Part I of the Arbitration and Conciliation Act, 1996[1] (the Arbitration Act) has been enacted to consolidate and amend the law relating to domestic arbitration as well as international commercial arbitration in India after taking into account UNCITRAL[2] Model Law on International Commercial Arbitration, 1985 (UNCITRAL Model Law).[3] Like the UNCITRAL Model Law, the Arbitration Act follows the territoriality principle, according to which the law of the seat of arbitration will govern the conduct of the arbitration and challenge to the arbitral award.[4] Thus, any party to an arbitration proceeding having seat/place of arbitration in India aggrieved by an arbitral award will have to seek recourse under the Arbitration Act.
Section 34 of the Arbitration Act stipulates that any person aggrieved by an arbitral award can file an application seeking setting aside of the arbitral award in terms of Sections 34(2), (2-A) and (3) of the Arbitration Act, 1996.[5] Sections 34(2) and 34(2-A) of the Arbitration Act enumerate the grounds for setting aside of the arbitral award whereas Section 34(3) of the Arbitration Act sets out the time-frame within which the party aggrieved by the arbitral award needs to file an application before the Court.
There was divergence of judicial opinion in India on the scope of the powers of a court exercising jurisdiction under Section 34 of the Arbitration Act (Section 34 court). The High Courts of Karnataka,[6] Delhi[7] and Bombay[8]had taken a view that a Section 34 court can only quash the arbitral award leaving the parties to resume fresh arbitration proceedings for resolution of their disputes. On the other hand, the High Courts of Madras[9], Telangana[10] and Andhra Pradesh[11]had taken a view that a Section 34 Court can either set aside the arbitral award or modify the arbitral award by varying the findings in the arbitral award. Owing to these divergent views expressed by various High Courts in India and the recent judgment of the Supreme Court of India in National Highways Authority of India v. M. Hakeem[12] this article seeks to examine the true scope and purport of the power of a court exercising jurisdiction under Section 34 of the Arbitration Act to modify, vary or reverse the findings in the arbitral award. In order to accomplish this objective, the author will first examine the legislative history of Section 34 of the Arbitration Act resulting in its enactment. Thereafter, the author will examine the views of the Supreme Court of India and the divergent views expressed by the High Courts on the powers of a Section 34 court to modify or vary the findings in the arbitral award. The author will conclude by summarising his views on the powers of a Section 34 court to modify, vary or reverse the findings in the arbitral award.
Legislative history of Section 34 of the Arbitration and Conciliation Act, 1996
Since the Arbitration Act was enacted to give effect to the UNCITRAL Model Law, Section 34 of the Arbitration Act almost mirrors Article 34 of the UNCITRAL Model Law. While the Arbitration and Conciliation (Amendment) Act, 2015[13] amended Section 34 of the Arbitration Act to clarify the scope of “public policy” as a ground for interfering with the arbitral award, none of the amendments had any bearing on the power of the court to modify or vary the findings in the arbitral award under Section 34 of the Act.[14] Thus, the reports setting out the historical background for formulation of Article 34 of the UNCITRAL Model Law will still be relevant to ascertain whether Section 34 of the Act confers power on the court to modify or vary the findings of the arbitral award. Besides, it is settled principle of law in India that special committee reports preceding the enactment of a legislation can be looked into for interpreting meaning of the statute that is unambiguous and for appreciating the background leading to enactment of the provision.[15]
The reports/deliberations at the time formulating the UNCITRAL Model Law assume significance for another reason. One of the primary reasons for formulating UNCITRAL Model Law was to evolve a harmonised legal framework for settlement of international commercial disputes.[16] Moreover, in India, the provisions of domestic statute must be read to enhance conformity with the global legal regime.[17] Therefore, for all these reasons, the historical origins of Article 34 of the UNCITRAL Model Law will be an important factor that need to be considered while ascertaining whether Section 34 of the Arbitration Act confers power on a court to modify or vary the arbitral award. Hence, this section briefly examines the legislative history of Article 34 of the UNCITRAL Model Law.
In 1976, the Asian-African Legal Consultative Committee (AALCC)[18] invited UNCITRAL to consider the possibility of drafting a protocol to the United Nations Convention on Recognition and Enforcement of Foreign Awards, 1958 (NYC) to redress several issues arising from divergent interpretations of the NYC[19]. In light of the said proposal, the UNCITRAL requested the Secretary General to prepare a report on further steps to be taken by the UNCITRAL in respect of international commercial arbitration.[20]Accordingly, the Secretary General of the UNCITRAL submitted his report on further steps in respect of international commercial arbitration.[21] The participants at the consultative meeting unanimously agreed that the preparation of the Model Law on arbitration (instead of a Protocol) would be the most appropriate way to achieve the desired uniformity.[22] Accordingly, UNCITRAL entrusted the work to prepare draft Model Law on international commercial arbitration to Working Group on International Contract Practices (Working Group).[23]
The Working Group commenced its work of preparing the Model Law by preliminary exchange of views on possible features of the draft model law based on the report of the Secretary General of the UNCITRAL and questions contained in the note circulated by the UNCITRAL Secretariat.[24] In his report, the Secretary General had noted that there was great variety in national laws for “attacking” an arbitral award.[25] Hence, it was suggested that the Model Law should ideally streamline the various types of recourse against an arbitral award and provide “only one type of action of ‘attacking’ an award”.[26]The Working Group concurred with the suggestion and requested the UNCITRAL Secretariat to prepare draft provisions for challenging the arbitral award along these lines.[27]
Based on the discussions of the Working Group at its fourth session, the UNCITRAL Secretariat prepared draft articles providing recourse against arbitral award.[28]In line with the discussions of the Working Group, Draft Article 40 proposed by the Secretariat stipulated that the only recourse available to a party aggrieved by the arbitral award was to seek setting aside of the arbitral award.[29] Interestingly, Draft Article 41(4) proposed by the Secretariat set out the consequences of setting aside the arbitral award. It provided that
“if the court set aside the award, it may order that the arbitration proceedings to continue for retrial of the case [or] a party may within three months request reinstitution of the arbitration proceedings unless such measure is incompatible with a ground on which the award is set aside”.[30]
Divergent views were expressed as to the appropriateness of Draft Article 41(4). Under one view, there was no place in Model Law for such a provision since it insufficiently dealt with several procedural questions arising in various legal systems[31]. But, majority of the members of the Working Group expressed support for retaining the provision, since “the provision made it clear that the arbitration agreement did not necessarily lapse (on setting aside of the award) and it opened the way for remission to an Arbitral Tribunal”.[32]Therefore, a reading of the draft article and travaux préparatoires seems to suggest that Working Group only sought to confer power on the court to set aside the arbitral award and remit the matter to the tribunal for reconsideration. The Working Group never contemplated court modifying or varying the findings in the arbitral award. This is also evident from the subsequent modifications suggested to Draft Article 41(4) by the Working Group. Amongst other things, the Working Group at the fifth session wanted the UNCITRAL Secretariat to prepare a revised draft to clarify that “reinstitution” of arbitral proceedings would not necessarily mean that the proceedings would be conducted by the previous Arbitral Tribunal and to stipulate the authority to whom the party should make a request for reinstitution.[33]
Based on the recommendations of the Working Group at its fifth session, the UNCITRAL Secretariat redrafted the article relating to recourse against an arbitral award to provide that the “court when asked to set aside the award, may also order, where appropriate and if so requested by a party that the arbitral proceedings be continued.”[34]While there was some resistance to the idea of the court remitting the matter back to the tribunal, the Working Group ultimately adopted the proposal since it reduced the likelihood of arbitral awards being set aside for curable procedural defects.[35] Therefore, apart from setting aside the arbitral award, the Model Law envisaged that the court exercising power under Article 34 of UNCITRAL Model Law could only remit the matter to the Arbitral Tribunal to remedy curable defects so as to prevent setting aside of the arbitral award.[36] No substantial changes were neither proposed nor made in subsequent drafts considered by the Working Group.[37] Thus, Article 34 of the UNCITRAL Model Law provides that any person aggrieved by an arbitral award can either seeking setting aside or remission to the tribunal to remedy curable defects. Therefore, by implication, Article 34 of the UNCITRAL Model Law never envisaged that the court exercising jurisdiction under Article 34 of the UNCTIRAL Model Law can vary or modify the findings.
