NEW DELHI: Momentum for expeditious adjudication of high-stakes corporate disputes through arbitration notwithstanding, the Union govt on Thursday requested a five-judge bench of the Supreme Court to enable courts to modify arbitral awards, instead of exercising its existing power to quash them, to save parties from undergoing fresh arbitration process.
Solicitor general Tushar Mehta told a bench of Chief Justice Sanjiv Khanna and Justices B R Gavai, Sanjay Kumar, K V Viswanathan and A G Masih that the Indian Arbitration and Conciliation Act, 1996, like the statutes in the US, the UK, Singapore, Australia and Canada, favoured minimal interference by the judiciary, except to quash unjust awards.
In contrast, other jurisdictions permitted courts to modify an award, by tweaking certain portions of the award to save the parties from going through the arbitration process afresh, Mehta said and asked for Indian courts to be similarly empowered by an authoritative pronouncement from the constitution bench of the Supreme Court.
“It is essential to have a little broader judicial oversight over arbitral awards since an almost minimalistic inference approach may have resulted in some shockingly unsustainable awards escaping judicial scrutiny since it may not fall strictly within the four corners of the grounds mentioned under Section 34 of the Act,” Mehta said.
“Absence of modification powers often results in unnecessary litigation, compelling parties to undergo de novo arbitration where partial corrections could have sufficed, thereby affecting speedy dispute resolution. Further, courts may have to set aside entire awards even when a minor correction would suffice,” he added.
The CJI-led judge bench is examining whether courts have the power to modify an arbitration award by exercising its powers under Sections 34 and 37 of the 1996 Act; and, the contours and scope of the modification power and in what circumstances it would be exercised.
The SG said the legal framework preceding the 1996 Act had vested courts with the power to modify, remit and set aside arbitral awards. Senior advocate Arvind Datar supported the SG in empowering courts, through judicial interpretation of Section 34, to modify arbitral awards. “Relegating the parties to fresh arbitration proceedings in case an award is set aside is against the legislative intent of expeditious disposal,” he said.