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TMI Blog2025 (5) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... anu Agarwal, Adv. Mr. Ashwin Shanker, Adv. Mr. Sanjay Grover, Adv. Ms. Ridhi Nyati, Adv. Ms. Vanshika Jain, Adv. Mr. Shivlal Singh, Adv. Mr. K.V. Mohan, AOR Mr. Vaibhav Dang, Adv. Mr. Amrendra Kumar Mehta, AOR Ms. Anita Mahapatra, Adv. Ms. Gunjan Kumari, Adv. Mr. Jinendra Jain, AOR Mr. Ajay Jain, Adv. Mr. Krishna Sharma, Adv. Ms. Bijay Lakshmi, Adv. Mr. M.N. Mishra, Adv. Mr. Manoj Gautam, Adv. Mr. Kunaal Sharma, Adv. Mr. Akul Chalia, Adv. Mr. Harshit Batra, Adv. Mr. Mitika Choudhary, Adv. Ms. Shreya Jain, Adv. Mr. Akshat Jain, Adv. Mr. R.C. Bansal, Adv. Mr. T. Harish Kumar, AOR Mr. Bharathi Subramanian, Adv. Mr. Shubham P. Chopra, Adv. Mr. Arvind Datar, Sr. Adv. Mr. Nishanth Patil, AOR Mr. M.V. Mukunda, Adv. Mr. Mithun Shashank, Adv. Mr. M.V. Swaroop, Adv. Ms. Payal Chawla, Adv. Ms. Hina Shaheen, Adv. Mr. Arijit Dey, Adv. Mr. Manish K. Bishnoi, AOR Mr. Khubaib Shakeel, Adv For the Respondent : Mr. Saurabh Kirpal, Sr. Adv. Ms. Manmeet Kaur, Adv. Mr. Debmalya Banerjee, Adv. Mr. Rohan Sharma, Adv. Mr. Gurtej Pal Singh, Adv. Mr. Rohan Anand, Adv. Mr. Jai Dogra, Adv. Ms. Liza Vohra, Adv. Mr. Dhruv, Adv. M/s. Karanjawala & Co., AOR Mr. Naresh Markanda, Sr. Adv. Mr. Rohan Markanda, Adv. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Joshi, Adv. Ms. Ritika Vohra, Adv. Mr. Ajay P. Singh, Adv. Ms. Charu Ambwani, Adv. Mr. Guneet Sidhu, Adv. Mr. Priyal Goyal, Adv. Mr. Rahul, Adv. Ms. Amber Tickoo, Adv. Mr. Shivam Gera, Adv. Mr. Akashdeep Singh, Adv. Mr. Verdaan Jain, Adv. Ms. Manisha Ambwani, AOR Ms. Sukanya Lal, AOR Mr. Saurav Agrawal, Adv. Ms. Sonali Jaitley Bakhshi, Adv. Mr. Jaiyesh Bakhshi, Adv. Mr. Ravi Tyagi, AOR Mr. Mayank Mishra, Adv. Ms. Manmilan Sidhu, Adv. Mr. Manish Bhatt, Adv. Mr. Atharva Koppal, Adv. Ms. Neetu Devrani, Adv. Mr. Abhijay Basu, Adv. Mr. Babit Jamwal, Adv. Ms. Prachi Dubey, Adv. Mr. Anshuman Chowdhury, Adv. Mr. Ajay Sharma, Adv. Ms. Mahek Upadhaya, Adv. Mr. Arya Bhatt, Adv. Ms. Soloni Paliwal, Adv. Mr. Harsh Khabar, Adv. Mr. Sarthak Nayak, Adv. Ms. Anushruti, Adv. Mr. Darius J. Khambata, Sr. Adv. Mr. Aditya Mehta, Adv. Mr. C. Rashmikant, Adv. Mr. Mahesh Agarwal, Adv. Mr. Ankur Saigal, Adv. Ms. S. Lakshmi Iyer, Adv. Mr. Rohan Dakshini, Adv. Ms. Namrata Shah, Adv. Ms. Suprriya Lopes, Adv. Ms. Sailee Dhayalkar, Adv. Mr. Shashwat Singh, Adv. Mr. Jai Sanyal, Adv. Ms. Vidhi Shah, Adv. Mr. E.C. Agrawala, AOR Mr. Gaurav Pachnanda, Sr. Adv. Ms. Garima Bajaj, AOR Mr. Mohit Goel, Adv. Mr. Sidharth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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?" 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, Hereinafter referred to as, "1996 Act" 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 nar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resident 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." 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, (2003) 8 SCC 593 where the rate of interest was reduced from 18% per annum to 6% per annum, and Mukand Ltd. v. Hindustan Petroleum Corpn. Ltd., (2006) 9 SCC 383 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, (2019) 11 SCC 465 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the limited grounds expressly provided therein. 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. The Court does not possess the power to correct errors of fact, reconsider costs, or engage in a review of the merits of the arbitral award. 13. In Ssangyong Engineering and Construction Company Limited v. National Highways Authority of India (NHAI), (2019) 15 SCC 131 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". 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, 1958 Hereinafter referred to as, "New York Convention", 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 less ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 intr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Civil Appeal @ S.L.P.(C) Nos.15336-15337 of 2021 Page 14 of 61 being beyond the scope of submission to arbitration, and the composition of the arbitral tribunal or the arbitral procedure not being by the agreement of the parties in certain circumstances. The proviso to Section 34(2)(a)(iv) outlines the concept of "severability of awards". This has been addressed separately in Part II of our Analysis. 29. Section 34(2)(b) stipulates that an arbitral award may be set aside when the subject matter of the dispute cannot be settled by arbitration per the applicable law or if the arbitral award c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s notice requirements, while Section 34(6) mandates the expeditious disposal of Section 34 applications, setting a hard outer limit of one year from the date of service of notice on the other party under Section 34(5). 31. The next question that arises is whether the power to set aside an award includes the power to partially set it aside. II. Severability of Awards 32. In the present controversy, the proviso to Section 34(2)(a)(iv) is particularly relevant. It states that if the decisions on matters submitted to arbitration can be separated from those not submitted, only that part of the arbitral award which contains decisions on matters non-submitted may be set aside. The proviso, therefore, permits courts to sever the non-arbitrable portions of an award from arbitrable ones. This serves a two-fold purpose. First, it aligns with Section 16 of the 1996 Act, which affirms the principle of kompetenzkompetenz - 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. The "validity" and "invalidity", as used here, does not refer to legal va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny 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 argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d appeals under Section 37 often take years to resolve. 