Two other aspects in the travaux préparatoires of the UNCITRAL Model Law fortify the conclusion that a court under Article 34 of the UNCITRAL Model was never conferred with the power to vary or modify the arbitral award. First, a proposal was made to include a provision in draft Model Law in case of setting aside of arbitral awards to exclude the time from commencement of arbitral proceedings till the date of setting aside of the arbitral award to enable the claimant/aggrieved party to pursue fresh arbitration/remedies in accordance with law.[38] While recognising the importance of such a provision, UNCITRAL eventually decided against its inclusion because it “touched upon issues regarded by many legal systems as matters of substantive law and might therefore be considered to be outside the scope of the model law”.[39] Most importantly, owing to paucity of time, UNCITRAL was not able to undertake a close study of issues involved for formulation of an appropriate rule.[40] Hence, from the aforesaid discussion, one may infer that Article 34 of the UNCITRAL Model Law only envisaged setting aside of arbitral awards. It was for this reason that UNCITRAL considered formulating a rule for excluding the time period from the date of commencement of arbitral proceedings till the date of setting aside of arbitral awards.
Second, in one of the UNCITRAL Secretariat working papers placed before the Working Group, the UNCITRAL Secretariat had recommended that UNCITRAL Model Law contain a provision regarding the manner in which a party may pursue a claim after setting aside of award under Article 34.[41] It was suggested, such a provision could clarify that, on setting aside of arbitral award, the original arbitration agreement stood discharged and parties were relegated to ordinary courts for adjudication of their disputes. Or, in the alternative, such a provision could recognise that original arbitration agreement was reactivated and the parties had to purse their claims by commencing fresh arbitration proceedings. But, for reasons not forthcoming from the record, it appears that the Working Group did not give serious consideration to the proposal. That said, in either of these cases, there was an implicit recognition of the fact that a court exercising power under Article 34 of the UNCITRAL Model Law could not vary or modify the award but only to set aside the award.
Hence, a meaningful reading of the preparatory works of UNCITRAL Model Law leads to conclusion that, on an application by a party, a court exercising jurisdiction under Article 34 of the UNCITRAL Model Law could remit the arbitral award to the tribunal to remedy curable defects. However, if the defects are not curable and grounds under Article 34(2) are made out by a party aggrieved by the arbitral award, the court can only set aside the arbitral award and not vary or modify the findings in the arbitral award.
Indian courts and divergent views on power under Section 34 of the Arbitration and Conciliation Act, 1996 to modify or vary the arbitral awards
This section will briefly examine the law laid down by the Supreme Court of India and the divergent views expressed by High Courts regarding the power of a Section 34 Court to vary or modify the arbitral award.
(i) Supreme Court of India
Since the law laid down by the Supreme Court of India binds all courts and tribunals in the country,[42] the judgments of the Supreme Court relating to power of a Section 34 Court to modify or vary the arbitral award will be examined first.
In McDermott International Inc. v. Burn Standard Co. Ltd.,[43] (McDermott case) the Supreme Court was seized of an appeal arising out of judgment of the Calcutta High Court dealing with challenge to an arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996. Prior to adverting to the contentions of the parties for setting aside the arbitral award, the Court opined that “the court (exercising jurisdiction under Section 34 of the Arbitration and Conciliation Act, 1996) cannot correct errors of arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if so desired”. But, for reasons detailed below, these observations cannot be regarded as law declared by the Supreme Court of India on the power of a Section 34 Court to modify or vary the arbitral award.
It is settled law that not everything said by a Judge while giving a judgment constitutes a precedent.[44] The enunciation of the reason or principle (i.e. ratio decidendi) upon which a question before a court has been decided is alone binding as a precedent under Article 141 of the Constitution of India.[45] A proposition of law can be regarded as ratio decidendi of a case if a deliberate/conscious judicial decision has been arrived at after hearing an argument on a question which arose or was put in issue in the facts of the case before the court.[46]Hence, viewed in this backdrop, the question whether a Section 34 Court can modify or vary the arbitral award never arose for consideration in McDermott case[47]. There was neither any question raised nor any argument advanced on the power of a Section 34 Court to modify or vary the arbitral award. Hence, the abovementioned observations can hardly be termed as a conscious judicial decision on the power of a Section 34 Court to modify or vary the arbitral award.
The matter can be considered from another standpoint. Recently, in State of Gujarat v. Utility Users’ Welfare Assn.,[48]the Supreme Court adopted “the Inversion Test” propounded by Prof. Eugene Wambaugh, with some modifications[49]to identify the ratio decidendi of a judgment. According to the Court, in order to test whether a particular proposition of law is to be treated as the ratio decidendi of the case, the proposition is to be inversed i.e. remove the proposition of law from the text of the case as if did not exist. If the conclusion of the case would still have been the same even without examining the proposition, then it cannot be regarded as ratio decidendi of the case.[50] Applying the said test to McDermott case[51], it can safely be concluded that, even if the observation that the court cannot correct errors of the arbitrators, but only set aside the award is inversed (i.e. removed from the text of the case), the conclusion of the case would have still been the same. Hence, owing to these reasons, the observations of the Supreme Court in McDermott case[52]cannot be regarded as law declared under Article 141 of the Constitution of India.
