The Appellant filed appeals under Section 37 of the Arbitration and Conciliation Act, 1996, challenging a judgment that set aside arbitral awards rejecting excise duty reimbursement. The High Court held the awards were patently illegal, as the contract terms clearly allowed reimbursement without requiring direct tax authority payment. The Appellant argued that the Single Judge overstepped the limited scope of interference under Section 34 by re-evaluating evidence and contract terms, while the Respondent countered that the arbitral award misinterpreted an unambiguous clause. The Court clarified that appellate review under Section 37 must ensure Section 34 jurisdiction was lawfully exercised.
The Delhi High Court set aside an arbitral award favoring Zostel in its dispute with OYO, citing conflict with the "public policy of India." Justice Sachin Datta held that the award permitted specific performance of an agreement lacking consensus on essential terms, violating fundamental legal principles. The Court found that the arbitrator failed to fully adjudicate key issues and improperly relegated Zostel to seek specific performance through separate proceedings. The award was deemed untenable due to the absence of a binding agreement. OYO's petition under Section 34 of the Arbitration and Conciliation Act, 1996, was thus allowed.
The petitioner challenged a 2019 arbitral award under Section 34 of the Arbitration and Conciliation Act, which held it jointly liable with another party to pay ?6.56 crore plus 38.85% interest to Respondent No. 1, stemming from a coal handling project. Though not an original signatory, the petitioner was found liable under the “Group of Companies” doctrine due to its active role, including issuing work orders and payments. It argued lack of jurisdiction under the MSMED Act and absence of privity of contract. The court rejected these claims, noting the petitioner’s participation and holding the petition time-barred and procedurally flawed.
The Supreme Court held that a plea of lack of jurisdiction in arbitration can only be raised under Section 34 of the Arbitration and Conciliation Act, 1996, if the party provides a strong justification for not raising it earlier before the Arbitral Tribunal. The Court set aside the Madhya Pradesh High Court’s decision that annulled an arbitral award solely on jurisdictional grounds. It emphasized that such objections, if not timely raised under Section 16, are deemed waived. The ruling reinforces the principle that arbitration finality cannot be disturbed merely due to delayed jurisdictional challenges without sufficient cause.
In a strong and detailed dissent, Justice K.V. Viswanathan disagreed with the majority on most substantive points. According to him, Section 34 of the Arbitration Act does not permit modification of arbitral awards, and courts should not assume such powers unless explicitly provided by statute.
He asserted that Section 34 provides only one remedy: setting aside an award. Allowing modification would mean that courts are re-writing the arbitral award, which strikes at the very ethos of arbitration—that is, party autonomy, finality of the award, and minimal court intervention.
Justice Viswanathan also rejected the argument that courts can modify awards by invoking Article 142 or Section 151 of the Civil Procedure Code. He emphasized that:
He warned that recognizing such powers would result in uncertainty, particularly in the enforcement of foreign arbitral awards, and dilute India’s reputation as an arbitration-friendly jurisdiction. He agreed only on the point that clerical or typographical mistakes could be corrected under Section 34. Justice Viswanathan concluded that set-aside and modification are distinct remedies and one cannot be read into the other.
In a landmark judgment delivered on April 30, 2025, a five-judge Constitution Bench of the Supreme Court of India ruled—by a 4:1 majority—that courts have limited powers to modify arbitral awards while exercising jurisdiction under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996. This judgment resolves a long-standing conflict in judicial precedent about whether courts can alter arbitral awards, and if so, under what circumstances.
The majority opinion, authored by Chief Justice Sanjiv Khanna and supported by Justices B.R. Gavai, Sanjay Kumar, and A.G. Masih, affirms that the judiciary may intervene in arbitral awards, but only in narrowly defined scenarios to maintain the autonomy of arbitral proceedings while ensuring justice.
The Supreme Court, while dismissing appeals by Larsen and Toubro (L&T) and Puri Construction Limited (PCL), expressed concern over unnecessarily long oral and bulky written submissions in arbitration cases. Emphasizing the limited jurisdiction under Sections 34 and 37 of the Arbitration Act, the Court criticized the tendency of lawyers to argue as if in regular civil appeals and overload hearings with irrelevant citations. The Bench stressed the need for time limits on arguments to ensure efficiency and fairness. The Court upheld the termination of the development agreement between L&T and PCL and called for introspection by the legal community.
On April 17, 2025, the Supreme Court ruled that failure to issue a Section 21 notice under the Arbitration and Conciliation Act, 1996 does not prevent an arbitral tribunal from impleading necessary parties. Setting aside the Delhi High Court’s judgment, the Court emphasized that the tribunal’s jurisdiction depends on whether a person is party to the arbitration agreement, not merely on procedural compliance. In the dispute between Adavya Projects Pvt. Ltd. and Vishal Structurals Pvt. Ltd., the Court held that even non-signatories, by their conduct, could be made parties. The tribunal was directed to continue the proceedings accordingly.
The Bombay High Court held that Section 32 of the Arbitration and Conciliation Act, 1996, does not restrict an arbitrator’s power to permit withdrawal of a claim. The Court emphasized that termination of the arbitral tribunal’s mandate under Section 32 is a consequence of claim withdrawal, not a ground to object to it. Dismissing writ petitions challenging the arbitral tribunal’s order allowing withdrawal, the Court found no perversity or bad faith. It also clarified that the tribunal becomes functus officio after withdrawal, and claimants may initiate fresh proceedings by issuing a new notice of arbitration. The petitions were accordingly dismissed.
Arbitration is not a monolithic process. It is shaped by the nature of the dispute, the location of the parties, and the agreement between them. Broadly, arbitration can be classified into the following categories: Domestic Arbitration, International Arbitration, Institutional Arbitration, Ad-Hoc Arbitration, Online Arbitration (E-Arbitration).
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