42. Given this background, if we were to decide that courts can only set aside and not modify awards, then the parties would be compelled to undergo an extra round of arbitration, adding to the previous four stages: the initial arbitration, Section 34 (setting aside proceedings), Section 37 (appeal proceedings), and Article 136 (SLP proceedings). In effect, this interpretation would force the parties into a new arbitration process merely to affirm a decision that could easily be arrived at by the court. This would render the arbitration process more cumbersome than even traditional litigation. 43. Equally, Section 34 limits recourse to courts to an application for setting aside the award. However, Section 34 does not restrict the range of reliefs that the court can grant, while remaining within the contours of the statute. A different relief can be fashioned as long as it does not violate the guardrails of the power provided under Section 34. In other words, the power cannot contradict the essence or language of Section 34. The court would not exercise appellate power, as envisaged by Order XLI of the Code of Civil Procedure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de, "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." a court executing a decree has the power to correct clerical or arithmetic mistakes in judgments, orders, or decrees arising from any accidental slips or omissions. This Court, in Century Textiles Industries Limited v. Deepak Jain and Another, (2009) 5 SCC 634 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esses the jurisdiction to remand the matter to the arbitral tribunal. 63. Our reasoning does not breach the principle of party autonomy. 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. Neither does it confer appellate powers on the courts. Instead, it adheres strictly to the parameters stipulated in Sections 34 and 37 of the 1996 Act. The power of the appellate court in civil proceedings under Order XLI of the Code, is as broad as that of a trial court, both in terms of facts and law. Contrastingly, the court's 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, (2019) 20 SCC 1 this Court emphasized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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, 1995 Supp (2) SCC 280 speaks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest, 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'. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 sett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd other basic features of the Constitution of India. Specific public policy should be understood as some express pre-eminent prohibition in any substantive law, and not stipulations and requirements to a particular statutory scheme. It should not contravene a fundamental and non-derogable principle at the core of the statute. Even in the strictest sense, it was never doubted or debated that this Court is empowered under Article 142(1) of the Constitution of India to do "complete justice" without being bound by the relevant provisions of procedure, if it is satisfied that the departure from the said procedure is necessary to do "complete justice" between the parties." 84. While exercising power under Article 142, this Court must be conscious of the aforesaid dictum. In our opinion, the power should not be exercised where the effect of the order passed by the court would be to rewrite the award or modify the award on merits. However, the power can be exercised where it is required and necessary to bring the litigation or dispute to an end. Not only would this end protracted litigation, but it would also save parties' money and time. CONCLUSIONS 85. Accordingly, the questions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al award on any matter with respect to which it may make a final arbitral award. (7)(a) Unless otherwise agreed by the parties, where and in so far as an arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at such rate as it deems reasonable, on the whole or any part of the money, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made. (b) A sum directed to be paid by an arbitral award shall, unless the award otherwise directs, carry interest at the rate of two per cent higher than the current rate of interest prevalent on the date of award, from the date of award to the date of payment. Explanation.-The expression "current rate of interest" shall have the same meaning as assigned to it under clause (b) of Section 2 of the Interest Act, 1978 (14 of 1978). (8) The costs of an arbitration shall be fixed by the arbitral tribunal in accordance with Section 31-A. 33. Correction and interpretation of award; additional award.- (1) Within thirty days from the receipt of the arbitral award, unless another period of time has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or (v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or (b) the Court finds that- (i) the subject-matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or (ii) the arbitral award is in conflict with the public policy of India. [Explanation 1.- For the avoidance of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Kingdom Section 30, 67(3), 68 and 69(7) of the 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ues 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 recons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 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 States of America Section 10 and 11 of the Federal Arbitration Act, 1925 Section 10. Same; vacation; grounds; rehearing (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 arbi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17, s. 45 (2). 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 Africa Section 31 of Arbitration Act 42 of 1965 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his 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- (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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. (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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. JUDGMENT K. V. VISWANATHAN, J. A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ON 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... veral 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccording to the learned Senior Counsel, the only option then was to set aside the award. Learned Senior Counsel contends that if the award is passed in violation of natural justice then the question would arise as to what the Court ought to do. Equally so with regard to awards infested with corruption and wrongful rejection of claims, learned Senior Counsel contends that mere setting aside would not put an end to the lis. Merely setting aside the award in such circumstances would defeat the purpose of resolving disputes expeditiously, contends Mr. Naphade. According to the learned Senior Counsel, it will also be contrary to fundamental notions of justice since there should be some remedy for every wrong and the consequence will be that the proceedings will revive and 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuation 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "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 arbitratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emit award .-(1) The Court may from time to time remit the award or any matter referred to arbitration to the arbitrators or umpire for reconsideration upon such terms as it thinks fit- (a) where the award has left undetermined any of the matters referred to arbitration, or where it determines any matter not referred to arbitration and such matter cannot be separated without affecting the determination of the matters referred; or (b)where the award is so indefinite as to be incapable of execution; or (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 otherw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal Commercial Arbitration. The General Assembly of the United Nations recommended that all countries give due consideration to the said Model Law, in view of the desirability of uniformity of the law of arbitral procedures and the specific needs of international commercial arbitration practice. The UNCITRAL also adopted in 1980 a set of Conciliation Rules. The General Assembly of the United Nations recommended the use of these Rules in cases where the disputes arise in the context of international commercial relations and the parties seek amicable settlement of their disputes by recourse to conciliation. An important feature of the UNCITRAL Model Law and Rules is that they have harmonised concepts on arbitration and conciliation of different legal systems of the world and thus contain provisions which are designed for universal application. 3. Though the said UNCITRAL Model Law and Rules are intended to deal with international commercial arbitration and conciliation, they could, with appropriate modifications, also serve as a model for legislation on domestic arbitration and conciliation. The present Bill seeks to consolidate and amend the law relating to domestic arbitration, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 aw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the arbitral proceedings but omitted from the arbitral award; (f) such additional award shall be made within 60 days from the receipt of such request; that the tribunal may extend the period of time within which it shall make correction, give an interpretation and make an additional award under sub-Section (2) of sub-Section (5) (g) for such correction or interpretation of the arbitral award or to an additional award, Section 31 was to apply. 49. This section is set out only for the reason that after the award is made, situations necessitating correction of computation errors, clerical or typographical errors are provided for to be remedied by approaching the arbitrator. This will have a bearing while interpreting Section 33 & Section 34(4) together, a little later in this judgment. 50. While Section 34 deals with application for setting aside arbitral award, Section 35 speaks of finality of arbitral awards and Section 36 speaks of enforcement. The epicenter for this reference, however, is Section 34, the scope, sweep and ambit of which this reference is directly concerned. 51. Section 34 occurs in Chapter VII under the heading "Recourse against arbitral award", which re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... review on the merits of the dispute. (2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award: Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by reappreciation of evidence. (3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal: Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months It may entertain the application within a further period of thirty days, but not thereafter. (4) On receipt of an application under sub-section (1), the Court may, where it is appropriate and it is so requested by a party, adjourn the proceedings for a period of time determined by it in order to give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot 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 subjectmatter 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 commercia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e intent. It is in this background that the arguments of the parties clamouring for a reading in of the power of modification, needs to be tested. 60. A Seven-Judge Bench of this Court in Interplay Between Arbitration Agreements under Arbitration and Conciliation Act, 1996 & Stamp Act, 1899, In re, [(2024) 6 SCC 1] interpreting Section 5 of the A&C Act had the following to say: "81. One of the main objectives of the Arbitration Act is to minimise the supervisory role of Courts in the arbitral process. Party autonomy and settlement of disputes by an Arbitral Tribunal are the hallmarks of arbitration law. Section 5 gives effect to the true intention of the parties to have their disputes resolved through arbitration in a quick, efficient and effective manner by minimising judicial interference in the arbitral proceedings. [Food Corpn. of India v. Indian Council of Arbitration, (2003) 6 SCC 564.] Parliament enacted Section 5 to minimise the supervisory role of Courts in the arbitral process to the bare minimum, and only to the extent "so provided" under the Part I of the Arbitration Act. In doing so, the legislature did not altogether exclude the role of Courts or judicial authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 SCC (Civ) 374], a Bench of three Judges of this Court observed that the : (Bhaven Construction case [Bhaven Construction v. Sardar Sarovar Narmada Nigam Ltd., (2022) 1 SCC 75 : (2022) 1 SCC (Civ) 374], SCC p. 82, para 12) "12. ... non obstante clause is provided to uphold the intention of the legislature as provided in the Preamble to adopt UNCITRAL Model Law and Rules, to reduce excessive judicial interference which is not contemplated under the Arbitration Act." 89. Section 5 is of aid in interpreting the extent of judicial interference under Sections 8 and 11 of the Arbitration Act. Section 5 contains a general rule of judicial non-interference. Therefore, every provision of the Arbitration Act ought to be construed in view of Section 5 to give true effect to the legislative intention of minimal judicial intervention." ( Emphasis supplied ) SOME CASES CITED IN THE REFERRAL ORDER:- 61. Before the contentions of the respective parties are addressed, the deck needs to be cleared by discussing the judgments set out in question No.5 in the referral order of 20.02.2024, particularly those cases referred to therein where modification of the award was ordered or an imprim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, (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 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? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce and appeals as provided in the Code of Civil Procedure, 1908 (C.P.C. for short) would ordinarily have been available to the aggrieved parties. 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 appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against him (Order XLI Rule 22). The Appellate Court can confirm, vary, reverse the decree and if the parties to the appeal agree as to the form which the decree in appeal is to take or as to the order to be made in appeal, the Appellate Court may pass a decree or make an order (order XLI Rule 31 and 32) and the Appellate Court shall have the power to pass any decree and make any order which ought to have been passed or made and pass or make such further or other decree or order. Further, the Appellate Court may exercise the power notwithstanding that the appeal was only to a part of the decree and may be exercised in favour of all or any of the respondents or parties, although such respondents or parties may not have filed any appeal or objection (Order XLI Rule 33). 87. This wide power is not available to a Court under Section 34 of the A&C Act while entertaining an application to set aside the arbitral award. The word 'modify' has been defined in P. Ramanatha Aiyar's Advanced Law Lexicon Third Edition to mean: '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 Tech ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... surping 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplied) 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. 3.25.10 The Committee feels that the proposed amendment will provide relief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his 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 it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. (Emphasis supplied) 102. As is clear, the doctrine of implied powers is invoked to effectuate the final power. Where it is impossible to effectuate the final power unless something not authorized in express terms be also done, in such an event, the power will be supplied by necessary intendment as an exception. The exceptional situation is to advance the object of the legislation under consideration and to avoid grave hardship. 103. This doctrine has no application to the question under consideration herein. The objects of the statute are very clear and have been elucidated hereinabove. The difference between the normal judicial procedure and the arbitration process contractually agreed upon with all its qualitative differences is also well established. No implied power is needed to effectuate the final power provided under Section 34 and, as set out earlier, there is no impediment to exercise the final power. In the teeth of the legislature expressly contemplating fresh 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the percentage of interest awarded by the arbitrators. The aspect of award of interest is discussed hereinbelow, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rism, federalism, and other basic features of the Constitution of India. Specific public policy should be understood as some express preeminent prohibition in any substantive law, and not stipulations and requirements to a particular statutory scheme. It should not contravene a fundamental and non-derogable principle at the core of the statute. Even in the strictest sense, it was never doubted or debated that his Court is empowered under Article 142(1) of the Constitution of India to do "complete justice" without being bound by the relevant provisions of procedure, if it is satisfied that the departure from the said procedure is necessary to do "complete justice" between the parties." 