At this juncture, it is pertinent to note another judgment of the Supreme Court in India wherein some observations appear to have been made on the power of the court to modify or vary the arbitral award under Section 34 of the Act. In Dakshin Haryana Bijli Vitran Nigam Ltd. v. Navigant Technologies (P) Ltd.,[53] (Dakshin Haryana case) an appeal was filed against the judgment of the High Court dismissing a petition under Section 34 of the Arbitration Act as time-barred under Section 34(3) of the Arbitration Act. Amongst other things, it was contended that the time period for filing the arbitral petition under Section 34 should be reckoned from the date of receiving the majority as well as the minority award from the Arbitral Tribunal since on several occasions courts had upheld minority awards while setting aside the majority award. The Court allowed the appeal on the ground that
“there is only date recognised by law i.e. date on which a signed copy of the final award is received by the parties, from which the period of limitation for filing objections (i.e. petition under Section 34 of the Arbitration and Conciliation Act, 1996) would start ticking.”[54]
Since 90 days had not lapsed from the date of receipt of signed copy of the arbitral award, the Court allowed the appeal and remanded the petition under Section 34 of the Arbitration Act for adjudication on merits. While dealing with the contention of the appellant on the relevance of minority arbitral award, the Court opined that
“under Section 34 of the Arbitration Act, the Court may either dismiss the objections filed, and uphold the award, or set aside the award if the grounds contained in sub-sections (2) and (2-A) of (Section 34)are made out. There is no power to modify the award”.
In support of this proposition, the Court relied on McDermott case[55]. As discussed earlier, McDermott case[56] is not an authority for the proposition that court cannot modify or vary the arbitral award.
That apart, for the reasons stated below, Dakshin Haryana case[57] also cannot be regarded as an authority for the proposition that court can only set aside the arbitral award. First, if the inversion test[58] (explained above) is applied to Dakshin Haryana case[59], it will become abundantly clear that, even if the observations that a Section 34 court can only set aside the arbitral award is “omitted” from the text of the judgment, the Supreme Court would still have come to the same conclusion that the time period for computing limitation under Section 34(2) is to be reckoned from the date of receipt of the signed copy of the arbitral award.
Second, not all observations of the Supreme Court while delivering a judgment are binding under Article 141 of the Constitution of India.[60] A judgment can be distinguished into two parts – ratio decidendi and obiter dictum.[61]As stated earlier, it is only the ratio decidendi i.e. principle upon which the case is decided by the Supreme Court of India that binds courts and tribunals under Article 141 of the Constitution of India.[62]An “obiter dictum”, unlike the ratio decidendi, is an observation by the court on a legal question suggested in a case before it but not arising in such a manner as to require decision.[63]Thus, in Dakshin Haryana case[64], once the Supreme Court of India had taken a view that the limitation had to be reckoned from the date of receipt of the signed copy of the arbitral award, it was wholly unnecessary to make any observations on the powers of a Section 34 court to modify or vary the arbitral award. Hence, the observations of the Supreme Court in Dakshin Haryana case[65] cannot be considered as law declared under Article 141 of the Constitution of India since the power of a Section 34 court to modify the arbitral award did not arise in such a manner to require decision.
Recently, in National Highways Authority of India v. M. Hakeem,[66] the Supreme Court was dealing with a batch of appeals from the Madras High Court wherein the said High Court had disposed of a large number of appeals filed under Section 37 of the Arbitration and Conciliation Act, 1996[67] holding that a Section 34 Court can modify the arbitral award and enhance compensation awarded by arbitrator under the National Highways Act, 1956[68]. The Supreme Court of India categorically held that a Section 34 Court cannot modify or alter the findings of the Arbitral Tribunal, but only set aside the arbitral award.
Four reasons primarily weighed in the mind of the Court to subscribe to the said view. First, Section 34 of the Arbitration Act was modelled on Article 34 of the UNCITRAL Model Law which did not permit modification of arbitral awards, but only setting aside of the arbitral award.[69]Second, the statutory scheme under Section 34 of the Arbitration Act was substantially different from the erstwhile Arbitration Act, 1940[70] wherein courts were specifically empowered to modify or correct an award.[71]Third, proceedings under Section 34 of the Arbitration and Conciliation Act, 1996 did not permit challenge to an arbitral award on merits.[72] Thus, necessarily, a Section 34 Court cannot conduct a roving enquiry on merits and make de novo findings modifying the arbitral award. Fourth, the McDermott case[73],Dakshin Haryanacase[74] and Kinnari Mullick v. Ghanshyam Das Damani(Kinnari Mullick case) [75]had already settled the law that a Section 34 court cannot modify the arbitral award, but merely set aside the award leaving parties to commence fresh arbitration proceedings to settle their disputes.[76]For reasons stated supra, the McDermott case[77]and the Dakshin Haryana case[78] cannot be considered as authorities for the proposition that courts can only set aside, but not modify the arbitral award. Even Kinnari Mullick case[79] cannot be regarded as an authority for the said proposition because the court was only considering the power of a Section 34 Court to remand the matter to the arbitral tribunal under Section 34(4) of the Arbitration and Conciliation Act, 1996. The question as to whether a Section 34 court can modify the arbitral award was neither put in argument nor consciously decided by the Supreme Court in Kinnari Mullick case[80]. Hence, the observations therein can hardly qualify as laying down that a court can only set aside the arbitral award.
Be that as it may, the other observations of the Supreme Court in National Highways Authority of India v. M. Hakeem80, now make it amply clear that a Section 34 Court can only set aside the arbitral award, but not vary or modify the findings of the Arbitral Tribunal. The next section will examine the decisions of the High Court on the power of the Court to modify or vary the arbitral award.
(ii) High Courts and power of a Section 34 Court to modify or vary the arbitral award
The Bombay High Court81 and the Delhi High Court82had taken a view that, unlike a court exercising appellate powers under Section 96 of the Code of Civil Procedure, 190883, a Section 34 Court does not have the power to vary or modify the arbitral award or decree the claims dismissed by the Arbitral Tribunal. Therefore, a Section 34 Court can either uphold the arbitral award or set aside the arbitral award.
In Padma Mahadev v. Sierra Constructions84, the High Court of Karnataka had also taken a view that a Section 34 Court cannot vary or modify the findings of the Arbitral Tribunal, but only set aside the arbitral award. To arrive at the said finding, first, the High Court adverted to the McDermott case85 and concluded that the Supreme Court has declared the law that a Section 34 Court can only set aside the arbitral award, leaving parties free to begin fresh arbitration if they so desired.[81] Second, the High Court referred to Section 34(4) of the Arbitration Act that permits a Section 34 Court to remit the arbitral award to the Arbitral Tribunal to remedy curable defects which would obviate setting aside of the arbitral award. Based on this provision, the High Court concluded that the said sub-section would be rendered otiose if a Section 34 Court was held to have the power to vary or modify the arbitral award.[82]Third, the High Court referred to Section 43(4) of the Arbitration Act[83] which provides that, in case of setting aside of arbitral award, the time period from the commencement of arbitration to setting aside of arbitral award should be excluded for the purpose of computing limitation. Based on this provision, the High Court concluded that such a provision would have been wholly unnecessary if a Section 34 Court had the power to modify or vary the arbitral award and finally settle the list between the parties. Except for the erroneous reading of the law laid down in Mc Dermott case[84], the judgment does make a compelling case based on the text of the Arbitration and Conciliation Act, 1996 that a Section 34 Court can only set aside the arbitral award and not vary or modify the findings of the Arbitral Tribunal.
