The Supreme Court has recently ruled that its powers under Article 142 of the Constitution can be used to modify an arbitral award, provided such modification aids in ending prolonged litigation.
In the majority opinion authored by CJI Sanjiv Khanna, the Court clarified that this power may be exercised cautiously, without delving into or altering the merits of the arbitral award.
The ruling was delivered by a Constitution Bench headed by Chief Justice Sanjiv Khanna, along with Justice BR Gavai, Justice Sanjay Kumar, Justice AG Masih, and Justice KV Viswanathan. Justice Viswanathan, however, dissented on the specific issue of whether Article 142 can be invoked to modify arbitral awards.
The Bench stated, “As far as the applicability of Article 142 of the Constitution is concerned, this power is to be exercised by this Court with great care and caution. Article 142 enables the Court to do complete justice in any cause or matter pending before it. The exercise of this power has to be in consonance with the fundamental principles and objectives behind the 1996 Act and not in derogation or in suppression thereof.”
The Supreme Court, referencing its earlier ruling in Shilpa Sailesh v. Varun Sreenivasan, reaffirmed that while Article 142 allows the Court to do complete justice, it cannot be used to override established law and procedure. In that case, the Court had allowed dissolution of marriage on grounds of irretrievable breakdown using Article 142. Applying this reasoning, the Court held that arbitral awards can be modified under Article 142 if (1) the modification does not amount to a re-evaluation of the award on its merits, and (2) it helps conclude the dispute and reduce litigation costs.
“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.” the Supreme Court added.
Justice KV Viswanathan, in his dissenting opinion, firmly held that neither Article 142 nor any other legal principle permits courts, including the Supreme Court, to modify arbitral awards. He emphasized that such a move would undermine the framework and intent of the Arbitration and Conciliation Act, 1996. According to him, Section 34 of the Act strictly allows courts to set aside an award on limited grounds, but not to alter or modify its terms.
“Apart from the above, if power is reserved for this Court to modify, at the fag end of the litigation, contracting parties will have grave uncertainties as they would not be sure of how the matter will play out when it reaches the apex Court. It will be antithetical to arbitration as an alternative and efficacious mode of dispute resolution.” Justice KV Viswanathan added.
Read Here: