court may set aside award
(1) A party to arbitral proceedings may (upon notice to
the other parties and to the tribunal) apply to the court
challenging an award in the proceedings on the ground of
serious irregularity affecting the tribunal, the proceedings
or the award.
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) Serious irregularity means an irregularity of one or
more of the following kinds which the court considers
has caused or will cause substantial injustice to the
applicant—
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(a) failure by the tribunal to comply with section 33
(general duty of tribunal);
(b) the tribunal exceeding its powers (otherwise than
by exceeding its substantive jurisdiction: see
section 67);
(c) failure by the tribunal to conduct the proceedings
in accordance with the procedure agreed by the
parties;
(d) failure by the tribunal to deal with all the issues
that were put to it;
(e) any arbitral or other institution or person vested
by the parties with powers in relation to the
proceedings or the award exceeding its powers;
(f) uncertainty or ambiguity as to the effect of the
award;
(g) the award being obtained by fraud or the award or
the way in which it was procured being contrary
to public policy;
(h) failure to comply with the requirements as to the
form of the award; or
(i) any irregularity in the conduct of the proceedings
or in the award which is admitted by the tribunal
or by any arbitral or other institution or person
vested by the parties with powers in relation to
the proceedings or the award.
(3) If there is shown to be serious irregularity affecting the
tribunal, the proceedings or the award, the court may—
(a) remit the award to the tribunal, in whole or in part,
for reconsideration,
(b) set the award aside in whole or in part, or
(c) declare the award to be of no effect, in whole or in
part. The court shall not exercise its power to set
aside or to declare an award to be of no effect, 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.
(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
the tribunal) appeal to the court on a question of law
arising out of an award made in the proceedings.
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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.
(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—
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(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.
3. United Section 10 and 11 of the Federal Arbitration Act, 1925
States of
Section 10. Same; vacation; grounds; rehearing
America
(a) In any of the following cases the United States court in
and for the district wherein the award was made may
make an order vacating the award upon the application
of any party to the arbitration
(1) Where the award was procured by corruption,
fraud, or undue means.
(2) Where there was evident partiality or corruption
in the arbitrators, or either of them.
(3) Where the arbitrators were guilty of misconduct in
refusing to postpone the hearing, upon sufficient
cause shown, or in refusing to hear evidence
pertinent and material to the controversy; or of
any other misbehavior by which the rights of any
party have been prejudiced.
(4) Where the arbitrators exceeded their powers,
or so imperfectly executed them that a mutual,
final, and definite award upon the subject matter
submitted was not made.
(5) Where an award is vacated and the time within
which the agreement required the award to
be made has not expired the court may, in its
discretion, direct a rehearing by the arbitrators.
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(b) The United States district court for the district wherein
an award was made that was 6(10) issued pursuant
to section 590 of title 5 may make an order vacating
the award upon the application of a person, other than
a party to the arbitration, who is adversely affected or
aggrieved by the award, if the use of arbitration or the
award is clearly inconsistent with the factors set forth in
section 582 of Title 5.

Section 11. Same; modification or correction; grounds;
order
In either of the following cases the United States court
in and for the district wherein the award was made may
make an order modifying or correcting the award upon the
application of any party to the arbitration
(a) Where there was an evident material
miscalculation of figures or an evident material
mistake in the description of any person, thing,
or property referred to in the award.
(b) Where the arbitrators have awarded upon a
matter not submitted to them, unless it is a
matter not affecting the merits of the decision
upon the matter submitted.
(c) Where the award is imperfect in matter of form
not affecting the merits of the controversy.
The order may modify and correct the award, so as to effect
the intent thereof and promote justice between the parties.
4. France Article 1502 of Code of Civil Procedure
Article 1502
Application for revision of an arbitral award may be made in
the circumstances provided in Article 595 for court judgments,
and under the conditions set forth in Articles 594, 596, 597 and
601 through 603.
Application shall be made to the arbitral tribunal. However, if
the arbitral tribunal cannot be reconvened, application shall be
made to the Court of Appeal which would have had jurisdiction
to hear other forms of recourse against the award.
Article 595
An application for revision of a judgment may be made only
where:
1. it comes to light, after the judgment is handed
down, that it was obtained fraudulently by the
party in whose favour it was rendered;
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2. decisive evidence that had been withheld by
another party is recovered after the judgment was
handed down;
3. the judgment is based on documents that have
since been proven or have been held by a court
to be false;
4. the judgment is based on affidavits, testimonies
or oaths that have been held by a court to be
false.
In all four cases, an application for revision shall be admissible
only where the applicant was not able, through no fault of
his or her own, to raise such objection before the judgment
became res judicata.
5. Australia Section 34A of the Commercial Arbitration Act, 2017
(Australian Capital Territory)
34A Appeals against awards
(1) An appeal lies to the court on a question of law arising
out of an award if—
(a) the parties agree, before the end of the appeal
period referred to in subsection (6), that an appeal
may be made under this section; and
(b) the court grants leave.
(2) An appeal under this section may be brought by any of
the parties to an arbitration agreement.
(3) The court must not grant leave unless it is satisfied—
(a) the determination of the question will substantially
affect the rights of 1 or more of the parties; and
(b) the question is one which the arbitral tribunal was
asked to determine; and
(c) 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) 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.
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(4) An application for leave to appeal must 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 is to determine an application for leave to
appeal without a hearing unless it appears to the court
that a hearing is required.

(6) An appeal may not be made under this section after
3 months have elapsed from the date on which the
party making the appeal received the 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 (in this section referred to as the
appeal period).

(7) On the determination of an appeal under this section
the court may by order—

(a) confirm the award; or

(b) vary the award; or

(c) remit the award, together with the court’s
opinion on the question of law which was
the subject of the appeal, to the arbitrator
for reconsideration or, where a new arbitrator
has been appointed, to that arbitrator for
consideration; or

(d) set aside the award in whole or in part.

(8) The court must 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 arbitral tribunal for reconsideration.

(9) Where the award is remitted under subsection (7) (c) the
arbitrator must, unless the order otherwise directs, make
the award within 3 months after the date of the order.

(10) The court may make any leave which it grants under
subsection (3) (c) subject to the applicant complying
with any conditions it considers appropriate.

(11) Where the award of an arbitrator is varied on an
appeal under this section, the award as varied has
effect (except for this section) as if it were the award
of the arbitrator.
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6. New Section 5 and 6 of Schedule 2 (Additional optional rules
Zealand applying to arbitration), Arbitration Act, 1996
5. Appeals on questions of law
(1) Notwithstanding anything in articles 5 or 34 of Schedule 1,
any party may appeal to the High Court on any question
of law arising out of an award—
(a) if the parties have so agreed before the making
of that award; or
(b) with the consent of every other party given after
the making of that award; or
(c) with the leave of the High Court.
(2) The High Court shall not grant leave under subclause
(1)(c) unless it considers that, having regard to all the
circumstances, the determination of the question of law
concerned could substantially affect the rights of 1 or
more of the parties.
(3) The High Court may grant leave under subclause (1)(c)
on such conditions as it sees fit.
(4) On the determination of an appeal under this clause,
the High Court may, by order,—
(a) confirm, vary, or set aside the award; or
(b) remit the award, together with the High Court’s
opinion on the question of law which was the
subject of the appeal, to the arbitral tribunal for
reconsideration or, where a new arbitral tribunal
has been appointed, to that arbitral tribunal
for consideration,— and, where the award
is remitted under paragraph (b), the arbitral
tribunal shall, unless the order otherwise
directs, make the award not later than 3 months
after the date of the order.
(5) With the leave of the High Court, any party may appeal
to the Court of Appeal from any refusal of the High Court
to grant leave or from any determination of the High
Court under this clause.
(6) If the High Court refuses to grant leave to appeal under
subclause (5), the Court of Appeal may grant special
leave to appeal.
(7) Where the award of an arbitral tribunal is varied on an
appeal under this clause, the award as varied shall have
effect (except for the purposes of this clause) as if it were
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the award of the arbitral tribunal; and the party relying on
the award or applying for its enforcement under article
35(2) of Schedule 1 shall supply the duly authenticated
original order of the High Court varying the award or a
duly certified copy.
(8) Article 34(3) and (4) of Schedule 1 apply to an appeal
under this clause as they do to an application for the
setting aside of an award under that article.
(9) For the purposes of article 36 of Schedule 1,—
(a) an appeal under this clause shall be treated as an
application for the setting aside of an award; and
(b) an award which has been remitted by the High
Court under subclause (4)(b) to the original or a
new arbitral tribunal shall be treated as an award
which has been suspended.
(10) For the purposes of this clause, question of law—
(a) includes an error of law that involves an incorrect
interpretation of the applicable law (whether or not
the error appears on the record of the decision); but
(b) does not include any question as to whether
(i) the award or any part of the award was
supported by any evidence or any sufficient
or substantial evidence; and
(ii) the arbitral tribunal drew the correct factual
inferences from the relevant primary facts.
7. Canada Section 45 of the Arbitration Act, 1991 Ontario
45. Appeals
Appeal on question of law
(1) If the arbitration agreement does not deal with appeals
on questions of law, a party may appeal an award to the
court on a question of law with leave, which the court
shall grant only if it is satisfied that,
(a) the importance to the parties of the matters at
stake in the arbitration justifies an appeal; and
(b) determination of the question of law at issue will
significantly affect the rights of the parties. 1991,
c. 17, s. 45 (1).
Idem
(2) If the arbitration agreement so provides, a party may
appeal an award to the court on a question of law. 1991,
c. 17, s. 45 (2).
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Appeal on question of fact or mixed fact and law
(3) If the arbitration agreement so provides, a party may
appeal an award to the court on a question of fact or on
a question of mixed fact and law. 1991, c. 17, s. 45 (3).
Powers of court
(4) The court may require the arbitral tribunal to explain any
matter. 1991, c. 17, s. 45 (4).
Idem
(5) The court may confirm, vary or set aside the award
or may remit the award to the arbitral tribunal with the
court’s opinion on the question of law, in the case of an
appeal on a question of law, and give directions about
the conduct of the arbitration. 1991, c. 17, s. 45 (5).
Family arbitration award
(6) Any appeal of a family arbitration award lies to,
(a) the Family Court, in the areas where it has
jurisdiction under subsection 21.1 (4) of the Courts
of Justice Act;
(b) the Superior Court of Justice, in the rest of Ontario.
2006, c. 1, s. 1 (6).
8. South Section 31 of Arbitration Act 42 of 1965
Africa 31. Award may be made an order of court
(1) An award may, on the application to a court of competent
jurisdiction by any party to the reference after due notice
to the other party or parties, be made an order of court.
(2) The court to which application is so made, may, before
making the award an order of court, correct in the award
any clerical mistake or any patent error arising from any
accidental slip or omission.
(3) (3) An award which has been made an order of court
may be enforced in the same manner as any judgment
or order to the same effect.
9. Hong Section 5 of Schedule 2 (Provisions that may be
Kong Expressly Opted for or Automatically Apply) of Cap. 609
Arbitration Ordinance
5. Appeal against arbitral award on question of law
(1) Subject to section 6 of this Schedule, a party to arbitral
proceedings may appeal to the Court on a question of law
arising out of an award made in the arbitral proceedings.
(2) An agreement to dispense with the reasons for an arbitral
tribunal’s award is to be treated as an agreement to
exclude the Court’s jurisdiction under this section.
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(3) The Court must decide the question of law which is the
subject of the appeal on the basis of the findings of fact
in the award.
(4) The Court must not consider any of the criteria set out in
section 6(4)(c)(i) or (ii) of this Schedule when it decides
the question of law under subsection (3).
(5) On hearing 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 decision; or
(d) set aside the award, in whole or in part.
(6) If the award is remitted to the arbitral tribunal, in whole
or in part, for reconsideration, the tribunal must make a
fresh award in respect of the matters remitted—
(a) within 3 months of the date of the order for
remission; or
(b) within a longer or shorter period that the Court
may direct.
(7) The Court must 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 arbitral tribunal for reconsideration.
(8) The leave of the Court or the Court of Appeal is required
for any further appeal from an order of the Court under
subsection (5).
(9) Leave to further appeal must not be granted unless—
(a) the question is one of general importance; or
(b) the question is one which, for some other special
reason, should be considered by the Court of
Appeal.
(10) Sections 6 and 7 of this Schedule also apply to an appeal
or further appeal under this section.
10. Kenya Section 39 of Arbitration Act, 1995

39. Questions of law arising in domestic arbitration

(1) Where in the case of a domestic arbitration, the parties
have agreed that—
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(a) an application by any party may be made to a
court to determine any question of law arising in
the course of the arbitration; or
(b) an appeal by any party may be made to a court
on any question of law arising out of the award,
such application or appeal, as the case may be,
may be made to the High Court.
(2) On an application or appeal being made to it under
subsection (1) the High Court shall—
(a) determine the question of law arising;
(b) confirm, vary or set aside the arbitral award
or remit the matter to the arbitral tribunal for
re-consideration or, where another arbitral
tribunal has been appointed, to that arbitral
tribunal for consideration.
(3) Notwithstanding sections 10 and 35 an appeal shall lie
to the Court of Appeal against a decision of the High
Court under subsection (2)—
(a) if the parties have so agreed that an appeal shall
lie prior to the delivery of the arbitral award; or
(b) the Court of Appeal, being of the opinion that a
point of law of general importance is involved the
determination of which will substantially affect the
rights of one or more of the parties, grants leave
to appeal, and on such appeal the Court of Appeal
may exercise any of the powers which the High
Court could have exercised under subsection (2).
(4) An application or appeal under this section shall be
made within the time limit and in the manner prescribed
by the Rules of Court applicable, as the case may be,
in the High Court or the Court of Appeal.
(5) When an arbitral award has been varied on appeal under
this section, the award so varied shall have effect as
if it were the award of the arbitral tribunal concerned.
11. Brunei Sections 47 and 49 of the Arbitration Order, 2009
Darussalam 47. No judicial review of award

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 Order. Appeal against award
49. Appeal against award
(1) A party to arbitral proceedings may, upon notice to the
other parties and to the arbitral tribunal, appeal to the
Court on a question of law arising out of an award made
in the proceedings.
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(2) Notwithstanding subsection (1), the parties may agree to
exclude the jurisdiction of the Court under this section and
an agreement to dispense with reasons for the arbitral
tribunal’s award shall be treated as an agreement to
exclude the jurisdiction of the Court under this section.
(3) An appeal must 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.
(4) The right to appeal under this section is subject to the
restrictions in section 50.
(5) Leave to appeal is to be given only if the Court is satisfied
that —
(a) the determination of the question will substantially
affect the rights of one or more of the parties;
(b) the question is one which the arbitral tribunal was
asked to determine;
(c) on the basis of the findings of fact in the award—
(i) the decision of the arbitral tribunal on the
question is obviously wrong; or
(ii) the question is one of general public
importance and the decision of the arbitral
tribunal is at least open to serious doubt; and
(d) 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.
(6) 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.
(7) The leave of the Court shall be required for any appeal
from a decision of the Court under this section to grant
or refuse leave to appeal.
(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.
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(9) 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 arbitral tribunal for reconsideration.
(10) The decision of the Court on an appeal under this
section shall be treated as a judgment of the Court
for the purposes of an appeal to the Court of Appeal.
(11) The Court may give leave to appeal against the decision
of the Court in subsection (10) only if it considers that the
question of law before it is one of general importance,
or is one which for some other special reason should
be considered by the Court of Appeal.
12. Philippines Section 41 of the Republic Act No. 9285 (2004) or the
Alternative Dispute Resolution Act of 2004 read with
Section 25 of the Republic Act No. 876
41. Vacation Award
A party to a domestic arbitration may question the arbitral
award with the appropriate regional trial court in accordance
with the rules of procedure to be promulgated by the Supreme
Court only on those grounds enumerated in Section 25 of
Republic Act No. 876. Any other ground raised against a
domestic arbitral award shall be disregarded by the regional
trial court.
25. Grounds for modifying or correcting award
In any one of the following cases, the court must make
an order modifying or correcting the award, upon the
application of any party to the controversy which was
arbitrated:
(a) Where there was an evident miscalculation of
figures, or an evident mistake in the description
of any person, thing or property referred to in the
award; or
(b) Where the arbitrators have awarded upon a matter
not submitted to them, not affecting the merits of
the decision upon the matter submitted; or
(c) Where the award is imperfect in a matter of form
not affecting the merits of the controversy, and if it
had been a commissioner’s report, the defect could
have been amended or disregarded by the court.
The order may modify and correct the award so as to
effect the intent thereof and promote justice between
the parties.
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Section 46 of the Republic Act No. 9285 (2004), or the
Alternative Dispute Resolution Act of 2004
46. Appeal from Court Decisions on Arbitral Awards
A decision of the regional trial court confirming, vacating,
setting aside, modifying or correcting an arbitral award may
be appealed to the Court of Appeals in accordance with the
rules of procedure to be promulgated by the Supreme Court.
The losing party who appeals from the judgment of the court
confirming an arbitral award shall required by the appellant
court to post counterbond executed in favour of the prevailing
party equal to the amount of the award in accordance with the
rules to be promulgated by the Supreme Court.

31. Award may be made an order of court
(1) An award may, on the application to a court of competent
jurisdiction by any party to the reference after due notice
to the other party or parties, be made an order of court.
(2) The court to which application is so made, may, before
making the award an order of court, correct in the award
any clerical mistake or any patent error arising from any
accidental slip or omission.
(3) An award which has been made an order of court may
be enforced in the same manner as any judgment or
order to the same effect.
13. Sri Lanka Section 687 and 688 of the Civil Procedure Code
687. Application to set aside or correct the award
Within fifteen days from the date of receipt of notice of the
filing of the award any party to the arbitration may by petition
apply to the court to set aside the award, or to modify or to
correct the award, or to remit the award to the arbitrators for
reconsideration, on grounds mentioned in the following sections.
688. When court may correct 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, provided
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.
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Judgment*

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

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

* Ed. Note: Pagination as per the original Judgment.
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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

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.
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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, 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)
(iii) That enforcement is truncated was further clear
from Section 34(4) which provides that on receipt
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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 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)

ORDER OF REFERENCE: -
6. In the referral order of 20.02.2024, this Court, while framing certain
questions for consideration, observed as under:-
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“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 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
[2025] 4 S.C.R. 2155

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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 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.
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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.
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
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that the 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 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
2158 [2025] 4 S.C.R.

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proceedings will revive and 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 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
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parameters 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 “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
specific power to modify/vary in their respective arbitration statutes.
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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 specified therein. Learned SG referred to the 76th 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.
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 Committee, namely, the Vishwanathan Committee had only
recommended the statutory amendment.
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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 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 Court’s jurisdiction and
choose arbitration for its expediency and finality and that the “limited
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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 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.
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
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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 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 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
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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.
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 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
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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”.
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
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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 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
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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
(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
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
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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 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
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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;
(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
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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.
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.
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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 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 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.
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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 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.
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(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.”
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 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)
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(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.
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
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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.
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.
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(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)

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.
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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
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
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.
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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.
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 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.
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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 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;
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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 &amp; Boyce Mfg. Co.
Ltd., (2004) 3 SCC 447] In Bhaven 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
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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, 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 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
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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:-
“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
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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 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 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
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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.