Contrary to the views of the Karnataka, Bombay and the Delhi High Courts, the Madras High Court,[85] Andhra Pradesh High Court[86] and Telangana High Court[87] had taken a view that a Section 34 court can either set aside the arbitral award or vary the findings of the Arbitral Tribunal. In Kurra Venkateshwara Rao v. Competent Authority,[88]the Andhra Pradesh High Court held that the expression “recourse to a Court against an arbitral award” used in Section 34(1)[89] of the Arbitration Act could not be interpreted to limit the power of a Section 34 Court to merely set aside the arbitral award. Such an interpretation of Section 34(1) would leave parties in a worse off position than contemplated or deserved prior to commencement of arbitral proceedings. Thus, the words “recourse against an arbitral award” in Section 34 of the Arbitration and Conciliation Act, 1996 were interpreted to include the power of a Section 34 court to modify or vary the arbitral award along with the power to set aside the arbitral award. Further, the High Court sought to fortify its conclusion that a Section 34 Court can modify, vary or revise the findings of the Arbitral Tribunal by adverting to the general practice of the High Courts and the Supreme Court of India to vary, modify or revise arbitral findings while adjudicating Section 34 petitions under the Arbitration Act.
In the author’s opinion, the Andhra Pradesh High Court’s view is wholly erroneous on both counts. It is settled law that an interpretation that renders the provisions of a statute otiose or nugatory should be eschewed.[90]Section 34(1) of the Arbitration Act stipulates that recourse against an arbitral award may be made “only” by an application for setting aside such award in accordance with sub-sections (2) and (3). If the interpretation given by the Andhra Pradesh High Court to the expression “recourse against an arbitral award” is accepted, the word “only” in Section 34(1) of the Arbitration Act will be rendered otiose. It is obvious that the word “only” was used in Section 34(1) of the Arbitration Act to make it abundantly clear that recourse against an arbitral award was “only” by an application for setting aside the arbitral award and nothing else.
That apart, the reference to the general practice of the High Court and the Supreme Courts in varying or modifying arbitral awards while adjudicating petitions under Section 34 of the Arbitration Act is also entirely misplaced.
Undoubtedly, usage or practice developed under a statute is indicative of the meaning ascribed to its words.[91] The doctrine is based on the precept that the words used in the statute must be understood in the same way in which they are usually understood in ordinary common parlance by the persons whose duty it is to construe and apply it.[92] But the rule is not of universal application and can be applied only on fulfilment of following preconditions:
(a) First, contemporary construction placed by authorities can be looked at for construing a statute only if the meaning of a provision is obscure, but not when the meaning of the statute is plain, simple and unambiguous.[93]Section 34(1) of the Arbitration Act provides that filing of a setting aside application is the “only” recourse available against an arbitral award. Hence, there is no obscurity or ambiguity in the provision that warrants looking at the practice and usage developed under the Arbitration Act to ascertain the meaning of the provision.
(b) Second, practice or usage developed under the statute is only relevant for interpretation of an ancient statute, but not a modern statute.[94]This is for the obvious reason that, in ancient statutes/very old statutes, the language may itself have a different meaning at the time of the enactment of statute and the Judges who lived during that time or soon thereafter would be best able to decipher the intention of the legislature.[95]The Arbitration Act is of recent origin and was enacted in 1996 to give effect the UNCITRAL Model Law in India. No drastic changes have taken place in English language that would warrant Section 34(1) of the Arbitration Act being interpreted dehors the text of the provision, but with reference to the practice and usage of courts. Hence, in the author’s opinion, the Andhra Pradesh High Court does not lay down the correct law.
Furthermore, as rightly noted by the Supreme Court of India in National Highways Authority of India v. M. Hakeem,[96] in interpreting a statutory provision, a Judge must put himself in the shoes of Parliament and then ask whether Parliament intended the result. Since Parliament very clearly intended that no power of modification of an award exists in Section 34 of the Arbitration Act, 1996, the Andhra Pradesh High Court could not have read such a power into Section 34 of Arbitration Act, 1996.
Like the Andhra Pradesh High Court, in Gayatri Balaswamy v. ISG Novasoft Technologies Ltd.,[97]the Madras High Court also held that a Section 34 Court can modify or vary the findings in the arbitral award. While examining the issue, the High Court noted the general practice of the Supreme Court of varying or modifying arbitral awards while considering appeals arising from petitions under Section 34 of the Arbitration Act.[98] Thereafter, the High Court held that Section 34(1) of the Arbitration Act merely prescribed the form (i.e. application for setting aside) in which a party can seek recourse against an arbitral award.[99] Hence, nothing in Section 34(1) of the Arbitration Act could be construed to limit the power of a Section 34 Court to modify or vary the arbitral award.[100]Further, the Court adverted to the observations of the Supreme Court in McDermott case[101] that a Section 34 court only exercises supervisory role, which was almost akin to revisional powers under Section 115 of the Code of Civil Procedure, 1908[102]. Since the revisional jurisdiction under Section 115 of the Code of Civil Procedure 1908 permitted correction of patent illegalities, the Court held that a Section 34 court can also modify or vary the findings in the arbitral award. This judgment was subsequently affirmed by the Division Bench of the Madras High Court.[103] Both these decisions of the Madras High Court have been declared per incuriam in National Highways Authority of India v. M Hakeem.[104]
Besides, both the reasons given by the Madras High Court are wholly fallacious. The Madras High Court’s interpretation renders the word “only” used in Section 34(1) of the Arbitration Act, 1996 otiose. The legislature has consciously used the word “only” in Section 34(1) of the Act to make it clear that an application for setting aside is the only recourse against an arbitral award. This is evident from examination of the scheme of the Arbitration Act. Section 43(4) of the Act provides that, the time period between commencement of arbitral proceedings and setting aside of award shall not be reckoned for computing limitation if the parties decide to pursue the claims that were subject-matter of the award set aside afresh. Such a provision would have been unnecessary if a Section 34 Court could modify or vary the arbitral award. That apart, if courts had the power to modify or vary the arbitral awards, there was no need to enact Section 34(4) of the Act that permits a Section 34 Court to remit the arbitral awards to the tribunal to correct curable defects to obviate setting aside of the award. If the courts could modify or vary the arbitral awards, the courts could have suo motu undertaken remedial measures instead of remitting the matter back to the tribunal. Hence, the interpretation of the Madras High Court is incompatible with the scheme of the Arbitration Act, 1996.
Further, the Madras High Court’s reference to Section 115 of the Code of Civil Procedure for interpreting Section 34 of the Arbitration and Conciliation Act, 1996 is also fallacious. Suffice it is to state that the language of both the provisions and scheme of their enactments are materially different. Therefore, no inspiration can be drawn from one provision to interpret the other. In any event, Section 115 of the Code of Civil Procedure, 1908[105] confers a specific power on the courts to vary or reverse the findings made by the subordinate court. There are no corresponding words in the text of Section 34(1) of the Arbitration Act permitting a court to vary or modify the arbitral award. Hence, the Madras High Court’s interpretation that a court can vary or modify the arbitral is without textual basis and deserves to be ignored.
Lastly, in Saptarishi Hotels (P) Ltd. v. National Institute of Tourism & Hospitality Management,[106] the Telangana High Court has subscribed to the view of the Madras High Court and held that a Section 34 Court can modify or vary the findings in the arbitral award. However, the judgment has used the words “modification” or “varying” the terms of the arbitral award in a broader sense to include partial setting aside of the awards, and not merely varying or modifying the arbitral award on merits.[107]
At this juncture, it may be noted that there is nothing in the text of the Arbitration and Conciliation Act, 1996 prohibiting “partial” setting aside of the arbitral awards.[108] Therefore, if the arbitral award is found bad in respect of some claims and perfectly tenable in case of other claims, a Section 34 Court will be well within its rights to set aside part of the arbitral award. Hence, there is no infirmity with the decision of the Telangana High Court to that extent. The term “modify” or “vary” has been used in this article to refer to only those instances wherein a Section 34 Court adverts to the merits of the dispute and modifies or varies the findings in the arbitral award. The word “modify” or “vary” in this article most certainly do not refer to partial setting aside of award by a Section 34 Court, which is obviously permissible under the Arbitration Act provided the grounds in Sections 34(2) and (2-A) of the said Act are made out.
Conclusion
The preparatory works of the UNCITRAL Model Law make it clear that the drafters envisaged remission to the Arbitral Tribunal for remedying curable defects or the setting aside of the arbitral award as the only recourses available to a party aggrieved by the arbitral award. The drafters did not intend to clothe the courts hearing challenges under Article 34 of the UNCITRAL Model Law with the power to vary or modify the arbitral awards. It is for this reason that the UNCITRAL Secretariat and the Working Group initially sought to engraft provisions setting out the consequences of setting aside the arbitral award which provided that, on setting aside of the arbitral award, the parties may start fresh arbitration proceedings for adjudication of the dispute. Further, there was also a proposal to exclude the time from commencement of arbitration till the date of setting aside the arbitral award for the purpose of reckoning claims if the arbitral award was ultimately set aside. These proposals were not adopted since such provisions did not sufficiently deal with procedural questions arising in various legal systems. But, it would have been wholly unnecessary to consider proposals to incorporate such provisions if the courts had the power to modify or vary the arbitral award and consequently, settle the dispute between the parties by varying or modifying the findings of the Arbitral Tribunal. Section 34 of the Arbitration Act is pari materia to Article 34 of the UNCITRAL Model Law. Moreover, since Section 34 of the Arbitration Act was enacted to give effect to UNCITRAL Model Law,[109]an interpretation in conformity with Article 34 of the UNCITRAL Model Law should be adopted. Hence, a Section 34 Court does have the power to modify or vary the findings in the arbitral award. It can only set aside the arbitral award if conditions set out in sub-sections (2) and (2-A) of Section 34 are satisfied.
Further, Section 5 of the Arbitration Act[110]stipulates that, notwithstanding anything contained in any other law for the time being in force, no judicial authority shall intervene in arbitration proceedings (including setting aside of arbitral award) except as provided in Part I of the Arbitration Act. Since Section 34(1) contained in Part I of the Arbitration Act provides that recourse against an arbitral award can be “only” by an application for setting aside the arbitral award, the judicial authority can only interfere by setting aside the arbitral award. Thus, by implication, any other manner of interference with the arbitral award including by way of varying or modifying the findings in the arbitral award is not permissible in light of Section 5 read with Section 34(1) of the Arbitration Act.
That apart, unlike UNCITRAL Model Law, Section 43(4) of the Arbitration and Conciliation Act, 1996 specifically stipulates that time period from the commencement of arbitration till the setting aside of the arbitral award should not be reckoned for computing limitation in case fresh proceedings initiated after the arbitral award has been set aside. If a Section 34 Court is held to have the power to modify or vary the arbitral award, there would be no need to exclude time period for fresh proceedings as courts could vary or modify the arbitral award and settle the lis (i.e. dispute) between the parties. Thus, Section 43(4) exists because Section 34 of the Arbitration Act only empowers courts to annul arbitral awards, not vary or modify them owing to the errors committed by the Arbitral Tribunal.
The judgment of the Supreme Court in National Highways Authority of India v. M. Hakeem[111] is welcome since it is line with the intent of the UNCITRAL Model Law and settles the law putting to rest the confusion that arose from divergent views of different High Courts.
Having said that, the concerns of the Madras High Court,[112] Telangana High Court[113] and the Andhra Pradesh High Court[114] are not entirely misplaced and without substance. The main reason that seems to have weighed with the High Courts in taking a view that a Section 34 Court has power to vary or modify the arbitral award was the fact that mere setting aside the arbitral award would “leave the parties in a position much worse than what they contemplated or deserved before the commencement of the arbitral proceeding.”[115] But, conferring power on the court to vary or modify the arbitral awards is not the panacea such a problem. In fact, the remedy lies in courts not interfering with the arbitral awards in a cavalier manner especially since the setting aside of the arbitral award entails such harsh consequences. Ultimately, the court will have to respect finality of the arbitral award and the party autonomy to get their dispute resolved through arbitration.[116] It is only in extraordinary circumstances wherein procedural fairness and safeguards are not complied with, powers under Section 34 of the Arbitration Act should be invoked to set aside the arbitral award.
Thus, for the aforesaid reasons, the power of the Section 34 Court is only confined to setting aside the arbitral award, but not varying or modifying the findings in the arbitral award. However, there is nothing in the Arbitration Act that prohibits partial setting aside of the arbitral awards. Therefore, modification or varying of the arbitral award by setting aside of the arbitral award in part is permissible. Obviously, the doctrine of severability and setting aside of the arbitral award in part only holds good if the bad parts of the arbitral award are severable from the sustainable parts of the award. If the bad parts of the arbitral award cannot be severed from the sustainable parts of the award, the court will have no option but to set aside the entirety of the arbitral award leaving parties to commence fresh arbitration proceedings.
*Author is an alumnus of National Law University, Jodhpur (’16) and practices dispute resolution in Bangalore, Karnataka, and can be reached at rohan231993@gmail.com.
[1]Arbitration and Conciliation Act, 1996.
[2]United Nations Commission on International Trade Law.
[3]Preamble, Arbitration and Conciliation Act, 1996; Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (2012) 9 SCC 552, para 68.
[4]Bharat Aluminium Co.v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552, paras 73-75, 120-124; S. 2(2) of the Arbitration and Conciliation Act, 1996.
[5]S. 34(1) of the Arbitration and Conciliation Act, 1996.
[6]Padma Mahadev v. Sierra Constructions Pvt. Ltd., COMAP 2 of 2021, decided on 22-3-2021 (High Court of Karnataka), para 24.
[7]Nussli Switzerland Ltd. v. Organising Commonwealth Games, 2010, 2014 SCC OnLine Del 4834, para 34; State Trading Corpn. of India Ltd. v. Toepfer International Asia Pte Ltd., 2014 SCC OnLine Del 3426, para 7.
[8]Dirk India (P) Ltd. v. Maharashtra State Electricity Generation Co.Ltd.,2013 SCC OnLine Bom 481, para 14; Wind World (India) Ltd. v. Enercon GmbH, 2017 SCC OnLine Bom 1147, para 16.
[9]Gayatri Balaswamy v. ISG Novasoft Technologies Ltd.,2014 SCC OnLine Mad 6568, paras 23, 24, 29, 30, 39, 51-53; ISG Novasoft Technologies Ltd. v. Gayatri Balasamy,2019 SCC OnLine Mad 15819, para 42.
[10]Saptarishi Hotels (P)Ltd.v. National Institute of Tourism & Hospitality Management, 2019 SCC OnLine TS 1765, paras 27, 34 and 35.
[11]Kurra Venkateshwara Rao v. Competent Authority, CMAs No. 987-993 & 1014 of 2008, decided on 1-5-2020 (Andhra Pradesh High Court, DB), paras 23, 24, 28, 34.
[13]Arbitration and Conciliation (Amendment) Act, 2015. http://www.scconline.com/DocumentLink/9ajA4z9b.
[14]Explanation, S. 34(2) and S. 34(2-A) of the Arbitration and Conciliation Act, 1996; Law Commission of India, Report No. 246 on Amendments to the Arbitration and Conciliation Act, 1996, (2014), Chapter II, Paras 34-37; Law Commission of India, Supplementary to Report No. 246 on Amendments to the Arbitration and Conciliation Act, 1996 – “Public Policy” Developments Post Report No. 246, (2014).
[15]Kalpana Mehta v. Union of India, (2018) 7 SCC 1, paras123-135; see M. Dhyan Chinnappa and Rohan Tigadi, Section 7(4)(c) of the Arbitration and Conciliation Act, 1996: Acquiescence by Silence?, (2021) 3 SCC J-32, 33.
[16]A/RES/40/72, Model Law on International Commercial Arbitration of the United Nations Commission on International Trade Law (11-12-1985); Preamble, Arbitration and Conciliation Act, 1996.
[17]K.S. Puttaswamy v. Union of India, (2017) 10 SCC 1, para 154; Commr. of Customs v. G.M. Exports,(2016) 1 SCC 91, paras 13-23; see M. Dhyan Chinnappa and Rohan Tigadi, Section 7(4)(c) of the Arbitration and Conciliation Act, 1996: Acquiescence by Silence?, (2021) 3 SCC J-32, 33.
[18]It is an international government organisation formed in 1956 to serve as an Advisory Board to member States on matters of international law.
[19]International Commercial Arbitration, Note by the Secretary General (A/CN.9/127).
[20]UNCITRAL Note by the Secretariat: Further Work in Respect of International Commercial Arbitration (A/CN.9/169), Para 2.
[21]UNCITRAL Report of the Secretary General: Study on the Application and Interpretation of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958) (A/CN.9/168).
[22] Note by the Secretariat: Further Work in Respect of International Commercial Arbitration (A/CN.9/169), Para 6.
[23]UNCITRAL, Report of Working Group on International Contract Practices on the Work of its Third Session, A/CN.9/216, Para 1; Dhyan Chinnappa and Rohan Tigadi, Section 7(4)(c) of the Arbitration and Conciliation Act, 1996: Acquiescence by Silence?, (2021) 3 SCC J-32, 33-34.
[24] UNCITRAL, Report of the Working Group on International Contract Practices on the Work of its Third Session, A/CN.9/216, Paras 6 and 13.
[25] Report of the Secretary General: Possible Features of a Model Law on International Commercial Arbitration (A/CN.9/207), Para 108.
[26]Working Paper Submitted to the Working Group on International Contract Practices at its Third Session (16-2-1982 to 26-2-1982): Note by the Secretariat: Possible Features of a Model Law on International Commercial Arbitration : Questions for Discussions by the Working Group (A/CN.9/WG.II/WP.35), Para 31; UNCITRAL, Report of the Working Group on International Contract Practices on the Work of its Fourth Session (Vienna, 4-10-1982 to 15-10-1982), A/CN.9/232 (10-11-1982), Paras 13 and 14.
[27] UNCITRAL, Report of the Working Group on International Contract Practices of its Fourth Session (Vienna, 4-10-1982 to 15-10-1982), A/CN.9/232 (10-11-1982), Paras 13 and 14.
[28]UNCITRAL, Report of the Working Group on International Contract Practices on the Work of its Fifth Session (New York, 22-2-1983 to 4-3-1983) (A/CN.9/233), Para 132.
[29]UNCITRAL, Report of the Working Group on International Contract Practices on the Work of its Fifth Session (New York, 22-2-1983 to 4-3-1983) (A/CN.9/233), Paras 178-180.
[30]UNCITRAL, Report of the Working Group on International Contract Practices on the Work of its Fifth Session (New York, 22-2-1983 to 4-3-1983) (A/CN.9/233), Para 181.
[31]UNCITRAL, Report of the Working Group on International Contract Practices on the Work of its Fifth Session (New York, 22-2-1983 to 4-3-1983) (A/CN.9/233), Para 190.
[32]UNCITRAL, Report of the Working Group on International Contract Practices on the Work of its Fifth Session (New York, 22-2-1983 to 4-3-1983) (A/CN.9/233), Para 191.
[33]UNCITRAL, Report of the Working Group on International Contract Practices on the Work of its Fifth Session (New York, 22-2-1983 to 4-3-1983) (A/CN.9/233), Para 192.
[34] UNICTRAL, Report of the Working Group on International Contract Practices on the Work of its Sixth Session (Vienna, 29-8-1983 to 9-9-1983) A/CN.9/245, Para 150.
[35] UNICTRAL, Report of the Working Group on International Contract Practices on the Work of its Sixth Session (Vienna, 29-8-1983 to 9-9-1983) A/CN.9/245, Para 154.
[36] UNICTRAL, Report of the Working Group on International Contract Practices on the Work of its Sixth Session (Vienna, 29-8-1983 to 9-9-1983) A/CN.9/245, Para 154.
[37] UNCITRAL, Report of the Working Group on International Contract Practices on the Work of its Seventh Session (New York, 6-2-1984 to 17-2-1984), A/CN.9/246, Para 139; Report of the United Nations Commission on International Trade Law on the Work of its Eighteenth Session, 3-6-1985 to 21-6-1985, A/40/17, Paras 272, 305-307.
[38]Report of the United Nations Commission on International Trade Law on the Work of its Eighteenth Session, 3-6-1985 to 21-6-1985, A/40/17, Paras 183-187.
[39] Report of the United Nations Commission on International Trade Law on the Work of its Eighteenth Session,3-6-1985 to 21-6-1985, A/40/17, Para185.
[40]Report of the United Nations Commission on International Trade Law on the work of its Eighteenth Session, 3-6-1985 to 21-6-1985, A/40/17, Para 185.
[41]UNCITRAL Secretariat, Composite Draft Text of a Model Law on International Commercial Arbitration: Some Comments and Suggestions for Consideration: Note by the Secretariat (A/CN.9/WG.II/WP.50), Paras 24-26.
[42]Art. 141 of the Constitution of India; Director of Settlements v. M.R. Apparao, (2002) 4 SCC 638, para 7.
[43](2006) 11 SCC 181, para 52.
[44]Union of India v. Dhanwanti Devi, (1996) 6 SCC 44, para 9.
[45]Krishena Kumar v. Union of India, (1990) 4 SCC 207, para 20; Union of India v. Dhanwanti Devi, (1996) 6 SCC 44, para 10.
[46]Union of India v. Dhanwanti Devi, (1996) 6 SCC 44, paras9 and10; Shah Faesal v. Union of India, (2020) 4 SCC 1, para 25; Krishena Kumar v. Union of India, (1990) 4 SCC 207, para 20; Union of India v. Dhanwanti Devi, (1996) 6 SCC 44, para 20.
[48](2018) 6 SCC 21, paras 113 and 114.
[49] There is a difference between the “Inversion Test” propounded by Professor Wambaugh and as understood by the Supreme Court of India. According to Professor Wambaugh, in order to apply the “inversion test”, the person has to formulate the supposed proposition of law that is ratio decidendi of the case. Then, he has to insert in that proposition a word reversing its meaning. Thereafter, he has to inquire whether, if the court had conceived of the new proposition (i.e. inversed proposition) as good, would the decision in the case have been the same. If the answer is the in the affirmative, then, however, excellent the original proposition may be, the case is not a precedent for that proposition (Wambaugh’s Inversion Test).
In contrast, the Supreme Court of India, in State of Gujarat v. Utility Users’ Welfare Assn.,(2018) 6 SCC 21 formulates a far simpler test. In order to apply this test, the person has to simply remove the supposed proposition of law from the text of judgment and examine if the decision in the case would have still been the same. If yes, then the proposition of law is not ratio decidendi (Supreme Court’s Inversion Test). The slight nuance can be best be explained with the help of an illustration.
Wambaugh’s Inversion Test: In Mcdermott case, (2006) 11 SCC 181, let us assume that the Courts are only permitted to set aside the arbitral awards and not correct error of the arbitrators is the supposed proposition of law. If inverted, the new conceived proposition will read “Courts are permitted, not only permitted to set aside the arbitral awards but also correct errors of the arbitrator”. Then, under Wambaugh’s Inversion Test, Court has to make an enquiry whether the Supreme Court of India in McDermott case, (2006) 11 SCC 181 would have arrived at the same decision even if the Judge had conceived the new proposition. If yes, the original proposition “court can only set aside the arbitral award but not correct errors of arbitrators” is not the ratio decidendi.
Supreme Court’s Inversion Test: In McDermott case, (2006) 11 SCC 181, let us assume that the supposed proposition of law “court can only set aside the arbitral award, but not correct the errors of the arbitrators. According to the Supreme Court’s inversion test, if the final decision in the case would be the same even after the supposed proposition of law is removed from the text of the judgment, then the said proposition is not the ratio decidendi of the case. Hence, unlike Wambaugh’s Test, the Indian courts are not required to evaluate whether the final outcome will be the same even if the Judge conceived the new inverted proposition to deduce ratio decidendi.
[50]State of Gujaratv. Utility Users’ Welfare Assn.,(2018) 6 SCC 21, para 114.
[54]Dakshin Haryana Bijli Vitran Nigam Ltd. v. Navigant Technologies (P) Ltd., 2021 SCC OnLine SC 157, paras 5(vii), (xvi) and(xvii).
[58]State of Gujaratv. Utility Users’ Welfare Assn., (2018) 6 SCC 21, para 114; Also see Nevada Properties (P) Ltd. v. State of Maharashtra, (2019) 20 SCC 119, para 13.
[60]Union of India v. Dhanwanti Devi, (1996) 6 SCC 44, para 9; Krishena Kumar v. Union of India,. (1990) 4 SCC 207, para 19; Director of Settlementsv. M.R. Apparao,(2002) 4 SCC 638, para 7; Nevada Properties (P) Ltd. v. State of Maharashtra, (2019) 20 SCC 119, para 13.
[61]Shah Faesal v. Union of India, (2020) 4 SCC 1, para 25; Director of Settlements v. M.R. Apparao, (2002) 4 SCC 638.
[62]Union of India v. Dhanwanti Devi, (1996) 6 SCC 44, paras 9 and 10; Krishena Kumar v. Union of India, (1990) 4 SCC 207, paras 19 and 20; Director of Settlementsv. M.R. Apparao, (2002) 4 SCC 638, para 7; Nevada Properties (P)Ltd. v. State of Maharashtra (2019) 20 SCC 119, para 13
[63]Director of Settlements v. M.R. Apparao, (2002) 4 SCC 638, para 7; Also see Fibre Boards (P)Ltd. v. CIT, (2015) 10 SCC 333, para 31.
[66]2021 SCC OnLine SC 473, paras 29 and 40.
[67]http://www.scconline.com/DocumentLink/0Vi7sQsH.
[68]http://www.scconline.com/DocumentLink/Ehv7iE72.
[69]Project Director, National Highways Authority of India v. M. Hakeem, 2021 SCC OnLine SC 473, paras 15 and 16.
[70]http://www.scconline.com/DocumentLink/3610ik0w.
[71]Project Director, National Highways Authority of India v. M. Hakeem, 2021 SCC OnLine SC 473, paras 17-20.
[72] National Highways Authority of India v. M. Hakeem, 2021 SCC OnLine SC 473, paras 21-28.
[76]National Highways Authority of India v. M. Hakeem, 2021 SCC OnLine SC 473, para 40.
81Dirk India (P) Ltd. v. Maharashtra State Electricity Generation Co. Ltd.,2013 SCC Online Bom 481, para 14; Wind World (India) Ltd.v. Enercon GmbH, 2017 SCC Online Bom 1147, para 16.
82Nussli Switzerland Ltd. v. Organising Committee Commonwealth Games, 2010, 2014 SCC OnLine Del 4834, para 34; State Trading Corpn. of India Ltd. v. Toepfer International Asia Pte Ltd., 2014 SCC OnLine Del 3426, para 7; Cybernetics Network (P) Ltd.v. Bisquare Technologies (P) Ltd., 2012 SCC OnLine Del 1155; Puri Construction (P) Ltd. v. Larsen & Tourbo Ltd., 2015 SCC OnLine Del 9126, paras 115-118.
83http://www.scconline.com/DocumentLink/XRnQ45N9.
84COMAP 2 of 2021, decided on 22-3-2021 (High Court of Karnataka).
[81]Padma Mahadev v. Sierra Constructions, COMAP 2 of 2021, decided on 22-3-2021 (High Court of Karnataka), para 16.
[82]Padma Mahadev v. Sierra Constructions COMAP 2 of 2021, decided on 22-3-2021 (High Court of Karnataka), para 22.
[83]Section 43(4) of the Arbitration Act.
[85]Gayatri Balaswamy v. ISG Novasoft Technologies Ltd., 2014 SCC OnLine Mad 6568, paras23, 24, 29, 30, 39, 51-53; ISG Novasoft Technologies Ltd.v. Gayatri Balasamy, 2019 SCC OnLine Mad 15819, para 42.
[86]Kurra Venkateshwara Rao v. Competent Authority, CMAs No. 987-993 & 1014 of 2008, decided on 1-5-2020 (Andhra Pradesh High Court, DB).
[87]Saptarishi Hotels (P) Ltd. v. National Institute of Tourism & Hospitality Management, 2019 SCC OnLine TS 1765.
[88]Kurra Venkateshwara Rao v. Competent Authority, CMAs No. 987-993 & 1014 of 2008, decided on 1-5-2020 (DB) paras 28, 34.
[89] Section 34(1) of the Arbitration and Conciliation Act, 1996 reads as under:
“34. Application for setting aside arbitral award.—(1) Recourse to a court against an arbitral award may be made by an application for setting aside such award in accordance with sub-ss. (2) and (3).”
[90]High Court of Gujaratv. Gujarat Kishan Mazdoor Panchayat, (2003) 4 SCC 712, paras 35 and36.
[91]Justice G.P. Singh, Principles of Statutory Interpretation (12th Edn., 2011) p. 341; National and Grindlays Bank Ltd.v. Municipal Corpn.of Greater Bombay,(1969)1 SCC 541, para 5; Principles of Statutory Interpretation (12th Edn., 2011), p. 341; Rohitash Kumarv. Om Prakash Sharma, (2013) 11 SCC 451; J.K. Lakshmi Cement Ltd.v. CTO, (2016) 16 SCC 213, para 34.
[92]J.K. Lakshmi Cement Ltd.v. CTO, (2016) 16 SCC 213, para 34; Ultratech Cement Ltd.v. State of Rajasthan, 2020 SCC OnLine SC 582, para 102.
[93]National and Grindlays Bank Ltd.v. Municipal Corpn.of Greater Bombay,(1969) 1 SCC 541, para 5; Doypack Systems (P)Ltd.v. Union of India (1988) 2 SCC 299, para 61; J.K. Lakshmi Cement Ltd.v. CTO, (2016) 16 SCC 213, para 35; Rohitash Kumarv. Om Prakash Sharma,(2013) 11 SCC 451, para 11.
[94]J.K. Lakshmi Cement Ltd.v. CTO, (2016) 16 SCC 213, para 34; Doypack Systems (P) Ltd.v. Union of India (1988) 2 SCC 299, para 61.
[95] Justice G.P. Singh, Principles of Statutory Interpretation (12th Edn., 2011) pp. 341-342.
[96]2021 SCC OnLine SC 473, para 46.
[98]Gayatri Balaswamy v. ISG Novasoft Technologies Ltd.,2014 SCC OnLine Mad 6568, paras 30-39.
[99]Gayatri Balaswamy v. ISG Novasoft Technologies Ltd.,2014 SCC OnLine Mad 6568, paras 50-52.
[100]Gayatri Balaswamy v. ISG Novasoft Technologies Ltd.,2014 SCC OnLine Mad 6568, paras 50-52.
[102]Section 115, Code of Civil Procedure, 1908.
[103]ISG Novasoft Technologies Ltd. v. Gayatri Balasamy, 2019 SCC OnLine Mad 15189, paras 41 and 42.
[104]2021 SCC OnLine SC 473, paras 29-37.
[105]S. 115(1) of the Code of Civil Procedure, 1908 reads as follows:
“115. Revision.—(1) The High Court may call for the record of any case which has been decided by any court to such High Court and in which no appeal lies thereto, and if such subordinate Court appears—
(a) to have exercised a jurisdiction not vested in it by law; or
(b) to have failed to exercise a jurisdiction so vested, or
(c) to have acted in exercise of its jurisdiction illegally or with material irregularity.
the High Court may make such order in the case as it thinks fit:
Provided that the High Court shall not, under this section, vary or reverse any order made, or any order deciding an issue, in the course of a suit or other proceeding, except where the order, if it had been made in favour the party applying for revision, would have finally disposed of the suit or other proceedings.” (emphasis supplied)
[106]2019 SCC OnLine TS 1765, paras 27, 34 and 35.
[107]Saptarishi Hotels (P) Ltd. v. National Institute of Tourism & Hospitality Management, 2019 SCC OnLine TS 1765, para 34.
[108]R.S. Jiwani v. Ircon International Ltd., 2009 SCC OnLine Bom 2021, paras 30-38; J.G. Engineers (P)Ltd. v. Union ofIndia, (2011) 5 SCC 758, para 25.
[109]Para 3, Statement of Objects and Reasons, Arbitration and Conciliation Act, 1996.
[110]Section 5 of the Arbitration Act.
[112]Gayatri Balaswamy v. ISG Novasoft Technologies Ltd., 2014 SCC OnLine Mad 6568; ISG Novasoft Technologies Ltd.v. Gayatri Balasamy, 2019 SCC OnLine Mad 15819.
[113]Saptarishi Hotels (P) Ltd. v. National Institute of Tourism & Hospitality Management, 2019 SCC OnLine TS 1765.
[114]Kurra Venkateshwara Rao v. Competent Authority, CMAs No. 987, 988, 989, 990, 991, 992 993 & 1014 of 2008, decided on 1-5-2020 (Andhra Pradesh High Court, DB).
[115]Gayatri Balaswamy v. ISG Novasoft Technologies Ltd., 2014 SCC OnLine Mad 6568, para 51; Kurra Venkateshwara Rao v. Competent Authority, CMAs No. 987-993 & 1014 of 2008, decided on 1-5-2020 (DB), para 28; Saptarishi Hotels (P) Ltd. v. National Institute of Tourism & Hospitality Management, 2019 SCC OnLine TS 1765, paras 34 and35.
[116]Dyna Technologies (P) Ltd. v. Crompton Greaves Ltd., (2019) 20 SCC 1, para 24.
noted that the “Under(sic) Section 9, court is concerned more with the necessity to preserve the status quo, so as to facilitate the arbitral process, to be initiated by the parties.” For this reason, the Court added that it was also “open to Section 9 court to, while passing pre-arbitral interim measures of protection under Section 9, condition such grant by requiring the parties benefiting therefrom, to institute arbitral proceedings within a specified timeframe”.
based on what it would have earned, had DMRC performed its obligations. It was further noted that on the other hand, “NSP’s claim for loss of overheads was in the nature of reimbursement of costs that it had incurred on overheads, which were allocated towards the contract in question. NSP’s claim that the said costs would have been met by the revenue earned from the sale of advertisement sites, had DMRC provided the same.” Thus, the Court concluded that “the claim of overheads was over and above the claim for loss of profits and the decision of the Arbitral Tribunal that such overheads had been absorbed in profits is patently erroneous” and set aside the award in this regard.
stages. Courts have risen to every challenge in recent times, to adopt a common sense, often commercially-driven approach with an underlying “business as usual” approach. In a country like India where several projects are often stalled due to a myriad variety of reasons, it is often left to the judiciary to find novel solutions so that roads and dams get built, contractors get paid and the public at large, does not suffer. This last is at the heart of many of its decisions.