112. A careful reading of the above paragraph reveals that the power under Article 142 will not be exercised if it would contravene a fundamental and non-derogable principle at the core of a statute. Further, it has been held that the power under Article 142 is to be tempered or bounded by restraint based on fundamental considerations of general and specific public policy. Amplifying further, it was held that specific public policy should be understood as some express preeminent prohibition in any s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revent 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 modal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded 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:- "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 appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the provisions of A&C Act and is in no manner conflict 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. We find 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etermined 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 proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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" b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he motions of Section 34(2)(a) (b) and 2 A, it would have arrived at an opinion as to whether the award is susceptible or whether it is sustainable. If it arrives at an opinion that the award is vulnerable and the threat of setting aside is looming large and if within the parameters laid down in Section 34(4) the grounds for setting aside can be eliminated - the case is appropriate and time is ripe for exercise of power under Section 34(4). The need for an application oral or in writing is really directory and does not militate against the exercise of Suo Moto powers in given cases by the Court. COMPUTATION, CLERICAL AND TYPOGRAPHICAL ERROR OR ANY OTHER ERROR OF SIMILAR NATURE - ACTUS CURIAE NEMINEM GRAVABIT PRINCIPLE:- 137. Section 33 enables parties to move the Arbitral Tribunal to correct any computational error, any clerical error or typographical error or any other errors of similar nature. Section 33(3) enables the arbitral Tribunal itself to correct any of those errors. No doubt, a time limit of 30 days has been prescribed for the parties to move unless there is a contract to the contrary. Equally, sub-Section 2 of Section 33 directs that the correction should be made wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was no embargo on the Arbitral Tribunal to exercise jurisdiction over the subject matter. The only limitation was that the correction and/or interpretation of the award should be done within 30 days from the date of receipt of the arbitral award unless another period of time has been agreed upon by the parties. Therefore, the expression unless another period of time has been agreed upon by the parties assumes critical significance." ( Emphasis supplied ) 139. With regard to computational errors, clerical or typographical error or any other error of similar nature - (the expression any other error of similar nature will be read ejusdem generis and will apply to errors similar to computational errors, clerical or typographical errors), what should be the course of action if the party has not moved under Section 33 or having moved the arbitrator has mechanically rejected the correction? 140. With regard to Section 152 CPC, this Court after holding that Section 152 is founded on the maxim - actus curiae neminem gravabit speaking through Dr. Arijit Pasayat J. in U.P. SRTC vs. Imtiaz Hussain, (2006) 1 SCC 380 lucidly explained the position thus. "8. The basis of the provision u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions 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 su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 subclause (iv) seeks to address a comprehensibly conceivable situation where while some parts of the award may have dealt with non-arbitrable issues or disputes falling outside the scope of the reference, its other components or parts constitute an adjudication which could have been validly undertaken by the AT. The Proviso thus seeks to address such a situation and redeems as well as rescues the valid parts of an award. This saves the parties from the spectre of commencing arbitral proceedings all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot severable, the option will be to dismiss the Section 34 application as not pressed, in view of the settlement arrived at. 156. I have since had the benefit of reading the judgment of the Hon'ble Chief Justice. In my judgment, I have independently given my reasons on each of the issues arising herein. The judgment of the Hon'ble Chief Justice grants power to the Section 34 Court to modify the post-award interest. I am not able to agree with the said view for the reasons stated hereinabove. Equally, the judgment of the Hon'ble Chief Justice permits the exercise of power under Article 142 of the Constitution of India to modify the award, though it has been stated in the judgment that the power must be exercised with caution. Here again, I am not able to agree with the said view for the reasons stated in my judgment. CONCLUSION:- (a) The Courts exercising power under Section 34 and Courts hearing appeals thereunder have no power to "modify" an award. (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 awa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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