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:
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“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 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.
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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).
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
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in situations where the order setting aside has findings impinging
on the validity of the arbitration agreement itself.
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:
“8. …..The intention of the legislature in making this change
in the consequences to follow the setting aside of an award
is clear in as much as the provision recognises that there
may be different kinds of arbitration agreements, some of
which might be exhausted by the reference already made
and the award following thereon which has been set aside
while others may be of a more comprehensive nature
and may contemplate continuation of the reference
relating to the same dispute or successive references
relating to different disputes covered by the arbitration
agreement. …..
……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 reference and order the
arbitration agreement to cease to have effect after taking
into account the reasons which have impelled it to set aside
the award and in another not to set aside the reference
with the result that the reference and the arbitration
agreement subsist; and if the arbitration agreement
provides for machinery to have further arbitration on
the same dispute or other disputes arising under the
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arbitration agreement it is permissible to have further
arbitration on the same dispute or other disputes. ….”
(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 altogether (for
instance, where there is no valid agreement to arbitrate,
where a party to the arbitration agreement was under
some incapacity or where the arbitral tribunal has not
been properly appointed) ... that would clearly be the
end of the enquiry and the tribunal would obviously not
be vested with jurisdiction to deal with the matter merely
because the award has been set aside by the court.
[emphasis in original]
52. We agree with this analysis. But save in this situation,
the arbitration agreement will generally survive the
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setting aside of an award. On this basis, it may be
open, subject to certain other limitations, to which
we will briefly turn, for a party which has successfully
obtained an award in the arbitration and then seen
that set aside by the court, to start a fresh arbitration.
This follows given that:
(a) The dispute has not yet been resolved since the
award has been set aside; and
(b) The arbitration agreement remains binding on the
parties as to how they will resolve their disputes.”
54. Against this background, we return to the possible
limitations that we alluded to at [52] above, which might
stand in the way of a party seeking to commence fresh
arbitration proceedings after an award was set aside. This
is by no means an exhaustive list but it seems to us that
there are at least three possibly significant matters that
would have to be considered, quite apart from practical
considerations of cost and time, which are mentioned in
some of the extracts from the academic commentaries
that we have referred to:
(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 time for
the commencement of proceedings by excluding from
consideration the period between the commencement
of the arbitration and the setting aside of the award.
We comment further on s 8A(2) below (at [64]–[67]).
(b) We have said that the arbitration agreement will
generally survive the setting aside of the award. This
would entail, however, the recommencement of fresh
arbitration proceedings and in general, one would
expect a new tribunal to be constituted. It is of course
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possible for both parties to agree to reconstitute the
previous tribunal as the new one. But in the absence
of such agreement, there remains the possibility that
objections might yet be taken by one of the parties
to any attempt by the other to re-appoint a member
of the previous tribunal, on the grounds that there
exist justifiable doubts as to the impartiality of the
prospective appointee by reason of his or her prior
involvement in the matter and in the award that has
been set aside. This will plainly be a fact-sensitive
inquiry and we say no more about this.
(c) We think it is inevitable that in attempting to
commence a fresh arbitration, consideration will have
to be given to the issue of res judicata. We deal with
this in the next section of this judgment.
(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.

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
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Civil Procedure, 1908 (C.P.C. for short) would ordinarily have been
available to the aggrieved parties.

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)

85. Order XLI of the CPC prescribes certain rules, some of which are
relevant herein. Rule 31, 32 and 33 are extracted hereinbelow:
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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)

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,
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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:
‘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.
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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 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.
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.
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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 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
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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 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
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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 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,
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(b) vary the award, or
(c) set aside the award in whole or in part.
(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.
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(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 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.
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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
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orders 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)

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
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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.

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
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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 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 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
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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 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
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can be adopted where time is of the essence, or tailor-
made dispute resolution mechanisms can be adopted in
particular commercial markets. More 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.
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
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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.
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).
“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
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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 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
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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 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
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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 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 the question of law should be permitted. Equally,
learned counsels contended that modification should be permitted
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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 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 National Highways Authority Act was given. It was contended
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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 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.
122. In particular, attention was drawn to Section 71 of the UK English
Arbitration Act which we deem it appropriate to set out hereinbelow:-
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“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 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
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& 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.

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 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.

# Ed. Note: “conflicting” instead of “conflict” in terms of subsequent corrigendum.
‡ Ed. Note: “Hakeem” instead of “We find Hakeem” in terms of subsequent corrigendum.
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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 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 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;
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(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.
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 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
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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
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
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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 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.
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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.
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)
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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 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 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
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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 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
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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 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?
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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.
“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
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moved under Section 33 or having moved the Arbitral Tribunal has
been obstinate in not correcting, a Court in Section 34 to uphold
the 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):
“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;”
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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, 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 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.”
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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 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.”
151. Sanjay Kumar J., (as His Lordship then was) in the High Court of
Judicature at Hyderabad for the State of Telangana in Saptarishi
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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 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
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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 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
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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.
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
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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:
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
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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 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
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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 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 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
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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.
(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) 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
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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.
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 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).
2236 [2025] 4 S.C.R.

Supreme Court Reports

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.

Result of the case: Reference disposed of.

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Headnotes prepared by: Nidhi Jain